NORTHERN CALIFORNIA POWER AGENCY, CITY OF REDDING, CALIFORNIA, CITY OF ROSEVILLE, CALIFORNIA, CITY OF SANTA CLARA, CALIFORNIA, Plaintiffs-Appellants
UNITED STATES, Defendant-Appellee
Appeals from the United States Court of Federal Claims in No.
1:14-cv-00817-TCW, Judge Thomas C. Wheeler.
Jeffrey Schwarz, Spiegel & McDiarmid LLP, Washington, DC,
argued for plaintiffs-appellants. Also represented by Lisa
Dowden, Katharine Mapes.
Davis Oliver, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, DC, argued
for defendant-appellee. Also represented by Joseph H. Hunt,
Robert Edward Kirschman, Jr., Franklin E. White, Jr.
Moore, Bryson, and Chen, Circuit Judges.
Bryson, Circuit Judge.
action was brought in the United States Court of Federal
Claims by the Northern California Power Agency and three
California cities-the City of Redding, the City of Roseville,
and the City of Santa Clara. The plaintiffs all purchase
hydroelectric power that is generated by power plants under
the jurisdiction of the United States Bureau of Reclamation
("Bureau"), an agency within the Department of the
Interior. The plaintiffs are seeking to recover payments that
they claim were unlawfully assessed and collected by the
Bureau in violation of section 3407(d) of the Central Valley
Project Improvement Act ("CVPIA"), Pub. L. No.
102-575, 106 Stat. 4706, 4706-31 (1992).
dispute turns on the meaning of a provision in section
3407(d) of the CVPIA that requires that certain payments made
by recipients of power and water from the project be assessed
in the same proportion, to the greatest degree practicable,
as other charges assessed against recipients of water and
power from the project. After a trial on liability, the Court
of Federal Claims concluded that the Bureau's
interpretation of the statute was correct and dismissed the
plaintiffs' complaint. N. Cal. Power Agency v. United
States, 139 Fed.Cl. 74 (2018)
("NCPA"). We disagree with the court's
interpretation of the statute, and we therefore reverse and
remand for further proceedings consistent with this opinion.
1930s, Congress enacted legislation authorizing the federal
government to operate a water management program known as the
Central Valley Project ("CVP"). The CVP, which is
the nation's largest federal water management project, is
operated by the Bureau of Reclamation and distributes water
throughout California's Central Valley.
addition to distributing water, the CVP generates
hydroelectric power through dams and power plants built as
part of the project. The CVP sells that power to cities and
other purchasers through its agent, the Department of
Energy's Western Area Power Administration. The rates
charged to CVP water and power customers reimburse the Bureau
for the proportionally allocated costs of building,
operating, and maintaining the CVP. Water customers are
responsible for roughly seventy-five percent of those costs.
Power customers, including the plaintiffs, are responsible
for the remaining twenty-five percent. Those allocations are
intended to reflect the relative benefits that water and
power customers derive from the CVP. Water customers are
responsible for a larger proportion of project costs because
the CVP is primarily a water-focused project.
than half a century after the CVP was first established,
Congress enacted the CVPIA to address the environmental
impact of the CVP, among other things. See CVPIA,
Pub. L. No. 102-575, § 3402, 106 Stat. 4706 (1992). As
part of the CVPIA, Congress created a "Restoration
Fund," which was to be used to help pay for CVPIA
activities, including the restoration of fish and wildlife
habitats that the project had disrupted. In order to raise
money for the Restoration Fund, Congress directed the
Secretary of the Interior to assess several types of charges
to CVP water and power customers. One of those charges, known
as Mitigation and Restoration payments ("M&R
payments"), is at issue in this case.
plaintiffs seek to recover some of the M&R payments that
they claim were unlawfully assessed by the Bureau in
violation of the CVPIA. Specifically, they allege that the
Bureau has ignored the "proportionality
requirement" in the statute, which provides that M&R
payments "shall, to the greatest degree practicable, be
assessed in the same proportion . . . as water and power
users' respective allocations for repayment of the
Central Valley Project." CVPIA § 3407(d), 106 Stat.
at 4727-28. Although the power customers' allocated share
of the CVP repayment costs has been only about twenty-five
percent of the total repayment costs, the Bureau in recent
years has charged the power customers nearly half of the
total M&R payments.
3407(b) of the CVPIA authorizes up to $50 million per year to
be appropriated to the Secretary of the Interior from the
Restoration Fund to carry out the habitat restoration and
other programs authorized by the statute. CVPIA §
3407(b), 106 Stat. at 4726. Sections 3407(c)(2) and 3407(d)
govern the amount of M&R payments the Bureau can assess
and collect each year to replenish the Restoration Fund. As
the parties agree, section 3407(c)(2) describes two methods
for calculating M&R payment collections. The parties