United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 9, 1998 Decided November 13, 1998
No. 97-1725
Alabama Power Company, et al.,
Petitioners
v.
Federal Energy Regulatory Commission,
Respondent
On Petition for Review of Orders of the
Federal Energy Regulatory Commission
Dan H. McCrary argued the cause for petitioners. With
him on the briefs were Rodney O. Mundy, Lyle D. Larson
and Andrew W. Tunnell.
Larry D. Gasteiger, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With him on
the brief were Jay L. Witkin, Solicitor, and Susan J. Court,
Special Counsel.
Edward H. Comer and Henri D. Bartholomot were on the
brief for amicus curiae Edison Electric Institute. William L.
Fang entered an appearance.
Before: Silberman, Rogers and Garland, Circuit Judges.
Opinion for the Court filed by Circuit Judge Silberman.
Silberman, Circuit Judge: Under the Federal Power Act,
federally regulated electric utilities must obtain FERC's ap-
proval before changing the rates they charge to wholesale
and retail consumers. This case presents the question wheth-
er a different provision of the Act requires utilities to obtain
similar "pre-approval" before modifying the depreciation
rates they use for accounting purposes. Petitioners contend-
ed unsuccessfully before the Commission that the statutory
provision does not impose such an obligation. We agree with
petitioners that the Commission unreasonably read the stat-
ute, and accordingly we vacate the orders under review.
I.
Electric utilities incur expenses in producing power, but
regulators do not permit every sort of expense to be recov-
ered immediately--nor should they. It would make no sense
to allow a utility that constructs a power plant for $100
million to set rates high enough to recover that expense over
the course of one year. Although the plant will deteriorate
from use from year to year, the plant might last for 20 years
or more, and its cost should be recovered over the course of
that useful life.
Depreciation charges are the means by which a utility
recovers over time the capital invested in the facilities or
plant used in producing power. Because a higher deprecia-
tion charge implies that the utility should be permitted a
higher rate (and conversely a lower depreciation charge im-
plies that the utility should be allowed a lower rate),1 one
__________
1 Cost of service ratemaking can be described in mathematical
terms: R=O+(V-d)r, where R is the utility's total revenue require-
ments; O is its operating costs, including all types of operating and
would expect both the Commission and the utilities it regu-
lates to have a keen interest in the accurate measurement of
depreciation. It is not surprising, then, that as a by-product
of its authority under ss 205 and 206 of the Federal Power
Act (FPA) (codified as amended at 16 U.S.C. ss 824d, 824e
(1994)) to regulate the rates utilities can charge to consumers,
the Commission has regulated depreciation accounting by
utilities. See, e.g., Cities of Aitkin v. FERC, 704 F.2d 1254,
1255-56 (D.C. Cir. 1982) (rejecting challenge to FERC order
granting a utility's proposed rate increase in part because the
utility had adequately justified increasing the rate of depreci-
ation claimed for steam and hydraulic generating equipment);
South Carolina Elec. & Gas Co., 76 F.E.R.C. p 61,338 (1996)
(rejecting proposed rate change because the utility had im-
properly shifted depreciation reserves from one asset to
another).
Where depreciation accounting is not implicated in a rate-
making proceeding, however, it appears that the Commission
has not attempted to regulate it. That is not to say that the
Commission lacks the statutory authority to do so. Apart
from its duties regarding the rates utilities may charge for
their service, the Commission has been delegated authority
over accounting procedures per se. Section 301 of the Act
addresses record keeping generally, requiring utilities to keep
"such accounts ... as the Commission may by rules and
regulations prescribe as necessary or appropriate for the
purposes of the administration of this chapter" and authoriz-
ing the Commission to inspect such accounts at all times. 16
U.S.C. s 825(a)-(b) (1994). Pursuant to this authority, the
Commission adopted in 1960 the Uniform System of Ac-
counts, 18 C.F.R. pt. 101 (1998), a comprehensive classifica-
tion and enumeration of revenue and expense items that
utilities must use in keeping their books. Yet although the
Uniform System of Accounts defines "depreciation," 18
__________
maintenance expenses, depreciation expense, and taxes; V is the
original cost or value of its investments in facilities; d is accumulat-
ed depreciation; and r is the reasonable rate of return. See
Charles F. Phillips, Jr., The Regulation of Public Utilities 177
(3d ed. 1993).
C.F.R. pt. 101, Definition 12, and sets forth the components of
the depreciation account, id. at Item 108, nowhere does it
prescribe a depreciation method or fix depreciation rates.
See Office of Chief Accountant, Federal Energy Regulatory
Commission, Electric Utility Depreciation Practices, 1976, at
1 (1980) ("The Uniform System of Accounts requires depreci-
ation accounting but prescribes no particular depreciation
method.").
Section 302, unlike section 301, reflects a specific focus on
depreciation and depreciation rates. 16 U.S.C. s 825a (1994).
Section 302(a) grants the Commission the authority, "after
hearing," to prescribe "rules, regulations, and forms of ac-
count" to govern the depreciation accounting of regulated
utilities. Id. at s 825a(a). The Commission is also autho-
rized to "ascertain and determine, and by order fix, the
proper and adequate rates of depreciation of the several
classes of property of each licensee and public utility." Id.
Section 302(b) obliges the Commission to notify State com-
missions having jurisdiction with respect to any public utility
involved "before prescribing any rules or requirements as to
accounts, records, or memoranda, or as to depreciation rates."
Id. at s 825a(b). Yet while s 302 would seem to authorize
the Commission to promulgate rules and regulations govern-
ing depreciation accounting, it has lain dormant in the United
States Code since Congress added it to the FPA in the Public
Utility Act of 1935, ch. 687, Title II, sec. 213, s 302, 49 Stat.
803, 855 (1935).
Section 302's dormancy ended in 1994, however, when the
Commission, responding to Midwest Power's unsolicited letter
informing the Commission of its intention to change its
depreciation rates, declared that it was "inappropriate for
[Midwest Power] to reduce its depreciation rates for account-
ing purposes without a corresponding change in the deprecia-
tion rates embedded in its wholesale and retail electric rates."
Midwest Power Sys. Inc., 67 F.E.R.C. p 61,076, at 61,207
(April 19, 1994) (quoting 1994 Letter Order from FERC's
Chief Accountant) (internal quotation marks omitted) (altera-
tion in original).2 The Commission reasoned that the plain
language of s 302--especially the part of s 302(a) providing
that public utilities shall not charge "with respect to any class
of property a percentage of depreciation other than that
prescribed therefor by the Commission," 16 U.S.C. s 825a(a)
(emphasis added)--implies that a utility may not unilaterally
choose its depreciation rates, for rates so chosen would not be
"prescribed by the Commission." Midwest Power, 67
F.E.R.C. at 61,208, 61,209. The Commission concluded that
utilities must henceforth seek prior approval from the Com-
mission before changing their depreciation rates. See id. at
61,209-10.
When Midwest Power obeyed this order and filed a request
for authorization to reduce its annual composite depreciation
rate, the Commission dismissed the request as moot--
changes made before April 19, 1994 (the date of FERC's
Midwest Power order) were retroactively accepted if based
on sound accounting practices--but did not offer further
justification for the new pre-approval system. MidAmerican
Energy Co., 79 F.E.R.C. p 61,169, at 61,794 (May 15, 1997).3
Because Midwest Power's request for a rate change was
__________
2 We are uncertain as to FERC's policy reasons for invoking
s 302 now for the first time since its enactment. The Commission's
counsel surmised at oral argument that it had something to do with
the problem of stranded investment costs that has arisen from the
recent movement toward giving competitors open-access to power
grids. See Cajun Elec. Power Coop. v. FERC, 28 F.3d 173, 175-77
(D.C. Cir. 1994) (describing the stranded costs problem).
3 Although the Commission thought the statutory language clear,
it decided against retroactive enforcement of its Midwest Power
order because of "confusion in the industry as to the appropriate
filing requirements." MidAmerican Energy Co., 79 F.E.R.C. at
61,793 (emphasis added). For rate changes made between April 19,
1994 and May 22, 1997 (the date the May 15, 1997 order was
published in the Federal Register), the Commission adopted an
amnesty policy under which a utility was obliged to file for retroac-
tive approval before December 31, 1997. Id. For rate changes
made after May 22, 1997, the Commission would require prior
approval before allowing any change. Id. at 61,793 n.2.
granted, it did not seek rehearing of the May 1997 order.
But Southern Company Services, Inc., acting as agent for its
subsidiary companies including Alabama Power Company,
was granted permission to intervene and requested rehear-
ing. MidAmerican Energy Co., 81 F.E.R.C. p 61,081 (Octo-
ber 22, 1997). Southern argued that s 302 is an enabling
statute that is not self-executing, and therefore does not
require public utilities to seek pre-approval from the Commis-
sion but only to conform to rates that the Commission has
already fixed. Id. at 61,326. Southern also asserted that the
May 1997 order was procedurally invalid because the Com-
mission had neither given notice to the State commissions as
s 302(b) requires nor followed the notice and comment proce-
dure of 5 U.S.C. s 553 (1994) in promulgating what Southern
claimed was a substantive rule. Id. at 61,327.
The Commission rejected Southern's arguments and denied
the request for rehearing. Pointing to the same language in
s 302(a) that it had emphasized in its April 1994 order, the
Commission concluded that s 302 is not merely an enabling
provision, but rather expressly imposes a pre-approval re-
quirement. Id. at 61,328. The Commission responded to
Southern's APA objection by characterizing the May 1997
order as an "interpretative" rule exempt from the APA's
notice and comment procedures; in the Commission's view,
the May 1997 order "did little more than reiterate the statu-
tory obligation imposed on public utilities and licensees by
Congress in 1935." Id. As for Southern's claim that the
Commission violated s 302(b) by not providing notice to the
State commissions prior to issuing the May 1997 order, the
Commission maintained that it did send the May 1997 order
to the State commissions after issuance and that no State
commission had responded or indicated any objection to the
order. Id. at 61,327 n.11. Southern and the other interve-
nors before the Commission now petition us for review of the
May 1997 and October 1997 orders.
II.
Before deciding whether s 302(a) requires utilities to gain
the Commission's approval before changing their depreciation
rates for accounting purposes, we see an initial weakness in
the Commission's position: its apparent failure to comply
with s 302(b). Section 302(b) provides:
The Commission, before prescribing any rules or require-
ments as to accounts, records, or memoranda, or as to
depreciation rates, shall notify each State commission
having jurisdiction with respect to any public utility
involved, and shall give reasonable opportunity to each
such commission to present its views, and shall receive
and consider such views and recommendations.
16 U.S.C. s 825a(b) (emphasis added). Petitioners argue that
the Commission neglected to provide the requisite notice to
the State commissions before issuing its May 1997 order, and
that the May 1997 order and the October 1997 order justify-
ing the May 1997 order are therefore invalid. The Commis-
sion responds that it complied with s 302(b) by publishing the
May 1997 order in the Federal Register after it was issued,
see 62 Fed. Reg. 28,015 (May 22, 1997), and by sending the
May 1997 order to the State commissions before issuing the
October 1997 order.
We think it obvious that the Commission did not comply
with s 302(b). The Commission identified its May 1997 order
as a "rule" in its October 1997 order, in its brief, and at oral
argument. See, e.g., MidAmerican Energy Co., p 61,081, at
61,328 (emphasis added) ("[W]e believe that the May 15 order
properly may be characterized as an 'interpretative rule.' ").
In doing so, the Commission has hoisted itself on its own
petard, for s 302(b) requires the Commission to notify the
State commissions "before prescribing any rules." 16 U.S.C.
s 825(a)(b) (emphasis added). Publishing the May 1997 or-
der in the Federal Register and notifying the State commis-
sions after issuing the May 1997 order do not satisfy that
requirement. The Commission's neglect of s 302(b) suffices
for us to hold the May 1997 and October 1997 orders invalid.
Alternatively, the Commission contends, rather obliquely,
that any failure to comply with s 302(b) was harmless in light
of the absence of response or objection from a single State
commission since the State commissions received notice--
albeit tardy--of the May 1997 order. We say "oblique"
because the Commission neither cited the APA's harmless
error rule nor explained why a State commission's failure to
object after receiving a belated notice necessarily implies that
no harm was done.4 In any event, we think it impossible to
conclude that no State commission would have had objections,
or at least comments, if they had been presented with a
proposal rather than a fait accompli.
Finally, we should note that the Commission's characteriza-
tion of its May 1997 order as an "interpretative rule"5 for
purposes of the APA's notice and comment requirement--
assuming the characterization were correct--would not re-
lease the Commission from its obligations under the organic
statute, s 302(b), which draws no distinction between in-
terpretative rules and other sorts of rules. See 5 U.S.C.
ss 553(b), (b)(A) (emphasis added) ("Except when notice or
__________
4 The APA provides that "[t]he reviewing court shall ... hold
unlawful and set aside agency action ... found to be ... without
observance of procedure required by law," 5 U.S.C. s 706(2)(D)
(1994), and that "[in] making the foregoing determination[], ... due
account shall be taken of the rule of prejudicial error," id. at s 706.
5 While petitioners do not challenge the orders on this ground,
the Commission's characterization of its May 1997 order as a rule is
troubling as a matter of administrative law. The APA establishes a
distinction between rulemaking (the agency process for "formulat-
ing, amending, or repealing a rule," 5 U.S.C. s 551(5) (1994)) and
adjudication (the "agency process for the formulation of an order,"
id. at s 551(7)). The APA does not contemplate the use of adjudi-
cation to develop rules. See 5 U.S.C. s 551(6) (emphasis added)
(defining "order" as "the whole or a part of a final disposition of an
agency in a matter other than rule making") (emphasis added); see
also H.R. Rep. No. 1980, 79th Cong., 2d Sess., at 20 (1946) ("[T]he
term 'order' is essentially and necessarily defined to exclude
rules."); NLRB v. Wyman-Gordon Co., 394 U.S. 759, 780 (1969)
(Harlan, J., dissenting); Bowen v. Georgetown Univ. Hosp., 488
U.S. 204, 218-19 (1988) (Scalia, J., concurring). Although FERC,
like other agencies, often engages in the practice of labeling an APA
"rule" an "Order," here the Commission was clearly involved in an
adjudication of Midwest Power's accounting practices.
hearing is required by statute, this subsection does not apply
... to interpretative rules."); Union of Concerned Scientists
v. Nuclear Regulatory Comm'n, 711 F.2d 370, 380-81 (D.C.
Cir. 1983) (holding that 5 U.S.C. s 553(b)(B)'s "good cause"
exemption from notice and comment requirements does not
dispense with procedural requirements imposed by the organ-
ic statute).
III.
Although we could rest on our determination that the
Commission's May 1997 order violates s 302(b), we think it
appropriate to consider alternatively petitioners' more sub-
stantive argument--that the order is simply not authorized
under s 302(a). Petitioners and the Commission, not atypi-
cally, both claim that the plain language of the section sup-
ports their respective readings and therefore ends our analy-
sis. See Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 842-43 (1984). We set out
s 302(a) in full:
The Commission may, after hearing, require licensees
and public utilities to carry a proper and adequate depre-
ciation account in accordance with such rules, regula-
tions, and forms of account as the Commission may
prescribe. The Commission may, from time to time,
ascertain and determine, and by order fix, the proper
and adequate rates of depreciation of the several classes
of property of each licensee and public utility. Each
licensee and public utility shall conform its depreciation
accounts to the rates so ascertained, determined, and
fixed. The licensees and public utilities subject to the
jurisdiction of the Commission shall not charge to operat-
ing expenses any depreciation charges on classes of
property other than those prescribed by the Commission,
or charge with respect to any class of property a percent-
age of depreciation other than that prescribed therefor
by the Commission. No such licensee or public utility
shall in any case include in any form under its operating
or other expenses any depreciation or other charge or
expenditure included elsewhere as a depreciation charge
or otherwise under its operating or other expenses.
Nothing in this section shall limit the power of a State
commission to determine in the exercise of its jurisdic-
tion, with respect to any public utility, the percentage
rate of depreciation to be allowed, as to any class of
property of such public utility, or the composite deprecia-
tion rate, for the purpose of determining rates or
charges.
16 U.S.C. s 825a(a).
As it did in its October 1997 order, the Commission empha-
sizes the portion of s 302(a) that states that "utilities ...
shall not charge to operating expenses any depreciation
charges on classes of property other than those prescribed by
the Commission, or charge with respect to any class of
property a percentage of depreciation other than that pre-
scribed therefor by the Commission." Id. (emphasis added).
The Commission asserts that this language "unambiguously
requires public utilities to employ as depreciation charges and
rates only those charges and rates that have been prescribed
by the Commission," and therefore that "common sense dic-
tates that the changes in depreciation rates must also be
approved by the Commission before they are used." Petition-
ers disagree, contending that the Commission has opportunis-
tically focused on selected portions of the provision. Petition-
ers claim that a reading of the provision as a whole--
especially the repeated use of the word "may" rather than
"shall"--indicates that s 302 is merely an enabling provision
that grants the Commission authority to regulate depreciation
accounts; in other words, s 302(a) does not itself impose any
obligation but merely lays the groundwork for the Commis-
sion to do so.
Although the language of s 302(a) is not pellucid in all
respects, we agree with petitioners that it is clear on the
discrete issue presented in this case--whether s 302(a) is a
self-executing statute or merely an enabling statute. A care-
ful reading reveals that Congress did not establish any self-
executing requirements for utilities to follow. Rather, Con-
gress intended to grant the Commission the authority to
regulate depreciation accounting by utilities.
We think the Commission's paraphrase of the section that a
utility may only use depreciation rates prescribed by the
Commission may be misleading. The structure of the section
seems to speak in terms of prescribing general rules and
fixing the rates of individual utilities. The first sentence of
s 302(a) authorizes the Commission, after holding a hearing,
to "require ... public utilities to carry a proper and adequate
depreciation account in accordance with such rules, regula-
tions, and forms of account as the Commission may pre-
scribe." 16 U.S.C. s 825a(a) (emphasis added). Here Con-
gress spoke in permissive terms--using "may" rather than
"shall"--and established the procedural prerequisite of a
"hearing," thereby contemplating that positive action by the
Commission, rather than the language of s 302 itself, would
underlie the actual regulation of utilities' depreciation ac-
counting. Although we need not decide the issue, it appears
that Congress here contemplated a general rulemaking au-
thority for the Commission. The verb "prescribe"--meaning
"to lay down ... [a] rule," Webster's New International
Dictionary 1954 (2d ed. 1934)--as well as the words "rules"
and "regulations" illustrate that Congress intended to autho-
rize the Commission to promulgate rules and requirements
generally applicable to all utilities. For example, the Com-
mission might promulgate a rule that utilities must follow
generally accepted accounting principles, or the Commission
might set a rate of depreciation (for a class of property)
applicable to all utilities.
The second sentence of s 302(a) provides that "[t]he Com-
mission may, from time to time, ascertain and determine, and
by order fix, the proper and adequate rates of depreciation of
the several classes of property of each licensee and public
utility." 16 U.S.C. s 825a(a) (emphasis added). Like the
first sentence, it is phrased to enable the Commission to
regulate rather than to impose self-executing requirements.
Although, again, we do not say definitively, Congress here
seems to have contemplated a more specific type of regula-
tion: case-by-case, utility-by-utility adjudication of rates of
depreciation as opposed to generally applicable rules govern-
ing accounting practices or generally applicable rates. This
is suggested by Congress' use of the verb "fix"--meaning "to
assign precisely," Webster's New International Dictionary
958 (2d ed. 1934)--rather than "prescribe," and the words
"order" and "each licensee and public utility."6
The third sentence explains the relationship between the
first and the second sentences, stating that "[e]ach licensee
and public utility shall conform its depreciation accounts to
the rates so ascertained, determined, and fixed." 16 U.S.C.
s 825a(a). In other words, where the Commission has speci-
fied general rules of depreciation accounting and has fixed an
individual utility's rates of depreciation in an adjudication,
that utility must employ the fixed rates in complying with the
more general accounting rules. Notably, as with the first two
sentences, the third sentence reflects Congress' understand-
ing that the Commission, not s 302 itself, would carry out the
fixing of rates. Only after the Commission had "ascertained,
determined, and fixed" a utility's depreciation rates--an obvi-
ous reference to the adjudication procedure described in the
second sentence--would that utility face any legal obligation.
Nor does the fourth sentence--on which the Commission
stakes its argument--support the notion that s 302 itself
establishes a pre-approval requirement. It provides that
"[t]he licensees and public utilities subject to the jurisdiction
of the Commission shall not charge to operating expenses any
depreciation charges on classes of property other than those
prescribed by the Commission, or charge with respect to any
class of property a percentage of depreciation other than that
prescribed therefor by the Commission." 16 U.S.C.
__________
6 Thus, FERC's authority under the first sentence of s 302(a) is
general (and analogous to rulemaking under the subsequently en-
acted APA), and under the second sentence is specific (and analo-
gous to adjudication under the subsequently enacted APA). The
APA, enacted in 1946, Pub. L. No. 79-404, 60 Stat. 237 (1946), post-
dates FPA s 302, which was added to the FPA by the Public Utility
Act of 1935. Nonetheless, the analogy to the APA's definitions of
rulemaking and adjudication is appropriate because the difference
between rulemaking and adjudication was recognized in pre-APA
law. Compare Bi-Metallic Co. v. State Bd. of Equalization, 239
U.S. 441, 445 (1915) (rulemaking), with Londoner v. Denver, 210
U.S. 373, 385 (1908) (adjudication).
s 825a(a).7 The Commission infers from the words "deprecia-
tion charges on classes of property other than those pre-
scribed by the Commission" and "a percentage of deprecia-
tion other than that prescribed therefor by the Commission"
that changes in depreciation rates must be approved by the
Commission before they are used, for otherwise, utilities
would be using rates established not by the Commission but
by the utilities themselves. We think the Commission takes
this sentence out of context. Read in light of the preceding
sentences, it seems clear to us that Congress, by using the
past tense of the verb "prescribe," was referring back to the
first sentence, which concerns the Commission's basic author-
ity to "prescribe" generally applicable rules and generally
applicable rates. Thus, if the Commission adheres to the
procedural requirements of the first sentence and prescribes
which classes of property are subject to depreciation, utilities
may not thereafter take depreciation charges from other
classes of property. Similarly, if the Commission follows the
procedural requirements of the first sentence and generally
prescribes a "percentage" (i.e., a rate) of depreciation with
respect to a class of property, utilities may not thereafter
employ a different rate with respect to that class of property.
In short, the fourth sentence lacks bite until the Commission
regulates by the rulemaking procedure authorized by the first
sentence.
In any event, whether or not the section mandatorily
divides Commission regulation into discrete rulemaking and
adjudication spheres, we think petitioners are correct that it
is not self-executing. Even if the term "prescribe" in the
fourth sentence could be read as applying to the Commis-
sion's setting of an individual utility's depreciation rates, that
sentence clearly calls for the Commission to take some action
__________
7 The annual "depreciation charge" for an asset is the value of the
asset multiplied by the depreciation rate applicable to that asset.
See Phillips, The Regulation of Public Utilities at 271.
with respect to rates of depreciation before a utility is under
an obligation not to alter those rates.
Another provision of the statute supports our reading of
s 302. When Congress amended the FPA in the Public
Utility Act of 1935, it added not only s 302, but several other
provisions, among which was s 205(d). Public Utility Act of
1935, ch. 687, Title II, sec. 213, s 205(d), 49 Stat. 803, 851-52
(1935) (codified at 16 U.S.C. s 824d(d)). Section 205(d), part
of a provision dealing with the regulation of rates "made ...
in connection with the transmission or sale of electric ener-
gy," 16 U.S.C. s 824d(a), provides:
Unless the Commission otherwise orders, no change
shall be made by any public utility in any such rate,
charge, classification, or service, or in any rule, regula-
tion, or contract relating thereto, except after sixty days'
notice to the Commission and to the public. Such notice
shall be given by filing with the Commission and keeping
open for public inspection new schedules stating plainly
the change or changes to be made in the schedule or
schedules then in force and the time when the changes
will go into effect.
16 U.S.C. s 824d(d) (emphasis added). In contrast to
s 302(a), s 205(d) does impose a self-executing requirement
on utilities: utilities must file their proposed rate schedules
with the Commission and may not implement those changes
until at least 60 days after filing.8 We can assume, therefore,
that Congress knew how to impose a pre-change filing re-
quirement and intentionally chose not to do so in s 302. See
Russello v. United States, 464 U.S. 16, 23 (1983) (" '[W]here
Congress includes particular language in one section of a
statute but omits it in another section of the same Act, it is
generally presumed that Congress acts intentionally and pur-
posely in the disparate inclusion or exclusion.' ") (quoting
United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir.
1972)) (alteration in original); Halverson v. Slater, 129 F.3d
180, 185 (D.C. Cir. 1997) (noting that the Russello rule has
__________
8 Section 205(e) gives FERC the authority to conduct a hearing to
determine the reasonableness of the proposed rate change and to
reject the change if it is found unreasonable. 16 U.S.C. s 825d(e).
force where, as here, "the two provisions in question are
included within the same legislative enactment").
* * * *
We should make clear the limitations of our holding. It
may be that the Commission could, pursuant to its authority
under the first sentence of s 302(a) to prescribe generally
applicable rules relating to depreciation accounting, promul-
gate a substantive rule requiring utilities to obtain approval
from the Commission before changing their depreciation
rates for accounting purposes. In promulgating such a rule,
the Commission would of course have to comply with the
"hearing" prerequisite of the first sentence of s 302(a), with
s 302(b)'s requirement of advance notification to State com-
missions, and with the notice and comment procedures set
forth in 5 U.S.C. s 553. And the Commission's rule would
still have to withstand scrutiny under the Chevron frame-
work. But the "precise question at issue," Chevron, 467 U.S.
at 842, would be different from what it was in this case.
Instead of asking whether s 302 itself requires utilities to
gain the Commission's approval before changing their depre-
ciation rates, we would ask whether s 302 forbids the Com-
mission from imposing such an obligation on utilities--or at
least whether s 302 is ambiguous in that respect. We do not
decide that question.
* * * *
For the foregoing reasons, we grant the petition for review,
vacate the Commission's May 1997 and October 1997 orders,
and remand for proceedings not inconsistent with this opin-
ion.
So ordered.