Dalles Irrigation District v. United States

88 Fed. Cl. 601, 2009 U.S. Claims LEXIS 291, 2009 WL 2606366
CourtUnited States Court of Federal Claims
DecidedAugust 21, 2009
DocketNo. 05-1042C
StatusPublished
Cited by2 cases

This text of 88 Fed. Cl. 601 (Dalles Irrigation District v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dalles Irrigation District v. United States, 88 Fed. Cl. 601, 2009 U.S. Claims LEXIS 291, 2009 WL 2606366 (uscfc 2009).

Opinion

OPINION AND ORDER

LETTOW, Judge.

This post-trial decision addresses damages for breach of a contract between The Dalles Irrigation District (“The Dalles” or “District”) and the United States Department of the Interior, Bureau of Reclamation (“Bureau”), under which the Bureau was obligated to supply the District with hydroelectric power for irrigation pumping. The District has claimed that the government contravened the contract by overcharging for energy and seeks damages of approximately $8,000,000.

As stipulated by the parties, trial of liability and of damages was bifurcated. Based upon evidence adduced in the trial of liability, the court found that the Bureau had breached its contract with the District to the extent that it had wrongfully included a “lost revenue component” in the rates charged to the District for irrigation pumping power. See Dalles Irrigation Dist v. United States, 82 Fed.Cl. 346, 366-67 (2008) (“Dalles II”). Thereafter, a trial on damages was held to determine what damages, if any, the District was entitled to as a result of the inclusion of the lost revenue component. Post-trial briefing has concluded and closing arguments were heard on July 27, 2009. The case is ready for disposition.

PROCEDURAL POSTURE

The Dalles initially filed its complaint in the United States District Court for the District of Oregon on August 18, 2004. The ease was subsequently transferred to this court in light of the Supreme Court’s ruling in Orff v. United States, 545 U.S. 596, 125 S.Ct. 2606, 162 L.Ed.2d 544 (2005), and was docketed here on September 28, 2005. See Dalles Irrigation Dist. v. United States, 71 Fed.Cl. 344, 345, 349 (2006) (“Dalles I”).1

In this court, the government filed a motion to dismiss for lack of subject matter jurisdiction, averring that relief was barred under the six-year statute of limitations set out at 28 U.S.C. § 2501. That motion was denied based on the continuing claims doctrine. In an opinion issued on June 19, 2006, the court held that The Dalles was entitled to seek damages for claims dating back to August 18, 1998, six years prior to the filing of the original complaint in the district court. Dalles I, 71 Fed.Cl. at 353. Although the court held that The Dalles could not seek relief respecting claims that occurred prior to August 18,1998 because the statute of limitations had already run on those claims, The Dalles was entitled to “support its post-August 1998 claims by using earlier events as ‘background evidence.’” Id. at 355 (citing National R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 113, 122 S.Ct. 2061, 153 L.Ed.2d 106 (2002)).

[605]*605Trial on liability was held from November 13 through 16, 2007, in Portland, Oregon. Dalles II, 82 Fed.Cl. at 347. Following post-trial briefing and closing argument, the court issued its decision finding liability only regarding the Bureau’s inclusion of a “lost revenue component” in the reserved-power rate charged the District. Id. at 364-65. The court found that this lost revenue component, which had been charged to the District beginning in 1990, included “[t]he difference between the actual cost of service and the revenue collected from the charge in effect for the previous five-year period” along with “project inflation (i.e., the difference between the historical cost of service and the projected cost of service in a given year).” Id. at 364 (citing DX 8 at 18 (Revision No. 1 to Memorandum of Understanding (“MOU”) between the Bonneville Power Administration and the Bureau (effective Jan. 1, 1990)) (“Revision'No. 1 to MOU”) (internal quotation marks omitted)).2 The Bureau added an interest rate to the lost revenue charges assessed to the District, calculating this rate based on the actual long-term interest rate for the previous five years and the anticipated project cost for the forthcoming five years. Id. (citing DX 8 at 19 (Revision No. 1 to MOU)). The government argued that the lost revenue component did not contravene the contract because it simply served as a “true-up” mechanism to ensure that the power rate it charged to the District accurately reflected the actual and anticipated future costs of power generation. See id. at 364-65. The court rejected these arguments, concluding that the lost revenue component ran afoul of the contract both by improperly including interest as a cost to the District and by circumventing the limitation that the Secretary make rate changes no more frequently than once every five year’s. Id. (noting that the “reserved power” rates charged to The Dalles “were not to include interest, and they were to be set in five-year incremental cycles”). Accordingly, because the lost revenue component was found to be contrary to law, the government was held liable to the District for the portion of the charges at issue reflecting that component. See id.

In other respects, the court found that the rate charged by the Bureau to the District properly included (i) costs for operation and maintenance of facilities for power production at the dam, reservoir, and power plant, (ii) fish and wildlife costs allocated to power production at the dam and reservoir, and (iii) depreciation costs associated with power-producing facilities at the dam. Dalles II, 82 Fed.Cl. at 366. Accordingly, the District could not recover on its claims for these charges. See id.

Trial on damages was held from April 22 to 23, 2009 in Portland, Oregon, focusing on inclusion of the lost revenue component in the rates charged by the Bureau to the District since August 18, 1998. At trial, however, the parties also raised ancillary issues that they contended affected the calculation of damages. The government averred that actual costs of producing power on a year-by-year basis exceeded the rate charged the District on a net basis during the years since 1998, and that the actual costs should be taken into account, effectively reducing to zero any recovery by the District. The District sought to revisit the court’s earlier decision that depreciation of power-generating facilities was properly taken into account by the government in setting the rate for power payable by the District. The District also contended that it should be refunded amounts charged by the Bureau in excess of its costs during the first thirty years of the contract, when those charges substantially exceeded the actual cost of power production.

FACTS3

A. Contract and Posty-Contractual Implementation

The Dalles Dam was completed in 1957, and in 1960 Congress authorized The Dalles [606]*606Irrigation Project by a separate enactment from the authorization for the Dam. See Act of Sept. 13,1960, Pub.L. No. 86-745, 74 Stat. 882. The contract at issue was entered in 1961 to implement the legislation authorizing the irrigation project, and under its provisions, the Bureau agreed to provide The Dalles with hydroelectrically generated power for irrigation pumping purposes. DX 6 (Contract No. 14-06-100-2276, captioned “Repayment Contract Between the United States of America and The Dalles Irrigation District” (Oct. 19, 1961) (“Contract”)).

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Related

Westlands Water District v. United States
109 Fed. Cl. 177 (Federal Claims, 2013)
Dalles Irrigation District v. United States
91 Fed. Cl. 689 (Federal Claims, 2010)

Cite This Page — Counsel Stack

Bluebook (online)
88 Fed. Cl. 601, 2009 U.S. Claims LEXIS 291, 2009 WL 2606366, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dalles-irrigation-district-v-united-states-uscfc-2009.