Northwest Environmental Defense Center, Public Employees for Environmental Responsibility, and Northwest Sportfishing Industry Association, together with the Confederate Tribes and Bands of the Yakama Nation (Petitioners) petitioned the Ninth Circuit for review of Bonneville Power Administration's (BPA) decision to transfer the functions of the Fish Passage Center (FPC) to two private entities --Battelle Pacific Northwest National Laboratory (Battelle) and Pacific States Marine Fisheries Commission (Pacific States)--under the new model Fish Passage Center (new model). After finding that the court had jurisdiction to hear the case, and that the Petitioners had standing, the Ninth Circuit granted the petition for review and held that BPA's decision to transfer the functions of the FPC to the two private entities was arbitrary, capricious, and contrary to law. Accordingly, the court ordered BPA to continue funding the FCP until it can properly transfer the functions.
BPA, created by the Bonneville Project Act, is a federal agency within the Department of Energy that sells and transmits electricity from federal and non-federal hydroelectric and nuclear energy plants and uses the money from the sale and transmission of electricity to fund its operations. In addition to BPA's responsibilities to sell low cost energy to its customers, BPA must "be environmentally conscious, supporting energy conservation and protecting the fish and wildlife of the Columbia River basin." To enable BPA to meet this requirement, Congress passed the Pacific Northwest Power Planning and Conservation Act (Northwest Power Act or the Act), allowing the state governments of Idaho, Montana, Oregon, and Washington to form an interstate compact agency--the Northwest Power and Conservation Council (the Council). The Council is charged with two tasks: (1) creating and reviewing a conservation and electric power plan (Power Plan) and (2) creating and reviewing a "program to protect, mitigate, and enhance fish and wildlife" (Fish and Wildlife Program). Any new project proposed as part of the Fish and Wildlife Program is submitted by the Council to the Independent Scientific Review Panel (the Panel) for review, which is composed of independent scientists appointed by the Council from recommendations. The Northwest Power Act also requires that BPA consult with Indian tribes and state agencies when carrying out responsibilities under the Act. Thus, the Act creates a system of cooperative federalism.
Under the Northwest Power Act, all of BPA's fish and wildlife actions must be consistent with the Council's Power Plan and its Fish and Wildlife Plan as well as the Northwest Power Act--this is called the "consistency requirement." In 2000, the Council adopted the current Fish and Wildlife Program (2000 Program), and amended it in 2003 (2003 Amendments). The 2000 Program's objectives are to "mitigat[e] the adverse effects to salmon and steelhead caused by the Columbia Rivers' hydropower system and ensuring sufficient populations of salmon and steelhead for both Indian tribal-trust and treaty-right fishing and non-tribal fishing." The 2000 Program's stated goal is to "increase total adult salmon and steelhead runs on the Columbia River from about one million annually today to an average of five million annually by 2025." The FPC has been part of the Fish and Wildlife Program from its inception and in 1987, the Council stated that BPA would be responsible for funding the FPC. The 2000 Program provides for the continued operation of the FPC, and the 2003 Amendments confirmed the place of the FPC within the Fish and Wildlife Program, stating that the FPC's purpose is to give technical assistance and information to agencies and tribes about issues relating to salmon and steelhead passage through the hydrosystem. To meet the requirements, the FPC monitors over twenty dams and collects information about fish and river conditions that it makes generally available; agencies and tribes use the information for water spill and flow requests. While the FPC is not a separate legal entity, and is funded by BPA, it operates independently of BPA.
In 2005, the U.S. Senate Appropriations Subcommittee on Energy and Water Development delivered its report on House Resolution 2419 (Subcommittee Report), wherein it 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 taxpayers." House Resolution 2419 became the Energy and Water Development Appropriations Act of 2006 (2006 Appropriations Act), and was passed on November 19, 2005. While the text of the 2006 Appropriations Act made no reference to the FPC, the Conference Committee Report (Committee Report) echoed the Subcommittee's report by stating "[t]he Bonneville Power Administration may make no new obligations in support of the Fish Passage Center" and calls for transfer of the FPC's operations to other groups in the region that are capable of continuing those functions. Following the passage of the 2006 Appropriations Act, BPA issued a Program Solicitation, asking other groups to take over the functions of the FPC and on January 26, 2006, BPA awarded contracts to Battelle and Pacific States to take over the functions of the FPC under a new model that split the functions of the FPC between the two entities. Accordingly, BPA executed contracts with Battelle and Pacific States in early 2006. In response to the contract awards, the Petitioners filed petitions for review challenging BPA's transfer of functions from FPC to Battelle and Pacific States. On March 17, 2006, the Ninth Circuit granted a stay pending review, and ordered BPA to continue funding and supporting the FPC.
The Ninth Circuit first addressed whether the court had jurisdiction to hear the appeal. BPA argued that the court did not have statutory jurisdiction because the Program Solicitation was not a final action. Under the Northwest Power Act, the Ninth Circuit has original and exclusive subject-matter jurisdiction to hear "final actions and decisions taken pursuant to [the Act] by the Administrator [of BPA] or the Council or the implementation of such final actions." While BPA argued that the Program Solicitation was not a final action, it conceded that the selection of Battelle and Pacific States to succeed FPC was a final action under the Act. Thus, the court determined that it had statutory jurisdiction to hear the case because the petitioners challenged the selection of the successors to the FPC.
The court next addressed BPA's second jurisdictional challenge: that the Petitioners lacked Article III standing because petitioners' injury could not be redressed. To have constitutional standing, the petitioner must show (1) that they have suffered an injury in fact that is concrete and particularized, and actual or imminent, (2) that the injury was caused by the conduct complained of, and (3) that a favorable court decision will redress the injury. The Petitioners sought to have the court set aside BPA's decision to transfer the functions of the FPC to the Battelle and Pacific States and to order BPA to continue funding the FPC. BPA's core argument was that because it has funded the FPC through a grant that had expired, a court order forcing it to continue funding the FPC would force BPA to contract against its will, which the court lacks the power to require. The court pointed out that with respect to contracts between private parties, the court has no authority to require the parties to complete obligations not contained within the contract. However, in the present case, the Petitioners requested a remedy for a violation of the Administrative Procedure Act (APA)--a public law. Under section 706(2) of the APA, the court has equitable power to set aside agency actions that are arbitrary, capricious, or contrary to law. Thus, when dealing with public laws, the court is not confined to the terms of the contract and may use its equitable powers to remedy violations of the law. The court turned to United States v. Alisal Water Corp. and FTC v. H.N. Singer, Inc., which both support the courts ability to use its equitable powers when the public interest is involved. Accordingly, the court determined that if it concluded that BPA violated the APA, it had the power to remedy BPA's violation by ordering "BPA to continue to fund the FPC, at least for a period of time in which BPA can reconsider its action." Petitioners thus presented a redressable injury and consequently had standing.
The Ninth Circuit then turned to the Petitioners two challenges to BPA's actions under the APA: (1) that BPA's decision to transfer the functions of the FPC based on language not in a statute but in the Committee Report was contrary to law, and (2) that BPA acted arbitrarily and capriciously in transferring the function of the FPC because it was not the result of a rational decision making process. In addressing Petitioners first argument, the court noted that while the actual language of the 2006 Appropriations Act did not reference the FPC, both the Committee Report and the Subcommittee Report stated that BPA was not to continue funding the FPC. The court stated that BPA "slavishly deferred to what it thought the reports commanded," as evidenced by statements in the Program Solicitation and emails from the Vice President of BPA suggesting the Committee Report imparted a legal obligation on BPA to cease funding the FPC and transfer its functions. The Ninth Circuit stated that:
[t]he case law of the Supreme Court and our court established 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.
The court turned to Shannon v. United States, wherein the Supreme Court stated that "courts have no authority to enforce [a] principl[e] gleaned solely from legislative history that has no statutory reference point." Thus, the Ninth Circuit pointed out that language in committee reports that is not attached to language in an enacted statute does not legally bind anyone, including agencies. This understanding is supported by Article I, section 7, clause 2 of the Constitution, which outlines the process for creating legally binding laws and requires that all laws that seek to create legal obligations to conform to bicameralism and presentment requirements. Therefore, because the Committee Report did not go through the process outlined by the Constitution, BPA acted contrary to law when it gave legally binding effect to the language contained in the Committee Report.
In addition to violating the Constitution, the court determined that BPA's reliance on the language in the Committee Report was contrary to the Northwest Power Act. The court opined that by creating the Council the Act "contemplates a participatory process in which the varied constituencies of the Pacific Northwest advise BPA on how it should exercise its discretion." Therefore, by not relying on the Council to make changes to the plan and programs, and instead relying on language in the Committee Report, BPA ignored the cooperative system that the Act established. Accordingly, the court determined that by treating the Committee Report language as having legally binding effect, BPA acted contrary to the Fish and Wildlife Program, which called for the continuance of the FPC, as well as the consistency requirement of the Act, which requires BPA's actions be consistent with the Fish and Wildlife Program.
In outlining its power to overrule BPA's actions, the court turned to SEC v. Chenery for the proposition that "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," meaning that the court must set aside BPA's transfer of the FPC functions unless BPA relied on other grounds besides the Committee Report in making its decision. With this understanding, the court turned to BPA's argument that even if it could not base its decision on the language in the Committee Report, its decision was a logical application of the Act's mandate that BPA use its power consistently with the Fish and Wildlife Program. Before addressing BPA's argument, the court noted that its scope of review under the APA was narrow, and that the court can only consider "whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." An agency has acted arbitrarily and capriciously if it considered factors that Congress did not direct the agency to consider, or failed to consider important factors, or provides an explanation that is contrary to or unsupported by the evidence, such that it goes beyond a valid difference in understanding and is not the result of the agency's expertise.
Turning to address the case at hand, the court noted that BPA stopped funding a unitary FPC (which was BPA's established practice), and transferred the functions to two entities. While the court noted that an agency is permitted to alter its practices for the public interest, the court looked to Greater Boston Television Corp. v. FCC for the understanding that when changing established practices, the agency is required to provide an analysis that demonstrates that the change was the result of calculated reasoning, and that the prior practice was not simply being ignored without reason. Thus, the Ninth Circuit reasoned that to decide whether BPA acted arbitrarily and capriciously, it must only look at BPA's explanations at the time it made the decision, not subsequent explanations. The court determined that BPA did not consider the relevant factors at the time of its decision, nor did the agency employ a rational decision making process, as there was no indication from the record that BPA relied on any other factor in making its decision besides its misplaced reliance on the Committee Report. The court rejected BPA's claim that a PowerPoint slide, which suggested that Batelle and Pacific States were the most qualified entities that responded to the Program Solicitation, provided evidence of a rational decision making process, stating that even if the slide could show a rational decision, there was no indication that BPA used a rational process because the slide was shown the same day that BPA announced that it was transferring the functions of the FPC to Battelle and Pacific States. The court similarly rejected a memorandum from BPA comparing the functions of the unitary model to the new model FPC as evidence of a decision making process because the memorandum was drafted six weeks after BPA transferred the functions to Battelle and Pacific State.
The court distinguished the present case from Confederated Tribes of the Umatilla Indian Reservation v. BPA, where the court held that BPA's decision to implement biological opinions was consistent with the Fish and Wildlife Program and the Act because the record showed that BPA considered the relevant factors in making its decision. In the present case, the court noted that the only pieces of evidence that BPA considered its requirements under the Act were six letters stating that BPA was transferring the functions of the FPC to comply with the agency's statutory mandate to protect fish and wildlife. However, the letters did not reveal the process that BPA employed to come to its decision. The court opined that to comply with the Act, BPA should have indicated its reasons for transferring the functions of the FPC and explained how its decision was consistent with the Fish and Wildlife Program and the Northwest Power Act.
The court analogized the present case to Motor Vehicles Manufacturing Association v. State Farm Mutual Automobile Insurance Co.(State Farm), where the Supreme Court determined that the National Highway Traffic Safety Administration's decision to withdraw a rule mandating car manufacturers to put passive restraints in cars was arbitrary and capricious because the agency failed to provide findings supporting it decision, as well as failed to explain its basis for the decision. Similar to State Farm, BPA did not adequately explain its decision, and there was nothing in the record demonstrating that the decision was based on a rational decision making process. Therefore, the court determined that BPA's decision to transfer the functions of the FPC to Battelle and Pacific States was arbitrary and capricious.
In conclusion, the Ninth Circuit granted the petition for review, determining that BPA's reliance on statements in the Committee Report to the 2006 Appropriations Act was not an adequate reason for transferring the functions of the FPC, and that BPA had failed to show that it had used a rational decision making process to reach its decision. Thus, the court held that BPA acted arbitrarily, capriciously, and contrary to law when it decided to transfer the functions of the FPC to Battelle and Pacific States. Accordingly, the court set aside BPA's decision and ordered BPA to continue to fund and support the FPC until it could provide a legitimate basis for transferring the functions.
 Bonneville Project Act of 1937, 16 U.S.C. §§ 832-832m (2000).
 Id.§ 838i(a), (b).
 Ass'n of Pub. Agency Customers, Inc. v. BPA, 126 F.3d 1158, 1164 (9th Cir. 1997).
 Pacific Northwest Power Planning and Conservation Act, Pub L. No. 96-501, 94 Stat. 2697 (1980) (codified at 16 U.S.C. §§ 839-839h).
 Nw. Envtl. Def. Ctr. v. Bonneville Power Admin. (NEDC v. BPA), No. 06-70430, 939, 947 (9th Cir. 2007); 16 U.S.C. § 839(b)(a)(1).
 16 U.S.C. § 839(b)(h)(10)(A) (2000).
 NEDC v. BPA, No. 06-70430, at 949 (citing Nw. Power & Conservation Council, Columbia River Basin Fish and Wildlife Program 16 (2000), available at http://www.nwcouncil.org/library/2000/2000-19/FullReport.pdf).
 NEDC v. BPA, No. 06-70430 at 949 (citing Nw. Power &Conservation Council, Columbia River Basin Fish and Wildlife Program 7, 17 (2000), available at http://www.nwcouncil.org/library/2000/2000-19/FullReport.pdf).
 The 2003 Amendments stated specifically that the FPC was to "(1) plan and implement a smolt monitoring program; (2) gather, organize, analyze, store, and make widely-available monitoring and research information about fish passage and the implementation of water management and fish passage and 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 recommendations for river operations avoid conflicts between anadromous and resident fish." NEDC v. BPA, No. 06-70430 at 951.
 NEDC v. BPA, No. 06-70430 at 952 (citing and quoting S. Rep. No. 109-84, at 179 (2005)).
 NEDC v. BPA, No. 06-70430 at 953(quoting H.R. Rep. No. 109-275, at 174 (2005) (Conf. Rep.)).
 Northwest Environmental Defense Center, Public Employees for Environmental Responsibility, and Northwest Sportfishing Industry Association filed their petition on January 23, 2006, and the Confederated Tribes and Bands of the Yakama Nation filed on March 3, 2006. The petitions were consolidated on April 7, 2006.
 NEDC v. BPA, No. 06-70430 at 955 (alterations original)(citing Pacific Northwest Power Planning and Conservation Act, Pub L. No. 96-501, 94 Stat. 2697 (1980) (codified at 16 U.S.C. §§ 839-839h), 16 U.S.C. § 839f(e)(5)).
 Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
 Administrative Procedure Act, 5 U.S.C. §§ 551-559, 701-706, 1305, 3105, 3344, 4301, 5335, 5362, 7521 (2000).
 See 5 U.S.C. § 706(2)(A) (2000).
 431 F.3d 643, 654 (9th Cir. 2005).
 668 F.2d 1107, 1109 (9th Cir. 1982).
 NEDC v. BPA, No 06-70430 at 960.
 Under the APA, the court has to set aside BPA's actions if they were "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A) (2000).
 SeeH.R. Rep. No. 109-275, at 174 (2005) (Conf. Rep.); S. Rep. No. 109-84, at 179 (2005).
 NEDC v. BPA, No 06-70430 at 961.
 Id. at 962.
 Id. at 963(quoting Shannon v. U.S., 512 U.S. 573, 579 (1994) (internal quotation marks omitted, citation omitted, alterations original)); see also Cherokee Nation of Okla. v. Leavitt, 543 U.S. 631, 646 (2005) (stating that "[t]he relevant case law makes clear that restrictive language contained in Committee Reports is not legally binding").
U.S. Const. art. I, § 7, cl. 2; see also INS v. Chadha, 462 U.S. 919, 952 (1983).
 NEDC v. BPA, No. 06-70430 at 967.
 318 U.S. 80, 95 (1943).
 NEDC v. BPA, No. 06-70430 at 970 (quoting Motor Vehicles Mfg. Ass'n v. State Farm Mutual Auto. Ins. Co. (State Farm), 463 U.S. 29, 48 (1983) (citation omitted))..
 See State Farm, 463 U.S. at 43.
 444 F.2d 841, 852 (D.C. Cir. 1970).
 See Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962).
 342 F.3d 924 (9th Cir. 2003).
 State Farm, 463 U.S. at 48.