Summarized by:

  • Court: 9th Circuit Court of Appeals Archives
  • Area(s) of Law: Constitutional Law
  • Date Filed: 09-18-2014
  • Case #: 11-71368; 11-71396; 11-71401; 11-71419
  • Judge(s)/Court Below: Circuit Judge Berzon for the Court; Chief Judge Kozinski; Partial Dissent and Partial Concurrence by Circuit Judge Reinhardt
  • Full Text Opinion

The Appropriations Clause does not establish a duty in which a business that is funded by a permanent appropriation, or revolving fund, must recover subsidies that were improperly distributed, so long as the behavior is not “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

The Bonneville Power Administration (“BPA”) advertises the remaining energy output of federal power projects to businesses, both large and small. In the business contracts at issue, BPA refused to seek a refund of improper subsidies they issued to those businesses. As a result, Industrial Customers of Northwest Utilities (“ICNU”) argues that the power cost raises that BPA charged them were impermissible, because they were unconstitutional under the Appropriations Clause, and they were contrary to the “sound business principles” that BPA should be required to act in accordance with. On review, the Ninth Circuit examined whether BPA’s actions were unconstitutional, while also determining if they were acting against the “sound business principles” in BPA’s governing statutes. The panel held that the Appropriations Clause did not compel BPA with a constitutional duty to recover subsidies because there may have been a suitable reason for the subsidies, despite them later being invalid. Additionally, the panel held that “sound business principles” do not compel BPA to charge the lowest rates, so long as it is consistent with its public mission. However, the panel explained that the decision refusing to pursue such a refund may amount to behavior that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” With this in mind, the panel held that only one of the three contracts at issue amounted to this egregious behavior. Accordingly, the panel granted the petition for review with regard to that particular contract. DENIED IN PART, AND GRANTED AND REMANDED IN PART.

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