Opinion ID: 185323
Heading Depth: 2
Heading Rank: 3

Heading: Usage fees under FPA S 10(e)

Text: 38 In addition to obliging WVIC to implement a wild rice enhancement plan pursuant to FPA S 4(e), FERC's order also charges the company annual fees for its use of the reservation lands flooded by its reservoir. See Wisconsin Valley Improvement Co., 76 FERC at 61,237. FERC imposed that condition pursuant to FPA S 10(e), which establishes that a licensee shall pay to the United States reasonable annual charges in an amount to be fixed by the Commission for the purpose of reimbursing the United States ... for the use, occupancy, and enjoyment of its lands or other property. 16 U.S.C. S 803(e) (1994). WVIC challenges the usage-fee condition by claiming that it does not, in fact, use, occupy, or enjoy any federal property, since it holds easements entitling it to flow water over the agencies' lands--and, indeed, acquired those easements many years before the agencies came to own the burdened land. In essence, the company attempts to defeat the S 10(e) conditions with the same argument it advanced against the S 4(e) conditions. 39 Though, as we already have explained, the issue whether WVIC owns rights to flow water over the agencies' lands is immaterial to the lands' status as federal reservations, it remains relevant to the subsequent question of whether the agencies may impose annual charges for the company's use of federal lands pursuant to FPA S 10(e). And, again as we have already explained, WVIC has not yet demonstrated that it has flooded the agencies' lands pursuant to its own flowage easements. However, WVIC's failure conclusively to establish that it owns the asserted easements does not end our inquiry. This Court must further determine whether the agencies have proffered a satisfactory explanation for now deciding to assess S 10(e) usage fees, given that WVIC's old license included no such charges. 40 Section 706(2)(A) of the APA requires agencies to, among other things, consider the relevant factors and draw a rational connection between the facts found and the choice made. Missouri Public Serv. Comm'n v. FERC, 215 F.3d 1, 3 (D.C. Cir. 2000) (citation and quotation marks omitted). In particular, an agency acts arbitrarily and capriciously when it abruptly departs from a position it previously held without satisfactorily explaining its reason for doing so. Indeed, where an agency departs from established precedent without a reasoned explanation, its decision will be vacated as arbitrary and capricious. ANR Pipeline Co. v. FERC, 71 F.3d 897, 901 (D.C. Cir. 1995); see also AT & T v. FCC, 974 F.2d 1351, 1355 (D.C. Cir. 1992) (faulting the FCC for failing to explain why it changed the original price cap rules and concluding that the Commission's Reconsideration Order is arbitrary and capricious for want of an adequate explanation). As the Supreme Court has put it, an agency changing its course must supply a reasoned analysis.... Motor Vehicles Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 57 (1983) (citation omitted). 41 The requirements imposed by FERC's order mark a sharp departure from WVIC's 1959 license, which contained no obligation to reimburse the federal government for flooding its lands. In its 1959 licensing order, the Commission found that the company's project occupied lands of the United States. See Wisconsin Valley Improvement Co., 21 FPC 785, 788 (1959). It concluded, however, that it could not impose usage fees until then-ongoing land studies revealed the extent of the United States' property rights. See id. (However, land studies, now in progress, must be completed before we can make a final determination as to the amount of lands of the United States occupied by the project and as to the amount of annual charges due the United States for the use, occupancy and enjoyment of such lands.). 42 FERC no longer holds that it may impose user fees only after a land study establishes the extent of the United States' property interests. Its new position is that it may charge such fees unless and until [WVIC's property] rights are confirmed by an appropriate state or federal authority. Wisconsin Valley Improvement Co., 80 FERC p 61,054, 61,174 (1997). Whereas the United States formerly bore the burden of establishing that WVIC used, occupied, or enjoyed various of its property interests, FERC's new license places the burden on the company to demonstrate that it does not use the government's land. FERC has offered no explanation--far less a reasoned one--for this abrupt departure. Because it has failed to do so, we find that FERC's sudden imposition of usage fees under FPA S 10(e) was arbitrary and capricious. 43 We therefore grant WVIC's petition for review, in part, and remand to FERC with instructions that the Commission remove the usage-fee provisions from the company's project license.