135 



No schedule for payment reduction Is prescribed. Hhen BPA takes credit for 

 such costs Is a discretionary matter left to the Administrator, and can be 

 determined during the normal ijudgetary process. S££ section I.e., iUDIA. 



C- SeCtIgn 4<h?<1Q?(C> Doe'; Not Annlv t() Lost RevPmiP. 



BPA loses revenues by providing spill and flow augmentation because water • 

 spilled over a dam's spillway does not generate electric energy. There appear 

 to be no tenable legal arguments for applying section 4<h)(10)(C) to lost 

 revenues. While this Is a mitigation cost borne by the ratepayers alone il- 

 ls not redressable under this provision. ■»■""«:. .i 



D. BPA Has Not Used Sectio n 4(h)Mn>ff> | ^ p^ ^p 



Prior to the passage of the Northwest Power Act, BPA lacked express authority 

 to directly fund fish and wildlife mitigation at Federal hydroelectric 

 projects. Congress appropriated funds to finance mitigation measures at the 

 projects. The appropriations language generally specified the site of the 

 measure, and BPA repaid the Treasury for the power purpose share of the 

 expenditure based on existing project purpose allocations for that site. BPA 

 funded less than 100 percent of the cost of such measures, unless the 

 appropriations language assigned the measure to a hydroelectric project with a 

 100 percent allocation for the power purpose. 



After passage of the Act, Congress continued to authorize and appropriate 

 funds for mitigation measures at Federal hydroelectric projects. In addition. 

 BPA began to exercise its express mitigation funding authority, but BPA did 

 not meet Its section 4(h)(10>(C) obligation. Hhere BPA funded mitigation 

 through the BPA Fund, not appropriations. It did not use Its section 

 4(h)(10)(C) authority. 



V. Imnlpentlna Section 4(h)(10)(C) 



Section 4(h)(10)(C) Instructs the Administrator to use "existing accounting 

 procedures" when making assignment determinations. 16 U.S.C. 

 § 839b(h)(10)(C)l^'. This Is most readily accomplished when site-specific 

 measures serve the site at which they are located. 



Greater difficulty Is encountered with respect to offslte. site-specific, or 

 system-wide measures serving the entire hydrosystem. For these measures, the 

 Administrator may assign the measure to a particular hydroelectric project or 

 projects on a case-by-case basis. 16 U.S.C. § 839b(h)(10)(C). 



BPA also could develop a formula for allocating costs to projects based on 

 existing accounting procedures. The formula should reflect the nonpower 

 purpose share of the entire hydroelectric system. 



Whether BPA elects to use a formula or simply assign system-wide measures to 

 specific hydroelectric projects on a case-by-case basis. It Is Interpreting 

 and Implementing the Northwest Power Act. Accordingly, rulemaking is not 

 required under the Administrative Procedure Act, 5 U.S.C. §§ 500-576. S££ ML. 

 Diablo HosD. Dist. v. Bowen . 860 F.2d 951, 956 (9th Cir. 1988) (policies 

 "merely clar1fy[1ng] or explalnCIng] existing law or regulations" are exempt 

 from rulemaking procedures because they are interpretive rules). 



1^' The accounting procedures BPA used in the accompanying Memorandum by the 

 Office of Financial Management are Identical to those existing In 1980. 



