                FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

ASSOCIATION OF PUBLIC AGENCY          No. 11-73178
CUSTOMERS,
                       Petitioner,
                                       OPINION
                v.

BONNEVILLE POWER
ADMINISTRATION,
                       Respondent,

CITIZENS UTILITY BOARD OF
OREGON; EUGENE WATER &
ELECTRIC BOARD; IDAHO POWER
COMPANY; NORTHWEST
REQUIREMENTS UTILITIES; PUGET
SOUND ENERGY, INC.; PACIFICORP;
PACIFIC NORTHWEST GENERATING
COOPERATIVE; PUBLIC POWER
COUNCIL; PUBLIC UTILITY
COMMISSION OF OREGON; PUBLIC
UTILITY DISTRICT NO. 1 OF COWLITZ
COUNTY, WASHINGTON; PUBLIC
UTILITY DISTRICT NO.1 OF
SNOHOMISH COUNTY, WASHINGTON;
PUBLIC UTILITY DISTRICT NO. 1 OF
BENTON COUNTY, WASHINGTON;
THE CITY OF SEATTLE,
           Respondents-Intervenors.
2                          APAC V. BPA

          On Petition for Review of an Order of the
             Bonneville Power Administration

                    Argued and Submitted
             February 19, 2013—Portland, Oregon

                      Filed October 28, 2013

         Before: Arthur L. Alarcón, Stephen S. Trott,
            and Richard A. Paez, Circuit Judges.

                     Opinion by Judge Paez;
                    Dissent by Judge Alarcón


                           SUMMARY*


              Bonneville Power Administration

   The panel denied a petition for review of a decision of the
Bonneville Power Administration adopting the Residential
Exchange Program Settlement Agreement, which set terms
for refunding energy customers who were previously
overcharged and set new rate terms for the next seventeen
years.

    The panel held that the Association of Public Agency
Customers, a group whose members were not direct
customers of the Bonneville Power Administration (“BPA”),
had constitutional and prudential standing to challenge the

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                        APAC V. BPA                            3

Settlement, due to the “pass-through” contracts under which
its members paid rates that directly reflected the rates that the
BPA charged its direct customers. Concerning the merits, the
panel held that the Settlement complied with the relevant
statutory requirements of the Pacific Northwest Electric
Power and Conservation Act, the Bonneville Project Act, and
regulations of the Federal Energy Regulatory Commission,
and with the court’s prior decisions in Portland Gen. Elec.
Co. v. BPA, 501 F.3d 1009 (9th Cir. 2007), and Golden Nw.
Aluminum, Inc. v. BPA, 501 F.3d 1037 (9th Cir. 2007). The
panel also held that the Settlement did not improperly bind
non-settling parties to the Agreement. Finally, the panel held
that the BPA Administrator’s adoption of the Settlement in
the Record of Decision was not arbitrary and capricious.

    Judge Alarcón dissented because he would hold that
Association of Public Agency Customers lacked Article III
standing, and therefore the court lacked jurisdiction to reach
the merits of the case.


                         COUNSEL

Kathleen M. Sullivan (argued), Quinn Emanuel Urquhart &
Sullivan, LLP, New York, New York; Michael Alcantar and
Donald Brookhyser, Alcantar & Kahl, LLP, Portland,
Oregon; Michael N. Kunselman, Alston & Bird, LLP,
Washington, D.C.; John M. Rochefort, Alston & Bird, LLP,
Los Angeles, California; Judith Endejan, Graham & Dunn,
PC, Seattle, Washington; Jason N. Poulos, Weinberg Wheeler
Hudgins Gunn & Dial, Atlanta, Georgia, for Petitioner.
4                     APAC V. BPA

Kurt R. Casad (argued), Special Assistant United States
Attorney, S. Amanda Marshall, United States Attorney,
Stephen J. Odell, Assistant United States Attorney, Richard
A. Greene, Special Assistant United States Attorney,
Portland, Oregon; Randy A. Roach and Timothy A. Johnson,
Bonneville Power Administration, Portland, Oregon, for
Respondent.

Jay T. Waldron (argued) and Sara Kobak, Schwabe
Williamson & Wyatt, PC, Portland, Oregon; Donald G. Kari
and Jason Kuzma, Perkins Coie, LLP, Bellevue, Washington;
Michael G. Andrea, Avista Corporation, Spokane,
Washington; Scott G. Seidman, Tonkon Torp, LLP, Portland,
Oregon; Dan L. Bagatell, Perkins Coie, LLP, Phoenix,
Arizona; Ryan L. Flynn, Pacificorp, Portland, Oregon; R.
Blair Strong, Paine Hamblen, LLP, Spokane, Washington, for
Intervenors PacificCorp., et al.

Paul M. Murphy (argued), Murphy & Buchal, LLP, Portland,
Oregon; Sarah Dennison-Leonard, Portland, Oregon, for
Intervenors Northwest Requirements Utilities, et al.

Stephanie Andrus, Assistant Attorney General, Salem,
Oregon; Donald L. Howell, II, Deputy Attorney General,
Boise, Idaho; G. Catriona McCracken and Raymond W.
Myers, Citizens’ Utility Board of Oregon, Portland, Oregon,
for Intervenors Idaho Public Utilities Commission, et al.
                            APAC V. BPA                                  5

                              OPINION

PAEZ, Circuit Judge:

    In this opinion, we consider whether a settlement
agreement between the Bonneville Power Administration
(“BPA”) and a large number of its customers is lawful. We
invalidated a previous settlement between BPA and a class of
customers because it did not comply with the Pacific
Northwest Electric Power Planning and Conservation Act
(“NWPA”). See Portland Gen. Elec. Co. v. BPA, 501 F.3d
1009, 1036–37 (9th Cir. 2007) (“PGE”); Golden Nw.
Aluminum, Inc. v. BPA, 501 F.3d 1037, 1048 (9th Cir. 2007)
(“Golden Nw.”). On remand, BPA initiated a complex rate-
making process, under which it calculated both (1)
overcharges resulting from the unlawful settlement, and (2)
new rates, intended to comply with PGE and Golden
Northwest. Its customers, in turn, filed numerous petitions
for review in this court, challenging various aspects of BPA’s
rate-making.1

    In the face of potentially unending litigation, BPA and a
large number of its customers entered into the Residential
Exchange Program Settlement Agreement (“REP-12
Settlement Agreement” or “Settlement”). Record of Decision
(“ROD”) 14.2 The Settlement sets terms for refunding



  1
    At the time of the BPA Administrator’s final decision in this case,
there were 56 petitions pending before the Ninth Circuit “on issues related
to BPA’s establishment of its power rates.” Record of Decision 13.
  2
    The REP-12 Record of Decision is contained in BPA’s supplemental
excerpts of record, filed with the court. It is also available at
6                          APAC V. BPA

customers who were previously over-charged, as well as
setting terms—including a new rate-making methodology—
for the next seventeen years. After a thorough evaluation, the
BPA Administrator issued the REP-12 Record of Decision, a
final agency action, in which he adopted the Settlement and
committed BPA to abide by its terms.

    In its petition for review, the Association of Public
Agency Customers (“APAC”) challenges the Settlement,
alleging that it violates several provisions of the NWPA,
16 U.S.C. §§ 839c(c), 839e(b), the Bonneville Project Act,
16 U.S.C. § 832d(a), regulations of the Federal Energy
Regulatory Commission, 18 C.F.R. §§ 300.1(b)(6),
300.21(e)(1), and this court’s decisions in PGE and Golden
Northwest.3 In response, BPA and the intervening parties
argue, in part, that APAC’s members lack standing to bring
this challenge, because they are merely the customers of
BPA’s customers, not direct customers themselves.4 We
conclude that APAC has standing to challenge the Settlement,
due to the “pass-through” contracts under which its members
pay rates that directly reflect the rates BPA charges its direct


http://www.bpa.gov/Finance/ResidentialExchangeProgram/Pages/defau
lt.aspx. We cite to the page numbers of the Record of Decision, rather
than to the parties’ supplemental excerpts of record.
 3
   APAC’s petition was initially consolidated with Alcoa Inc. v. BPA, No.
11-73161. However, BPA and Alcoa later reached a settlement of their
dispute and agreed to dismiss that action under Rule 42(b) of the Federal
Rules of Appellate Procedure. We dismissed Alcoa’s petition with
prejudice on December 18, 2012.
    4
      The intervening parties are: a group of investor-owned utilities
(“IOUs”), a group of consumer-owned utilities (“COUs”), and the
Citizens’ Utility Board of Oregon. All intervening parties urge the court
to dismiss or deny APAC’s petition.
                          APAC V. BPA                                7

customers. With respect to the merits, however, we conclude
that the Settlement complies with the relevant statutory
requirements and with our prior decisions, and we therefore
deny APAC’s petition for review.

                       I. BACKGROUND

    We have previously chronicled the history of BPA, a
federal agency that markets power generated by federal
hydroelectric projects in the Columbia River Basin. See, e.g.,
Alcoa, Inc. v. Bonneville Power Admin., 698 F.3d 774, 779
(9th Cir. 2012); Pac. Nw. Generating Co-op. v. Dep’t of
Energy, 580 F.3d 792, 797–800 (9th Cir. 2009); Golden Nw.,
501 F.3d at 1041; PGE, 501 F.3d at 1013–16; Pub. Power
Council, Inc. v. Bonneville Power Admin., 442 F.3d 1204,
1206 (9th Cir. 2006); M-S-R Pub. Power Agency v.
Bonneville Power Admin., 297 F.3d 833, 836–37 (9th Cir.
2002) (as amended); Ass’n of Pub. Agency Customers, Inc. v.
Bonneville Power Admin., 126 F.3d 1158, 1163–65 (9th Cir.
1997) (“APAC”). Nevertheless, because of the complexity of
the case, we begin with a brief review of the relevant history
of the agency and provisions of the NWPA, one of “the tangle
of statutes that govern [BPA’s] operations.” Golden Nw.,
501 F.3d at 1042.5 We then discuss the specific facts relevant
to this appeal.




 5
   “BPA’s authority to market power is derived from four separate acts:
the Bonneville Project Act; the Regional Preference Act of 1964,
16 U.S.C. §§ 837–837k (2000); the Federal Columbia River Transmission
System Act, 16 U.S.C. §§ 838–838k (2000); and the [NWPA], 16 U.S.C.
§§ 839–839h (2000).” PGE, 501 F.3d at 1014 n.2. BPA “originally
operated under an annual congressional appropriation, but was
restructured as a self-financed agency in 1974.” Id. at 1014.
8                      APAC V. BPA

                             A.

     Congress created BPA, an agency within the Department
of Energy, in 1937. PGE, 501 F.3d at 1013. The agency was
initially “tasked with marketing the power generated by
federally owned dams on the Columbia River.” Id. For the
first thirty years of its existence—from the 1930s through the
1960s—BPA had sufficient resources to meet the power
demands of two classes of customers. Id. at 1014. First, BPA
provided power to “preference utilities,” also known as
“consumer-owned utilities” or “COUs.” This class consists
of publicly-owned utilities, cooperatives, and federal
agencies, who are accorded priority to federal power under
the Bonneville Project Act. Id.; see also 16 U.S.C. § 832c(a),
(d). Second, BPA provided power to “non-preference
utilities.” PGE, 501 F.3d at 1014. This class of customers is
made up of two sub-classes: (1) investor-owned utilities
(“IOUs”), who purchase power for re-sale, and (2) direct
service industrial customers (“DSIs”), who purchase power
for direct consumption. Id.; see also APAC, 126 F.3d at
1164.

    As demand for low-cost federal power rose in the 1970s,
BPA forecast that it would be unable to meet all of its
customers’ power needs by the end of the decade. PGE,
501 F.3d at 1014. An “uncertain and unstable” period
followed, during which BPA advised non-preference
customers—and, later, preference customers—of its looming
inability to provide them with power. APAC, 126 F.3d at
1165; see also PGE, 501 F.3d at 1014. As a result, many
non-preference customers were forced to purchase power
elsewhere, “at a severe cost disadvantage in the marketplace.”
Id.
                       APAC V. BPA                          9

                             B.

    In response to the pending energy crisis, Congress
enacted the NWPA in 1980. The NWPA “transformed BPA
from an agency that merely sold whatever power was
available from generating facilities in the Federal Columbia
River Power System to one charged with the responsibility of
meeting the region’s future power needs.” APAC, 126 F.3d
at 1165. Of particular importance here, the statute authorizes
BPA to “exercise greater control over its power supply and to
augment that supply by purchasing electric power in the
market.” PGE, 501 F.3d at 1014. It also authorizes the BPA
Administrator to “establish and revise the rates at which
BPA’s power is sold,” and—subject to certain limitations—to
“enter into contracts, agreements, and settlements of claims
and contractual obligations.” Id. Two of the provisions
granting BPA such authority, section 5, 16 U.S.C. § 839c, and
section 7, 16 U.S.C. § 839e, are at issue in this appeal.

                              1.

    Section 5(c) of the NWPA makes low-cost power
available to IOUs, one of the classes of non-preference
customers. Under this provision, IOUs are entitled to
“exchange power they have purchased or generated for lower-
cost power generated by BPA.” PGE, 501 F.3d at 1015; see
also 16 U.S.C. § 839c(c)(1); Golden Nw., 501 F.3d at 1047.
This process, known as the Residential Exchange Program
(“REP”), “essentially acts as a cash rebate to the IOUs,”
allowing the IOUs to benefit from BPA’s low rates even
when BPA cannot itself provide them with power. PGE,
501 F.3d at 1015 (explaining that the “‘exchange’ is a paper
10                           APAC V. BPA

transaction”).6 The IOUs, in turn, are required to pass on this
financial benefit to their customers. 16 U.S.C. § 839c(c)(3);
see also Cal. Energy Res. Conservation & Dev. Comm’n v.
Johnson, 807 F.2d 1456, 1460 (9th Cir. 1986) (explaining
that without the REP, “consumers living in areas served by
private utilities faced higher power prices than consumers
living in areas served by public utilities”).

    The traditional formula for deciding if an IOU is entitled
to a “REP Benefit” is as follows: first, the IOU offers to sell
power to BPA at its “average system cost” (“ASC”) for
producing power.7 Second, BPA calculates the “PF Exchange
rate,” which is the sum of a base rate for power, see 16 U.S.C.
§ 839e(b)(1), plus any supplemental charges triggered by the
“rate ceiling,” see id. at (b)(3), discussed infra. If the PF
Exchange rate is lower than the ASC, the IOU is entitled to a
REP Benefit, which will be the difference between those two

 6
   Section 5(c) technically makes REP benefits available to any qualified
utility, including COUs. See 16 U.S.C. § 839c(c)(1). But it was intended
primarily to benefit the IOUs, and the Settlement guarantees REP benefits
only to IOUs. See Washington Utilities & Transp. Comm’n (WUTC) v.
F.E.R.C., 26 F.3d 935, 936–37 (9th Cir. 1994) (“The exchange program
is designed to eliminate the disparities between electric rates paid by
residential customers of IOUs and the lower rates paid by customers of
publicly-owned utilities”). For these reasons, and for the sake of clarity,
we refer to “IOUs,” rather than “utilities,” as the relevant beneficiaries of
section 5(c).
     7
     BPA determines an IOU’s ASC “on the basis of methodology
developed for this purpose in consultation with the [Pacific Northwest
Electric Power and Conservation Planning] Council, the Administrator’s
customers, and appropriate State regulatory bodies in the region.”
16 U.S.C. § 839c(c)(7). The ASC methodology is subject to review and
approval by the Federal Energy Regulatory Commission (“FERC”).
BPA’s current methodology was developed in 2008 and approved by
FERC in 2009. ROD 3.
                            APAC V. BPA                                11

amounts, multiplied by the IOU’s residential load. See
16 U.S.C. § 839c(c)(1) (stating that the Administrator “shall
acquire by purchase such power and shall offer, in exchange,
to sell an equivalent amount of electric power” (emphasis
added)); ROD 2.

                                    2.

    While section 5 provides low-cost power to the IOUs,
section 7 ensures that the preference customers—i.e., the
COUs—will not bear the cost of this benefit. See PGE,
501 F.3d at 1015 (“The legislative history of the NWPA
suggests that Congress viewed the NWPA as a compromise
between the preference and non-preference utilities”).
Section 7 governs the rates that BPA charges its customers,
Golden Nw., 501 F.3d at 1041, and it contains two relevant
restrictions.

    First, BPA may not charge its preference customers
higher rates than it would in the absence of the REP.
16 U.S.C. § 839e(b)(2)(C).8 In order to ensure this does not
happen, BPA is required to perform a “rate test,” through
which it compares the “PF Public rate”—i.e. the projected
rate for the COUs—to a hypothetical rate based on five
assumptions, including the assumption that no exchanges
were made through the REP. Id. at (A)–(E). If the “rate test”
shows that the PF Public rate is higher than the hypothetical
rate, BPA must adjust the PF Public rate downward by the


  8
    The rate that BPA charges its preference customers is the “Priority
Firm Public rate,” or “PF Public rate.” See ROD xi, 180, 185, 330; see
also 16 U.S.C. §§ 839c(b), 839e(b); Pac. Nw. Generating Co-op.,
580 F.3d at 802. This rate is also referred to as the “PF Preference rate.”
ROD 7; see also ROD 203.
12                     APAC V. BPA

amount of the difference. This is called the “rate ceiling”
trigger.

    The triggering of the “rate ceiling” leads to the second
restriction: if the PF Public rate is adjusted downward, the
cost of making such an adjustment must be recovered from all
of the other rates BPA charges for power, including the PF
Exchange rate that BPA sets for the IOUs. Id. at (b)(3). This
brings us somewhat full circle: the practical effect of adding
a supplemental charge to the PF Exchange rate charged to
IOUs is simply a reduction in REP Benefits for the IOUs.
See PGE, 501 F.3d at 1015.

                             C.

    Put simply, the REP is complicated. It was the source of
“almost continuous litigation” in the 1980s, during which
period many IOUs chose to settle with BPA rather than
actively participate in the program. ROD 5; see also Cal.
Energy Res. Cons. & Dec. Comm’n v. Johnson, 807 F.2d
1456, 1458 (9th Cir. 1986). And it was at the heart of the
2000 REP Settlement Agreement, which this court struck
down in PGE and Golden Northwest.

    In the 2000 REP Settlement Agreement, BPA attempted
to settle its REP obligations to the IOUs for fiscal years
2002–2011. Golden Nw., 501 F.3d at 1047. It then adjusted
the rates for the COUs upward, in order to recover the costs
associated with the settlement. Id. at 1048. We held that
BPA’s actions were contrary to the NWPA. In PGE, we
held—contrary to BPA’s argument—that BPA must comply
with sections 5 and 7 “whenever [it] engages in a purchase
and exchange of power,” including in settlement agreements.
501 F.3d at 1032 (emphasis added). We concluded that BPA
                             APAC V. BPA                                 13

had failed to do so, because the settlement did not rely on the
IOUs’ current ASCs—that is, the rates at which the IOUs
offer to sell power to BPA—when calculating their REP
settlement benefits. Id. at 1033; see also id. at 1037
(concluding that the settlement did not “resemble the REP
program created in §§ 5(c) and 7(b) that it purports to be
settling”).9 And in PGE’s companion case, Golden
Northwest, we further held that it was a violation of
section 7(b) for BPA to distribute the costs of the settlement
to its preference customers. 501 F.3d at 1048. We remanded
both cases to BPA to set rates in accordance with our
opinions.

    On remand, BPA initiated proceedings to set new rates in
compliance with PGE and Golden Northwest. This resulted
in several final decisions: (1) the “WP-07 Supplemental
Record of Decision,” which set a refund schedule for past
over-charges from the unlawful 2000 settlement, (2) the
“2008 Residential Purchase and Sale Agreement Record of
Decision,” which applied specifically to IOUs, and (3) the
“WP-10 Record of Decision,” which established future rates
for 2010–2011. The details of these decisions do not matter
here. What does matter is that each of these decisions
resulted in an onslaught of appeals to this court, which have
been stayed pending the outcome of this case. ROD 29.




    9
       We explained that BPA had erroneously relied on a “set of
assumptions . . . [that] served to enlarge the group of IOUs eligible for the
settlement and to increase the benefits of those already qualified for the
REP,” including (1) the possibility of a legal challenge to the methodology
for rate-making, despite the lack of any such existing challenge, (2) the
possibility of a challenge to the PF Exchange rate, and (3) future
fluctuations in the energy market. PGE, 501 F.3d at 1033.
14                           APAC V. BPA

                                     D.

    Against this backdrop, we turn to the subject of this
appeal: the REP-12 Record of Decision. In the face of
“seemingly endless litigation” over the REP, a large number
of BPA’s customers entered into settlement negotiations.10
This resulted in the REP-12 Settlement Agreement, which
was signed by parties representing 94 percent of the total load
that BPA serves.11 The Settlement was then submitted to the
BPA Administrator, who conducted a seven-month
evaluation to determine if it was reasonable and if it complied
with BPA’s statutory mandates, as well as with PGE and
Golden Northwest. After concluding that the Settlement was
lawful and reasonable, the BPA Administrator adopted it and
committed BPA to abide by its terms. ROD 419. The REP-
12 Record of Decision replaces the Administrator’s previous
REP-related decisions. See ROD 20; 29.

   Although the Settlement includes “many complicated
formulas and terms,” ROD 29, its three key elements can be
described succinctly. First, the Settlement sets a lump sum of
REP benefits to be paid to the IOUs as a class over the
seventeen-year term of the settlement.12 These lump sums are


  10
     The BPA Administrator publicly urged customers to work toward a
settlement that would “provide greater long-term certainty” and “greater
political equity” than what BPA could provide on its own. ROD xvii.
 11
   The settling parties consist of all six regional IOUs, three public utility
commissions, several customer representative groups, the Citizens’ Utility
Board of Oregon, and 89.1 percent (by load) of the COUs.
  12
      The lump sum allocated to the IOUs reflects the resolution of all
disputed claims arising from fiscal years 2002–2011, as well as the IOUs’
entitlement to REP benefits for fiscal years 2012–2028. Id.
                           APAC V. BPA                               15

broken down by year—for example, in FY 2012, the IOUs
will collectively be paid $182.1 million, and in FY 2028, they
will collectively be paid $286.1 million. ROD 30. Although
the yearly lump sums are fixed, the payments to any
particular IOU are not. Rather, the individual IOUs will still
be required to file their ASCs with BPA every two years.
Pursuant to section 5(c), if an IOU’s ASC does not exceed the
applicable exchange rate for a particular period, that IOU will
not receive REP benefits for that period.13 The BPA
Administrator, in his analysis of the Settlement, concluded
that the net present value of the REP benefits under the
Settlement—$2.05 billion—is approximately $1 billion less
than the net present value of the projected REP benefits over
the same period of time, should BPA continue to pay out REP
benefits without the Settlement. ROD 59.

     Second, the Settlement sets a new “rate test” methodology
to meet the requirements of section 7(b). Under its traditional
approach, BPA conducts a “rate test” every two years to
determine the rate ceiling (i.e. the maximum rate that can be
charged to COUs) and the PF Exchange rate. See 16 U.S.C.
§ 839e(b)(2). But under the Settlement, BPA prospectively
conducted the rate test for each year of the Settlement. Thus,
it ran seventeen separate rate tests, under which it determined
the prospective cost of REP benefits (and the rate ceiling) for
fiscal years 2012–2028, should the Settlement not take effect.
In addition, it ran these tests using twenty-six different
scenarios, to account for a range of different rate levels and
litigation outcomes in the absence of the Settlement. BPA


 13
    The Settlement sets forth a specific formula for determining whether
an individual IOU qualifies for REP benefits, and if so, what amount of
REP benefits it should receive. See ROD Appendix A 19–20. We discuss
this formula infra, in Part III.A.1.b.
16                         APAC V. BPA

then compared the projected cost of REP benefits under these
rate tests to the cost of REP benefits under the Settlement. It
concluded that the COUs’ interests were adequately
protected, because in twenty-three of the twenty-six
scenarios, the Settlement results in lower rates for the
preference customers than would be allowed by the section
7(b)(2) rate ceiling absent the Settlement.14

    Third, the Settlement provides a schedule of refunds to
the COUs, who were overcharged under the terms of the 2000
REP Settlement Agreement. See Golden Nw., 501 F.3d at
1048. The Settlement provides that the COUs can retain the
refunds they have already received from BPA—which total
$587 million, for the period fiscal years 2008–2011—without
further dispute.15 It also provides that BPA will continue to
refund the COUs during fiscal years 2012–2019, paying a
total of $612 million over the course of eight years. ROD
253. The mechanism for making these refunds is to withhold
a certain amount of the IOUs’ REP benefits, which the IOUs
have agreed can be used to “pay for” the refunds to which the
COUs are entitled.

                                  E.

   APAC is an “unincorporated ad hoc organization.” It is
composed of six member groups, all of whom own and

 14
     The three scenarios in which the COUs’ rates were higher under the
Settlement were scenarios that presumed the COUs would prevail on all
their major contested legal issues and the IOUs would prevail on none;
BPA deemed this unlikely. ROD 80–81.
 15
   These refunds are referred to by the parties as “Lookback Amounts,”
and are the subject of numerous pending petitions before this court. See
ROD 13–15.
                             APAC V. BPA                                 17

operate industrial facilities in the Pacific Northwest.16 The
member groups are not customers of BPA; rather, they
purchase electricity from BPA’s preference customers, the
COUs. On appeal, APAC submitted an affidavit from the
director of energy procurement at Georgia-Pacific LLP
(“GP”), stating that GP contracts to buy power from two
different COUs, the Clatskanie Public Utility District
(“CPUD”) and the Central Lincoln Public Utility District
(“CLPUD”).17 The affidavit describes the contractual
relationship between GP and CPUD as follows:

         The electrical contract between BP and CPUD
         is a cost-based pass-through contract
         according to which GP buys power from
         CPUD at CPUD’s cost to purchase the power


  16
   These groups are Georgia-Pacific LLC, Grays Harbor Paper LP, JR
Simplot Co., Longview Fibre Paper and Packaging, Inc., Ponderay
Newsprint Company, and Weyerhaeuser Company.
  17
     APAC filed this affidavit with our court in order to establish standing.
“Because Article III’s standing requirement does not apply to agency
proceedings, petitioners had no reason to include facts sufficient to
establish standing as a part of the administrative record. We therefore
consider the affidavit[] not in order to supplement the administrative
record on the merits, but rather to determine whether petitioners can
satisfy a prerequisite to this court’s jurisdiction.” Nw. Envtl. Def. Ctr. v.
Bonneville Power Admin., 117 F.3d 1520, 1527–28 (9th Cir. 1997).

     APAC also submitted an affidavit from the general manager of a
group called “Grays Harbor PUD.” This affidavit addresses the former
contractual relationship between “Grays Harbor Paper Company” and a
COU, but suggests that Grays Harbor Paper Company no longer exists.
It also fails to state whether Grays Harbor Paper Company is or was a
member of APAC. Because we can resolve the question of standing on
the basis of the affidavit from Georgia-Pacific LLP, we do not rely on the
affidavit from Grays Harbor PUD.
18                         APAC V. BPA

          from BPA and other sources, plus additional
          charges for overhead. Thus the rates and
          charges incurred by CPUD to purchase power
          from BPA for the Wauna mill are recovered
          by GP.

The affidavit describes GP’s contractual relationship with
CLPUD in nearly identical terms.18 As a result of these “pass
through” contracts, GP claims to be “directly impacted
financially by any rate increases or decreases adopted by
BPA.”

       II. JURISDICTION AND STANDARD OF REVIEW

                            A. Standing

     We have jurisdiction to review the REP-12 Record of
Decision, because it is a final agency action. See 16 U.S.C.
§ 839f(e)(5); PGE, 501 F.3d at 1023. At the outset, however,
we must address an important threshold question: does
APAC, a group whose members are not direct customers of
BPA, have standing to challenge the Settlement? Our answer
to this question requires two separate inquiries. First, we ask
if at least one of APAC’s members has “suffered sufficient
injury to satisfy the ‘case or controversy’ requirement of
Article III.” Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174
(9th Cir. 2004). Second, if APAC has established Article III
standing, we “ask whether a statute has conferred ‘standing’
on [at least one of APAC’s members],” id. at 1175, such that
the member is “within [its] zone of interests,” thereby


  18
     In its description of GP’s contractual relationship with CLPUD, the
affidavit replaces “CPUD” with “CLPUD,” deletes the phrase “and other
sources,” and replaces “Wauna mill” with “Toledo plant.”
                            APAC V. BPA                               19

meeting the requirements for prudential standing, Cent. Ariz.
Water Conservation Dist. v. U.S. E.P.A., 990 F.2d 1531, 1538
(9th Cir. 1993).19 We conclude that APAC has met the
requirements for both constitutional and prudential standing,
for the reasons explained below.

                    1. Constitutional Standing

     The requirements for Article III standing are familiar.
First, the petitioner must show that it has suffered “an injury
in fact,” i.e., “an invasion of a legally protected interest which
is (a) concrete and particularized, and (b) actual or imminent,
not conjectural or hypothetical.” Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560 (1992) (quotation marks and
citations omitted). Second, it must show that the injury is
“fairly traceable to the challenged action of the defendant,”
and is not “the result of the independent action of some third
party not before the court.” Id. (quotation marks and
alternations omitted). Finally, “it must be likely, as opposed
to merely speculative, that the injury will be redressed by a
favorable decision.” Id. at 561 (quotation marks omitted).


 19
    We consider the standing of APAC’s individual members because an
organization has standing to sue on behalf of its members if “‘(a) its
members would otherwise have standing to sue in their own right; (b) the
interests it seeks to vindicate are germane to the organization’s purpose;
and (c) neither the claim asserted nor the relief requested requires the
participation of individual members in the lawsuit.’” Smith v. Pac.
Properties & Dev. Corp., 358 F.3d 1097, 1101–02 (9th Cir. 2004)
(quoting Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 343
(1977)); see also Ocean Advocates v. U.S. Army Corps of Engineers,
402 F.3d 846, 859–61 (9th Cir. 2005) (concluding that organization had
standing because one of its members had standing). BPA and the
intervenors do not contend—nor do we have any reason to believe—that
the latter two requirements are not satisfied.
20                           APAC V. BPA

We address each requirement in turn, focusing on whether it
has been satisfied by one of APAC’s members, GP.

                            a. Injury in Fact

    The alleged injury in this case is economic: according to
APAC, its members will “suffer the burden” of over-inflated
power rates, which BPA will set in order to ensure it can
make the required REP payments to the IOUs.20 Put another
way, the Settlement will cause BPA to set higher rates for the
COUs, who will in turn set higher rates for members of
APAC. The intervening IOUs counter that “because APAC’s
members’ rates are set by COUs, not BPA, they have no legal
right to any particular rate under the NWPA,” and thus do not
have a legally protected interest in non-inflated rates.21 We
disagree.

    First, we must clarify that a petitioner’s “legally protected
interest” need not be a statutorily created interest.22 Thus, to


 20
    APAC also argues that the Settlement fails to reimburse the COUs for
illegal overcharges resulting from the 2000 REP Settlement Agreement,
which we struck down in PGE and Golden Northwest.
  21
    BPA does not dispute that APAC’s members may suffer an injury in
fact; it instead focuses on the second and third requirements for
constitutional standing, arguing that “any burden imposed on APAC’s
members comes from the COUs that sell power to them,” and any remedy
must also come from the COUs. See infra, at Part III.A.1.b–c.
 22
    The intervening IOUs confuse two separate inquiries: (1) the Article
III “legally protected interest” inquiry, which is a part of establishing
“injury-in-fact,” and (2) the prudential standing inquiry, which looks to
whether a relevant statute confers a right to sue upon a particular plaintiff.
But it is only after determining that “a plaintiff has suffered sufficient
injury to satisfy Article III” that the court “ask[s] whether a statute has
                             APAC V. BPA                                  21

the extent the parties and the dissent focus on whether
APAC’s members have a “right to any particular rate under
the [NWPA],” Dissent at 67, their focus is too narrow.23 We
have previously held that “economic injury is generally a
legally protected interest.” Cent. Ariz., 990 F.2d at 1537; see
also Montana Shooting Sports Ass’n v. Holder, 727 F.3d 975,
980 (9th Cir. 2013) (“The economic costs of complying with
a licensing scheme can be sufficient for standing.”); San
Diego Cnty. Gun Rights Comm. v. Reno, 98 F.3d 1121, 1130
(9th Cir. 1996) (“Economic injury is clearly a sufficient basis
for standing.”); Aluminum Co. of Am. v. Bonneville Power
Admin., 903 F.2d 585, 590 (9th Cir. 1989) (“There is harm in
paying rates that may be excessive . . . .”). And we have
found standing where the petitioners’ economic interest in an
agency’s action was created by contract, rather than by
statute.24 Cent. Ariz., 990 F.3d at 1537–38.


conferred ‘standing’ on that plaintiff” as part of the prudential standing
inquiry. Cetacean Cmty., 386 F.3d at 1175 (emphasis added); see also
Salmon Spawning & Recovery Alliance v. Gutierrez, 545 F.3d 1220,
1224–25 (9th Cir. 2008).
 23
     The exact requirements for a “legally protected interest” are far from
clear. See, e.g., In re Special Grand Jury 89-2, 450 F.3d 1159, 1172 (10th
Cir. 2006) (explaining that the term has “generated some confusion,” but
concluding that the interest need not be “protected by law . . . so long as
it is the sort of interest that courts think to be of sufficient moment to
justify judicial intervention); Judicial Watch, Inc. v. U.S. Senate, 432 F.3d
359, 363 (D.C. Cir. 2005) (Williams, Senior J., concurring) (expressing
“puzzlement” over the requirement and discussing the “powerful reasons”
it should be interpreted to “simply reformulate[] pre-existing
requirements, particularly that the interest affected be a cognizable one”).
 24
    The dissent misconstrues our explanation here that a legally protected
interest need not be a statutorily created interest as a suggestion that it is
“inappropriate to examine the statute in the context of a legally cognizable
interest.” See Dissent at 66, n.9. We make no such suggestion. Our
22                          APAC V. BPA

    For example, in Central Arizona—a case with strikingly
similar facts—the EPA had promulgated a rule requiring the
owners of a power generating system to take steps to reduce
its SO2 emissions. Id. at 1533–34. The petitioners, who
purchased electricity from those owners, claimed “an
economic interest in the Final Rule,” arguing that they
“[would] be required, due to [their] contractual relationship
with the [owners], to repay a major portion of . . . the costs of
installing and maintaining the emission controls required by
the Final Rule.” Id. at 1534. We held that the petitioners had
standing to sue EPA, concluding, in part, that their pecuniary
injury was “clearly a sufficient basis” upon which to establish
an “injury in fact,” as required by Lujan.25 Id. at 1537
(quotation marks omitted).

   Likewise, in Maricopa-Stanfield Irrigation and Drainage
District v. United States, we held that the plaintiffs had


point is only that a legally protected interest can derive from a source
other than a statute.
 25
    The dissent asserts that Central Arizona is distinguishable because in
that case EPA was acting in its regulatory capacity while in this case BPA
acted “within its power to contract [with the COUs] by adopting the REP-
12 Settlement Agreement.” Dissent at 71. This distinction makes no
difference. Central Arizona is analogous because, just as the pecuniary
impact of EPA’s regulations passed through to the purchasers of power
from the generating system, the pecuniary impact of BPA’s actions passed
through to GP. The pass-through contracts that GP has with the two
COUs discussed in GP’s affidavit forms the basis for APAC’s Article III
standing. BPA’s own authority to enter into a contractual relationship
with the COUs does not somehow render GP a mere downstream
customer without standing, as the dissent argues. Nor does it mean that
GP seeks to establish standing by asserting the rights of a third party. See
Dissent at 72–73. There is a direct correlation between the REP-12
Settlement and the costs that GP will shoulder. The alleged injury is GP’s
own, not that of the COUs or any other third party.
                        APAC V. BPA                           23

established “injury in fact” when the alleged unlawful act
deprived them of rights they held under contract, not by
statute. 158 F.3d 428, 435 (9th Cir. 1998). There, the
plaintiffs were irrigation districts who claimed that the San
Carlos Apache Tribe Water Rights Settlement Act of 1992
(the “SCAT Act”) had resulted in the government taking their
rights to certain water without just compensation. Id. at 433.
We concluded that the plaintiffs had standing to bring the
lawsuit, explaining in part:

        The Districts allege that, by reallocating the
        excess Ak-Chin water to the [Central Arizona
        Project], the Ak-Chin Settlement Act
        automatically reallocated that water to the
        non-Indian agricultural pool, which water the
        Districts had purchased under their 1984
        subcontracts. If the Districts are correct in
        their assertion that the excess Ak-Chin water
        [should have] defaulted to them, then the
        SCAT Act’s reallocation of the excess Ak-Chin
        water . . . indirectly deprived the Districts of
        water due to them in their subcontracts.
        Because a higher-priority right to a CAP
        water allocation is more valuable than a
        lower-priority right to the same water, the
        Districts adequately have alleged that the
        SCAT Act deprived them of their legal rights
        to the excess Ak-Chin water allocation.

Id. at 434 (emphasis added). Here, as in Central Arizona and
Maricopa-Stanfield, GP has an interest in receiving whatever
it is guaranteed under its contracts with the COUs. By
alleging that the Settlement will directly affect the rates it is
24                         APAC V. BPA

charged, resulting in economic harm, GP has sufficiently
established an invasion of a legally protected interest.26

    But our inquiry does not end there. GP still must show
that its harm is “concrete and particularized” and “actual or
imminent, not conjectural or hypothetical.” Lujan, 504 U.S.
at 560 (quotation marks omitted). The COUs argue that GP
cannot meet these requirements, because APAC’s members
are not entitled to “any particular rate under the NWPA.” We
disagree.

    The record shows that the “pass-through” contracts are
just what their name suggests: under these contracts, GP’s
affidavit explains, GP “buys power from [the COUs] at [the
COUs’] cost to purchase the power from BPA,” such that
“the rates and charges incurred by [the COUs] to purchase
power from BPA . . . are recovered from” GP. Thus, BPA’s
argument that “any burden imposed on APAC’s members
comes from the COUs that sell power to them,” and not from
BPA, relies on technicalities at the expense of common sense.
Under the terms of the Settlement, GP will almost certainly
be charged a rate that directly reflects the rates BPA charges
the COUs. See Clapper v. Amnesty Int’l USA, 133 S. Ct.
1138, 1150 n.5 (2013) (“Our cases do not uniformly require


 26
    The dissent devotes an extensive part of its discussion to confronting
arguments on which we do not rely to hold that APAC has standing. For
instance, we do not hold that APAC has standing because its members are
“significant purchasers” of BPA power. See Dissent at 69. Nor do we
hold that all downstream consumers of energy, including residential
customers, have standing to challenge the Settlement or any other action
by BPA. See Dissent at 67–68. Our holding is limited to the unique facts
of this case. Further, because APAC filed an affidavit on behalf of GP,
which is uncontested, we do not need to address the “burden of
production” issue raised by the dissent. See Dissent at 62, n. 7.
                        APAC V. BPA                          25

plaintiffs to demonstrate that it is literally certain that the
harms they identify will come about.”). Although “the extent
of [GP’s] economic harm is not readily determinable,” Cent.
Ariz., 990 F.2d at 1538 (emphasis added), the record reveals
that if APAC prevails on the merits of its claims, “the
[Settlement] will likely cause [GP] some amount of pecuniary
harm,” id., due to the pass-through provisions in its contracts.
See Maricopa-Stanfield, 158 F.3d at 434 (“If the SCAT Act
reallocated water that became the Districts’ property under
the Ak-Chin Settlement Act, then the harm is certain even
though its precise valuation may not be.”); see also Bennett
v. Spear, 520 U.S. 154, 168 (1997) (“Given petitioners’
allegation that the amount of available water will be reduced
and that they will be adversely affected thereby, it is easy to
presume specific facts under which petitioners will be injured
. . . .”). We therefore conclude that the evidentiary showing
by APAC is sufficient to establish an actual, concrete harm
that is neither conjectural nor hypothetical. See Lujan,
504 U.S. at 560.

           b. Fairly Traceable to Actions of BPA

     We next turn to the second requirement for constitutional
standing: that the alleged injury be “fairly traceable to the
challenged action of the defendant,” rather than to “the
independent actions of some third party not before the court.”
Id. (alterations and quotation marks omitted). To satisfy this
requirement, APAC need not show that BPA’s actions are
“the very last step in the chain of causation.” Bennett,
520 U.S. at 169. Rather, APAC must show only that there are
no independent actions of third parties that break the causal
link between BPA’s allegedly unlawful act—i.e., its adoption
of the Settlement—and GP’s economic harm. If there are no
such independent actions, BPA’s challenged actions may be
26                      APAC V. BPA

understood to have had a “determinative . . . effect upon the
action” of the third party, which in turn will cause harm to
GP. Id.; see also Maya v. Centex Corp., 658 F.3d 1060, 1070
(9th Cir. 2011) (“A causal chain does not fail simply because
it has several ‘links,’ provided those links are ‘not
hypothetical or tenuous’ and remain ‘plausible.’” (quoting
Nat’l Audubon Soc., Inc. v. Davis, 307 F.3d 835, 849 (9th Cir.
2002)) (internal alteration omitted)).

    Here, again, we find guidance in Central Arizona. As we
explained there, the fact that the petitioners’ “contractual
obligations may provide the basis for its economic liability
for the increased costs imposed by the Final Rule . . . hardly
means that the Final Rule itself is not the direct cause of that
liability.” 990 F.2d at 1538. This statement rings even more
true here, where the pass-through contracts directly pass on
to GP whatever rates BPA charges the COUs. Indeed, it is
difficult to imagine a causal chain in which the defendant’s
actions are more “determinative” of the actions of a third
party—and, in turn, of the alleged harm done to GP. See
Bennett, 520 U.S. at 169. To consider the COUs’ rate-setting
an “independent action,” separate from BPA’s rate-setting,
simply “misses the point.” Cent. Ariz., 990 F.2d at 1538.
Nor does it matter, as the dissent suggests, that the COUs
may be able to depart from their contractual arrangements
with APAC members. See Dissent at 74–75. This does not
change the fact that the contractual rates GP will pay are
directly correlated to the Settlement Agreement. We
therefore conclude that APAC has shown that GP’s alleged
economic injury is “fairly traceable” to the challenged action
of BPA—i.e., the adoption of the Settlement —such that its
has satisfied the second requirement for Article III standing.
                           APAC V. BPA                               27

                          c. Redressability

     Finally, we consider the third requirement for Article III
standing: “it must be likely, as opposed to merely
speculative, that the injury will be redressed by a favorable
decision.” Lujan, 504 U.S. at 561 (quotation marks omitted).
We conclude that GP has satisfied this requirement for the
same reasons it has satisfied the “fairly traceable” causation
requirement. If the Settlement turned out to be unlawful, we
would invalidate the REP-12 Record of Decision; as a result,
it could no longer be the source of any economic harm to GP.
GP has therefore satisfied the third requirement for Article III
standing, and as a result, we conclude that APAC has
constitutional standing to challenge the Settlement.

                      2. Prudential Standing

    We turn to the second standing inquiry: the “judicially
self-imposed” requirement of prudential standing.27 “For a




   27
      APAC argues that BPA has waived any challenge to APAC’s
prudential standing by failing to raise it during the REP-12 proceedings
before the agency. Unlike Article III standing, the issue of a party’s
prudential standing can be waived if not raised in a timely manner. See
Pershing Park Villas Homeowners Ass’n v. United Pac. Ins. Co., 219 F.3d
895, 899 (9th Cir. 2000). But here, BPA had no reason to challenge
APAC’s prudential standing before filing its answering brief, since REP
proceedings are not subject to standing requirements. See Overton Power
Dist. No. 5 v. O’Leary, 73 F.3d 253, 257 (9th Cir. 1996) (“[I]t does not
necessarily follow that a party able to participate in administrative
proceedings therefore has standing to challenge agency decisions.”); see
also 16 U.S.C. § 839(3)(B) (stating that one of the purposes of the NWPA
is “to provide for the participation and consultation of the Pacific
Northwest States, local governments, consumers, customers, users of the
28                          APAC V. BPA

plaintiff to have prudential standing under the APA, the
interest sought to be protected by the complainant must be
arguably within the zone of interests to be protected or
regulated by the statute in question.” Nat’l Credit Union
Admin. v. First Nat. Bank & Trust Co., 522 U.S. 479, 488
(1998) (internal quotation marks and alteration omitted); see
also Cetacean Cmty., 386 F.3d at 1176 (“When a plaintiff
seeks to challenge federal administrative action, section 10(a)
[of the Administrative Procedure Act (‘APA’)] provides a
mechanism to enforce the underlying substantive statute.”).28
To satisfy this requirement, “all that is required is a rough
correspondence of the plaintiff’s interests with the statutory
purpose.” Bernhardt v. Cnty. of Los Angeles, 279 F.3d 862,
870 (9th Cir. 2002). The test “‘is not meant to be especially
demanding’ . . . keeping with Congress’s ‘evident intent’
when enacting the APA ‘to make agency action
presumptively reviewable.’” Match-E-Be-Nash-She-Wish
Band of Pottawatomi Indians v. Patchak, 132 S. Ct. 2199,
2210 (2012) (quoting Clarke v. Securities Industry Assn.,
479 U.S. 388, 399 (1987)); see also id. (noting that “the
benefit of any doubt goes to the plaintiff”).



Columbia River System . . . and the public at large within the region” in
“facilitating the orderly planning of the region’s power system”). Thus,
BPA has not waived this challenge.
  28
     The “zone of interest” requirement derives from section 10 of the
APA, which provides that “[a] person suffering legal wrong because of
agency action, or adversely affected or aggrieved by agency action within
the meaning of a relevant statute, is entitled to judicial review thereof.”
5 U.S.C. § 702. The Supreme Court has “interpreted § 10(a) of the APA
to impose a prudential standing requirement in addition to the
requirement, imposed by Article III of the Constitution, that a plaintiff
have suffered a sufficient injury in fact.” Nat’l Credit Union Admin.,
522 U.S. at 488.
                            APAC V. BPA                               29

    Here, the interests of APAC’s members clearly line up
with the statutory purposes of the NWPA.29 APAC’s
members have an interest in purchasing low-cost power,
which allows them to operate their businesses. The statute,
in turn, states that one of its purposes is “to provide that the
customers of the [BPA] and their consumers continue to pay
all costs necessary to produce, transmit, and conserve
resources to meet the region’s electric power requirements.”
16 U.S.C. § 839(4) (emphasis added); see also 16 U.S.C.
§ 838g (explaining that “rate schedules . . . shall be fixed and
established . . . with a view to encouraging the widest
possible diversified use of electric power at the lowest
possible rates to consumers consistent with sound business
principles” (emphasis added)); § 839a(5) (defining
“consumer” as “any end user of electric power”). The
legislative history of the NWPA also shows that Congress
intended for the customers of COUs to benefit from its
protections. See H.R. Rep. No. 96-976, pt. 2, at 36 (1980),
reprinted in 1980 U.S.C.C.A.N. 6023, 6034 (“As an added
protection against preference utilities and their customers
suffering adverse economic consequences as a result of this
legislation, section 7(b)(2) establishes a ‘rate ceiling.’”


  29
      In addition to arguing that the Settlement is unlawful because it
violates the NWPA, APAC also argues that the Settlement is unlawful
because it violates the Bonneville Power Act and related FERC
regulations. However, this argument is wrapped into APAC’s argument
that the Settlement violates the NWPA, insofar as the NWPA incorporates
the relevant provisions of Bonneville Project Act. 16 U.S.C. § 839c(a)
(stating that all power sales conducted pursuant to section 5 of the NWPA
are “subject at all times to the preference and priority provisions of the
Bonneville Project Act of 1937 (16 U.S.C. § 832 and following) and, in
particular, sections 4 and 5 thereof [16 U.S.C. §§ 832c, 832d]”). We
therefore need not separately consider whether APAC’s interests line up
with the statutory purposes of the Bonneville Power Act.
30                      APAC V. BPA

(emphasis added)). On this basis, we conclude that the
interests of APAC’s members are more than “marginally
related” to the purposes of the NWPA, and therefore they
have satisfied the requirements for prudential standing. See
Match-E-Be-Nash-She-Wish, 132 S. Ct. at 2210.

    In sum, we conclude that APAC has constitutional and
prudential standing to challenge the Settlement. We therefore
turn to the merits of the petition for review.

                   B. Standard of Review

    “Our review of BPA’s actions is governed by the [APA].”
PGE, 501 F.3d at 1023; see also 16 U.S.C. § 839f(e)(2).
Thus, we will set aside the Record of Decision only if it is
“arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” 5 U.S.C. § 706(2)(a). “In
determining whether BPA has acted in accordance with law,
we defer to BPA’s reasonable interpretations of its governing
statutes.” Golden Nw., 501 F.3d at 1045; see also
Confederated Tribes of Umatilla Indian Reservation v.
Bonneville Power Admin., 342 F.3d 924, 928 (9th Cir. 2003)
(“Due to the complex subject matter and BPA’s factual and
legal expertise, we give special, substantial deference to
BPA’s interpretation of the [NWPA].”).

                       III. ANALYSIS

                   A. NWPA Section 5(c)

   One of APAC’s main arguments is that the Settlement
does not comply with section 5(c) of the NWPA, which
governs the process by which BPA implements the REP. See
16 U.S.C. § 839c(c). First, APAC argues that setting a lump
                        APAC V. BPA                          31

sum of REP benefits, rather than calculating REP benefits “on
an individual IOU-by-IOU basis,” violates section 5(c)(1).
Second, APAC argues that BPA’s waiver of the “in lieu”
provision of section 5(c), 16 U.S.C. § 839c(c)(5), is unlawful.
We conclude that the Settlement does not violate section 5(c)
on either ground.

                      1. Section 5(c)(1)

    We begin by clarifying the process for setting REP
benefits. This is a three-step process: first, BPA estimates
the aggregate amount of REP benefits to be paid to the IOUs
for a given year, pursuant to section 7(b)(2); second, BPA
uses that estimate to set the PF Exchange rate for a given
year; third, BPA uses the PF Exchange rate to determine an
individual IOU’s REP Benefit, pursuant to section 5(c)(1).
Thus, contrary to APAC’s characterization of the process,
BPA must always calculate the aggregate amount of REP
benefits to be paid out in a given year prior to setting the PF
Exchange rate for that year. See 16 U.S.C. § 839e(b)(2)(C).
This is not a novel concept invented by the Settlement. As
the BPA Administrator explained, “[i]f BPA does not know
the total permissible cost of the REP after running the 7(b)(2)
rate test, then BPA has no way of setting the PF Exchange
rate.” ROD 93.

    What is a novel concept is that the Settlement obligates
BPA to actually pay out the total amount of REP benefits it
estimates under section 7(b). Put another way, estimating the
aggregate amount of REP benefits to be paid is fundamentally
different from actually setting that amount. We acknowledge
that this is an important difference. But we fail to see how
setting an aggregate amount of REP benefits is a violation of
section 5(c), so long as the amount that is set is less than the
32                      APAC V. BPA

maximum possible REP benefits that could be distributed
pursuant to section 7. As the BPA Administrator explained,
“it is section 7(b) that ultimately establishes the amount of the
REP costs that BPA may recover in rates, while section 5(c)
. . . establishes how the REP benefits are distributed among
the REP participants.” ROD 93 (emphasis added). We find
this explanation helpful, as it clearly isolates what we must
decide here: so long as the amount of REP benefits under the
Settlement is lawful—a question we address infra in Part
III.B—all that we must decide is whether the process for
setting and distributing those benefits among the individual
IOUs complies with section 5(c).

        a. Setting REP Benefits for Individual IOUs

     We therefore turn to section 5(c). Under this provision,
there are two requirements that BPA must follow when
setting REP benefits for any given IOU. First, “the
Administrator shall acquire by purchase” the power that a
utility “offers to sell . . . at [its] average system cost [ASC].”
16 U.S.C. § 839c(c)(1). Second, “the Administrator shall . . .
sell an equivalent amount of power to such utility” in return.
Id. As APAC reads section 5(c), these two directives
necessarily require BPA to calculate an individual IOU’s REP
Benefit using the following formula, which we will call the
“traditional section 5 formula”:

     [(ASC - PF Exchange Rate) x (load)] = REP Benefit

Thus, according to APAC, section 5(c) requires BPA to first
calculate the PF Exchange rate, and then—on the basis of that
rate, together with an IOU’s ASC and load—calculate the
                           APAC V. BPA                               33

IOU’s REP Benefit.30 But by setting a lump sum of REP
benefits, APAC argues, the Settlement allows BPA to “back[]
into the rate[] to produce [the] guaranteed REP benefits.”
APAC claims that this is a violation of section 5(c).

    We disagree. Although the traditional section 5 formula
satisfies the requirements of section 5(c), it is not the only
formula that would do so. Of critical importance here,
section 5(c) does not specify the rate at which BPA must sell
power back to qualifying utilities; as the Administrator noted,
“[s]ection 5(c) is notably silent on what rate BPA must use to
sell its power to the utility.” ROD 93. Thus, although BPA
has traditionally calculated the REP Benefit using the PF
Exchange rate, all that section 5 actually requires is for BPA
to make the following calculation, where both italicized terms
are variables:

 [(ASC - Rate Charged by BPA) x (load)] = REP Benefit

If BPA uses this basic formula with the goal of calculating
the maximum REP benefit for any given IOU, it will
effectively use the traditional section 5 formula—that is, it
will figure out the PF Exchange rate, and it will base the REP
Benefit on that rate. How do we know this? We know
because the PF Exchange rate is the sum of BPA’s base rate
for power, 16 U.S.C. § 839e(b)(1), plus any supplemental
charges triggered by the “rate ceiling,” id. at (b)(3). Thus, the
PF Exchange rate is the lowest rate that BPA can charge the
IOUs. And, as the lowest rate possible, it necessarily creates



  30
     Put in more mathematical terms, APAC argues that the value of the
“REP Benefit” must be the dependent variable in the formula derived from
section 5(c).
34                        APAC V. BPA

the largest possible difference with the ASC—which, in turn,
results in the maximum possible REP Benefit.

    But an IOU does not have to accept the maximum
possible REP Benefit. See, e.g., United States v. Mezzanatto,
513 U.S. 196, 201 (1995) (“[A]bsent some affirmative
indication of Congress’ intent to preclude waiver, we have
presumed that statutory provisions are subject to waiver by
voluntary agreement of the parties.”). We agree with the
Administrator that the IOUs are not prohibited from “taking
fewer REP benefits than any otherwise would be entitled to
under the law.” ROD 91. And if an IOU accepts less than
the maximum REP Benefit, the effect is simply that BPA will
charge a higher rate to that IOU, in order to create a smaller
difference between the ASC and the rate charged. Nothing in
section 5 suggests that this is unlawful. See ROD 119
(concluding that “allowing the IOUs to waive their statutory
rights to full REP benefits . . . results in lower rates for all
COU ratepayers”). We therefore conclude that setting a pre-
determined REP Benefit, as required by the Settlement, is not
a violation of section 5 so long as the pre-determined benefit
is lower than the maximum REP Benefit that would result
from using the PF Exchange rate.31 See 16 U.S.C.
§ 839e(b)(2) (stating that the rates charged to the COUs “may
not exceed” a certain rate, but not setting a minimum rate);
see also ROD 94 (“Section 7(b)(2) creates only a cap—not a
floor—on the aggregate amount of REP benefits that BPA




     31
       This, of course, raises the “critical question” of “whether the
aggregate REP benefits provided under the Settlement exceed what the
[NWPA] permits.” ROD 116. We address that question infra in Part
III.B.
                             APAC V. BPA                                 35

must pay to the exchanging utilities and include in rates.”).32
Here, the BPA Administrator concluded that the pre-
determined REP benefits under the Settlement amount to
approximately $1 billion less than what the IOUs would be
entitled to without the Settlement, and therefore setting such
a lump sum is not a violation of section 5(c)(1).

        b. Distributing REP Benefits Among the IOUs

    Our inquiry could end there if we knew that every IOU
would qualify for REP benefits for each of the seventeen
years covered by the Settlement. If so, it would logically
follow that no IOU could receive REP benefits beyond what
they would be entitled to in the absence of the Settlement.33
But here, it is not a foregone conclusion that every settling
IOU will qualify for REP benefits in a given year. Rather,
under the Settlement, each IOU is required to file its ASC

   32
       We also reject APAC’s argument that reference to “a Pacific
Northwest electric utility,” 16 U.S.C. § 839c(c)(1) (emphasis added), is
evidence of “Congress’ intent to provide benefits only on an IOU-specific
basis.” First, section 5(c)(1) is silent with respect to “calculating the
exchange benefits for the IOUs as a class.” ROD 92. We therefore defer
to the Administrator’s reasonable interpretation of section 5(c)(1), which
allows BPA to settle its REP obligations. Id.; see also ROD 98
(explaining that under APAC’s interpretation of section 5(c), “BPA has no
choice but to implement the traditional REP,” and in that case “there could
be no settlement of the REP”); PGE, 501 F.3d at 1037 (“BPA has broad
authority to settle claims under the NWPA.”). Second, even under the
Administrator’s interpretation of section 5(c), BPA still must provide
benefits on an IOU-specific basis, for the reasons discussed in this section.
  33
    Put another way, if we start from two premises—first, that the total
amount of aggregate REP benefits is lawful, and second, that the REP
benefits are distributed proportionately among all IOUs—we must
necessarily conclude that the total amount of REP benefits distributed to
any particular IOU is lawful.
36                          APAC V. BPA

with BPA every two years, consistent with BPA’s current
methodology. ROD 111. BPA will then determine if the
IOU qualifies for REP benefits by comparing the IOU’s ASC
to the “utility-specific exchange rate” established for that
IOU. ROD 112. If the ASC is higher than the “utility
specific exchange rate,” BPA will calculate the IOU’s REP
benefits using the following formula, set forth in section 6 of
the Settlement:


 ([(ASC - Base Rate) x (load)] X [(Total REP Settlement Benefits) /
 (3((ASC - Base Rate) x Load))]) + 6.2 Adjustment = REP Benefit




ROD Appendix A 19–20; see also ROD 376–77. Although
complicated, this formula essentially serves one main
purpose: it ensures that each qualifying IOU will receive an
amount of REP benefits proportional to the difference
between its ASC and the base rate for power.34



  34
     The formula is best understood when broken into sub-parts. First,
BPA will calculate the difference between an individual IOU’s ASC and
the base rate for power in that fiscal year, and multiply that amount by the
IOU’s power load:

       (ASC - Base Rate) x (Load) = A

The value of “A” will be different for each IOU, since it is dependent on
that IOU’s particular ASC and load.

    Second, BPA will divide the total amount of REP settlement benefits
in a given year—that is, the lump sum provided for all IOUs in that
year—by the total sum of all of the “A” values, as calculated for each IOU
using the formula above:
                             APAC V. BPA                                 37

    APAC argues that it is unlawful for BPA to use a
“formula not specified in the statute,” for two reasons: first
“BPA cannot assure that it will pay REP benefits only to
those qualified IOU’s that qualify for such a benefit,” and
second, it cannot assure that it will pay REP benefits “only in



    (Total REP Settlement Benefits) = B

    3((ASC - Base Rate) x Load))

This creates a scaled value that will be the same for all IOUs, since it does
not rely on any IOU-specific values.

    Third, BPA will multiply A times B:

   ([(ASC - Base Rate) x (Load)] X [(Total REP Settlement
Benefits)/( 3((ASC - Base Rate) x Load))]) = C

This third step serves to divide the aggregate REP benefits among the
IOUs in a way that is proportional to their ASCs: a higher ASC results in
a greater difference between the ASC and the base rate, which results in
a greater value for “A,” which in turns results in a greater value for “C.”

     Finally, BPA will add the amount of any “6.2 adjustment,” resulting
in the final REP Benefit for that IOU:

    C + [Section 6.2 adjustment] = REP Benefit

This final step involves a “reallocation” of REP benefits among the IOUs,
which reflects the fact that the IOUs have not received equal refund
payments from BPA thus far. ROD 120. Thus, “some [IOUs] have
agreed to take a larger amount of rate protection in the calculation of their
PF Exchange rate, while others have agreed to take less.” ROD 121. This
internal reallocation of benefits among the IOUs does not affect any other
class of BPA ratepayers. See id. (concluding that “[n]othing in section
5(c), section 7(b)(2), or section 7(b)(3) prohibits the IOUs from waiving
their rights to have rate protection dollars allocated on a pro rata basis
among the PF Exchange rates”).
38                            APAC V. BPA

the amount to which each qualified IOU is entitled under § 5(c).”

    With respect to APAC’s first argument, we agree that
some IOUs could qualify for REP benefits under the
Settlement even though they would not qualify for benefits
absent the Settlement. The formula used in the Settlement
requires BPA to calculate only “(ASC - Base Rate) x (Load),”
as opposed to “(ASC - PF Exchange Rate) x (Load),” when
deciding if an IOU qualifies for benefits. Because the base
rate for power is necessarily lower than the PF Exchange rate,
the former formula will allow more IOUs to qualify for REP
benefits than the latter formula.35

    But this is not unlawful. Although BPA has traditionally
calculated REP benefits using the PF Exchange rate, section
5(c) does not prohibit BPA from selling power to the IOUs at
rates lower than the PF Exchange rate. See ROD 94
(“Section 7(b)(2) does not require BPA to either pay the IOUs
or charge the COUs in rates the exact amount of REP benefits
established by a comparison of the utilities’ ASCs and BPA’s
PF Exchange rate.”). Rather, under its traditional approach,
BPA has done so in order to ensure that the COUs’ interests
are protected under section 7. But once BPA has fulfilled its
obligations under section 7, as it has under the Settlement,36
section 5 does not impose any additional restrictions on the
rate at which BPA must sell power to the IOUs. See ROD


 35
    Consider, for example, a scenario where an IOU’s ASC is 40.00, the
base rate for power is 30.00, and the PF Exchange rate is 50.00. Under the
formula used in the Settlement, the IOU would qualify for some portion
of the REP benefits. Under the formula traditionally used, however the
IOU would not qualify for any REP benefits, because 40 - 50 = -10.
 36
      See discussion infra Part III.B.
                          APAC V. BPA                               39

115 (“Aggregate REP costs are determined pursuant to
sections 7(b)(1) and 7(b)(2) of the Northwest Power Act.
Once the size of the aggregate REP is determined, BPA will
use ASCs, PF Exchange rates, and qualifying exchange load
to determine each utility’s REP benefits, whether under the
Settlement or under no settlement.”). Thus, even though
more IOUs may qualify for REP Benefits under the
Settlement than otherwise would qualify, the formula that
BPA uses to determine eligibility still complies with section
5.

    The same reasoning leads us to reject APAC’s second
argument, that some IOUs may receive a greater share of
REP benefits than they are “entitled” to under section 5(c).
Yet again, we agree with the factual premise of APAC’s
argument: if the total amount of REP benefits is a pie, and
not every IOU gets a slice of the pie, the other IOUs will
simply get corresponding bigger slices of pie.37 Or, as APAC
frames it, “each qualifying IOU will receive its proportional
share of the fixed total annual amount of REP benefits
provided in the Settlement regardless of the actual difference
between its ASC and Exchange Rate.” And we understand
the intuitive concern that a particular IOU should not receive
greater benefits under the Settlement than it would otherwise.

    But here, again, we conclude that so long as the total
amount of REP benefits distributed does not violate section
7, there is no statutory restriction on what share of those
benefits any particular IOU may receive.           As the
Administrator explained, if “the IOUs wish to share among
themselves a smaller amount of REP benefits through a fixed

 37
    This would occur if one or more of the IOUs did not qualify for REP
benefits under the formula set forth in the Settlement.
40                          APAC V. BPA

payment stream that settles future uncertainties . . . there is
nothing in section 5(c) . . . that prohibits BPA from honoring
such a decision.” ROD 94. Thus, so long as “the aggregate
level of REP benefits provided under the Settlement”
comports with section 7, and “the distribution of those
payments is being administered in a manner that closely
resembles the REP envisioned by Congress in section 5(c),”
the Settlement is “consistent with BPA’s statutory authority
and is consistent with law.” ROD 115; see also PGE,
501 F.3d at 1037 (striking down the 2000 Settlement because
it did not “resemble” the REP program created in section 5).
And given the meticulous calculations that BPA will use to
distribute the REP benefits proportionately among the IOUs,
we too are “frankly at a loss as to how the Settlement . . .
could be closer to the[] statutory requirements” of section
5(c).38 ROD 115. We therefore agree with the Administrator
that the Settlement’s lump sum of REP benefits does not
violate section 5(c)(1). See Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 843 (1984).

              2. Section 5(c)(5) (“in lieu” powers)

    We also reject APAC’s argument that BPA violated
section 5(c) by waiving its ability to make in lieu purchases
pursuant to section 5(c)(5). See 16 U.S.C. § 839c(c)(5).39


  38
    We further note that BPA staff “worked with the parties to test the
formulas in the Settlement to ensure they would function over time,”
which included identifying a potential “anomalous scenario” that could
occur if “BPA’s cost of power was higher than all of the IOUs’ cost of
power.” ROD 116–17.
 39
    The in-lieu provision of section 5 provides: “Subject to the provisions
of sections 839b and 839d of this title, in lieu of purchasing any amount
of electric power offered by a utility under paragraph (1) of this
                             APAC V. BPA                                  41

The in lieu provision of section 5 permits BPA, “in its
discretion, [to] sell the IOUs actual power purchased from
other sources in lieu of participating in the REP so long as
BPA’s cost for purchasing such power is less than the IOUs’
cost to produce or secure their own power.” PGE, 501 F.3d
at 1022. Thus, in theory, BPA can reduce the costs of the
REP by engaging in in lieu transactions, which involve the
actual sale of power, rather than paper transactions.40 We
agree with the BPA Administrator’s conclusion that BPA did
not violate section 5(c) by waiving this authority. See ROD
129–34.

    First, we agree with the Administrator that BPA’s
decision to engage, or not engage, in in-lieu transactions is
entirely discretionary. See ROD 133. Indeed, the statute
itself says only that BPA “may” engage in in-lieu
transactions. 16 U.S.C. § 839c(c)(5) (emphasis added). “The
permissive language and the absence of any legislative
history lead us to conclude that the implementation of section
5(c)(5) is completely within the discretion of the BPA.” Cal.
Energy, 807 F.2d at 1462. Thus, the Administrator has
interpreted section 5 as presenting “no statutory impediment”
to BPA’s waiving its in-lieu authority, so long as BPA
provides “a reasoned decision for withholding [its] discretion


subsection, the Administrator may acquire an equivalent amount of
electric power from other sources to replace power sold to such utility as
part of an exchange sale if the cost of such acquisition is less than the cost
of purchasing the electric power offered by such utility.” 16 U.S.C.
§ 839c(c)(5).
  40
     In practice, however, BPA has never actually exercised this power.
ROD 132; see also Cal. Energy, 807 F.2d at 1461 (explaining that in-lieu
purchases are “but a minor feature of the exchange program created in
section 5,” with “only a very limited usefulness”).
42                      APAC V. BPA

under the Settlement.” ROD 131; see also ROD 133
(explaining that the “discretionary decision to engage in in-
lieu transactions,” pursuant to section 5(c)(5), is not “part of
BPA’s obligation to protect the rates of COUs under section
7(b)(2)”).

    This is not to say that it is always permissible for BPA to
waive its in-lieu authority. As APAC points out, we have
previously held—albeit under markedly different facts—that
BPA would have “abused its discretion under 5(c)(5)” if it
had “completely precluded itself from ever making in-lieu
purchases.” Cal. Energy, 897 F.2d at 1462 (concluding that
the petitioner had not shown that the contract actually
contained such a “complete ban on in-lieu sales of power”).
In California Energy, however, the contracts at issue did not
contain any limit on the amount of REP benefits that utilities
might receive, meaning that the risk of waiving the in-lieu
power—which is a means of keeping REP benefits in
check—were much higher than in this case. This is
consistent with the Administrator’s observation that “[i]n a
world where the IOUs’ REP payments are determined rate
case by rate case, it makes sense for the Administrator to
retain his rights to engage in in lieu transactions to damper
otherwise unknown REP costs.” ROD 130.

    Here, unlike in California Energy, there is a cap on the
total amount of REP benefits the IOUs can receive under the
Settlement, meaning that the cost of REP benefits will not
suddenly spike in an unexpected way, as it could absent the
Settlement. And BPA has provided a reasoned decision for
waiving its in-lieu authority, taking into account the costs and
benefits of doing so. Its primary reason for waiving this
authority is “to achieve the substantial cost protections
afforded by the Settlement,” ROD 130, the certainty of which
                        APAC V. BPA                          43

would be undermined if BPA retained the power to add
another variable to its rate calculations. Essentially, BPA has
waived one way of controlling REP costs—the ability to
engage in in-lieu transactions—for another, greater way of
controlling REP costs, i.e., the Settlement. ROD 132–33.
We agree with the BPA Administrator that this is a
reasonable trade-off. Furthermore, we note that because the
amount of REP benefits is set under the Settlement, the only
effect of an in-lieu transaction would be to “adjust the
amounts paid to each IOU,” as opposed to creating “cost
savings to BPA or any other ratepayers.” ROD 131. This
further supports BPA’s decision to waive its in-lieu authority,
because doing so does not deprive other ratepayers of a
benefit they might otherwise receive. We therefore conclude
that, under these facts, it was reasonable, and not unlawful,
for BPA to waive its authority to engage in in-lieu
transactions.

    We likewise reject APAC’s second argument, that “BPA,
as a member of the executive branch,” cannot contract away
the powers given to it by Congress. Here, BPA is “acting as
a private contracting party,” and as a result, its “rights and
duties are governed by law applicable to private parties
unaltered by the government’s sovereign status.” Kimberly
Assocs. v. United States, 261 F.3d 864, 869 (9th Cir. 2001);
see also PGE, 501 F.3d at 1029 n.17 (“Unlike many
regulatory agencies, ‘Congress endowed the Administrator
with broad-based powers to act in accordance with BPA’s
best business interests,’ allowing BPA ‘to function more like
a business than a governmental regulatory agency.’” (quoting
APAC, 126 F.3d at 1170)). BPA therefore did not err by
waiving its ability to exercise one of its discretionary powers.
44                      APAC V. BPA

                   B. NWPA Section 7(b)

    APAC also argues that the Settlement does not comply
with section 7(b) of the NWPA, under which BPA must
calculate a “rate ceiling” to protect the COUs. See 16 U.S.C.
§ 839e(b)(2)–(3). Here, rather than challenging the “lump
sum” term of the Settlement, APAC challenges the new
methodology for running the “rate test” under section 7(b).
As explained supra, under the Settlement, BPA ran the “rate
test” prospectively for each year of the Settlement.

      APAC argues that under section 7(b), BPA cannot use
rate projections “that extend beyond five years,” and
therefore it cannot rely on its prospective rate tests for the
entire term of the seventeen-year settlement. In support of
this argument, APAC cites to the requirement that BPA must
calculate the rate ceiling for any given year using projected
power costs for that year, “plus the ensuing four years.”
16 U.S.C. § 839e(b)(2); see also id. at (C) (explaining that
BPA must calculate the rate ceiling by assuming that no REP
benefits are paid out “during such five-year period”). This
requirement, according to APAC, imposes “time constraints
. . . which were designed to ensure that REP benefits must be
based on current cost and load data.” We disagree.

    As APAC concedes, section 7(b) is silent with respect to
how far in advance BPA can run the rate test for any given
year. And the language APAC cites requires only that BPA
use information from five separate years—the year in
question, plus the following four years—to set rates for a
single year. This requirement does not impose a restriction
on running the section 7(b)(2) rate test in advance of a
particular year; to the contrary, it supports the conclusion that
BPA can rely on projected rates when running its rate tests.
                       APAC V. BPA                          45

    In the absence of clear statutory language regarding how
far in advance BPA can run its rate tests, we accord
substantial deference to BPA’s interpretation of section 7.
See PGE, 501 F.3d at 1025. Here, the Administrator
concluded that since BPA unquestionably has the legal
authority to settle REP disputes, see id. at 1030, it must also
be able to satisfy its section 7(b)(2) obligations by running
the rate test for the term of the settlement. ROD 173–74.
Otherwise, “there could never be a meaningful REP
settlement,” or at least not one that settled the dispute for
longer than a five-year period. ROD 174. The Administrator
thus explained:

       In a normal ratemaking context, where BPA
       revises its rates every two years in a contested
       environment, BPA conducts the 7(b)(2) rate
       test for the rate period plus four years to
       determine two-year rates. A REP settlement,
       however, resolves REP disputes for a longer
       term than a single rate period . . . . Therefore
       a REP settlement must satisfy section 7(b)(2)
       in a different manner from the rate test used to
       establish rates for a single rate period.

ROD 173.         We conclude that this is a reasonable
interpretation of section 7(b)(2). See Chevron, 467 U.S. at
843 & n.11 (“[I]f the statute is silent or ambiguous with
respect to the specific issue, the question for the court is
whether the agency’s answer is based on a permissible
construction of the statute. The court need not conclude that
the agency construction was the only one it permissibly could
have adopted to uphold the construction . . . .”). As BPA
argues in its answering brief, section 7(b)(2) is not “a
straitjacket that effectively prohibits settlement of the REP.”
46                          APAC V. BPA

And the mere fact that BPA has traditionally calculated the
rate ceiling on a two-year cycle does not mean that is the only
legal method for running the test.41 Rather, it makes sense
that BPA would run the rate test for a two-year period when
setting rates for the upcoming two years, and for a seventeen-
year period when setting rates for the upcoming seventeen
years.

    Nor does BPA’s method of running the section 7(b)(2)
rate test under the Settlement render the test “superfluous,” as
APAC argues. The purpose of the rate test is not to ensure
that BPA charges the COUs the exact amount at which the
rate ceiling is set; the purpose is to ensure they are charged an
amount no higher than the rate ceiling. See 16 U.S.C.
§ 839e(b)(2). Thus, contrary to APAC’s argument, it does
not matter if “the result of the § 7(b)(2) rate test can be
directly, arithmetically linked” to the COUs’ rates, so long as
those rates to do not exceed the rate ceiling. The section
7(b)(2) rate test plays an important role in the Settlement,
insofar as it requires BPA to compare the lump sum of REP
benefits to the projected rate ceilings, in order to ensure that
the COUs would not be charged rates higher than the rate
ceiling. And to the extent the Settlement “pre-determine[s]
the rate ceiling” by setting a lump sum of REP benefits, as
APAC argues, it pre-determines a lower rate ceiling than
would otherwise be set under section 7(b)(2). This is not a
violation of section 7(b)(2).

 41
    Furthermore, as the BPA Administrator explained, the argument that
“the duration of the 2012 Settlement . . . is unprecedented” not only fails
to show that the Settlement is unlawful, it is also “simply wrong . . . .
During the 1980s and 1990s, BPA negotiated REP settlement agreements
and paid benefits under such agreements to 33 exchanging utilities,
including all of BPA’s exchanging preference customers, for terms up to
15 years.” ROD 201.
                            APAC V. BPA                               47

     In addition to challenging the method of applying the
section 7(b)(2) rate test, APAC also challenges its result.
Thus, it argues that the Settlement violates section 7 because
“the projected costs under some of the various scenarios in
[BPA’s] analysis did, in fact, exceed the § 7(b)(2) rate test.”
It is true that in three of the twenty-six scenarios, the COUs
would not receive greater rate protection under the Settlement
than they would without the Settlement.42 But these three
scenarios involved “extreme instance[s] where the COUs
prevail on multiple major contested issues and the IOUs
succeed in virtually none of their issues.” ROD 59; 198.
Although we recognize the narrow possibility that a violation
of section 7(b)(3) could occur if one of these scenarios
presented itself, we are satisfied with the Administrator’s
conclusion that these “extreme” scenarios are unlikely to
occur. ROD 80–81. “This is not to say that BPA could act
contrary to a clear statutory directive in settling, but if there
is room for doubt, we ought not to resolve it in a manner that
sends the parties back to litigation.” Util. Reform Project v.
Bonneville Power Admin., 869 F.2d 437, 443 (9th Cir. 1989).
Such is the case here.




  42
      These twenty-six scenarios consisted of “four scenarios to analyze
uncertainty in BPA’s costs and [twenty-two] scenarios to analyze the
possible impact of the litigation outcomes.” ROD 56–58. As the
Administrator noted, “the lower projected costs of the REP . . . are not
mere ethereal guesswork.” ROD 60. In making these projections, BPA
considered “multiple variations on the key drivers of future REP benefits,
i.e., ASCs, exchange loads, BPA’s costs, litigation risks, and market
variations.” ROD 64. Thus, although the very nature of forecasting
implies some uncertainty, the rates that BPA forecast cannot fairly be
characterized as, in APAC’s words, “pure speculation and conjecture.”
48                      APAC V. BPA

            C. Cost Recovery Adjustment Clause

    APAC next argues that the Settlement is unlawful because
it does not permit BPA to apply a Cost Recovery Adjustment
Clause (“CRAC”) to the REP benefit levels. The CRAC is a
rate mechanism by which BPA can adjust customers’ rates
when “changes in costs and revenues vary substantially from
what BPA was projecting when setting rates,” so that BPA is
able to recover all of its costs. ROD 138; see also Indus.
Customers of Nw. Utilities v. Bonneville Power Admin.,
408 F.3d 638, 642 (9th Cir. 2005) (“The CRACs were created
to allow the BPA to address any financial shortfalls without
having to raise base rates.”). APAC argues that by
“guaranteeing the IOUs a fixed amount of REP benefits that
BPA cannot adjust,” the Settlement “excuses IOU customers
from the CRAC,” which means that other customers will bear
the burden of assuring that BPA recovers its costs. We agree
with the factual premise that BPA cannot apply a CRAC to
the IOUs’ REP benefit levels under the Settlement, even if
BPA’s costs are higher than expected. See ROD 134. We
nevertheless reject APAC’s argument, for two reasons.

    First, as the BPA Administrator explained “CRACs are
not required by the [NWPA].” Rather, they are a mechanism
by which BPA exercises its statutory authority to “recover . . .
the cost associated with the acquisition, conservation, and
transmission of electric power.” 16 U.S.C. § 839e(a)(1); see
also Cal. Energy Comm’n, 909 F.2d at 1303 (explaining that
section 7 “requires BPA, in marketing federal power, to
establish rates that will produce sufficient revenues to ensure
BPA’s fiscal independence”). BPA thus has broad authority
to determine if and how to apply a CRAC. See, e.g., Pub.
Power Council, 442 F.3d at 1211 (explaining that a CRAC is
                       APAC V. BPA                          49

“entirely bound up with BPA’s rate making responsibilities,
and we owe deference to the BPA in that area”).

     Second, to the extent APAC challenges BPA’s exercise of
this discretion, we reject this challenge. The BPA
Administrator concluded that it was reasonable to insulate the
IOUs from a potential CRAC for two reasons: first, the IOUs
“will not receive any upside benefits during a rate period” if,
for example, BPA is unexpectedly able to charge lower rates
than expected; and second, “because the REP benefits are
fixed, the IOUs’ REP benefits payments would never be a
contributing factor” to any unexpected costs that might
trigger a CRAC. ROD 135; see also ROD 137. Thus, “the
lack of a CRAC mechanism in the Settlement . . . [is] simply
one of the trade-offs” of the Settlement, counter-balanced by
other terms that are less beneficial to the IOUs. ROD 136.
And while “COU customers may feel the brunt of a CRAC in
a future rate case,” the BPA Administrator concluded that
“the discount the IOUs are taking in their REP benefits under
the Settlement would . . . more than make-up for the small
amount of CRAC contributions the IOUs would have
provided under a no-settlement alternative.” ROD 139. This
was a reasonable conclusion. See Pac. Nw. Generating Co-
op., 580 F.3d at 806 (“[W]e have identified the question of
how best to further BPA’s business interests consistent with
its public mission as a statutory gap that Congress has left to
BPA to fill.” (quotation marks omitted)); Pub. Power
Council, 442 F.3d at 1209 (“[W]e may not substitute our own
judgment for that of BPA; we must simply assess whether
BPA relied on improper factors, failed to consider an
important aspect of the question, offered an explanation for
its decision that runs counter to the evidence before it, or
rendered a decision that is so implausible that it could not be
ascribed to a difference in view or the product of agency
50                          APAC V. BPA

expertise.” (quotation marks and alterations omitted)). We
therefore conclude that the Administrator’s decision to
approve the Settlement without including a CRAC
mechanism was neither unlawful nor unreasonable.

       D. Bonneville Power Act and FERC Regulations

                                   1.

    In addition to arguing that the Settlement violates the
NWPA, APAC also argues that the Settlement violates the
Bonneville Project Act, 16 U.S.C. § 832d, and applicable
FERC regulations, 18 C.F.R. §§ 300.1(b)(6), 300.21(e)(1), by
setting rates for a period that exceeds five years.43

    These sources require that contractual rates be equitably
adjusted no less than once every five years. See 16. U.S.C.
§ 832d(a) (“Contracts entered into under this subsection shall
contain . . . such provisions as the administrator and
purchaser agree upon for the equitable adjustment of rates at
appropriate intervals, not less frequently than once in every
five years . . . .” (emphasis added)); 18 C.F.R. § 300.1(b)(6)
(“Proposed rate approval period means the period for which
confirmation and approval of the rate schedules is requested.
This period must not exceed five years.”); § 300.21(e)(1)
(stating that rate-approval periods are “not to exceed a five-
year period” unless FERC deems it appropriate). But, as
BPA argues, “establishing costs is not the same as setting


  43
     All power sales conducted pursuant to section 5 of the NWPA are
“subject at all times to the preference and priority provisions of the
Bonneville Project Act of 1937 (16 U.S.C. 832 and following) and, in
particular, sections 4 and 5 thereof [16 U.S.C. §§ 832c, 832d].” 16 U.S.C.
§ 839c(a).
                        APAC V. BPA                          51

rates.” Here, the Settlement sets a fixed amount of REP
benefits that BPA will be required to pay over the term of the
Settlement, but it does not set any rates, meaning the five-
year limit on rate-setting is inapplicable. As the BPA
Administrator explained,

       Establishing rates and establishing costs are
       two substantively different things. The
       Settlement establishes the amount of REP
       benefits provided to the IOUs over the
       Settlement term and thus the amount of REP
       costs included in preference customers’ rates
       during that term. The Settlement does not
       establish rates.

ROD 203. Rather, the Settlement resolves disputes about
REP costs and rate-making methodology, neither of which
“must be revised every five years” by statute or regulation.
ROD 202.

    Furthermore, although the Settlement “pre-determines”
REP benefits, that does not mean that it also pre-determines
rates. As the Administrator explained, “ratemaking involves
many steps, including a forecast of loads and resources; a
determination of BPA’s total revenue requirement; a forecast
of market prices; an analysis of risk and its mitigation; a cost
of service analysis; a rate design analysis; and additional
steps.” ROD 202. The Settlement itself likewise makes clear
that BPA will continue to engage in ongoing rate-setting
throughout the term of the Settlement. See, e.g., ROD
Appendix A 19 (“For each Fiscal Year, BPA will develop
rates, in the Rate Proceeding for the applicable Rate Period,
such that each IOU will be paid its IOU-Specific REP
Settlement Benefit Amount as calculated for such Fiscal Year
52                      APAC V. BPA

pursuant to this section 6.”). Indeed, after the Administrator
approved the Settlement, BPA conducted the “BP-12” rate
proceeding to “establish[] power and transmission rates for
FY 2012–2013.” ROD 25. We thus conclude that the
Settlement sets only costs, not rates, and therefore does not
violate the five-year rate-setting limitations established by the
Bonneville Power Act and FERC regulations.

                               2.

    Next, APAC argues that the Settlement violates the
Bonneville Power Act, 16 U.S.C. § 832d(a), because it does
not permit BPA to cancel any contract with five years’ notice.
The Bonneville Power Act provides the following
cancellation requirements for contracts:

        [I]n the case of a contract with any purchaser
        engaged in the business of selling electric
        energy to the general public, the contract shall
        provide that the administrator may cancel
        such contract upon five years’ notice in
        writing if in the judgment of the administrator
        any part of the electric energy purchased
        under such contract is likely to be needed to
        satisfy the requirements of the said public
        bodies or cooperatives referred to in this
        chapter, and that such cancelation [sic] may
        be with respect to all or any part of the
        electric energy so purchased under said
        contract to the end that the preferential rights
        and priorities accorded public bodies and
        cooperatives under this chapter shall at all
        times be preserved.
                          APAC V. BPA                               53

16 U.S.C. § 832d(a) (emphasis added). We conclude that
APAC’s argument fails because such cancellation can occur
only if “any part of the electric energy purchased under [the]
contract is likely to be needed.” But the Settlement does not
deny the COUs’ access to power, because the Settlement
guarantees only REP benefits, not actual power, for the IOUs.
See generally Util. Reform Project, 869 F.2d at 443–44
(concluding that a particular power exchange between BPA
and certain IOUs was “properly viewed as an exchange,
rather than a sale, of power,” such that the five-year
cancellation clause did not apply, because “BPA’s right to
obtain exchange energy” meant there would be “no net
diminution to the federal system” and BPA would “therefore
continue to have the ability to meet its preference customers’
needs”). Thus, there is no possibility that, under the terms of
the Settlement, BPA will be required to provide power to the
IOUs, much less power that is needed elsewhere.

      E. Compliance with PGE and Golden Northwest

    In addition to challenging the Settlement terms that
provide benefits to the IOUs, APAC also raises a challenge to
the terms that provide refunds to the COUs. APAC argues
that the Settlement “fails to fulfill the mandate” of PGE and
Golden Northwest because it “neither calculates the past
overcharges nor provides for refunds with interest.”44 We
find no merit to this argument. First, the Settlement
addresses the overcharges by providing refunds for the
COUs, in an amount totaling $612 million over eight years.


 44
    APAC also argues that the Settlement does not comply with PGE and
Golden Northwest. because it violates section 5 and section 7 of the
NWPA. We reject this argument for the reasons explained in our analysis
of those provisions, supra.
54                        APAC V. BPA

As the Administrator explained, this amount “reflects BPA’s
calculation of the outstanding Lookback Amount payments
($511 million), adjusted for interest earned over eights
years.” ROD 253.45 Second, the very nature of a settlement
is that the parties forego certain benefits or rights to which
they may have a cognizable legal claim, in exchange for
something else—here, guaranteed refunds, future certainty,
and the end to ongoing litigation. Short of arguing that the
parties to the Settlement have no right to settle, APAC cannot
plausibly claim that the Settlement is invalid because it does
not provide for the full amount of refunds to which the COUs
may have been entitled, absent the Settlement. “An agency’s
discretion is at its zenith when it is fashioning policies,
remedies and sanctions . . . .” Pub. Utils. Comm’n of State of
Cal. v. F.E.R.C., 462 F.3d 1027, 1053 (9th Cir. 2006)
(emphasis added) (internal quotation marks and alteration
omitted). We therefore will not disturb the Settlement’s
refund schedule for the COUs, which all settling parties
agreed to and which the BPA Administrator approved.

     F. Enforcement of Settlement on Non-Binding Parties

    APAC next argues that the Settlement is only a “partial
settlement,” which “does not resolve all claims between all
adverse parties” and cannot bind the non-signatories. This is
true: the Settlement cannot, and does not, bind any parties
that have not signed it. But this does not mean that BPA is


  45
     After our decisions in PGE and Golden Northwest, but before the
Administrator approved the Settlement, BPA provided partial refunds to
the COUs for over-charges under the 2000 Settlement. Adding these
refunds to the $612 million guaranteed under the Settlement, “the total
refund payments BPA will have made to the COUs will be approximately
$1.2 billion.” ROD 253.
                       APAC V. BPA                          55

prohibited from setting the same rates for signing and non-
signing parties. As BPA argues, it has the statutory authority
to set rates and to recover costs through those rates, pursuant
to section 7 of the NWPA. See 16 U.S.C. § 839e. So long as
the Settlement complies with the relevant statutory
authority—as we have concluded that it does—BPA does not
need its customers to unanimously agree to the rates it sets in
accordance with the Settlement. We agree with the
Administrator’s explanation of the Settlement:

       Non-signers are bound only in the sense that
       they will pay in rates the REP benefits
       provided under the Settlement, but only after
       BPA has independently found that the
       Settlement satisfies the requirements and
       protections set forth in the [NWPA]. This is
       not the same thing, though, as treating non-
       signers as if they have executed the
       Settlement. For example, pursuant to section
       7.10 of the Settlement, signers may not
       “directly or indirectly challenge, either in
       whole or in part, the legality of the Settlement
       Agreement or any REP Settlement
       Implementation Agreement.” Non-signers are
       not so limited.
56                           APAC V. BPA

ROD 348.46 In other words, our conclusion that BPA can
lawfully set the same rates for signing and non-signing parties
does not necessarily preclude non-signing parties from
challenging those rates going forward. Cf. ROD 325 (“[A]s
a legal matter, BPA’s decision to execute the Settlement (and
therefore become a ‘Party’), and BPA’s decision to replace its
previous disputed decisions with the Settlement and this
ROD, may have an effect on [parties’] pending claims.”). We
therefore conclude that the Settlement does not improperly
bind non-settling parties to the Settlement.

       G. Fairness and Reasonableness of the Settlement

    Finally, APAC argues that the Settlement is neither fair
nor reasonable, and that the Administrator’s conclusion to the
contrary is “arbitrary and capricious.” See 5 U.S.C. § 706(2)
(providing that a court shall “hold unlawful and set aside
agency actions, findings, and conclusions” that are “arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law”). APAC essentially re-caps the same
arguments we have rejected supra, arguing, inter alia, that the
COUs have “forfeited” the protections of the section 7(b)(2)
rate test, that several of the tested scenarios did not result in


  46
     See also ROD 322 (“In terms of whether the Settlement provides
equity to non-settling parties, BPA believes the non-settling parties are
being treated equitably under the Settlement because they will benefit
from the return of the Refund Amounts and resolution of the past refund
payments.”); ROD 361 (“The conclusion is that under most possible future
results of the rate test, rates for COUs would be higher than the rates under
the Settlement . . . . Thus, BPA is not imposing rates on non-signing
customers that would deny such customers their statutory 7(b)(2)
protection.”); ROD 372 (“Because the Settlement is consistent with BPA’s
ratesetting directives, the statutory protections of non-settling entities are
not being violated by the Settlement.”).
                       APAC V. BPA                        57

lower REP benefits under the Settlement than would be
distributed without the Settlement, that the Settlement
improperly projects costs over a seventeen year period, that
the Settlement improperly waives BPA’s in-lieu power and
prevents it from allocating CRAC costs to the IOUs, and that
the Settlement’s value to the COUs is “overstated,” since the
COUs are entitled to greater refunds pursuant to PGE and
Golden Northwest. We reject these arguments for the reasons
provided supra. The Settlement is lawful. Furthermore, the
BPA Administrator engaged in an exhaustive evaluation of
the Settlement, providing thorough analyses and conclusions
for countless challenges raised during the administrative
proceedings.     We therefore conclude that the BPA
Administrator’s adoption of the REP-12 Settlement in the
REP-12 Record of Decision was not arbitrary or capricious.

                    IV. CONCLUSION

  For the foregoing reasons, APAC’s petition for review is
DENIED.
58                           APAC V. BPA

ALARCÓN, Circuit Judge, dissenting:

         I respectfully dissent.

    In this matter, we must initially determine whether
APAC,1 a group whose members are not direct customers of
BPA, has standing to challenge the REP-12 Settlement
Agreement. BPA and the intervening parties,2 some of whom
supply electricity to APAC’s members, contend that APAC’s
members lack standing to bring this challenge because they
are not direct customers of BPA. APAC counters that it has
standing on account of its members’ cost-based pass-through
contracts with the COUs.3 I would deny the petition because


 1
   APAC is the only party challenging the REP-12 Settlement Agreement.
APAC’s petition initially was consolidated with Alcoa Inc. v. Bonneville
Power Administration, No. 11-73161. BPA and Alcoa later settled their
dispute and agreed to dismiss that action under Rule 42(b) of the Federal
Rules of Appellate Procedure. This Court dismissed Alcoa’s petition with
prejudice on December 18, 2012.
     2
    Three groups of intervenors sought and were granted permission to
intervene and file answering briefs: (1) Joint COUs; (2) Joint IOUs; and
(3) State Commissions. These parties joined in BPA’s arguments. The
Joint IOUs separately challenge APAC’s standing in their answering brief.
APAC filed a motion to supplement the record with affidavits, which the
court granted. BPA filed a response to APAC’s motion to supplement the
record with affidavits, contending that although it did not oppose APAC’s
motion, APAC’s evidence failed to establish standing.
 3
   APAC has previously challenged BPA’s determinations in this Court.
See, e.g., Ass’n of Pub. Agency Customers, Inc. v. Bonneville Power
Admin. (APAC), 126 F.3d 1158, 1163 (9th Cir. 1997); Pub. Utils. Comm’n
of Cal. v. FERC, 814 F.2d 560 (9th Cir. 1987); Aluminum Co. of Am. v.
Bonneville Power Admin. (Alcoa), 903 F.2d 585, 587 (9th Cir. 1989). Of
those cases, BPA disputed APAC’s standing only in APAC. 126 F.3d at
1183 n.9. There, the Ninth Circuit declined to decide whether APAC had
                            APAC V. BPA                                59

it is my view that we lack the power to review its merits
because APAC has failed to demonstrate that it has Article III
standing. Accordingly, I am persuaded I lack the power to
comment on the majority’s opinion regarding the merits of
APAC’s petition.

                                     I

    Because standing was not at issue in the agency
proceeding below, we must consider the question in the first
instance. Stormans, Inc. v. Selecky, 586 F.3d 1109, 1119 (9th
Cir. 2009) (“Questions of standing . . . may be raised and
considered for the first time on appeal, including sua sponte.”
(citations omitted)). We must first consider whether at least
one of APAC’s members “suffered sufficient injury to satisfy
the ‘case or controversy’ requirement of Article III.”4
Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004).
If APAC establishes Article III standing, we next would be
required to determine whether one of its members has


standing to challenge BPA’s final actions because it was uncontested that
two other petitioners raising the same challenges in the proceeding had
standing. See id. A ruling on APAC’s standing is necessary here,
however, because APAC is the only party challenging the REP-12
Settlement Agreement.
  4
    An association like APAC has standing to bring suit on behalf of its
members if: (1) at least one of its members had standing to bring this
petition on its own; (2) by bringing this petition APAC sought to protect
interests germane to its purpose; and (3) neither the claim brought nor
relief sought by APAC requires individual members to participate in the
lawsuit. See Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333,
343 (1977). Neither BPA nor the intervenors argue, nor is there any
reason to believe, that APAC fails to satisfy the second and third elements
of this test. The only inquiry, then, is whether at least one of APAC’s
individual members has standing under Article III.
60                       APAC V. BPA

prudential standing—“whether a statute has conferred
‘standing’” on at least one of APAC’s members, id. at 1175,
such that the member falls “within [the statute’s] zone of
interests,” Cent. Ariz. Water Conservation Dist. v. EPA,
990 F.2d 1531, 1538 (9th Cir. 1993) (internal quotation marks
omitted).

                                A

     Article III of the United States Constitution limits the
power of the courts to the resolution of actual “Cases” and
“Controversies.” U.S. Const., art. III, § 2; Valley Forge
Christian Coll. v. Ams. United for Separation of Church &
State, Inc., 454 U.S. 464, 471 (1982). “[T]he irreducible
constitutional minimum of standing contains three elements”:
(1) injury in fact, (2) causation, and (3) redressability. Lujan
v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). Thus,
the party seeking to establish standing must show the “actual
or imminent” “invasion of a legally protected interest” that
is “fairly traceable to the challenged action” and is “likely . . .
to be redressed by a favorable decision.” Id. at 560–61
(emphasis added) (alterations, citations, and quotation marks
omitted). The party seeking to establish jurisdiction—here,
APAC—bears the burden of demonstrating standing.
DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 & n.3
(2006); Lujan, 504 U.S. at 561. When, as here, the party
seeking to establish standing “is not himself the object of the
government action or inaction he challenges, standing is not
precluded, but is ordinarily ‘substantially more difficult’ to
establish.” Lujan, 504 U.S. at 562 (quoting Allen v. Wright,
468 U.S. 737, 758 (1984)).
                           APAC V. BPA                               61

                                   1

    Both BPA and APAC rely on the NWPA’s language and
legislative history in making their respective standing
arguments. Additionally, APAC supplemented the record on
appeal with two affidavits.5 Though slightly different, the
affidavits establish that two of APAC’s members purchase
electricity from BPA’s COU customers, which purchase
power from BPA directly. Two of APAC’s members have
operated in the past6 or currently operate facilities in the
Pacific Northwest that manufacture goods from forest
products. Georgia-Pacific LLC’s (“GP”) paper mill in
Wauna, Washington accounts for approximately 70% of the
total load served by its COU supplier, and its Toledo
packaging and container-board mill accounts for
approximately 40% of the load served by its COU supplier.
APAC’s members’ agreements with the COUs are “cost-
based pass-through” contracts by which members purchase
power from the COUs at the COUs’ cost of purchasing power
from BPA—and, in some cases, other sources—plus any
additional charges for overhead. As a result of these pass-

 5
   We consider APAC’s affidavits solely to determine whether APAC has
standing. While a party may not supplement the record on appeal from an
agency decision, this rule does not apply when a party attempts to
establish standing. See Nw. Envtl. Def. Ctr. v. Bonneville Power Admin.,
117 F.3d 1520, 1527–28 (9th Cir. 1997) (“Because Article III’s standing
requirement does not apply to agency proceedings, petitioners had no
reason to include facts sufficient to establish standing as a part of the
administrative record.”). Standing was not at issue in the earlier
proceedings. Accordingly, APAC may establish standing during the
briefing phase. Id. at 1528.
  6
   The Lovely Affidavit repeatedly uses the past tense when describing
APAC’s member. I accordingly assume this member is no longer in
operation and no longer has a contract with the COU.
62                          APAC V. BPA

through contracts, “the rates and charges incurred by [the
COUs] to purchase power from BPA . . . are recovered from
[APAC’s members].” And, while at least one member’s
supplier had the “right to depart from this arrangement upon
giving the contractually required notice,” the COU supplier
“did not do so during the contract term.” The affidavits state
that APAC’s members consequently “are directly impacted
financially by any rate increases and decreases adopted by
BPA.”

    BPA has not refuted or submitted supplemental evidence
controverting these facts, though it argues they are
insufficient to confer standing on APAC. Thus, the only
question regarding APAC’s standing is whether it submitted
sufficient admissible evidence to support each element of
standing by a substantial probability.7

 7
   The Ninth Circuit has not explicitly articulated the appropriate burden
of production that a petitioner bears when directly appealing an agency
decision, but suggested in Northwest Environmental Defense Center that
the appropriate standard is a summary judgment standard. 117 F.3d at
1528–29; Lujan, 504 U.S. at 561 (“[F]acts that must be averred (at the
summary judgment stage) [and] proved (at the trial stage) in order to
establish standing . . . .”); cf. Didrickson v. U.S. Dep’t of Interior,
982 F.2d 1332, 1340 (9th Cir. 1992) (applying a summary judgment
burden of production to an intervenor’s evidence of standing submitted for
the first time on appeal, where the challenged decision was resolved at
summary judgment). The Court of Appeals for the District of Columbia,
which handles a large docket of direct agency appeals, has adopted a
summary judgment burden of production for petitioners seeking review of
administrative actions. See Sierra Club v. EPA, 292 F.3d 895, 899 (D.C.
Cir. 2002). Under this standard, the petitioner must demonstrate each
element of standing “by a substantial probability” and “may carry its
burden of production by citing any record evidence relevant to its claim
of standing and, if necessary, appending to its filing additional affidavits
or other evidence sufficient to support its claim.” Id. at 899, 900–01; see
also Lujan, 504 U.S. at 561 (stating that a plaintiff “must set forth by
                            APAC V. BPA                                 63

                                     2

    To establish Article III standing, APAC must first
demonstrate by a substantial probability that at least one of its
members suffered or will suffer a injury in fact—the invasion
of a legally protected interest that is concrete and
particularized, and actual or imminent. Lujan, 504 U.S. at
560–61. APAC has not satisfied this burden.8


affidavit or other evidence specific facts” to support standing to survive
a motion for summary judgment).
 8
    I note that APAC’s participation in the underlying agency proceeding
does not confer standing because Article III’s standing requirements do
not apply to agency proceedings. See Summers v. Earth Land Inst.,
555 U.S. 488, 496 (2009); Nw. Envtl. Def. Ctr., 117 F.3d at 1528. The
rules governing standing to participate in agency proceedings are almost
universally more permissive than the requirements for constitutional
standing. See, e.g., Office of Commc’n of the United Church of Christ v.
FCC, 359 F.2d 994 (D.C. Cir. 1966) (holding listening public’s interest in
programming content was sufficient to confer standing to intervene in
FCC adjudicatory proceeding involving license renewal); Scenic Hudson
Preservation Conference v. Fed. Power Comm’n, 354 F.2d 608 (2d Cir.
1965) (holding the “private attorney general” concept justifies intervention
in agency hearing by those without a direct personal or economic interest
in agency decision). Historically, courts and agencies have broadened
public participation in agency proceedings on the theory that broad public
participation allows interested persons and groups to express their views
before agency policies are announced and implemented, eases the
enforcement of administrative programs relying upon public cooperation,
satisfies judicial demands that agencies observe the highest procedural
standards, and increases public confidence in the fairness of administrative
hearings. See Barry B. Boyer, Funding Public Participation in Agency
Proceedings: The Federal Trade Commission Experience, 70 Geo. L.J.
51, 52 & n.6 (1981) (“[N]umerous legal and administrative victories . . .
established broad rights of public participation in agency proceedings.”);
Roger C. Cramton, The Why, Where and How of Broadened Public
Participation in the Administrative Process, 60 Geo. L.J. 525, 530–33
64                          APAC V. BPA

    APAC claims the REP-12 Settlement harms its “concrete
economic interests” in two ways: (1) it creates future harm by
providing “unlawfully inflated” REP benefits to the IOUs;
and (2) it perpetuates past harm by failing to redress the
overcharges the COUs incurred (and in turn passed on to
APAC’s members) as a result of the 2000 REP Settlement.
As to the former, APAC contends BPA recovers the cost of
the REP benefits in the Settlement by increasing the COUs’
rates, which pass through to APAC’s members pursuant to
their contracts with certain COUs. As to the latter, APAC
notes that the REP-12 Settlement Agreement reimburses the
COUs for overpayments by providing billing credits, or
“Refund Amounts,” in an attempt to cure the overcharges the
Ninth Circuit declared improper in Golden Northwest
Aluminum, Inc. v. Bonneville Power Administration, 501 F.3d
1037 (9th Cir. 2007), and Portland General Electric Co. v.
Bonneville Power Administration (PGE), 501 F.3d 1009 (9th
Cir. 2007). APAC asserts these Refund Amounts are an
“illusory fiction” and consequently fail to redress its
members’ past harm. APAC contends that if it cannot
challenge the REP-12 Settlement Agreement, its members
will never have an opportunity “to remedy those past
wrongs.”

    It is undisputed that APAC’s members do not contract
with BPA for their power but instead contract with third-
parties that in turn contract with BPA—here, some of BPA’s


(1972); Reuel E. Schiller, Enlarging the Administrative Polity:
Administrative Law and the Changing Definition of Pluralism,
1945–1970, 53 Vand. L. Rev. 1389, 1417 (2000) (starting in the 1940s,
federal courts “chang[ed] a variety of administrative law doctrines in ways
that increased judicial scrutiny of the administrative process and opened
that process up to parties that it believed were systematically excluded”).
                        APAC V. BPA                          65

COU customers. APAC contends that it has demonstrated
that its members’ rates directly rise and fall with the COUs’
rates as a result of the “cost-based pass-through contracts”
they have with the COUs, under which “[APAC] buys power
from [a COU] at [the COU]’s cost to purchase the power
from BPA, plus additional charges for overhead.” BPA and
the Joint IOUs argue these pass-through contracts are
insufficient to confer standing. Specifically, BPA contends
that APAC “has no relationship with BPA to support standing
in this case” because its members are not BPA customers and
do not have a direct relationship with BPA. As a result, BPA
is not the party that sets the rates APAC’s members pay,
rather, the COUs do.

      The general harm APAC claims—economic—has been
recognized as a type of legally cognizable harm because
paying excessive rates, either in the past or the future, is a
concrete injury. See Alcoa, 903 F.2d at 590 (“There is harm
in paying rates that may be excessive . . . .”); see also Sierra
Club, 405 U.S. at 733–34 (“[E]conomic injuries have long
been recognized as sufficient to lay the basis for standing
. . . .”). While APAC identifies a legally cognizable type of
harm, it nevertheless has failed to establish a legally
cognizable interest because it cannot point to any right that
would entitle its members to a particular rate. APAC
maintains that its members’ pass-through contracts with the
COUs confer statutory and contractual rights. APAC asserts
that its members’ contracts with the COUs entitle those
members to the rights the COUs enjoy pursuant to the NWPA
and their direct contracts with BPA.
66                          APAC V. BPA

    I first consider APAC’s claimed statutory rights9 under
the NWPA. The NWPA identifies the three customer
groups—COUs, IOUs, and DSIs—that fall within its purview
and establishes guidelines and methodologies for calculating
those customers’ rates.10 The NWPA requires BPA to
promulgate these three groups’ rates in compliance with
certain statutory obligations. 16 U.S.C. §§ 839c(c)(5),
e(b)(2). These statutory mandates do not, however, constrain
the rates of downstream end users like APAC’s members.
See id. § 839e(b)(2) (providing guidelines for ratesetting
relating to BPA’s three direct customer groups).
Furthermore, the NWPA distinguishes between a “customer,”
which it defines as “anyone who contracts for the purchase of
power from the Administrator,” id. § 839a(7) (emphasis
added), and a “consumer,” which it defines as “any end user


 9
   The majority suggests that it is inappropriate to examine the statute in
the context of a legally cognizable interest, and that instead we should
look to the statute only when analyzing prudential standing. This Court’s
and the Supreme Court’s jurisprudence suggest otherwise. See, e.g., Linda
R.S. v. Richard D., 410 U.S. 614, 617 n.3 (1973) (“It is, of course, true
that Congress may not confer jurisdiction on Article III federal courts to
render advisory opinions. But Congress may enact statutes creating legal
rights, the invasion of which creates standing, even though no injury
would exist without the statute.” (citation and internal quotation marks
omitted)); Fulfillment Servs. Inc. v. United Parcel Serv., Inc., 528 F.3d
614, 618–19 (9th Cir. 2008) (same); Maricopa-Stanfield Irrigation &
Drainage Dist. v. United States, 158 F.3d 428, 435 (9th Cir. 1998) (stating
that in construing a water district’s subcontracts with the United States,
this Court “must interpret them ‘against the backdrop of the legislative
scheme that authorized them, and . . . in light of the policies underlying
the controlling legislation.’” (quoting Peterson v. U.S. Dep’t of Interior,
899 F.2d 799, 807 (9th Cir. 1990))).
     10
        While BPA may make sales to other parties under limited
circumstances, APAC does not allege it purchased power from BPA under
any of these circumstances.
                          APAC V. BPA                              67

of electric power,” id. § 839a(5). Customers are entitled to
specified rate protections, while “consumers” under the Act,
like APAC’s members and residential customers, are not.
The NWPA refers to “consumers” in the “Congressional
declaration of purpose,” but one reference merely describes
BPA’s general policy of including an array of parties in its
administrative proceedings,11 including the “public at large,”
id. § 839(3), and a second states only that BPA’s customers
and their consumers should continue to bear the costs of
administering the region’s electric power requirements, id.
§ 839(4). Because the NWPA groups all “end users” into the
broad “consumers” category—including end users like
residential consumers—these brief references do not establish
that APAC’s members have the right to any particular rate
under the Act.

    Additionally, while the NWPA contemplates the
involvement of consumers of BPA power in its administrative
proceedings and recognizes that the NWPA may benefit
many parties (including the general public), it does not
provide protections to these indirect consumers in its rate-
setting provisions. For example, the NWPA requires that the
IOUs pass through their REP benefits to their residential
customers. 16 U.S.C. § 839c(c)(3); see PGE, 501 F.3d at
1015. Thus, individual residential consumers of BPA power
enjoy pass-through benefits from the IOUs, much as APAC’s
members enjoy pass-through rates from the COUs through
their contracts. Thus, to the extent the majority would rest
APAC’s standing on the pass-through nature of its members’
contracts, individual residential purchasers of BPA power


  11
     As noted above, the underlying policy favoring the inclusion of a
broad range of parties in administrative proceedings does not apply to
Article III courts. See supra note 8.
68                         APAC V. BPA

would also have standing based on the same pass-through
nature of their rates.

    In addition, nothing in the NWPA’s legislative history
suggests that Congress, in insuring that the benefits flowing
from BPA’s direct customers’ rates would pass to end users,
intended to confer a right on the end users of BPA power,
including all residential customers. For example, while
Congress expressed a desire to protect “the customers of
preference utilities” by implementing the Rate Ceiling,12
Congress also stated repeatedly that it intended to benefit the
IOUs’ residential customers by implementing the REP.13
Like the NWPA’s statutory language, the Act’s legislative
history—which also recognizes the NWPA’s benefit to
indirect consumers—does not establish that indirect
consumers have the right to any particular rate under the
NWPA. Put differently, Congress’s placement of restrictions
on the rates that BPA’s direct customers charge their




       12
      See H.R. Rep. No. 96-976(II), at 35–36 (1980), reprinted in
1980 U.S.C.C.A.N. 6023, 6033.
  13
     Id. at 36 (noting that while the REP program broadened residential
customers’ access to less expensive BPA power, the concurrent
implementation of the rate ceiling “added protection against preference
utilities and their customers suffering the adverse and economic
consequences as a result of [the NWPA]) (emphasis added); see also PGE,
501 F.3d at 1016; Pub. Util. Comm’n of Or. v. Bonneville Power Admin.,
767 F.2d 622, 624 (9th Cir. 1985) (“One of the goals of the Act is to
ensure that residential customers served by the Northwest IOU’s have
wholesale rate parity with residential customers served by publicly owned
utilities and public cooperatives, BPA’s preference customers.” (emphasis
added)).
                             APAC V. BPA                             69

customers does not confer a right on those indirect customers
to challenge BPA’s contracts with its direct customers.14

     APAC responds that it is not just another downstream
consumer of BPA power, but rather a “significant purchaser”
of BPA power. To support this argument, APAC submits
evidence, inter alia, that one of its members, GP, purchases
70% of the total load served by one of BPA’s COUs, which
in turn purchases 80% of its power from BPA. APAC’s
evidence, though scant, likely establishes that it is a
“significant purchaser” of BPA power. But being a
“significant purchaser” of BPA power does not itself establish
that at least one of APAC’s members has suffered a legally
cognizable injury. This Court used the term “significant
purchaser” of power in Public Utility District No. 1 of
Douglas County v. Bonneville Power Administration (PUD),
947 F.2d 386, 390 n.1 (9th Cir. 1991). There, in a footnote,
we found that the intervenors–customers of certain public
utilities alleged a sufficient injury where uncompensated
losses to public utilities directly affected the customers’ rates.
Id. In reaching that conclusion, we noted that the entities
were “significant purchasers of [BPA] power,” but also relied
on the intervenors–customers’ statutory right,15 under certain
circumstances, to obtain compensation for monetary costs and
power losses. Id. APAC similarly argues that BPA’s
adoption of the REP-12 Settlement Agreement will increase
the COUs’ rates, which in turn will increase the rates of
APAC’s members who are “significant purchasers” of BPA


 14
       See infra note 19 and accompanying text.
  15
    This case and others belie the majority’s suggestion that this Court
does not examine statutory rights when analyzing the injury-in-fact
element. See also supra note 9.
70                     APAC V. BPA

power. Unlike the customers in PUD, however, APAC does
not (and cannot) point to a statutory guarantee that its
members will be charged a certain rate or a statutory mandate
that the COUs pass on credits or refunds to APAC’s
members. Having pass-through contracts and being a
“significant purchaser” without more, does not establish a
legally cognizable injury.

    APAC similarly cites In re California Power Exchange
Corp., 245 F.3d 1110 (9th Cir. 2001), for the proposition that
“end-use (or retail) customers have standing when their
serving utility’s costs are increased.” However, the holding
in California Power Exchange was not so broad. There, the
intervenor–city petitioned for mandamus to compel the FERC
to take action on California wholesale power purchasers’
requests for refunds. In re Cal. Power Exch. Corp., 245 F.3d
at 1119. This Court addressed the city’s standing in a
footnote, holding that the city—a public utility
customer—had standing because it had been injured by
“unjust and unreasonable short-term rate conditions in
California (in the form of higher electricity bills), and any
refunds owed to [the utility] would redress the City’s injury,
insofar as such refunds would flow through to [the utility’s]
customers in the form of rate reductions.” Id. at 1124 n.14.
The injury there was not speculative—we could conclude
with certainty that any refunds to the utilities “would flow
through” to the city because a state statute so provided. See
id. (quoting and citing Cal. Pub. Util. Code § 332.1(2)).
Thus, like the holding in PUD, the California Energy court’s
holding was narrow and relied on the petitioners’ statutory
right to compensation to establish certainty of injury and
                           APAC V. BPA                               71

redressability.16 APAC has pointed to no such statutory right
here.

     Nor does APAC allege a legally cognizable injury arising
from a contractual right. The majority’s reliance on Central
Arizona Water Conservation District v. EPA, 990 F.3d 1531
(9th Cir. 1993) is misplaced. In Central Arizona, this Court
held that the petitioners—a water district and four related
irrigation districts—had standing to challenge an EPA
regulation that required a generating station to reduce sulfur
dioxide emissions by 90%. Id. at 1537–38. We held the
petitioners, as direct customers of the generating station,
established an injury in fact where they were “contractually
required” to repay the generating station “the major portion
of” costs relating to the station’s compliance with the EPA
order. Id. at 1534, 1537–38. APAC argues, and the majority
opinion suggests, that EPA and BPA are analogous in that
both engaged in agency determinations that affected indirect
parties and consequently that these indirect parties both have
standing to challenge the agency determination. However,
this comparison ignores that in this instance BPA occupies a
role that is distinct from the EPA’s regulatory role, in that
BPA was acting within its power to contract by adopting the
REP-12 Settlement Agreement. Accordingly, BPA is
analogous to the generating station that directly contracted
with the water and irrigation districts. In contrast to those
directly contracting customers, APAC’s members are merely
downstream retail customers.


  16
     While APAC cites to the Rate Ceiling Test and provisions of the
NWPA to demonstrate that its members enjoy various protections under
the NWPA, for the reasons set forth above, these provisions do not confer
rights on consumers like APAC, but rather only on BPA’s direct
customers.
72                       APAC V. BPA

    The facts here are also distinguishable from the second
contractual case on which the majority relies, Maricopa-
Stanfield, where the Ninth Circuit held that the plaintiffs
established “injury in fact.” 158 F.3d at 435. There, the
plaintiffs were irrigation districts who claimed that adoption
of the San Carlos Apache Tribe Water Rights Settlement Act
of 1992 (“SCAT Act”) resulted in the government taking
their rights to certain water without just compensation. Id. at
433. There, we concluded that irrigation district alleged a
legally cognizable injury. However, the irrigation districts’
legal rights arose from their direct contracts with the United
States. See id. at 431 (“Each of the Districts entered into a
subcontract with the United States Department of the Interior
. . . .” (emphasis added)), 434 (noting that the districts
demonstrated a legally cognizable injury because they alleged
that “the SCAT Act’s reallocation . . . indirectly deprived the
Districts of water due to them in their subcontracts”
(emphasis added)). Unlike the irrigation districts in
Maricopa-Stanfield, APAC’s members cannot point to an
entitlement in a direct contract with an agency of the United
States. And, contrary to the majority’s suggestion otherwise,
neither Central Arizona nor Maricopa-Stanfield stand for the
proposition that a downstream retail customer can establish
an injury in fact.

    “It is . . . a fundamental restriction on our authority that in
the ordinary course, a litigant must assert his or her own legal
rights and interests, and cannot rest a claim to relief on the
legal rights or interests of third parties.” Hollingsworth v.
Perry, 570 U.S. ___, ___, 133 S. Ct. 2653, 2663 (2013)
(emphasis added) (internal quotation marks and alteration
omitted). APAC attempts here to assert the COUs’ statutory
and contractual rights, where APAC’s members lack their
own. This Court has never found standing under such
                        APAC V. BPA                          73

circumstances. I would not extend standing here and would
hold that APAC has failed to demonstrate that its members
suffered a legally cognizable injury.

                               3

    Similarly, I would conclude that APAC also has failed to
demonstrate causation and redressability by a substantial
probability. “Traceability and redressability are linked
causation requirements that look in different directions.”
Donald Doernberg & C. Keith Wingate, Federal Courts,
Federalism and Separation of Powers: Cases and Materials
54 (2d ed. 2000). “Traceability” or causation is backward-
looking and refers to whether a party’s injury arises from the
alleged wrongful conduct. Id.; see also M-S-R Pub. Power
Agency v. Bonneville Power Admin., 297 F.3d 833, 843 (9th
Cir. 2002) (stating that to demonstrate causation, a party must
establish that its injury is “fairly traceable to the challenged
action of the [agency], and not the result of the independent
action of some third party not before the court” (quoting
Bennett v. Spear, 520 U.S. 154, 167 (1997)).
“Redressability,” on the other hand, is forward-looking and
considers whether the relief requested is likely to improve the
situation for the party requesting it. Doernberg & Wingate,
supra, at 54. Thus, APAC must demonstrate that a favorable
decision here would create “a significant increase in the
likelihood that [APAC’s members] would obtain relief that
directly redresses the injury suffered.” Utah v. Evans,
536 U.S. 452, 464 (2002). APAC fails to establish causation
and redressability because of a fatal flaw common to both
queries—the COUs independent decisions have a significant
effect on APAC’s members’ alleged harm and prevent this
Court from redressing that alleged harm.
74                      APAC V. BPA

    When an alleged injury arises from government action
relating to a third party, as here, “standing is not precluded,
but it is ordinarily substantially more difficult to establish.”
Lujan, 504 U.S. at 562 (internal quotation marks omitted);
Clapper v. Amnesty Int’l USA, 568 U.S. ___, ___, 133 S. Ct.
1138, 1150 (2013) (“We decline to abandon our usual
reluctance to endorse standing theories that rest on
speculation about the decisions of independent actors.”).
Indeed, “it becomes the burden of the plaintiff to adduce facts
showing that those choices have been or will be made in such
manner as to produce causation and permit redressability of
injury.” Lujan, 504 U.S. at 562. APAC has not met its
burden here.

    BPA and the Joint IOUs contend that the lack of a direct
contractual relationship between APAC and BPA renders
APAC unable to establish causation and redressability. BPA
argues that “any burden imposed on APAC’s members comes
from the COUs that sell power to them,” rather than from
BPA. Similarly, the Joint IOUs assert that APAC’s alleged
injury will not be redressed by a favorable decision here
because such redress would depend on the actions of third
parties—the COUs with whom APAC contracts. In response,
APAC argues, and the majority agrees, that the “pass-through
nature” of its members’ contracts with the COUs prevents the
COUs from acting as “independent” third parties. As such,
APAC claims a favorable ruling here would redress its
members’ harm by restoring their pre-Settlement rates.

    Contrary to the majority’s conclusion, the COUs’
“independent decisions” do have a “significant effect” on
APAC’s members’ alleged harm. See Allen, 468 U.S. at 759.
As noted above, at least one member’s contract with its COU
supplier allowed the COU to depart from the parties’
                          APAC V. BPA                               75

contractual arrangement by providing notice. Furthermore,
as direct BPA customers, the COUs are statutorily entitled to
enter into contracts with BPA, including contracts that settle
rate disputes with BPA and waive their rights to BPA benefits
to which they otherwise would be entitled under the NWPA.
See PUD, 947 F.2d at 396 (“[N]othing in the statute suggests
that a non-Federal project cannot waive its right to
compensation.”); Avista Corp. v. Bonneville Power Admin.,
380 F. App’x 652, 654–55 (9th Cir. 2010) (holding that IOUs
can waive their REP benefits because nothing in § 5
“preclude[s] waiver of benefits”). It makes little sense that
the statute would allow the COUs to waive such rights, but
also allow the COUs’ customers to challenge such waivers.
When entering into settlement agreements, parties often give
up rights to which they otherwise would be entitled in
exchange for predictability. This Settlement is a compromise
by which the contracting parties agreed to give up the
possibility, inter alia, of more REP benefits, lower rates, or
more refunds—in exchange for greater certainty and lower
litigation costs. That is precisely what APAC’s COU
suppliers17 did here—they waived their rights to potentially
higher reimbursements of past overcharges.18 The rights the

 17
   All of the Joint COUs entered into the REP-12 Settlement Agreement.
“[S]ome of the Joint COUs” supply power to APAC. Thus, at least
“some” of APAC’s COU suppliers agreed to the REP-12 Settlement
Agreement and also intervened in this action to oppose APAC’s petition.
  18
     In their brief, the Joint COUs explain why they joined the REP-12
Settlement and gave up potential rights in exchange for certainty:

        APAC also claims [the REP-12 Settlement] is
        unreasonable because all the risk is on the side of the
        COUs.     This assertion is not credible.          The
        COUs—who, unlike APAC, have a direct stake in the
        settlement—overwhelmingly supported and joined the
76                           APAC V. BPA

COUs gave up are valuable, but so is predictability. APAC’s
members cannot now step into the COUs’ shoes to challenge
the Settlement.19




         Settlement. No COU has challenged the Settlement
         here as being unreasonable or inconsistent with its
         statutory rights. In supporting the Settlement before
         BPA, the COUs explained the serious risks they faced
         in the absence of the Settlement and their belief that
         settlement was the only reasonable way for them to
         achieve, within a reasonable time frame, the certainty
         regarding the REP they need to conduct their business.
  19
     The parties rely on principles of contract law in their briefs. Although
not explicitly adopting the term “intended beneficiary,” the parties appear
to present differing views regarding whether APAC, on account of its
pass-through contracts, is an intended third-party beneficiary of BPA’s
agreements with the COUs. Since the parties rely on principles of contract
law in making their arguments, contract law relating to third-party
beneficiaries is instructive here. First, state law applies to a determination
of whether APAC is a third-party beneficiary of the COUs’ contracts with
BPA. See Snohomish Cnty. Pub. Util. Dist. No. 1 v. Pacificorp (SCPUD),
745 F. Supp. 1581, 1584 (D. Or. 1990). In Oregon and Washington,
courts have held that intent to include a third-party beneficiary in a
contract must appear from the terms of the contract construed as a whole
and in light of the circumstances in existence at the time the contract was
entered into. See Aetna Cas. & Surety Co. v. Or. Health Scis. Univ.,
773 P.2d 1320, rev. allowed 781 P.2d 1214 (Or. Ct. App. 1989);
Postlewait Constr., Inc. v. Great Am. Ins. Co., 720 P.2d 805, 806–07
(Wash. 1986). The parties to a contract must intend that the promisor
assume a direct obligation to the intended beneficiary. Postlewait,
720 P.2d at 806. In the absence of this direct benefit, the third-party
beneficiary is merely an “incidental” beneficiary that acquires no rights
under the contract. Id. Failure to name the third-party beneficiary, while
not dispositive, is a strong indication that the promisee did not intend to
confer a benefit on that party. Nw. Airlines v. Crosetti Bros., 483 P.2d 70,
73 (Or. 1971).
                             APAC V. BPA                                  77

     APAC is not the correct party to adjudicate the claims in
this petition. “[T]he standing inquiry requires careful judicial
examination of [the facts supporting standing] to ascertain
whether the particular plaintiff is entitled to an adjudication
of the particular claims asserted.” Allen, 468 U.S. at 752
(emphasis added); see Hollingsworth, 570 U.S. at ___,
133 S. Ct. at 2663 (“It is . . . a fundamental restriction on our
authority that in the ordinary course, a litigant must assert his
or her own legal rights and interests, and cannot rest a claim
to relief on the legal rights or interests of third parties.”
(emphasis added) (internal quotation marks and alterations
omitted)). APAC’s remedy, if any, lies with the COUs with
which its members contract. APAC’s statement that “BPA’s
preference customer utilities are fiduciaries for their
customers who actually incurred costs resulting from BPA’s
unlawful treatment of the REP costs pursuant to the 2007
Decisions” only supports the conclusion that APAC’s remedy
is not against BPA—which has no duty to APAC—but rather
against the COUs, which (according to APAC) owe fiduciary
duties to its members.




     Here, APAC has not argued or offered evidence that the COUs’
contracts with BPA name APAC’s members as beneficiaries, nor is there
any indication from the contract terms or circumstances that BPA and the
COUs intended to confer rights on the COUs’ customers. At most, the
statutory language indicates APAC members could be construed as
incidental beneficiaries that acquire no enforceable rights. See SCPUD,
745 F. Supp. at 1584 (holding a local utility district lacked standing to
bring a declaratory relief action in a contract dispute between an IOU and
a joint operating agency because the utility failed to demonstrate a
cognizable injury or a personal stake in the contracts at issue; the fact that
the local utility districts might “receive the benefit of lower rates due to
[the IOUs] participation” in the contracts was not sufficient to confer
third-party standing or to establish an injury in fact).
78                     APAC V. BPA

    Moreover, APAC has not established that the perpetuation
of APAC’s past harm is fairly traceable to BPA. APAC’s
evidence demonstrates that the rates BPA charges its utilities
pass through to the utilities’ customers, but does not
demonstrate that any credits or refunds for past overcharges
also pass from the utilities to APAC’s members. This is
important because APAC’s alleged past harm arises from
these overcharges and the perpetuation of this harm arises
from the Settlement’s alleged failure to remedy this harm.
Unlike the indirect customers in California Power Energy
and PUD, APAC does not point to a statute that would entitle
its members to such refunds. And, unlike the direct
customers in Maricopa-Stanfield, it cannot rely on a
contractual right with BPA that would entitle its members to
such refunds. If the COUs are able to amend their contracts,
retain these refunds, or account for them in a manner that
would not directly lower APAC’s members’ rates, any action
by this Court would not redress APAC’s harm. Given that at
least one of APAC’s member’s supplier was able to alter the
terms of the pass-through contract upon notice, APAC has not
established by a substantial certainty that a favorable ruling
here would provide its members with the relief they seek.
APAC carries the burden of supporting each element of
standing with admissible evidence and has failed to do so.

    I conclude that APAC has failed to establish standing
under Article III of the United States Constitution because it
has not demonstrated by a substantial probability that at least
one of its members has a legally cognizable injury that is
fairly traceable to BPA’s adoption of the REP-12 Settlement,
or that granting this petition would redress its harms. For
these reasons, I would hold that this Court lacks jurisdiction
to reach the merits of APAC’s contentions.
                     APAC V. BPA                     79

                    CONCLUSION

   As I would conclude that APAC lacks standing, I would
deny APAC’s petition for review.
