Court Opinion

ID: 3040522
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:03:11.028976+00
Date Added: 2024-06-11T12:05:52.987901
License: Public Domain

FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

NORTHWEST ENVIRONMENTAL               
DEFENSE CENTER, PUBLIC
EMPLOYEES FOR ENVIRONMENTAL
RESPONSIBILITY; NORTHWEST
SPORTFISHING INDUSTRY
ASSOCIATION,
                      Petitioners,
NORTHWEST POWER AND                      No. 06-70430
CONSERVATION COUNCIL,
                        Intervenor,
                v.
BONNEVILLE POWER
ADMINISTRATION,
                      Respondent.
                                      

CONFEDERATED TRIBES AND               
BANDS OF THE YAKAMA INDIAN
NATION,
                      Petitioner,
                                      
                                          No. 06-71182
                v.                         OPINION
BONNEVILLE POWER
ADMINISTRATION,
                     Respondent.
                                      
      On Petition for Review of a Final Action of the
             Bonneville Power Administration

                 Argued and Submitted
          September 12, 2006—Portland, Oregon

                            939
940   NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
                 Filed January 24, 2007

  Before: Michael Daly Hawkins, Barry G. Silverman, and
             Ronald M. Gould, Circuit Judges.

                 Opinion by Judge Gould
942   NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER

                        COUNSEL

Stephanie M. Parent, Pacific Environmental Advocacy Cen-
ter, Portland, Oregon, for petitioners Northwest Environmen-
        NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER               943
tal Defense Center, Public Employees for Environmental
Responsibility, and Northwest Sportfishing Industry Associa-
tion.

Tim Weaver, Law Office of Tim Weaver, Yakima, Washing-
ton, for petitioner Confederated Tribes and Bands of the
Yakama Nation.

David J. Adler, Special Assistant United States Attorney and
Stephen J. Odell, Assistant United States Attorney, Portland,
Oregon, for respondent Bonneville Power Administration.

John Shurts, Northwest Power and Conservation Council,
Portland, Oregon, for intervenor Northwest Power and Con-
servation Council.

David J. Cummings, Nez Perce Tribe Office of Legal Coun-
sel, Lapwai, Idaho, for amicus Nez Perce Tribe.

Howard G. Arnett, Karnopp Petersen, LLP, Bend, Oregon, for
amicus Confederated Tribes of the Warm Springs Reservation
of Oregon.

Christopher B. Leahy, Fredericks, Pelcyger & Hester, LLC,
Louisville, Colorado, for amicus Confederated Tribes of the
Umatilla Reservation.

                              OPINION

GOULD, Circuit Judge:

  Salmon and steelhead1 are two of the great natural
  1
   A steelhead is a rainbow trout which has spent part of its life at sea.
Alaska Dep’t of Fish & Game, Steelhead Trout, http://
www.adfg.state.ak.us/pubs/notebook/fish/steelhd.php (last visited Jan. 17,
2007).
944    NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
resources of the Columbia River. Their continued existence
has been threatened by the construction of dams to capture a
third great natural resource of the Columbia River, its water
power. As these dams were constructed, the number of
salmon and steelhead migrating up the Columbia River to
reproduce at its headwaters dropped. At one time, an esti-
mated ten to sixteen million adult fish returned to the Colum-
bia River basin each year. Today, only about one million fish
return for spawning that is essential to the species’ survival in
the Columbia River system.

   In response to declining salmon and steelhead runs, Con-
gress passed the Northwest Power Planning and Conservation
Act of 1980. The Act created the Northwest Power and Con-
servation Council, an interstate compact agency, and directs
the Council to prepare programs to protect and enhance the
fish and wildlife of the Columbia River basin while also
assuring the Pacific Northwest an adequate, efficient, eco-
nomical, and reliable power supply. The Act also instructs the
Bonneville Power Administration, the federal agency that
operates the dams on the Columbia River, to use its authority
in a manner consistent with the programs developed by the
Council.

   In 1982, the Council called for the creation of what would
eventually become the Fish Passage Center. The Fish Passage
Center provides technical assistance and information to fish
and wildlife agencies, Indian tribes, and the general public on
matters related to juvenile and adult salmon and steelhead
passage through the Columbia River and its tributaries. Since
1987, the Bonneville Power Administration has funded the
Fish Passage Center, and the Fish Passage Center has gath-
ered, analyzed, and publicly-disseminated data regarding fish
passage. The Bonneville Power Administration has used this
information, in consultation with fisheries and Indian tribes
and in conjunction with its control over water flow past the
dams, to help improve the survival rates of fish migrating up
and down the Columbia River.
       NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER        945
   In light of language in two 2005 congressional committee
reports, however, the Bonneville Power Administration
decided to transfer the functions performed by the Fish Pas-
sage Center to Battelle Pacific Northwest Laboratory and
Pacific States Marine Fisheries Commission. In this consoli-
dated case, Northwest Environmental Defense Center, Public
Employees for Environmental Responsibility, Northwest
Sportsfishing Industry Association, and the Confederated
Tribes and Bands of the Yakama Nation (collectively, “peti-
tioners”) petition for review of the Bonneville Power Admin-
istration’s action transferring the functions of the Fish Passage
Center to Battelle Pacific Northwest Laboratory and Pacific
States Marine Fisheries Commission and creating a new
model Fish Passage Center (“new model”).

                                I

                               A

   Created by the Bonneville Project Act of 1937, 16 U.S.C.
§§ 832-832m, the Bonneville Power Administration (“BPA”)
is a federal agency within the Department of Energy. BPA
sells and transmits wholesale electricity from thirty-one fed-
eral hydroelectric plants, one non-federal nuclear power plant
in Hanford, Washington, and other non-federal power plants
in the Columbia River basin. About BPA Home,
http://www.bpa.gov/corporate/About_BPA/ (last visited Jan.
17, 2007). BPA’s customers include federal agencies, public
and private utility companies, and direct service industrial
customers. See Kaiser Aluminum & Chem. Corp. v. BPA, 261
F.3d 843, 845 (9th Cir. 2001). BPA does not receive annual
appropriations, as is the case with most federal agencies.
Rather, the revenue that BPA obtains from its sales and trans-
mission of electricity is deposited in the Bonneville Power
Administration fund (“BPA fund”). 16 U.S.C. § 838i(a). BPA
then uses the fund to finance its operations. Id. § 838i(b).

   As a self-financing power marketing agency, BPA must set
its prices high enough to cover its costs. Indus. Customers of
946     NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
Nw. Utilities v. BPA, 408 F.3d 638, 641 (9th Cir. 2005); Ass’n
of Public Agency Customers, Inc. v. BPA, 126 F.3d 1158,
1164 (9th Cir. 1997) [hereinafter APAC]. BPA must also sell
power to consumers “at the lowest possible rates.” 16 U.S.C.
§ 838g. At the same time, BPA must be environmentally con-
scious, supporting energy conservation and protecting the fish
and wildlife of the Columbia River basin. APAC, 126 F.3d at
1164; see, e.g., 16 U.S.C. § 839b(h)(10)-(11) (providing that
BPA must use the BPA fund and its statutory authority in a
manner that protects and enhances fish and wildlife).

   In 1980, to assist BPA in balancing its responsibilities to
provide low-cost energy while protecting fish and wildlife,
Congress passed the Pacific Northwest Power Planning and
Conservation Act (“Northwest Power Act” or “Act”), Pub. L.
No. 96-501, 94 Stat. 2697 (1980) (codified at 16 U.S.C.
§§ 839-839h). The Act authorized state governments to form
what is now called the Northwest Power and Conservation
Council (“Council”), an interstate compact agency2 comprised
of members from Idaho, Montana, Oregon, and Washington.
16 U.S.C. § 839b(a)(2)(B); see Seattle Master Builders Ass’n
v. Pac. Nw. Elec. Power & Conservation Council, 786 F.2d
1359, 1366 (9th Cir. 1986) (upholding the constitutionality of
the Council). Each state has agreed to participate in the Coun-
cil, see Idaho Code § 61-1201; Mont. Code Ann. § 90-4-401;
Or. Rev. Stat. § 469.803; Wash. Rev. Code Ann.
§ 43.52A.010, and has enacted legislation authorizing its gov-
ernor to appoint two members to the Council, see Idaho Code
§ 61-1202; Mont. Code Ann. § 90-4-402; Or. Rev. Stat.
§ 469.805; Wash. Rev. Code Ann. § 43.52A.030.
  2
   For a landmark discussion of the use of the Compact Clause, article I,
section 10, clause 3 of the Constitution, to permit agreements by states on
a regional basis, including the need to do so to promote sound develop-
ment of electrical power and conservation of natural resources, see Felix
Frankfurter & James M. Landis, The Compact Clause of the Constitution
—A Study In Interstate Adjustments, 34 Yale L.J. 685 (1925).
       NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER             947
   The Act charges the Council with two tasks fundamental to
this case: (1) preparing and periodically reviewing a regional
conservation and electric power plan to aid BPA in acquiring
and developing power resources (“Power Plan” or “Plan”) and
(2) preparing and periodically reviewing a program to protect,
mitigate, and enhance fish and wildlife (“Fish and Wildlife
Program” or “Program”). 16 U.S.C. § 839b(a)(1).

   The current composition of the Council reflects the varied
constituencies it serves. The Council is chaired by an expert
in natural resource economics. Many Council members are
former business persons or practicing attorneys. Indian tribes
and fishing enthusiasts are also represented on the Council.
Four of the eight current Council members have served as
state senators or state representatives in the Pacific Northwest.3

   The Council submits each project proposed for funding
under its Fish and Wildlife Program for review by the Inde-
pendent Scientific Review Panel, an eleven-member panel of
independent scientists appointed by the Council from the rec-
ommendations of the National Academy of Scientists. See id.
§ 839b(h)(10)(D). The Act obliges BPA to consult with state
fish and wildlife agencies and Indian tribes in carrying out its
responsibilities under the Act. See id. § 839b(h)(11)(B). In
short, the Act “establishes an innovative system of coopera-
tive federalism under which the states, within limits provided
in the Act, can represent their shared interests in the mainte-
nance and development of a power supply in the Pacific
Northwest and in related environmental concerns.” Seattle
Master Builders, 786 F.2d at 1366.

                                  B

  Section 839b(h)(10)(A) of the Act explains how the views
of the Council guide BPA’s actions. It provides:
  3
    For biographical information on the Council’s current members, see
Council Members, http://www.nwcouncil.org/contact/members.asp (last
visited Jan. 17, 2007).
948     NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
      The Administrator [of BPA] shall use the Bonneville
      Power Administration fund and the authorities avail-
      able to the Administrator under this chapter and
      other laws administered by the Administrator to pro-
      tect, mitigate, and enhance fish and wildlife to the
      extent affected by the development and operation of
      any hydroelectric project of the Columbia River and
      its tributaries in a manner consistent with the plan,
      if in existence, the program adopted by the Council
      under this subsection, and the purposes of this chap-
      ter.

16 U.S.C. § 839b(h)(10)(A). In other words, the Act requires
BPA’s fish and wildlife protection, mitigation, and enhance-
ment actions to be consistent with (1) the Council’s Power
Plan; (2) the Council’s Fish and Wildlife Program; and (3) the
purposes of the Act.4 Section 839b(h)(10)(A) is thus referred
to as the Act’s “consistency requirement.”

   The Council adopted its first Fish and Wildlife Program in
1982. Since 1982, the Council has reviewed and reformulated
its Program five times. The current version of the Program
was adopted in 2000 (“2000 Program”) and amended in 2003
by the Mainstem Amendments (“2003 Amendments”).
  4
    In 16 U.S.C. § 839, Congress listed the purposes of the Act: (1) to
encourage electricity conservation and the development of renewable
resources in the Pacific Northwest; (2) “to assure the Pacific Northwest of
an adequate, efficient, economical, and reliable power supply”; (3) to
allow the States, local governments, and citizens of the Pacific Northwest
(including fish and wildlife agencies and Indian tribes) to participate in the
development of regional energy conservation plans, plans for renewable
resources, and plans for environmental protection and enhancement; (4) to
ensure that BPA’s customers cover the costs necessary to meet the
region’s electricity needs; (5) to ensure that non-federal entities continue
to regulate, plan, conserve, supply, and distribute electricity; and (6) “to
protect, mitigate and enhance the fish and wildlife . . . of the Columbia
River and its tributaries.”
      NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER       949
   In preparing the 2000 Program, the Council consulted with
the Pacific Northwest’s fish and wildlife agencies, Indian
tribes, and other interested members of the public, as required
by the Act. See id. § 839b(g). After considering these parties’
recommendations, the Council prepared a draft Program and
conducted a public comment period before preparing the final
version of the 2000 Program. The Program “expresses goals
and objectives for the entire [Columbia River] basin based on
a scientific foundation of ecological principles.” Nw. Power
& Conservation Council, Columbia River Basin Fish and
Wildlife Program 9 (2000) [hereinafter 2000 Program],
available at http://www.nwcouncil.org/library/2000/2000-19/
FullReport.pdf. These objectives apply to all fish and wildlife
projects implemented in the basin. Id. The objectives crucial
to this case include mitigating the adverse effects to salmon
and steelhead caused by the Columbia River’s hydropower
system and ensuring sufficient populations of salmon and
steelhead for both Indian tribal-trust and treaty-right fishing
and non-tribal fishing. Id. at 16. A goal of the Program is to
increase total adult salmon and steelhead runs on the Colum-
bia River from about one million annually today to an average
of five million annually by 2025. Id. at 7, 17.

                              C

   The Fish Passage Center (“FPC”) has been a part of the
Council’s Fish and Wildlife Program since 1982. Originally
called the Water Budget Center, it consisted of two managers
who oversaw the annual water budget the Council adopted as
part of the Program. The water budget provided for additional
releases of water from federal dams each spring to facilitate
the migration of juvenile salmon and steelhead to the Pacific
Ocean. The Water Budget Center’s two managers recom-
mended to federal agencies how they could use the water bud-
get to improve the survival rate of fish passing through the
dams during their downstream migration. See Pub. Utility
Dist. No. 1 v. BPA, 947 F.2d 386, 389 (9th Cir. 1991) (dis-
950     NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
cussing FPC’s oversight of the annual water budget contained
in the 1987 Program).

   The FPC’s responsibilities under the Program have
expanded considerably since its days as the Water Budget
Center. The Council’s 1987 Program provided that BPA
“shall fund the establishment and operation of a Fish Passage
Center.” The Council envisioned that the FPC would assist
the dams’ fish passage managers in planning and implement-
ing a smolt5 monitoring program, developing and implement-
ing flow and spill requests, and monitoring and analyzing
research results to assist in implementing the water budget
and spill planning.

   The Council’s 2000 Program “continues the operation of
the Fish Passage Center.” 2000 Program, supra, at 28. The
2003 Amendments to the Program elaborate on the Council’s
vision of the FPC’s role, stating that “[t]he mainstem plan
calls for the continued operation of the Fish Passage Center,”
and listing specific tasks the Council expects the FPC to per-
form in helping implement the water management measures
in the Council’s Fish and Wildlife Program. Nw. Power &
Conservation Council, Mainstem Amendments to the
Columbia River Basin Fish and Wildlife Program 27 (2003)
[hereinafter 2003 Amendments], available at http://
www.nwcouncil.org/library/2003/2003-11.pdf.

   The 2003 Amendments provide that “[t]he primary purpose
of the [FPC] is to provide technical assistance and informa-
tion to fish and wildlife agencies and [Indian] tribes in partic-
ular, and the public in general, on matters related to juvenile
and adult salmon and steelhead passage through the mainstem
hydrosystem.” Id. The 2003 Amendments require the FPC to
(1) plan and implement a smolt monitoring program; (2)
  5
   A smolt is a juvenile salmon in the stage where it becomes covered
with silvery scales and first embarks on its journey to salt water. See John
V. Byrne, Salmon Is King—Or Is It?, 16 Envtl. L. 343, 352-53 (1986).
        NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER                951
gather, organize, analyze, store, and make widely-available
monitoring and research information about fish passage and
the implementation of water management and fish passage
measures contained in the Council’s Program; (3) provide
technical information to assist fish and wildlife agencies and
Indian tribes requesting the federal dams to spill water; and
(4) provide technical assistance to ensure the recommenda-
tions for river operations avoid conflicts between anadromous6
and resident fish. Id. at 27-28.

   To carry out these responsibilities, the FPC monitors more
than twenty dams and fish traps; collects data on chinook,
steelhead, coho, shad, sockeye, pink salmon, and lamprey;
and monitors river conditions, including temperature, dis-
solved gases, fish hatchery releases, and dam flows and spills.
The FPC makes information it gathers available on its web-
site. Fishery managers and Indian tribes use this information
to make flow and spill requests to BPA and the operators of
the dams, who, by controlling the water flow past the dams,
can improve the survival rates of fish migrating downstream.7
  6
     An anadromous fish lives in the sea but breeds in freshwater. See 50
C.F.R. § 401.2(g) (defining anadromous fish as “[a]quatic, gill breathing,
vertebrate animals bearing paired fins which migrate to and spawn in fresh
water, but which spend part of their life in an oceanic environment”); see
also Convention for the Conservation of Anadromous Stocks of the North
Pacific Ocean, art. II.1, annex pt. I, Feb. 11, 1992, T.I.A.S. No. 11,465
(classifying the following species as anadromous fish: chum salmon, coho
salmon, pink salmon, sockeye salmon, chinook salmon, cherry salmon,
and steelhead trout); 16 U.S.C. §§ 5001-12 (implementing the Conven-
tion).
   7
     Fish migrating down the stream of a dammed river encounter a series
of dangers. The fish must navigate the reservoir of standing water main-
tained behind the dam. The standing water slows the migration of the fish
and exposes the fish to predators. After navigating the reservoir, the fish
must then pass the dam safely. Fish may pass a dam by being spilled over
the dam, by passing through the turbines of the dam, or by being trans-
ported around the dam. See Nat’l Wildlife Fed’n v. Nat’l Marine Fisheries
Serv., 422 F.3d 782, 788-89 (9th Cir. 2005). The data gathered by the FPC
is used to measure the success that fish have passing dams.
952    NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
  From the administrative record it appears that the FPC
operates independently of BPA and the Council. However,
nothing in the record indicates that the FPC is a distinct legal
entity. BPA funds the FPC through grants administered by
master contracts with the Pacific States Marine Fisheries
Commission (“Pacific States”). BPA specifies tasks for the
FPC to perform in annual statements of work within BPA’s
master contract with Pacific States.

                               D

   Conflict between environmental and energy interests in the
Columbia River basin has on occasion played out in the court-
room, as shown in BPA-related cases decided by us. See, e.g.,
Confederated Tribes of the Umatilla Indian Reservation v.
BPA, 342 F.3d 924 (9th Cir. 2003); Nw. Envtl. Def. Ctr. v.
BPA, 117 F.3d 1520 (9th Cir. 1997); Nw. Res. Info. Ctr., Inc.
v. Nw. Power Planning Council, 35 F.3d 1371 (9th Cir. 1994)
[hereinafter, NRIC]; Nw. Res. Info. Ctr., Inc. v. Nat’l Marine
Fisheries Serv., 25 F.3d 872 (9th Cir. 1994). In this case,
however, an issue over how to balance fish survival and
recovery with the inexpensive production of hydropower was
raised in the legislative committee process.

   In June 2005, the United States Senate Appropriations Sub-
committee on Energy and Water Development issued its
report on House Resolution 2419, the resolution that would
become the Energy and Water Development Appropriations
Act of 2006 (“2006 Appropriations Act”). The subcommittee
report stated that BPA “may make no new obligations from
the Bonneville Power Administration Fund in support of the
Fish Passage Center” because “there are universities in the
Pacific Northwest that already collect fish data for the region”
and can carry out the FPC’s responsibilities “at a savings to
the region’s ratepayers.” S. Rep. No. 109-84, at 179 (2005).

   On November 19, 2005, Congress passed the 2006 Appro-
priations Act. Pub. L. No. 109-103, 119 Stat. 2247 (2005).
        NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER               953
The 2006 Appropriations Act makes no reference to the FPC.
The Conference Committee Report of the Congress accompa-
nying the Act, however, states that

      The Bonneville Power Administration may make no
      new obligations in support of the Fish Passage Cen-
      ter. The conferees call upon Bonneville Power
      Administration and the Northwest Power and Con-
      servation Council to ensure that an orderly transfer
      of the Fish Passage Center functions (warehouse of
      smolt monitoring data, routine data analysis and
      reporting and coordination of the smolt monitoring
      program) occurs within 120 days of enactment of
      this legislation. These functions shall be transferred
      to other existing and capable entities in the region in
      a manner that ensures seamless continuity of activi-
      ties.

H.R. Rep. No. 109-275, at 174 (2005) (Conf. Rep.).

   On December 8, 2005, in response to the committee
reports, BPA issued a “Program Solicitation for Key Func-
tions previously performed by the Fish Passage Center”
(“Program Solicitation”). The Program Solicitation states that
“[i]n November 2005, the US Congress passed legislation
(House Report 109-275), which forbids BPA from making
additional obligations in support of the Fish Passage Center.”
The Program Solicitation further states that “BPA has decided
to implement this requirement thru [sic] the issuance of this
Program Solicitation.”

   BPA received five responses to its Program Solicitation.
On January 26, 2006, BPA announced, in a press release, its
decision to award contracts for the functions formerly per-
formed by the FPC to Battelle Pacific Northwest National
Laboratory (“Battelle”) and Pacific States.8 The new model
  8
   Pacific States is the entity that now contracts with BPA to receive the
grants that Pacific States in turn uses to fund the operations of the FPC.
See supra at 952.
954    NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
divides between Battelle and Pacific States a number of the
functions that had been wholly the responsibility of the FPC.
According to the press release, under this new model, Pacific
States will “coordinate implementation of the Smolt Monitor-
ing Program, manage the real-time database of the monitoring
program and related data, and perform routine analysis and
reporting of that data.” On the other hand, Battelle will “serve
a coordinating function, relying on experts in the field to pro-
vide in-depth analysis of the data.” Battelle executed its con-
tract with BPA on February 28, 2006, and Pacific States
executed its contract on March 16, 2006.

                               E

   Northwest Environmental Defense Center, Public Employ-
ees for Environmental Responsibility, and Northwest Sports-
fishing Industry Association (collectively, “NEDC”) filed a
petition for review with us on January 23, 2006 and an
amended petition for review on February 6, 2006, challenging
BPA’s decision to transfer the functions of the FPC to Pacific
States and Battelle, alleging that the transfer of the functions
of the FPC ran afoul of BPA’s duties under the Northwest
Power Act. The Confederated Tribes and Bands of the
Yakama Nation (“Yakama”) filed a petition for review on
March 3, 2006, also challenging BPA’s decision to transfer
the functions of the FPC.

   On March 17, 2006, we granted the petitioners’ request for
a stay pending our review of BPA’s action. We ordered BPA
to “continue, pending resolution of [the petition for review]
and/or further order of the court, its existing contractual
arrangement to fund and support the Fish Passage Center
under the existing terms and conditions.” On April 7, 2006,
we consolidated NEDC’s petition with the petition filed by
Yakama.

   The petitioners ask us to set aside BPA’s decision to trans-
fer the functions of the FPC and to use our equitable authority
       NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER       955
to order BPA to fund the FPC. Before we address the merits
of their petitions for review, we must determine whether we
have jurisdiction. See Steel Co. v. Citizens for a Better Env’t,
523 U.S. 83, 94-95 (1998).

                               II

   BPA raises two challenges to our jurisdiction. First, BPA
argues that we lack statutory jurisdiction to adjudicate the
petitioners’ challenge to BPA’s decision to transfer the func-
tions of the FPC because BPA’s December 8, 2005 Program
Solicitation is not a “final action” of BPA. See 16 U.S.C.
§ 839f(e)(5) (permitting judicial review of “final actions” of
BPA and the Council). Second, BPA asserts that the petition-
ers do not have standing to challenge BPA’s action in this
case because a decision in favor of the petitioners will not be
likely to redress the petitioners’ injury, as required for us to
exercise jurisdiction under Article III of the United States
Constitution. We consider these challenges to our subject-
matter jurisdiction de novo. Indus. Customers of Nw. Utils.,
408 F.3d at 644.

                               A

   [1] The Northwest Power Act vests us with original and
exclusive subject-matter jurisdiction over challenges to “final
actions and decisions taken pursuant to [the Act] by the
Administrator [of BPA] or the Council, or the implementation
of such final actions.” 16 U.S.C. § 839f(e)(5). We have inter-
preted § 839f(e)(5)’s judicial review provision “with a broad
view of this Court’s jurisdiction.” Transmission Agency of N.
Cal. v. Sierra Pac. Power Co., 295 F.3d 918, 925 (9th Cir.
2002) (internal quotation omitted).

   [2] BPA argues that we lack jurisdiction over the petition-
ers’ challenge to the December 8, 2005 Program Solicitation
because the Program Solicitation was not a “final action.” But
in its brief BPA concedes that its January 26, 2006 decision,
956    NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
selecting the successors to the FPC, is a final agency action
subject to judicial review under § 839f(e)(5). While BPA’s
issuance of the Program Solicitation alone might not have
been a final action subject to our review, BPA’s initial deci-
sion to create a new model Fish Passage Center and to issue
the Program Solicitation was part of the process BPA used to
set its course, leading to what BPA concedes was its final
action transferring the functions of the FPC to Pacific States
and Battelle. Because both NEDC’s and Yakama’s petitions
for review directly challenge the January 26, 2006 final
action, and BPA’s December 8, 2005 action was simply a part
of the process that led to BPA’s final action, we have statu-
tory jurisdiction over both NEDC’s and Yakama’s petitions
for review.

                               B

   BPA next argues that we lack Article III jurisdiction over
these petitions for review. To have constitutional standing to
challenge BPA’s action, the petitioners must satisfy a familiar
three-part test established by the Supreme Court. First, the
petitioners must have suffered an “injury in fact” which is (a)
concrete and particularized and (b) actual or imminent. Lujan
v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Second,
the petitioners must show a causal connection between the
injury and the conduct complained of. Id. Finally, “it must be
likely, as opposed to merely speculative, that the injury will
be redressed by a favorable decision.” Id. at 561 (internal quo-
tations omitted). BPA argues that the petitioners have failed
to satisfy the final element of the test, claiming that the rem-
edy that the petitioners seek is beyond our authority.

   The petitioners ask that we set aside BPA’s final action
transferring the functions of the FPC to Pacific States and
Battelle and order BPA to continue the FPC’s funding until
it can reconsider, in accordance with any opinion of this court,
its decision to transfer the functions of the FPC. BPA con-
tends that we have no authority to order BPA to fund the FPC,
        NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER                 957
making it impossible for us to redress any injury suffered by
the petitioners and leaving the petitioners without standing.
BPA points out that it funded the FPC through an annual
grant that expired and was renewed every year. BPA argues
that to order it to continue to fund the FPC requires us to force
BPA to contract against its will, an action beyond the author-
ity of the judiciary.

   [3] The cases BPA relies on are cases stating the unremark-
able proposition of contract law that a court will not create
new obligations that do not exist within the four corners of a
contract. See Imperial Fire Ins. Co. of London v. Coos
County, 151 U.S. 452, 462 (1894) (rejecting jury instructions
contrary to the unambiguous language of an insurance pol-
icy); City of New Orleans v. New Orleans Waterworks Co.,
142 U.S. 79, 91 (1891) (refusing to construe a decision of the
Louisiana Supreme Court as creating a new contract between
the parties); Jaeger v. Canadian Bank of Commerce, 327 F.2d
743, 745 (9th Cir. 1964) (stating that courts have no power to
make new contracts); Peterson v. Noots, 255 F. 875, 880 (9th
Cir. 1919) (refusing to read additional provision into a liqui-
dated damages clause where the liquidated damages clause
was unambiguous). In a contract case between two private
parties, our remedial power is no doubt limited to enforcing
the obligations to which the private parties agreed. See 25
Richard A. Lord, Williston on Contracts § 67:30 (4th ed.
2006) (stating that a court, in granting equitable relief “is cur-
tailed to the extent that it must generally act within the frame-
work of the contract”).

  [4] This case presents a different situation. Rather than ask-
ing us to remedy a violation of private law (e.g., a breach of
contract), the petitioners ask us to remedy the violation of a
public law—the Administrative Procedure Act (“APA”)9—by
  9
    Public law is the body of law regulating relations between private par-
ties and the government and regulating the structure and operation of the
government itself. See Black’s Law Dictionary 1267 (8th ed. 2004). Public
law consists of the fields of constitutional law, criminal law, and adminis-
trative law. Id.
958     NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
contending that BPA acted arbitrarily, capriciously, and con-
trary to law in transferring the functions of the FPC. See 5
U.S.C. § 706(2)(A); see also 16 U.S.C. § 839(f)(e)(2) (direct-
ing that courts review final actions of BPA under the APA).
When a public law has been violated, we are not bound to
stay within the terms of a private agreement negotiated by the
parties, and may exercise our equitable powers to ensure com-
pliance with the law. See Nat’l Wildlife Fed’n v. Espy, 45
F.3d 1337, 1343 (9th Cir. 1995) (“The court’s decision to
grant or deny injunctive or declaratory relief under [the] APA
is controlled by principles of equity.”).

   Moreover, “[w]here the public interest is involved, ‘equita-
ble powers assume an even broader and more flexible charac-
ter than when only a private controversy is at stake.’ ” United
States v. Alisal Water Corp., 431 F.3d 643, 654 (9th Cir.
2005) (quoting Porter v. Warner Holding Co., 328 U.S. 395,
398 (1946)). Unless Congress provides otherwise, “ ‘[c]ourts
of equity may, and frequently do, go much farther both to
give and withhold relief in furtherance of the public interest
than they are accustomed to go when only private interests are
involved.’ ” United States v. Coca-Cola Bottling Co. of L.A.,
575 F.2d 222, 228 (9th Cir. 1978) (quoting United States v.
First Nat’l City Bank, 379 U.S. 378, 383 (1965)).

  For example, in FTC v. H.N. Singer, Inc., 668 F.2d 1107,
1109 (9th Cir. 1982), the FTC sought a permanent injunction
under the Federal Trade Commission Act. In comparing the
scope of the equitable powers of federal courts in private law
matters versus public law matters, we wrote:

      “Unless otherwise provided by statute, all the inher-
      ent equitable powers of the District Court are avail-
      able for the proper and complete exercise of [its]
      jurisdiction. And since the public interest is involved
      in a proceeding of this nature, those equitable pow-
      ers assume an even broader and more flexible char-
      acter than when only a private controversy is at
         NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER               959
       stake. Power is thereby resident in the District Court,
       in exercising [its] jurisdiction, to do equity and to
       mould each decree to the necessities of the particular
       case.”

Id. at 1112 (quoting Porter, 328 U.S. at 398) (citation and
internal quotation omitted). We concluded that, in the absence
of congressional directive, federal courts retain broad equita-
ble powers in public law matters, including the “authority to
grant any ancillary relief necessary to accomplish complete
justice.” Id. at 1113. We thus affirmed the district court’s
injunction freezing the assets of certain defendants. Id.

   [5] Section 706(2) of the APA gives us the equitable power
to “set aside” BPA’s action transferring the functions of the
FPC, if we determine that BPA’s action was arbitrary, capri-
cious, or contrary to law. See 5 U.S.C. § 706(2)(A); Tinoqui-
Chalola Council of Kitanemuk & Yowlumne Tejon Indians v.
U.S. Dep’t of Energy, 232 F.3d 1300, 1305 (9th Cir. 2000)
(holding that, under the APA, a court has authority to order
recision of a contract for sale if the federal agency “acted in
excess of statutory authority or without observance of the pro-
cedures required by law”). As shown by our prior order man-
dating that BPA continue to fund the FPC until we rule on the
merits of the petitions for review, this court, as a court of
equity conducting judicial review under the APA, has broad
powers to order “mandatory affirmative relief,”10 Adams v.
Witmer, 271 F.2d 29, 38 (9th Cir. 1958), if such relief is “nec-
essary to accomplish complete justice,” H.N. Singer, Inc., 668
  10
    In Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55, 64
(2004), the Supreme Court held that, when a party seeks redress because
an agency has failed to act, a court may only require the agency to perform
non-discretionary actions that the agency is required by law to undertake.
Norton is distinguishable from the instant case because Norton dealt with
the power of courts to “compel agency action unlawfully withheld” under
5 U.S.C. § 706(1). The petitioners here do not seek redress for agency
inaction under § 706(1), but rather challenge a final agency action under
the § 706(2) and the Northwest Power Act.
960    NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
F.2d at 1113. Stated another way, if we conclude that BPA
violated the APA by acting arbitrarily, capriciously, or con-
trary to law, we have the ability and indeed the juristic duty
to remedy BPA’s violation. Viewed in this light, we are confi-
dent that we retain the power to require BPA to fund the FPC,
at least for a period of time in which BPA can reconsider its
action in accordance with our opinion. Because we have the
power to redress the injury suffered by the petitioners if they
prevail on their legal theory, we hold that, under Lujan, the
petitioners have standing to pursue their petitions for review.

                              III

   As we discussed above, the Northwest Power Act dictates
that our review of BPA’s final agency action is governed by
§ 706 of the APA, 5 U.S.C. § 706. 16 U.S.C. § 839f(e)(2).
Under the APA, we must set aside BPA’s action if it was “ar-
bitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. § 706(2)(A); see NRIC, 35
F.3d at 1383. The petitioners contend that BPA violated the
APA in two ways. First, the petitioners contend that BPA
acted “not in accordance with law” by transferring the func-
tions of the FPC based on its belief that language in a commit-
tee report had a binding legal effect on the agency. Second,
the petitioners argue that BPA acted arbitrarily and capri-
ciously because it did not employ a rational decision-making
process in deciding to transfer the functions of the FPC to
Pacific States and Battelle. We address those arguments in
turn.

                               A

   The petitioners first contend that BPA’s decision to transfer
the functions of the FPC was “not in accordance with law,”
5 U.S.C. § 706(2), because BPA gave legally-binding effect
to a passage of legislative history. BPA counters by asserting
that it engaged in the rational decision-making process that
the APA requires by observing the language contained in the
       NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER       961
congressional committee reports regarding the 2006 Appro-
priations Act and implementing the directives in the reports.

                               1

   Though the text of the 2006 Appropriations Act itself made
no reference to the FPC, its accompanying conference com-
mittee report stated that “[t]he Bonneville Power Administra-
tion may make no new obligations in support of the Fish
Passage Center.” H.R. Rep. No. 109-275, at 174 (2005)
(Conf. Rep.). The committee report language also instructed
BPA and the Council “to ensure an orderly transfer of the
Fish Passage Center functions . . . within 120 days of enact-
ment of this legislation.” Id. The report issued by the Senate
Appropriations Subcommittee on Energy and Water Develop-
ment on House Resolution 2419, the resolution that would
become the 2006 Appropriations Act, contained similar lan-
guage, indicating that BPA “may make no new obligations
from the Bonneville Power Administration Fund in support of
the Fish Passage Center.” S. Rep. No. 109-84, at 179 (2005).

   It is an understatement to say that BPA gave great weight
to these reports; more accurate is the observation that BPA
slavishly deferred to what it thought the reports commanded.
As one example, BPA’s Program Solicitation states that “[i]n
November 2005, the US Congress passed legislation (House
Report 109-275), which forbids BPA from making additional
obligations in support of the Fish Passage Center.” A Septem-
ber 20, 2005 email written by a Vice President of BPA, Greg-
ory K. Delwiche, also reflects BPA’s view of the importance
of the Senate subcommittee report. Michelle DeHart, Man-
ager of the FPC, had asked Delwiche his thoughts on the
future of the FPC. After Delwiche responded that he would
have to wait and see “how this is playing out in our nation’s
capitol [sic],” DeHart replied, “I was really not thinking about
talking about the language [in the subcommittee report] but in
getting an idea from you as to what your thinking was on the
Fish Passage Center in the future.” Delwiche responded:
962    NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
“[T]he reason the language is important is that what my think-
ing is on the Fish Passage Center really isn’t relevant, what’s
relevant is what the direction from Wash DC [sic] is. We are
merely the implementer of guidance from back there.”

   Delwiche again indicated his belief that BPA had no choice
but to follow the committee report language in a declaration
filed in our court, characterizing the language in the commit-
tee reports as “unambiguous Congressional direction.” Del-
wiche explained BPA’s decision to transfer the FPC by stat-
ing that “I did not think that, as an Executive Branch agency,
accountable to Congress, BPA could ignore this unambiguous
Congressional direction.” Finally, in BPA’s brief, BPA states
that it interpreted the conference committee report as “the
unambiguously expressed will of the Congress.”

   In summary, BPA treated the committee report language as
if the language placed a legal obligation on BPA to transfer
the functions of the FPC. However, as we explain in the next
section, committee report language unconnected to the text of
an enacted statute has no binding legal import, and it was con-
trary to law for BPA to base its decision to transfer the FPC
on its belief that “the US Congress passed legislation (House
Report 109-275) . . . forbid[ding] BPA from making addi-
tional obligations in support of the Fish Passage Center.”

                                2

   The APA empowers us to set aside an agency decision that
is contrary to governing law. 5 U.S.C. § 706(2); see Lands
Council v. Powell, 395 F.3d 1019, 1026 (9th Cir. 2005). The
case law of the Supreme Court and our court establishes that
legislative history, untethered to text in an enacted statute, has
no compulsive legal effect. It was thus contrary to law for
BPA to conclude, from committee report language alone, that
it was bound to transfer the functions of the FPC.

  In Shannon v. United States, 512 U.S. 573, 579 (1994), the
petitioner, a criminal defendant, argued that the district court
       NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER         963
erred by failing to instruct the jury about the consequences of
finding him not guilty by reason of insanity. The petitioner
argued that Congress, in enacting the Insanity Defense
Reform Act of 1984 (“IDRA”), intended to require that dis-
trict courts instruct the jury as to the consequences of an
insanity acquittal. Id. at 583. The text of IDRA was silent on
the matter. Id. at 580; see 18 U.S.C. § 4242(b) (stating that
“the jury shall be instructed to find . . . the defendant—(1)
guilty; (2) not guilty; or (3) not guilty only by reason of insan-
ity”). In support of his argument that IDRA required the dis-
trict court to instruct the jury about the consequences of an
insanity acquittal, the petitioner in Shannon pointed to lan-
guage in the Senate Report on IDRA, which stated that “[t]he
Committee endorses the procedure used in the District of
Columbia whereby the jury, in a case in which the insanity
defense has been raised, may be instructed on the effect of a
verdict of not guilty by reason of insanity.” Shannon, 512
U.S. at 583 (internal quotation omitted).

   [6] The United States Supreme Court refused to give
weight to this passage of legislative history unattached to the
text of IDRA: “We are not aware of any case . . . in which we
have given authoritative weight to a single passage of legisla-
tive history that is in no way anchored in the text of the stat-
ute.” Id. The Court emphasized that the passage of legislative
history Shannon identified “[did] not purport to explain or
interpret any provision of the IDRA.” Id. The Court con-
cluded by stating that “ ‘courts have no authority to enforce
[a] principl[e] gleaned solely from legislative history that has
no statutory reference point.’ ” Id. at 584 (alterations in origi-
nal) (quoting Int’l Bhd. of Elec. Workers, Local Union No.
474 v. NLRB, 814 F.2d 697, 712 (D.C. Cir. 1987)); see also
Abrego v. Dow Chem. Co., 443 F.3d 676, 686 (9th Cir. 2006)
(per curiam) (holding that statutory silence, “coupled with a
sentence in a legislative committee report untethered to any
statutory language,” did not bring about a change in govern-
ing law). The Supreme Court thus made clear that principles
in legislative history that have no statutory reference point
964     NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
and do not purport to explain any part of an enacted law do
not carry the force of law. As such, they do not bind anyone
—administrative agencies included.

   Shannon is not the only case illustrating that it is contrary
to law for an agency to conclude that it is legally bound by
language in a congressional committee report. In Cherokee
Nation of Oklahoma v. Leavitt, 543 U.S. 631, 646 (2005), the
Secretary of Health and Human Services argued that unam-
biguous statutory language, when paired with conflicting leg-
islative history, rendered a statute ambiguous. The Court held
that the statute was not ambiguous, stating that “[t]he relevant
case law makes clear that restrictive language contained in
Committee Reports is not legally binding.” Id. at 646 (citing
Lincoln v. Vigil, 508 U.S. 182, 192 (1993); UAW v. Donovan,
746 F.2d 855, 860-61 (D.C. Cir. 1984) (Scalia, J.); Blackhawk
Heating & Plumbing Co. v. United States, 622 F.2d 539, 552
& n.9 (Ct. Cl. 1980)); see also Lincoln, 508 U.S. at 192
(“[I]ndicia in committee reports and other legislative history
as to how . . . funds should or are expected to be spent do not
establish any legal requirements on [an] agency.” (internal
quotation omitted)).11
  11
     The utility of legislative history stands on a different footing when it
is tied directly to statutory language and that language is ambiguous. In
such a case, the legislative history may permissibly inform judgment about
interpreting ambiguous statutory terms. For example, in Northwest Forest
Resource Council v. Glickman, we stated, “a congressional conference
report is recognized as the most reliable evidence of congressional intent
because it ‘represents the final statement of the terms agreed to by both
houses.’ ” 82 F.3d 825, 835 (9th Cir.1996) (quoting Dep’t of Health &
Welfare v. Block, 894 F.2d 895, 901 (9th Cir. 1986)). However, in that
case, the statutory language was not silent on the relevant issue. See id.
Here, by contrast, the passage of legislative history in question is unrelated
to any provision of the statute that Congress has enacted. When legislative
history is not tied to any statutory text, we properly should give it no
weight. See Abrego, 443 F.3d at 683 (“[C]onsideration of legislative his-
tory is appropriate where statutory language is ambiguous. Ambiguity,
however, is at least a necessary condition. In this instance, the statute is
not ambiguous. Instead, it is entirely silent as to the burden of proof on
removal.” (citations omitted))
          NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER                      965
   [7] The principle that committee report language has no
binding legal effect is grounded in the text of the Constitution
and in the structure of separated powers the Constitution cre-
ated. Article I, section 7, clause 2 of the Constitution is
explicit about the manner in which Congress can take legally
binding action.12 Members of Congress cannot use committee
report language to make an end run around the requirements
of Article I. If Congress wishes to alter the legal duties of per-
sons outside the legislative branch, including administrative
agencies, it must use the process outlined in Article I. See INS
v. Chadha, 462 U.S. 919, 952 (1983); see also Clinton v. City
of New York, 524 U.S. 417, 439-40 (1998) (holding that “the
power to enact statutes may only be exercised in accord with
a single, finely wrought and exhaustively considered, proce-
dure” outlined in Article I (internal quotation omitted)). BPA
acted contrary to law by treating committee report language—
language that was not subjected to the bicameralism and pre-
sentment requirements of Article I—as imposing upon BPA
a legal duty to transfer the functions of the FPC. Because the
  12
    Article I, section 7, clause 2 of the United States Constitution pro-
vides:
       Every bill which shall have passed the House of Representatives
       and the Senate shall, before it become a law, be presented to the
       President of the United States; if he approve; he shall sign it; but
       if not, he shall return it, with his objections, to that House in
       which it shall have originated, who shall enter the objections at
       large on their journal, and proceed to reconsider it. If after such
       reconsideration two thirds of that House shall agree to pass the
       bill, it shall be sent, together with the objections, to the other
       House, by which it shall likewise be reconsidered, and if
       approved by two thirds of that House, it shall become a law. But
       in all such cases the votes of both Houses shall be determined by
       yeas and nays, and the names of the persons voting for and
       against the bill shall be entered on the journal of each House
       respectively. If any bill shall not be returned by the President
       within ten days (Sundays excepted) after it shall have been pre-
       sented to him, the same shall be a law in like manner as if he had
       signed it, unless the Congress by their adjournment prevent its
       return, in which case it shall not be a law.
966       NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
committee reports in this case were not subject to the “finely
wrought” process in Article I, BPA erred by giving the reports
binding effect.

   [8] Treating legislative reports as binding law also under-
mines our constitutional structure of separated powers,
because legislative reports do not come with the traditional
and constitutionally-mandated political safeguards of legisla-
tion. As noted above, legislative reports are not acts of law
satisfying the precise requirements of Article I, which were
devised by the Framers to ensure separation of powers and a
careful legislative process. By contrast, legislative reports
may in some cases be written by an individual legislator, con-
gressional staffers, or even lobbyists.13 Giving binding effect
  13
      The Supreme Court has cautioned:
       [L]egislative materials like committee reports, which are not
       themselves subject to the requirements of Article I, may give
       unrepresentative committee members—or, worse yet, unelected
       staffers and lobbyists—both the power and the incentive to
       attempt strategic manipulations of legislative history to secure
       results they were unable to achieve through the statutory text.
Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, ___, 125
S. Ct. 2611, 2626 (2005)).
  Judge Kozinski has likewise observed:
       Reports are usually written by staff or lobbyists, not legislators;
       few if any legislators read the reports; they are not voted on by
       the committee whose views they supposedly represent, much less
       by the full Senate or House of Representatives; they cannot be
       amended or modified on the floor by legislators who may dis-
       agree with the views expressed therein.
Wallace v. Christensen, 802 F.2d 1539, 1560 (9th Cir. 1986) (en banc)
(Kozinski, J., concurring).
   Committee reports often contain “what some committee members
wanted in the bill, but did not get,” and are often written before the bill
is drafted, Puerta v. United States, 121 F.3d 1338, 1344 (9th Cir. 1997),
or after a bill is passed, Lao v. Wickes Furniture Co., Inc., 455 F. Supp.
2d 1045, 1051 (C.D. Cal. 2006) (refusing to give weight to committee
report issued ten days after the passage of a law).
       NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER       967
to passages in legislative reports may thus give binding legal
effect to the unchecked will of a lone person, and that is not
what our Constitution envisions.

   The statements of BPA Vice President Delwiche illustrate
how BPA’s reliance on legislative history undermined separa-
tion of powers in this case. Delwiche said that BPA, the
agency he led, was “an Executive Branch agency, accountable
to Congress.” It is certainly true that Congress through legis-
lation may direct how BPA shall operate. But an executive
branch agency which views itself as subservient to a sentence
in a legislative report undermines the distribution of authority
in our federal government in which every exercise of political
power is checked and balanced.

    [9] BPA’s treatment of legislative history as binding law
also frustrated the statutory design of the Northwest Power
Act. Rather than adhering to the Act’s carefully-tailored
requirement that BPA take actions consistent with the guid-
ance provided by the Plan and Program crafted by the Council
as well as the purposes of the Act, BPA simply gave conclu-
sive weight to what might have been the view of a lone legis-
lator, staffer, or lobbyist. That the Council, and guidance from
it, derives from political and expert representatives from four
Pacific Northwest states, affected Indian tribes, and groups
with interest in fisheries only intensifies BPA’s error in rely-
ing so heavily on congressional report statements that might
have been penned by a single legislator or single lobbyist, and
that do not satisfy Article I’s requirements and do not have
force of law. The Act contemplates a participatory process in
which the varied constituencies of the Pacific Northwest
advise BPA on how it should exercise its discretion. By fol-
lowing congressional committee report language as if it were
mandatory law, BPA ignored the opinions of those individu-
als and groups directly affected by its policy choices and cir-
cumvented the unique structure of cooperative federalism
created by the Act.
968     NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
   Delwiche incorrectly believed that the dominant factors in
his decision about the continued operation of the FPC were
statements in legislative history, untied to the legislative com-
mands of Congress, when, to the contrary, his agency’s
organic statute, the Northwest Power Act, states that one of its
purposes is to allow the States, local governments, and citi-
zens of the Pacific Northwest (including fish and wildlife
agencies and Indian tribes) to participate in the development
of regional energy conservation plans, plans for renewable
resources, and plans for environmental protection and
enhancement. 16 U.S.C. § 839(3).14

   The Act also requires BPA to exercise its authority in a
manner consistent with the Council’s Fish and Wildlife Pro-
gram, see id. § 839b(h)(10)(A), the most recent version of
which called for the continued operation of the FPC. Indeed,
the Act makes no secret that BPA’s actions “shall be consis-
tent with the [Council’s Fish and Wildlife] plan and any
amendment thereto,” id. § 839b(d)(2), as the Act recites the
consistency requirement numerous times, see id. §§ 839b(h),
839c(d)(3), 839d(b)-(c). Possibly, BPA could exercise some
discretion to depart from its prior practice of funding the FPC
in accordance with the Council’s Fish and Wildlife Program,
if such a departure was necessary for BPA to comply with its
statutory obligation to use its authority in a manner consistent
with the Council’s Power Plan or purposes of the Act. But no
nice question of balancing potentially conflicting obligations
is presented when BPA adopts a slavish adherence to a sen-
tence in a legislative committee report.
  14
     In NRIC, 35 F.3d at 1388, we recognized that the Council must give
“due weight” to views of fishery managers, state and federal wildlife agen-
cies, and Indian tribes in formulating the Fish and Wildlife Program. See
16 U.S.C. § 839b(h)(7). It follows with stronger logic that when the final
Fish and Wildlife Program, the product of a collaborative process, calls for
the continued operation of the FPC, BPA cannot then disregard the Coun-
cil’s view without giving the Council’s view due weight. The Northwest
Power Act requires BPA to act in a manner consistent with the Fish and
Wildlife Program. Id. § 839b(h)(10)(A).
      NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER      969
   We may only sustain an agency’s action on the grounds
actually considered by the agency. As the Supreme Court
explained in SEC v. Chenery Corp., 318 U.S. 80, 95 (1943),
“an administrative order cannot be upheld unless the grounds
upon which the agency acted in exercising its powers were
those upon which its action can be sustained.” In other words,
the APA obliges us to set BPA’s action aside unless the
record demonstrates that, because BPA considered some other
basis for its action, BPA’s decision to transfer the functions
of the FPC was not arbitrary, capricious, or contrary to law.
See SEC v. Chenery Corp., 332 U.S. 194, 196 (1947) (“[A]
reviewing court, in dealing with a determination or judgment
which an administrative agency alone is authorized to make,
must judge the propriety of such action solely by the grounds
invoked by the agency. If those grounds are inadequate or
improper, the court is powerless to affirm the administrative
action by substituting what it considers to be a more adequate
or proper basis.”).

                              B

   BPA argues that, even if language in the congressional
committee reports did not provide a rational basis for its
action transferring the functions of the FPC, its decision can
be upheld as a reasonable application of the Act’s requirement
that it exercise its authority in a manner consistent with the
Council’s Fish and Wildlife Program. BPA contends that it
carefully considered the issues before it and therefore we
should let stand its decision to transfer the functions of the
FPC. The petitioners contend, by contrast, that BPA never
considered the consistency provision of the Act in deciding to
transfer the functions of the FPC and insufficiently analyzed
the issues before it. Thus, petitioners urge that BPA acted
arbitrarily and capriciously.

                              1

   [10] Before further evaluating BPA’s decision to transfer
the functions of the FPC to Pacific States and Battelle, we
970      NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
outline the principles governing the scope of our review under
the arbitrary and capricious standard of § 706(2) of the APA.
The Supreme Court has explained:

       The scope of review under the “arbitrary and capri-
       cious” standard is narrow and a court is not to substi-
       tute its judgment for that of the agency.
       Nevertheless, the agency must examine the relevant
       data and articulate a satisfactory explanation for its
       action including a “rational connection between the
       facts found and the choice made.”

Motor Vehicle Mfgs. Ass’n v. State Farm Mutual Auto. Ins.
Co., 463 U.S. 29, 43 (1983) (quoting Burlington Truck Lines
v. United States, 371 U.S. 156, 168 (1962)); see Natural Res.
Def. Council v. U.S. Forest Serv., 421 F.3d 797, 806 (9th Cir.
2005). That is, an agency must “cogently explain why it has
exercised its discretion in a given manner,” and “[i]n review-
ing that explanation, we must ‘consider whether the decision
was based on a consideration of the relevant factors and
whether there has been a clear error of judgment.’ ” State
Farm, 463 U.S. at 43, 48 (quoting Bowman Transp., Inc. v.
Ark.-Best Freight Sys., 419 U.S. 281, 285 (1974)).

   [11] An agency decision is arbitrary and capricious “if the
agency has relied on factors which Congress has not intended
it to consider, entirely failed to consider an important aspect
of the problem, offered an explanation for its decision that
runs counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference in
view or the product of agency expertise.” State Farm, 463
U.S. at 43.15
  15
     “Some courts have held that agency action is arbitrary and capricious
if ‘the agency has not really taken a ‘hard look’ at the salient problems and
has not genuinely engaged in reasoned decision-making.’ ” Riverbend
Farms, Inc. v. Madigan, 958 F.2d 1479, 1488 (9th Cir. 1992) (quoting
Greater Boston Television Corp. v. FCC, 444 F.2d 841, 851 (D.C. Cir.
        NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER                971
   In this case, BPA departed from its long-standing practice
of funding a unitary Fish Passage Center and transferred the
FPC’s functions to two separate entities. An agency is entitled
to change its course when its view of what is in the public’s
interest changes. However, “an agency changing its course
must supply a reasoned analysis indicating that prior policies
and standards are being deliberately changed, not casually
ignored, and if an agency glosses over or swerves from prior
precedents without discussion it may cross the line from the
tolerably terse to the intolerably mute.” Greater Boston Tele-
vision Corp. v. FCC, 444 F.2d 841, 852 (D.C. Cir. 1970)
(footnotes omitted), quoted in State Farm, 463 U.S. at 57; see
also Atchison, Topeka & Santa Fe Ry. v. Wichita Bd. of
Trade, 412 U.S. 800, 808 (1973) (plurality opinion)
(“Whatever the ground for the [agency’s] departure from prior
norms, . . . it must be clearly set forth so that the reviewing
court may understand the basis of the agency’s action and so
may judge the consistency of that action with the agency’s
mandate.”); W. States Petroleum Ass’n v. EPA, 87 F.3d 280,

1970)). Accordingly, some commentators have suggested that our task in
reviewing agency action under § 706(2) of the APA is to “look[ ] closely
at whether the agency has taken a hard look at the question” before it, 33
Charles Alan Wright & Charles H. Koch, Jr., Federal Practice and Proce-
dure § 8335 (2006) (emphasis omitted), though other commentators
decline to adopt the “hard look” phraseology, see 2 Richard J. Pierce, Jr.,
Administrative Law Treatise § 11.4 (4th ed. 2002) (“In order to avoid judi-
cial reversal of its action as arbitrary and capricious, an agency must
engage in ‘reasoned decisionmaking,’ defined to include an explanation of
how the agency proceeded from its findings to the action it has taken.”).
Because the Supreme Court has never explicitly embraced the “hard look”
approach to judicial review under the arbitrary and capricious standard of
the APA, cf. Indus. Union Dep’t, AFL-CIO v. Am. Petroleum Inst., 448
U.S. 607, 695 n.9 (1980) (Marshall, J., dissenting) (stating that the arbi-
trary and capricious “inquiry is designed to require the agency to take a
‘hard look’ ” at the issues before it), we adhere to the Supreme Court’s
explicit guidance in State Farm that an agency must cogently explain its
actions and demonstrate a rational connection between the facts it found
and the choice it made.
972     NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
284 (9th Cir. 1996) (stating that an agency “must clearly set
forth the ground for its departure from prior norms”).

   Moreover, in reviewing BPA’s action, we must look to
BPA’s reasoning in making its decision to transfer the func-
tions of the FPC, and not to other reasons for its decision that
BPA might marshal before us. As the Supreme Court has
explained, we “may not accept appellate counsel’s post hoc
rationalizations for agency action,” Burlington Truck Lines,
371 U.S. at 168, and we “may not supply a reasoned basis for
the agency’s action that the agency itself has not given,” Bow-
man Transp., Inc., 419 U.S. at 85-86 (citing Chenery, 332
U.S. at 196).16

                                      2

    [12] In arguing that it sufficiently assessed the issues before
it, BPA defends its decision as the outcome of “a public pro-
cess within the confines of the 120-day transition period set
by Congress.” However, the administrative record does not
show that BPA, as required by State Farm, considered the rel-
evant facts and used a rational process to decide to transfer
the functions of the FPC to other entities. Apart from the evi-
dence in the record reflecting BPA’s incorrect belief that it
was required to follow the congressional committee report
language, there is no evidence showing how BPA decided to
  16
     BPA argues that its interpretation of the Northwest Power Act and its
decision to transfer the functions of the FPC are entitled to substantial def-
erence under Chevron U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837, 842-45 (1984), Aluminum Co. of America v. Central
Lincoln Peoples’ Utility District, 467 U.S. 380, 389 (1984), and their
progeny in our court, see, e.g., APAC, 126 F.3d at 1164. Perhaps BPA
might be entitled to deference in this case if it was actually interpreting the
Act, one of its organic statutes. However, as we discuss in the next sec-
tion, there is scant evidence in the record that BPA, in deciding to transfer
the functions of the FPC, was interpreting the Act’s provision that it exer-
cise its authority in a manner consistent with the Council’s Fish and Wild-
life Program, see 16 U.S.C. § 839b(h)(10)(A), or was interpreting any
other provision of the Act.
        NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER              973
transfer the functions of the FPC and to issue the December
8, 2005 Program Solicitation. This failure presents itself in
high relief in light of the Council’s program calling for the
continued operation of the FPC. So far as the record is con-
cerned, we have no explanation for why BPA would abandon
the FPC in the face of its inclusion in the Council’s Program,
beyond the mistaken belief of BPA that statements in legisla-
tive reports were mandatory and foreclosed the continued
funding of the FPC.

   As evidence of the decision-making process BPA used to
decide to award the contract for the functions formerly per-
formed by the FPC to Pacific States and Battelle, BPA points
to a PowerPoint slide from a presentation dated January 26,
2006, the same day BPA issued a press release announcing
that it decided to transfer the FPC’s functions to Pacific States
and Battelle. In the slide BPA prepared, each bidder received
an “X” for each of eight specified tasks17 BPA determined the
bidder could satisfactorily perform. In other words, a bidder
who BPA concluded could perform all eight tasks satisfacto-
rily would receive eight Xs, a bidder who could perform four
of the eight tasks satisfactorily would receive four Xs, and so
on. But there is no evidence in the record of how BPA deter-
mined whether a bidder would get an X or be left blank for
each specified task. And even if the PowerPoint presentation
did contain evidence of a rational decision-making process, it
is uncertain whether BPA actually relied on that process in
making its decision to transfer the functions of the FPC to
Pacific States and Battelle because the PowerPoint slide was
prepared on January 26, 2006, the very same day BPA
announced it decided to award Pacific States and Battelle the
contracts to perform the functions formerly performed by the
FPC.
   17
      The specified tasks were: database management; routine analysis and
reporting; coordination of the smolt monitoring program; miscellaneous
additional technical tasks; expanded, non-routine analysis; independent
technical review; policy oversight and guidance; and coordination with
other contractors.
974    NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
   As further purported evidence of the process which led
BPA to decide to transfer the functions of the FPC to Pacific
States and Battelle, BPA presents a memorandum comparing
the functions of the FPC with the functions of the new model.
However, the memorandum giving this comparison was
drafted on March 13, 2006, a month and a half after BPA
awarded the contracts for the functions formerly performed by
the FPC to two other entities. BPA thus could not have relied
on this memorandum in deciding to transfer the functions of
the FPC and in awarding the contracts to Pacific States and
Battelle.

   BPA also indicated, in a letter to the Yakama tribe and a
similar letter to five members of the Pacific Northwest’s con-
gressional delegation, that it believed the Program Solicitation
complied with its duty, under the Act, to “mitigate the impact
on salmon and steelhead in a manner consistent with the Pro-
gram.” But again, the letter does not reflect any rational
decision-making process that BPA relied upon to conclude
that transferring the functions of the FPC was in accord with
its statutory duty to use its authority in a manner consistent
with the Council’s Fish and Wildlife Program.

   In Confederated Tribes, 342 F.3d at 933, we held that BPA
provided a reasoned explanation for its decision that imple-
menting certain biological opinions was consistent with
BPA’s statutory mandate to treat fish and wildlife equitably
with power because the record elaborated BPA programs,
decisions, and opinions reflecting how BPA gave equitable
treatment to fish and wildlife. By contrast, in this case, the
only reference in the administrative record to the Act’s con-
sistency requirement is the letter from BPA to Yakama and
the similar letter from BPA to five members of the Pacific
Northwest’s congressional delegation baldly asserting that
BPA is transferring the functions of the FPC to comply with
its statutory mandate to protect fish and wildlife consistent
with the Program. But the record does not show the process,
if there was one, that BPA used to determine that its decision
        NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER                975
to transfer the functions of the FPC was consistent with
BPA’s statutory mandate to use its authority in a manner con-
sistent with the Council’s Fish and Wildlife Program. Because
the 2003 Amendments to the Council’s Program describe the
functions the FPC should perform, BPA’s record of decision
should have shown reasons for its decision to transfer the
FPC’s functions elsewhere and how this would be consistent
with the Council’s Fish and Wildlife Program.

   This case is more similar to State Farm than it is to Confed-
erated Tribes. In State Farm, the Supreme Court held that the
National Highway Traffic Safety Administration’s
(“NHTSA”) decision to rescind a rule requiring automobile
manufacturers to include passive restraints in their cars was
arbitrary and capricious because the NHTSA provided “ ‘no
findings and no analysis here to justify the choice made, no
indication of the basis on which the [agency] exercised its
expert discretion.’ ” State Farm, 463 U.S. at 48 (alteration in
original) (quoting Burlington Truck Lines, 371 U.S. at 167).
Just as the NHTSA had the authority to use its discretion to
rescind the passive restraint rule in State Farm, so too BPA
possibly may have the ability rationally to conclude that the
continued operation of the FPC in its present state was no lon-
ger in the public interest, after giving due weight to the Act’s
requirement that its actions be consistent with what the Coun-
cil said in the Program and Plan, and the purposes of the
Northwest Power Act. “But an agency changing its course
must supply a reasoned analysis . . . .” Id. at 57 (internal quo-
tation omitted). BPA has not cogently explained its decision
to transfer the functions of the FPC, and the record does not
indicate that that decision was the output of a rational
decision-making process. Instead, BPA departed from its two-
decade-old precedent without supplying a reasoned analysis
for its change of course.18 BPA’s decision to transfer the func-
  18
     In its brief, BPA argues that it consulted with various fishery manag-
ers, one scientist, and the public in making its decision to transfer the
976     NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER
tions of the FPC was arbitrary and capricious.19

                                     IV

  [13] The United States Supreme Court has declared that we
must require that an agency “cogently explain why it has
exercised its discretion in a given manner.” State Farm, 463
U.S. at 48. The only explanation shown in BPA’s record for

functions of the FPC. BPA asserts that, in deciding which proposals to
accept, it “consulted with tribal, state and federal fisheries managers”;
“provided a forum in which to hold public discussion and debate on this
issue”; “considered and largely followed the recommendations” of a group
of Indian tribes and an association of fisheries; ensured that the Program
Solicitation complied with the 2003 Amendments to the Fish and Wildlife
Program; “followed the general principles from the U.S. National Acade-
mies scientific reporting process” in preparing the technical services
agreement with the entities replacing the FPC; obtained “expert scientific
review of the proposals” from the former executive director of the Colum-
bia Basin Fish and Wildlife Authority; and “relied on the advice provided
in letters from members of the Northwest congressional delegation, as
well as the report language and the Program amendments.” However, as
we discussed, it does not appear from the record that BPA actually relied
upon any of these rationales in deciding to transfer the functions of the
FPC, and BPA may not justify its decision to our court based on these
post-hoc rationalizations for its action. See Burlington Truck Lines, 371
U.S. at 168.
   19
      BPA argues that its decision to transfer the functions of the FPC com-
plies with its substantive obligation to exercise its authority “in a manner
consistent with the plan, . . . the program adopted by the Council . . . , and
the purposes of [the Northwest Power Act],” 16 U.S.C. § 839b(h)(10)(A),
even though the 2000 Program and the 2003 Amendments “call[ ] for the
continued operation of the Fish Passage Center.” 2003 Amendments,
supra, at 27. Because we hold that BPA’s decision to transfer the func-
tions of the FPC was not the output of a reasoned decision-making pro-
cess, as the APA requires, we need not determine whether, on a proper
record with factual determinations and an adequate explanation of a ratio-
nal connection between facts determined and action taken, a decision of
BPA to transfer the functions of the FPC is consistent with the Council’s
Fish and Wildlife Program and with the Plan and the objectives of the
Northwest Power Act.
      NORTHWEST ENV’TL DEF. CEN. v. BONNEVILLE POWER       977
why it transferred the functions of the FPC was that it was
responding to congressional committee report language that
BPA believed created a binding obligation on it. That is not
a cogent explanation because BPA acted contrary to law in
concluding that congressional committee report language car-
ried the force of law and bound BPA to transfer the functions
of the FPC. Because BPA has not shown a rational basis for
its decision to transfer the functions of the FPC to Pacific
States and Battelle, we grant the petition for review. We hold
that BPA’s decision to transfer the functions of the FPC to
Pacific States and Battelle was arbitrary, capricious, and con-
trary to law. We set aside BPA’s decision to transfer the func-
tions of the FPC to Pacific States and Battelle and order that
BPA continue its existing contractual arrangement to fund and
support the FPC unless and until it has established a proper
basis for displacing the FPC.

  PETITION FOR REVIEW GRANTED.