Sam Rayburn Mun. Power Agency v. The United States, 20-1535

CourtCourt of Federal Claims
Writing for the CourtRYAN T. HOLTE JUDGE
Docket Number20-1535
Decision Date19 October 2021



No. 20-1535

United States Court of Federal Claims

October 19, 2021


RCFC 12(b)(1); Subject-Matter Jurisdiction; RCFC 12(b)(6); Failure to State a Claim; Motion to Dismiss; Breach of Contract; Monetary Damages; Remedy

Neil H. Koslowe, with whom was Michael J. Rustom, Potomac Law Group, PLLC, both of Washington, D.C., for plaintiff.

Kelly A. Krystyniak, Trial Attorney, with whom were Brian M. Boynton, Acting Assistant Attorney General, Robert E. Kirschman, Jr., Director, Elizabeth M. Hosford, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, John D. Bremer, General Counsel, Southwestern Power Administration, U.S. Department of Energy, and Katharine S. Talbot, Assistant District Counsel, U.S. Army Corps of Engineers, all of Washington, D.C., for defendant.



Plaintiff, Sam Rayburn Municipal Power Agency, filed an amended complaint alleging breach of contract and requesting monetary damages. The government moved to dismiss plaintiff's claims under Rules 12(b)(1) and 12(b)(6) of the Rules of the Court of Federal Claims ("RCFC"). For the following reasons, the Court DENIES the government's motion to dismiss.


I. Factual and Procedural History

A. Factual History[1]

The Flood Control Act of 1944 authorizes the United States Department of Energy, through its Power Marketing Administrations, "to sell energy produced at hydropower facilities operated by the United States Army Corps of Engineers" ("the Army" or "the Corps"). Def.'s Mot. to Dismiss Am. Compl. ("Def.'s MTD") at 2, ECF No. 13 (citing 16 U.S.C. § 825s; 42 U.S.C. § 7152). The Southwestern Power Administration ("SWPA" or "the government") "is one of four 'Power Marketing Administrations' within the Department of Energy, responsible for marketing federally-generated hydroelectric power." Id. at 3 (citing 42 U.S.C. § 7152). "By law, power owned by [SWPA] is marketed and delivered primarily to public bodies, such as rural electric cooperatives and municipal utilities, known as 'preference' customers." Id. (citing 16 U.S.C. § 825s). The Sam Rayburn Municipal Power Agency ("plaintiff" or "Sam Rayburn"), "as a preference customer, is 'entitled to a preference in the sale and disposition of power and energy by [SWPA], and, following a public notice and participation process' was 'selected to receive the power and energy produced at [the Town Bluff Hydropower Project].'" Id. (quoting Contract No. DE-PM75-85SW00117 ("Contract" [2]) at 2, ECF No. 13-1).

On 28 June 1985, the government, "acting by and through the Commander, Fort Worth District of the Corps, and . . . the Administrator of SWPA, executed a first-of-its-kind Construction Agreement for the Town Bluff Hydropower Project" ("the Project") with plaintiff. Am. Compl. at 3, ECF No. 6. Plaintiff "agreed to pay 100% of the total construction costs for [the Project], and the Corps agreed to construct and then operate the Town Bluff Dam, including the hydropower generating facilities resulting from the construction of that Project." Id. Also on 28 June 1985, the government, "acting by and through the Administrator of SWPA, executed 'Contract No. DE-PM75-85SW00117,' entitled 'Power Sales Contract Between United States of America and Sam Rayburn Municipal Power Agency' . . . ." Id.; see also Def.'s MTD at 2 ("[Plaintiff] entered into Contract No. DE-PM75-855W00117 [sic] with the Government . . . .").

In 1989, plaintiff "entered into an agreement with the Sam Rayburn Generation and Transmission Cooperative ('SRG&T') by which [Sam Rayburn] agreed to an allocation of 68.06% of the electric power and energy produced by [the Project] and SRG&T agreed to an allocation of 24.89% of that electric power and energy." Am. Compl. at 8. "The remaining 7.05% of the electric power and energy was allocated to the Vinton (Louisiana) Public Power Authority," which is not party to the suit. Id. Plaintiff, however, "is contractually responsible to pay for 100% of SWPA's billings for the power and energy i[t] delivers to these three power purchasers." Id. at 9.


The Contract provides: "SWPA shall sell and deliver and [Sam Rayburn] shall purchase and receive, or cause to be received, all of the electric power . . . and energy . . . generated at the Project which is made available to SWPA . . . ." Contract at 4; Am. Compl. at 4; Def.'s MTD at 2, 12; see also Def.'s Reply in Supp. of Mot. to Dismiss Am. Compl. ("Def.'s Reply") at 4, ECF No. 15). Regarding compensation, the Contract says:

[Sam Rayburn] shall compensate SWPA each month for Hydro Power and Energy purchased under this Contract at the rates and under the terms and conditions set forth in the rate schedule . . . . It is understood and agreed that said rates are to be isolated project rates and are only intended to recover all operating, maintenance, addition replacement, marketing, and concomitant interest expenses associated with the Project and with this Contract and not intended to recover (through amortization, depreciation, or any other means) any Project construction costs [F]ollowing start of deliveries under this Contract, such rates shall be applicable regardless of the quantity of Hydro Power and Energy available or delivered to [Sam Rayburn]; Provided, however, That if an Uncontrollable Force prevents utilization of both of the Project's power generating units for the purposes of this Contract for an entire billing period, and if during such billing period water releases were being made which otherwise would have been used to generate Hydro Power and Energy, then SWPA shall, upon request by [Sam Rayburn], suspend billing for subsequent billing periods, until such time as at least one of the Project's generating units is again available for the purposes of this Contract.

Contract at 5-6; see Am. Compl. at 5-6; Def.'s MTD at 4-5, 12; Def.'s Reply at 5. The Contract defines an "Uncontrollable Force" as:

any force which is not within the control of the party affected, including, but not limited to failure of water supply, failure of facilities, flood, earthquake, storm, lightning, fire, epidemic, war, riot, civil disturbance, labor disturbance, sabotage, or restraint by court of general jurisdiction, which by exercise of due diligence and foresight such party could not reasonably have been expected to avoid.

Contract at 4; see Am. Compl. at 5; Def.'s MTD 5 n.5; Pl.'s Opp'n to Def.'s Mot. to Dismiss ("Pl.'s Resp.") at 16 n.63, ECF No. 14; Def.'s Reply at 6, 10. Regarding payment to SWPA, the Contract says:

If [Sam Rayburn] fails to pay any amount due under this Contract, SWPA may, at its option, cause the delivery of power and energy under this Contract to be discontinued upon 90 days' prior written notice to [Sam Rayburn], unless payment of the amount due is made by [Sam Rayburn] within such 90-day period. Such discontinuance of the delivery of power and energy, as herein provided, shall not relieve [Sam Rayburn] of liability for the SWPA rate schedule charges during the period of such discontinuance, and the rights granted SWPA herein shall be in addition to all other remedies available to SWPA, either at law or in equity, for the breach of any of the provisions of this Contract.

Contract at 11; see Def.'s MTD at 10; Pl.'s Resp. at 17-18; Def.'s Reply at 7-8. The Contract further provides:

Hydro Power and Energy shall be delivered by SWPA as scheduled except for interruptions or curtailments in delivery caused by an Uncontrollable Force, or by the operations of devices installed for system protection, or by the necessary installation, maintenance, repair, and replacement of equipment. Such interruptions or reductions in service, as hereinbefore set forth, shall not constitute a breach of this Contract, and neither party shall be liable to the other for damages resulting therefrom. Except in case of an emergency, SWPA shall give [Sam Rayburn] reasonable advance notice of temporary interruptions or curtailments in service necessary for such installation, maintenance, repair, and replacement of equipment, and shall schedule such interruptions or curtailments so as to cause the least inconvenience to [Sam Rayburn].

Contract at 15; see Am. Compl. at 5; Def.'s MTD at 5, 9, 11, 15; Pl.'s Resp. at 16, 22; Def.'s Reply at 6, 7, 10-11. The Contract also contains a provision regarding termination for breach:

If either party hereto breaches a material provision of this Contract and such breach shall be continuing, the other party, at its option, may terminate this Contract upon 30 days' prior written notice of its intention to do so, and this Contract ipso facto shall terminate at the end of such 30-day period unless within that period such period is extended by mutual agreement or unless such violation is corrected. Neither party hereto, however, shall be considered to be in default or breach with respect to any obligation under this Contract if prevented from fulfilling such obligation by reason of an Uncontrollable Force.

Contract at 20; see Am. Compl. at 7-8; Def.'s MTD at 5-6, 10-11, 15; Pl.'s Resp. at 17-18; Def.'s Reply at 7 n.4, 8.

Plaintiff alleges: "By the year 2006, the two generator units at [the Project] began to fail frequently. In November 2015, both units were put out of service as a result of the failures." Am. Compl. at 9. "From December 2015 through April 2017, the two generator units at [the Project] did not produce any electric power or energy, and SWPA did not deliver any electric power or energy during this 17-month period to [Sam Rayburn] . . . ." Id. Nonetheless, "SWPA continue[d] to bill [Sam Rayburn] at its regular rates and [Sam Rayburn] continued to pay those bills in full. During this...

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