                 FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

ALCOA, INC.,                          
                        Petitioner,
PACIFIC NORTHWEST GENERATING
COOPERATIVE AND MEMBERS; PUBLIC
POWER COUNCIL; AVISTA
CORPORATION; IDAHO POWER
COMPANY; PACIFICORP; PORTLAND
GENERAL ELECTRIC COMPANY;                 No. 10-70211
PUBLIC UTILITY COMMISSION OF
OREGON; PUGET SOUND ENERGY,
                                          BPA No.
                                          10PB-12175
INC.,
                      Intervenors,
                v.
BONNEVILLE POWER
ADMINISTRATION; U.S.
DEPARTMENT OF ENERGY,
                     Respondents.
                                      

CANBY UTILITY BOARD,                  
                        Petitioner,
ALCOA, INC.,
                                      
                       Intervenor,
                                          No. 10-70707
                v.
BONNEVILLE POWER
ADMINISTRATION,
                       Respondent.
                                      


                          12381
12382                ALCOA, INC. v. BPA


PUBLIC POWER COUNCIL,                 
                        Petitioner,
ALCOA, INC.,
                        Intervenor,
                v.                       No. 10-70743
BONNEVILLE POWER
ADMINISTRATION; U.S.
DEPARTMENT OF ENERGY,
                     Respondents.
                                      

INDUSTRIAL CUSTOMERS OF               
NORTHWEST UTILITIES,
                       Petitioner,
ALCOA, INC.,
                      Intervenor,        No. 10-70782
                v.
BONNEVILLE POWER
ADMINISTRATION,
                     Respondent.
                                      
                     ALCOA, INC. v. BPA             12383



NORTHWEST REQUIREMENTS                
UTILITIES,
                       Petitioner,
ALCOA, INC.,
                                      
                      Intervenor,
                                          No. 10-70813
                v.
U.S. DEPARTMENT OF ENERGY;
BONNEVILLE POWER
ADMINISTRATION,
                    Respondents.
                                      

PACIFIC NORTHWEST GENERATING          
COOPERATIVE; BLACHLY-LANE
COUNTY COOPERATIVE ELECTRIC
ASSOCIATION; CENTRAL ELECTRIC
COOPERATIVE, INC.; CLEARWATER
POWER COMPANY; CONSUMERS
POWER, INC.; COOS-CURRY ELECTRIC
COOPERATIVE, INC.; DOUGLAS
ELECTRIC COOPERATIVE; FALL RIVER
RURAL ELECTRIC COOPERATIVE, INC.;     
LANE ELECTRIC COOPERATIVE;
NORTHERN LIGHTS, INC.; OKANOGAN
COUNTY ELECTRIC COOPERATIVE,
INC.; RAFT RIVER RURAL ELECTRIC
COOPERATIVE, INC.; UMATILLA
ELECTRIC COOPERATIVE
ASSOCIATION; WEST OREGON
ELECTRIC COOPERATIVE, INC.,
                       Petitioners,
                                      
12384                   ALCOA, INC. v. BPA


ALCOA, INC.,                             
               Petitioner-Intervenor,
ALCOA, INC.,
                           Intervenor,
                                         
                                               No. 10-70843
                 v.
                                                OPINION
U.S. DEPARTMENT OF ENERGY;
BONNEVILLE POWER
ADMINISTRATION,
                    Respondents.
                                         
          On Petition for Review of an Order of the
              Bonneville Power Administration

                   Argued and Submitted
               May 5, 2011—Portland, Oregon

                      Filed October 16, 2012

        Before: A. Wallace Tashima, Carlos T. Bea, and
                Sandra S. Ikuta, Circuit Judges.

                 Opinion by Judge Ikuta;
              Concurrence by Judge Tashima;
   Partial Concurrence and Partial Dissent by Judge Bea
12388                ALCOA, INC. v. BPA


                        COUNSEL

Michael C. Dotten and Dustin T. Till, Marten Law Group,
Portland, Oregon, for petitioner-intervenor Alcoa, Inc.

R. Erick Johnson, R. Erick Johnson, PC, Lake Oswego, Ore-
gon, for petitioners Pacific Northwest Generating Cooperative
et al.

Melinda J. Davidson and Irion Sanger, Davidson Van Cleve,
PC, Portland, Oregon, for petitioner Industrial Customers of
Northwest Utilities.

Mark R. Thompson, Public Power Council, Portland, Oregon,
for petitioner Public Power Council.

Betsy Bridge, Law Office of Betsy Bridge, LLC, Portland,
Oregon, for petitioner Northwest Requirements Utilities.

Daniel Seligman, Seattle, Washington; David Doughman,
Beery, Elsner & Hammond, LLC, Portland, Oregon, for peti-
tioner Canby Utility Board.

David J. Adler and J. Courtney Olive, Special Assistant U.S.
Attorneys, Portland, Oregon, Randy A. Roach, Timothy A.
Johnson, Herbert V. Adams and John D. Wright, Bonneville
Power Administration, Portland, Oregon, for respondent Bon-
neville Power Administration.
                          ALCOA, INC. v. BPA                         12389
Jay T. Waldron, Schwabe, Williamson & Wyatt, Portland,
Oregon, on behalf of respondent-intervenors Avista Corpora-
tion, Idaho Power Company, Pacificorp, Portland General
Electric Company, and Puget Sound Energy, Inc.


                               OPINION

IKUTA, Circuit Judge:

   These consolidated petitions for review challenge a con-
tract between the Bonneville Power Administration (BPA)
and one of its long-time customers, Alcoa Inc. BPA’s prefer-
ence customers, as well as other entities and organizations in
the Pacific Northwest, filed this petition for review, request-
ing that we hold that the contract is unlawful because it is
inconsistent with the agency’s statutory mandate to act in
accordance with sound business principles. They claim that
instead of entering into a contract to sell power to Alcoa at the
statutorily required Industrial Firm power (IP) rate (a cost-
based rate prescribed by 16 U.S.C. § 839e(c)(1) for sales of
power to customers such as Alcoa), BPA should sell to other
buyers at the market rate. BPA’s decision not to do so, peti-
tioners allege, forgoes revenue that could otherwise be used
to lower the rates charged to its preference customers. They
further argue that BPA relied on flawed data in determining
it would make a modest profit by selling surplus power to
Alcoa. Alcoa also petitions for review, asking the court to
hold that the Equivalent Benefits standard1 is contrary to
  1
    According to the Power Sales Agreement between BPA and Alcoa
(referred to here as the “Alcoa Contract”), the Equivalent Benefits stan-
dard requires that BPA “derive[ ] benefits equivalent to the cost of provid-
ing Alcoa with electric power service.” BPA determined this Equivalent
Benefits standard was met for the initial period of the Agreement and pro-
vided that the Alcoa Contract will enter into a Second Period in the event
that “a Court holds that the Equivalent Benefits standard does not apply
to this Agreement.” See infra p. 12397.
12390                      ALCOA, INC. v. BPA
BPA’s governing statutes, Alcoa makes this request because
such a judicial determination is a condition precedent for the
commencement of a five-year period (the “Second Period” of
the Alcoa Contract) during which time BPA would continue
to sell power to Alcoa at the contracted rate. In May 2012, the
Alcoa Contract was amended to remove all references to the
Second Period. We dismiss the petitioners’ and Alcoa’s chal-
lenge in part as moot, and otherwise reject their claims.2

                                      I

                       BPA’s Statutory Duties

           A.     Categories of Customers BPA Serves

   BPA is a federal agency within the Department of Energy
which “has marketing authority over nearly all the electric
power generated by federal facilities in the Pacific North-
west.” Ass’n of Pub. Agency Customers, Inc. v. BPA (APAC),
126 F.3d 1158, 1163 (9th Cir. 1997). We have previously
detailed the “complex statutory landscape” under which BPA
operates at length. See Pac. Nw. Generating Coop. v. Dep’t
of Energy (PNGC I), 580 F.3d 792, 799 (9th Cir. 2009). For
present purposes, we focus on BPA’s statutory obligations to
three different types of customers.

  First, “in disposing of electric energy generated” at BPA
projects, BPA is required to “give preference and priority” to
“public bodies3 and cooperatives” that purchase power from
   2
     We use the term “petitioners” to refer collectively to the Pacific North-
west Generating Cooperative (PNGC), Industrial Customers of Northwest
Utilities (ICNU), Public Power Council (PPC), Northwest Requirements
Utilities, and Canby Utility Board. We refer to Alcoa Inc. separately as
“Alcoa” because petitioners’ and Alcoa’s claims are distinct from, and
often opposed to, each other’s.
   3
     “Public bodies” include “[s]tates, public power districts, counties, and
municipalities, including agencies of subdivisions of any thereof.” 16
U.S.C. § 832b.
                          ALCOA, INC. v. BPA                        12391
BPA for resale to their consumers. 16 U.S.C. § 832c(a). These
entities are “preference” customers, and BPA is required to
give priority to their applications for power when competing
applications from nonpreference customers are received. See
id. § 832c(b).

   Second, BPA is authorized to sell power to private,
investor-owned utilities (IOUs), which, like the preference
customers, buy power for resale to ultimate consumers. See
id. § 832d(a); APAC, 126 F.3d at 1164.

   Third, BPA may sell to a limited group of “direct service
industrial customers” (DSIs), which are large industrial com-
panies with a high demand for electricity. 16 U.S.C.
§ 839c(d). Unlike BPA’s other customers, DSIs purchase
power directly from BPA for their own consumption, not for
resale. Id. § 839a(8); APAC, 126 F.3d at 1164. Alcoa, the
power purchaser in the contract at issue here, is one of BPA’s
DSI customers, and runs an aluminum smelting operation at
its Intalco plant in Ferndale, Washington.

B.    BPA’s Rate Structure and “Sound Business Principles”

   BPA’s statutory framework also sets out the specific
criteria by which BPA determines the rates it may charge for
power to these different customers. Regardless of the type of
customer, BPA must charge a rate that, at a minimum,
recoups BPA’s own costs of generating or acquiring the elec-
tricity. See 16 U.S.C. § 839e(a)(1).

   BPA charges preference customers a cost-based rate,
referred to as the priority firm or “PF rate,” that allows BPA
to recover the costs of generating or obtaining the power
required to meet the preference customers’ needs. Id.
§§ 839c(a), 839e(b);4 see also PNGC I, 580 F.3d at 802. IOUs
  4
   16 U.S.C. § 839e(b)(1) provides that the PF rate “shall recover the
costs of that portion of the Federal base system resources needed to supply
12392                     ALCOA, INC. v. BPA
can elect to sell power to BPA “at the average system cost of
the utility’s resources,” id. § 839c(c)(1), and then buy power
back from BPA at the PF rate. Id. §§ 839c(c); 839e(b). This
subsidy “enables the [IOU] to sell power to its residential cus-
tomers at the priority rate given to residential consumers
receiving BPA federal power.” Central Elec. Coop., Inc. v.
BPA, 835 F.2d 199, 201 (9th Cir. 1987) (quoting Pacificorp
v. Fed. Energy Regulatory Comm’n, 795 F.2d 816, 818 (9th
Cir. 1986)).

  DSI customers also pay a cost-based rate (the “IP rate”),
which is prescribed by § 839e(c).5 PNGC I, 580 F.3d at 812

[preference customers’] loads until such sales exceed the Federal base sys-
tem resources. Thereafter, such rate or rates shall recover the cost of addi-
tional electric power as needed to supply such loads . . . .” Federal base
system resources are defined as: “(A) the Federal Columbia River Power
System hydroelectric projects; (B) resources acquired by the [BPA] under
long-term contracts in force on December 5, 1980; and (C) resources
acquired by the [BPA] in an amount necessary to replace reductions in
capability of the resources referred to in subparagraphs (A) and (B) of this
paragraph.” 16 U.S.C. § 839a(10).
   5
     16 U.S.C. § 839e(c)(1) provides, in pertinent part:
    (c) Rates applicable to direct service industrial customers
         (1) The rate or rates applicable to direct service industrial
         customers shall be established . . . (B) for the period begin-
         ning July 1, 1985, at a level which the Administrator deter-
         mines to be equitable in relation to the retail rates charged by
         the public body and cooperative customers to their industrial
         consumers in the region.
         (2) The determination under paragraph (1)(B) of this subsec-
         tion shall be based upon the Administrator’s applicable
         wholesale rates to such public body and cooperative custom-
         ers and the typical margins included by such public body and
         cooperative customers in their retail industrial rates but shall
         take into account—
           (A) the comparative size and character of the loads served,
           (B) the relative costs of electric capacity, energy, trans-
           mission, and related delivery facilities provided and other
           service provisions, and
                         ALCOA, INC. v. BPA                         12393
(“[W]hen entering into contracts for the sale of firm power to
a DSI, [BPA] must initially offer the IP rate.”) The IP rate
must be “equitable in relation to the retail rates charged” by
BPA’s preference customers to their own industrial consum-
ers in the region, 16 U.S.C. § 839e(c)(1)(B), and is always
higher than the PF rate, Golden Nw. Alum., Inc. v. BPA, 501
F.3d 1037, 1046-47 (9th Cir. 2007).

   In addition to charging all customers at a rate that recoups
BPA’s costs of generating or acquiring electricity, 16 U.S.C.
§ 839e(a)(1), BPA is also responsible for setting rates in
accordance with “sound business principles.” Thus, § 838g
prescribes general factors BPA must balance when setting
rates for the sale and transmission of federal power:

    Such rate schedules . . . shall be fixed and estab-
    lished (1) with a view to encouraging the widest pos-
    sible diversified use of electric power at the lowest
    possible rates to consumers consistent with sound
    business principles, (2) having regard to the recovery
    (upon the basis of the application of such rate sched-
    ules to the capacity of the electric facilities of the
    projects) of the cost of producing and transmitting
    such electric power . . . and (3) at levels to produce
    such additional revenues as may be required, in the
    aggregate with all other revenues of the Administra-
    tor, to pay [all expenses associated with] bonds
    issued and outstanding pursuant to this chapter, and
    amounts required to establish and maintain reserve
    and other funds and accounts established in connec-
    tion therewith.

          (C) direct and indirect overhead costs.
   all as related to the delivery of power to industrial customers,
   except that the Administrator’s rates during such period shall in
   no event be less than the rates in effect for the contract year end-
   ing on June 30, 1985.
12394                 ALCOA, INC. v. BPA
Id. § 838g (emphasis added). Section 839e similarly sets
guidelines for fixing “rates for the sale and disposition of
electric energy and capacity and for the transmission of non-
Federal power.” Id. § 839e(a)(1). Specifically, those rates:

    shall . . . recover, in accordance with sound business
    principles, the costs associated with the acquisition,
    conservation, and transmission of electric power,
    including the amortization of the Federal investment
    in the Federal Columbia River Power System . . .
    and the other costs and expenses incurred by the
    [BPA] pursuant to this chapter and other provisions
    of law.

Id. § 839e(a)(1) (emphasis added). Finally, BPA is charged
with “assur[ing] the timely implementation of [16 U.S.C.
§§ 839-839h] in a sound and businesslike manner.” Id.
§ 839f(b) (emphasis added).

                 C.   Prior Alcoa Contracts

   Before entering into the Alcoa Contract, BPA and Alcoa
entered into two prior power sales contracts. In response to a
challenge to these prior contracts by many of the same peti-
tioners involved in this case, we struck down key provisions
of these contracts. See Pac. Nw. Generating Coop. v. BPA
(PNGC II), 596 F.3d 1065 (9th Cir. 2010). Because the details
of those contracts are described at length in those opinions,
we describe only the relevant points here. In each agreement,
BPA entered a power sale contract with Alcoa, but the terms
of the contract did not require BPA to provide power to
Alcoa. PNGC II, 596 F.3d at 1069-70. Instead, the contract
provided that BPA would make a cash payment to Alcoa that
was approximately equal to the difference between the
regional market price of electricity and either the PF rate
(under the contract at issue in PNGC I) or the IP rate (under
the contract in PNGC II), both of which are significantly
below the regional market price for electricity. Id. at 1070;
                      ALCOA, INC. v. BPA                  12395
PNGC I, 580 F.3d at 800. The payments at issue were not
trivial: The first contract provided that BPA would pay Alcoa
up to $295 million over 5 years, PNGC I, 580 F.3d at 798,
and the second provided that BPA would pay Alcoa nearly
$32 million over the course of 9 months, PNGC II, 596 F.3d
at 1070. In PNGC I, we held that BPA’s decision to offer
power to a DSI at the PF rate (rather than the IP rate), and
then monetize those rates, was invalid because inconsistent
with BPA’s statutory authority. 580 F.3d at 823. After BPA
modified its contract with Alcoa to offer power at the IP rate,
we held that BPA’s decision to “incur a $32 million expense
that will increase the rates of its preference customers, pro-
vides no direct benefit to the agency, and subsidizes the oper-
ations of its competitors” violated its statutory obligation to
set rates for power sales in a manner that is “consistent with
sound business principles.” PNGC II, 596 F.3d at 1085-86.
We held that this “sound business principles” standard was
applicable, even though BPA’s contract required it to sell
Alcoa power at the IP rate. Id. at 1072-73. As we explained,
BPA had no obligation to sell Alcoa power at all, but if it
entered into a contract with Alcoa, it would have to offer the
IP rate. Id. at 1073. We noted that if the market rate were
higher than the IP rate, BPA should consider whether sound
business principles weighed against entering into such a con-
tract. Id.

   Although striking down BPA’s prior contracts with Alcoa
on the ground that they were inconsistent with BPA’s statu-
tory requirements, we did not expressly establish any criteria
that BPA would have to meet to ensure its contracts were con-
sistent with sound business principles. BPA, however, inter-
preted PNGC II as holding that in order for BPA “to offer a
sale of power to a DSI, BPA must conclude based on evi-
dence in the record that the proposed transaction will result in
benefits that equal or exceed the costs to BPA of the transac-
tion.” BPA has dubbed its interpretation the “Equivalent Ben-
efits standard” or the “Equivalent Benefits Test.”
12396                   ALCOA, INC. v. BPA
                D.   The Current Alcoa Contract

   BPA restructured its agreement with Alcoa in light of this
Equivalent Benefits standard. On December 21, 2009, it
entered into the Alcoa Contract, which defined four different
time periods: (1) an “Initial Period,” (2) an “Extended Initial
Period,” (3) a “Transition Period”; and (4) a “Second Period.”

   The Alcoa Contract defined the Initial Period as “the period
December 22, 2009, through the earlier of (i) May 26, 2011;
or (ii) the start of the Second Period.”6 During the Initial
Period, BPA agreed to sell, and Alcoa to buy, up to 320 aver-
age megawatts (aMW) of electricity. As required by statute,
all such power sales “will be made to Alcoa at the then appli-
cable Industrial Firm power (IP) rate.” See also Administra-
tor’s Record of Decision (“The sale [in the Alcoa Contract
commencing December 22, 2009] is priced at the Industrial
Firm power (‘IP’) rate, . . . which is the applicable rate for
sales of non-surplus firm power to BPA’s direct service
industrial (‘DSI’) customers.”).

   Although BPA complied with the statutory requirement to
sell power to Alcoa at the IP rate, because BPA could have
declined to sell power to Alcoa at all, BPA was also required
to consider whether its power sale to Alcoa was consistent
with “sound business principles.” PNGC II, 596 F.3d at 1073.
BPA did so. As explained in its Record of Decision, BPA
determined that its sale of power during the Initial Period was
consistent with the Equivalent Benefits standard that it had
derived from PNGC I and II. Using market forecasts, pro-
jected water-flow patterns, and other data, BPA concluded it
could earn a profit on a sale of electricity to Alcoa from
December 22, 2009 through May 26, 2011. It calculated this
total net benefit to be approximately $10,000.
  6
   Because the Second Period had not begun by May 26, 2011, the Initial
Period terminated as scheduled on that date.
                      ALCOA, INC. v. BPA                  12397
   The Alcoa Contract also provided that at the end of the Ini-
tial Period, Alcoa could request a three- to twelve-month
extension (the “Extended Initial Period”). BPA was required
to agree to this extension if it determined that it would obtain
Equivalent Benefits, as defined, from its sales to Alcoa during
that period. As noted, the Alcoa Contract defined “Equivalent
Benefits” as benefits accruing to BPA as a result of providing
power to Alcoa that equal or exceed BPA’s costs of providing
the power. At oral argument, the parties informed us that
Alcoa and BPA had executed an agreement to enter into the
Extended Initial Period for one year; that period expired on
May 26, 2012. According to BPA, this separate action could
have formed the basis for a separate petition for review and,
therefore, the validity of the Extended Initial Period was not
before us.

   After the Initial Period and any Extended Initial Period, the
Alcoa Contract provided for a Transition Period and a Second
Period. The one-year Transition Period would occur only if
“the Ninth Circuit issues an opinion or other ruling holding,
or that BPA determines can reasonably be interpreted to
mean, that the Equivalent Benefits standard does not apply to
sales under [the Alcoa Contract].” (emphasis added).

   Upon the occurrence of this contingency, BPA would have
up to one year to determine whether: (i) service to Alcoa dur-
ing the Second Period would be “consistent with any alterna-
tive standard established by any such opinions” and other
applicable rulings; and (ii) the cost to serve Alcoa will not
exceed specified cost caps. If these criteria were met, the Sec-
ond Period would commence and last for five years. During
the Second Period, BPA would sell, and Alcoa would buy,
320 aMW of electric power at the IP rate during each year the
contract is in effect.

   After the Extended Initial Period passed, the parties entered
into discussions regarding extending the contract beyond May
26, 2012. To accommodate these negotiations, the parties
12398                       ALCOA, INC. v. BPA
entered into three successive short term amendments, which
extended the Initial Period from: (1) May 27, 2012 to June 30,
2012; (2) July 1, 2012 to July 31, 2012; and (3) August 1,
2012 to August 31, 2012. In addition, the May-June 2012
amendment provided that “all references in the Agreement to
‘Second Period’ are hereby removed and all contract clauses
implementing the Second Period shall have no effect.”

      E.    The Record of Decision for the Alcoa Contract

   BPA released a draft of the Alcoa Contract for public com-
ment in October 2009, and issued the final version of the con-
tract and Record of Decision (ROD) on December 21, 2009.
In the ROD, BPA explained its determination that it did not
have to prepare an Environmental Impact Statement (EIS) for
the Alcoa Contract because it fell within a categorical exclu-
sion from review under the National Environmental Policy
Act (NEPA), 42 U.S.C. §§ 4321-4347. See 10 C.F.R. pt.
1021, subpart D, App. B4.1.7 The ROD stated that BPA
would be able to “supply power to Alcoa’s Intalco Plant from
existing generation sources, [which] would be expected to
continue to operate within their normal operating limits.” The
power “would be supplied to the Intalco Plant over existing
transmission lines,” meaning that “no physical changes to this
system would occur.” BPA therefore concluded that the above
categorical exclusion applied and exempted the Alcoa Con-
tract from NEPA’s requirements.
  7
  This regulation exempts the following actions from the EIS require-
ment:
      Establishment and implementation of contracts, marketing plans,
      policies, allocation plans, or acquisition of excess electric power
      that does not involve: (1) the integration of a new generation
      resource, (2) physical changes in the transmission system beyond
      the previously developed facility area, unless the changes are
      themselves categorically excluded, or (3) changes in the normal
      operating limits of generation resources.
10 C.F.R. pt. 1021, subpart D, App. B4.1.
                      ALCOA, INC. v. BPA                   12399
           F.   Effect of Amendment to PNGC II

   In March 2010, after the parties executed the Alcoa Con-
tract, we added a clarifying amendment to PNGC II in
response to BPA’s petition for review. The amended opinion
distinguished “BPA’s voluntary decision to provide Alcoa
with up to $32 million in cash payments” from “the decision
to sell physical power to Alcoa” (at the IP rate) noting that the
latter was different because “the sale of physical power to the
DSIs is expressly authorized by statute, see § 839c(d)(1)(A),”
and therefore “BPA’s conclusion that such a sale is in its busi-
ness interests is more likely to be reasonable.” 596 F.3d at
1085. Further, we observed that “many of the justifications
that BPA gave for its decision to execute the costly amended
contract, though inapplicable to a ‘monetized’ sale, would
apply to a physical power sale.” Id. Finally, we noted that “a
physical power sale implicates a number of issues that fall
within BPA’s particular expertise,” such as “BPA’s current
and future generating capacity, its transmission capabilities,
its relationship with suppliers, its current and projected com-
mitments of physical power to other customers, its ability to
acquire additional power if needed, and so forth.” Id. Accord-
ingly, we stated that “the agency’s conclusion that a physical
sale of power to Alcoa, even at loss, furthered its business
interests might very well warrant our deference.” Id.

   In its briefs on appeal here, BPA argued that this amend-
ment to PNGC II, which acknowledged that a physical sale of
power at the IP rate, “even at a loss” (compared to selling the
power at the market rate), might further BPA’s business inter-
est, could “reasonably be interpreted to mean that the Equiva-
lent Benefits Test does not apply to sales under the Alcoa
Contract,” and therefore might meet the first contingency for
the Second Period. But both at oral argument and in a subse-
quent letter brief, BPA clarified that no prior opinion of this
court, including PNGC II as amended, had rejected the Equiv-
12400                     ALCOA, INC. v. BPA
alent Benefits Test and that the first requirement for triggering
the Second Period had not been met.8

   After BPA issued the ROD and executed the Alcoa Con-
tract, many of BPA’s preference customers, as well as other
entities and organizations in the Pacific Northwest, filed this
petition for review, requesting that we hold that the contract
is unlawful and invalid because it is inconsistent with the
agency’s statutory mandate to act in accordance with sound
business principles. They claim that BPA should not have
entered into a contract with Alcoa at the IP rate when BPA
could have instead sold that same power at a higher market
rate. Because BPA must set its rates to cover all its system
costs, petitioners argue, if BPA had maximized profits by sell-
ing power in the market, it could have charged its preference
customers a lower rate. According to petitioners, this failure
to maximize profits violates BPA’s duty to provide power “at
the lowest possible rates to consumers consistent with sound
business principles.”

   Alcoa also petitions for review, asking us to hold that BPA
erred in adopting the Equivalent Benefits standard, because
such a ruling is a condition precedent for commencement of
a Second Period under the Alcoa Contract. Finally, PPC
argues that BPA violated NEPA by failing to prepare an EIS.
According to PPC, the Alcoa Contract did not fall within a
categorical exclusion to NEPA, because the status quo is
Alcoa’s inevitable closure of its smelter, and the Alcoa Con-
tract changes the status quo by allowing the smelter to keep
operating. All these arguments are wrong.
  8
   This clarification was crucial to BPA’s arguments at the time, because
under the original contract, the Second Period had to begin “no later than
12 months after” issuance of the Ninth Circuit decision that, in BPA’s
opinion, met the first contingency (i.e., a determination that the Equivalent
Benefits standard does not apply to sales under the Alcoa Contract). If the
amendment to PNGC II had triggered this 12 month period, the time
period during which the Second Period had to begin would have lapsed on
March 2, 2011.
                      ALCOA, INC. v. BPA                  12401
                               II

          The Initial Period of the Alcoa Contract

   We consider each of petitioners’ distinct legal and factual
challenges in turn. We have jurisdiction over these consoli-
dated petitions pursuant to 16 U.S.C. § 839f(e)(5) and must
uphold “BPA’s actions unless they are ‘arbitrary, capricious,
an abuse of discretion, or in excess of statutory authority.’ ”
PNGC I, 580 F.3d at 806 (quoting Aluminum Co. of Am. v.
BPA, 903 F.2d 585, 590 (9th Cir. 1990)). When reviewing
whether BPA has acted “in accordance with law,” we defer to
BPA’s reasonable interpretations of its governing statutes.
See, e.g., Nw. Envtl. Def. Ctr. v. BPA, 117 F.3d 1520, 1530
(9th Cir. 1997).

             A.   The Controversy Is Not Moot

   Before considering the contract terms relating to the Initial
Period, we must first determine whether the petitioners’ chal-
lenges to this part of the contract are moot. City of Colton v.
Am. Promotional Events, Inc.-West, 614 F.3d 998, 1005 (9th
Cir. 2010). The Initial Period of the Alcoa Contract concluded
on May 26, 2011, and BPA has completed its performance
under that part of the contract. Thus, we cannot return the par-
ties to their original position because Alcoa cannot return the
power it obtained from BPA. Friends of the Earth, Inc. v.
Bergland, 576 F.2d 1377, 1379 (9th Cir. 1978) (holding that
“[w]here the activities sought to be enjoined have already
occurred, and the appellate courts cannot undo what has
already been done, the action is moot”); see also Feldman v.
Bomar, 518 F.3d 637, 642-43 (9th Cir. 2008). Nor is there any
legal basis to conclude that Alcoa is liable to BPA for the dif-
ference between the IP rate for power charged under the con-
tract and a higher market rate. BPA charged Alcoa the
statutorily mandated IP rate; it was not empowered to charge
either more or less. PNGC I, 580 F.3d at 818. In short, to the
extent that the petitioners’ claim is that BPA should have sold
12402                  ALCOA, INC. v. BPA
surplus power at market rates, and not contractually bound
itself to sell power at the lower IP rate during the Initial
Period, we cannot offer relief after the Initial Period has con-
cluded.

   [1] Nevertheless, we conclude that the petitioners’ chal-
lenge “is not moot because it falls within a special category
of disputes that are ‘capable of repetition’ while ‘evading
review.’ ” Turner v. Rogers, 131 S. Ct. 2507, 2514-15 (2011)
(quoting S. Pac. Terminal Co. v. ICC, 219 U.S. 498, 515
(1911)). “A dispute falls into that category, and a case based
on that dispute remains live, if ‘(1) the challenged action [is]
in its duration too short to be fully litigated prior to its cessa-
tion or expiration, and (2) there [is] a reasonable expectation
that the same complaining party [will] be subjected to the
same action again.’ ” Id. at 2515 (quoting Weinstein v. Brad-
ford, 423 U.S. 147, 149 (1975) (per curiam) (alterations in
original)). The rationale behind this exception is straightfor-
ward: some activities or situations are inherently fleeting in
nature, such that orderly and effective judicial review would
be precluded if we hewed strictly to the requirement that only
a presently live controversy presents a justiciable question. In
such cases, if a particular plaintiff is likely to suffer the same
or very similar harm at the hands of the same defendant, the
alleged wrongdoer should not be permitted to escape respon-
sibility simply because the transaction is completed before an
appellate court has a chance to review the case.

   We have previously relied on this exception to the moot-
ness doctrine in a case examining a BPA contract. In Califor-
nia Energy Resources Conservation & Development
Commission v. BPA, 754 F.2d 1470 (9th Cir. 1985), a state
energy agency challenged a contract between BPA and certain
electric utilities for the provision of hydroelectric power that
had been fully performed within a four month period. BPA
argued that the case was moot because the challenged con-
tracts had been completed and terminated. Id. at 1473. We
disagreed, observing that “short-term transactions such as
                       ALCOA, INC. v. BPA                  12403
these before us can evade review in the sense that they can be
completed in a shorter time than that required by the parties
and this court to file, brief, argue, and decide a case.” Id. We
also reasoned that because the unpredictability of the hydro-
electric power market could give rise to conditions where
short-term sales were desirable, it was foreseeable that the
parties could enter similar agreements in the future. Id.

   The test for transactions that are “capable of repetition
while evading review” is applicable to the petitioners’ chal-
lenge to the Initial Period. Turning to the “evading review”
prong of the test, we consider whether the 17 months of the
Initial Period is so short a time that it renders effective review
unlikely. “[W]e have recognized that ‘evading review’ means
that the underlying action is almost certain to run its course
before either this court or the Supreme Court can give the
case full consideration.” Alaska Ctr. for Env’t v. U.S. Forest
Serv., 189 F.3d 851, 855 (9th Cir. 1999) (quoting Miller v.
Cal. Pac. Med. Ctr., 19 F.3d 449, 453-54 (9th Cir. 1994)).
According to Turner, events that are completed within 18
months, First Nat’l Bank of Boston v. Bellotti, 435 U.S. 765,
774-75 (1978), or even within 2 years, S. Pac. Terminal Co.,
219 U.S. at 515, can be “ ‘too short to be fully litigated’
through the state courts (and arrive [at the Supreme Court])
prior to its ‘expiration.’ ” Turner, 131 S. Ct. at 2515. We have
held that a federal regulation establishing a “total allowable
catch” for pollock in the Gulf of Alaska, which was in effect
for less than one year, would evade “effective judicial
review,” Greenpeace Action v. Franklin, 14 F.3d 1324,
1329-30 (9th Cir. 1992), and have held with respect to the
Forest Service’s issuance of a two-year special use permit that
“the duration of the permit is too short to allow full litigation
before the permit expires.” Alaska Ctr., 189 F.3d at 856. Nor,
as discussed above, is BPA any stranger to this mootness
exception. See Pub. Util. Comm’r v. BPA, 767 F.2d 622, 625
(9th Cir. 1985) (holding that a BPA ratemaking procedure of
one year’s duration did not supply sufficient time for adequate
judicial review). And the exception may be applied even
12404                     ALCOA, INC. v. BPA
where (as here) the parties do not seek expedited review or a
stay pending appeal. Alaska Ctr., 189 F.3d at 856. Although
petitioners may bring a challenge to a BPA contract directly
in this court, as a practical matter a transaction set for a term
of 17 months, such as the Initial Period in this case, would be
likely to expire before our review (let alone the Supreme
Court’s) could be completed.9 Accordingly, we conclude that
the transaction at issue here is likely to “evade review.”

   Turning to the second prong, the challenged conduct is
capable of repetition where there is evidence that it has
occurred in the past, or there is a “reasonable expectation”
that the petitioner would again face the same alleged invasion
of rights. Id.; First Nat’l Bank v. Bellotti, 435 U.S. 765, 774
(1978); Cal. Energy Res., 754 F.2d at 1473; Trans Int’l Air-
lines, 650 F.2d at 956 n.5. This case presents the required
“reasonable expectation” of repetition. Indeed, BPA has
already extended the Initial Period four times using identical
terms, except that the extensions (of 12 months, 1 month, 1
month, and 1 month, respectively) were for briefer periods of
time than the 17-month Initial Period.

   [2] Furthermore, even though the petitioners can theoreti-
cally challenge the Extended Initial Period, that challenge
would likely also be moot by the time we are ready to hear
the case. Because BPA could continue to enter into agree-
ments of such short duration, the agreements could effectively
escape judicial review before their completion. Under these
circumstances, we should apply the “capable of repetition yet
evading review” exception, as directed by Turner.

  Accordingly, we proceed to the merits of petitioners’ and
Alcoa’s claims regarding the Initial Period.
   9
     In 2010 and 2011, the most recent years for which data are available,
the average time in this court from the filing of a notice of appeal through
to final disposition of a case was 16.4 and 17.4 months, respectively. Ninth
Circuit: 2011 Annual Report 59, available at http://www.ce9.uscourts
.gov/publications/AnnualReport2011.pdf.
                      ALCOA, INC. v. BPA                   12405
         B.   BPA’s Failure to Maximize Its Profits

   The petitioners argue that BPA violated its statutory
responsibilities in agreeing to sell surplus power at the IP rate
to Alcoa pursuant to the terms of the Initial Period. First, the
petitioners argue that by selling the power to Alcoa at the sta-
tutorily mandated IP rate, and thus forgoing the profits that
could be made by selling surplus power on the market, BPA
violated its statutory responsibility to operate pursuant to
sound business principles. Second, the petitioners challenge
the analysis supporting BPA’s conclusion that it will make a
modest profit of $10,000 by selling power to Alcoa at the IP
rate during the Initial Period. The petitioners claim that BPA
erred in its method for determining the cost of the program
and will likely fail to make a profit, contrary to the Equivalent
Benefits standard. Third, the petitioners claim that BPA’s
waiver of potential claims against Alcoa violates BPA’s statu-
tory and constitutional authority. Finally, Alcoa argues that it
is arbitrary and capricious for BPA to adhere to the Equiva-
lent Benefits standard because neither PNGC II nor the gov-
erning statutes requires BPA to sell power to DSIs at the
market rate.

   In reviewing these arguments, we consider merely whether
“the agency considered the relevant factors and articulated a
rational connection between the facts found and the choices
made”; we do not second-guess its policy judgments. Cal.
Wilderness Coal. v. U.S. Dep’t of Energy, 631 F.3d 1072,
1084 (9th Cir. 2011) (quoting Nw. Ecosystem Alliance v. U.S.
Fish & Wildlife Serv., 475 F.3d 1136, 1140 (9th Cir. 2007)).

   First, we consider petitioners’ argument that BPA’s statu-
tory obligation to operate in accordance with “sound business
principles” requires BPA to forego selling its power at the IP
rate to Alcoa, and instead to maximize its profits, as a private
corporation would strive to do. See 16 U.S.C. §§ 839e(a)(1),
839f(b), 838g. The failure to maximize profits that could oth-
erwise be used to lower the rates charged to its preference
12406                 ALCOA, INC. v. BPA
customers, petitioners argue, violates BPA’s duty to provide
power “at the lowest possible rates to consumers consistent
with sound business principles.” See also PNGC I, 580 F.3d
at 821 (noting that because BPA’s rates are based on its “total
system costs,” 16 U.S.C. § 839e(a)(2), a “side-effect” of sell-
ing power at the lower IP rates for the DSIs “will be an
increase in the rates paid by a much larger set of customers-
the businesses, industries, farms, and residences served by
public utilities, electrical cooperatives, and investor-owned
utilities with BPA power”). According to ICNU, BPA did not
operate in accordance with sound business principles because
the sale of power to Alcoa at the IP rate during the Initial
Period will net the agency a profit of only $10,000. ICNU
alleges that BPA has undervalued the profits it could obtain
from selling power in the open market rather than to Alcoa by
approximately $20 million, that forgoing such profits is not
businesslike, and that BPA violated the APA by relying on an
inadequate record and reasoning. PNGC claims that BPA is
not operating according to sound business principles because
it is not acting according to a profit-making purpose, but
rather is subsidizing Alcoa (by selling it power at the IP rate,
which is lower than the market rate) so as to preserve jobs at
its smelting plant and the surrounding community.

   [3] We disagree that BPA is required to maximize its prof-
its. The Northwest Power Act mandates that BPA establish
the IP rate for DSIs “at a level which [BPA] determines to be
equitable in relation to the retail rates charged by the [BPA’s
preference] customers to their industrial consumers in the
region,” taking into account certain factors. 16 U.S.C.
§ 839e(c)(1)(B). Further, BPA must set rates “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,” id. § 838g(1). But as we have
previously noted, BPA’s governing statutes “do not dictate
that BPA always charge the lowest possible rates.” Cal.
Energy Comm’n v. BPA, 909 F.2d 1298, 1307-08 (9th Cir.
1990). Rather, we are mindful that Congress has delegated to
                      ALCOA, INC. v. BPA                   12407
BPA the discretion to determine “how best to further BPA’s
business interests consistent with its public mission,” APAC,
126 F.3d at 1171, and we “may only set aside such an assess-
ment if it is unreasonable, meaning that it is ‘contrary to clear
congressional intent or that [it] frustrate[s] the policy Con-
gress sought to implement,’ ” PNGC II, 596 F.3d at 1080
(alteration in original) (quoting Biodiversity Legal Found. v.
Badgley, 309 F.3d 1166, 1175 (9th Cir. 2002)).

   [4] In light of the deference we are to give BPA, we cannot
say that BPA’s decision to enter into the Alcoa Contract was
so arbitrary and capricious as to violate its statutory obliga-
tion. First, the Alcoa Contract requires BPA to sell power to
Alcoa at the IP rate, not merely transfer funds as in PNGC I
and II. We stated in PNGC II that a “physical” sale of power,
with the attendant balancing of market factors, resource con-
straints, and business judgments it entails, would be more
likely to merit our deference than would a cash payout by
BPA for Alcoa to use in buying power from one of BPA’s
competitors. Id. at 1085. Second, BPA anticipated earning a
profit during the Initial Period, which contrasts sharply with
the hundreds of millions of dollars BPA expected to forego
under the agreements in PNGC I and II, where BPA did not
identify any profit from its agreement to provide funding to
Alcoa. See id.; PNGC I, 580 F.3d at 823.

   [5] Nor is there evidence supporting PNGC’s claim that
BPA entered into the Alcoa Contract to subsidize Alcoa. The
ROD expressly disclaimed reliance on job impacts as a factor
in its decision and declined to include such impacts in its
Equivalent Benefits analysis. PNGC’s speculation is an insuf-
ficient basis for upsetting the agency’s contracting decision.
See Ctr. for Biological Diversity v. Kempthorne, 588 F.3d
701, 710-11 (9th Cir. 2009). We therefore defer to BPA’s
determination that a sale on the terms specified for the Initial
Period is in keeping with sound business principles and find
no violation of the agency’s statutory mandate.
12408                 ALCOA, INC. v. BPA
        C.   BPA’s Allegedly Erroneous Calculations

   We next consider petitioners’ claims that BPA’s determina-
tion that it will net a $10,000 profit during the Initial Period
is based on faulty calculations and a flawed methodology.
Petitioners challenge BPA’s methodology on four main
grounds: (1) BPA relied on faulty data regarding weather and
water flows; (2) BPA erred in calculating the value of Alcoa’s
power reserves; (3) BPA ignored forward market prices; and
(4) BPA’s calculations erroneously relied on a “demand
shift,” that is, the concept that by supporting Alcoa’s opera-
tions, BPA increases the demand for power, which in turn
raises the price of power and increased BPA’s revenues from
sales in the market. According to petitioners, these errors cast
doubt on BPA’s cost-benefit calculations and indicate that
BPA will fall grievously short of the breakeven point, thereby
violating the Equivalent Benefits standard.

   We again approach these methodological challenges with
deference to BPA’s decisionmaking. In reviewing agency
decisions, we are “ ‘not empowered to substitute [our] judg-
ment for that of the agency.’ ” Ranchers Cattlemen Action
Legal Fund United Stockgrowers of Am. v. U.S. Dep’t of
Agric., 415 F.3d 1078, 1093 (9th Cir. 2005) (quoting Ariz.
Cattle Growers’ Ass’n v. U.S. Fish & Wildlife Serv., 273 F.3d
1229, 1236 (9th Cir. 2001)). “Deference to the informed dis-
cretion of the responsible federal agencies is especially appro-
priate, where, as here, the agency’s decision involves a high
level of technical expertise.” Id.; see also Ctr. for Biological
Diversity, 588 F.3d at 710-11.

  We begin by considering the challenges to BPA’s reliance
on weather and water flow data. ICNU argues it was unrea-
sonable for BPA to assume it would have a power surplus in
every month of the Initial Period, given the unpredictability
of weather and water levels. PNGC builds on these argu-
ments. Although the Alcoa Contract was executed December
21, 2009, PNGC claims that later-collected water flow data
                      ALCOA, INC. v. BPA                  12409
(from May 2010) show that BPA’s estimates of likely power
surpluses were inaccurate, thereby making it very likely that
BPA will lose money during the Initial Period. PNGC also
points to evidence from National Weather Service (NWS)
reports that are not part of the Administrative Record, but we
cannot consider new evidence on appeal that was not pre-
sented to BPA. In addition, PNGC cites NWS reports from
December 17, 2009 (three days after Alcoa signed the con-
tract and four days before BPA did so) and January 2010 that
show increasingly severe water-flow conditions.

   The record reveals that BPA gave adequate consideration
to these matters. The agency forecast that it would be able to
supply Alcoa’s needs from its existing inventory (which oth-
erwise would constitute surplus power), in all weather and
flow conditions except “critical” situations. In so forecasting,
it relied extensively on the 2009 Pacific Northwest Loads and
Resources Study (2009 White Book) and BPA’s 2010 Loads
and Resources Study (WP-10 Study). Both studies supported
BPA’s prediction that it would have sufficient average power
to serve the DSIs’ needs (though BPA acknowledged the pos-
sible need to make additional “balancing” purchases based on
month-to-month assessments of loads and resources). Nor did
BPA erroneously ignore potential El Niño weather conditions
when making its forecasts, because the model it used to gen-
erate those predictions considered dry, normal, and wet
weather patterns alike.

   [6] In sum, BPA’s analysis of these issues was thorough.
No factor or argument identified by the petitioners went unad-
dressed in the ROD, and all of BPA’s explanations are plausi-
ble and rationally connected to the facts that were before it at
the time. Moreover, to the extent PNGC’s claims are rooted
in data that did not exist at the time BPA executed the con-
tract, such data provides no support to PNGC’s argument that
BPA failed to consider relevant information. See 16 U.S.C.
§ 839f(e)(2) (“The record upon review of such final actions
shall be limited to the administrative record compiled in
12410                  ALCOA, INC. v. BPA
accordance with this chapter.”); Fla. Power & Light Co. v.
Lorion, 470 U.S. 729, 743-44 (1985) (“[T]he focal point for
judicial review should be the administrative record already in
existence, not some new record made initially in the review-
ing court.” (alteration in original) (quoting Camp v. Pitts, 411
U.S. 138, 142 (1973))); Vt. Yankee Nuclear Power Corp. v.
Natural Res. Def. Council, 435 U.S. 519, 553-54 (1978).10
The petitioners fail to establish that BPA’s dry-weather pro-
jections omitted important information or that BPA erred in
not placing greater weight on those projections. Accordingly,
we reject the argument that BPA was arbitrary and capricious
in its consideration of how weather and water flows would
affect its profits during the Initial Period.

   [7] Second, PNGC argues that the terms of the Initial
Period require BPA to subsidize Alcoa’s rate by providing a
credit for Alcoa’s provision of contingency power reserves to
BPA, even though BPA has a much larger, more efficient
pool of power to draw on in an emergency: the Northwest
Power Pool Reserves Sharing Group. Moreover, according to
PNGC, Alcoa’s reserves may not even comply with manda-
tory quality standards. BPA also addressed these issues. It
analyzed benefits from Alcoa’s required contribution to
BPA’s power reserves according to a reasonable formula, and
determined that the reserves complied with industry reliability
criteria. The value to BPA of the power reserves it extracts
from DSI customers is the kind of issue within the particular
expertise of BPA and not easily susceptible to judicial
second-guessing. See PNGC II, 596 F.3d at 1085. We are
therefore unpersuaded by this challenge to BPA’s evaluation
of power reserves.
  10
   We therefore deny as moot Alcoa’s motion to strike the portion of
PNGC’s opening brief that presented this evidence.
                          ALCOA, INC. v. BPA                        12411
               D.    Waiver of Damages Provision

   Next, ICNU and PPC challenge the waiver-of-damages
provision in the Alcoa Agreement which provides that, in the
event a court renders any part of the agreement void or unen-
forceable, both BPA and Alcoa waive any right to seek dam-
ages or restitution. ICNU and PPC assert that BPA is
constitutionally obligated to sue for any damages to which it
is entitled, pursuant to Royal Indem. Co. v. United States, 313
U.S. 289 (1941), and Fansteel Metallurgical Corp. v. United
States, 172 F. Supp. 268 (Ct. Cl. 1959).11 Petitioners are mis-
taken, however, as neither case involved a waiver of the right
to seek damages. Royal Indemnity dealt with an IRS agent’s
decision to release a surety bond before a taxpayer had paid
his obligation in full. 313 U.S. at 292-93. The Court held that
Congress alone holds the “[p]ower to release or otherwise dis-
pose of the rights and property of the United States,” and that
subordinate officers, such as the revenue agent at issue in the
case, accordingly lacked the power to do so unless granted
that power by the legislature. Id. at 294. In Fansteel (a non-
precedential district court case), the court held that the gov-
ernment has an obligation to recoup an unlawful overpayment
for goods from a vendor. 172 F. Supp. at 270.

   [8] Neither case dealt with the situation present here,
where an agency determined that a mutual release of future
liability was in its interest. As BPA noted in its ROD, the
BPA Administrator has broad powers to enter and modify
contracts, including the power to compromise or settle claims.
  11
     PPC also asserts that BPA acted arbitrarily and capriciously by not
determining whether Alcoa owed a refund to BPA under the prior con-
tracts with Alcoa which were invalidated by PNGC I and II. We previ-
ously held that BPA’s failure to seek a refund from Alcoa on a prior
contract was not a basis for invalidating a subsequent contract. PNGC II,
596 F.3d at 1081 n.11, 1086. Because the facts here are substantially iden-
tical to the facts at issue in PNGC II, we reach the same conclusion and
reject PPC’s argument here.
12412                        ALCOA, INC. v. BPA
See 16 U.S.C. § 832a(f);12 see also id. § 839f(a); APAC, 126
F.3d at 1170-71. Because the damage waiver provision in the
Alcoa Contract falls within such claim-settling authority, it
does not violate either statutory or constitutional provisions.
See Util. Reform Project v. BPA, 869 F.2d 437, 443 (9th Cir.
1989). We likewise reject ICNU’s argument that there is no
basis for BPA’s conclusion that such a waiver is in BPA’s
interest. The ROD states that the waiver will protect BPA
from any damages claims that Alcoa might otherwise choose
to pursue against BPA in the event of cancellation. It is not
our place to second-guess the agency’s considered judgment
regarding the balance of risks embodied in a damage waiver
or similar release or settlement provision. See Cal. Wilderness
Coal., 631 F.3d at 1084.

             E.    Alcoa’s Challenge to the Initial Period

   [9] Having rejected the petitioners’ challenges to the terms
of the Initial Period, we now turn to Alcoa’s challenge,
namely, that it is arbitrary and capricious for BPA to refuse
to sell power to DSIs at the statutorily mandated IP rate unless
those sales will net at least as much profit as an open-market
sale would achieve. Alcoa’s position rests on flawed factual
and legal premises. First, there is no support in the record for
Alcoa’s contention that BPA has refused to sell power unless
the IP rate equals or exceeds the market rate for power.
Indeed the petitioners claim that BPA could have sold the
same surplus power on the open market for a higher price.
  12
    Section 832a(f) provides:
       Subject only to the provisions of this chapter, the Administrator
       is authorized to enter into such contracts, agreements, and
       arrangements, including the amendment, modification, adjust-
       ment, or cancel[l]ation thereof and the compromise or final settle-
       ment of any claim arising thereunder, and to make such
       expenditures, upon such terms and conditions and in such manner
       as he may deem necessary.
                      ALCOA, INC. v. BPA                   12413
   [10] Second, BPA has no obligation to sell to Alcoa at all;
if it decides to do so, it must exercise its judgment in accord
with sound business principles, see PNGC I, 580 F.3d at
811-12. While in certain extreme circumstances we may con-
clude that BPA has strayed too far afield from businesslike
operations, see PNGC II, 596 F.3d at 1073-74, in the ordinary
case we will not usurp BPA’s judgment regarding whether to
sell surplus power to DSIs, or on what terms.

   [11] The terms of the Initial Period here are within BPA’s
discretion. Because BPA did not act arbitrarily and capri-
ciously in entering into such terms, we need not decide
whether the Equivalent Benefits Test, as an abstract proposi-
tion, is wholly in accord with BPA’s governing statutes.
Moreover, we doubt that courts are well-suited to making
such a categorical ruling; instead, we must evaluate whether
BPA has violated its statutory obligation to adhere to sound
business principles on a case-by-case basis. See Norton v. S.
Utah Wilderness Alliance, 542 U.S. 55, 66 (2004).

   [12] Having considered all the petitioners’ and Alcoa’s
specific challenges to the terms of the Initial Period, we con-
clude that BPA did not exceed its statutory authority, and
therefore did not act arbitrarily and capriciously, by entering
a contract under the terms prescribed for the Initial Period.
We therefore deny the petitions for review insofar as they
challenge the Initial Period of the agreement.

                               III

          The Second Period of the Alcoa Contract

   Petitioners also challenge the terms of the Second Period
on the ground that it could involve an up to $300 million net
loss to BPA that would result in higher rates for BPA’s other
customers, thereby violating the agency’s statutory mandate
to set electric power rates “at the lowest possible rates to con-
12414                 ALCOA, INC. v. BPA
sumers consistent with sound business principles.” 16 U.S.C.
§ 838g.

   [13] Whether framed in terms of ripeness or standing, peti-
tioners’ alleged injury is too speculative to give rise to a case
or controversy as required by Article III. A party has standing
to press its claim in federal court only when it can demon-
strate the existence of an injury in fact, that is, “an invasion
of a legally protected interest which is (a) concrete and partic-
ularized, and (b) actual or imminent, not conjectural or hypo-
thetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992) (citations and internal quotation marks omitted). We
have characterized the related ripeness inquiry “as standing on
a timeline.” Thomas v. Anchorage Equal Rights Comm’n, 220
F.3d 1134, 1138 (9th Cir. 2000). Specifically, “[a] claim is
not ripe for adjudication if it rests upon ‘contingent future
events that may not occur as anticipated, or indeed may not
occur at all.’ ” Texas v. United States, 523 U.S. 296, 300
(1998) (quoting Thomas v. Union Carbide Agric. Prods. Co.,
473 U.S. 568, 580-81 (1985)). “That is so because, if the con-
tingent events do not occur, the plaintiff likely will not have
suffered an injury that is concrete and particularized enough
to establish the first element of standing.” Bova v. City of
Medford, 564 F.3d 1093, 1096 (9th Cir. 2009). We have dis-
missed claims that are based solely on harms stemming from
events that have not yet occurred, and may never occur,
because the plaintiffs raising such claims have not “suffered
an injury that is concrete and particularized enough to survive
the standing/ripeness inquiry.” Id. at 1096-97.

   [14] Petitioners’ challenge to the Second Period is too con-
tingent and speculative to meet our standing and ripeness test.
Petitioners base their claims on harms they may incur if the
Second Period comes into effect, but those harms have not
occurred and are not reasonably likely to occur in the future.
Three hurdles stand in the way of petitioners’ alleged injury.
First, as originally drafted, the Second Period of the Alcoa
Contract would not come into effect until this court ruled that
                      ALCOA, INC. v. BPA                  12415
BPA need not adhere to the Equivalent Benefits standard.
This case did not, and does not, require us to make any such
determination, and we lack a basis for predicting whether
there will be such a ruling in the future. Second, even if such
a ruling occurred, the Second Period would not commence
under the terms of the prior contract unless BPA determined
it could provide service to Alcoa in a manner “consistent with
any alternative standard established” by such a ruling and that
the cost to serve Alcoa would not exceed specified cost caps
set forth in the Alcoa Contract. These determinations would
require BPA to conduct additional economic modeling of
future IP rates and market prices, thereby creating a new
record of decision. Finally, the parties’ May 2012 amendment
to the Alcoa Contract eliminated all references to the Second
Period. This means that BPA and Alcoa would need to enter
into a new contract that includes a similar Second Period
before the petitioners could point to even the threat of suffer-
ing harm from the commencement of a Second Period in the
future. This “chain of speculative contingencies,” Nelsen v.
King Cnty., 895 F.2d 1248, 1252 (9th Cir. 1990), is “not suffi-
ciently tangible or definite to meet the ‘concrete and particu-
larized’ injury requirement of Lujan.” Bova, 564 F.3d at 1097;
see also PNGC I, 580 F.3d at 826 (validity of contract provi-
sion providing that BPA could elect to deliver physical power
was not ripe for review because “BPA has not yet exercised
its option to deliver physical power, nor has it defined the
terms that would govern a physical power sale”).

   In claiming that petitioners have standing to challenge the
Second Period, dis. op. at 12439-40, the dissent overlooks
these contingencies. Its conclusion that petitioners would be
injured if the Second Period commences fails to grapple with
the fact that even under the original contract, such a com-
mencement was highly speculative. Similarly, the dissent fails
to account for the recent amendment eliminating the Second
Period entirely. In short, the dissent provides no insight as to
why the remote possibility of the Second Period is sufficiently
12416                  ALCOA, INC. v. BPA
tangible and definite enough “to survive the standing/ripeness
inquiry.” Bova, 564 F.3d at 1097.

   [15] Because the petitioners lack standing to challenge the
Second Period, this claim cannot be salvaged under the “capa-
ble of repetition, but evading review” doctrine. That doctrine
“is an exception only to the mootness doctrine; it is not trans-
ferable to the standing context” because it “governs cases in
which the plaintiff possesses standing, but then loses it due to
an intervening event.” Nelsen, 895 F.2d at 1254; see also
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 109
(1998) (“ ‘[T]he mootness exception for disputes capable of
repetition yet evading review . . . will not revive a dispute
which became moot before the action commenced.’ ”) (quot-
ing Renne v. Geary, 501 U.S. 312, 320 (1991)). Where, as
here, the potential future harm from the Second Period is too
contingent to create an injury-in-fact, the petitioners never
possessed standing, and thus they cannot invoke the “capable
of repetition” exception. Nelsen, 895 F.2d at 1254. Therefore,
the dissent is mistaken in arguing that we can consider a chal-
lenge to a harm that has not, and may never occur. Dis. op.
at 12440-41.

   [16] In sum, because the possibility that petitioners would
be harmed due to BPA entering into a contract in the future
that included provisions analogous to the now-deleted Second
Period is too speculative to give rise to an injury in fact within
the meaning of Article III, we cannot conclude that petitioners
have demonstrated any injury, or threat thereof, “of sufficient
immediacy and ripeness” to satisfy the jurisdictional require-
ments of the federal courts. Warth v. Seldin, 422 U.S. 490,
516 (1975). Therefore, we dismiss this claim.
                          ALCOA, INC. v. BPA                        12417
                                   IV

                          NEPA Obligations

   [17] Finally, we consider petitioners’ argument that BPA
violated its obligations under NEPA by failing to prepare an
EIS.13 NEPA sets forth procedural requirements aimed at
ensuring that an agency has “consider[ed] every significant
aspect of the environmental impact of a proposed action” and
has “inform[ed] the public that it has indeed considered envi-
ronmental concerns in its decisionmaking process.” Balt. Gas
& Elec. Co. v. Natural Res. Def. Council, Inc., 462 U.S. 87,
97 (1983) (internal quotation marks omitted). Under certain
circumstances, a federal agency must prepare an EIS, specifi-
cally, a “detailed statement” on “the environmental impact” of
“major Federal actions significantly affecting the quality of
the human environment.” 42 U.S.C. § 4332(C)(i); 40 C.F.R.
§ 1502.1. An EIS is not required if the action in question falls
within a “categorical exclusion,” which the applicable regula-
tions define to mean “a category of actions which do not indi-
vidually or cumulatively have a significant effect on the
human environment” and “for which, therefore, neither an
environmental assessment nor an environmental impact state-
ment is required.” 40 C.F.R. § 1508.4; see also 10 C.F.R.
§ 1021.103 (making the Council on Environmental Quality’s
NEPA regulations applicable to BPA, as an agency within the
Department of Energy).
  13
     The petitioners also claim that BPA acted arbitrarily and capriciously
by not explaining its change of opinion regarding the necessity of an EIS:
in prior contracts, it professed a belief that an EIS was necessary and
relied on one completed in 1995, whereas now it has concluded that one
was not required. There was no error in this omission. BPA acknowledged
that it was no longer relying on its 1995 EIS and explained its view that
a categorical exclusion applied. Under the APA, nothing more was
required. See FCC v. Fox Television Stations, Inc., 129 S. Ct. 1800, 1811
(2009).
12418                 ALCOA, INC. v. BPA
   We will uphold an agency’s reliance on a categorical exclu-
sion if “the application of the exclusions to the facts of the
particular action is not arbitrary and capricious.” Bicycle
Trails Council of Marin v. Babbitt, 82 F.3d 1445, 1456 & n.5
(9th Cir. 1996). In analyzing this issue, we ask “whether the
decision was based on a consideration of the relevant factors
and whether there has been a clear error of judgment.” Alaska
Ctr., 189 F.3d at 859 (quoting Marsh v. Or. Natural Res.
Council, 490 U.S. 360, 378 (1989)).

  BPA expressly invoked the relevant categorical exclusion
in its ROD. Specifically, it relied on the Department of
Energy regulations that exclude the following action from the
requirement to prepare an EIS:

    Establishment and implementation of contracts, mar-
    keting plans, policies, allocation plans, or acquisition
    of excess electric power that does not involve: (1)
    the integration of a new generation resource, (2)
    physical changes in the transmission system beyond
    the previously developed facility area, unless the
    changes are themselves categorically excluded, or
    (3) changes in the normal operating limits of genera-
    tion resources.

10 C.F.R. pt. 1021, subpart D, App. B4.1.

   BPA’s decision to do so was not arbitrary and capricious.
As required by the regulation, BPA considered the relevant
factors and determined that the present sale of power to Alcoa
under the Alcoa Contract fell squarely within the terms of the
categorical exclusion because it did not involve any new
power-generation sources, any physical changes in transmis-
sion, or any alteration in the operating limits of existing gen-
eration resources.

  In support of this conclusion, BPA explained that if its
existing power supply proved insufficient to provide Alcoa
                         ALCOA, INC. v. BPA                      12419
with the power mandated by the contract, the shortfall would
be met through purchases on the open market (i.e., not
through expansion of that capacity). Moreover, BPA noted
that it would supply power to Alcoa “over existing transmis-
sion lines that connect Intalco to BPA’s electrical transmis-
sion system and no physical changes to this system would
occur.”

   [18] BPA’s judgment regarding the applicability of the
exclusion “implicates substantial agency expertise” and is
entitled to deference. Alaska Ctr., 189 F.3d at 859. Because
BPA considered the relevant factors and did not make a “clear
error of judgment” in determining that the categorical exclu-
sion was applicable to its execution of the Alcoa Contract, no
EIS was required, and we are obliged to reject the petitioners’
contrary contentions. See Bicycle Trails, 82 F.3d at 1456 & n.5.14

                                  V

                             Conclusion

   [19] The petitioners’ challenges to the Alcoa Contract ask
us to second-guess BPA’s policy judgment regarding the costs
and benefits of its sale of electric power. But the belief that
another approach might have been wiser is not a valid basis
for jettisoning an agency action as arbitrary and capricious.
We therefore deny the petitions for review insofar as they per-
tain to the Initial Period. Because the potential for BPA and
Alcoa to enter into the Second Period of the contract is no
longer before us, we dismiss those portions of the petitions.
Finally, we hold that because BPA relied on a categorical
exclusion to NEPA’s requirements, declining to complete an
  14
    Given our resolution of this issue, we need not address the parties’
dispute regarding whether the Alcoa Contract merely maintained the envi-
ronmental status quo and that an EIS was therefore unnecessary. See Bur-
bank Anti-Noise Group v. Goldschmidt, 623 F.2d 115, 116 (9th Cir. 1980)
(per curiam).
12420                    ALCOA, INC. v. BPA
EIS was not arbitrary and capricious. Accordingly, we deny
petitioners’ NEPA claim.15

  DISMISSED in part and DENIED in part.



TASHIMA, Circuit Judge, concurring:

  I concur fully in Judge Ikuta’s majority opinion. I write
separately only to note briefly that I also concur in Judge
Bea’s interpretation of Miranda B. v. Kitzhaber, 328 F.3d
1181, 1186-87 (9th Cir. 2003), that the only dicta by which
we are bound “is well-reasoned dicta.” Concurring and dis-
senting op. at 12435 n.4 (Bea, J.).

   Miranda B. adopted the definition of dicta in Judge Kozin-
ski’s separate, minority opinion in United States v. Johnson,
256 F.3d 895, 914 (9th Cir. 2001) (en banc) (separate opinion
of Kozinski, J.), apparently under the belief that that opinion
was the expression of the majority of the en banc court. At
least the opinion in Miranda B. does not identify the citation
as anything other than the opinion of the en banc majority.
The citation in Miranda B. following the quotation of Judge
Kozinski’s definition of dicta reads simply “United States v.
Johnson, 256 F.3d 895, 914 (9th Cir. 2001) (en banc).” But
page 914 is part of Judge Kozinski’s separate, minority opin-
ion, which starts on page 909, and is joined in by only three
other judges of the 11-judge en banc court. See id. at 909. Be
that as it may, because it was adopted by the Miranda B.
panel, mistakenly or otherwise, Judge Kozinski’s definition of
dicta is now the law of the circuit.

   My views on what constitutes dicta are adequately set forth
in my concurring opinion in Johnson, 256 F.3d at 919-21, and
won’t be repeated here. Suffice it for me to observe that,
  15
    Each party shall bear its own costs on appeal.
                      ALCOA, INC. v. BPA                 12421
given its subjective and amorphous nature, I concur in Judge
Bea’s limitation of that definition to only “well-reasoned
dicta,” as a welcome first step in cabining the expansive defi-
nition adopted by Miranda B.



BEA, Circuit Judge, concurring in part and dissenting in part:

   I agree with the panel’s judgment denying the petitions as
to the First Period of the contract between the Bonneville
Power Authority (“BPA”) and the Aluminum Company of
America (“Alcoa”), as extended by the parties. I dissent, how-
ever, from the panel’s judgment dismissing the petitions seek-
ing to invalidate the contract’s Second Period because I find
Petitioners have standing to press their claims, and that their
claims are valid, as far as they are based on BPA’s statutory
duty to charge Alcoa the IP rate. See Maj. Op. Part IV. We
should grant the petition as to the Second Period of BPA’s
contract with Alcoa.

   The effect of the BPA-Alcoa contract is that BPA will lose
up to $66,000,000 annually for five years ($5,500,000 a
month) as the difference between BPA’s costs of production
and transmission and the price paid by Alcoa. These losses
must be made up by rate hikes to BPA’s other customers,
such as Petitioners. Such losses cannot be justified by the
agency’s interpretations of what constitutes “sound business
practices,” nor by the so-called Equivalent Benefits standard,
because BPA is constrained by statute to sell power to Alcoa
at the IP price, and at no other price. Properly tabulated, the
IP price must prevent the losses projected by BPA or, indeed,
any loss at all. Micro-economic social engineering to preserve
jobs at Alcoa is not within the agency’s “discretion,” which
is just another way of saying “power.”

  BPA’s preference customers, as well as other entities and
organizations in the Pacific Northwest, filed this petition for
12422                      ALCOA, INC. v. BPA
review, requesting that we hold the unlawful Second Period
of BPA’s contract with Alcoa is inconsistent with the agen-
cy’s statutory mandate to act in accordance with sound busi-
ness principles. They claim BPA should have maximized
profits by selling power to Alcoa at market rate. Alcoa also
petitions for review, arguing that BPA erred in adopting the
Equivalent Benefits standard1 because it is contrary to BPA’s
governing statutes, and that if BPA had not made this error,
it would have entered into a contract even more favorable to
Alcoa’s interests. In short, each party contends BPA has a
duty to charge its other customers more, so that it may charge
the complaining party less. Each is mistaken. BPA in turn
contends it should not be bound by the Equivalent Benefits
standard and should have even wider latitude to determine
rates. While BPA is correct that the Equivalent Benefits test,
which it invented, is not binding, BPA is still bound by the
Congressional statutes which govern it in determining rates—
statutes it continually overlooks. Those statutes convey far
less latitude in determining rates than BPA thinks.

   The parties concentrate almost exclusively on the content
and applicability of the Equivalent Benefits standard as a con-
sideration in pricing. They ignore the plain language of the
relevant statutes which mandate that BPA is authorized to sell
power to Direct Service Industrial (“DSI”) customers such as
Alcoa at the Industrial Firm Power rate (the “IP rate”)—not
more as Petitioners contend, and not less as BPA and Alcoa
contend. See 16 U.S.C. §§ 838g, 839a(10), 839c(b),
  1
    The Equivalent Benefits standard is an amorphous, undefined standard
invented by BPA that does not appear in the statute, and that has not been
clearly defined by BPA or our court. As best I can understand it, it allows
the agency to incur losses by pricing power sales below its costs, so long
as the agency finds that preserving employment at Alcoa will bestow ben-
efit upon its other clients, in the greater scheme of things, equivalent to the
higher rates they must pay to make up the loss caused by the below cost
pricing. As explained in this dissent, this understanding of the Equivalent
Benefits standard is flatly contradicted by higher authority: Congress’ stat-
utes. See pp. 12425-30 infra.
                       ALCOA, INC. v. BPA                   12423
839e(b)(1). Because the Second Period of BPA’s contract
with Alcoa fails even to recover BPA’s costs, let alone charge
Alcoa the IP rate, it violates BPA’s governing statutes.

   The majority thinks it best not to address the parties’
attempt to draft a Second Period of the contract now. It would
rather wait until the parties draft a new contract and then
review those terms. It concentrates entirely on the recent let-
ters by the parties making it clear they will not draft a new
contract until after a ruling from this court. Maj. Op. at
12414-15. The majority’s view has a definite appeal to it, and
if this were an ordinary contract affecting only the contracting
parties, I might agree. But this is not an ordinary contract. To
the contrary, the terms of the new contract will affect the rates
BPA charges millions of other customers. And the majority’s
opinion does not give the parties the guidance they have
shown they need. Most importantly, the history of contracts
between BPA and Alcoa shows that these parties have repeat-
edly entered into contracts designed to subsidize Alcoa, and
will continue to do so in the future. In these letters relied on
by the majority, neither BPA nor Alcoa agree to set out their
options for the terms of the contract they might draft in the
future—including any provisions for payment of damages
caused to the Petitioners should the contract be found to be
invalid under the governing statutes. It is foolish for us to
ignore what these parties have actually done in the past. We
should give these filings little weight given the consistent
conduct of the parties in the past, and the heavy price paid by
the public each time. I fear it is the majority that is ignoring
the relevant evidence in the record of the parties’ past con-
duct.

   This is the third time we have reviewed a contract between
BPA and Alcoa in which BPA essentially subsidizes Alcoa’s
purchase of power in the amount of roughly $60,000,000 a
year. It is predictable that BPA and Alcoa will enter into yet
another contract which will result in Alcoa purchasing power
at less than the IP price, and it is predictable that yet again the
12424                  ALCOA, INC. v. BPA
wheels of the judicial review system will grind too slowly to
avoid the resultant and unrecoverable rate hikes to preference
customers which BPA must put in place to balance its books.
Thus, like our review of the First Period, this is a problem
capable of repetition, yet escaping judicial review. We should
hold that this new form of subsidy is equally invalid.

   Because BPA continues to sell power to Alcoa and will in
all probability continue to do so in the future, and because the
terms of the Second Period could result in a loss of up to
$5,500,000 per month, it is prudent to set forth a few princi-
ples the parties must keep in mind when re-negotiating their
contract.

   First, BPA is prohibited by statute from selling power to
any of its customers below its properly tabulated costs of pro-
duction and transmission. The PF rate for preference custom-
ers must cover that cost. The IP rate for direct service
industrial customers must similarly cover the costs of produc-
tion and transmission, plus the normal retail markup the
industry-owned utilities in turn charge their customers. BPA
can sell power to Alcoa only at the IP rate.

   Second, the parties misinterpret the phrase “sound business
principles” in the statute. This phrase usually applies to proper
cost accounting principles for long-term assets; it does not
justify BPA subsidizing Alcoa by charging it a rate lower than
the IP rate, let alone a rate lower than BPA’s costs. It calls for
BPA to use sound judgment in the allocation of costs; it does
not give BPA permission to engage in regional economic
planning.

   Third, the present BPA-Alcoa contract ignores this statu-
tory mandate and anticipates that BPA will lose up to
$330,000,000 in its performance of the contract during the
Second Period. The BPA-Alcoa contract provides that BPA
will recover this loss by raising the rates it charges its other
customers by up to four percent (4%); thus Petitioners will be
                      ALCOA, INC. v. BPA                   12425
directly affected financially by the contract if BPA and Alcoa
continue as stated in their contract. And the contract provides
that Petitioners cannot simply sue afterwards to recover this
money.

   Fourth, if Petitioners are forced to wait until the Second
Period has begun to challenge the BPA-Alcoa contract, it will
be in large measure too late to prevent their quite foreseeable
overcharges. BPA will lose approximately $5,500,000 a
month until a final judicial ruling. BPA must make up that
loss by raising rates on its other customers, including Petition-
ers, because it is prohibited by statute from seeking funds
from the federal government to make up its loss and there is
no other purse to tap. And, according to the contract, if the
BPA-Alcoa contract is found to be invalid, BPA cannot seek
damages from Alcoa. Once the operating losses are sustained,
BPA will have no other avenue than to raise the rates its
charges its other customers to make up the loss.

   Thus, I dissent from the court’s judgment as to the Second
Period because the terms of the Second Period of the BPA-
Alcoa contract violate BPA’s statutory duty to recover its
costs before BPA loses millions of dollars recoverable only
by imposing a surcharge on its other customers such as Peti-
tioners; and I dissent from that portion of the court’s judgment
that Petitioners do not have standing to have this determina-
tion made.

                               I

   BPA is prohibited by statute from selling power to
                    Alcoa at a loss.

   When reviewing a challenge to an agency’s statutory
authority, we must “begin . . . by examining the statutory lan-
guage.” Pac. Nw. Generating Coop. v. Dep’t of Energy
(“PNGC I”), 580 F.3d 792, 806 (9th Cir. 2009). If Congress
clearly expressed its intent, we “reject administrative con-
12426                 ALCOA, INC. v. BPA
structions of a statute that are inconsistent with the statutory
mandate or that frustrate the policy Congress sought to imple-
ment.” Id. (citations omitted).

    When a court reviews an agency’s construction of
    the statute which it administers, it is confronted with
    two questions. First, always, is the question whether
    Congress has directly spoken to the precise question
    at issue. If the intent of Congress is clear, that is the
    end of the matter; for the court, as well as the
    agency, must give effect to the unambiguously
    expressed intent of Congress. If, however, the court
    determines Congress has not directly addressed the
    precise question at issue, the court does not simply
    impose its own construction on the statute, as would
    be necessary in the absence of an administrative
    interpretation. Rather, if 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.

Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467
U.S. 837, 842-43 (1984) (footnotes omitted). Here, Congress
directly spoke to the issue of what rates BPA must charge
DSIs—the IP rate. Let us review the overall rate structure cre-
ated by Congress.

  BPA’s statutory framework sets out the specific criteria by
which BPA determines the rates it may charge for power to
each of the three different categories of customers it serves.

   First, BPA must sell power to its “preference” customers
and the investor-owned utilities (“IOUs”), 16 U.S.C.
§ 839c(b), at a cost-based rate referred to as the Preference
Customer’s rate or “PF rate.” 16 U.S.C. § 839c(a); 16 U.S.C.
§ 839e. Those rates “shall recover the costs of that portion of
the Federal base system resources needed to supply [prefer-
ence and IOU customers’] loads until such sales exceed the
                           ALCOA, INC. v. BPA                        12427
Federal base system resources.” 16 U.S.C. § 839a(10)
(emphasis added).2 The power generated by BPA itself goes
into the Federal base system. The recovery of BPA’s costs is
not discretionary. Rates must, at a minimum, recover BPA’s
costs. The Northwest Power Act:

       directs BPA to “establish, and periodically review
       and revise, rates for the sale and disposition of elec-
       tric energy,” § 839e(a)(1), which are subject to “con-
       firmation and approval” by the Federal Energy
       Regulatory Commission [(“FERC”)] upon a finding
       by the Commission that, among other things, “such
       rates . . . are based upon [BPA]’s total system costs.”
       § 839e(a)(2)(B). Rates for preference customers are
       mandated, accordingly, to be sufficient to “recover
       the costs of that portion of the Federal base system
       resources needed to supply such loads,”
       § 839e(b)(1), with “Federal base system resources”
       ....

PNGC I, 580 F.3d at 801 (italics added). Thereafter, such rate
or rates “shall recover the cost of additional electric power as
needed to supply such loads . . . .” § 839e(b)(1) (emphasis
added). In a nutshell, if the Federal base system resources do
not supply sufficient power, and BPA must buy the power in
the market, BPA must charge the market rate to its customer.

  Second, BPA must charge its DSI customers the IP rate
which is prescribed by 16 U.S.C. § 839e(c). The IP rate must
  2
   16 U.S.C. § 839a(10) defines “Federal base system resources” as:
      (A) the Federal Columbia River Power System hydroelectric
      projects;
      (B) resources acquired by the Administrator under long-term con-
      tracts in force on December 5, 1980; and
      (C) resources acquired by the Administrator in an amount neces-
      sary to replace reductions in capability of the resources referred
      to in subparagraphs (A) and (B) of this paragraph.
12428                 ALCOA, INC. v. BPA
be “equitable in relation to the retail rates” charged by BPA’s
preference customers to their own industrial consumers in the
region, so long as the price charged by the preference custom-
ers is “based upon the Administrator’s applicable wholesale
rates to [preference and IOU] customers and the typical mar-
gins included by such [preference and IOU] customers in their
retail industrial rates.” 16 U.S.C. § 839e(c)(1)(B), (c)(2). Note
that this provision does not provide an exception to allow
BPA to lower prices below the IP rate, even if to do so would
accord with sound business principles.

  Title 16, Section 838g also prescribes general factors BPA
must balance when setting rates for the sale and transmission
of federal power:

    Such rate schedules . . . shall be fixed and estab-
    lished (1) with a view to encouraging the widest pos-
    sible diversified use of electric power at the lowest
    possible rates to consumers consistent with sound
    business principles, (2) having regard to the recovery
    (upon the basis of the application of such rate sched-
    ules to the capacity of the electric facilities of the
    projects) of the cost of producing and transmitting
    such electric power . . . .

  Section 839e similarly states that BPA’s rates:

    shall . . . recover, in accordance with sound business
    principles, the costs associated with the acquisition,
    conservation, and transmission of electric power,
    including the amortization of the Federal investment
    in the Federal Columbia River Power System . . .
    and the other costs and expenses incurred by the
    Administrator pursuant to this chapter and other pro-
    visions of law.

16 U.S.C. § 839e(a)(1). Thus, when setting rates for any of its
customers—whether preference, IOU or DSI—BPA must
                      ALCOA, INC. v. BPA                   12429
charge a rate that, at a minimum, recoups BPA’s own costs
of generating or acquiring the electricity. Accordingly, the
phrase “sound business principles” would apply to issues such
as how to factor depreciation. As explained by our previous
decision in PNGC I, however, the phrase does not mean BPA
can decide that lowering rates for one category of customers
justifies raising rates for another category. PNGC I, 580 F.3d
at 821-22.

  BPA argues that as a supplier of energy, it is a sound busi-
ness principle for it to subsidize such large customers as
Alcoa, at least for a period of time, rather than see such a cus-
tomer close its doors with the resulting effect that would have
on the local economy. We have previously rejected such argu-
ments:

    By subsidizing the DSIs’ smelter operations beyond
    what it is obligated to do, BPA is simply giving
    away money. . . . The agency cites its “historic rela-
    tionship with the DSIs, the important role the DSIs
    played in the development of the [federal power sys-
    tems], and the importance to local economies of DSI
    jobs” as reasons for the payments. These justifica-
    tions for simply giving a few of its customers nearly
    $300 million, however laudable, are simply not
    reflective of a “business-oriented philosophy,” nor
    do they “further [BPA’s] business interests.” Id.

    As we made clear recently in another context, BPA’s
    governing statutes restrain BPA’s activities even
    when, on a pure policy basis, those policies have
    much to recommend them.

PNGC I, 580 F.3d at 822-23. This is one such instance. BPA
is directed to operate with “sound business principles” but the
minimum its must charge the DSIs is the IP rate. 16 U.S.C.
§ 839e(c)(1)(B), (c)(2).
12430                 ALCOA, INC. v. BPA
   If BPA were to sell electricity to Alcoa at the statutorily-
mandated IP rate, it would not lose any money, let alone
$330,000,000. Remember, the IP rate is the PF rate (which
recovers costs) plus the profit margin IOUs are charging their
own customers. It means that DSIs have no advantage over
the other businesses that buy their electricity from the IOUs
instead of directly from BPA.

                               II

 The phrase “sound business principles” in the statutes
 does not justify BPA charging DSIs a rate that fails to
                   recover BPA’s costs.

  By entering into this Second Period of the contract, BPA
evinces a renewed misunderstanding of the impact of our
opinions interpreting the phrase “sound business principles”
as that phrase is used in BPA’s governing statutes.

   The phrase “sound business principles” appears in a num-
ber of different statutes governing BPA’s actions. Where the
phrase is used in connection with setting rates, it appears to
be a limitation on BPA’s ability to charge low rates, not a fac-
tor that would justify charging rates that do not recover BPA’s
costs and are thus even below the PF rate.

   There are four relevant statutory references to the “sound
business principles” in relation to the operation of BPA. 16
U.S.C. § 825s provides that “the Secretary of Energy . . . shall
transmit and dispose of [Army-supervised reservoir projects’]
power and energy in such manner as to encourage the most
widespread use thereof at the lowest possible rates to consum-
ers consistent with sound business principles” (emphasis
added). Notice that BPA is not instructed to charge is custom-
ers “the lowest possible rates.” Rather, it is instructed to
charge “the lowest possible rates consistent with sound busi-
ness principles.”
                      ALCOA, INC. v. BPA                  12431
  Section 838g prescribes the factors BPA must balance
when setting rates for the sale and transmission of federal
power:

    Such rate schedules . . . shall be fixed and estab-
    lished (1) with a view to encouraging the widest pos-
    sible diversified use of electric power at the lowest
    possible rates to consumers consistent with sound
    business principles, (2) having regard to the recov-
    ery (upon the basis of the application of such rate
    schedules to the capacity of the electric facilities of
    the projects) of the cost of producing and transmit-
    ting such electric power . . . and (3) at levels to pro-
    duce such additional revenues as may be required, in
    the aggregate with all other revenues of the Adminis-
    trator, to pay [all expenses associated with] bonds
    issued and outstanding pursuant to this chapter, and
    amounts required to establish and maintain reserve
    and other funds and accounts established in connec-
    tion therewith.

(emphasis added). Note that although operating with “sound
business principles” is listed here in the rate making section,
BPA must have “regard” for the recovery its costs of produc-
tion, transmission, and debt service are listed as an indepen-
dent requirements.

   The phrase “sound business principles” is also used in con-
nection with BPA’s calculation of the recovery of costs. Sec-
tion 839e sets guidelines for fixing “rates for the sale and
disposition of electric energy and capacity and for the trans-
mission of non-Federal power [in other words, power that is
not from the Federal Base System].” Specifically, those rates:

    shall . . . recover, in accordance with sound business
    principles, the costs associated with the acquisition,
    conservation, and transmission of electric power,
    including the amortization of the Federal investment
12432                    ALCOA, INC. v. BPA
      in the Federal Columbia River Power System . . .
      and the other costs and expenses incurred by the
      Administrator pursuant to this chapter and other pro-
      visions of law.

§ 839e(a)(1) (emphasis added).

   Finally, the BPA Administrator is charged with “assur[ing]
the timely implementation of [16 U.S.C. §§ 839-839h] in a
sound and businesslike manner.” § 839f(b) (emphasis added).

   A handful of the court’s prior cases have given some mean-
ing to the phrase “sound business principles,” although no
panel has given the phrase a comprehensive definition. Most
relevant are PNGC I and Pac. Nw. Generating Coop. v. BPA,
580 F.3d 828 (9th Cir. 2009), amended on denial of rehr’g by
596 F.3d 1065 (9th Cir. 2010) (“PNGC II”). In PNGC I, BPA
executed a contract with the aluminum DSIs such as Alcoa
and the local utilities. As with all these contracts, the terms
were complicated but, in essence, BPA agreed to pay each of
the aluminum DSIs a monetary payment equal to the amount
of physical power the DSI purchased from the local utility
partner multiplied by the difference between BPA’s PF rate
and the market rate. See 580 F.3d at 798-800. This agreement
was to last five years, but BPA retained the right simply to
supply the DSIs with power directly at the PF rate during the
last two years. Id. Thus, the DSIs could buy as much or as lit-
tle power as they wanted from any electricity supplier at the
PF rate, instead of having to pay the higher IP rate or market
rate. BPA acknowledged that “service to the DSIs will come
at the expense of higher rates paid by . . . preference custom-
ers.” Id. at 801.3
  3
   Importantly, in PNGC I, “[n]o party challenges BPA’s statutory
authority to sell power at mutually agreed upon rates that have not been
previously approved by FERC. This Court therefore assumes, without
deciding, that BPA has such authority.” 580 F.3d at 803 n.13.
                     ALCOA, INC. v. BPA                 12433
   This court held that monetary payments by BPA to Alcoa
and other DSIs was “highly suspect” because, inter alia, BPA
was giving Alcoa such a large subsidy that Alcoa could
acquire power at an effective rate that was below both the
market-price and the statutorily prescribed IP rate. BPA con-
tended, as it does here, that it could sell power to DSIs at a
rate below the IP rate. We clearly held:

    BPA’s interpretation of [its ability to sell power to
    DSIs at a rate other than the IP rate] is unreasonable
    on two grounds. First, it ignores the plain language
    of the statute and, in so doing, renders the IP rate
    superfluous. Second, it runs counter to the NWPA’s
    legislative history, which evinces Congress’s intent
    that BPA offer power to the DSIs, if at all, at the IP
    rate, not at some other rate of its choosing.

580 F.3d at 812-13. We also considered and rejected the argu-
ment that DSIs might be entitled to purchase power at the
lower PF rate:

    Having concluded that BPA must first offer DSIs the
    IP rate—and in light of Alcoa’s failure to identify
    which cost-based rate it thinks it deserves—we next
    consider whether the DSIs are also entitled to an
    offer at the PF rate. We hold that they are not. . . .
    [T]he plain language of § 839e(b) & (c) permits only
    one conclusion: that the DSIs are not entitled to the
    PF rate.

Id. at 818.

  Because the size of the monetary payment to the aluminum
DSIs would have resulted in higher rates for all other BPA
customers, the court viewed it as inconsistent with BPA’s
mandate to provide power at “the lowest possible rates to cus-
tomers consistent with sound business principles.” Id. at
820-21 (quoting § 838g). Specifically, we held that “ [i]n
12434                 ALCOA, INC. v. BPA
essence, BPA has voluntarily agreed to forgo revenues by
charging the DSIs a rate below what is authorized by statute
(i.e., the IP rate) and below what is available on the open mar-
ket. These foregone revenues result in higher rates for all
other customers. This outcome is in apparent and direct con-
flict with BPA’s statutory mandate, see § 838g, and renders
BPA’s decision to ‘monetize’ the DSI contracts in an amount
reflective of those underlying rate decisions—albeit a capped
amount—highly suspect.” Id. at 820-21. Thus, we considered
BPA’s argument that it was acting in accordance with “sound
business principles” and specifically rejected the argument
that such actions could trump BPA’s duty to charge the IP
rate. We specifically held BPA had a duty to sell to Alcoa at
the IP rate, rather than subsidizing it at a lower rate because
this would require BPA to raise the rates it charged its other
customers. Id. at 822-23 (rejecting BPA’s rationale that it was
in BPA’s business interests to offer this lower rate to the
DSIs).

   Instead of following the clear holding of PNGC I, BPA
again tried to subsidize Alcoa. The economics of producing
that subsidy led to another challenge. In PNGC II, BPA exe-
cuted an amended contract with Alcoa that provided BPA
would simply pay Alcoa up to $32,000,000 annually. 596
F.3d at 1080. That contract, too, would have resulted in higher
rates for BPA’s other customers. Id. at 1080-81. We again
concluded that many of the arguments BPA advanced as justi-
fications for its contract with Alcoa could not support the con-
clusion that the contract was an exercise of sound business
principles. Id. at 1082. There was no evidence in the record
supporting BPA’s conclusion that Alcoa was likely to provide
enough of a future benefit to BPA to make up for BPA’s
annual transfer of $32,000,000 to Alcoa; in fact, the evidence
was to the contrary. Alcoa was in decline and did not show
a strong likelihood of recovery. Id. at 1083-84.

  PNGC II expressly noted that a sale of physical power was
a different situation from the monetary payment at issue, and
was one that might require this court to defer to BPA:
                          ALCOA, INC. v. BPA                         12435
      [A]lthough we do not defer to BPA’s determination
      that paying Alcoa $32 million was “consistent with
      sound business principles,” the agency’s conclusion
      that a physical sale of power to Alcoa, even at loss,
      furthered its business interests might very well war-
      rant our deference.

Id. at 1085 (italics added). This dicta is what BPA believes
frees it from recovering its costs, as required by the statute.

   BPA interpreted the word “loss” in the hypothetical in
PNGC II to mean that even if it sold power to Alcoa at a rate
that failed to recover its costs, that decision might be justified.4
BPA took this statement out of context. The panel was
responding to the petitioner’s argument that BPA was
required to sell power to Alcoa at the market rate—thus mak-
ing a larger profit off of Alcoa, which could then be used to
lower the PF rate BPA charged petitioners. Petitioners
referred to any rate below market rate as a “loss” because in
their view BPA could be making more money if it charged
Alcoa market rate, rather than the IP rate. Thus, the panel
used the word “loss” in the sense of opportunity cost. In other
words, it used the phrase to represent the difference between
the market rate and the IP rate, not the difference between the
rate BPA charges its customers and the costs of production.
Hence, the panel was not writing on a case involving a loss
  4
    Even if the panel did overlook BPA’s statutory duty to sell to DSIs at
the IP rate, we are not bound by this dicta, which was based purely on a
hypothetical situation. We are bound only by dicta that is well-reasoned
dicta. “[W]here a panel confronts an issue germane to the eventual resolu-
tion of the case, and resolves it after reasoned consideration in a published
opinion, that ruling becomes the law of the circuit, regardless of whether
doing so is necessary in some strict logical sense.” United States v. John-
son, 256 F.3d 895, 914 (9th Cir. 2001) (en banc); see also Miranda B v.
Kitzhaber, 328 F.3d 1181, 1186-87 (9th Cir. 2003). The issue of sales
below costs was not confronted in PNGC II. A hypothetical that is unnec-
essary in any sense to the resolution of the case, and is determined only
tentatively (note the court’s use of the word “might”) does not make pre-
cedential law. Accordingly, it is not binding.
12436                     ALCOA, INC. v. BPA
resulting from BPA charging a price below the IP rate. The
rate would still have to be the IP rate as clearly held in PNGC
I. 580 F3d at 812-13.

   As shown above, BPA’s reading of the phrase “even at a
loss” in PNGC II is taken out of context. We were still bound
by those statutes in our ruling. Because the IP rate can never
be below BPA’s cost, BPA is not authorized to sell power at
a rate that would fail to recover its costs. Yet that is exactly
what the Second Period of BPA’s contract with Alcoa does.

                                    III

  The Second Period of BPA’s contract with Alcoa will
 lose money, which the contract states BPA will recover
              by raising Petitioner’s rates.

   Rather than recovering BPA’s costs and the same profit
margin the IOUs make in reselling power (the IP rate), the
Second Period of the contract between BPA and Alcoa actu-
ally plans for BPA to incur a net loss. The contract initially
sets the cost cap—i.e., the amount of loss BPA is willing to
incur—at $300,000,000 over a five year period, but BPA can
decide to increase this cost cap to $330,000,000.5

   The Second Period of Alcoa’s contract with BPA violates
the statutory mandate that BPA must recover all its costs. The
paragraph titled “Cost Caps” states:

      If service were to be provided to Alcoa for a Second
      Period, which requires the court to modify the
  5
    Of course, any contract that was expected to result in an actual loss at
all, let alone a $330,000,000 loss, would violate BPA’s duty to charge
DSIs the IP rate. §§ 838g, 839a(10), 839c(b), 839e(b)(1). As noted above,
the IP rate is based on the PF rate plus the typical margin of profit charged
by IOUs to their own industrial customers. § 839e(c)(1)(B), (2). The PF
rate itself requires that BPA “shall recover” its costs. See §§ 839a(10),
839e(b)(1).
                     ALCOA, INC. v. BPA                 12437
    Equivalent Benefits test, at a forecasted cost match-
    ing the maximum allowable under the Cost Caps,
    and if it were to be served at a weighted average
    annual IP rate linked to BPA’s Tier 1 PF rate fore-
    casted to be $38.22 per Mwh, a cost of only $60 mil-
    lion per year, or $300 million for the entire Second
    Period, would be borne by the preference customers.
    (See Table 2 of Exhibit B in the Block Contract)
    Using the traditional yardstick that $60 million in
    cost per year translates into a one mill per kWh
    impact in the PF rate, the PF rate would increase by
    approximately one mill per kWh. That is a modest
    and tolerable rate increase, and one that BPA
    believes is reasonable given the tangible and intangi-
    ble benefits of continued DSI service, as discussed in
    this ROD. We project that even with such an
    increase, the Tier 1 PF rate will be no more than 4%
    greater (and lower under an expected case) that they
    otherwise would be as a result of service to DSIs (all
    other things being equal), a level that continues to
    assure preference customers very substantial system
    benefits. The PF rate would still be substantially
    below expected market rates.

(Emphasis added). In other words, BPA has decided it will
compel its preference and IOU customers to subsidize Alcoa
in the amount of $330,000,000 over five years. BPA does not
have the authority to do this.

   During oral argument, counsel conceded that the second
period of Alcoa’s contract with BPA would in fact result in
a loss of $300,000,000. Counsel stated that BPA would not be
able to generate the power Alcoa would need, and thus BPA
would have to purchase the power on the open market. This
creates the risk that the price on the open market will be
greater than the BPA-Alcoa contract price. Counsel also con-
ceded that the $300,000,000 to $330,000,000 was not just a
cost cap, but would in fact be the actual loss BPA would sus-
12438                    ALCOA, INC. v. BPA
tain. As the contract states, this loss will result in a rate hike
to BPA’s other customers up to 4%. Thus, the Second Period
of BPA’s contract with Alcoa, which will result in BPA los-
ing money (and having to raise the rates it charges its pre-
ferred customers and IOUs 4%), does not comply with the
statutory mandate of § 839e(c)(1)(B), (2) that BPA charge
Alcoa the IP rate.

   Because the second Period of BPA’s contract with Alcoa
anticipates that BPA will not recover its costs, and instead
will lose $330,000,000, BPA is acting “in excess of [its] statu-
tory authority” and we cannot defer to it. PNGC I, 580 F.3d
at 806. Clearly BPA is not charging Alcoa the IP rate because,
if it were, it would not be losing money by the performance
of the contract.

   Nor can Petitioners simply sue later to recover their dam-
ages if BPA continues this pattern of conduct. The Northwest
Power Act states, in part, “For purposes of sections 701
through 706 of Title 5 [i.e., the Administrative Procedure Act
(“APA”)], the following actions shall be final agency actions
subject to judicial review . . . 839f(e)(1)(G) final rate determi-
nations under section 839e of this title . . . .” 16 U.S.C.
§ 839f(e)(1). Accordingly, rate making is reviewed pursuant
to the APA. Under the APA, “monetary damages” are not
available. 5 U.S.C. § 702. BPA’s rates are the basis of this
suit.

   If Petitioners were suing BPA for a breach of contract, then
they could sue for the total amount of their damages. 16
U.S.C. § 832a(f).6 Here, however, BPA has not breached a
  6
    16 U.S.C. § 832a(f) provides as follows: “Subject only to the provi-
sions of this chapter, the Administrator is authorized to enter into such
contracts, agreements, and arrangements, including the amendment, modi-
fication, adjustment, or cancelation thereof and the compromise or final
settlement of any claim arising thereunder, and to make such expenditures,
upon such terms and conditions and in such manner as he may deem nec-
essary.”
                            ALCOA, INC. v. BPA                         12439
contract with Petitioners. Rather, Petitioners have sued
because BPA’s contract with Alcoa requires BPA to raise its
rates with other third parties. Petitioner’s claim seeks a
change in BPA’s rate making, and is thus under the APA. At
most, it could be said that Petitioners are suing BPA for the
negligent discharge of its duties. But then their recovery
would be limited to a total of $1,000, 16 U.S.C. § 832k(a), not
the $330,000,000 they have been overcharged.

                                      IV

 Petitioners have standing to challenge BPA’s contract.

   Once BPA begins losing money under the Second Period
of the contract, it will have no choice but to raise the rates of
its other customers to make up for this loss. This is because
BPA can neither go to Congress for the money nor seek dam-
ages from Alcoa.

   In 1974, Congress stopped funding BPA’s operations and
required BPA to finance its own operations from the rates that
it charges for the sale and transmission of electric power. 16
U.S.C. § 838i; Aluminum Co. of Am. v. Bonneville Power
Admin., 903 F.2d 585, 588 (9th Cir. 1990). Thus, any loss
BPA incurs from selling power to Alcoa must be recovered
through an increase in rates. BPA cannot simply ask Congress
for more money as so many other federal agencies do each
year.

   Further, BPA’s contract with Alcoa specifically states that
BPA cannot seek damages from Alcoa in the event this court
holds that part of the contract exceeds BPA’s statutory author-
ity.7 Therefore, it is Petitioners who will be harmed if the Sec-
  7
   Provision 21.11 of the contract, Waiver of Damages, provides:
         In the event the Ninth Circuit Court of Appeals or other court
      of competent jurisdiction issues a final order that declares or ren-
12440                    ALCOA, INC. v. BPA
ond Period of the contract between BPA and Alcoa takes
effect.

   To have standing, Petitioners must demonstrate the exis-
tence of an injury in fact, that is, “an invasion of a legally pro-
tected 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) (citations and
internal quotation marks omitted).

   Petitioners meet this standard. See PNGC II, 580 F.3d at
804 (holding that BPA’s preferred customers and IOUs had
standing to challenge BPA’s contract with Alcoa because it
would result in higher rates for the petitioners); Cal. Energy
Comm’n v. Bonneville Power Admin., 909 F.2d 1298, 1306
(9th Cir. 1990) (holding that one group of customers has
standing to challenge a BPA contract when they demonstrated
“1) that the challenged action caused them injury in fact, 2)
that the injury was within the zone of interests to be protected
by the statutes that were allegedly violated, and 3) that the
relief sought would cure the injury.”); Alum. Co. of Am. v.
Bonneville Power Admin., 903 F.2d 585, 590 (9th Cir. 1989)
(holding that a party has standing to challenge actions by BPA
that result in that party paying higher rates than it would if
BPA had complied with its governing statutes).

   The problem with waiting until BPA and Alcoa enter into
the Second Period to address the merits of the contract is that

    ders this Agreement, or any part thereof, void or otherwise unen-
    forceable, neither Party shall be entitled to any damages or
    restitution of any nature, in law or equity, from the other Party,
    and each Party hereby expressly waives any right to seek such
    damages or restitution. For the avoidance of doubt, the Parties
    agree this provision shall survive the termination of this Agree-
    ment, including any termination effected through any order
    described herein.
   BPA and Alcoa have also had similar provisions in their previous con-
tract. See PNGC II, 596 F.3d 1065.
                       ALCOA, INC. v. BPA                  12441
appeals can take quite a long time, especially complicated
ones involving multiple parties, such as suits over BPA con-
tracts. Although it is possible for Petitioners to obtain judicial
review before the entire five year period would expire, the
harm in this case would be ongoing, not something that
occurs only upon completion of the entire five year period.
Because BPA would be losing approximately $5,500,000
each month according to its own calculations, the harm Peti-
tioners now seek to prevent through their current challenge
would occur “before either this court or the Supreme Court
can give the case full consideration.” Alaska Ctr. for Env’t v.
U.S. Forest Serv., 189 F.3d 851, 855 (9th Cir. 1999) (internal
quotation marks omitted). Thus, it makes more sense for Peti-
tioners to challenge the action before it goes into effect and
seek a permanent injunction. And, as stated above, Petitioners
cannot sue later to recover their damages. Once the damage
is done, all they can do is seek a change in the rates BPA sets.

   Because BPA has stated in its contract that it will raise
Petitioner’s rates if the Second Period of its contract with
Alcoa goes into effect, and because BPA cannot recover its
losses any other way, Petitioners have demonstrated that if
they are required to wait until the Second Period of BPA’s
contract with Alcoa has begun to bring a challenge, they will
suffer an “irreparable injury that is not correctable on review
of final BPA action.” Public Util. Comm’r of Oregon v. Bon-
neville Power Admin., 767 F.2d 622, 630 (9th Cir. 1985); Cal.
Energy Comm’n v. Johnson, 767 F.2d 631, 634 (9th Cir.
1985). Not only will an injunction or declaratory judgment
remedy Petitioner’s injury, but it is the only thing that will
remedy the injury, because the damages cannot be remedied
after they occur.

                               V.

    The parties continue to repeat their legal errors.

   Nor is the case rendered moot by the parties’ statements
that they will not enter into the Second Period unless this
12442                 ALCOA, INC. v. BPA
court issues an opinion that BPA is not bound by the Equiva-
lent Benefits standard. The same rationale that applies to our
review of the Initial Period of the contract—that it is an action
capable of repetition yet escaping judicial review—applies to
the Second Period as well. See discussion at Section III A of
the majority opinion. In fact, Petitioners’ challenge to the Sec-
ond Period of the contract makes far more sense than does
their challenge to the Initial Period. By obtaining an injunc-
tion or a declaratory judgment, Petitioners can stop the loss
before it happens, whereas if we wait to review the contract
after it has taken place, all our decision could achieve is to
prevent BPA from making the same mistakes again. It would
not remedy or prevent the harm from occurring in the first
place, which is what is needed. Feldman v. Bomar, 518 F.3d
637, 642-43 (9th Cir. 2008); Friends of the Earth, Inc. v.
Bergland, 576 F.2d 1377, 1379 (9th Cir. 1978).

   Although BPA has indicated in its letter to this court dated
May 31, 2012 that it has extended the Initial Period of its con-
tract with Alcoa instead of beginning the Second Period, BPA
has a history of entering into contracts in which it attempts to
subsidize Alcoa’s operations with terms similar to the Second
Period.

   This is the third time in a row that BPA has entered into a
contract with Alcoa that is not based on the IP rate, and it is
the third time in a row that all the parties have failed to read
the plain language of the statutes. PNGC II, 580 F.3d 828;
PNGC I, 580 F.3d 792.

                             ***

   For the foregoing reasons, we should grant the petition and
hold that the Second Period of BPA’s contract violates BPA’s
statutory duty to charge DSIs the IP rate under 16 U.S.C.
§§ 838g, 839a(10), 839c(b), 839e(b)(1).
