Document ID: FERC-2017-1325-0001
Agency: ferc
Document Type: Rule
Title: Policy Statements: Establishing License Terms for Hydroelectric Projects
Posted Date: 2017-10-26T04:00Z

[Federal Register Volume 82, Number 206 (Thursday, October 26, 2017)]
[Rules and Regulations]
[Pages 49501-49504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-23286]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 4, 5, and 16

[Docket No. PL17-3-000]

Policy Statement on Establishing License Terms for Hydroelectric 
Projects

AGENCY:  Federal Energy Regulatory Commission, Department of Energy.

ACTION:  Policy statement.

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SUMMARY:  The Federal Energy Regulatory Commission (Commission) is 
giving notice of a new policy on establishing license terms for 
hydroelectric projects. In this Policy Statement, the Commission adopts 
a 40-year default license term for original and new licenses for 
hydropower projects located at non-federal dams. The Policy Statement 
also sets forth when the Commission will consider issuing those 
projects a license with a term for less or more than 40 years.

DATES:  This policy statement will be applicable as of October 26, 
2017.

FOR FURTHER INFORMATION CONTACT: 
Nicholas Jayjack, (Technical Information), Office of Energy Projects, 
Federal Energy Regulatory Commission, 888 First Street NE., Washington, 
DC 20426, (202) 502-6073.
Carolyn Clarkin, (Legal Information), Office of the General Counsel--
Energy Projects, Federal Energy Regulatory Commission, 888 First Street 
NE., Washington, DC 20426, (202) 502-8563.

SUPPLEMENTARY INFORMATION: 
    1. In this Policy Statement, the Commission sets forth a new policy 
on establishing license terms for original and new licenses for 
hydropower projects located at non-federal dams. The goal of this 
action is to provide more certainty for stakeholders regarding the 
Commission's regulatory process, reduce regulatory burden, increase 
administrative efficiency for all stakeholders, and further encourage 
licensees to negotiate settlement agreements and promptly seek 
authorization to implement voluntary environmental, recreational, and 
developmental enhancements.

I. Background

A. Current License Term Policy

    2. Section 6 of the Federal Power Act (FPA) \1\ provides that 
hydropower licenses shall be issued for a term not to exceed 50 years. 
There is no minimum license term for original licenses. FPA section 
15(e) \2\ provides that any ``new license'' \3\ shall be for a term 
that the Commission determines to be in the public interest, but not 
less than 30 years or more than 50 years.
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    \1\ 16 U.S.C. 799 (2012).
    \2\ 16 U.S.C. 808(e) (2012).
    \3\ ``New license'' is the term used in the FPA to refer to a 
license issued to replace a project's expiring license.
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    3. It is current Commission policy to set a 50-year term for 
licenses issued for projects located at federal dams.\4\ For projects 
located at non-federal dams, the Commission sets a 30-year term where 
there is little or no authorized redevelopment, new construction, or 
environmental mitigation and enhancement; a 40-year term for a license 
involving a moderate amount of these activities; and a 50-year term 
where there is an extensive amount of such activity.\5\ The Commission 
previously established this policy to ease the economic impact of new 
costs, promote balanced and comprehensive development of renewable 
power generating resources, and encourage licensees to be good 
environmental stewards.\6\
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    \4\ City of Danville, Virginia, 58 FERC ] 61,318, at 62,020 
(1992) (citing Little Falls Hydroelectric Associates, 27 FERC ] 
61,376 (1984)).
    \5\ Id. (addressing original licenses); Consumers Power Co., 68 
FERC ] 61,077, at 61,384 (1994) (addressing new licenses). Projects 
that entail construction of a new dam have generally received 50-
year licenses. City of Danville, Virginia, 58 FERC ] 61,318 at 
62,020 (citing Little Falls Hydroelectric Associates, 27 FERC ] 
61,376).
    \6\ Consumers Power Co., 68 FERC ] 61,077 at 61,384.
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    4. Determining whether the measures required under a license are 
minimal, moderate, or extensive is highly case-

[[Page 49502]]

specific and largely based on a qualitative analysis of the record 
before the Commission. In establishing the appropriate license term, 
staff initially examines the nature and extent of the required measures 
in the context of the project at issue,\7\ and then uses the cost of 
measures as a check on a qualitative conclusion that the measures 
required under the license are minimal, moderate, or extensive. The 
Commission's current policy takes a forward-looking approach, such that 
any measures adopted under a prior license term are not considered.\8\ 
It has also been the Commission's policy to coordinate, to the extent 
feasible, license terms for projects in the same river basin to 
maximize consideration of cumulative impacts when the projects are due 
to be relicensed.\9\
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    \7\ For example, one type of fishway may be more expensive than 
another, and a fishway type that might be considered extensive for a 
small project could be seen as minimal for a larger one.
    \8\ See, e.g., Duke Energy Carolinas, LLC, 156 FERC ] 61,010, at 
P 19 (2016) (Duke Energy) (stating Commission's long-standing policy 
is to only consider measures required in the new license) (citing 
Alabama Power Co., 155 FERC ] 61,080, at P 72 (2016); Georgia Power 
Co., 111 FERC ] 61,183, at P 12 (2005); Ford Motor Co., 110 FERC ] 
61,236, at PP 6-8 (2005)).
    \9\ 18 CFR 2.23 (2017); see also Public Utility of District No. 
1 of Chelan County, Washington, 127 FERC ] 61,152, at P 18 (2009) 
(Chelan PUD).
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    5. The length of an original license has not been contested on 
rehearing for some time; however, licensees and other parties have 
recently contested the length of a new license in several relicensing 
proceedings. The arguments raised in these cases include that the 
Commission, when establishing the license term, should have considered, 
or given more weight to: Previously-authorized capacity-related 
investments or environmental enhancements made by the licensee before 
issuance of the new license; \10\ total cost of the relicensing 
process; \11\ losses in generation value related to environmental 
measures; \12\ the license terms of projects that the license applicant 
states are similarly situated to its project; \13\ and the license term 
provided for in settlement agreements.\14\ In each circumstance, the 
Commission declined to extend the length of the license.
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    \10\ See, e.g., Duke Energy, 156 FERC ] 61,010 at P 12; Alabama 
Power Co., 155 FERC ] 61,080 at P 71; Public Utility District No. 1 
of Douglas County, Washington, 143 FERC ] 61,130, at PP 12-13 (2013) 
(Douglas PUD); Chelan PUD, 127 FERC ] 61,152 at PP 12-13; Georgia 
Power Co., 111 FERC ] 61,183 at P 10; Ford Motor Co., 110 FERC ] 
61,236 at P 6.
    \11\ See, e.g., Duke Energy, 156 FERC ] 61,010 at P 12.
    \12\ See, e.g., id.
    \13\ See, e.g., id. P 20; Alabama Power Co., 155 FERC ] 61,080 
at P 71; Duke Energy Progress, Inc., 153 FERC ] 61,056, at P 39 
(2015); Douglas PUD, 143 FERC ] 61,130 at P 15.
    \14\ See, e.g., Duke Energy Progress, Inc., 153 FERC ] 61,056 at 
P 40; Douglas PUD, 143 FERC ] 61,130 at P 18; Chelan PUD, 127 FERC ] 
61,152 at P 16.
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B. Notice of Inquiry on Establishing License Terms for Hydroelectric 
Projects

    6. On November 17, 2016, the Commission issued a notice of inquiry 
(NOI) to seek comments on whether, and if so how, the Commission should 
revise its current license term policy. The NOI invited comments on 
five potential license term policy options: (1) Retain the current 
policy; (2) modify the current policy to consider voluntary authorized 
actions implemented under the prior license (``previously-authorized 
voluntary actions''); (3) replace the current license term policy with 
a policy for a 50-year default license term unless a lesser license 
term would be in the public interest (for example, to better coordinate 
the license terms of projects in the same river basin); (4) add a more 
quantitative cost-based analysis to the current policy; and (5) alter 
the current policy to accept license terms agreed upon in settlement 
agreements, when appropriate. Comments on alternative policy options 
were also encouraged. The NOI established January 24, 2017, as the 
deadline for comments, which staff extended to March 24, 2017.
    7. Industry members, federal and state resource agencies, 
environmental and recreation groups, and individuals filed comments. 
Most commenters support revising the current policy. Several commenters 
state that under the current policy stakeholders lack certainty, and, 
consequently, license applicants lack guidance on what measures will 
yield longer license terms and are deterred from proposing additional 
protection, mitigation, and enhancement measures. Further, many 
commenters state that because the policy is forward-looking, licensees 
delay seeking authorizations for capacity upgrades and environmental 
and recreational enhancements until they apply for a new license. Some 
industry commenters state that under the current policy, license 
applicants and settlement parties cannot use the license term as a 
bargaining chip because the Commission might reject that term in the 
license order. To address these concerns, many commenters recommend 
that the Commission consider previously-authorized voluntary actions 
and defer to the license term that was negotiated as part of a 
settlement agreement.
    8. Commenters disagree on the 50-year default license term policy 
option. Industry commenters generally support the 50-year default 
license term because they state it would provide a clear, predictable 
standard. Industry commenters add that such policy would eliminate the 
current ``penalty'' for efficient, well-maintained, and relatively low-
impact projects that do not require substantial environmental or 
developmental measures and therefore only receive a 30-year license.
    9. In contrast, environmental groups, individuals, and most 
resource agencies oppose the 50-year default license term option. 
Several resource agencies argue that this option would provide little 
incentive for a license applicant to voluntarily propose or agree to 
mitigation measures because such measures would no longer factor into 
the Commission's license term decision. The resource agencies also 
contend that such policy would result in applicants focusing their 
license application study efforts on disproving project effects rather 
than on identifying potential mitigation measures.
    10. Most commenters recommend against the policy option to adopt a 
more quantitative cost-based analysis. Many commenters state that it 
would be difficult to develop a quantitative cost-based analysis that 
takes into account the diverse hydropower fleet and environmental and 
recreational values.
    11. As an alternative to the five policy options, several industry 
commenters recommend that the Commission adopt a 40-year default 
license term with credit (up to an additional 10 years) for previously-
authorized actions and deference to settlement agreements. They state 
that under this alternative, licenses should be issued for less than 40 
years only when a license applicant has agreed to a settlement 
agreement with a negotiated license term of less than 40 years, or 
voluntarily coordinates its license term with other projects in a river 
basin.

II. Discussion

    12. The extensive comments received have given the Commission a 
deeper understanding of the effects that the current license term 
policy has on stakeholders in hydropower licensing proceedings. The 
Commission recognizes the importance of providing license applicants 
and other stakeholders as much certainty as possible. License 
applicants expend significant financial resources on preparing their 
license applications and complying with their licenses thereafter.

[[Page 49503]]

Further, stakeholders need certainty to determine the protection, 
mitigation, and enhancement measures that they will negotiate and 
license applicants will propose.
    13. The current policy also affects the Commission's staff and 
resources needed to review and process license applications. Staff 
anticipate that over 300 projects will enter the relicensing process 
through 2025. Under the current policy, staff would establish the 
license term for each of those projects case by case.
    14. After considering this matter and the comments on the NOI, the 
Commission has decided it is in the public interest to change its 
license term policy. With this Policy Statement, the Commission 
establishes a 40-year default license term policy for original and new 
licenses for hydropower projects located at non-federal dams.\15\
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    \15\ This policy does not apply to pilot hydrokinetic projects, 
which have terms of up to five years. See FERC, Licensing 
Hydrokinetic Pilot Projects, www.ferc.gov/industries/hydropower/gen-info/licensing/hydrokinetics/pdf/white_paper.pdf.
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    15. There are three circumstances where the Commission will 
consider issuing a license for less or more than 40 years. First, the 
Commission will establish a shorter or longer term if necessary to 
coordinate license terms for projects located in the same river basin. 
Second, the Commission will defer to a shorter or longer term 
explicitly agreed upon in a generally-supported comprehensive 
settlement agreement, provided that such term does not conflict with 
coordination. Settlement agreements that state the settlement 
signatories would not oppose a certain term or would support a term 
within a range of years will not be considered to include an explicitly 
agreed upon license term.\16\
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    \16\ See, e.g., Chelan PUD, 127 FERC ] 61,152 at n.27 
(settlement states that the signatories do not oppose the licensee's 
efforts to seek a 50-year term); Duke Energy, 156 FERC ] 61,010 at P 
24 (settlement states the signatories agree to support a license 
term that is not less than 40 years nor more than 50 years).
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    16. Third, the Commission will consider a longer license term--
provided that doing so is consistent with coordinating license terms 
within a basin--when a license applicant specifically requests a longer 
license term based on significant measures expected to be required 
under the new license or significant measures implemented during the 
prior license term that were not required by that license or other 
legal authority \17\ and for which the Commission has not already given 
credit through an extension of the prior license term. The Commission 
will consider, on a case-by-case basis, measures and actions that 
enhance non-developmental project purposes (i.e., environmental, 
project recreation, water supply), and those that enhance power and 
developmental purposes, together with the cost of those measures and 
actions to determine whether they are significant and warrant the 
granting of a longer license term. Maintenance measures and measures 
taken to support the licensing process will not be considered. As 
guidance, we note that the Commission has found that measures including 
the construction of pumped storage facilities, fish passage facilities, 
fish hatcheries, substantial recreation facilities, dams, and 
powerhouses warranted longer license terms.
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    \17\ See, e.g., Chelan PUD, 127 FERC ] 61,152, at P 14 (stating 
that the licensee acted in order to comply with the Endangered 
Species Act, not to simply voluntarily resolve relicensing issues 
early).
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    17. There are a number of reasons for establishing a 40-year 
default license term with exceptions for coordination, deference to 
generally-supported comprehensive settlement agreements, and 
consideration of previously-authorized voluntary actions. This policy 
will provide significant certainty to licensees, resource agencies, and 
other stakeholders. A 40-year default license term will provide a 
simpler method for Commission staff to establish license terms, and, 
thus, increase administrative efficiencies. A case-specific assessment 
will only be required for those license applications that request a 
longer license term, and are not explicitly supported by a generally-
supported comprehensive settlement agreement. Because many projects 
would be relicensed less frequently, the policy would also lower 
administrative costs for all stakeholders, provide licensees longer 
license terms to recoup costs, and reduce regulatory burden. Further, 
the policy will place efficient, low-impact projects that require 
minimal measures--and thus, would receive a 30-year term under the 
current policy--on more equal footing with projects that require more 
measures.
    18. The policy may also encourage licensees to voluntarily make 
capacity upgrades and enhance recreational and environmental resources 
during the prior license term. Affected resources will benefit from 
licensees undertaking preventative or remedial measures sooner rather 
than later. In addition, the policy may further encourage license 
applicants to engage with stakeholders to negotiate a license 
settlement agreement. Because a generally-supported comprehensive 
settlement agreements represent stakeholder values, terms negotiated as 
part of those agreements are in the public interest, provided they do 
not conflict with coordination.
    19. A 40-year default license term will not adversely affect 
environmental and recreation resources. All of our licenses contain 
extensive environmental and recreation measures. While under our new 
policy some projects may be relicensed less frequently and 
unanticipated project effects on environmental resources may go 
unmitigated for longer durations of time than before, there are many 
tools available to address these unanticipated effects in a timely 
manner. The Commission may address serious, unanticipated environmental 
effects using its standard reopener article,\18\ and licensees often 
file applications for license amendments to address significant, 
unanticipated environmental issues. Further, resource agencies 
frequently reserve authority to address those effects under FPA section 
4(e) (federal reservation) \19\ and section 18 (fishway 
prescription),\20\ and in water quality certifications issued under 
section 401 of the Clean Water Act. Stakeholders have also negotiated 
with or encouraged licensees to propose measures that include adaptive 
management approaches to allow for appropriate modifications as 
additional information is gathered, new technologies develop, and 
societal and environmental needs change.
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    \18\ Each license incorporates a Commission L-Form that includes 
standard reopener clauses to enhance fish and wildlife resources. 
See Standardized Conditions for Inclusion in Preliminary Permits and 
Licenses Issued Under Part I of the Federal Power Act, 54 F.P.C. 
1792 (1975).
    \19\ 16 U.S.C. 797(e) (2012) (licenses for projects located on 
federal reservations are subject to and contain conditions as the 
Secretary of the department under whose supervision such reservation 
falls shall deem necessary).
    \20\ 16 U.S.C. 811 (2012) (Secretaries of the Interior and 
Commerce may prescribe fishway prescriptions).
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    20. This Policy Statement will apply to all licenses issued 
following its publication in the Federal Register with no retroactive 
application. License applicants with pending license applications may 
file a comprehensive settlement agreement, or addendum to an existing 
agreement, that includes an explicitly agreed upon license term or may 
make a filing demonstrating why the Commission should award them a 
longer license term than 40 years. The Commission, however, will not 
entertain applications to amend existing licenses to extend their 
license terms simply on the basis of this new license term policy. 
Pursuant to current policy, licensees that seek to extend existing 
licenses with terms of less than 50

[[Page 49504]]

years, must justify such requests, for example by proposing 
development, environmental, and recreation enhancements in a license 
amendment application accompanied by a request that the Commission 
extend their license term.\21\
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    \21\ See, e.g., Idaho Power Co., 132 FERC ] 62,001 (2010) (10-
year extension of the license term due to the costs of replacing the 
project's existing powerhouse and increasing generating capacity); 
PPL Holtwood, LLC, 129 FERC ] 62,092 (2009) (16-year extension of 
license term due to costs associated with the constructing a new 
powerhouse, installing two turbine generating units at the existing 
powerhouse, and various environmental measures).
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III. Document Availability

    21. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5:00 
p.m. Eastern time) at 888 First Street NE., Room 2A, Washington, DC 
20426.
    22. From FERC's Home Page on the Internet, this information is 
available on eLibrary. The full text of this document is available on 
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or 
downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field. User assistance is available for eLibrary and the 
Commission's Web site during normal business hours from FERC Online 
Support at 202-502-6652 (toll free at 1-866-208-3676) or email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202)502-8659. Email the Public Reference Room at 
[email protected].

    By the Commission.

    Issued: October 19, 2017.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2017-23286 Filed 10-25-17; 8:45 am]
 BILLING CODE 6717-01-P