ALCOA V. CLP UTILITY DIST., 467 U. S. 380 (1984)

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U.S. Supreme Court

Alcoa v. CLP Utility Dist., 467 U.S. 380 (1984)

Aluminum Company of America v.

Central Lincoln Peoples' Utility District

No. 82-1071

Argued January 9, 1984

Decided June 5, 1984

467 U.S. 380


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 (I0Us); 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 chanrobles.com-red

Page 467 U. S. 381

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(e) 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.


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. 467 U. S. 389-395.

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. 467 U. S. 396-398.

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

Page 467 U. S. 382

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. 467 U. S. 398-400.

686 F.2d 708, reversed and remanded.

BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C.J.,and BRENNAN, WHITE, MARSHALL, POWELL, REHNQUIST, and O'CONNOR, JJ., joined. STEVENS, J., filed a dissenting opinion, post p. 467 U. S. 400.


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