Aluminum Company of America v. Central Lincoln Peoples Utility District, No. 82-1071

CourtUnited States Supreme Court
Writing for the CourtBLACKMUN
PartiesALUMINUM COMPANY OF AMERICA et al., Petitioners v. CENTRAL LINCOLN PEOPLES' UTILITY DISTRICT et al
Docket NumberNo. 82-1071
Decision Date05 June 1984

467 U.S. 380
104 S.Ct. 2472
81 L.Ed.2d 301
ALUMINUM COMPANY OF AMERICA et al., Petitioners

v.

CENTRAL LINCOLN PEOPLES' UTILITY DISTRICT et al.

No. 82-1071.

Supreme Court of the United States

Argued Jan. 9, 1984.
Decided June 5, 1984.
Syllabus

Since enactment of the Bonneville Project Act of 1937 (Project Act), the Bonneville Power Administration (BPA) has marketed low-cost hydroelectric power generated by a series of dams along the Columbia River. BPA sells two types of power: "firm" power (energy that BPA expects to produce under predictable streamflow conditions) and "nonfirm" power (energy that is in excess of firm power and is provided only when such excess exists). BPA's customers include three groups: (1) "public bodies and cooperatives," which include public utilities and which are "preference" customers to whom BPA is required to give priority over nonpreference customers; (2) private, investor-owned utilities (IOUs); and (3) direct-service industrial customers (DSIs), which purchase power directly from BPA instead of through a utility. IOUs and DSIs are "nonpreference" customers. As demand for power increased to exceed BPA's generating capability, Congress moved to avert a customer struggle for BPA power by enacting in 1980 the Pacific Northwest Electric Power Planning and Conservation Act (Regional Act). Section 5(a) of that Act requires all power sales under the Act to be subject to the preference and priority provisions of the Project Act. Section 5(d)(1)(B) requires BPA to offer each existing DSI customer a new contract that provides "an amount of power" equivalent to that to which such customer was entitled under its existing 1975 contract. Section 10(c) provides that the Act does not "alter, diminish, abridge, or otherwise affect" federal laws by which the public utilities are entitled to preference. Pursuant to the Regional Act, the Administrator of BPA offered new contracts to DSI customers for the same amount of power specified by the existing 1975 contracts, but, based upon his interpretation of the statute and its legislative history, concluded that terms of the power sales need not be the same as they had been under the 1975 contracts. Those contracts had provided that a portion of the power supplied to DSIs could be interrupted "at any time," thus making that portion subject to the preference provisions of the Project Act and enabling preference utilities to interrupt it whenever they wanted nonfirm power. The Administrator concluded that such a provision in the new contracts would conflict with the

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directive of § 5(d)(1)(A) of the Regional Act that sales to DSIs should provide a portion of the Administrator's reserves for firm power loads. Accordingly, the new contracts allowed power interruption only to protect BPA's firm power obligations, thus reducing the amount of nonfirm power available to preference utilities. Respondent preference utilities challenged the new contracts by a petition for review in the Court of Appeals, claiming that those contracts violated the preference accorded to nonfirm power under the 1975 contracts, that §§ 5(a) and 10(c) of the Regional Act required that DSI power be interruptible under the new contracts on the same terms as it was under the 1975 contracts, and that the conditions in the new contracts provided DSIs with a greater "amount of power" than the 1975 contracts, in violation of § 5(d)(1)(B) of the Regional Act. The Court of Appeals agreed and found the Administrator's interpretation of the Regional Act unreasonable.

Held:

1. Giving the Administrator's interpretation of the Regional Act the deference it is due, his interpretation is a fully reasonable one, particularly in the absence of any statutory provision affirmatively indicating the contrary. It is reasonable to conclude that the statutory directive that the new contracts be for the same "amount of power" as the 1975 contracts requires simply that the new contracts involve the same number of kilowatts, and, contrary to respondents' argument, does not preclude curtailing the situations in which power can be interrupted. Nor is there any merit to respondents' argument that the terms of the new contracts conflict with § 5(a) of the Regional Act. While that section preserves the priority and preference provisions of the Project Act, that preference system merely determines the priority of different customers when the Administrator receives "conflicting or competing" applications for power that he is authorized to allocate. The new contracts offered to the DSIs are not part of such an administrative allocation of power; the power sold pursuant to those contracts is allocated directly by statute. The Project Act's preference provisions, as incorporated in the Regional Act, therefore simply do not apply to the contracts that the latter Act requires BPA to offer. Pp. 24792483.

2. The legislative history of the Regional Act confirms the Administrator's interpretation. That history shows that Congress paid specific attention to power sales to DSIs, and consulted BPA on the relationship between those sales and the Act's broader purposes. There is no indication that Congress intended the new DSI contracts to have provisions governing interruptibility that were the same as in the 1975 contracts. Pp. 24832484.

3. Because the Regional Act does not comprehensively establish the terms on which power is to be supplied to DSIs under the new contracts,

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the Administrator has broad discretion to negotiate them. Sales to DSIs under that Act are intricately related to the "exchange" program established by the Act to reduce the disparity existing under the Project Act whereby consumers served by public utilities enjoyed much cheaper power than consumers served by IOUs. Pp. 24842485.

686 F.2d 708, reversed and remanded.

M. Laurence Popofsky, San Francisco, Cal., for petitioners.

Jerrold J. Ganzfried, Washington, D.C., for federal respondent in support of petitioners.

James T. Waldron, Portland, Or., for respondents.

Justice BLACKMUN delivered the opinion of the Court.

Since enactment of the Bonneville Project Act of 1937, 50 Stat. 731, 16 U.S.C. § 832 et seq. (Project Act), the Bonneville Power Administration (BPA) has marketed low-cost hydroelectric power generated by a series of dams along the Columbia River. Although § 4(a) of the Project Act, 16

Page 383

U.S.C. § 832c(a), directs the BPA Administrator to "give preference and priority to public bodies and cooperatives" when selling its power, BPA for many years enjoyed a surplus of power that allowed it to satisfy the needs of all customers in the region. As demand for power increased to exceed BPA's generating capability, however, the allocation of low-cost federal power became an issue of significant area concern. In 1980, Congress moved to avert what appeared to be an emerging customer struggle for BPA power by enacting the Pacific Northwest Electric Power Planning and Conservation Act, 94 Stat. 2697, 16 U.S.C. § 839 et seq. (Regional Act). That Act required BPA to offer new contracts to its several customers. Some of the respondents 1 brought this suit to challenge the new contracts that BPA signed with certain customers. The United States Court of Appeals for the Ninth Circuit held that the contracts violated the statute. We now reverse that judgment, and remand the case to the Court of Appeals for further proceedings.

I

Before discussing the Regional Act's provisions that give rise to the dispute, certain aspects of hydroelectric power generation and the Project Act's allocation scheme must be explained.

Because the amount of power generated by BPA depends on streamflow in the Columbia River system, BPA cannot predict with accuracy the amount of power that it can generate. Accordingly, BPA historically has sold two types of power. "Firm power" is energy that BPA expects to produce under predictable streamflow conditions. "Nonfirm" power is energy in excess of firm power, and is provided only when such excess exists.

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BPA's customers include three groups that are relevant to this case.2 The primary group is what the Project Act refers to as "public bodies and cooperatives," which includes public utilities and other public entities.3 These entities are "preference" customers, and BPA is required to give priority to their applications for power when competing applications from nonpreference customers are received. See § 4(b) of the Project Act, 16 U.S.C. § 832c(b). BPA's other two groups of customers are private, investor-owned utilities (IOUs), and direct-service industrial customers (DSIs). The latter are large industrial end-users that purchase power directly from BPA instead of through a utility. IOUs and DSIs are "nonpreference" customers, and BPA is allowed to contract to sell to them only power for which preference customers do not apply. Once a contract between BPA and a customer is signed, however, the Project Act makes clear that the contract is "binding in accordance with the terms thereof." § 5(a), 16 U.S.C. § 832d(a).

In the early years of the Project Act, BPA's contract with each of its customers obligated BPA to supply the customer's full contractual requirements on a "firm," noninterruptible basis. In 1948, the increasing demand for power in the Northwest caused BPA to modify its industrial sales policy so as to require that, where feasible, a new contract signed with a DSI provide that some power be supplied on a nonfirm basis. This condition meant that a portion of DSI power could be interrupted when necessary to supply BPA's prefer-

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ence customers. DSIs are unique among BPA's customers in their ability to tolerate such interruptions in service; they are able to do so because some of their industrial processes can withstand periodic power interruptions without damage. Utilities, on the other hand, require power on a noninterruptible basis because...

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105 practice notes
  • Golden Northwest Alum. v. Bonneville Power Admin., No. 03-73426.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • May 3, 2007
    ...utilities ("IOUs"); and direct-service industrial users ("DSIs"). See Aluminum Co. of Am. ("Alcoa") v. Cent. Lincoln Peoples' Util. Dist., 467 U.S. 380, 104 S.Ct. 2472, 81 L.Ed.2d 301 (1984) (describing BPA's customer groups). Other opinions of this Court chronicle the history of BPA and de......
  • Youssefi v. Renaud, Civil Action No. 10–cv–00428–AW.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • March 11, 2011
    ...of agency expertise, and whether an agency's decision was well-reasoned. See, e.g., Aluminum Co. v. Cent. Lincoln Peoples' Util. Dist., 467 U.S. 380, 390, 104 S.Ct. 2472, 81 L.Ed.2d 301 (1984); Inv. Co. Inst. v. Camp, 401 U.S. 617, 626–27, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971).III. ANALYSISA......
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    • United States District Courts. 4th Circuit. Middle District of North Carolina
    • August 26, 2003
    ...appropriate where the subject being regulated is technical and complex. Aluminum Co. of Am. v. Central Lincoln Peoples' Util. Dist., 467 U.S. 380, 390, 104 S.Ct. 2472, 81 L.Ed.2d 301 (1984). An agency's interpretation of its own regulations must be given "`controlling weight unless it is pl......
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    ...the agency empowered to administer it is entitled to great weight. See Aluminum Co. of America v. Central Lincoln Peoples' Utility Dist., 467 U.S. 380, 389, 104 S.Ct. 2472, 81 L.Ed.2d 301 (1984); Blum v. Bacon, 457 U.S. 132, 141, 102 S.Ct. 2355, 72 L.Ed.2d 728 (1982) ("We have often noted t......
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103 cases
  • Golden Northwest Alum. v. Bonneville Power Admin., No. 03-73426.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • May 3, 2007
    ...utilities ("IOUs"); and direct-service industrial users ("DSIs"). See Aluminum Co. of Am. ("Alcoa") v. Cent. Lincoln Peoples' Util. Dist., 467 U.S. 380, 104 S.Ct. 2472, 81 L.Ed.2d 301 (1984) (describing BPA's customer groups). Other opinions of this Court chronicle the history of BPA and de......
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    • United States
    • United States District Courts. United States District Court (Columbia)
    • March 10, 2014
    ...Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 417 (1993) (consistency); Aluminum Co. of Am. v. Cent. Lincoln Peoples' Util. Dist., 467 U.S. 380, 390 (1984) (expertise); Gen. Elec. Co. v. Gilbert, 429 U.S. 125, 142 (1976) (thoroughness). The Court concludes that the NS1 Guidelines deserve c......
  • Youssefi v. Renaud, Civil Action No. 10–cv–00428–AW.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • March 11, 2011
    ...of agency expertise, and whether an agency's decision was well-reasoned. See, e.g., Aluminum Co. v. Cent. Lincoln Peoples' Util. Dist., 467 U.S. 380, 390, 104 S.Ct. 2472, 81 L.Ed.2d 301 (1984); Inv. Co. Inst. v. Camp, 401 U.S. 617, 626–27, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971).III. ANALYSISA......
  • U.S. v. Duke Energy Corporation, No. CIV. 1:00CV01262.
    • United States
    • United States District Courts. 4th Circuit. Middle District of North Carolina
    • August 26, 2003
    ...appropriate where the subject being regulated is technical and complex. Aluminum Co. of Am. v. Central Lincoln Peoples' Util. Dist., 467 U.S. 380, 390, 104 S.Ct. 2472, 81 L.Ed.2d 301 (1984). An agency's interpretation of its own regulations must be given "`controlling weight unless it is pl......
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