The Federal Power Act of 1920 gives the
Federal Energy Regulatory Commission the exclusive authority to issue licenses
to nonfederal hydroelectric power projects on navigable waterways and federal
lands. Specifically, FERC may issue licenses to corporations, States or
municipalities for the purpose of "constructing, operating, and maintaining
dams, water conduits, reservoirs, powerhouses, transmission lines, or other
project works necessary or convenient for the development and improvement of
navigation and for the development, transmission, and utilization of power...".
The FPA specifies that such licenses shall only be issued upon any part of the
public lands and reservations of the United States if it will not interfere or
be inconsistent with the purpose of the reservation.
In accordance with the FPA, FERC issues
hydropower licenses for a period between 30 and 50 years.
Click here to see a list of
FERC-license hydropower projects in Washington, Oregon, California, Idaho and
Montana. When a
license expires, the applicant may apply to FERC for a new long-term operating
license. Because many public laws and regulations (particularly with
regard to the environment) were enacted after the original licenses for these
projects, the relicensing process can be very complex and involve a significant
number of stakeholders. When deciding whether to issue a new license, FERC
considers the power and development purposes of the project but must give equal
consideration to the purposes of energy conservation, the protection, mitigation
of damage to, and enhancement of fish and wildlife (including related spawning
grounds and habitat), the protection of recreational opportunities, and the
preservation of other aspects of environmental quality.
The hydropower relicensing process is a
lengthy and resource-intense commitment for electric utilities. The
expense and complexity of relicensing (in addition to the potential
contentiousness and the possibility of legal disputes delaying license) has
prompted FERC to reform the relicensing process several times. In 1997,
FERC approved the alternative licensing process that was designed to encourage
settlement agreements. In 2003, FERC approved the current "default"
licensing process - the integrated licensing process - that is intended to make
the process more predictable, efficient, and streamlined by encouraging early
identifications of issues and better integrating other agency permitting
There are three types of relicensing
processes, though since 2005 the Integrated Licensing Process has been the
default process. The Alternative Licensing Process and the Traditional
Licensing Process may only be utilized after specific approval by FERC.
The traditional relicensing
process consists of a three-stage pre-filing consultation process that involves
consultation with stakeholders and resource studies. It culminates in the
filing of a license application to FERC, which then conducts a 2-to-7 year
environmental review process. As part of the FERC's review phase, it
produces a draft Environmental Assessment. If the assessment determines that the
proposed Project will cause significant impacts to the environment, an
Environmental Impact Statement (EIS) is required.
On October 29, 1997 FERC issued regulations allowing the
consultation and environmental review phases of relicensing to be
combined into a single process. The ALP allowed applicants to
prepare a preliminary draft Environmental Assessment to submit to
FERC along with the license application. The ALP was designed
to encourage the applicant and stakeholders to cooperatively develop
mitigation and enhancement proposals early in the relicensing
process with the goal of reaching settlement.
The Integrated Licensing Process (ILP)
became the default relicensing process on July 23, 2005 after three years of
development by FERC and coordination with industry and non-governmental
entities. The ILP is intended to encourage concurrent NEPA scoping and
application preparation, increased public participation, and early FERC staff
participation in relicensing processes.
On September 12, 2002, FERC announced that
the FERC would undertake a rulemaking to develop a new hydropower relicensing
process. With a unanimous 3-0 vote, the FERC approved the Integrated Licensing
Process (ILP) rule on July 23, 2003. In October 2003, the rule became
effective, and on July 23, 2005, the ILP became the default process (with
Commission approval required for the TLP and ALP).
The ILP is intended to encourage concurrent
NEPA scoping and application preparation, increased public participation, and
early FERC staff participation. Other emphases are development of a preliminary
application document five years before the current license expires; early study
plan development with informal and formal dispute resolution; and enhanced
tribal consultation. A flowchart
detailing the steps in the ILP process is available. FERC has developed a document to help parties understand the study criteria in the ILP.
FERC staff has been conducting training and
outreach on ILP implementation. FERC released an effectiveness study of the new
regulations, to analyze if the rule is accomplishing what it set out to do -
develop better licenses in a shorter time period. The guidance document that
was released in February, 2006 is entitled "Ideas
for Implementing and Participating in the Integrated Licensing Process (ILP):
Tools for Industry, Agencies, Tribes, Non-Governmental Organizations, Citizens,
and FERC Staff." The study will be the basis for a report on the rule
in 5-6 years.
EPAct 2005 allows a license applicant, or
any other party to a licensing process, to propose an alternative to mandatory
conditions placed on hydropower licenses by federal resource agencies
(Departments of Interior, Commerce and Agriculture). If the Secretary of an
agency determines that the alternative meets the statutory environmental and
resource protection standards, and the alternative provides significant cost or
power savings, the Secretary accepts the alternative. EPAct 2005 also allows any
party to a licensing proceeding to call for a single, expedited trial-type
agency hearing on disputed issues of material fact concerning mandatory
conditions. See EPAct 2005:
Sec. 241 Alternative
Conditions and Fishways. It required the Secretaries of the
Interior, Commerce, and Agriculture to jointly establish, by rule, the
procedures for such expedited trial-type hearing, including the opportunity to
undertake discovery and cross-examine witnesses, in consultation with FERC. The
rulemaking was issued on November 17, 2005. See
Interim rule on Sec. 241. The rule applies to all relicensings where
a license has not been issued. It also applies to future reopeners.
On December 16, 2005 American Rivers (and
others) filed for declaratory and injunctive relief against the Departments of
Agriculture, Commerce, and Interior. They sought to "enjoin and set aside" the
hydropower license regulations. The challenge was filed in the Western District
of Washington. See
American Rivers’ complaint.
On October 3, 2006, the judge dismissed American Rivers’ case against the agency
rule implementing the EPAct 2005 provisions on trial type hearings. The judge
ruled that the federal resources agencies did not violate the notice and comment
requirements of the APA when they adopted rules authorized under EPAct 2005.
The judge said that the rules adopted by the agencies qualify for the APA's
exemption from notice and comment requirements because they are "procedural and
interpretative" in nature, not "substantive."
While the interim rule has been upheld,
there is a possibility that the agencies will conduct a final rulemaking, which
may provide an avenue for public comment. In addition, Senator Larry Craig
(R-ID) has asked that FERC report back to the Senate Energy Committee to provide
an update on how the law is working. Such a hearing has not yet been scheduled.
FERC 's Policy Statement on Hydropower
On September 21, 2006, the FERC Commission
issued a policy statement in the form of a guidance document for participants in
hydroelectric relicensing settlement agreements. The guidance is designed to
help parties determine which conditions are appropriate for inclusion in
settlement agreements. Over the past couple of years, FERC staff had been
reviewing settlement agreements with increased scrutiny and rejecting measures
that were not project-related, ambiguous or contingent on future action, or were unenforceable by FERC. The
settlement guidance memorializes this approach in an attempt to reduce the
number of conditions in settlement agreements that do not "meet the requirements
of the Federal Power Act."
Specifically, FERC recommended that:
1) Measures be based on substantial evidence
in the record of the licensing proceeding.
2) Measures be consistent with the law,
enforceable, and within FERC's jurisdiction.
3) A relationship must be established
between a proposed measure and project effects/purposes.
4) Measures should be drafted as narrowly as
possible, with specific measures preferred over general.
5) Actions required should occur physically
or geographically as close to the project as possible.
6) Measures must reserve FERC's compliance
authority, as well as its authority to review and modify as necessary proposed
resource or activity plans.
Practically, the policy calls into question how FERC will treat
off-project mitigation/enhancement and recreation, funds, and
A 45 day comment period ended on November 10, 2006.