BLM Assessment of EIS Costs Against Rights of Way Applicants Held Invalid Under Independent Offices Appropriation Act

A federal district court has turned back an attempt by the Bureau of Land Management (BLM) to require six utility companies applying for rights of way for electrical transmission lines across federal lands to reimburse the government for costs incurred in preparing environmental impact statements (EISs) in connection with processing the applications. The decision¹ is the first judicial pronouncement directly construing the applicability of the Independent Offices Appropriation Act's (IOAA) provision² for agency assessment of fees for work performed or benefit provided to the significant costs incurred in preparing impact statements under the National Environmental Policy Act (NEPA) on requests for federal permits or licenses. At least one court of appeals had suggested that recovery of such costs would be possible under the statute,³ and commentators have asserted that such an assessment system would work to internalize the costs of environmental analysis by placing them on the private sponsor of the project or action.⁴ The district court's reasoning is flawed in several respects, however, and its decision is being appealed. The issue of agency recovery of EIS preparation costs under the IOAA thus remains very much alive.

Public Service Company v. Andrus

In Public Service Company v. Andrus,⁵ six utility companies sought declaratory and injunctive relief against BLM's enforcement of regulations⁶ which became effectiveJuly 1, 1975 and required applicants for rights of way across public lands to reimburse the agency for costs incurred in processing the applications and monitoring the applicants' activities after rights of way had been granted. BLM based the regulations on three statutes: § 28(1) of the 1973 amendments to the Mineral Leasing Act,⁷ §§ 201 and 204 of the Public Land Administration Act,⁸ and the Independent Offices Appropriation Act.⁹ The court had little trouble concluding that the Mineral Leasing Act was limited by its terms to rights of way for transportation of liquid or gaseous fuels, and thus it could not serve as a basis for reimbursement regulations as applied to electrical energy suppliers.

The Public Land Administration Act, on the other hand, had been repealed on October 21, 1976 by the Federal Land Policy and Management Act.¹⁰ Because the agency had not yet issued regulations under the newer statute, however, the court declined to rule on any question presented under it and continued to look to the Public Land Administration Act as governing right of way applications filed before it was repealed. Holding that § 204(a) was inapplicable since it dealt only with refunds of overpayments made by applicants, Judge Finesilver decided that § 201 set the same standards as did the Independent Offices Appropriation Act for allowing recoupment, i.e., only against those who are primary beneficiaries of the governmental services.

The Independent Offices Appropriation Act

The IOAA authorizes the head of each federal agency to prescribe fees for any "work, service, publication, report, document, … license, permit … or similar thing of value performed, … prepared, or issued … to or for any person."¹¹ In so doing, the agency head must take into consideration "direct and indirect cost to the Government, value to the recipient, public policy or interest to be served, and other pertinent facts." This statutory language would appear to cover the preparation of environmental impact statements in conjunction with federal permits or licenses for private parties.

The court held, however, that BLM had no authority to impose the cost of EIS preparation on the applicants under either § 201 of the Public Land Administration Act or the Independent Offices Appropriation Act. Completion of impact statements pursuant to NEPA, according to the court, is not a service which provides special benefits to the applicant beyond those which accrue to the public at large. This conclusion was based on Judge Finesilver's reading of the gloss placed on the latter statute by two 1974 Supreme Court decisions, National Cable Television Ass'n v. United States¹² and Federal Power Commission v. New England Power Co.¹³

Supreme Court Decisions

In National Cable Television, the Court remanded to the Federal Communications Commission (FCC) regulations imposing an annual assessment of 30 cents per subscriber against all cable television systems. The Court noted that the statute permits an agency to exact a fee for a service or grant "which, presumably, bestows a benefit on the applicant, not shared by other members of society," but held that the measure of the fee must be the "value to the recipient" of this service. Remand was necessary because the Court could not be sure that the agency used the proper standard in setting the fee. Justice Douglas, writing for the majority, cautioned that "[i]t is not enough to figure the total cost (direct and indirect) to [7 ELR 10214] the Commission" since "some of the costs inured to the benefit of the public" rather than to the licensees.

In New England Power, the Court held illegal annual assessments against jurisdictional electric utilities and natural gas companies which were based on the general cost of administering the Federal Power Commission. The Court stated that no charge could be made for services rendered "when the identification of the ultimate beneficiary is obscure and the service can be primarily considered as benefitting broadly the general public." The Act reaches "only specific charges for specific services to specific individuals or companies."

D.C Circuit Decisions

The district court also relied heavily on two later IOAA decisions by the United States Court of Appeals for the District of Columbia Circuit in Electronic Industries Ass'n v. Federal Communications Commission¹⁴ and National Cable Television Ass'n v. Federal Communications Commission.¹⁵ The D.C. Circuit's opinions in these two companion cases interpreted the Supreme Court's 1974 ruling in National Cable Television to require "a certain nexus, a threshold level of private benefit, between the regulatee and the agency before a fee can be assessed against the recipient of the service." The D.C. Circuit held that the FCC was entitled to charge for services which assisted persons in complying with their statutory duties relating to tariff filings and equipment testing and approval, but it remanded the fee schedule to the agency for a clearer justification of the amounts set for the assessments. The agency was admonished that it could only charge for "those expenses necessary to service the applicant or grantee." The assessment could include "a pro-rata share of any expenses for regulatory activities which are necessary in order to grant [a license]" but not those expenses "independently required to protect the public."

Specific Services, Identifiable Beneficiaries

The district court in Public Service Company concluded that "it is not enough that the service is required in order to grant some privilege or license to the applicant" and rejected BLM's contention that the statutorily-required preparation of an EIS benefited the utility companies because without NEPA compliance no rights of way could be issued. In Judge Finesilver's view, NEPA was clearly enacted for the primary benefit of the general public. Environmental reports which result from the normal processing of a right of way application are thus not "services rendered for the special benefit of the applicant" but are to be considered instead as "benefitting broadly the general public." The costs of preparing such documents are therefore not chargeable to the applicants since the Independent Offices Appropriation Act "gives the agency no authority to charge for general activities which independently benefit the general public."

In reaching this conclusion, the district court overlooked the D.C. Circuit's warning in National Cable Television Ass'n v. FCC that:

the fact that the public interest is also benefitted … does not mean that cable operators cannot be charged, so long as those operators are identifiable beneficiaries of agency services.¹⁶

Completion of the NEPA process in conjunction with requests for rights of way across public lands is undoubtedly designed to protect the environment of those lands, but it also undeniably benefits the applicants by fulfilling the relevant statutory requirements so that the rights of way can be granted. Agency compliance with NEPA both confers general benefits on the public at large and constitutes a prerequisite to the applicants' receipt of benefits "not shared by other members of society," i.e., the rights of way. The applicants are thus "identifiable beneficiaries" of agency preparation of the impact statements who may properly be called upon to pay for those services.

Moreover, a distinction can be drawn between tasks such as EIS preparation which BLM performs in conjunction with particular outside applications and in response to a specific statutory directive, and general administrative and office functions which are not limited to one application or mandated by a specific statutory provision. Much of the confusion surrounding the Independent Offices Appropriation Act's reimbursement provision stems from the fact that both Supreme Court cases and nearly all the lower court decisions construing it have dealt with industry-wide annual assessment schemes in which the fees charged each licensee were based on a pro rata share of the agency's operating expenses for the year rather than specific, individual services rendered that licensee. The judicial insistence upon a specific benefit from specific services to a particular applicant or licensee and exclusion of charges for "general activities independently benefitting the public at large" can be better understood when viewed within this factual context. BLM's attempt to charge a particular right-of-way applicant for the costs incurred in preparing an impact statement in conjunction with the consideration of his application clearly presents a different situation, and Judge Finesilver's failure to recognize this distinction undercuts the validity of his decision.

In setting the amount of the fee assessed, BLM attempted to go beyond simply charging for the EIS, however. Its reimbursement regulations allowed a pro rated assessment of the agency's general operating expenses to be included in the fee charged the applicants, an arrangement analogous to those considered and invalidated or remanded by the Supreme Court in National Cable Television and New England Power and the D.C. Circuit in Electronic Industries. The agency also apparently considered the total value which the applicants could derive as a result of receiving the rights of way in determining the measure of the fee. Judge Finesilver correctly questioned the permissibility of these actions on the ground that the required nexus between the costs incurred by the agency and the value of the services rendered to the recipients had not been adequately articulated.

Conclusion

Public Service Company v. Andrus will not be the last word on the issue of agency recovery under the [7 ELR 10215] Independent Offices Appropriation Act of EIS preparation costs from applicants for permits or licenses. The court's decision has been appealed and its reasoning¹⁷ is suspect because it failed to recognize that discreet agency actions such as impact statement completion can have both identifiable private beneficiaries and diffuse public benefits. In addition, the Federal Land Policy and Management Act of 1976, which was not involved in the Public Service Company case, contains a provision¹⁸ allowing BLM to charge applicants for the costs of preparing impact statements under NEPA. This measure indicates that Congress may simply bypass the Independent Offices Appropriation Act in particular instances and expressly allow agencies to charge applicants for EIS preparation costs in conjunction with certain types of federal actions.

The court's decision also demonstrates, as does the D.C. Circuit's 1976 opinion in National Cable Television Ass'n v. FCC,¹⁹ the difficulties courts and agencies are encountering in trying to apply the "value to the recipient" reimbursement standard enunciated by the Supreme Court in 1974.²⁰ BLM hung itself in Public Service Company by overreaching this standard in its attempted inclusion of general operating costs in the fees assessed against the applicants. With its new authority under the Federal Land Policy and Management Act to charge applicants for EIS preparation costs, a more reasonable and detailed cost assessment system would almost certainly survive judicial scrutiny.

1. Public Service Co. v. Andrus, 433 F. Supp. 144, 7 ELR 20715 (D. Colo. May 31, 1977), appeal docketed, No. 77-1734 (10th Cir. Sept. 13, 1977).

2. 31 U.S.C. § 483a.

3. Silva v. Romney, 473 F.2d 287, 291, 3 ELR 20082, 20084 (1st Cir. 1973).

4. Comment, Who Should Pay for the Impact Statement: More on the Independent Offices Appropriation Act of 1952, 3 ELR 10086 (1973).

5. 433 F. Supp. 144, 7 ELR 20715 (D. Colo. May 31, 1977), appeal docketed, No. 77-1734 (10th Cir. Sept. 13, 1977).

6. 43 C.F.R. § 2802.1-2 et seq., 40 Fed. Reg. 17841 (1975).

7. 30 U.S.C. § 185(l).

8. 43 U.S.C. §§ 1371, 1374.

9. 31 U.S.C. § 483a.

10. 43 U.S.C. § 1701 et seq., ELR STAT & REG. 41458.

11. 31 U.S.C. § 483a.

12. 415 U.S. 336 (1974). See Comment, Supreme Court Clarifies, Confuses Independent Offices Appropriation Act, 4 ELR 10094 (1974).

13. 415 U.S. 345 (1974). See Comment, supra note 12.

14. 554 F.2d 1109 (D.C. Cir. 1976).

15. 554 F.2d 1094 (D.C. Cir. 1976).

16. Id. at 1103.

17. Public Service Co. v. Andrus, appeal docketed, No. 77-1734 (10th Cir. Sept. 13, 1977).

18. 43 U.S.C. § 1734(b), ELR STAT. & REG. 41467.

19. 554 F.2d 1094 (D.C. Cir. 1976).

20. National Cable Television Ass'n v. United States, 415 U.S. 336 (1974). See Comment, Supreme Court Clarifies, Confuses Independent Offices Appropriation Act, 4 ELR 10094 (1974).