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IN THE UNITED STATES COURT OF FEDERAL CLAIMS
No. 07-184C (Senior Judge Smith)
THE PEOPLE OF THE STATE OF CALIFORNIA EX REL. EDMUND G. BROWN, JR., ATTORNEY GENERAL OF THE STATE OF CALIFORNIA, and the CALIFORNIA DEPARTMENT OF WATER RESOURCES BY AND THROUGH ITS CALIFORNIA ENERGY RESOURCES SCHEDULING DIVISION, Plaintiffs, v. THE UNITED STATES, Defendant.
DEFENDANT'S MOTION TO DISMISS
JEFFREY S. BUCHOLTZ Acting Assistant Attorney General JEANNE E. DAVIDSON Director OF COUNSEL: Sean B. McNamara Trial Attorney Department of Justice Peter Burger Attorney Bonneville Power Administration John D. Bremer Attorney Western Area Power Administration MARK A. MELNICK Assistant Director Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit, 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tele: (202) 616-0475 Fax: (202) 305-7644
March 28, 2008
Attorneys for Defendant
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TABLE OF CONTENTS PAGE(S) DEFENDANT'S MEMORANDUM ............................................................................................. 2 STATEMENT OF THE ISSUES ................................................................................................... 2 STATEMENT OF THE CASE ...................................................................................................... 2 I. II. Background ............................................................................................................ 2 The Power Crisis .................................................................................................... 4 A. FERC Initiates An Investigation And CERS Starts Purchasing Power ............................................................................ 4 FERC Imposes A Prospective Price Cap And Retroactivwe Refund Order, But The Appellate Court Reverses The Retroactive Refund Order's Applicability To The Government ............... 5 1. FERC Imposes A Prospective Price Cap And Retroactive Refund Order .............................................................. 5 The Ninth Circuit Reverses The Refund Order's Applicability To Government-Owned Sellers ............................... 6
B.
2.
C.
Exclusions From FERC's Refund Order And Appellate Response ........... 7 1. 2. FERC's Exclusions ........................................................................ 7 Appellate Response To FERC's Exclusions .................................. 7
D. III.
Refund Proceedings In The Pacific Northwest .......................................... 8
Current Claims In This Court .............................................................................. 10 A. B. Damages Claims ...................................................................................... 10 Declaratory Claims .................................................................................. 11
ARGUMENT .............................................................................................................................. 13
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I. II.
Standards For A Motion To Dismiss For Lack Of Jurisdiction ........................... 13 The Court Should Dismiss Counts Four Through Eight Of The Complaint, All Of Which Seek Declaratory Relief, For Lack Of A Case Or Controversy Under Article III Of The Constitution ..................... 13 A. Counts Four Through Seven Seek Advisory Opinions About Hypothetical FERC Orders That May Or May Not Occur ...................... 16 Count Eight Seeks An Advisory Opinion About Hypothetical ISO And PX Orders That May Or May Not Occur ................................. 17
B.
III.
This Court Should Dismiss California's Fourth And Seventh Through Eleventh Claims Because They Were Not Presented To The Contracting Officers ............................................................................................ 18 A. B. Introduction .............................................................................................. 18 California's Claims Are Based Upon New Operative Facts .................... 19 i. ii. The Operative Facts Presented To The Contracting Officers ...... 20 The Operative Facts Of California's Claims In This Court ......... 21 a. b. c. d. e. C. D. ISO And PX Accounts Claim .......................................... 21 Bilateral Sales Claim ....................................................... 22 Contractual Liability For Market Shortfall Claim ........... 22 Good Faith And Fair Dealing Claim ................................ 23 Lack Of Consent Claims .................................................. 25
California's Claims Are Based Upon New Legal Theories ..................... 26 One Of California's Claims Requests Entirely New Relief .................... 29
IV.
California Lacks Standing To Sue Upon PX And ISO Market Sales .................. 29 A. B. Federal Law Should Govern The Substantive Issues In This Case ......... 30 California Lacks Privity Of Contract With BPA And WAPA Respecting Their Transactions On The PX ................................. 36 -ii-
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a.
The PX Tariff Mechanism Does Not Establish Privity Of Contract Between California And The Agencies ................... 36 FERC Has Adopted SCE's Position That There Is No Privity Of Contract Between California And The Agencies ........................................................................ 39 The Ninth Circuit Has Adopted SCE's Position That There Is No Privity Of Contract Between The IOUs And The Agencies ........................................................................ 41 The Court Should Defer To The Holdings Dictating That There Is No Privity Of Contract Between California And The Agencies ...................................................... 42 California Is Not A Third Party Beneficiary Of The Contracts Between The Agencies And The PX ........................... 45
b.
c.
d.
e.
C.
California Lacks Standing To Sue On Its Own Upon ISO Market Transactions Or Out-Of-Market Transactions ............................ 46
V.
Count I Should Be Dismissed Because it Fails To State A Claim Upon Which Relief May Be Granted Because No Contractual Obligation To Issue Refunds Has Arisen Yet ........................................................................ 50
CONCLUSION ............................................................................................................................ 54
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TABLE OF AUTHORITIES CASES PAGE(S) AAB Joint Venture v. United States, 75 Fed. Cl. 414 (2007) .............................................................................................. 19, 25 Aetna Life Ins. Co. v. Haworth, 300 U.S. 227 (1937) .................................................................................................. 13, 14 Al-Kurdi v. United States, 25 Cl. Ct. 599 (1992) ...................................................................................................... 31 Alliant Techsystems, Inc. v. United States, 178 F.3d 1260 (Fed. Cir. 1999) ...................................................................................... 18 Anderson v. United States, 344 F.3d 1343 (Fed. Cir. 2003) ...................................................................................... 14 Arakaki v. United States, 71 Fed. Cl. 509 (2006) .................................................................................................... 30 Bernstein Bros. Pipe & Machinery Co. v. Denver & R.G.W.R Co 193 F.2d 441 (10th Cir. 1951) ........................................................................................ 35 Bonneville Power Administration v. FERC, 422 F.3d 908 (9th Cir. 2005), cert. denied, 2007 WL 2273650 (U.S. Dec. 10, 2007) (No. 07-155) .......................................................................... passim Boston Edison Co. v. FERC, 441 F.3d 10 (1st Cir. 2006) ............................................................................................. 43 Boyle v. United Technologies Corp., 487 U.S. 500 (1988) ........................................................................................................ 32 Brunswick Leasing Corp. v. Wisconsin Central, Ltd., 136 F.3d 521 (7th Cir. 1998) .............................................................................. 48, 49, 50 Burnside-Ott Aviation Training Center, Inc. v. United States, 985 F.2d 1574 (Fed. Cir. 1993) ...................................................................................... 25 California Power Exchange Corp., 245 F.3d 1110 (9th Cir. 2001) ...................................................................................... 3, 4 -iv-
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Calpine Energy Servs. v. FERC, 471 F.3d 1054 (9th Cir. 2006) ........................................................................................ 43 Casa de Cambio Comdiv. S.A., de C.V. v. United States, 291 F.3d 1356 (Fed. Cir. 2001) ...................................................................................... 49 Castle v. United States, 301 F.3d 1328 (Fed. Cir. 2002) ...................................................................................... 30 Cerberonics, Inc. v. United States, 13 Cl. Ct. 415 (1987) ................................................................................................ 18, 27 Church v. Jamison, 143 Cal. App. 4th 1568 (2006) ....................................................................................... 52 Clearfield Trust Co. v. United States, 318 U.S. 363 (1943) ........................................................................................................ 32 Cochran v. Cochran, 56 Cal. App. 4th 1115 (1997) ......................................................................................... 52 Contract Cleaning Maint., Inc. v. United States, 811 F.2d 586 (Fed. Cir. 1987) .................................................................................. 18, 28 DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (2006) ........................................................................................................ 14 Dangfeng Shen Ho v. United States, 49 Fed. Cl. 96 (2001) ...................................................................................................... 29 Dureiko v. United States, 209 F.3d 1345 (Fed. Cir. 2000) ...................................................................................... 25 Fireman's Fund Ins. Co. v. England, 313 F.3d 1344 (Fed. Cir. 2002) ...................................................................................... 30 Franconia Assocs. v. United States, 536 U.S. 129 (2002) ........................................................................................................ 50 Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167 (2000) ........................................................................................................ 15 German Alliance Ins. Co. v. Home Water Supply Co., 226 U.S. 220 (1912) ........................................................................................................ 45 -v-
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Glass v. United States, 258 F.3d 1349 (Fed. Cir. 2001) ...................................................................................... 45 Goldman v. Bequai, 19 F.3d 666 (D.C. Cir. 1997) .......................................................................................... 25 Gutz v. United States, 45 Fed. Cl. 291 (1999) .................................................................................................... 31 J. Cooper & Assoc., Inc. v. United States, 47 Fed. Cl. 280 (2000) .................................................................................................... 20 Johnson Controls World Services, Inc. v. United States, 43 Fed. Cl. 589 (1999) ............................................................................................... 26-27 Kiewit Constr. Co. v. United States, 56 Fed Cl. 414 (2003) ......................................................................................... 19, 28, 29 Kuehne & Nagel, Inc. v. United States, 17 Cl. Ct. 11 (1989) ........................................................................................................ 31 Laidlaw Envir. Serv. (GS), Inc. v. United States, 43 Fed. Cl. 44 (1999) ...................................................................................................... 19 Long Island Savs. Bank v. United States, 503 F.3d 1234 (Fed. Cir. 2007) ...................................................................................... 49 M.A. DeAtley Constr., Inc. v. United States, 75 Fed. Cl. 575 (2007) .................................................................................................... 24 Manuel Bros., Inc. v. United States, 55 Fed. Cl. 8 (2002) ........................................................................................................ 19 McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178 (1936) ........................................................................................................ 13 Mobil Exploration and Producing Southeast, Inc. v. United States, 530 U.S. 604 (2000) ........................................................................................................ 49 Nat'l Treasury Employees Union v. United States, 101 F.3d 1423 (D.C. Cir. 1996) .......................................................................... 14, 15, 17 O'Neill v. Dept. of Housing and Urban Dev., 220 F.3d 1354 (Fed. Cir. 2000) ...................................................................................... 49 -vi-
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In Re Pac. Ry. Comm., 32 F. 241 (C.C. Cal. 1887) ............................................................................................... 14 Padbloc Co., Inc. v. United States, 161 Ct. Cl. 369 (1963) ..................................................................................................... 31 Palmer v. United States, 168 F.3d 1310 (Fed. Cir. 1999) ...................................................................................... 13 Port of Seattle v. FERC, 499 F.3d 1016 (9th Cir. 2007) ................................................................................. passim Public Service Co. of Colorado v. United States, 5 Cl. Ct. 818 (1984) ........................................................................................................ 45 Pub. Serv. Elec. and Gas Co. v. FERC, 485 F.3d 1164 (D.C. Cir. 2007) ...................................................................................... 44 Public Utilities Commission v. FERC, 456 F.3d 1025 (9th Cir. 2006) ................................................................................. passim Raines v. Byrd, 521 U.S. 811 (1997) ........................................................................................................ 13 Reg'l Rail Reorganization Act Cases, 419 U.S. 102 (1974) ........................................................................................................ 15 Reliance Ins. Co. v. United States, 931 F.2d 863 (Fed. Cir. 1991) .................................................................................. 18, 28 Renda Marine, Inc. v. United States, 71 Fed. Cl. 378 (2006) ........................................................................................ 19, 20, 27 Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43 (1993) .......................................................................................................... 15 Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746 (Fed. Cir. 1988) ........................................................................................ 13 Roedler v. Dept. of Energy, 255 F.3d 1347 (Fed. Cir. 2001) ...................................................................................... 45 Romano v. Rockwell Int'l, Inc., 14 Cal. 4th 479 (1996) .................................................................................................... 52
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Rothe Dev. Corp. v. Dept. of Def., 413 F.3d 1327 (Fed. Cir. 2005) ...................................................................................... 15 Rumsfeld v. Freedom NY, Inc., 329 F.3d 1320 (Fed. Cir. 2003) ...................................................................................... 25 S. Cal. Fed. Sav. & Loan Ass'n. v. United States, 422 F.3d 1319 (Fed. Cir. 2005) ................................................................................ 30, 39 S.R.A., Inc. v. Minnesota, 327 U.S. 558 (1946) ........................................................................................................ 32 San Diego Gas & Electric Co., 92 F.E.R.C. ¶ 61,172 (2000) ............................................................................................. 4 San Diego Gas & Electric Co., 95 F.E.R.C. ¶ 61,418 (2001) ............................................................................................. 6 San Diego Gas & Electric Co., 96 F.E.R.C. ¶ 61,120 (2001) ............................................................................................. 6 Santa Fe Engineers, Inc. v. United States, 818 F.2d 856 (Fed. Cir. 1987) ............................................................................ 18, 19, 21 Scheuer v. Rhodes, 416 U.S. 232 (1974) ........................................................................................................ 13 Schism v. United States, 316 F.3d 1259 (Fed. Cir. 2002) ...................................................................................... 49 Scott Timber Co. v. United States, 333 F.3d 1358 (Fed. Cir. 2003) ................................................................................ 18, 19 Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26 (1976) .......................................................................................................... 14 So. Cal. Ed. Co. v. Lynch, 307 F.3d 794 (9th Cir. 2002) .................................................................................... 41, 42 Southern California Edison Co., 80 F.E.R.C. ¶ 61262 (1997) ................................................................................ 39, 40, 44 Taylor v. Johnston, 15 Cal. 3d 130 (1975) ..................................................................................................... 52
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Texas v. United States, 523 U.S. 296 (1998) .................................................................................................. 15, 17 Thomas Creek Lumber Co. v. United States, 36 Fed. Cl. 220 (1996) .................................................................................................... 31 United States v. Kimbell Foods, Inc., 440 U.S. 711 (1979) ........................................................................................................ 32 United States v. Seckinger, 397 U.S. 203 (1970) .................................................................................................. 31, 33 Walter Dawgie Ski Corp. v. United States, 30 Fed. Cl. 115 (1993) .............................................................................................. 23, 28 Whitmore v. Ark., 495 U.S. 149 (1990) ........................................................................................................ 15 STATUTES Cal. Pub. Util. Code §§ 330-398.5 ................................................................................................ 3 16 U.S.C. § 824(e) .................................................................................................................... 4, 5 28 U.S.C. § 1491 ......................................................................................................................... 31 41 U.S.C. § 601(4) ...................................................................................................................... 30 41 U.S.C. § 605(a) ................................................................................................................ 18, 28 41 U.S.C. § 609 ........................................................................................................................... 30 MISCELLANEOUS 4 A. Corbin, Contracts § 959 (1951) .......................................................................................... 50 13 Samuel Williston, A Treatise on the Law of Contracts, § 37:19 (4th ed. 2000) .................... 45 Restatement (Second) of Agency §§ 148, 187, 305 (1958) ........................................................ 49 Restatement (Second) of Contracts § 235(2) (1979) ............................................................ 49, 50 Restatement (Third) of Agency § 6.05(2) (2006) ................................................................. 47, 48
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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ________________________________________________ ) THE PEOPLE OF THE STATE OF CALIFORNIA ) EX REL. EDMUND G. BROWN JR., ATTORNEY ) GENERAL OF THE STATE OF CALIFORNIA, and the ) CALIFORNIA DEPARTMENT OF WATER ) RESOURCES BY AND THROUGH ITS ) CALIFORNIA ENERGY RESOURCES SCHEDULING ) DIVISION, ) ) Plaintiffs, ) ) v. ) No. 07-184C ) (Senior Judge Smith) ) THE UNITED STATES, ) ) Defendant. ) ________________________________________________)
DEFENDANT'S MOTION TO DISMISS Pursuant to Rule 12(b)(1) of the Rules of the United States Court of Federal Claims ("RCFC"), defendant respectfully requests that the Court dismiss this case. Defendant respectfully requests dismissal of counts four through eight for lack of jurisdiction because these counts invoke no case or controversy, as required by Article III, Section 2 of the Constitution. Defendant also respectfully requests dismissal of counts four and seven through eleven for lack of jurisdiction on the basis that they were not the subject of a claim to a contracting officer. Further, defendant respectfully requests dismissal of any of the counts to the extent they are based upon sales into the California Power Exchange market or California Independent System Operating Corporation market by the relevant agencies, because plaintiffs lack standing to sue upon such sales. Finally, pursuant to RCFC 12(b)(6), defendant respectfully requests that, to the extent the Court determines it possesses jurisdiction to entertain it, count one be dismissed for
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failure to state a claim because the alleged contractual performance obligation that the count claims was breached has not yet arisen. In support of this motion, we rely upon the complaint filed in these cases, the following memorandum, and the accompanying appendix.1 DEFENDANT'S MEMORANDUM STATEMENT OF THE ISSUES 1. Whether the Court should dismiss counts four through eight for lack of
jurisdiction because these counts are not based upon a case or controversy as required by Article III, Section 2 of the Constitution. 2. Whether the Court should dismiss counts four and seven through eleven for lack
of jurisdiction on the basis that they were not the subject of a claim to a contracting officer. 3. dismissed. 4. Whether the Court should dismiss count one for failure to state a claim upon Whether any claim based upon agency sales into the PX or ISO markets should be
which relief may be granted because even if the tariff rates have been reset by the Federal Energy Regulatory Commission, no obligation to pay refunds has arisen under the tariff terms yet. STATEMENT OF THE CASE I. Background
As noted in prior filings, this case arises from the California power crisis of 2000 through 2001. Explanations of the facts surrounding this case can be found in Public Utilities Commission ("CPUC") v. FERC, 456 F.3d 1025, 1035-44 (9th Cir. 2006); Bonneville Power Administration ("BPA") v. FERC, 422 F.3d 908, 911-14 (9th Cir. 2005), cert. denied, 2007 WL
1
For the sake of convenience, our appendix in this case is identical to our appendix in Pacific Gas and Electric v. United States, No. 07-157C. 2
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2273650 (U.S. Dec. 10, 2007) (No. 07-155); and In re: California Power Exchange Corp. ("CPX"), 245 F.3d 1110, 1114-19 (9th Cir. 2001). To summarize, in 1996 California enacted Assembly Bill 1890 ("AB 1890"). Cal. Pub. Util. Code §§ 330-398.5. That Act required California's three major investor-owned electric utilities ("IOUs") to divest themselves of substantial amounts of their power generation facilities. CPUC, 456 F.3d at 1035-36. Those utilities are Pacific Gas and Electric Co. ("PG&E"), Southern California Edison Co. ("SCE"), and San Diego Gas and Electric Co. ("SDG&E"). Instead of generating their own electricity, under AB 1890 the IOUs initially were required to purchase all of their power from a new, centralized market called the California Power Exchange ("PX," "CPX," or "CalPX"). The PX ran a price auction in which purchasers and suppliers submitted bids that generated a single market clearing price necessary to meet the entire market's demands for electricity for a particular period of time. All bidders paid or received that single market clearing price for the time period. Because the PX was deemed a public utility pursuant to the Federal Power Act ("FPA"), its operations and transactions were governed by a tariff approved by the Federal Energy Regulatory Commission ("FERC"). CPUC, 456 F.3d at 1036-37. That tariff also provided the mechanism by which payments were made for the power transacted, with the PX generating settlement statements and invoices that billed participants for the amounts they owed. Complaint ¶ 18, 26.2 AB 1890 also established the California Independent System Operator Corporation ("ISO" or "CAISO"). Although the IOUs continued to own their electricity transmission facilities, the legislation required the IOUs to give operational control of these facilities to the ISO. The ISO operated the electricity transmission grid, directing necessary power to the loads
2
"Complaint ¶ ___" refers to the Amended Complaint. 3
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of the IOUs. CPUC, 456 F.3d at 1037. To run the grid, the ISO was authorized to acquire the necessary power to balance it, known as "imbalance energy," as well as operating reserves, known as "ancillary services." Id. The ISO ran its own auction market to obtain these services in which it received bids from suppliers and then, like the PX, set a single price necessary to meet the market's demands for a particular time period. Like the PX, the ISO was regulated by FERC and therefore operated under a FERC-approved tariff. Also like the PX, the ISO tariff provided the mechanism for the ISO to generate statements and invoices that billed the IOUs for the power and services purchased. CPUC, 456 F.3d at 1037; Complaint ¶ 26. From time to time the ISO single auction market failed to provide enough power to meet its needs. When that happened the ISO engaged in out-of-market transactions directly with sellers. CPUC, 456 F.3d at 1050; Complaint ¶ 22. II. The Power Crisis A. FERC Initiates An Investigation And CERS Starts Purchasing Power
In the summer of 2000, California began to experience a power crisis. Prices in the PX market spiked sharply. CPX, 245 F.3d at 1115-16. Accordingly, in August, 2000, SDG&E filed a complaint with FERC claiming the PX and ISO markets were producing unjust and unreasonable prices, and sought a price cap. FERC denied the request but initiated an investigation of those allegations under section 206 of the FPA (16 U.S.C. § 824e) on August 23, 2000. BPA, 422 F.3d at 912; San Diego Gas & Electric Co., 92 F.E.R.C. ¶ 61,172, at 61,603 (2000). While FERC proceedings were continuing, the PX market collapsed, ceasing operations on January 30, 2001. CPUC, 456 F.3d at 1041. On January 17, 2001, the Governor of California declared a state of emergency, ordering the California Department of Water Resources
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to purchase energy on behalf of consumers. CPUC, 456 F.3d at 1040. On January 18, 2001, the Department's Energy Resources Scheduling Division ("CERS") began buying power bilaterally from various sources, including the Bonneville Power Administration ("BPA") and the Western Area Power Administration ("WAPA"), two power marketing agencies of the Department of Energy. Id. at 1041; Complaint ¶ 45. B. FERC Imposes A Prospective Price Cap And Retroactive Refund Order, But The Appellate Court Reverses The Retroactive Refund Order's Applicability To The Government 1. FERC Imposes A Prospective Price Cap And Retroactive Refund Order
Pursuant to section 206(a) of the FPA (16 U.S.C. § 824e(a)), whenever FERC determines that a public utility's rate for a sale, or contract affecting that rate, is unjust or unreasonable, it shall determine a new just and reasonable rate or contract to be thereafter observed by that public utility for its future sales.3 However, FERC's retroactive powers are more limited. Pursuant to section 206(b) of the FPA (16 U.S.C. § 824e(b)), FERC may order a public utility only to refund amounts already paid to the utility upon previous sales that exceed the prospective rate or contract that FERC has ordered to be thereafter observed. Thus, in contrast to its power under section 206 to prospectively modify a public utility's rates or contracts, FERC is not also empowered to retroactively modify those rates or contracts; it may only order public utilities to issue refunds.4 In purported accordance with these provisions, on June 19, 2001, FERC implemented a prospective price cap upon future ISO spot market sales, effective June 20, 2001, through
3
Significantly, a public utility is an investor-owned utility, not a government-owned
utility. The refunds are limited to amounts paid after an "effective refund date," which is established by FERC pursuant to requirements contained in section 206(b). 5
4
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September 30, 2002. CPUC, 456 F.3d at 1041-43; San Diego Gas & Electric Co., 95 F.E.R.C. ¶ 61,418, at 62,545-48 (2001). Respecting prior sales into the markets, on July 25, 2001, FERC set a Mitigated Market Clearing Price ("MMCP") and ordered sellers to refund the difference between the MMCP and the prices paid for sales occurring between October 2, 2000, and June 20, 2001, with some modifications. CPUC, 456 F.3d at 1042, 1054; San Diego Gas & Electric Co., 96 F.E.R.C. ¶ 61,120, at 61,502, 61,516 (2001). This time frame is commonly referred to as the "Refund Period." FERC ordered the ISO and the CPX to commence calculating the refund amounts due from each seller and to rerun their settlement/billing process in accordance with the order. San Diego Gas & Electric Co., 96 F.E.R.C. at 61,516-17, 61,520; Complaint ¶ 52. That process has continued since then, with no final billing statements presented for payment. FERC's order included the unprecedented requirement that government-owned sellers, and not just investorowned public utilities, pay refunds. 2. The Ninth Circuit Reverses The Refund Order's Applicability To Government-Owned Sellers
Various governmental entities that sold electricity into the PX and ISO markets, including BPA, challenged FERC's inclusion of governmental entities within the scope of its July 25, 2001 refund order. In a decision dated September 6, 2005, the United States Court of Appeals for the Ninth Circuit ruled that FERC lacked the authority to order governmental entities to issue refunds. BPA, 422 F.3d at 914. The Court ruled that Congress had limited FERC's refund authority to public utilities, which again means investor-owned utilities, not government-owned entities. The court of appeals remanded the matter to FERC for actions consistent with its decision. Id. at 926. Because BPA foreclosed any recourse at FERC against the United States, California now effectively seeks refunds, among other relief, in this Court.
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C.
Exclusions From FERC's Refund Order And Appellate Response 1. FERC's Exclusions
FERC's July 25, 2001 refund order excluded certain items from the scope of its MMCP methodology that had been sought by claimants. First, FERC excluded all sales that had taken place outside of the PX and ISO markets, including CERS' bilateral power purchases, from the scope of its order. CPUC, 456 F.3d at 1042. Second, FERC excluded sales in the ISO and PX markets that lasted more than 24 hours, so-called "multi-day sales." Id. at 1054. Third, FERC excluded so-called Exchange Sellers from the refund proceedings. Id. at 1057-58. In an exchange, the ISO would enter into a transaction with a first seller, the "Exchange Seller," which would agree to provide the ISO with an agreed upon amount of power, in exchange for which it would receive power back from the ISO at a later time, plus some additional amount of power. Later, the ISO would purchase power on the spot market from a second seller, the "Spot Seller," and use that power to pay back the Exchange Seller. FERC's July 25 refund order applied to mitigate the price paid by the ISO to the Spot Seller, but FERC declined to take action upon the transaction with the Exchange Seller to mitigate the value of the exchange with that entity. Id. 2. Appellate Response To FERC's Exclusions
As part of a comprehensive review of FERC's actions, the United States Court of Appeals for the Ninth Circuit in CPUC affirmed FERC respecting its exclusion of the CERS bilateral purchases from the scope of its order, but reversed FERC respecting the Exchange Sellers and multi-day transactions. CPUC, 456 F.3d at 1057-1063. Respecting the CERS purchases, the court of appeals found that these sales were through bilateral transactions that took place outside the PX and ISO markets. Id. at 1061. Indeed, the market in which these transactions occurred did not even exist at the time SDG&E filed its initial 7
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complaint with FERC. Id. at 1062. Instead of occurring through the centralized, single-price PX and ISO auctions, the CERS sales were two-party, mutually negotiated, ostensibly arms-length transactions. Id. Accordingly, the CERS transactions were not within the scope of the refund proceedings. In contrast, respecting transactions exceeding 24 hours, the court of appeals essentially ruled that FERC had not provided a reasonable explanation for limiting its refund order to transactions not exceeding that length of time. CPUC, 456 F.3d at 1057. Regarding Exchange Sellers, the court rejected FERC's suggestion that it was impossible to place a monetary value upon the exchanges to assess whether they were unreasonable. FERC had not performed an adequate analysis to support that conclusion. Id. at 1059. No mandate has been issued yet in CPUC, and accordingly FERC has yet to commence any remand proceedings respecting the multi-day sales or exchanges. There is no current schedule for FERC to do so either. D. Refund Proceedings In The Pacific Northwest
Shortly after SDG&E filed its complaint with FERC, a utility in Washington State, Puget Sound Energy, filed a similar complaint with FERC, seeking price caps for sales in the Pacific Northwest wholesale power markets. Port of Seattle v. FERC, 499 F.3d 1016, 1023 (9th Cir. 2007) ("Port of Seattle"). Power sales in the Pacific Northwest were not consummated through central power exchanges like the ISO and PX but instead through "bilateral contracts negotiated independently between buyers and sellers, without a central clearing price." Id. at 1023. Most of these contracts "were entered into under the terms of the Western Systems Power Pool (`WSPP') Agreement, a standard form contract for electricity sales." Id. California alleges that some of these transactions involved CERS. Complaint ¶ 86.
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Following the Puget complaint, FERC conducted a hearing and received evidence concerning prices in the Pacific Northwest. Id. at 1024-26. Unlike the SDG&E proceedings, FERC declined to order refunds, citing a variety of factors, including "the time and effort required to calculate refunds in the Pacific Northwest bilateral spot market." Id. at 1026. In particular, concerning the time and effort to calculate refunds, FERC found that the "volume of transactions involved in the bilateral spot market in the Pacific Northwest during the relevant time period is massive and would require prolonged time and effort to unravel." Puget Sound Energy, Inc., et al., 103 FERC ¶ 61348 at 62,367. Because it declined to order refunds, FERC made no findings concerning whether prices in the Pacific Northwest during this time were unjust or unreasonable. Port of Seattle, 499 F.3d at 1025. FERC also excluded from the Pacific Northwest proceedings "transactions involving energy that was ultimately consumed in California," such as CERS bilateral purchases. Id. at 1026. FERC held that such transactions were "into" California and not "into" the Pacific Northwest and were thus beyond the scope of the Puget complaint. Id. at 1033. The State of California, among other parties, challenged this exclusion and FERC's decision to deny refunds. Id. at 1032. The United States Court of Appeals for the Ninth Circuit agreed with California that FERC arbitrarily excluded CERS transactions from the Pacific Northwest refund proceedings. Id. at 1034. The court of appeals also held that FERC should have considered evidence of market manipulation in the proceedings. Id. at 1035-36. The court remanded the matter for these purposes, but expressly declined "to reach the merits of FERC's ultimate decision to deny refunds . . . ." Id. at 1036.
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III.
Current Claims In This Court A. Damages Claims
In addition to referring to CERS' bilateral electricity transactions with BPA and WAPA, California's complaint appears to allege that it is in privity of contract with BPA and WAPA, or a third party beneficiary, respecting certain transactions in the ISO and PX markets. The complaint makes assertions similar to those advanced by the plaintiffs in Pacific Gas and Electric Co. v. United States, No. 07-157C. It claims that, notwithstanding the court of appeals' holding in BPA v. FERC that FERC lacks jurisdiction to order governmental agencies such as BPA and WAPA to issue refunds to electricity purchasers, FERC's July 25 refund order effectively required the agencies to do so anyway by retroactively revising the terms of the PX and ISO tariffs to contractually impose new, lower rates upon these Refund Period power sales, reflecting FERC's price cap. Accordingly, California claims that WAPA (though not BPA) has been contractually required by the retroactively amended tariffs to issue the same refunds to California that were ordered by FERC and nullified by the Ninth Circuit. It claims that WAPA has either breached that refund obligation or anticipatorily breached it. It seeks damages for all amounts received by WAPA in excess of the revised prices. Amended Complaint ¶¶ 68-75. California also claims that BPA (but not WAPA) has breached its implied covenant of good faith and fair dealing on some unspecified set of contracts because BPA "knew or was on notice of conduct in the Western energy markets inconsistent with legitimate energy transactions . . . ; BPA took no action to stop such conduct; and BPA was also a beneficiary of the extraordinary prices . . . ." California proceeds also to allege that "BPA engaged in conduct inconsistent with legitimate energy transactions during the Summer of 2000, that further investigation and discovery are likely to disclose that BPA continued to engage in such conduct . . . ." California seeks a judgment "for the difference between the amount paid and the 10
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amount which should have been paid," again on some unspecified set of contracts. California asserts that the amount of its claim "is in the range of $171,000,000, excluding applicable interest." Complaint ¶¶ 93-96. Finally, California claims that the agencies engaged in duress and undue influence upon CERS respecting its bilateral transactions with them by demanding "exorbitant prices for energy and onerous terms in exchanges." Alternatively, California avers that the transactions were premised upon a critical energy shortage that the parties did not learn until later was actually artificially created. Accordingly, California seeks "a judgment against the United States rescinding each of the transactions with the Agencies from January 17, 2001, through June 20, 2001 and for restoration of consideration paid." Complaint ¶¶ 100-104; Prayer for Relief ¶ 10. B. Declaratory Claims
California also seeks the following seven declaratory rulings: First, California seeks a declaratory judgment that WAPA owes the amount sought for the refund period. Complaint ¶ 77. Second, California seeks a declaratory judgment that the United States is contractually required to permit the agencies' accounts at the ISO and PX to be adjusted to reflect FERC's alleged correction of the ISO and PX market prices for sales and exchanges at such time as FERC makes those corrections. Complaint ¶¶ 78-80. Third, in apparent recognition that FERC's July 25 refund order did not include exchange transactions, and that FERC has not reconsidered that matter yet upon remand of CPUC, California seeks a declaratory judgment that, "at such time as FERC corrects the rates charged by sellers for energy exchanges during the Refund Period, [California] will be entitled to recover from the United States the difference between the rates the Agencies initially charged in the exchange transactions and the lawful rates as ultimately determined by FERC . . . ." Complaint 11
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¶¶ 81-82. Fourth, as with exchange transactions, California seeks a declaratory judgment that it will be entitled to recover for multi-day sales if FERC, pursuant to CPUC, ever corrects the applicable rates. Complaint ¶¶ 83-84. Fifth, California seeks a declaratory judgment that it will be entitled to a recovery related to bilateral transactions in the Pacific Northwest. California acknowledges that FERC, as with the exchanges and multi-day sales, has yet to actually "correct the prices for these transactions." Complaint ¶¶ 85-88. Sixth, like the plaintiffs in Pacific Gas and Electric Co., California suggests that the refusal of the agencies to "honor their repayment obligations will result in a shortfall of funds needed to settle the accounts of the ISO and PX participants," without being clear concerning the "repayment obligations" to which it is referring. It proceeds to claim that "[u]nder the terms of the ISO and PX Tariffs, other market participants, including CERS, may therefore be required to pay for any resulting market shortfall." California therefore seeks "a declaratory judgment that the United States will be contractually liable to CERS for any amount assessed against CERS' accounts due to the Agencies' refusal to honor their repayment obligations." Complaint ¶¶ 8992. Seventh, as with its damages claim, California claims that the agencies engaged in duress and undue influence upon CERS respecting its bilateral transactions with them by demanding "exorbitant prices for energy and onerous terms in exchanges." Alternatively, California avers that the transactions were premised upon a critical energy shortage that the parties did not learn until later was actually artificially created. Accordingly, it seeks a declaration that the transactions are void or rescinded. Complaint ¶¶ 97-99.
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Finally, California seeks a declaration that its transactions with the Agencies are void or rescinded, entitling California to damages. Complaint ¶¶ 97-99. ARGUMENT I. Standards For A Motion To Dismiss For Lack Of Jurisdiction
A challenge to the "court's general power to adjudicate in specific areas of substantive law . . . is properly raised by 12(b)(1) motion." Palmer v. United States, 168 F.3d 1310, 1313 (Fed. Cir. 1999). In determining whether it has subject matter jurisdiction to entertain a plaintiff's complaint, the Court should presume all undisputed factual allegations to be true and construe all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236-37 (1974). If this Court's jurisdiction is challenged, a plaintiff cannot rely merely upon allegations in the complaint, but must instead bring forth relevant, competent proof to establish jurisdiction. See McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189 (1936). The plaintiff bears the burden of establishing the Court's jurisdiction by a preponderance of the evidence. Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988). II. The Court Should Dismiss Counts Four Through Eight Of The Complaint, All Of Which Seek Declaratory Relief, For Lack Of A Case Or Controversy Under Article III Of The Constitution
Counts four through eight of the complaint, which seek solely declaratory relief, based upon hypothetical events, should be dismissed for lack of jurisdiction because they are nonjusticiable. Article III of the Constitution limits the judicial power of the United States to "Cases" and "Controversies." U.S. Const. Art. III § 2; Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-40 (1937). Federal courts possess jurisdiction only over suits that present a case or controversy. Raines v. Byrd, 521 U.S. 811, 818 (1997) ("No principle is more fundamental to the judiciary's proper role in our system of government than the constitutional limitation of 13
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federal-court jurisdiction to actual cases or controversies." (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 37 (1976))). Indeed, "[i]f a dispute is not a proper case or controversy, the courts have no business deciding it, or expounding the law in the course of doing so." DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 341 (2006). Though established under Article I of the Constitution, this Court's jurisdiction is also limited by this same Article III case or controversy requirement. Anderson v. United States, 344 F.3d 1343, 1350 n.1 (Fed. Cir. 2003). The Supreme Court has instructed that "`[t]he term `controversies' if distinguishable at all from `cases,' is so in that it is less comprehensive than the latter, and includes only suits of a civil nature.'" Aetna Life Ins. Co., 300 U.S. at 239 (quoting In Re Pac. Ry. Comm., 32 F. 241, 255 (C.C. Cal. 1887)). It proceeded to explain that [a] justiciable controversy is thus distinguished from a difference or dispute of a hypothetical or abstract character; from one that is academic or moot. The controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests. It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.
300 U.S. at 240-41 (citations omitted, emphasis added). Thus, under Article III's case or controversy requirement itself, the Court is not free to render advisory opinions upon hypothetical questions of fact. Analysis of the Article III case or controversy requirement has also been broken down into what are called "justiciability doctrines," among which are the related doctrines of standing and ripeness. Nat'l Treasury Employees Union v. United States, 101 F.3d 1423, 1427 (D.C. Cir. 1996). "To establish standing, a plaintiff must demonstrate `(1) it has suffered an injury in fact that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as 14
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opposed to merely speculative, that the injury will be redressed by a favorable decision.'" Rothe Dev. Corp. v. Dept. of Def., 413 F.3d 1327, 1334 (Fed. Cir. 2005) (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 180-81 (2000)). Thus, this standing element to the Article III case or controversy requirement dictates that the alleged injury not be conjectural, hypothetical, remote, speculative, or abstract. Nat'l Treasury Employees Union, 101 F.3d at 1427. "Rather it must be `certainly impending.'" Id. (quoting Whitmore v. Ark., 495 U.S. 149, 158 (1990)). Finally, ripeness also, at least in part, is a component of the Article III case or controversy requirement. Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993) ("We have noted that ripeness doctrine is drawn both from Article III limitations on judicial power and from prudential reasons for refusing to exercise jurisdiction."); Reg'l Rail Reorganization Act Cases, 419 U.S. 102, 138 (1974) ("[B]ecause issues of ripeness involve, at least in part, the existence of a live `Case or Controversy,' we cannot rely upon concessions of the parties and must determine whether the issues are ripe for decision in the `Case or Controversy' sense"). Ripeness shares the requirement of standing that an injury in fact be pending. Nat'l Treasury Employees Union, 101 F.3d at 1427. 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) (internal quotations omitted). Given the jurisdictional ban upon claims based upon hypothetical or contingent facts that may or may not occur, counts four through eight of the complaints should be dismissed for lack of jurisdiction.
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A.
Counts Four Through Seven Seek Advisory Opinions About Hypothetical FERC Orders That May Or May Not Occur
California's fourth, fifth, sixth, and seventh counts seek declaratory rulings related to energy exchanges, multi-day sales, and bilateral sales. As we explained above in the Statement of the Case, FERC's July 25 order, which provides the ostensible basis for California's other claims, did not include these transactions. Recognizing this, California bases its fourth, fifth, and sixth counts upon CPUC, which held that FERC arbitrarily excluded exchanges and multiday sales from the refund proceedings, and its seventh count upon Port of Seattle, which ordered FERC to evaluate whether refunds are appropriate for certain WSPP Agreement sales made in the Pacific Northwest. California's fourth through seventh counts are flawed because it is anything but certain that FERC will ultimately issue any orders as a result of CPUC or Port of Seattle that could be characterized as revising the tariff or WSPP Agreement prices. No mandate has been issued yet in either case and accordingly FERC has not even initiated any remand proceedings, much less issued any rulings. Further, nothing in either decision dictates the ultimate result of the remands to FERC, much less requires FERC to somehow "correct the rates" charged by all of the sellers engaging in these transactions. FERC has in no way indicated that it will issue any such orders. Indeed, in the Pacific Northwest proceedings, FERC has not even found the rates charged by the sellers in bilateral transactions to be unjust and unreasonable. Port of Seattle, 499 F.3d at 102526. FERC declined to make such a finding because it held that numerous equitable factors weighed against refunds, including the time and effort required to calculate refunds for the approximately 500,000 transactions at issue; the Ninth Circuit did not review this decision in Port of Seattle. Id. at 1026, 1036; Puget Sound Energy, Inc. et al., 103 FERC ¶ 61348 at 62,369. It remains to be seen just what FERC will do regarding the bilateral, exchange, and multi-day
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transactions upon remand, what the language of any such orders might be, or what their scope might be. California nevertheless seeks a ruling now declaring that the unwritten language of FERC's non-existent orders will indeed revise the ISO and PX tariffs and the WSPP Agreement, alter the terms of the transactions, and impose contractual refund obligations upon BPA and WAPA. This request that the Court engage in pure speculation is a quintessential attempt to obtain a purely advisory opinion upon a completely hypothetical set of facts that may or may not ever occur. Whether viewed generally through the lens of Article III's case or controversy requirement, or the more specific standing or ripeness doctrines, these claims should be dismissed for lack of jurisdiction. See Texas, 523 U.S. at 300 (holding that a request for a declaratory judgment as to whether certain possible sanctions Texas might impose upon school districts violate Federal law is not ripe given that Texas had not imposed the challenged sanctions yet); Nat'l Treasury Employees Union, 101 F.3d at 1430 (rejecting a challenge to the Line Item Veto Act upon ripeness grounds when no act causing any injury had actually occurred yet). B. Count Eight Seeks An Advisory Opinion About Hypothetical ISO And PX Orders That May Or May Not Occur
In count eight, California contends that because the Government has allegedly failed to pay refunds due to somebody, there will be a shortage of funds to settle the accounts of ISO and PX market participants. Strangely, California suggests that the ISO and PX might solve that problem by requiring it, allegedly one of the market participants claiming a right to refunds, to somehow pay itself for the shortfall. It therefore seeks a declaratory judgment that should it be assessed for this shortfall the Government is contractually obligated to pay it the amount assessed. Putting aside the fact that the suggestion simply makes no sense, California again
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seeks a ruling from the Court about the contractual significance of a purely speculative state of facts that has simply not occurred. California does not contend that it has actually been assessed for anything by the ISO or PX. It seeks an advisory opinion about a purely hypothetical set of facts that may never occur. Count eight should therefore be dismissed for lack of jurisdiction. III. This Court Should Dismiss California's Fourth And Seventh Through Eleventh Claims Because They Were Not Presented To The Contracting Officers A. Introduction
California did not present counts four or seven through eleven in its complaint to BPA and WAPA's contracting officers, and this Court should accordingly dismiss those claims. The CDA requires that "all claims by a contractor against the government . . . shall be in writing and shall be submitted to the contracting officer for decision." 41 U.S.C. § 605(a). While a claim need not "be submitted in any particular form or use any particular wording," the claim must be a "clear and unequivocal statement that gives the contracting officer adequate notice of the basis and amount of the claim." Contract Cleaning Maint., Inc. v. United States, 811 F.2d 586, 592 (Fed. Cir. 1987). A properly submitted claim, and a resulting contracting officer's decision, are jurisdictional prerequisites for proceeding in this Court on a CDA claim. See Alliant Techsystems, Inc. v. United States, 178 F.3d 1260, 1264 (Fed. Cir. 1999). Accordingly, a contractor may not raise in this Court any claim not presented to the contracting officer. Scott Timber Co. v. United States, 333 F.3d 1358, 1365 (Fed. Cir. 2003); Reliance Ins. Co. v. United States, 931 F.2d 863, 866 (Fed. Cir. 1991); Santa Fe Engineers, Inc. v. United States, 818 F.2d 856, 858 (Fed. Cir. 1987). Allowing new claims in this Court would circumvent "the statutory role of the contracting officer to receive and pass judgment on the contractor's entire claim." Cerberonics, Inc. v. United States, 13 Cl. Ct. 415, 418 (1987). This Court thus routinely dismisses for lack of subject matter jurisdiction claims not properly
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presented to contracting officers. See, e.g., AAB Joint Venture v. United States, 75 Fed. Cl. 414, 423 (2007); Renda Marine, Inc. v. United States, 71 Fed. Cl. 378, 392 (2006); Kiewit Constr. Co. v. United States, 56 Fed Cl. 414, 419-23 (2003). This Court considers three factors when determining whether a claim in this Court is the same as that presented to a contractor officer. Renda Marine, 71 Fed. Cl. at 388-89 (citing Manuel Bros., Inc. v. United States, 55 Fed. Cl. 8, 33 (2002)). The Court considers whether: (1) the claim is based on the same common or related set of operative facts brought before the CO; (2) the legal theory underlying the claim remains the same as that presented to the CO; and (3) the complaint requests the same relief as requested from the CO. Id. at 389; see also Scott Timber, 333 F.3d at 1365-66 (applying these factors). The Court also looks to the contracting officer's decision as evidence of whether a claim was properly presented. See Santa Fe, 818 F.2d at 858-59; Laidlaw Envir. Serv. (GS), Inc. v. United States, 43 Fed. Cl. 44, 51 (1999). Here, California's fourth and seventh through eleventh claims are based upon different facts and legal theories than the claims presented to BPA and WAPA's contracting officers, and one of the claims also requests entirely different relief. The claims themselves confirm this conclusion, as do the resulting contracting officers' decisions, both of which rejected California's claims on ripeness grounds and without discussing any facts concerning California's current claims of bad faith, duress, undue influence, or mutual mistake. See Def. App. A118284, A1209-10. Accordingly, the Court should dismiss these claims for lack of subject matter jurisdiction. B. California's Claims Are Based Upon New Operative Facts
Operative facts "are the essential facts that give rise to a cause of action." Kiewit, 56 Fed. Cl. at 420. To determine whether a claim in this Court is based upon the same operative facts presented to the contracting officer, this Court considers the cause of action alleged by the 19
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contractor in its complaint, determines what facts would support that cause of action, and examines the claims to see if the required facts were presented to the contracting officer. See, e.g., Renda Marine, 71 Fed. Cl. at 389-90 (examining facts required for a differing site conditions claim and a claim relating to a breach of the duty to cooperate); J. Cooper & Assoc., Inc. v. United States, 47 Fed. Cl. 280, 285 (2000). California alleges a variety of causes of action in its fourth and seventh through eleventh claims. It neither presented these causes of action, nor facts supporting them, to the contracting officers. i. The Operative Facts Presented To The Contracting Officers
In its claims submitted to BPA and WAPA's contracting officers, California asserted breach of contract claims, alleging in detail facts necessary to support these claims. California first noted that BPA and WAPA were participants in the FERC-regulated ISO and PX markets. Def. App. at A1173-74, A1198-99. The claims then related how the markets tumbled into crisis, and how California sought relief from FERC. Id. at A1174-77, A1199-1202. The claims stated that during FERC proceedings, "discovery provided evidence of a pattern of manipulation involving numerous sellers into the ISO and PX markets," and the claims referenced FERC dockets for cases EL00-95 and EL00-98, though they did not allege that either BPA or WAPA engaged in any "manipulation." Id. at A1176, A1201. The claims stated, in summary, that they were "based on the identical facts that were at issue in the proceedings at FERC and in the Ninth Circuit: the sellers' (including [BPA's and WAPA's]) receipt and retention of prices for sales of wholesale power in the ISO and PX markets that are now unlawful and unauthorized under the ISO and PX tariffs." Id. at A1177, A1202. The "Description of Claims" sections were similarly specific, alleging that BPA and WAPA were contractually "obligated to reimburse purchasers for the difference between the rates [they] received for [their] sales in the ISO and PX markets and the lower FERC-adjusted 20
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lawful rates." Id. These sections also identified the legal theories upon which California's claims were based: Causes of action for damages or other monetary relief that the People may assert include, but are not limited to, breach and repudiation of contract obligations and contractual indemnification. The People will also seek such other relief, including pre-judgment and post-judgment interest, as may be appropriate. Id. Finally, these sections limited California's claims to particular periods of time, noting that damages were "being calculated by the ISO and PX" or would amount to whatever "FERC determines is appropriate." Id. at A1177-78, A1202-04. ii. The Operative Facts Of California's Claims In This Court
California's first through sixth claims, with the exception of its fourth claim, concern the Agencies' alleged breach of contract related to sales made in the ISO and PX markets, and to socalled multi-day sales and exchanges. See Complaint ¶¶ 68-84. California appears to have properly presented these claims to the contracting officers. In contrast, California's fourth and seventh through eleventh claims encompass and depend upon sets of operative facts that the agencies' contracting officers never considered. These claims should, accordingly, be dismissed. See Santa Fe, 818 F.2d at 859-60. a. ISO And PX Accounts Claim
The fourth claim in California's complaint seeks a declaratory ruling that the United States "is contractually obligated to permit the Agencies' accounts at the ISO and PX to be adjusted to reflect all pricing changes resulting from FERC's determination of the corrected, maximum rates allowed for sales in the ISO and PX markets and the recalculation by the ISO and PX pursuant to FERC's direction, and is contractually obligated to pay any refunds and to otherwise honor the invoices reflecting the refunds associated with all affected transactions."
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Complaint ¶ 80. California never presented any facts to the contracting officers concerning the agencies' alleged contractual obligation "to permit the Agencies' accounts at the ISO and PX to be adjusted," failing to identify what provisions of the tariffs created such an obligation. This claim should accordingly be dismissed. b. Bilateral Sales Claim
California's seventh claim seeks a declaratory ruling that the United States will owe California money if FERC ever "corrects the rates charged by sellers for bilateral sales transactions pursuant to the WSPP Agreement . . . ." Complaint ¶ 88. California failed to present sufficient facts to the contracting officers concerning this claim. California's claims to the agencies merely restated generalities about the WSPP Agreement, and noted that the "People are further entitled to receive refunds reflecting the difference between rates received for any sales made under the WSPP Agreement and a lawful rate as determined by FERC." Def. App. A1174, A1177, A1199, A1202. The section of California's claim that specified precisely the transactions for which California was seeking a recovery did not include bilateral transactions, but focused instead upon exchanges and "non-spot" transactions. Def. App. A1178, A1203. Further, California's claims were premised upon FERC's potential rulings in the SDG&E refund proceedings; California said nothing in its claims about the Pacific Northwest proceedings at issue in Port of Seattle, upon which it now relies. Def. App. A1175, 1200. This Court should dismiss this claim because California failed to present to the contracting officers sufficient facts to put them on notice that California sought relief for bilateral transactions. c. Contractual Liability For Market Shortfall Claim
The eighth claim in California's complaint seeks a declaratory ruling that the agencies "will be contractually liable to CERS for any amount assessed against CERS' accounts due to the Agencies'