NEVADA POWER CO. v. WATT

SEYMOUR, Circuit Judge.

I.

INTRODUCTION

These consolidated appeals present a question of first impression concerning the reimbursement to the government of costs incurred in processing applications for rights-of-way under the Federal Land Policy and Management Act of 1976, 43 U.S.C. §§ 1701-1784 (1976 & Supp. V 1981) (FLPMA or Act). FLPMA authorizes the Secretary of the Department of the Interior to recover "reasonable costs" of processing applications for rights-of-way. FLPMA §§ 304, 310, 504(c), (g), 43 U.S.C. §§ 1734, 1740, 1764(c), (g).

Three district courts, in cases involving almost identical issues of fact and law, reached differing results on the central issue we must resolve here: whether the Secretary adequately considered the "reasonableness factors" listed in section 304(b) (hereinafter reasonableness factors or 304(b) factors) in assessing "reasonable costs" of processing to applicants for rights-of-way across the public lands. In Nevada Power Co. v. Watt, No. 81-1944, and Public Service Co. v. Watt (PSC II), Nos. 81-2066 and 81-2143, district courts in Utah and Colorado, respectively, held that the Secretary must consider the 304(b) factors, and that he had failed to do so adequately. The Secretary appeals in both cases, and the appellees in PSC II raise additional issues on cross-appeal. In Colorado-Ute Electric Ass'n v. Watt, No. 82-1304, another judge in the District of Colorado held that the Secretary was not required by law to consider the factors, and Colorado-Ute appeals.

These appeals raise a number of fairly straightforward legal issues. Where possible, common issues will be discussed collectively. Significantly different factual and legal issues will be discussed individually.

II.

HISTORY

A. Interior's Cost Reimbursement Regulations

1. The Independent Offices Appropriation Act and the Public Land Administration Act

Although our opinion primarily addresses Interior's cost-reimbursement practices under FLPMA, we must also consider cost-reimbursement under two earlier acts, the Independent Offices Appropriation Act (IOAA), 31 U.S.C. § 483a (1976), and the Public Land Administration Act (PLAA), 43 U.S.C. §§ 1371, 1374 (repealed 90 Stat. 2792 (1976)). Interior's FLPMA cost-reimbursement regulations had their genesis in regulations developed under the two earlier acts. The validity of the earlier regulations is raised for our examination in Colorado-Ute. We therefore discuss the development of the regulations under the earlier acts in order to provide the historical context for the FLPMA regulations and to facilitate our review of Colorado-Ute.

At all times pertinent to this appeal, federal policy has required persons seeking special permits to use the public lands to reimburse the government for costs incurred in processing their applications. Interior initially promulgated the cost reimbursement regulations here at issue in 1975, citing as authority, inter alia, Title V of the IOAA, 31 U.S.C. § 483a and sections 201 and 204 of the PLAA, 43 U.S.C. §§ 1371, 1374. 40 Fed.Reg. 17,841 (April 23, 1975); see 43 C.F.R. § 2802.1-2 (1975). The regulations provided that:

Id. § 2802.1-2(a)(1).1

In January 1976, six western utility companies filed suit challenging the reimbursement regulations. The utilities sought declaratory and injunctive relief against application of the regulations on the grounds that the regulations exceeded the Secretary's statutory authority, and alternatively, that if the regulations were authorized, the statutes represented an unconstitutional delegation by Congress of the tax power. In Public Service Co. v. Andrus, 433 F.Supp. 144 (D.Colo.1977) (PSC I), Judge Finesilver held that the IOAA and PLAA authorized Interior to recover costs only for services providing "special benefits to [applicants] beyond those which accrue to the public at large." Id. at 155. The judge found that environmental assessments and impact statements triggered by an application for a right-of-way were of general benefit to the public. Id. at 152-53. Because those studies did not "provide special benefits to [applicants] beyond those which accrue to the public at large," id. at 156, he held that their costs could not be charged to applicants. He enjoined Interior from enforcing the regulations "to the extent that they exceed the authority provided by" the PLAA and the IOAA. Id.

FLPMA became effective in October 1976. During the proceedings in PSC I, the plaintiffs moved to amend their complaint to challenge the regulations under FLPMA as well as the IOAA and the PLAA. The trial court denied the motion "[b]ecause the Secretary of the Interior has not yet interpreted the FLPMA nor, to [the court's] knowledge, issued regulations under it." Id. at 147 n. 2. Interior dismissed its appeal of PSC I on November 22, 1977, assertedly because FLPMA provided express new authority for cost reimbursement.

2. The Federal Land Policy and Management Act

FLPMA directs Interior to promulgate rules and regulations to carry out the purposes of the Act.2 FLPMA § 310, 43 U.S.C. § 1740. Prior to such rulemaking, existing rules and regulations were to continue in force to the extent practicable. Id. The Act specifically authorizes the Secretary to issue regulations concerning rights-of-way:

Id. § 504(g), 43 U.S.C. § 1764(g). Section 304 gives the Secretary more explicit authority to charge persons for applications relating to the public lands, including those for rights-of-way.

43 U.S.C. § 1734.

On September 29, 1977, approximately four months after PSC I was decided, Interior promulgated Secretarial Order No. 3011, implementing FLPMA's reimbursement provisions. The order stated:

Secretarial Order No. 3011, 42 Fed.Reg. 55,280 (1977) (emphasis added). Subsequently, the reimbursement regulations were reissued, 45 Fed.Reg. 44,532 (1980), with an effective date of July 31, 1980. The reissued regulations are published at 43 C.F.R. § 2803.1-1 (1982), and except for their numeration are identical to the original regulations in all respects significant to this case.

B. The Lawsuits Below

Two of the three suits in this appeal were tried as original actions in federal district court. The third, Colorado-Ute, sought review of an administrative decision of the Interior Board of Land Appeals (IBLA) in addition to declaratory and injunctive relief.

1. Nevada Power Co. v. Watt

Nevada Power Company (Nevada Power) filed applications with the BLM for rights-of-way in Utah for the construction of the Allen-Warner Valley Electric Generation and Transmission System. The System was to supply electricity to portions of Nevada, California, and Utah. The BLM determined that the National Environmental Policy Act (NEPA) required the preparation of an environmental impact statement (EIS). During the processing of Nevada Power's applications, the BLM required the company to make payments under the reimbursement regulations for costs incurred, including those incurred in the preparation of the EIS. Nevada Power paid under protest.

Nevada Power filed suit in May 1978 in the District of Utah seeking a declaratory judgment that Interior's reimbursement regulations and reimbursement program are invalid, and that the Secretary is required to consider the reasonableness factors in determining reimbursement costs. Judge Christenson granted in part Nevada Power's motion for summary judgment. He interpreted the language of section 304(b) as mandatory rather than merely permissive, and held that Interior's reimbursement regulations were not authorized by FLPMA because they do not adequately consider the section's reasonableness factors. Nevada Power Co. v. Watt, 515 F.Supp. 307, 324 (D.Utah 1981). The judge rejected Interior's argument that the Secretary had considered the 304(b) factors, finding a "lack of any showing in the record that ... the factors enumerated in 304(b) were weighed at all." Id. at 325.

2. Public Service Co. v. Watt (PSC II)

The plaintiffs in PSC II are utility companies (hereinafter referred to collectively as Public Service) that generate, transmit, and supply electric power in nine western states.3 Public Service holds numerous rights-of-way over public lands and has additional applications for rights-of-way pending with the BLM. The BLM has charged Public Service for costs of processing applications, which Public Service has paid under protest. Public Service filed suit in the District of Colorado in February 1980, seeking declaratory and injunctive relief against the reimbursement regulations.

The trial court partially granted Public Service's motion for summary judgment. Judge Finesilver interpreted the language of section 304(b) as mandatory, rather than discretionary, PSC II, slip op. at 25, and held that the reimbursement regulations were not authorized by FLPMA because they precluded consideration of the section's reasonableness standards, id. at 26. Declaring that "[t]he rulemaking process is a singularly inappropriate vehicle by which to achieve compliance with FLPMA" in the determination of reimbursable costs, the judge stated that at least two of the reasonableness factors, "the public service provided" and "that portion of costs incurred for the benefit of the general public interest," must be considered on "an individual, case-by-case basis." Id. Additionally, Judge Finesilver held that Interior was collaterally estopped by his ruling in PSC I to relitigate the validity of the pre-FLPMA regulations. Id. at 15.

3. Colorado-Ute Electric Association v. Watt

Colorado-Ute is a public utility incorporated in Colorado as a cooperative association. Its thirteen members are Colorado corporations organized as cooperative associations or nonprofit corporations that retail electricity purchased from Colorado-Ute, which operates generation and transmission facilities.

In 1973, Colorado-Ute filed a right-of-way application with the BLM for a power line. The BLM assessed Colorado-Ute processing costs under pre-FLPMA reimbursement regulations, which the corporation paid under protest.

Colorado-Ute's right-of-way was granted in 1975, prior to FLPMA's enactment. The utility then filed a protest with the BLM seeking a refund of the costs it had been assessed. In January 1976, the BLM dismissed the protest. On administrative appeal, the IBLA affirmed in part and remanded in part, approving nearly all of the costs assessed by the BLM. In re Colorado-Ute, 46 I.B.L.A. 35 (1980). Colorado-Ute filed this suit in the District of Colorado in April 1980, seeking review of the IBLA decision. The utility also sought declaratory and injunctive relief against the BLM's application of the reissued regulations to two applications then pending and to its envisioned future applications.

Judge Carrigan granted Interior's motion for summary judgment, basing his opinion on an analysis of FLPMA. See Colorado-Ute Electric Ass'n v. Watt, 533 F.Supp. 197 (D.Colo.1982). The judge found that the language of section 304(b) was discretionary, and upheld the reimbursement regulations. In addition, he affirmed the IBLA decision without discussion.4

III.

MERITS OF THE APPEAL

The principal issues before us on appeal are common to all three suits. We must first decide whether Interior's consideration of the section 304 reasonableness factors in assessing reimbursement costs is mandatory or discretionary. If mandatory, we must then decide whether the agency adequately considered those factors in promulgating the reimbursement regulations. Second, we must examine chargeable costs and determine to what extent costs of environmental impact statements and other studies triggered by right-of-way applications may be assessed to the applicants. Third, we must consider whether the reimbursement regulations can be applied to recover costs incurred prior to FLPMA's passage. Finally, in reviewing Colorado-Ute, we must determine the validity of the pre-FLPMA regulations.

A. The Statutory Language

Section 304(b) states that in determining reasonable costs for reimbursement, the Secretary "may take into consideration" the several listed factors. Interior argues that consideration of the reasonableness factors is purely discretionary — that the plain words of the statute should govern, and that "may" is permissive. Interior takes the position that for right-of-way applications, "reasonable costs" equals actual costs. The utilities contend that under the statute the Secretary must consider the reasonableness factors.

In resolving this conflict, we "must begin with the language of the statute itself." Touche Ross & Co. v. Redington, 442 U.S. 560, 568, 99 S.Ct. 2479, 2485, 61 L.Ed.2d 82 (1979). "[T]he language of the statute itself is controlling when it is sufficiently clear in context," Blue Cross Ass'n v. Harris, 664 F.2d 806, 809 (10th Cir.1981) (citing Ernst & Ernst v. Hochfelder, 425 U.S. 185, 201, 96 S.Ct. 1375, 1384, 47 L.Ed.2d 668 (1976)), and must prevail absent a conflict with the statute's legislative history, Aaron v. Securities & Exchange Commission, 446 U.S. 680, 699-700, 100 S.Ct. 1945, 1956-1957, 64 L.Ed.2d 611 (1980). See, e.g., Dickerson v. New Banner Institute, Inc., 460 U.S. 103, 103 S.Ct. 986, 990, 74 L.Ed.2d 845 (1983); Watt v. Alaska, 451 U.S. 259, 266 & n. 9, 101 S.Ct. 1673, 1678 & n. 9, 68 L.Ed.2d 80 (1981). We must bear in mind that when a statute is ambiguous, the interpretation given it by the agency charged with its administration is entitled to deference. Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965); Blue Cross Ass'n, 664 F.2d at 810. However, administrative interpretations are entitled to deference, not obeisance. An administrative construction will not be adopted if a different construction is plainly required. R.V. McGinnis Theatres & Pay T.V., Inc. v. Video Independent Theatres, Inc., 386 F.2d 592, 594 (10th Cir.1967), cert. denied, 390 U.S. 1014, 88 S.Ct. 1265, 20 L.Ed.2d 163 (1968); see Zuber v. Allen, 396 U.S. 168, 192-93, 90 S.Ct. 314, 327-28, 24 L.Ed.2d 345 (1969).

On first impression, Interior's argument — that "may" means "may" — is appealing. Under that analysis, however, the Secretary would be free to render superfluous the factors carefully set out in section 304(b). Such a result would not comport either with our reading of the statute, or with the rule that statutes must, where possible, be interpreted so as not to render any clause or provision unnecessary, contradictory, or insignificant. Equal Employment Opportunity Commission v. Continental Oil Co., 548 F.2d 884, 889 (10th Cir.1977); Zeigler Coal Co. v. Kleppe, 536 F.2d 398, 406 (D.C.Cir.1976); Parker v. United States, 448 F.2d 793, 797 (10th Cir.1971), cert. denied, 405 U.S. 989, 92 S.Ct. 1255, 31 L.Ed.2d 455 (1972).

"`May' ordinarily connotes discretion, but neither in lay nor legal understanding is this result inexorable. Rather, the conclusion to be reached `depends on the context of the statute, and on whether it ... was the intention of the legislature to confer a discretionary power or to impose an imperative duty.'". Thompson v. Clifford, 408 F.2d 154, 158 (D.C.Cir.1968) (footnotes omitted); see Farmers & Merchants Bank v. Federal Reserve Bank, 262 U.S. 649, 662, 43 S.Ct. 651, 656, 67 L.Ed. 1157 (1923); United States v. Cook, 432 F.2d 1093 (7th Cir.1970), cert. denied, 401 U.S. 996, 91 S.Ct. 1224, 28 L.Ed.2d 535 (1971); United States v. Bowden, 182 F.2d 251, 252 (10th Cir.1950).

United States v. Rodgers, 461 U.S. 677, ___, 103 S.Ct. 2132, 2149, 76 L.Ed.2d 236 (1983) (footnote and citations omitted). See, e.g., Bennett v. Panama Canal Co., 475 F.2d 1280, 1282 (D.C.Cir.1973); United States v. Reeb, 433 F.2d 381, 383 (9th Cir.1970), cert. denied, 402 U.S. 912, 91 S.Ct. 1391, 28 L.Ed.2d 654 (1971); Wilshire Oil Co. v. Costello, 348 F.2d 241, 243 (9th Cir.1965). Courts have construed "may" to mean "must" when the statutory context and legislative history so required. See Massachusetts v. Andrus, 594 F.2d 872, 890 (1st Cir.1979); Thompson v. Clifford, 408 F.2d at 169; Kraft v. Board of Education, 247 F.Supp. 21, 24-25 (D.D.C.1965), cert. denied, 386 U.S. 958, 87 S.Ct. 1026, 18 L.Ed.2d 106 (1967); cf., e.g., Sierra Club v. Train, 557 F.2d 485 (5th Cir.1977) ("shall" means "may"). "`Without question such a construction is proper in all cases where the legislature means to impose a positive and absolute duty, and not merely to give a discretionary power.'" United States ex rel. Siegel v. Thoman, 156 U.S. 353, 359, 15 S.Ct. 378, 380, 39 L.Ed. 450 (1895) (quoting Minor v. Mechanics' Bank, 26 U.S. (1 Pet.) 46, 64, 7 L.Ed. 47 (1828) (Story, J.)).

Sections 304(a) and 504(g) grant Interior authority to charge reasonable fees. Section 304(b) is not another grant of authority, but rather appears intended by Congress to establish the outer boundaries of the blanket delegation given the Secretary elsewhere. If section 304(b) were not intended to limit Interior's ability to assess fees, it would be mere surplusage because the Secretary receives the authorization to charge fees and require reimbursement from other sections of FLPMA. In some sense, then, the section's list of reasonableness factors must act as a constraint upon the general grant of authority to charge "reasonable" costs. We believe the section contemplates that the Secretary pay some attention to the listed factors in determining reasonable costs to be assessed.

Interior suggests that the factors were listed by Congress solely to provide helpful guidelines to the department's quest to identify the elements of "reasonable" costs. We do not take such a trivial view of Congress' explicit enunciation, noting that Congress further authorized the Secretary to consider "factors relevant" in the Secretary's expert opinion "to determining the reasonableness of the cost." If Congress' only intent were that posited by Interior, the listed factors could have been omitted entirely. The context and design of the statute indicate that section 304(b) was devised to restrict the Secretary's discretion.

We must interpret the statute to effect its clear purpose, Chapman v. Houston Welfare Rights Organization, 441 U.S. 600, 608, 99 S.Ct. 1905, 1911, 60 L.Ed.2d 508 (1979), and "evidenced congressional intent," Symons v. Chrysler Corp. Loan Guarantee Board, 670 F.2d 238, 242 (D.C.Cir.1981). The purpose suggested by the Act's structure is seemingly at odds with Congress' use of the word "may." Accordingly, this case is one in which we recognize that "while the clear meaning of statutory language is not to be ignored, `words are inexact tools at best,' ... and hence it is essential that we place the words of a statute in their proper context by resort to the legislative history." Tidewater Oil Co. v. United States, 409 U.S. 151, 157, 93 S.Ct. 408, 412, 34 L.Ed.2d 375 (1972) (citation omitted).

B. The Legislative History

The language in section 304(b) represents a compromise between the equivalent provisions of the bills originally passed by the Senate and the House of Representatives. The Senate bill that was eventually enacted as FLPMA provided:

S. 507, 94th Cong., 2d Sess. § 302, 122 Cong.Rec. 4427 (1976). The committee report accompanying S. 507 commented:

S.Rep. No. 583, 94th Cong., 1st Sess. 55-56 (1975), reprinted in Sen. Comm. on Energy & National Resources, Legislative History of the Federal Land Policy and Management Act of 1976, at 120-21 (1978) (emphasis added).

The House counterpart to S. 507 provided:

H.R. 13,777, 94th Cong., 2d Sess. § 303, 122 Cong.Rec. 23,464 (1976) (emphasis added). The accompanying committee report stated:

H.R.Rep. No. 1163, 94th Cong., 2d Sess. 15, reprinted in 1976 U.S.Code Cong. & Ad.News 6175, 6189 (emphasis added).

The differing cost recovery provisions were the subject of extensive discussion when the bills reached the Conference Committee.

Senate House Conference Committee on S. 507 "Resource Lands Management," United States Senate, Unpublished Meeting and Markup Transcript at 28-32 (Sept. 15, 1976), reprinted in 18 Dep't of Interior, Legislative History of the Federal Land Policy and Management Act of 1976 (emphasis added).

The Conference Committee renewed its discussion of the costs issue in a subsequent committee meeting, at which the basic language of section 304(b) as enacted was introduced:

Id. at 25-28 (Sept. 20, 1976).

The conclusions of the Conference Committee were summarized in the conference report as follows:

H.R.Conf.Rep. No. 1724, 94th Cong., 2d Sess. 61, reprinted in 1976 U.S.Code Cong. & Ad.News 6228, 6233 (emphasis added).

Our review of this unusually abundant legislative history reinforces our conclusion that the reasonableness factors were intended to limit the Secretary's authorization to charge reasonable costs. The factors were added to ensure that applicants would not as a matter of course bear all of the costs occasioned by their application.6 On the other hand, private enterprises were not to be subsidized by requiring the government to shoulder all of the costs. The conferees sought to draw a line between the two extremes; the reasonableness factors constitute that line. To suggest that the Secretary may completely disregard that line flouts the clear expression of congressional intent contained in the legislative history.7 The congressional intent expressed by the inclusion of the reasonableness factors is aptly summarized in the conferees' report: "The conferees wrote into the bill factors to be considered by the Secretary in determining whether charges are in fact reasonable."8 H.R.Conf.Rep. No. 1724, supra, at 61, U.S.Code Cong. & Ad.News 1976, p. 6233 (emphasis added). We hold that the Secretary must, when establishing reasonable costs of processing applications, consider the reasonableness factors listed in section 304(b).9

C. The Reimbursement Regulations

Interior next argues that even if the Secretary is required to examine the factors, he has in fact done so. Interior asserts that because the current regulations are substantially the same as those promulgated in 1976 under the PLAA and the IOAA, and because Secretarial Order 3011 made the earlier regulations applicable under FLPMA until new regulations were issued, "the consideration given by the Secretary to the factors listed in Section 304(b) at any point in this continuum would ... fulfill any duty he had under FLPMA to consider those factors." Interior Brief at 39, Nevada Power Co. However, even applying Interior's continuum theory, the validity of which we do not now decide, the consideration given the reasonableness factors by Interior was inadequate.

Interior alleges that the preambles to the proposed and final regulations on cost reimbursement under the IOAA, PLAA, and FLPMA reflect consideration of every one of the factors listed in section 304(b). Interior also asserts that the factor "the efficiency to the government processing involved" was considered, because charging actual costs eliminated the need for further appropriations to finance application processing and the delays that would thus occur. Rec., vol. III, PSC II at 207, ¶ 49.a.(iii). Furthermore, Interior argues, "that portion of the costs incurred for the benefit of the general public interest" and "the public service provided" were adequately considered because the Secretary exempts from reimbursement requirements (1) state or local governments in certain circumstances when the right-of-way is for government purposes serving the general public, (2) road use agreements and reciprocal road use agreements, and (3) federal agencies. Id. at 205-06, ¶ 47; 207-08, ¶ 49.a.(iv).

The contention that the 304(b) factors were adequately considered is belied by Interior's stipulation that "[n]o consideration was given to the `monetary value of the rights or privileges sought by the applicant,' [because] [t]his would require an independent economic review of each application which would be inefficient to government processing of applications." Id. at 207, ¶ 49.a.(ii). Outright rejection of a factor required by Congress to be considered in assessing "reasonable costs" in no way constitutes the active consideration and application mandated by Congress.10

A brief examination of the documents relied upon by Interior to show active consideration of the reasonableness factors further convinces us we need not linger over this contention.11 The regulations do not reveal the effective consideration that must be given each of the 304(b) factors; indeed, as the trial court in Nevada Power Co. noted, there is no showing in the record that the factors other than actual costs were considered at all. 515 F.Supp. at 325. The final cost-reimbursement regulations, published at 43 C.F.R. § 2803.1-1, are inconsistent with FLPMA and in excess of the authority therein granted and are therefore invalid.12 See King v. United States, 545 F.2d 700, 706 (10th Cir.1976).

D. Rulemaking versus Adjudication

As a result of our holding, Interior must reconsider how "reasonable costs" of application for rights-of-way are to be determined. The trial court in PSC II declared that "[t]he rulemaking process is a singularly inappropriate vehicle by which to achieve compliance with FLPMA," and that consideration of at least the public versus private benefit and the public service standards "must be made on an individual, case-by-case basis." Slip op. at 26. The court in Nevada Power Co. reached a similar conclusion. See 515 F.Supp. at 325. We are unwilling to go so far. "[T]he choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency." Securities & Exchange Commission v. Chenery Corp., 332 U.S. 194, 203, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995 (1947).

We will not dictate the process to be used by Interior in weighing the factors listed in section 304(b). Interior is far better informed than is this court concerning the steps necessary to implement our holding. Although it is difficult to envision in what manner "the monetary value of the rights or privileges sought," the "portion of the cost incurred for the benefit of the general public interest rather than for the exclusive benefit of the applicant," or "the public service provided" may be calculated other than by a determination in an individual case, Interior is free to do so by whatever means it finds practicable. The Department may, if it so chooses, use rulemaking as far as possible to achieve this result, bearing in mind only that "the problem may be so specialized and varying in nature as to be impossible of capture within the boundaries of a general rule." Id.

In summary, the Secretary must examine and weigh each of the factors listed in section 304(b), as well as whatever other factors he finds relevant, in determining the "reasonable costs" allowed by FLPMA to be assessed. The touchstone of the Secretary's determination is reasonableness, and the Secretary is thus vested with considerable discretion in performing the weighing mandated by section 304(b), whether by rulemaking or adjudication. However, we echo the trial court's admonition in Nevada Power Co. that the Secretary must provide a reasonably articulate record showing the bases of the determination so that a reviewing court might determine whether the action is in accordance with FLPMA. The record must be adequate to show that "consideration was given to the relevant factors and that the consideration was sufficiently meaningful to commend deference by the court." Nevada Power Co., 515 F.Supp. at 325. See Dunlop v. Bachowski, 421 U.S. 560, 571-72, 95 S.Ct. 1851, 1859-60, 44 L.Ed.2d 377 (1975); see generally National Lime Ass'n v. Environmental Protection Agency, 627 F.2d 416, 451-53 (D.C.Cir.1980).

E. Chargeable Costs

1. Costs of environmental impact statements

Interior's practice of charging applicants for the costs of environmental impact statements triggered by right-of-way applications is a major issue of this appeal. The utilities argue that they should not be charged for the total costs of EIS preparation.13 They also argue that it is not reasonable under the Act to charge applicants for portions of an EIS that address impacts occurring on private lands apart from the right-of-way sought.14

We note initially that this circuit has previously considered and rejected the argument that Interior may not require applicants for rights-of-way to reimburse any part of the cost of an EIS prepared in connection with processing their applications. In Alumet v. Andrus, 607 F.2d 911 (10th Cir.1979), we held that FLPMA requires all reasonable costs incurred by the Secretary in processing applications to be chargeable against the applicant, and that those reasonable costs include costs of an EIS. Id. at 916. We expressly rejected the contention that an EIS "inures solely to the benefit of the general public, and therefore, no part is assessable to the applicant." Id. We also considered and rejected the trial court's alternative holding that the provision in section 304(b) directing Interior to consider "`that portion of the costs incurred for the benefit of the general public rather than for the exclusive benefit of the applicant' ... completely negated the former provision in the same statute that reasonable costs included the cost of an environmental impact statement." Id. (emphasis in original). We held that the latter provision "may well modify the earlier provision ... but [it] does not, in effect, excise the former provision from the statute." Id. (emphasis in original).15

Our construction of section 304(b) in the present case is in full accord with our holding in Alumet. The reasonableness factors do indeed modify the provision that "`reasonable costs' include ... the costs of ... environmental impact statements." FLPMA § 304(b). The Secretary must consider the reasonableness factors when assessing "reasonable costs" of preparing an EIS triggered by an application.

The utilities argue that it is not "reasonable" under FLPMA to charge applicants for costs of studies examining the impacts of the applicants' projects that are caused by facilities or activities not located within the right-of-way sought. Their argument hinges on the assertion that such studies primarily benefit the public, because they "[go] so far beyond what [the applicant] seeks from the BLM," namely, the right-of-way. Brief for Public Service at 50. The utilities also assert that charging for those often-massive studies contributes to the disproportion between costs of processing and the monetary value of the easement sought.

The trial court in PSC II treated this issue under the rubric of NEPA, stating that "an EIS which conforms to the requirements of NEPA cannot be unreasonable for the purposes of FLPMA," slip op. at 28, "notwithstanding the fact that a considerable portion of the statement may speak to the environmental impact of a right-of-way on non-federal lands," id. at 29. The court cautioned that "the scope of an EIS ... should generally be a factor in the agency's consideration of the costs incurred for the benefit of the public at large." Id. (emphasis added). The district court in Nevada Power Co. apparently reached a similar result, rejecting the notion that total costs of an EIS are made "reasonable per se" by their inclusion in the first provision of section 304(b). See 515 F.Supp. at 317-22. The court held that

Id. at 322.

Interior argues strenuously that FLPMA permits recovery of the full cost of an EIS necessitated by an application, even when the EIS considers impacts beyond the right-of-way itself. The parties' battle is joined in a field of caselaw extrinsic to that of FLPMA itself; thus, although our holding is dictated by our examination of FLPMA's legislative history, we shall briefly examine the cases upon which the parties rely. This examination will also guide our later consideration of the validity of the pre-FLPMA cost-reimbursement regulations.

In the companion cases of National Cable Television Ass'n v. United States, 415 U.S. 336, 94 S.Ct. 1146, 39 L.Ed.2d 370 (1974), and Federal Power Commission v. New England Power Co., 415 U.S. 345, 94 S.Ct. 1151, 39 L.Ed.2d 383 (1974), the Supreme Court addressed the claim that fees assessed under the IOAA to industry members were "taxes" levied by administrative agencies and therefore unconstitutional. The Court held that the IOAA granted agencies only the power to assess fees and not taxes, thereby avoiding the constitutional issue.

In National Cable, the Court described a "fee" as "incident to a voluntary act, e.g., a request that a public agency permit an applicant to practice law ... or run a broadcast station. [An] agency ... normally may exact a fee for a grant which, presumably, bestows a benefit on the applicant, not shared by other members of society." 415 U.S. at 340-41, 94 S.Ct. at 1148-49. The Court said that assessing industry members for the costs of oversight over the entire industry would require the members to pay "not only for benefits they received but for the protective services rendered the public by the Commission" in its regulatory role, and suggested that such an assessment might be an unconstitutional tax. See id. at 341-42, 94 S.Ct. at 1149.

In New England Power Co., the Court stated that charges "`should be made to each identifiable recipient for a measurable unit or amount of Government service or property from which he derives a special benefit,'" and "that no charge should 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.'" 415 U.S. at 349-50, 94 S.Ct. at 1154 (quoting with approval a Bureau of the Budget interpretation) (emphasis in original). The Court said that such a construction "keeps [the Act] within the boundaries of the `fee' system and away from the domain of `taxes.'" Id. at 351, 94 S.Ct. at 1155. Consequently, the Court struck down the cost-charge systems in both cases because they explicitly assessed an industry member with the agencies' costs of regulating the entire industry, rather than with that portion of the agencies' costs incurred in agency actions relating specifically to the industry member. In so doing, it noted that "[c]ertainly some of the costs [of regulating an industry] inured to the benefit of the public." National Cable, 415 U.S. at 343, 94 S.Ct. at 1150.

The utilities argue that National Cable and New England Power Co. support their EIS argument, reasoning that an EIS primarily benefits the public and thus cannot be charged to an applicant. Interior disagrees, citing Mississippi Power & Light Co. v. United States Nuclear Regulatory Commission, 601 F.2d 223 (5th Cir.1979), cert. denied, 444 U.S. 1102, 100 S.Ct. 1066, 62 L.Ed.2d 787 (1980). In Mississippi Power, the Fifth Circuit examined both National Cable and New England Power Co., and then held that the NRC could "recover the full cost of providing a service to an identifiable beneficiary, regardless of the incidental public benefits flowing from the provision of that service." Id. at 230 (emphasis in original). Accordingly, the court held that the Commission could recover from a license applicant the full costs of conducting environmental reviews required under NEPA "because they are a prerequisite to the issuance of a license.... The Commission must conduct these reviews before it can issue a license to an applicant; it is a necessary part of the cost of providing a special benefit to the licensee. In other words, it is `incident to a voluntary act.'" Id. at 231 (quoting National Cable, 415 U.S. at 340, 94 S.Ct. at 1148) (footnote omitted). It mattered not that there was an "obvious public benefit flowing from the preparation of these environmental reviews." Id.

The charges for environmental impact statements at issue in this case represent the costs of studies required by law to be performed when an application triggers NEPA. See National Environmental Policy Act of 1969, § 102(2)(C), 42 U.S.C. § 4332(2)(C) (1976). They are therefore unlike the charges struck down in National Cable and New England Power Co. These studies are a necessary prerequisite to the receipt by the applicant of a "special benefit," the grant of a right-of-way. Therefore, Interior is not restrained by the doctrine laid out in National Cable and New England Power Co. from charging the full cost of such an EIS to the applicant. Mississippi Power, 601 F.2d at 231. However, FLPMA requires the Secretary to consider "that portion of the cost incurred for the benefit of the general public interest rather than for the exclusive benefit of the applicant" in determining "reasonable costs." FLPMA § 304(b). Although the preparation of an EIS may be triggered by an application, beyond a doubt it confers benefits on the general public as well. Hence, because of FLPMA's affirmative command, Interior must consider the benefit to the public interest when it determines "reasonable costs" of processing.

It is admittedly difficult to draw a bright line between an EIS's "general public benefit" and the benefit to the applicant. Certainly it does not depend on a distinction made between costs of studies of the effects within the right-of-way granted and NEPA-required studies of its effects on lands outside of the grant, since presumably an application could not be granted if the EIS were less than sufficient by NEPA's standards. Nonetheless, Congress' inclusion of the reasonableness factors requires that Interior consider the problem, however metaphysical it may be.16 Interior may charge an applicant for the "reasonable" costs of EIS preparation.

2. Costs for work required even in the absence of a right-of-way application

Public Service argues that Interior charges applicants for work that would have been done even absent an application. Interior denies this allegation and asserts: "The Secretary believes that he is not authorized to charge, and in fact does not charge, right-of-way applicants for work that would have been done in the absence of a right-of-way application." Reply Brief at 4. The utilities have identified no specific examples of charges for work that would have been done absent an application. We find the Secretary's interpretation of his authority, as quoted above, reasonable under FLPMA in light of our construction of section 304(b).

3. Management overhead costs

Section 304(b) states that in determining reasonable costs, the Secretary is to consider "actual costs (exclusive of management overhead)." Public Service argues that Interior's stipulated practice of charging applicants for certain "indirect costs" incurred by the agency, constitutes a charge for "management overhead." Interior replies that by regulation it excludes work deemed "management overhead" from "indirect costs." The utilities argue that all "indirect costs" — i.e., costs not allocable to specific applications — should be excluded as "management overhead."

The district court in PSC II expressly declined to reach this issue because of its disposition of the case, expecting Interior to properly apply and explain its application of the overhead exclusion in assessing "reasonable" costs under section 304(b). See slip op. at 27. We do not address this issue here beyond noting that Interior is authorized by section 504(g) to collect "reasonable administrative and other costs." The exclusion of "management overhead," under our interpretation of section 304(b), modifies the authority granted in section 504(g) but does not negate it. We expect that Interior will, when calculating reasonable costs of processing, consider the factors listed in section 304(b) as construed in our opinion, as well as the Supreme Court's warning in National Cable and New England Power Co. that an applicant may not be charged for work relating to the agency's general costs of administration.

F. Retroactive Application

Public Service argues that Interior may not use the FLPMA reimbursement regulations to recover costs incurred prior to the Act's passage. Interior asserts that FLPMA expressly authorizes such recovery:

FLPMA § 510(a), 43 U.S.C. § 1770 (emphasis added).

We must decide whether this language reflects congressional intent that Interior recover costs under FLPMA incurred prior to the Act's passage in processing applications for rights-of-way that were still pending on the date of enactment.

Union Pacific Railroad v. Laramie Stock Yards Co., 231 U.S. 190, 199, 34 S.Ct. 101, 102, 58 L.Ed. 179 (1913) (quoting United States v. Heth, 7 U.S. (3 Cranch) 399, 413, 2 L.Ed. 479 (1806)). This circuit has said that "[n]ormally, retroactive application of legislative acts is impermissible absent a clear indication of congressional intent." Jensen v. United States, 662 F.2d 664, 667 (10th Cir.1981); accord Edgar v. Fred Jones Lincoln-Mercury, 524 F.2d 162 (10th Cir.1975).

The question before us is purely one of legislative intent. This intent must be gleaned from the statute for there is little legislative history on the point. We believe the language of section 510(a) indicates that Congress intended costs to be assessed retroactively. Accordingly, we hold that Interior may charge applicants for rights-of-way pending at the date of FLPMA's enactment for "reasonable" costs of processing incurred prior to the Act's passage. See generally Hunter v. Morton, 529 F.2d 645, 648-49 (10th Cir.1976); Hannifin v. Morton, 444 F.2d 200, 202-03 (10th Cir.1971); Southwestern Petroleum Corp. v. Udall, 361 F.2d 650, 654-55 (10th Cir.1966).

G. The Pre-FLPMA Reimbursement Regulations

Finally, we must consider the validity of the pre-FLPMA regulations and the effect of the trial court's holding in PSC I upon the cases on appeal here. The pre-FLPMA regulations were litigated in PSC I, where the trial court held that under the IOAA and the PLAA, Interior could recover only costs for services providing special benefits to applicants beyond those accruing to the public at large. The court held specifically that the costs of an EIS could not be charged to applicants because they did not "provide special benefits to [applicants] beyond those which accrue to the public at large." PSC I, 433 F.Supp. at 156.

One of the parties in PSC II, Sierra Pacific, was granted its right-of-way on July 6, 1976, three months prior to FLPMA's enactment. Interior charged costs against Sierra Pacific under the reimbursement regulations promulgated under the IOAA and PLAA, and not under the FLPMA regulations that we have struck down today. The trial court in PSC II held Interior collaterally estopped from contesting the validity of the pre-FLPMA regulations. PSC II, slip op. at 15. We agree that Interior is estopped to recover costs from Sierra Pacific under the earlier regulations,17 and that those costs actually collected must be refunded.

The pre-FLPMA regulations are also involved in Colorado-Ute. In that case, the trial court affirmed an IBLA decision imposing reimbursement costs on Colorado-Ute for expenses incurred in processing its application for a right-of-way granted prior to FLPMA, based on pre-FLPMA regulations. Colorado-Ute argues on appeal that Interior should be collaterally estopped from contesting the regulations' validity because the issue was fully litigated in PSC I. However, Colorado-Ute did not raise this issue in the trial court, but instead contested the regulations on the merits. The utility may not raise this issue for the first time on appeal. See, e.g., Bradford v. United States ex rel. Department of Interior, 651 F.2d 700, 704 (10th Cir.1981). The pre-FLPMA regulations were before the trial court, and its determination is open to our review on appeal.

The pre-FLPMA regulations were promulgated under the authority of the IOAA and the PLAA. Because we find the IOAA18 dispositive, we do not address the other alleged sources of authority. Unlike FLPMA, the IOAA provides little legislative history relevant to cost reimbursement. Other than the statutory command that fees charged be "fair and equitable," 31 U.S.C. § 483a, the IOAA reveals none of the evidence of Congressional intent that we found so compelling in construing FLPMA § 304(b). Colorado-Ute's only substantive argument is that the regulations were invalid under National Cable and New England Power Co.

We have discussed those cases earlier in this opinion, and we will not repeat that discussion here. Interior may, consonant with National Cable and New England Power Co., recover the full costs of services provided to Colorado-Ute as an identifiable beneficiary. These costs may include the full expenses of an EIS triggered under NEPA by Colorado-Ute's application.19 Interior may not charge Colorado-Ute with general management costs and other expenses not incurred in agency action relating specifically to Colorado-Ute's application. See Mississippi Power, 601 F.2d at 230.

The trial court's affirmance of the costs assessed against Colorado-Ute was apparently based on its analysis of FLPMA. We remand so that it may reexamine those charges under the IOAA in light of our opinion.

IV.

CONCLUSION

In conclusion, we hold that Interior must consider the factors listed in section 304(b) in establishing reasonable costs of processing applications for rights-of-way under FLPMA for reimbursement purposes. Because Interior did not adequately do so in promulgating its cost-reimbursement regulations, the regulations are invalid as inconsistent with and in excess of the authority granted by FLPMA. Interior may, consistently with this opinion, determine and assess the reasonable costs of processing an individual application either by rulemaking or by case-by-case adjudication. Reasonable costs of processing include the reasonable costs of EIS preparation, as determined using the section 304(b) factors.

Where applications pending on the date of FLPMA's enactment are concerned, we hold that FLPMA authorizes the recovery of reasonable costs of processing incurred by Interior prior to that date. With respect to Colorado-Ute only, we hold that Interior may properly charge the actual costs of processing Colorado-Ute's pre-FLPMA applications.

We have considered the other issues raised in these three cases and find them to be without merit. Colorado-Ute is accordingly reversed in part. PSC II and Nevada Power Co. are affirmed insofar as they are consistent with this opinion. All three cases are remanded for further proceedings in accordance herewith.