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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 15, 2002 Decided June 10, 2003
No. 01-1375
CITY OF TACOMA, WASHINGTON, ET AL.,
PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
NORTHERN CALIFORNIA POWER AGENCY, ET AL.,
INTERVENORS
On Petition for Review of an Order of the
Federal Energy Regulatory Commission
Howard E. Shapiro argued the cause for the petitioners.
Gary D. Bachman, Michael A. Swiger and Charles R. Sensi-
ba were on brief. Susan A. Moore entered an appearance.
Frances E. Francis, Ben Finkelstein and Tracy E. Connor
were on brief for the intervenors.
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Richard B. Geltman and Donald H. Clarke were on brief
for amici curiae American Public Power Association and
National Hydropower Association.
Lona T. Perry, Attorney, Federal Energy Regulatory
Commission, argued the cause for the respondent. Cynthia
A. Marlette, General Counsel, and Dennis Lane, Solicitor,
Federal Energy Regulatory Commission, were on brief.
Before: SENTELLE and HENDERSON, Circuit Judges, and
SILBERMAN, Senior Circuit Judge.
Opinion for the court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: The petition-
ers, a group of hydroelectric utilities licensed under the
Federal Power Act (FPA or Act), 16 U.S.C. § 791a et seq.,
seek review of three orders of the Federal Energy Regulato-
ry Commission (Commission or FERC) that denied them
refunds of annual charges that FERC imposed on them
pursuant to section 10 of the FPA. The charges should be
refunded, they contend, because FERC inadequately super-
vises the submission of cost reports by other federal agencies
(OFAs) upon which the annual charges are based. They also
argue that the charges should be refunded because they are
based on costs beyond the scope of those recoverable under
the Act.
FERC argues that the court lacks jurisdiction because the
orders under review are not final. We conclude that the
orders are final and we grant the petition because FERC’s
method of assessing the annual charges based on OFAs’ FPA
costs conflicts with its obligations under the Act.
I.
A.
When the Congress began to regulate the production of
hydroelectric power pursuant to the Federal Water Power
Act of 1920 (FWPA), it intended to pass the costs of adminis-
tration on to the regulated entities. To that end, in addition
to authorizing the Federal Power Commission (now FERC)
to charge utilities for the use of federal lands or property, the
3
FWPA (now the Federal Power Act)1 required that licensees
‘‘shall pay to the United States reasonable annual charges in
an amount to be fixed by the [C]ommission for the purpose of
reimbursing the United States for the costs of the administra-
tion of this Act.’’ Federal Water Power Act of 1920, ch. 285,
§ 10(e), 41 Stat. 1063, 1069 (codified as amended at 16 U.S.C.
§ 803(e)(1)).2 Pursuant to this statutory directive, codified in
section 10(e) of the FPA, the Commission issued regulations
to govern the computation and collection of the fixed charges.
18 C.F.R. pt. 11.
Until 1986, the Commission used this authority to impose
charges only to reimburse the Commission for its costs
incurred in administering the Act. City of Idaho Falls, 87
F.E.R.C. ¶ 61,114, 61,469 (1999), (Idaho Falls I). In that
year, however, the Inspector General of the United States
Department of Energy issued a report interpreting section
10(e) of the Act to authorize FERC, in imposing charges ‘‘for
the purpose of reimbursing the United States,’’ to impose
additional charges reflecting OFAs’ costs incurred in adminis-
tering the Act (emphasis added).3 That same year, the
1In 1935, most of the FWPA became Part I of the Federal Power
Act. Act of Aug. 26, 1935, ch. 687, §§ 212, 213, 49 Stat. 803, 847,
863.
2 The Act also requires a licensee to ‘‘recompense the Govern-
ment for the use, occupancy, and enjoyment of its lands or other
property’’ and to pay charges if the licensee uses ‘‘Government
dams or other structures owned by the United States.’’ 16 U.S.C.
§ 803(e)(1). Thus, the Commission imposes three types of annual
charges on regulated hydroelectric utilities: first, the charges at
issue here, which are intended to reimburse the government for
administering Part I of the Act; second, charges for the use of
public land; and third, charges for the use of dams or other
structures owned by the United States. Id.; 18 C.F.R. §§ 11.1–.4;
City of Vanceburg, Ky. v. FERC, 571 F.2d 630, 634 (D.C. Cir. 1977).
3Idaho Falls I, 87 F.E.R.C. at 61,469 n.6 (quoting Report on
Accounts Receivable, Billings and Collections of the Federal Ener-
gy Regulatory Commission, U.S. Department of Energy, Office of
the Inspector General, Report No. DOE/IE–0224 (Feb. 3, 1986));
Revision of the Billing Procedures for Annual Charges for Adminis-
4
Congress enacted the Omnibus Budget Reconciliation Act
(OBRA). Omnibus Budget Reconciliation Act, Pub. L. No.
99–509, § 3401, 100 Stat. 1874, 1890–91 (1986) (codified at 42
U.S.C. § 7178). That legislation directed that ‘‘[FERC] shall,
using the provisions of this subtitle and authority provided by
other laws, assess and collect fees and annual charges in any
fiscal year in amounts equal to all of the costs incurred by the
Commission in that fiscal year’’ and that the ‘‘fees or annual
charges assessed shall be computed on the basis of methods
that the Commission determines, by rule, to be fair and
equitable.’’ Id. Accordingly, FERC began to pass the addi-
tional costs on to the hydroelectric licensees. Idaho Falls I,
87 F.E.R.C. at 61,469. FERC has continued to assess
charges for OFAs’ FPA-related costs ever since.
In the early 1990s, several hydroelectric licenses were due
for relicensing and FERC anticipated a heavy strain on
federal and state wildlife agency budgets to complete re-
quired studies as part of the relicensing process. H.R. Rep.
No. 102–474(I), at 222 (1992), reprinted in 1992 U.S.C.C.A.N.
1954, 2045. The Congress responded to FERC’s concern by
amending section 10(e)(1) as part of the 1992 Energy Policy
Act (EPAct) to provide that federal and state agencies were
to be reimbursed for their work. Id. Section 1701 of the
EPAct made the costs recoverable and authorized annual
appropriations to cover some of the agencies’ costs.4
tering Part I of the Federal Power Act, 52 Fed. Reg. 18,201, 18,207
(May 14, 1987).
4 Section 1701(a)(1) amended section 10(e) to read:
the licensee shall pay to the United States reasonable
annual charges in an amount to be fixed by the Commis-
sion for the purpose of reimbursing the United States for
the costs of the administration of this subchapter, includ-
ing any reasonable and necessary costs incurred by Fed-
eral and State fish and wildlife agencies and other natu-
ral and cultural resource agencies in connection with
studies or other reviews carried out by such agencies for
purposes of administering their responsibilities under
this subchapterTTTT
5
The Commission has established a relatively simple system
to assess charges for FPA administrative costs. For each
fiscal year, the Commission solicits from the eight OFAs5 cost
reports of their FPA-related administrative costs for the
previous fiscal year. 18 C.F.R. § 11.1(g)(1); City of Idaho
Falls 93 F.E.R.C. ¶ 61,145, 61,453 (2000), (Idaho Falls II).
The Commission adds these figures to its own costs6 and
assesses the licensees according to a weighted formula that
considers the type of licensee (municipal, state or other) and
the kind of hydroelectric project (conventional, pure pumped
storage or mixed).7 18 C.F.R. § 11.1(c)–(h).
Energy Policy Act of 1992, Pub. L. No. 102–486, § 1701(a), 106 Stat.
2776, 3008 (codified at 16 U.S.C. § 803(e)(1)) (amendment empha-
sized). Section 1701(a)(2) added this proviso:
Provided, That, subject to annual appropriations acts, the
portion of such annual charges imposed by the Commission
under this subsection to cover the reasonable and neces-
sary costs of such agencies shall be available to such
agencies (in addition to other funds appropriated for such
purposes) solely for carrying out such studies and reviews
and shall remain available until expendedTTTT
Id.
5 The eight agencies are the Bureau of Indian Affairs, the Bureau
of Land Management, the Bureau of Reclamation, the U.S. Fish
and Wildlife Service, the Army Corps of Engineers, the U.S. Forest
Service, the National Oceanographic and Atmospheric Administra-
tion and the Environmental Protection Agency. City of Idaho
Falls, 93 F.E.R.C. ¶ 61,145, 61,453 (2000). To date the EPA has not
submitted reports to FERC. Id. at 61,453 n.6.
6 The charges attributed to the Commission’s administrative costs
reflect anticipated costs for the current fiscal year. 18 C.F.R.
§ 11.1(g)(1). At the end of the year, the Commission compares the
estimated costs with its actual costs and in the subsequent fiscal
year’s bill, includes a ‘‘true-up’’ of charges due. Id.
7 Utilities that operate small conduit hydroelectric facilities and
small hydroelectric projects that have more than 1.5 megawatts of
installed capacity, both of which are exempt from the license
requirements of the Act, 18 C.F.R. §§ 4.90–.96; 18 C.F.R.
6
Since the Commission began imposing charges for OFA
costs, the charges have sharply increased. In FY 1992, for
example, OFAs reported costs totaling $3,858,192; by FY
1999, the total rose to $14,866,849. Brief for Petitioner at 40.
Contributing to the escalation has been the OFAs’ expansion
of costs sought to be recovered, including overhead, prepara-
tion of comments on FERC rulemakings, training and attend-
ance at conferences—as well as costs attendant to certain
OFAs’ block grants to Indian tribes to oppose hydroelectric
licenses, legal fees and litigation expenses. In 1997, hydro-
electric licensees brought a challenge before the Commission
on the OFA cost-related charges, complaining that (1) the
costs were not based on substantial evidence; (2) there was
no mechanism in place to review agency cost submissions to
determine whether those costs are reasonable, necessary and
within the scope of section 10(e)(1) of the Act; and (3) the
Commission impermissibly broadened the scope of costs be-
yond those for the FPA ‘‘studies and reviews’’ specified in
section 10(e)(1) of the FPA as amended by the EPAct. Idaho
Falls I, 87 F.E.R.C. at 61,470.
B.
The petitioners’ initial challenge appealed fiscal year (FY)
1996 OFA costs included in the FY 1997 annual charges
before the Commission’s Chief Financial Officer (CFO). Id.
Their objections were in the main rejected by the CFO. Id.
FERC postponed review of the CFO’s decision until an
administrative law judge (ALJ) concluded his fact-finding
regarding the FY 1996 OFA costs. Id. at 61,471. In the
meantime, however, the petitioners had filed similar objec-
tions to the FY 1997 OFA costs. The Commission then
consolidated the two appeals and ordered the ALJ to include
in his fact-finding both the FY 1996 and FY 1997 OFA costs.
Id. The parties opted to settle the disputed costs before the
ALJ. Idaho Falls II, 93 F.E.R.C. at 61,452. On review,
FERC declined to approve the settlement, uncertain that the
§§ 4.101–.108, also pay a share of FPA administrative costs. 18
C.F.R. § 11.1(c)–(h).
7
figures contained in the agreement had an adequate factual
basis. Id. at 61,455. The Commission did, however, consider
the petitioners’ legal issues.
First, the Commission rejected their claim that recoverable
costs under the FPA are limited to those specified in the 1992
amendment. Id. at 61,456. Notwithstanding the amend-
ment’s addition of the language ‘‘including any reasonable and
necessary costs incurred by Federal and State fish and
wildlife agencies and other natural and cultural resource
agencies in connection with studies or other reviews’’ to
section 10(e)(1), FERC concluded that recoverable costs were
not limited to fish, wildlife and other natural and cultural
resource agencies nor to costs related to studies and reviews.
Id. The only effect of the amendment, the Commission said,
was to broaden the scope of recoverable costs from OFAs’
FPA-related administrative costs to ‘‘qualifying administra-
tive and study costs of qualifying state resource agencies,
whose costs had never before been the subject of Section
10(e).’’ Id. at 61,456 (emphasis added). Furthermore, the
Commission ruled, there was no merit to the petitioners’
claim that section 10(e)(1)’s limit of recoverable costs to those
incurred under ‘‘FPA Part I’’ made OFA overhead and litiga-
tion costs unrecoverable. Id. at 61,457. According to the
Commission, the recovery of those costs was justified because
‘‘the administration of FPA Part I TTT is inextricably inter-
woven with the administration of other federal statutes ad-
dressing important national resources, statutes that may be
triggered by hydroelectric licensing or other action under
Part I of the FPA.’’ Id.
Next, the Commission rejected the petitioners’ argument
that the section 10(e)(1) requirement (also found in OBRA
§ 3401) that annual charges be ‘‘reasonable’’ and ‘‘fair and
equitable’’ meant the Commission was obligated to provide a
mechanism to review the OFAs’ cost reports for reasonable-
ness and consistency with recoverable costs under the Act.
Id. at 61,455. Instead, the Commission said, the language
addressed the Commission’s ‘‘rate design’’ responsibility only.
Id. at 61,455–56. In fact, FERC said that it ‘‘[did] not
consider it to be in the ambit of this Commission’s authority
8
to purport to tell another agency what studies or other
reviews it should or should not undertake in the exercise of
its statutory obligations.’’ Id. at 61,458. It did announce,
however, that thenceforth OFAs were required to certify as
true and accurate their cost reports according to federal cost
accounting rules. Id. at 61,456, 61,458. Future cost reports,
the Commission said, must comply with the Office of Manage-
ment and Budget’s Circular A–25—User Charges and the
Federal Accounting Standards Advisory Board’s Material
Cost Accounting Concepts and Standards for the Federal
Government: Statement of Federal Financial Accounting
Standard Number 4. Id. at 61,456–57. If OFA cost reports
were so certified, the Commission then considered them
based on substantial evidence and recoverable under section
10(e)(1). Id. at 61,456–58. In the future, challenges to
recoverable OFA costs were to be made directly to the
agency involved. Id. The Commission also required a com-
plaining hydroelectric utility to lodge a placeholder appeal
with the Commission CFO while pursuing its challenge before
the agency. Id. Once the agency resolved the challenge, it
was to submit a revised cost sheet to the Commission which
would make an adjustment (if necessary) in the next annual
charge total. Id. at 61,458. If the administrative process did
not resolve the matter, the agency was required to file its cost
documentation with the Commission for the record on appeal.
Id. at 61,458 & n.44.
FERC, however, did not apply its new ‘‘certification’’ rule
retroactively to the FY 1996 and FY 1997 OFA charges that
were under challenge. Because those costs had been only
partially certified, it again remanded to the ALJ for him to
determine which FY 1996 and FY 1997 costs were substanti-
ated. Id. at 61,458–59. While the Idaho Falls II matter was
pending, two more years’ worth of charges were assessed
against, and paid by, the petitioners and they again chal-
lenged the OFA costs, this time for FY 1998 and FY 1999.
In its Idaho Falls II order, FERC decided to apply its
certification requirement to those appeals and ordered the
OFAs to review their submissions for FY 1998 and FY 1999
to ensure that the costs were appropriately certified. It also
9
announced that cost submissions had to be certified within
ninety days of the order. Id. at 61,458.
Thus, following Idaho Falls II, the petitioners’ challenges
to OFA costs in four fiscal years were pending: The FY 1996
and FY 1997 cost challenges were pending before the ALJ
and the FY 1998 and FY 1999 cost challenges were pending
FERC’s approval of costs certified in accord with the Idaho
Falls II order. The parties again settled the FY 1996 and
FY 1997 costs, the ALJ again certified the settlement and the
petitioners again sought FERC approval. City of Idaho
Falls, 95 F.E.R.C. ¶ 61,126, 61,396 (2001), (Idaho Falls III).
This time the Commission gave its approval, noting at the
same time that the settlement ‘‘does not affect or preclude
any parties’ appeals, on legal grounds that are the same as or
similar to legal arguments made in this proceeding, of any
other pending or future OFA cost submittals.’’ Id. Although
Idaho Falls III is entitled ‘‘Order Approving Settlement
Agreement,’’ id. at 61,395, the Commission went beyond the
settlement and ruled on the FY 1998 and FY 1999 appeals.
Id. at 61,397. With little discussion other than to state that
the new certification requirement was applicable ‘‘starting
with the OFAs’ costs for FY 1998 and FY 1999,’’ id. at 61,396,
the Commission ‘‘granted and denied to the extent discussed
in the text of this order’’ the FY 1998 and FY 1999 cost
appeals, id. at 61,397.
Because the FY 1998 and FY 1999 challenges had not been
consolidated with the FY 1996/FY 1997 appeals that were the
subject of the settlement, and because the Idaho Falls III
order failed to indicate which FY 1998/FY 1999 costs were
allowed (and disallowed) consistent with the certification re-
quirements of Idaho Falls II, the petitioners sought clarifica-
tion from the Commission and, in the alternative, requested
rehearing. Motion for Clarification or, in the Alternative,
Request for Rehearing Regarding Appeals of FY 1999 Annual
Charges Bills, at 7, 15, City of Tacoma, 95 F.E.R.C. ¶ 61,465
(2001) (Idaho Falls III Motion for Clarification).8 In their
8The petitioners focused on the FY 1998 costs at issue here, but
they also requested that their motion be considered with other
10
motion, the petitioners indicated they had obtained through
Freedom of Information Act requests correspondence be-
tween the agencies and the Commission regarding the FY
1998/FY 1999 OFA cost recertifications that FERC in Idaho
Falls II had ordered to be performed. Id. at 6 & n.18.
Based on the correspondence, they contemplated refunds
because many of the OFA submissions did not conform to the
Idaho Falls II standard. Id. Because the Idaho Falls III
order was silent as to which certifications had been allowed,
the petitioners inquired whether the Commission intended to
deduct the nonconforming costs from the charges. Id. at 6,
10 n.25, 11 n.32, 11 n.35, 12 n.40.
In City of Tacoma, the Commission clarified its Idaho
Falls III order, declaring that it did indeed intend in Idaho
Falls III to resolve the appeals of the FY 1998 and FY 1999
OFA costs. City of Tacoma, 95 F.E.R.C. ¶ 61,465, 62,672
(2001). The Commission further explained that the petition-
ers and others that had appealed FY 1998/FY 1999 costs
would receive credit in FY 2001 assessments consistent with
the deficiencies they had identified in their clarification mo-
tion. Id. at 62,672. The Commission rejected the petitioners’
assertion that upward adjustments made by some OFAs were
impermissible, concluding instead that, because the charges
had been appealed, they were not final and thus subject to
change. Id. at 62,673. The Commission further provided
that the petitioners could again ‘‘obtain Commission review of
any legal, policy, and factual arguments they wish to make
with respect to the rulings in [the Idaho Falls II] and [Idaho
Falls III] Orders regarding the OFA FY 1998 costs’’ should
they appeal the FY 2001 assessments. Id. at 62,672.
The petitioners filed the instant petition on August 27,
2001, seeking review of the Commission’s orders in Idaho
Falls II, Idaho Falls III and City of Tacoma and raising the
same legal issues they raised in Idaho Falls II & III as well
as additional issues ruled upon by the Commission in City of
Tacoma. At the same time, the petitioners have separately
petitioners’ appeals of both FY 1998 and FY 1999 OFA costs.
Idaho Falls III Motion for Clarification, at 7–8.
11
appealed the Commission’s decision regarding FY 1998 and
FY 1999 credits reflected in FY 2001 assessments following
City of Tacoma—although in that appeal (which is not before
us) they simply make four challenges specific to the FY 1998
and FY 1999 credits.9
II.
A.
The Commission first challenges our jurisdiction to consid-
er the petition. In doing so, it places great significance on
the fact that it specifically provided in City of Tacoma that
‘‘Licensees that appealed the OFA FY 1998/FY 1999 costs
submittals, may have the opportunity to obtain commission
review of any legal, policy, and factual arguments they wish
to make with respect to the rulings in [the Idaho Falls II]
and [Idaho Falls III] Orders regarding the OFA FY 1998
costs, TTT within the appeal time periods that will pertain for
the FY 2001 bills.’’ City of Tacoma, 95 F.E.R.C. at 62,672.
Because it permitted the petitioners to resurrect their chal-
lenges to OFA costs in any FY 2001 appeal, the Commission
says, its rulings on issues regarding the FY 1998 costs are not
‘‘final’’ for the purpose of judicial review. Furthermore, the
Commission insists, because the petitioners have in fact ap-
pealed the FY 1998 costs adjustments included in the FY
2001 assessments, their petition is incurably premature be-
9 That appeal maintains that (1) the FERC accounting staff failed
to execute the City of Tacoma order because it allowed costs the
Commission indicated were not recoverable; (2) the FERC staff
failed to issue a refund to a licensee that, they allege, timely
appealed FY 1998/FY 1999 costs; (3) credit is due them for two
OFAs’ cost reports because the OFAs failed to provide documenta-
tion supporting the submitted costs; and (4) credit is due them for
costs the OFAs did not properly attribute to municipal and non-
municipal projects as required by FERC rule. See generally
Appeal of Credits Contained in FY 2001 Annual Charges Bills
Attributable to Other Federal Agencies’ FY 1998 and FY 1999
Costs and Motion for Waiver of Regulations and for Expedited
Action, FERC Proj. No. 4881, Sept. 4, 2001 (petitioners’ FY 2001
Charges Appeal).
12
cause they cannot simultaneously seek both agency reconsid-
eration and judicial review of the same FERC order. See
Tenn. Gas Pipeline Co. v. FERC, 9 F.3d 980, 980 (D.C. Cir.
1993).
We reject the Commission’s challenge to this court’s juris-
diction. See 5 U.S.C. § 704; 16 U.S.C. § 825l(b); Papago
Tribal Util. Auth. v. FERC, 628 F.2d 235, 238–39 (D.C. Cir.),
cert. denied, 449 U.S. 1061 (1980). As the Commission would
have it, so long as it permits the petitioners to ‘‘raise all legal,
factual or policy issues regarding 1998 costs’’ in challenges to
subsequent annual charges, its action is not final because it
has not finally ‘‘ ‘impose[d] an obligation, denie[d] a right, or
fixe[d] some legal relationship as a consummation of the
administrative process,’ ’’ and therefore the orders are not
final. Ala. Power Co. v. FERC, 993 F.2d 1557, 1566 (D.C.
Cir. 1993) (quoting Papago Tribal Util. Auth., 628 F.2d at
239). The Commission’s willingness to reconsider the peti-
tioners’ legal arguments originally made and ruled on in
Idaho Falls II & III and City of Tacoma in a later proceed-
ing notwithstanding, the Commission’s decisions manifest that
its position with respect to the issues raised in the petition is
unchanged. The Commission does not deny that its orders
firmly establish its position on the issues under review,
namely the OFA cost submission and reimbursement scheme
and the scope of section 10(e)(1) of the FPA. Indeed, the
Commission does not suggest that it intends to shift its
position on these issues nor does it indicate that it could alter
its decision denying the petitioners’ challenge to the increased
FY 1998/FY 1999 costs resulting from the recertifications
following the Commission’s Idaho Falls II order. ‘‘[N]ormal-
ly, where an agency has stated that the action in question
governs and will continue to govern its decisions, such action
must be viewed as final.’’ Miss. Valley Gas Co. v. FERC, 68
F.3d 503, 508 (D.C. Cir. 1995) (internal quotations omitted)
(emphasis removed). As a practical matter, the Commission’s
rulings in the orders represent a ‘‘definitive [position that]
has a direct and immediate TTT effect on the day-to-day
business of the parties challenging the action,’’ manifesting
that the orders are sufficiently final for judicial review. Ciba-
13
Geigy Corp. v. EPA, 801 F.2d 430, 436 (D.C. Cir. 1986)
(internal quotations omitted); see Fourth Branch Assocs.
(Mechanicville) v. FERC, 253 F.3d 741, 746–47 (D.C. Cir.
2001). Accordingly, we conclude that the Commission’s or-
ders challenged by the petitioners constitute final agency
actions that this court has the power to review.10
B.
The petitioners argue that the Commission has miscon-
strued the scope of recoverable costs under section 10(e)(1)
because both the structure and the text of section 1701(a)
manifest that the only recoverable OFA costs thereunder are
those ‘‘reasonable and necessary’’ costs for ‘‘studies and other
reviews’’ by OFAs. They contend that the Commission
wrongly relies on section 3401 of OBRA to broaden the scope
of recoverable costs under the FPA and challenge the Com-
mission’s denial of FY 1998 OFA cost refunds based only on
OFAs’ certifications. They also complain that the Commis-
sion erroneously denied them refunds from the costs the
OFAs added upon recertification following Idaho Falls II.
Because we grant the petitioners’ petition on another ground,
however, we leave the resolution of those claims to the
Commission on remand.11
10 We also reject the Commission’s contention that the FY 2001
appeal now before the Commission is a request for a rehearing of
City of Tacoma or the other two orders under review and therefore
is premature. That appeal challenges FY 2001 assessments, supra
n.9, and, although they contain FY 1998 OFA cost adjustments, the
appeal does not relate to the orders considered by the Commission
in Idaho Falls II & III and City of Tacoma—those orders involved
FY 1999/FY 2000 assessments (FY 1998/FY 1999 OFA costs).
11 We note, however, our skepticism of the petitioners’ assertion
that the Congress, when it amended section 10(e) to add ‘‘including
any reasonable and necessary costs incurred by Federal and State
fish and wildlife agencies and other natural and cultural resource
agencies in connection with studies or other reviews carried out by
such agencies,’’ intended to limit recoverable costs to those related
only to ‘‘studies and other reviews.’’ The use of the word ‘‘includ-
ing’’ itself indicates that the enumerated costs are not the sole
14
The petitioners’ primary argument is that FERC failed to
meet the mandate of section 10(e)(1) of the FPA in not
determining whether the OFAs’ reported costs were reason-
able and necessary within the scope of section 10(e)(1). To
determine whether FERC has acted, as the petitioners con-
tend, contrary to law ‘‘we look first to determine whether
Congress has delegated to the agency the legal authority to
take the action that is under dispute.’’ Atlantic City Elec.
Co. v. FERC, 295 F.3d 1, 8 (D.C. Cir. 2002) (internal quota-
tions omitted). To answer that question, we turn to the two-
step approach of Chevron U.S.A. Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837 (1984). Transmission Access
Policy Study Group v. FERC, 225 F.3d 667, 687 (D.C. Cir.
2000); S. Cal. Edison Co. v. FERC, 195 F.3d 17, 22–23 (D.C.
Cir. 1999). Under that approach the court first asks if
‘‘Congress has directly spoken to the precise question at
issue’’—here whether the Commission may delegate to other
federal agencies the task of reviewing the reasonableness of
reported FPA costs. Chevron, 467 U.S. at 842–43 (Chevron
step one). We use the traditional tools of statutory construc-
tion, beginning with ‘‘the most traditional tool of statutory
construction, [reading] the text itself.’’ S. Cal. Edison, 195
F.3d at 22–23 (citing Halverson v. Slater, 129 F.3d 180, 184
(D.C. Cir. 1997)). And to decide whether the plain meaning
of the text resolves the issue, the court considers ‘‘the partic-
ular statutory language at issue, as well as the language and
design of the statute as a whole.’’ Halverson, 129 F.3d at 184
(internal quotations omitted) (emphasis removed). Because
the Congress has directly spoken in section 10(e)(1), directing
that FERC is to review FPA-related costs upon which assess-
recoverable costs. Phelps Dodge Corp. v. NLRB, 313 U.S. 177,
188–89 (1941) (holding that National Labor Relations Act provision
authorizing NLRB to take ‘‘affirmative action, including reinstate-
ment of employees’’ did not limit Board’s remedies to reinstatement
only) (‘‘To attribute such a function to the participial phrase intro-
duced by ‘including’ is to shrivel a versatile principle to an illustra-
tive application. We find no justification whatever for attributing to
Congress such a casuistic withdrawal of the authority which, but for
the illustration, it clearly has given the Board.’’).
15
ments are made, we reject FERC’s differing interpretation as
impermissible under the statute.
As we have previously held, the authority to assess charges
under section 10(e)(1) of the FPA is FERC’s exclusive re-
sponsibility. E. Columbia Basin Irrigation Dist. v. FERC,
946 F.2d 1550, 1557–58 (D.C. Cir. 1991). Section 10(e)(1)
provides that it is the Commission that is to fix the amount of
‘‘reasonable annual charges’’ under the Act. In doing so, it is
the Commission that must ‘‘seek to avoid increasing the price
to the consumers of power by such charges.’’ 16 U.S.C.
§ 803(e)(1). By delegating to other federal agencies the
responsibility of ensuring that their cost reports are reason-
able and within the scope of the Act, the Commission fails to
discharge both duties. Its delegation of its responsibility
means that the OFAs, not the Commission, ‘‘fix’’ the amounts
of annual charges. Id. And by not meeting its obligation to
review OFA costs, the Commission cannot act to ‘‘avoid
increasing the price to consumers of power by such charges’’
as it is required to do. Id. Given ‘‘the particular statutory
language at issue, as well as the language and design of the
statute as a whole,’’ Halverson, 129 F.3d at 184 (internal
quotations omitted) (emphasis removed), we conclude that
FERC’s interpretation invalidly strays from the plain text of
the Act.
Although the Commission responds that the ‘‘reasonable-
ness’’ command of section 10(e)(1) references only its ‘‘rate
design’’ responsibility, i.e., the statute requires the Commis-
sion to ensure only that a reasonable methodology to assess
annual charges is established, FERC fails to explain its
rationale for interpreting section 10(e)(1) to mean that it has
no duty to review the costs themselves. Its failure is under-
standable given that its construction of section 10(e)(1) con-
flicts with its construction of other provisions of the Act. For
example, section 30(e) of the FPA, which relates to fish and
wildlife agencies’ cost recovery incurred in connection with
hydroelectric exemption applications for small conduit facili-
ties, directs that the ‘‘Commission TTT shall establish fees TTT
adequate to reimburse the fish and wildlife agencies TTT for
any reasonable costs incurred in connection with any studies
16
or other reviews carried out by such agencies for purposes of
compliance with this section.’’ 16 U.S.C. § 823a(e) (emphasis
added). Notwithstanding, the Commission interprets the lan-
guage differently:
Since the Commission is responsible for establishing
fees to reimburse ‘‘reasonable costs,’’ it necessarily
has the authority to determine whether the costs
submitted by agencies are reasonable. The Com-
mission has a statutory obligation TTT to ensure that
agencies are not unreasonable in making their cost
statements and study requirements under FPA sec-
tion 30(c).
Fees for Hydroelectric Project Applications to Reimburse
Fish and Wildlife Agencies, 52 Fed. Reg. 48,398, 48,402 (Dec.
22, 1987). The Commission’s failure to interpret consistently
two statutory provisions that are in pari materia manifests
that it has not correctly read ‘‘the language and design of the
statute as a whole.’’ Halverson, 129 F.3d at 184 (internal
quotations omitted) (emphasis removed). Because section
10(e) plainly commands the Commission to assess annual
charges under the FPA, including a review of OFA cost
reports on which the charges are based, we conclude that the
Commission, by failing to conduct that review, has acted
contrary to ‘‘the unambiguously expressed intent of Con-
gress’’ and therefore contrary to law.
For the foregoing reasons, we vacate the orders under
review, namely, Idaho Falls II, 93 F.E.R.C. ¶ 61,145 (2000),
Idaho Falls III, 95 F.E.R.C. ¶ 61,126 (2001), and City of
Tacoma, 95 F.E.R.C. ¶ 61,465 (2001), and remand to FERC
for further proceedings consistent with this opinion.
So ordered.