TRANSMISSION AGENCY of NORTHERN CALIFORNIA V. SIERRA PAC. POWER CO

By Cowan, Klint A. | Energy Law Journal, January 1, 2003 | Go to article overview

TRANSMISSION AGENCY of NORTHERN CALIFORNIA V. SIERRA PAC. POWER CO


Cowan, Klint A., Energy Law Journal


I. SUMMARY

Private power providers may now be forced to file suit in federal district court concurrent with initiation of an administrative action challenging federal power-marketing agency decisions in order to preserve any affected contract rights against "final agency actions." In Transmission Agency of Northern California v. Sierra Pacific Power Co., the Ninth Circuit Court of Appeals held that the Northwest Power Planning Act gave it exclusive original jurisdiction over contract rights and imposed a ninety-day limitation on making a contract claim. The court also held that filing an administrative action to challenge decisions by the Bonneville Power Administration (Bonneville), even where those decisions may impair a plaintiff's contract rights, does not preserve one's ability to sue for breach of contract. Instead, the district court is supposed to look beneath specific claims to see if a federal agency is being attacked and whether the basis of that attack is a "final action" made pursuant to statutory authority. Where agency breaches cannot be predicted within ninety days of the action becoming "final," private power providers may be unable to preserve their contractual causes of action.

In 1996, Bonneville approved interconnection of the Northwest AC and Alturas Interties. The Transmission Agency of Northern California (TANC) asserted the interconnection reduced its access to transmission capacity from the Northwest AC Intertie in breach of prior agreements between itself and Bonneville. TANC filed breach of contract and inverse condemnation actions against Bonneville. TANC also alleged that Sierra Pacific Power Company (Sierra Pacific), Portland General Electric (Portland) and PacificCorp (utility company defendants) violated state tort, property, fraud, and contract law during the approval, construction and operation phases of the new transmission line. The Ninth Circuit affirmed the district court's dismissal of TANC's claims for lack of subject matter jurisdiction and failure to state a claim.1

II. FACTUAL BACKGROUND

During the 1970's and 80's California obtained surplus electricity from the Pacific Northwest in two steps: first, the Northwest AC Intertie delivered the electricity to the California-Oregon Border;2 from the border, the Pacific AC Intertie distributed the energy to consumers throughout the state.3 This transmission system permitted a maximum 3200 megawatt (MW) injection of electric power into California to supplement its own generation, and helped satisfy the nation's most rapacious energy market. In the early 1980's Bonneville expressed concern that limited transmission capacity across the California-Oregon Border created a bottleneck, and inhibited its ability to market energy in California.4 To address these concerns, Congress authorized the Secretary of Energy to cooperate with non-federal entities for the construction and operation of additional facilities to "allow mutually beneficial power sales between the Pacific Northwest and California, and to accept funds contributed by non-Federal entities for that purpose."5

Pursuant to this Act, Bonneville,6 Portland,7 PacifiCorp,8 and TANC9 agreed to construct, and jointly operate, facilities to increase the transmission capacity across the California-Oregon Border from 3200 MW to 4800 MW.10 In 1991, the parties entered into an Interim Interconnection Agreement governing the construction of these facilities and the operation of two electricity interties.11 Under the agreement, TANC promised to construct a 1600 MW transmission line, the California-Oregon Transmission Project, and to connect it with the Pacific AC Intertie.12 California utilities dubbed the resulting distribution system, capable of transmitting 4800 MW throughout the state, the California-Oregon Intertie.13 Bonneville, Portland and PacifiCorp agreed to construct upgrades necessary to increase the Northwest AC Intertie's rating.14 Finally, all parties agreed to connect the California-Oregon and Northwest AC Interties, creating a 4800 MW transfer capability across the California-Oregon Border. …

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