California Energy Resources Conservation and Development Com'n v. Bonneville Power Admin.

• Decision Date: 06 November 1987
• Docket Number: 85-7430,84-7838 and 85-7470,Nos. 84-7836,s. 84-7836
• Citation: 831 F.2d 1467
• Parties: CALIFORNIA ENERGY RESOURCES CONSERVATION AND DEVELOPMENT COMMISSION, Petitioner, v. BONNEVILLE POWER ADMINISTRATION; James J. Jura, as Administrator * ; and John S. Herrington, as Secretary of the Department of Energy of the United States of America, Respondents. PUBLIC UTILITIES COMMISSION OF the STATE OF CALIFORNIA, Petitioner, v. James J. JURA, as Administrator of the Bonneville Power Administration * ; John S. Herrington, as Secretary of the Department of Energy of the United States of America; and the United States of America, Respondents.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1467

831 F.2d 1467

CALIFORNIA ENERGY RESOURCES CONSERVATION AND DEVELOPMENT

COMMISSION, Petitioner, v. BONNEVILLE POWER ADMINISTRATION; James J. Jura, as

Administrator ^*; and John S.

Herrington, as Secretary of the

Department of Energy of the

United States of

America,

Respondents.

PUBLIC UTILITIES COMMISSION OF the STATE OF CALIFORNIA, Petitioner, v. James J. JURA, as Administrator of the Bonneville Power

Administration ^*; John S. Herrington, as

Secretary of the Department of Energy of the United States

of America; and the United States of America, Respondents.

Nos. 84-7836, 85-7430, 84-7838 and 85-7470.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 13, 1986.

Decided Nov. 6, 1987.

William M. Chamberlain, Sacramento, Cal., for petitioners.

Peter G. Fairchild, San Francisco, Cal., for Public Utilities Commission of the State of Cal.

L. Randall Weisberg, Portland, Or., for Bonneville Power Admin.

R. John Seibert, Department of Justice, Washington, D.C. (argued), for respondents.

On Petition for Review of Action of the Bonneville Power Administration

Before TANG, SCHROEDER and NORRIS, Circuit Judges.

SCHROEDER, Circuit Judge:

Introduction

These are consolidated petitions to review the Bonneville Power Administration's [BPA] interim access policy for the Pacific Northwest-Pacific Southwest Intertie, a system of high voltage lines transmitting federal and non-federal power from the Pacific Northwest to the Southwest. The petitioners are: (1) the California Public Utilities Commission (CPUC), a government entity responsible for insuring reasonable rates for the State's energy consumers, Cal.Pub.Util.Code Secs. 301-322, and (2) the California Energy Resources Conservation and Development Commission (CEC), a state agency that adopts energy policies, forecasts energy needs, and certifies construction of power plants in California, Cal. Pub. Res. Code Secs. 25200, 25216. The essence of their claim is that the access policy unlawfully excludes low cost energy generated in the Pacific Northwest and Canada from BPA's transmission lines and thus prevents that lower cost energy from reaching California electric power consumers.

This is the second challenge to the interim policy. In the first, we upheld it over the objections of the Los Angeles Department of Water and Power. Department of Water & Power of the City of Los Angeles v. Bonneville Power Admin., 759 F.2d 684 (9th Cir.1985). Several of the objections of these petitioners are similar to objections which we discussed in that case.

Before reaching the merits of petitioner's objections, however, we must first discuss a threshold jurisdictional question. The question is whether the policy can be considered final agency action that is now reviewable on the merits by this court, or whether the policy is in the nature of a rate that is not final, and therefore not yet subject to our review, until reviewed by the Federal Energy Regulatory Commission [FERC]. See 16 U.S.C. Secs. 839e(i), (k); Central Lincoln Peoples' Util. Dist. v. Johnson, 735 F.2d 1101, 1109 (9th Cir.1984). We conclude that we have jurisdiction to review because the policy is not a rate. On the merits, we find no basis for overturning the agency's actions, adopting the policy on a temporary interim basis pending implementation of a long term policy.

Facts

In Department of Water & Power, this court recently set forth a description of BPA's operations and the provisions of the Intertie Access Policy. See 759 F.2d at 685-90. Because they are important to this case, we will again review the background facts.

BPA is a federal agency that markets hydroelectric power within the Pacific Northwest and oversees distribution of power from the Pacific Northwest to California and the Southwest desert. See 16 U.S.C. Sec. 832a. Its operations are governed in part by the Pacific Northwest Electric Power Planning and Conservation Act, 16 U.S.C. Secs. 839-839h (the Regional Act). The Regional Act prescribes procedures for setting and modifying rates for the sale and transmission of energy, and requires FERC approval of rates. 16 U.S.C. Secs. 839e(i), 839e(k). It also requires BPA to establish rates that are sufficient to insure BPA's fiscal independence. 16 U.S.C. Sec. 839e(a)(1). BPA's operations are also governed by the Bonneville Project Act, 16 U.S.C. Secs. 832-832l, the Pacific Northwest Power Preference Act, 16 U.S.C. Secs. 837-837h, and the Federal Columbia River Transmission System Act, 16 U.S.C. Secs. 838-838k. See generally Blumm, The Northwest's Hydroelectric Heritage: Prologue to the Pacific Northwest Electric Power Planning and Conservation Act, 58 Wash.L.Rev. 175 (1983).

In the late 1960's, Congress established the Pacific Northwest-Pacific Southwest Intertie. 16 U.S.C. Secs. 838-838k. The purpose of the Intertie is to allow the Pacific Northwest and Pacific Southwest to exchange power when one region has a surplus supply and the other region has a heavy demand. BPA owns and operates most of the Intertie transmission lines above the Oregon-California border. A small group of California utilities owns the lines south of Oregon. See Department of Water & Power, 759 F.2d at 686.

On its lines, BPA transmits both federal "firm" and "nonfirm" power. Firm power is provided with the assurance of continued availability, and nonfirm power is provided only when supply exceeds firm power commitments. BPA also "wheels" non-federal firm and the less expensive nonfirm power for public and private utilities at established rates. See id. at 686. In selling its own firm and nonfirm power, BPA is statutorily required to give priority to purchasers within the Northwest, 16 U.S.C. Sec. 837a, and to public bodies and cooperatives, 16 U.S.C. 832c(a). Sales to purchasers outside the Northwest are limited to surplus energy, or energy "which would otherwise be wasted because of the lack of a market therefor in the Pacific Northwest at any established rate." 16 U.S.C. Secs. 837(c), (d) and 837a.

Because the Intertie has a limited transmission capacity, BPA must provide for allocation of Intertie capacity among competing power producers. In allocating Intertie capacity, BPA is statutorily required to give itself priority. 16 U.S.C. Sec. 837e. Any capacity in the Intertie "which is not required for the transmission of Federal energy ... shall be made available as a carrier for transmission of other electric energy." Id. Additionally, BPA "shall make available to all utilities on a fair and nondiscriminatory basis, any [excess] capacity in the Federal transmission system." 16 U.S.C. Sec. 838d.

Before adoption of the policies challenged here, BPA generally allowed access to the Intertie to be determined by the spot market. This meant that producers offering the most attractive prices at any given moment could make sales and obtain Intertie access until capacity was reached. On September 7, 1984, BPA promulgated an interim Near Term Intertie Access Policy to provide a more predictable mechanism for allocating Intertie capacity. 49 Fed.Reg. 44,232 (Nov. 5, 1984). The policy was adopted after a series of public hearings and publication of notices in the Federal Register. See 48 Fed.Reg. 33,515 (July 22 1983); 49 Fed.Reg. 5,990 (Feb. 16, 1984); 49 Fed.Reg. 30,34 6 (July 30, 1984); 50 Fed.Reg. 19,781 (May 10, 1985). In 1985, the Los Angeles Department of Water and Power challenged the policy as an abuse of discretion and beyond BPA's statutory authority. This court upheld the policy. See Department of Water & Power, 759 F.2d at 695.

On June 1, 1985, BPA adopted a revised Near Term Intertie Access Policy. See 50 Fed.Reg. 26,827 (June 28, 1985). This policy is substantially identical to the interim policy. Both policies are challenged here and are referred to collectively as the Access Policy.

Under the Access Policy, assured transmission service is available for firm power sold by Pacific Northwest producers to California purchasers under BPA-approved sales contracts. Extraregional producers, including Canadian producers, cannot obtain assured service for firm power. Any capacity on the Intertie in excess of firm power needs is sold on an hourly or daily ("nonfirm") basis under one of three "conditions." Revised Near Term Intertie Access Policy, 50 Fed.Reg. at 26,830-31.

Condition One incorporates the Exportable Energy Agreement of 1969. This Agreement becomes operative only when river flows into Pacific Northwest dams are sufficiently high to threaten wasteful "spillover" conditions. Under this Agreement, BPA and each Northwest utility that declares a surplus of energy at BPA's "applicable rate" may sell and transmit a pro rata portion of its surplus to California purchasers. Non-regional producers, like Canadian utilities, may not use the Intertie when the Exportable Agreement takes effect. Id. at 26,831.

Condition Two becomes operative whenever BPA and Pacific Northwest utilities have enough surplus nonfirm energy to fill the Intertie at any price. Again, access to the Intertie is limited to BPA and Pacific Northwest producers. Each receives access to a pro rata portion of its declared surplus. Id.

Finally, under Condition Three, which becomes operative only when BPA and the Northwest utilities lack sufficient surplus to fill the Intertie at any price, extraregional utilities, including Canadian utilities, may gain access to the Intertie. Id.

Although the revised Near Term Intertie Access Policy was originally set to terminate on September 30, 1986, with the adoption of a long term policy, BPA extended the expiration date to June 30, 1987, to allow further evaluation of the long term policy. See 51 Fed.Reg. 23,819 (July 1, 1986). BPA has not yet adopted a long term policy, and the expiration of the interim policy has further been extended until June 30, 1988, or upon implementation of the long term policy, whichever occurs first. See 52 Fed.Reg. 9,530 (March 25, 1987).

Jurisdiction:...