United States Court of Appeals
      for the Federal Circuit
                ______________________

              BAY COUNTY, FLORIDA,
                  Plaintiff-Appellee

                           v.

                  UNITED STATES,
                 Defendant-Appellant
                ______________________

                      2014-5149
                ______________________

    Appeal from the United States Court of Federal
Claims in No. 1:11-cv-00157-CFL, Judge Charles F.
Lettow.
               ______________________

               Decided: August 11, 2015
                ______________________

   CHARLES FRANKLIN BEALL, JR., Moore, Hill & West-
moreland, P.A., Pensacola, FL, argued for plaintiff-
appellee. Also represented by GEORGE R. MEAD, II.

    ANTONIA RAMOS SOARES, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, Washington, DC, argued for defendant-appellant.
Also represented by JOYCE R. BRANDA, ROBERT E.
KIRSCHMAN, JR., DEBORAH A. BYNUM; CHRISTOPHER S.
COLE, Commercial Law Litigation, Air Force Legal Opera-
tions Agency, JB Andrews, MD.
                 ______________________
2                    BAY COUNTY, FLORIDA   v. UNITED STATES




    Before PROST, Chief Judge, CLEVENGER, and MOORE,
                      Circuit Judges.
CLEVENGER, Circuit Judge.
     The United States appeals the decision of the United
States Court of Federal Claims, holding that Bay County,
Florida is an independent regulatory body and may revise
rates in utility contracts without resorting to negotiations
with the Air Force. Bay County v. United States, 112 Fed.
Cl. 195, 203–04 (2013). This court has jurisdiction under
28 U.S.C. § 1295(a)(3) (2012). Because the Court of Feder-
al Claims correctly applied the regulatory definitions of
independent and nonindependent regulatory bodies, we
affirm.
                             I
    Bay County, Florida (“Bay County” or “County”) owns
and operates Bay County Utilities, a department which
provides water and sewer services throughout the County.
The Bay County Board of Commissioners (“Board”) is
responsible for establishing the rates and charges for
these services.
    In 1966, the United States Air Force (“Air Force”) and
Bay County entered a contract under which the County
agreed to provide water services to Tyndall Air Force
Base (“the water contract”). The parties entered into a
similar contract for the provision of sewer services in 1985
(“the sewer contract”). Early iterations of both contracts
contained clauses requiring the parties to renegotiate any
new rates, and provided that new rates would become
effective upon mutual agreement.
BAY COUNTY, FLORIDA   v. UNITED STATES                    3



                             A
    In 1994, the Federal Acquisition Regulations (“FAR”) 1
were amended to require certain standardized clauses be
included in utility service contracts. As it pertains to the
present appeal, the FAR articulate two clauses for adopt-
ing new rates in existing utility contracts. There is a
negotiated rates clause at FAR 52.241-8. When the gov-
ernment is contracting with an unregulated utility, the
contract should include this clause requiring the parties
to negotiate new rates. 48 C.F.R. § 41.501(d)(2) (2014). On
the other hand, there is a clause for when the government
agrees to pay the rate approved by the regulator—without
further negotiation. This clause, FAR 52.241-7, is to be
included when the government is contracting with a
regulated utility. 48 C.F.R. § 41.501(d)(1). 2




   1    Federal Acquisition Regulations are at title 48 of
the Code of Federal Regulations.
    2   In 1997, the Air Force and Bay County agreed to a
bilateral modification of the sewage contract. At that
time, the parties incorporated FAR 52.241-8—the negoti-
ated rates clause—into the agreement. The parties have
not been able to find a copy of the water contract reflect-
ing amendments in light of the FAR. The Court of Federal
Claims held that because Bay County satisfies the regula-
tory definition of “independent regulatory body,” as a
matter of law FAR 52.241-7—the no further negotiation
clause—must be deemed to be incorporated into both
contracts. Bay 

. The parties do
not dispute that on appeal. The only issue is whether Bay
County is an independent or nonindependent regulatory
body under the regulations. The parties do not challenge
that the same FAR clause should be incorporated into
both contracts, depending only on Bay County’s status as
a regulator.
4                     BAY COUNTY, FLORIDA   v. UNITED STATES



     The Department of Defense (“DoD”) has adopted a
modified version of the FAR. The Defense Federal Acqui-
sition Regulation Supplement (“DFARS”) incorporates
slightly different, but substantially similar, language to
satisfy these FAR requirements for utility service con-
tracts. If the utility providing service to the DoD is subject
to oversight by an independent regulatory body (“IRB”),
then the government includes the no further negotiation
clause at FAR 52.241-7. 48 C.F.R. § 241.501(d)(1). Howev-
er, if a utility is unregulated or subject to a non-
independent regulatory body (“NIRB”), then the parties
have to negotiate any change in rate. 48 C.F.R.
§ 241.501(d)(2) (requiring that DoD include the negotiated
rates clause from FAR 52.241-8 in NIRB contracts).
                              B
    In 2007 and 2009, Bay County adopted resolutions to
increase wholesale water rates. The Air Force ignored
those increases, and continued to pay at the pre-2007
rate. In 2009 and 2010, the Air Force unilaterally modi-
fied the water contract, and incorporated new rates.
However, the Air Force’s self-imposed rates were still
lower than the rates set by Bay County. Similarly, in 2009
Bay County notified the Air Force that the County was
increasing sewer rates. Again, the Air Force refused to
pay those higher rates, and instead instituted a unilateral
contract modification in 2010 to moderately increase
sewer rates.
     On April 8, 2010, Bay County submitted two Contract
Disputes Act (“CDA”) claims to recover the unpaid bal-
ance on the Air Force’s utility contracts. The contracting
officer denied Bay County’s claims, and concluded that
Bay County is an unregulated utility. Therefore, accord-
ing to the contracting officer, while Bay County is allowed
to propose new rates, the parties have to negotiate rate
changes and incorporate them as contract modifications.
Bay County has alleged breach of both contracts, because
BAY COUNTY, FLORIDA   v. UNITED STATES                  5



the Air Force has failed to pay the Bay County-set utility
rates since 2007. Bay County asserted a balance of unpaid
invoices of approximately $850,000.
    The present dispute turns on whether Bay County is
an IRB or an NIRB. If, as the government contends, Bay
County is an NIRB, then the parties must negotiate any
rate changes in the water and sewer contracts. If, on the
other hand, Bay County is an IRB, then the government
must pay utility rate increases fixed by the Board.
     The Court of Federal Claims held that Bay County is
an IRB, because under Florida law it is an agency of the
state and Florida authorized the County to regulate
utilities. Bay 

. Therefore, Bay
County was allowed to revise utility rates without negoti-
ating with Tyndall Air Force Base. 

The Court
of Federal Claims granted summary judgment in favor of
Bay County, and reserved the determination of damages
for a later proceeding, 

which was concluded
before this appeal, see Bay County v. United States, 

(2014) (damages calculation decision). We
agree with the Court of Federal Claims that Bay County
is an IRB under the DFARS definitions.
                             II
    We review the Court of Federal Claims’ legal conclu-
sions without deference, Vaizburd v. United States, 

, 1282 (Fed. Cir. 2004), and its grant of sum-
mary judgment de novo, AmeriSource Corp. v. United
States, 

, 1152 (Fed. Cir. 2008).
    This is a straightforward case of regulatory interpre-
tation. The DFARS defines both of the relevant terms:
   Independent regulatory body means the Federal
   Energy Regulatory Commission [(“FERC”)], a
   state-wide agency, or an agency with less than
   state-wide jurisdiction when operating pursuant
   to state authority. The body has the power to fix,
6                      BAY COUNTY, FLORIDA   v. UNITED STATES



    establish, or control the rates and services of utili-
    ty suppliers.
    Nonindependent regulatory body means a body
    that regulates a utility supplier which is owned or
    operated by the same entity that created the regu-
    latory body, e.g., a municipal utility.
48 C.F.R. § 241.101.
    Based on the plain meaning of these definitions, Bay
County is clearly an IRB. Bay County has been authorized
by the State of Florida to fix, establish, and control the
rates and services of utility suppliers. Specifically, each
Florida county has the power to: (1) “[p]rovide and regu-
late waste and sewage collection and disposal, [and] water
and alternative water supplies . . . ,” Fla. Stat.
§ 125.01(1)(k)(1), as well as (2) “fix and collect rates, fees
and other charges for the service and facilities furnished
by any such water supply system or . . . sewage disposal
system . . . ,” Fla. Stat. § 153.03(3).
    This delegation of state authority also makes Bay
County “an agency with less than state-wide jurisdiction.”
Neither party can reasonably dispute that Bay County
has less than state-wide jurisdiction. Oral Arg. at 3:24–
3:59, available at http://www.cafc.uscourts.gov/oral-
argument-recordings/2014-5149/all. And, in its capacity of
regulating utilities—as a county acting pursuant to state
authority—Bay County is an agency of the State of Flori-
da. See Amos v. Mathews, 

, 321 (Fla. 1930)
(“[A] county in the performance of certain functions is an
agency or arm of the state . . . .”). Therefore, Bay County
plainly satisfies the regulatory definition of an IRB.
    Moreover, Bay County clearly falls outside the defini-
tion of an NIRB. To fit the NIRB definition, there must be
a single entity which both created the relevant regulatory
body and owns or operates the regulated utility supplier.
In this case, Bay County is the regulatory body and it
BAY COUNTY, FLORIDA   v. UNITED STATES                    7



owns the utility supplier. There is no entity that created
one and owns the other. The State of Florida created Bay
County. See Fla. Const. art. VIII, § 1. And Bay County,
not Florida, owns and operates the utility supplier. There-
fore, Bay County is not an NIRB under the DFARS defini-
tion.
    The government suggests it is improper to rely on
state law to resolve this case. Br. of Def.-Appellant at 22–
23, 51–52; see also Roedler v. Dep’t of Energy, 

, 1351 (Fed. Cir. 2001) (federal common law governs
contracts of the United States).
    Not only is it proper, but it is necessary to refer to
state law when applying these regulations. The regula-
tions are written in terms of state authority and jurisdic-
tion. The Court of Federal Claims was, and this court is,
correct to look at Florida law to decide whether Bay
County was created by the state and whether it is acting
pursuant to state authority. Cf. Baltimore Gas & Elec. Co.
v. United States, 

, 738 (D. Md. 2001)
(“[T]he federal government has absorbed state law, in-
cluding utilities law, to supply the regulatory standards
necessary and appropriate for the operation and mainte-
nance of the electricity and natural gas distribution
systems at Fort Meade . . . .”).
                             III
    Since the terms of the regulation are unambiguous,
and the Court of Federal Claims correctly applied the
definitions of “independent regulatory body” and “nonin-
dependent regulatory body,” no further inquiry is re-
quired. Glover v. West, 

, 1332 (Fed. Cir.
1999). However, the government makes four arguments
against the plain meaning of the regulations, and we
respond to each briefly.
8                    BAY COUNTY, FLORIDA   v. UNITED STATES



                            A
    The government’s overarching argument that Bay
County lacks the requisite independence relies on DFARS
policy and historical context. The government explains
that DoD complies with decisions of IRBs as a matter of
comity, and it is DoD policy that rates set by independent
bodies are determined to be fair and reasonable. 48 C.F.R.
§ 241.201. “This policy does not extend to nonindependent
regulatory bodies.” 

end, the government suggests that regulated
utilities are only those regulated by statewide public
utility commissions (“PUC”). Therefore, the government
contends that in Florida, the only IRB is the Florida
Public Service Commission. Br. of Def.-Appellant at 31–
32. If utilities lack independent oversight from a
statewide PUC, then DoD and the Air Force have tradi-
tionally treated them as unregulated and required new
rates be negotiated. This policy is reflected in the pre-
DFARS version of the water and sewer contracts—they
both originally contained negotiated rates clauses.
    The rationale for this policy is, according to the gov-
ernment, obvious. “The federal government does not want
its utility providers to have authority to set their own
rates, without any ‘independent’ review.” Br. of Def.-
Appellant at 37 (quoting Jeffrey A. Renshaw, Utility
Privatization in the Military Services: Issues, Problems,
and Potential Solutions, 53 A.F.L. Rev. 55, 100 (2002)).
That concern is directly implicated in the case of county
and municipal utilities where the utility supplier and the
rate-setting body are indistinguishable.
     We do not challenge the logic of this policy. The DoD
may have good reasons for treating a statewide PUC
differently from a municipal or county legislative body
when it comes to accepting fixed rates. That policy does
not, however, alter the plain language of the regulations.
An IRB can have “less than state-wide jurisdiction,” 48
BAY COUNTY, FLORIDA   v. UNITED STATES                     9



C.F.R. § 241.101, and therefore cannot be limited to
statewide PUCs. Similarly, the NIRB definition does not
say that utilities owned by local governments are unregu-
lated. See 

to rewrite the regulation to
convert Bay County to a nonindependent body where the
text of the regulations define Bay County as independent.
                             B
    The government also argues we should defer to the
Air Force’s interpretation of the regulatory definitions. 3
According to the government, the interpretation is con-
sistent with DFARS policy and the Air Force has histori-
cally treated Bay County as an NIRB. Under these
circumstances, the government asserts, the DoD interpre-
tation of its own regulation should be entitled to defer-
ence. Br. of Def.-Appellant at 28 (citing Auer v. Robbins,

, 461 (1997)).
    The court should defer to agency interpretation only
when a “regulation is ambiguous and the agency’s inter-
pretation is neither plainly erroneous nor inconsistent
with the regulation.” Gose v. U.S. Postal Serv., 

, 836 (Fed. Cir. 2006); see also Christensen v. Harris
County, 

, 588 (2000) (“[D]eference is war-
ranted only when the language of the regulation is am-
biguous.”); Bowles v. Seminole Rock & Sand Co., 

, 414 (1945) (“[A]dministrative interpretation . . .
becomes of controlling weight unless it is plainly errone-
ous or inconsistent with the regulation.”). Here we have



    3   In this case, the Air Force is interpreting a regula-
tion promulgated not by it, but by DoD. Bay County
argues that deference is limited to interpretations pre-
sented by the promulgating agency. We do not reach this
argument, because this is an unambiguous regulation and
the agency interpretation is inconsistent with the regula-
tory text.
10                   BAY COUNTY, FLORIDA   v. UNITED STATES



an unambiguous regulation and the agency interpretation
is inconsistent with it. Therefore, deference is not appro-
priate.
     First, the regulatory definitions at issue are not am-
biguous. The definition of an NIRB unequivocally de-
scribes the relationship between three units: an entity
which created a regulator and owns a utility. Similarly,
this case does not demonstrate ambiguity in the definition
of an IRB. Deferring to the Air Force here would essen-
tially allow the government to rewrite the regulatory
definitions under the guise of interpretation. See Chris-

(deferring to an agency position
where the regulation is not ambiguous “would be to
permit the agency, under the guise of interpreting a
regulation, to create de facto a new regulation”).
    Second, the Air Force’s interpretation is plainly incon-
sistent with the regulations. As explained in the previous
section, Bay County satisfies the definition of an IRB. It
does not fit the definition of an NIRB. Because the Air
Force’s contrary interpretation is inconsistent with the
regulatory text, we will not defer to it. 

(where an agency’s proposed interpretation is “per se
inconsistent with the regulation [it] may be accorded no
deference”).
                             C
    Next, the government argues that Bay County falls
within the definition of an NIRB. To that end, the gov-
ernment faults the Court of Federal Claims for failing to
consider the plain meaning of “nonindependent,” points to
the paradigm example of a “municipal utility,” and argues
that Bay County created the Board of Commissioners as a
regulatory body. None of these arguments succeed in
establishing Bay County is an NIRB, given the text of the
regulations in suit.
BAY COUNTY, FLORIDA   v. UNITED STATES                  11



    As to plain meaning, the government suggests the
Court of Federal Claims erred when it focused exclusively
on the words contained in the DFARS definitions, without
considering the plain meaning of the terms that make up
the defined phrase. It argues that the meaning of “inde-
pendent” and “nonindependent” should also have in-
formed the court’s interpretation of these terms. Br. of
Def.-Appellant at 42. According to the government, Bay
County cannot be an IRB because it is plainly not inde-
pendent—it both owns the utility supplier and sets its
rates.
    The court refers to the ordinary meaning of terms on-
ly when they are not defined elsewhere in a regulation.
Cf. Asgrow Seed Co. v. Winterboer, 

, 187
(1995) (“When terms used in a statute are undefined, we
give them their ordinary meaning.”); Terry v. Principi,

, 1382–83 (Fed. Cir. 2003) (“In the absence
of an express definition, we presume that Congress in-
tended to give these words their ordinary meanings.”). By
including a specific definition for “independent” and
“nonindependent,” the agency chose to refine what those
terms mean in this regulation. We refer to the regulatory
definition, and not the dictionary, to interpret the terms.
    The government also highlights the fact that a “mu-
nicipal utility” is an example of an NIRB; and because
Bay County has a municipal utility, the government
suggests it must be an NIRB. We disagree. The example
does not overwhelm the rest of the definition. This exam-
ple shows that municipal utilities might meet the defini-
tion of an NIRB. The example does not indicate that every
municipal utility is necessarily an NIRB.
     According to the government, Bay County also quali-
fies as an NIRB because it created the Board of Commis-
sioners, and the Board sets the utility rates. Therefore,
the Board is an NIRB—created by the County which owns
the utility supplier.
12                   BAY COUNTY, FLORIDA   v. UNITED STATES



    This argument fails because Bay County did not cre-
ate its own Board of Commissioners. The Board is Bay
County’s governing body, and the County acts through the
Board. Both the Board and the County are creatures of
Florida law. The Florida Constitution divides the state
into counties, and provides that each county shall have a
board of commissioners as its governing body. Fla. Const.
art. VIII, § 1. Moreover, Florida law defines “county” and
“board” as one and the same. Fla. Stat. § 125.011(1) (“Use
of the word ‘county’ within the above provisions shall
include ‘board of county commissioners’ of such county.”).
The government’s attempt to parse the County and the
Board are not persuasive, and this argument strains the
concept of “created” too far in an effort to wedge Bay
County into the NIRB definition.
                             D
    Finally, the government argues that Bay County is
not an IRB. Relying on the canon of ejusdem generis, the
government argues the Court of Federal Claims should
have read the regulation differently. The definition ex-
plains that FERC, state agencies, and agencies with less
than state-wide jurisdiction are IRBs. When read in the
context of that list, the government suggests that “an
agency with less than state-wide jurisdiction when operat-
ing pursuant to state authority” does not refer to any
agency with state authorization. Instead, the phrase
should be read in context to refer to agencies that are
similar to FERC and statewide PUCs. When read in that
context, the government contends that Bay County is not
an IRB. Br. of Def.-Appellant at 50–51.
    We do not think ejusdem generis applies here, and in-
stead take the phrase “an agency with less than state-
wide jurisdiction when operating pursuant to state au-
thority” at face value. Ejusdem generis is a tool for deter-
mining “the correct meaning of words when there is
uncertainty. Ordinarily, it limits general terms which
BAY COUNTY, FLORIDA   v. UNITED STATES                     13



follow specific ones to matters similar to those speci-
fied . . . .” Gooch v. United States, 

, 128
(1936). “[T]he inference embodied in ejusdem generis [is]
that Congress remained focused on [a] common attribute
when it used [a] catchall phrase.” Ali v. Fed. Bureau of
Prisons, 

, 225 (2008). We do not need such a
tool in this case. First, this definition does not lend itself
to application of ejusdem generis because the “an agency
with less than state-wide jurisdiction” phrase is not a
general term following a list of specific items. See 

generis is used to avoid giving gen-
eral phrases at the end of a list such broad meaning that
they swallow the specific words preceding them. For
example, to understand “fishing rods, nets, hooks, bob-
bers, sinkers, and other equipment,” it would be useful to
apply ejusdem generis. “Other equipment” should be
interpreted to give meaning to the previous words—it
refers to other fishing equipment, and reading it broadly
to include all types of equipment would render the preced-
ing list meaningless. See CSX Transp. Inc. v. Ala. Dep’t of
Revenue, 

, 294–95 (2011) (first quoting Unit-
ed States v. Aguilar, 

, 615 (1995) (Scalia, J.,
concurring in part dissenting in part); then citing Circuit
City Stores, Inc. v. Adams, 

, 114–15 (2001)).
In this case, there is no risk that “an agency with less
than state-wide jurisdiction when operating pursuant to
state authority” will render the rest of the definition
superfluous. This definition identifies three distinct types
of IRBs. We do not need to rely on our understanding of
two of those entities to give meaning to the third.
                        CONCLUSION
    The regulations do not support the Air Force’s inter-
pretation that Bay County is an NIRB. It should not be a
matter of great difficulty for the DoD to amend the regu-
lations to provide for definitions that accomplish its policy
goals. This court is not authorized to misinterpret the
14                  BAY COUNTY, FLORIDA   v. UNITED STATES



regulatory language to achieve those goals. Because the
Court of Federal Claims correctly interpreted the regula-
tory text, we affirm.
                      AFFIRMED
     No costs.