B-219857, DEC 1, 1986

B-219857, DEC 1, 1986

MISCELLANEOUS TOPICS - ENVIRONMENT/ENERGY/NATURAL RESOURCES - REGULATORY AGENCIES - AUTHORITY - FILING FEES DIGEST: FEDERAL ENERGY REGULATORY COMMISSION MAY IMPOSE FILING FEE ON APPLICANTS FOR PERMITS OR ON OWNERS OF CONDUIT FACILITIES OR SMALL HYDROELECTRIC POWER PROJECTS WHO APPLY FOR EXEMPTION FROM REQUIREMENTS OF FEDERAL POWER ACT. FERC MAY IMPOSE SUCH FEES UNDER REGULATIONS ISSUED PURSUANT TO THE USER CHARGE STATUTE, 31 U.S.C. SEC. 9701. IN SOME CIRCUMSTANCES, FERC MAY ALSO SET CHARGES AT A LEVEL WHICH DOES NOT RECOVER ALL COSTS OF ADMINISTERING PART I. 16 U.S.C. SEC. 803(E).

THE HONORABLE JOHN D. DINGELL:

AT YOUR REQUEST, WE HAVE REVIEWED THE FEDERAL ENERGY REGULATORY COMMISSION'S HYDROPOWER FEES PROGRAM. THE RESULTING REPORT, "MORE EFFORT NEEDED TO RECOVER ALL COSTS AND INCREASE HYDROPOWER USER CHARGES" (GAO/RCED-86-216), WAS RECENTLY ISSUED TO YOU.

IN CONNECTION WITH THAT WORK, WE FOUND THAT THE COMMISSION IS RECOVERING THE COST OF ADMINISTERING ITS HYDROPOWER REGULATORY FUNCTION THROUGH ANNUAL CHARGES TO HOLDERS OF COMMISSION-ISSUED HYDROPOWER FACILITY OPERATING LICENSES. THESE CHARGES INCLUDE ELEMENTS ATTRIBUTABLE TO ISSUANCE BY THE COMMISSION OF SO-CALLED PRELIMINARY PERMITS AND OF EXEMPTIONS FROM LICENSING REQUIREMENTS. LICENSEES THUS BEAR THE COSTS OF ISSUING THESE PERMITS AND EXEMPTIONS, WHICH ARE OF NO BENEFIT TO THEM, WHILE PERMIT AND EXEMPTION APPLICANTS ARE NOT CHARGED FOR THE BENEFITS WHICH THEY RECEIVE.

IN LIGHT OF THIS FINDING, YOUR STAFF ASKED THAT WE COMMENT ON THE COMMISSION'S AUTHORITY TO IMPOSE FILING FEES ON APPLICANTS FOR PERMITS AND EXEMPTIONS. FOR THE REASONS SET FORTH IN THE ENCLOSURE, WE CONCLUDE THAT, ALTHOUGH IT IS NOT REQUIRED TO IMPOSE FEES ON PERMIT AND EXEMPTION APPLICANTS, THE COMMISSION MAY DO SO. HOWEVER, TO AVOID POTENTIAL LITIGATION OVER ANY ATTEMPT BY THE COMMISSION TO CHANGE THE EXISTING FEE STRUCTURE, CLARIFYING LEGISLATION MAY BE DESIRABLE.

ENCLOSURE

FEDERAL ENERGY REGULATORY COMMISSION'S AUTHORITY TO IMPOSE FILING FEES FOR HYDROPOWER PERMIT AND EXEMPTION APPLICATIONS

BACKGROUND:

THE FEDERAL ENERGY REGULATORY COMMISSION (FERC OR THE COMMISSION) IS RESPONSIBLE FOR LICENSING HYDROPOWER PROJECTS. 16 U.S.C. SEC. 797(E). LICENSEES ARE REQUIRED TO PAY ANNUAL FEES UNDER THE FOLLOWING PROVISION OF THE FEDERAL POWER ACT (FPA OR THE ACT):

"ALL LICENSES ISSUED UNDER THIS SUBCHAPTER SHALL BE ON THE FOLLOWING CONDITIONS:

"(E) THAT THE 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 COSTS OF THE ADMINISTRATION OF THIS SUBCHAPTER *** AND IN FIXING SUCH CHARGES THE COMMISSION SHALL SEEK TO AVOID INCREASING THE PRICE TO THE CONSUMERS OF POWER BY SUCH CHARGES, AND ANY SUCH CHARGES MAY BE ADJUSTED FROM TIME TO TIME BY THE COMMISSION AS CONDITIONS MAY REQUIRE ***." 16 U.S.C. SEC. 803(E). (THE SUBCHAPTER REFERRED TO IS SUBCHAPTER I OF CHAPTER 12, TITLE 16, U.S.C. CORRESPONDING TO PART I OF THE FEDERAL POWER ACT, ACT OF JUNE 10, 1920, CH. 285, 49 STAT. 863, AS AMENDED.)

ONLY THOSE WHO ALREADY POSSESS A LICENSE ARE "LICENSEES" UNDER THE DEFINITION IN PART I OF THE FPA. 16 U.S.C. SEC. 796(5).

CURRENT FERC POLICY IS THAT LICENSEES BE ASSESSED FOR ALL ADMINISTRATIVE COSTS OF PART I OF THE ACT. BECAUSE FERC CONDUCTS ACTIVITIES UNDER THAT SUBCHAPTER WHICH ARE OF DIRECT BENEFIT TO NON LICENSEES, LICENSEES IN EFFECT PAY FOR COSTS OF ADMINISTRATION WHICH BEAR NO RELATIONSHIP TO ANY BENEFIT THEY MIGHT RECEIVE AND WHICH, IN FACT, DIRECTLY BENEFIT OTHERS.

FOR EXAMPLE, FERC, UNDER PART I, PROCESSES APPLICATIONS FOR "PRELIMINARY PERMITS." AN APPLICANT FOR A LICENSE NEEDS A PRELIMINARY PERMIT TO GET INFORMATION AND MEET OTHER CONDITIONS REQUIRED AS PART OF THE APPLICATION PROCESS. 16 U.S.C. SECS. 797(F), 798; 18 C.F.R. SEC. 4.80 ET SEQ. FERC DOES NOT REQUIRE A FEE FOR A PRELIMINARY PERMIT.

THE BENEFIT OF THE PRELIMINARY PERMIT PROCESS REACHES RELATIVELY FEW LICENSEES. FERC HAS A LARGE WORKLOAD OF PRELIMINARY PERMIT APPLICATIONS. IT ESTIMATES THAT ONLY 50 PERCENT OF THESE APPLICANTS WILL RECEIVE PERMITS, FILE LICENSE APPLICATIONS. NEVERTHELESS, WE UNDERSTAND THAT FERC INCLUDES THE COST OF PROCESSING PERMIT APPLICATIONS IN THE ANNUAL CHARGES ASSESSED AGAINST LICENSEES UNDER 16 U.S.C. SEC. 803(E).

ANOTHER PART I ACTIVITY WHICH DOES NOT BENEFIT LICENSEES, BUT THE COST OF WHICH IS RECOVERED THROUGH FEES TO LICENSEES, IS THE SO-CALLED CONDUIT EXEMPTION. FERC MAY GRANT EXEMPTIONS FROM ANY OR ALL PART I REQUIREMENTS, INCLUDING THE REQUIREMENT TO GET A LICENSE, FOR A HYDROPOWER PROJECT WHICH IS ON NON-FEDERAL LANDS, AND USES FOR POWER GENERATION

"ONLY THE HYDROELECTRIC POTENTIAL OF A MANMADE CONDUIT, WHICH IS OPERATED FOR THE DISTRIBUTION OF WATER FOR AGRICULTURAL, MUNICIPAL, OR INDUSTRIAL CONSUMPTION AND NOT PRIMARILY FOR THE GENERATION OF ELECTRICITY." U.S.C. SEC. 823A(A). SEE ALSO 18 C.F.R. SEC. 4.90 ET SEQ.

FERC ALSO INCLUDES THE COST OF PROCESSING APPLICATIONS FOR THE "SMALL HYDROELECTRIC POWER PROJECT" EXEMPTION IN THE ANNUAL ADMINISTRATIVE CHARGES ASSESSED AGAINST LICENSEES. FERC MAY EXEMPT FROM SUBCHAPTER I REQUIREMENTS SMALL HYDROPOWER PROJECTS (LESS THAN 5000 KILOWATTS). /1/

FERC HAS CONSIDERED REVISING ITS FEE STRUCTURE ADMINISTRATIVELY TO ASSESS FILING FEES AGAINST APPLICANTS FOR PRELIMINARY PERMITS, CONDUIT EXEMPTIONS, AND SMALL HYDROPOWER EXEMPTIONS, BASED ON AUTHORITY IN THE SO- CALLED USER CHARGE STATUTE, 31 U.S.C. SEC. 9701:

"THE COMMISSION'S STAFF *** IS PREPARING FOR COMMISSION CONSIDERATION A NOTICE OF PROPOSED RULEMAKING TO PROMULGATE REGULATIONS TO ASSESS FILING FEES (AS OPPOSED TO ANNUAL CHARGES) AGAINST APPLICATIONS FOR PRELIMINARY PERMIT AND CONDUIT AND SMALL HYDROELECTRIC POWER PROJECT (5-MW) EXEMPTIONS ***. THE NOTICE OF PROPOSED RULEMAKING BEING PREPARED WOULD BASE THE ASSESSMENT OF THESE FEES ON THE *** USER CHARGE STATUTE 31 U.S.C. SEC. 9701 (1982). IT WOULD BE PREFERABLE, HOWEVER, TO SUPPLEMENT THE COMMISSION'S AUTHORITY UNDER THE USER CHARGE STATUTE BY MAKING THE COMMISSION'S FEE COLLECTION AUTHORITY MORE EXPLICIT." LETTER FROM CHAIRMAN, FERC, TO CHAIRMAN, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, HOUSE COMMITTEE ON ENERGY AND COMMERCE, NOVEMBER 25, 1985.

FERC HAS NOT ISSUED A RULE. INSTEAD, IT HAS SUBMITTED PROPOSED LEGISLATION TO THE HOUSE OF REPRESENTATIVES WHICH WOULD GIVE IT EXPLICIT AUTHORITY TO COLLECT FEES FOR SERVICES PROVIDED TO NON LICENSEES.

THE USER CHARGE STATUTE, 31 U.S.C. 9701, REFERRED TO IN THE FORMER FERC CHAIRMAN'S LETTER, EXPRESSES THE SENSE OF CONGRESS THAT A CHARGE SHOULD BE IMPOSED FOR ANYTHING OF VALUE PROVIDED BY AN AGENCY TO A PERSON, SO THAT SUCH ACTIVITIES WILL BE "SELF-SUSTAINING TO THE EXTENT POSSIBLE."

ANALYSIS:

QUESTION: DOES PART I OF THE FPA PREVENT FERC FROM IMPOSING A FILING FEE UNDER THE USER CHARGE STATUTE ON APPLICANTS FOR PRELIMINARY PERMITS OR ON OWNERS OF CONDUIT FACILITIES OR SMALL HYDROELECTRIC POWER PROJECTS WHO APPLY FOR AN EXEMPTION FROM SOME OR ALL OF THE REQUIREMENTS OF PART I OF THE FPA?

ANSWER:

THE APPLICABLE PORTION OF THE FEDERAL POWER ACT IS EXPLICIT THAT LICENSEES ARE TO PAY REASONABLE ANNUAL CHARGES FIXED "FOR THE PURPOSE OF REIMBURSING THE UNITED STATES FOR THE COSTS" OF ADMINISTERING PART I OF THE ACT. AMONG THE COSTS ASSOCIATED WITH ADMINISTERING PART I ARE THOSE OF PROCESSING APPLICATIONS FOR PRELIMINARY PERMITS AND FOR CONDUIT AND SMALL HYDROELECTRIC PROJECT EXEMPTIONS. /2/

THE QUESTION HERE, IN ESSENCE, IS WHETHER FERC MUST, AS HAS BEEN ITS PRACTICE, INCLUDE THESE LATTER COSTS IN COMPUTING THE ANNUAL CHARGES TO BE PAID BY LICENSEES. IF NOT, THE USER CHARGE STATUTE PROVIDES AMPLE AUTHORITY TO ASSESS CHARGES FOR PRELIMINARY PERMITS, AND CONDUIT AND SMALL HYDROELECTRIC PROJECT EXEMPTION APPLICATIONS, AGAINST THOSE WHO BENEFIT, THE APPLICANTS. A RELATED QUESTION IS WHETHER THE LAW REQUIRES FERC TO SET ANNUAL CHARGES, WHETHER TO LICENSEES OR TO OTHERS, TO RECOVER ALL PART I COSTS.

WE CONCLUDE, FOR THE REASONS SET FORTH BELOW, THAT FERC IS PERMITTED UNDER SOME CIRCUMSTANCES TO SET CHARGES FOR ITS ACTIVITIES UNDER PART I AT A LEVEL WHICH WILL NOT REIMBURSE ALL ITS COSTS. IN ADDITION, FERC MAY SET CHARGES TO LICENSEES BASED ON ONLY THOSE ADMINISTRATIVE COSTS ATTRIBUTABLE TO FERC'S LICENSING FUNCTION, AND MAY CHARGE OTHER PART I ADMINISTRATIVE COSTS TO THE PRELIMINARY PERMIT, CONDUIT EXEMPTION, AND SMALL HYDROELECTRIC PROJECT EXEMPTION APPLICANTS WHO BENEFIT FROM THEM.

THREE ELEMENTS OF THE LAW SUPPORT THE IDEA THAT FERC HAS DISCRETION TO SET CHARGES TO LICENSEES AT LESS THAN THE AMOUNT NECESSARY TO RECOVER ALL COSTS OF ADMINISTERING PART I. CHARGES TO LICENSEES ARE TO BE (1) FIXED AT A REASONABLE AMOUNT; (2) ADJUSTED FROM TIME TO TIME BY THE COMMISSION AS CONDITIONS MAY REQUIRE; AND (3) SET WITH THE OBJECTIVE OF AVOIDING INCREASES OF THE PRICE OF POWER TO CONSUMERS. 16 U.S.C. 803(E).

WHETHER OR NOT THIS WAS THE INTENT (THE LEGISLATIVE HISTORY IS SILENT ON THIS POINT), THESE GRANTS OF DISCRETION TO ADJUST CHARGES AND TO MAKE THEM REASONABLE, AND THE GOAL OF AVOIDING RATE INCREASES TO CONSUMERS, APPEAR TO BE APPLICABLE TO ELEMENTS OF THE CHARGES TO LICENSEES ATTRIBUTABLE TO THE COSTS OF ADMINISTERING PART I. /3/

THE REMAINING, FOURTH, STATUTORY CRITERION APPLICABLE TO CHARGES TO LICENSEES IS THAT THEY ARE TO BE FIXED FOR THE PURPOSE OF REIMBURSING THE UNITED STATES FOR THE COSTS OF ADMINISTRATION OF THIS SUBCHAPTER. IT IS THIS STATEMENT WHICH RAISES THE QUESTION WHETHER FERC MUST RECOVER ALL COSTS OF ADMINISTERING PART I FROM LICENSEES ONLY.

WE READ THIS FOURTH CRITERION, NOT AS AN ABSOLUTE REQUIREMENT TO RECOVER ALL COSTS FROM LICENSEES ONLY, BUT AS A CONDITION TO BE CONSIDERED BY THE COMMISSION IN SETTING CHARGES, OF WEIGHT EQUAL TO, BUT NOT GREATER THAN, THAT ACCORDED THE FIRST THREE CONDITIONS. THAT IS, THE COMMISSION, IN ESTABLISHING CHARGES, IS TO ATTEMPT TO RECOVER COSTS BUT, AT THE SAME TIME, TO KEEP CHARGES REASONABLE, TO AVOID RATE INCREASES TO CONSUMERS, AND TO ADJUST CHARGES AS CONDITIONS MAY REQUIRE: CHARGES MUST BE SET WITH REIMBURSEMENT IN FULL AS THE GOAL, BUT WITH SOMETHING LESS THAN THAT PERMISSIBLE IF REIMBURSEMENT IN FULL WOULD RESULT IN UNREASONABLE CHARGES OR IN RATE INCREASES TO CUSTOMERS.

THIS INTERPRETATION PERMITS FERC TO GIVE EFFECT TO ALL FOUR STATUTORY CRITERIA. THE COMMISSION CAN, IN THIS VIEW, SET CHARGES TO LICENSEES AT A LEVEL WHICH REIMBURSES IT IN PART FOR THE COSTS OF ADMINISTERING PART I, BUT WHICH IS NEVERTHELESS NOT SO HIGH AS TO BE UNREASONABLE OR TO RESULT (IN AN EXTREME CASE) IN HIGHER RATES TO CONSUMERS OF POWERS (TO WHOM THESE ANNUAL CHARGES ARE PRESUMABLY PASSED ALONG BY THE LICENSEES).

ON THE OTHER HAND, TO READ THE STATUTE AS CREATING A REQUIREMENT THAT ALL PART I COSTS BE REIMBURSED BY LICENSEES WOULD MEAN THAT FERC WOULD HAVE NO CHOICE BUT TO DIVIDE TOTAL COSTS, INCLUDING THOSE ATTRIBUTABLE TO ITS ACTIVITIES ON BEHALF OF NON-LICENSEES (PERMIT AND EXEMPTION APPLICANTS), AMONG ALL LICENSEES. THE RESULT WOULD BE CHARGES TO LICENSEES WHICH ARE ARGUABLY UNREASONABLE OR WHICH COULD RESULT IN INCREASED RATES TO CONSUMERS OF HYDROPOWER, THUS GIVING EFFECT TO ONE OF THE STATUTORY CRITERIA AT THE EXPENSE OF PREVENTING COMPLIANCE WITH ONE OR MORE OF THE OTHERS. /4/

FURTHER, TO CONCLUDE THAT FERC MUST COLLECT PART I ADMINISTRATIVE COSTS FROM LICENSEES ONLY PREVENTS THE APPLICATION OF THE WILL OF CONGRESS AS EXPRESSED IN THE USER CHARGE STATUTE. BY ITS TERMS, THE USER CHARGE STATUTE, URGING THAT FEES BE COLLECTED FROM BENEFICIARIES OF ACTIVITIES PROVIDING SOMETHING OF VALUE TO THEM (EXCEPT WHERE CHARGES ARE PROHIBITED), IS INTENDED TO APPLY GOVERNMENT-WIDE. 31 U.S.C. SEC. 9701. ALTHOUGH NOT AN ABSOLUTE REQUIREMENT TO CHARGE FEES, THE USER CHARGE STATUTE DOES EXPRESS A CONGRESSIONAL PHILOSOPHY THAT OUGHT TO BE GIVEN EFFECT WHEREVER POSSIBLE. TREATING SECTION 803(E) AS A REQUIREMENT THAT ONLY LICENSEES CAN BE CHARGED FOR PART I COSTS IS INCONSISTENT WITH THE CONGRESSIONAL PURPOSE ENUNCIATED IN THE USER CHARGE STATUTE.

FINALLY, IT FOLLOWS FROM THE ANALYSIS OF THE STATUTE WHICH WE ADOPT THAT THE SAME BALANCING OF THE FOUR CRITERIA WHICH PERMITS FERC NOT TO RECOVER ALL PART I COSTS SOLELY FROM LICENSEES WOULD ALSO PERMIT FERC TO SET CHARGES, WHETHER TO LICENSEES OR OTHERS, AT A LEVEL NOT SUFFICIENT TO RECOVER ALL ADMINISTRATIVE COSTS OF PART I. THIS WOULD BE APPROPRIATE WHEN RECOVERY OF ALL COSTS WOULD LEAD TO UNREASONABLE CHARGES OR TO INCREASED RATES TO CONSUMERS.

IN THIS CONNECTION, "REASONABLE" IS NOT DEFINED IN THE STATUTE, LEAVING ITS INTERPRETATION WITHIN FERC'S DISCRETION. HOWEVER, IN DECIDING WHETHER RATES ARE REASONABLE, FERC WOULD BE ENTITLED TO TAKE INTO ACCOUNT THAT CONDITIONS HAVE CHANGED SINCE ENACTMENT OF SECTION 803(E). SPECIFICALLY, WHEN SECTION 803(E) WAS ENACTED AND FOR SOME TIME THEREAFTER, ESSENTIALLY ALL PART I COSTS WERE ATTRIBUTABLE TO ACTIVITIES ON BEHALF OF THOSE WHO BECAME LICENSEES. TODAY, AS NOTED ABOVE, A SIGNIFICANT PORTION OF PART I COSTS DOES NOT BENEFIT LICENSEES. THIS COULD PROVIDE, IN OUR OPINION, A BASIS FOR CONCLUDING THAT RECOVERING ALL COSTS OF PART I ACTIVITIES ONLY FROM LICENSEES WOULD BE UNREASONABLE.

ACCORDINGLY, WE BELIEVE THE BETTER VIEW TO BE THAT UNDER SECTION 803(E) AND THE USER CHARGE STATUTE, FERC MAY CHARGE NON-LICENSEES FOR COSTS ATTRIBUTABLE TO ACTIVITIES BENEFITING THEM AND MAY IN ADDITION SET CHARGES AGAINST LICENSEES AT A LEVEL WHICH DOES NOT ALONE RECOVER ALL COSTS OF ADMINISTERING PART I. SECTION 803(E) DOES NOT REQUIRE THAT ONLY LICENSEES BEAR ALL CHARGES, WHETHER ATTRIBUTABLE TO THEIR ACTIVITIES OR NOT, NOR DOES IT REQUIRE THAT ALL COSTS OF PART I BE RECOVERED THROUGH CHARGES TO LICENSEES OR OTHERS. THIS READING BOTH GIVES EFFECT TO THE REQUIREMENT THAT CHARGES BE REASONABLE AND PERMITS THE USER CHARGE STATUTE TO BE INTERPRETED IN HARMONY WITH THE FEDERAL POWER ACT. AT THE SAME TIME, WE BELIEVE THAT FERC IS ACTING PRUDENTLY SUGGESTING THAT LEGISLATION MAY BE DESIRABLE. THE CONGRESS HAD NEVER DIRECTLY ADDRESSED THIS ISSUE. NEITHER IN 1920, WHEN THE FEDERAL POWER ACT WAS FIRST ENACTED, NOR DURING CONSIDERATION OF SUBSEQUENT AMENDMENTS, DID THE CONGRESS CONSIDER HOW IT WANTED PART I COSTS FINANCED IN THE EVENT COSTS NOT ATTRIBUTABLE TO ACTIVITIES ON BEHALF OF LICENSEES BECAME A SIGNIFICANT PART OF THE COSTS OF ADMINISTERING PART I, AS HAS NOW HAPPENED. AN ATTEMPT BY FERC TO CHANGE ITS LONGSTANDING PRACTICE AND INSTITUTE FEES FOR PERMIT AND EXEMPTION APPLICATIONS COULD BE CHALLENGED IN COURT. CLARIFYING LEGISLATION WOULD AVOID WHAT COULD OTHERWISE BE LENGTHY AND EXPENSIVE LITIGATION.

/1/ THIS EXEMPTION IS NOT PART OF PART I. THE STATUTORY AUTHORITY FOR EXEMPTING THESE PROJECTS APPEARS, NOT IN PART I, BUT IN A SEPARATE STATUTE, SECTION 405 OF PUBLIC LAW 95-617, 92 STAT. 3156, 16 U.S.C. SEC. 2705(D). HOWEVER, THE EXEMPTION IS FROM THE REQUIREMENTS OF PART I WHICH, BUT FOR THE EXEMPTION, WOULD APPLY TO THESE PROJECTS.

/2/ IN THIS AND THE FOLLOWING DISCUSSION, WE DO NOT DISTINGUISH BETWEEN SMALL HYDROELECTRIC PROJECT EXEMPTIONS AND PART I ACTIVITIES IN GENERAL EVEN THOUGH, AS DISCUSSED ABOVE, THESE EXEMPTIONS ARE NOT EXPRESSLY UNDER PART I. FERC HAS TREATED SMALL HYDROELECTRIC EXEMPTION APPLICATIONS AS A PART I COST, AND WE DEFER TO ITS ADMINISTRATIVE INTERPRETATION SINCE IT IS NOT WITHOUT BASIS IN THE STATUTE.

/3/ THE ANNUAL CHARGE HAS TWO OTHER COMPONENTS, BESIDES THE COSTS OF ADMINISTERING PART I, TO BE SET BY FERC. THESE ARE RECOMPENSE FOR THE USE BY THE LICENSEE OF PROPERTY OF THE UNITED STATES AND EXPROPRIATION TO THE UNITED STATES OF EXCESSIVE PROFITS OF LICENSEES (TO THE EXTENT NOT REGULATED BY THE STATES). 16 U.S.C. SEC. 803(E). THUS, FERC, IT MIGHT BE ARGUED, WAS GIVEN THE STATUTORY DISCRETION, NOT TO ADJUST THE ADMINISTRATIVE COST COMPONENT OF THE ANNUAL CHARGE, BUT TO ADJUST THE OTHER TWO COMPONENTS. HOWEVER, THE WORDING OF THE LAW DOES NOT SUPPORT THIS DISTINCTION, AND IT IS NOT APPARENT WHY THE CONGRESS WOULD HAVE WANTED THE LATTER COSTS, BUT NOT THE ADMINISTRATIVE COSTS, TO BE SET AT "REASONABLE" LEVELS. MOREOVER, RECOVERY OF EXCESSIVE PROFITS AND RECOMPENSE FOR THE USE OF PROPERTY SEEM LESS SUSCEPTIBLE OF ADJUSTMENT TO "REASONABLE" LEVELS THAN DO ADMINISTRATIVE COSTS.

/4/ FERC'S CURRENT PRACTICE IS CONSISTENT WITH THE IDEA THAT THE LAW DOES NOT REQUIRE RECOVERY FROM LICENSEES OF ALL COSTS OF ADMINISTERING PART I. FERC IS AUTHORIZED UNDER PART I OF THE FPA TO EXEMPT CERTAIN LICENSEES FROM THE ANNUAL CHARGE (FOR EXAMPLE, MUNICIPALITIES SELLING POWER TO THE PUBLIC WITHOUT PROFIT). IF THE LAW WERE INTERPRETED AS REQUIRING FERC TO RECOVER ALL ADMINISTRATIVE COSTS OF PART I FROM LICENSEES, FERC WOULD HAVE TO RECOVER THE ADMINISTRATIVE COSTS ATTRIBUTABLE TO THESE EXEMPT LICENSEES FROM NON-EXEMPT LICENSEES. FERC DOES NOT DO SO. RATHER, IT TREATS PART I COSTS ATTRIBUTABLE TO EXEMPT LICENSEES AS "UNREIMBURSABLE EXPENDITURES" FOR WHICH IT SEEKS AN APPROPRIATION.