Nevada Power Co. v. Watt

Nos. 81-1944 et al. (711 F.2d 913, 21 ERC 2029) (10th Cir. June 16, 1983)

ELR Digest

The court invalidates regulations issued by the Secretary of Interior requiring applicants for right-of-way permits under the Federal Land Policy and Management Act (FLPMA) to reimburse the government for all administrative costs incurred in processing their applications, including the cost of environmental impact statement (EIS) preparation, on the ground that the regulations do not adequately consider the factors listed in FLPMA § 304(b) for assessing reasonable processing costs. FLPMA § 504(g) specifically authorizes the Secretary to require applicants for right-of-way permits to reimburse the government for "all reasonable administrative and other costs incurred in processing an application. . . ." Section 304(b) sets out several factors that the Secretary "may" consider, including actual costs, in determining what cost is reasonable. The challenge regulations, 43 C.F.R. § 2802.1-2, interpreted reasonable costs to be the actual cost to the government of processing the applications including the costs of EIS preparation. This opinion consolidates appeals from three district court cases in which plaintiff utility companies, all applicants for Bureau of Land Management right-of-way permits that were assessed processing costs, challenged the reimbursement regulations.

The court first holds that Interior must consider the § 304 factors in assessing processing costs. Interior argues that since § 304(b) states that the Secretary "may take into consideration" the several cost factors listed, its consideration of these factors is purely discretionary. The court concludes that such a reading would allow the Secretary to ignore the factors carefully spelled out by Congress and would result in § 304(b) being completely superfluous. Further, these factors must have been intended to restrict the Secretary's discretion, since the Secretary receives authority to charge fees and require reimbursement from other sections of FLPMA. However, since Congress' use of the word "may" conflicts with the court's interpretation of the structure and design of the Act, a review of the legislative history is necessary. The legislative history reveals that Congress sought to draw a line between the two extremes of requiring the applicants or the government to bear all processing costs. The factors in § 304(b) are that line and thus must be considered when establishing reasonable processing costs.

The court next holds that Interior in fact failed to adequately consider the § 304(b) factors in its reimbursement regulations, noting that there is no showing in the record that factors other than actual costs were considered at all. The court directs Interiorto reconsider how it calculates reasonable processing costs by examining each of the factors in § 304(b). The court leaves it to the Secretary's discretion as to how best to implement its holding, whether by rulemaking or adjudication, but notes that examination of certain factors may require individual adjudication.

Turning to an analysis of the extent to which certain specific expenses may be assessed to right-of-way permit applicants, the court first holds that Interior may charge applicants for the reasonable costs of EIS preparation. However, the Secretary must consider the § 304(b) factors when assessing these costs. One of these factors requires the Secretary to consider those costs "incurred for the benefit of the general public interest rather than for the exclusive benefit of the applicant . . . ." Since an EIS confers benefits on the general public, Interior must undertake the difficult task of separating an EIS's public benefit and the benefit to the applicant. Second, the court finds reasonable the Secretary's policy that he may not charge applicants for work that could have been performed in absence of the permit application. Third, the court declines to address the issue of what constitutes management overhead costs, which can not be assessed under § 304(b), beyond noting that an applicant may not be charged for work relating to the agency's general costs of administration.

The court then holds that Interior may charge applicants for reasonable processing costs for right-of-way permit applications already pending at the date of FLPMA's enactment. Finally, Interior properly charged one of the appellants the actual cost of processing its permit application under pre-FLPMA regulations issued under the Independent Offices Appropriation Act (IOAA). The legislative history behind IOAA reveals none of the evidence of congressional intent the court found so compelling in construing FLPMA § 304(b).

The full text of this opinion is available from ELR (22 pp. $5.00, ELR Order No. C-1338).

Counsel for Defendant-Appellees
Jacques B. Gelin
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2762

Counsel for Plaintiffs-Appellees
Francis M. Shea
Shea & Gardner
1800 Massachusetts Ave. NW, Washington DC 20036
(202) 828-2000

Elliot Lee Pratt
Clyde, Pratt, Gibbs & Cahoon
Suite 200, American Savings Plaza, 77 W.2d St. S., Salt Lake City UT 84101
(801) 322-2516

Stephen M. Mathis
Mathis, Koonce & Reed
121 N. Park Ave., P.O. Box 1022, Montrose CO 81402
(303) 294-2546

Seymour, J.

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]