Aluminum Company of America v. Central Lincoln Peoples' Utility District

PETITIONER: Aluminum Company of America
RESPONDENT: Central Lincoln Peoples' Utility District
LOCATION: Alpha House

DOCKET NO.: 82-1071
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 467 US 380 (1984)
ARGUED: Jan 09, 1984
DECIDED: Jun 05, 1984

ADVOCATES:
Jerrold J. Ganzfried - on behalf of federal respondent in support of Petitioners
James T. Waldron - on behalf of the Respondents
M. Laurence Popofsky - on behalf of the Petitioners

Facts of the case

Question

Media for Aluminum Company of America v. Central Lincoln Peoples' Utility District

Audio Transcription for Oral Argument - January 09, 1984 in Aluminum Company of America v. Central Lincoln Peoples' Utility District

Warren E. Burger:

Mr. Popofsky.

M. Laurence Popofsky:

Mr. Chief Justice, and may it please the Court:

We are here because we believe that the Ninth Circuit fundamentally misconceived the background, history and purposes of the statute enacted in 1980, and as a consequence also misconceived the congressional solution to the problem of the northwest region.

I would like to dwell just a brief moment on the history because I think it is instructive of how the preference problem fits into the congressional solution.

Under the Bonneville Project Act of 1937 Bonneville was authorized to serve all classes of customers with power.

Those classes of customers included not only those who were accorded statutory preference and priority but also utilities, which were privately owned and which had no such a priority, federal agencies and my clients, the DSI's, the Direct Service Industries, which are principally aluminum companies operating in the northwest.

Now the service to the aluminum companies, to the DSI's has certain characteristics which are important as we move into the congressional considerations in 1980.

Among those considerations are that the load is interruptable.

Unlike most industries or indeed most utilities it is possible without absolute and complete harm to operations to stop electricity, at least for short times, on an immediate basis in order to protect service to other customers.

At the same time because of the character of the DSI load it is also possible to serve that load with what is called nonfirm energy, essentially energy, the production of which cannot be guaranteed based on historic water conditions.

As a consequence, over the years the DSI load was conceived by Bonneville has having unique values to the northwest in the form of providing reserves to protect firm power loads by others.

There was only one problem with the system as it existed in the thirties, forties and fifties, and that is that water was finite.

Dams were built on all acceptable locations, environmentally acceptable locations, and by the early 1970's all the best estimates were that the finite amount of power being generated by Bonneville would run out.

That is where the preference clause of the 1937 statute was triggered.

First, went the private utilities.

Their contracts expired in 1973.

All service to them was terminated by Bonneville except for spot purchases thereafter.

In 1975 and 1976 the DSI's were advised that their contracts which had been in existence since the early sixties would when they expired most likely not be renewed, again because of the existence of the preference clause.

The consequence was and the picture which emerged was that the only power that would be available would go to preference customers, preference utilities alone, and that that would be inadequate.

But the anomoly was that the Bonneville Project Act of 1937 was intended to serve consumers and farmers in the region and yet only a portion of the region was served by the preference utilities.

The fact I believe you will see in the record that Oregon was generally not served by preference utilities whereas Washington was largely served by preference utilities and the disparity in rates that emerged in the seventies caused, needless to say, a considerable political problem in the northwest.

What happened in sum was that preference emerged as the problem, not an adequate solution to the problems of the northwest.

The only solution that was possible was congressional, and that is why the statute was enacted in 1980.

Now the statute ended what was called a regional civil war, and it ended it in a manner which we think is straightforward.

It decreed as its first element of legislation that the power which was to be available would be legislatively allocated, not allocated administratively.

Priority and preference, the old preference clause after all, was a congressional direction to the administrator giving him instructions as to how he, the administrator, should allocate power.

That is what the preference clause does.

It governs administrative allocations.

The heart of a statute in 1980 was to take the allocation function away from the administrator and legislate it directly by statute.

William H. Rehnquist:

Mr. Popofsky, do we find this heart of the statute in any one section or subsection?