Document ID: FERC-2016-1601-0001
Agency: ferc
Document Type: Notice
Title: Establishing the Length of License Terms: Hydroelectric Projects
Posted Date: 2016-11-25T05:00Z

[Federal Register Volume 81, Number 227 (Friday, November 25, 2016)]
[Notices]
[Pages 85218-85220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28195]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RM17-4-000]

Establishing the Length of License Terms for Hydroelectric 
Projects

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION:  Notice of Inquiry.

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SUMMARY:  The Federal Energy Regulatory Commission (Commission) is 
inviting comments on what changes, if any, the Commission should make 
to its policy for establishing the length of original and new license 
terms for hydroelectric projects.

DATES:  Comments are due January 24, 2017.

ADDRESSES:  Comments, identified by docket number, may be filed in the 
following ways:
     Electronic Filing through http://www.ferc.gov. Documents 
created electronically using word processing software should be filed 
in native applications or print-to-PDF format and not in a scanned 
format.
     Mail/Hand Delivery: Those unable to file electronically 
may mail or hand-deliver comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments, see 
the Comment Procedures section of this document.

FOR FURTHER INFORMATION CONTACT:
Nick 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 Notice of Inquiry, the Federal Energy Regulatory 
Commission (Commission) seeks comment on whether, and, if so, how the 
Commission should revise its policy for establishing the length of 
original and new licenses it issues for hydroelectric projects.

I. Background

    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 (i.e., relicense) 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).
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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.\3\ For projects 
located at non-federal dams, the Commission's current policy is to set 
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.\4\ The purpose of this policy is to ease the economic 
impact of new costs, promote balanced and comprehensive development of 
renewable power generating resources, and encourage licensees to be 
better environmental stewards.\5\
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    \3\ See City of Danville, Virginia, 58 FERC ] 61,318, at 62,020 
(1992).
    \4\ See id. (addressing original licenses); Consumers Power Co., 
68 FERC ] 61,077, at 61,384 (1994) (addressing relicenses).
    \5\ 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-sensitive 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,\6\ and then uses the cost of measures as a check on a 
qualitative conclusion that measures required under a relicense are 
minimal, moderate, or extensive. Further, the Commission's policy is to 
take a forward-looking approach, such that measures adopted under a 
previous license term are not considered.\7\ It has also been the 
Commission's policy to set license terms that coordinate, to the extent 
feasible, the license terms for projects in the same river basin to 
maximize future consideration of cumulative impacts at the same time 
the projects are due to be relicensed.\8\
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    \6\ 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.
    \7\ See, e.g., Duke Energy Carolinas, LLC (Duke Energy), 156 
FERC ] 61,010, at P 19 (2016); Public Utility District No. 1 of 
Chelan County, Washington (Chelan PUD), 127 FERC ] 61,152, at PP 12-
14 (2009); Ford Motor Co., 110 FERC ] 61,236, at PP 6-8 (2005).
    \8\ See, e.g., 18 CFR 2.23 (2016); Chelan PUD, 127 FERC ] 61,152 
at P 18.
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    5. The length of an original license has not been contested on 
rehearing for some time. The length of a new license, however, has 
recently been contested 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: Capacity-related investments or environmental enhancements 
made by the licensee during the current license and before issuance of 
the new license; \9\ total cost of the relicensing process; \10\ losses 
in generation value related to environmental measures; \11\ the license 
terms of projects that the licensee states are similarly situated to 
its project; \12\ and the license term provided for in settlement 
agreements.\13\ In each circumstance, the Commission declined to 
deviate from its current policy to extend the length of the license.
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    \9\ See, e.g., Duke Energy, 156 FERC ] 61,010 at PP 9-26; 
Alabama Power Co., 155 FERC ] 61,080, at P 72 (2016); Public Utility 
District No. 1 of Douglas County, Washington (Douglas PUD), 143 FERC 
] 61,130, at PP 12-14 (2013); Chelan PUD, 127 FERC ] 61,152 at PP 
12-14; Georgia Power Co., 111 FERC ] 61,183, at PP 10-15 (2005); 
Ford Motor Co., 110 FERC ] 61,236 at PP 6-8.
    \10\ See, e.g., Duke Energy, 156 FERC ] 61,010 at P 14.
    \11\ See, e.g., id. P 12.
    \12\ See, e.g., Duke Energy, 156 FERC ] 61,010 at PP 20-23; 
Alabama Power Co., 155 FERC ] 61,080 at PP 71, 75; Duke Energy 
Progress, Inc., 153 FERC ] 61,056, at PP 39, 42 (2015); Douglas PUD, 
143 FERC ] 61,130 at P 15.
    \13\ See, e.g., Duke Energy Progress, Inc., 153 FERC ] 61,056 at 
PP 40, 44; Douglas PUD, 143 FERC ] 61,130 at PP 18-19; Chelan PUD, 
127 FERC ] 61,152 at PP 16-17.
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II. Subject of the Notice of Inquiry

    6. The Commission seeks comments on whether, and, if so, how the 
Commission should revise its policy for establishing license terms for 
projects located at non-federal dams. Below, we outline five potential 
options that

[[Page 85219]]

Commission staff has identified for establishing license terms: (1) 
Retain the existing license term policy; (2) add to the existing 
license term policy the consideration of measures implemented under the 
prior license; (3) replace the existing license term policy with a 50-
year default license term unless the Commission determines that a 
lesser license term would be in the public interest (for example, to 
better coordinate, to the extent feasible, the license terms for 
projects in the same river basin for future consideration of cumulative 
impacts); (4) add a more quantitative cost-based analysis to the 
existing license term policy; and (5) alter current policy to accept 
the longer license term agreed upon in an applicable settlement 
agreement, when appropriate. We encourage comments on these options, as 
well as the suggestion of any other alternatives. While the Commission 
will consider comments filed, the Commission may not, and is not 
required to, take further action.

A. Retain Existing License Term Policy

    7. The Commission could retain its current policy to set a 30-year 
term where there is little or no authorized redevelopment, new 
construction, or environmental mitigation and enhancement; a 40-year 
term where there is a moderate amount of these activities; and a 50-
year term where there is an extensive amount of such activity. The 
Commission seeks comment on whether it should retain its current 
license term policy and on the following questions:
    i. What challenges does the Commission's current license term 
policy pose?
    ii. Does the Commission's current license term policy discourage 
licensees from investing in environmental and recreational enhancements 
or in development improvements (e.g., efficiency upgrades or project 
expansions) before relicensing? How so? What other factors affect 
whether and when a licensee makes such project enhancements or 
improvements?
    iii. Does a license term affect a licensee's ability to finance its 
project, and if so, how?
    iv. Does the Commission's license term policy affect the likelihood 
of parties reaching settlement agreements? How so?
    v. Does the current license term policy have benefits for 
stakeholders and affected resources? If so, please describe these 
benefits.

B. Consider Measures Implemented During a Prior License Term

    8. In addition to considering measures required under the new 
license, the Commission could, when establishing the license term, 
consider measures implemented under the prior license.\14\ The 
Commission would have to determine which measures to consider (i.e., 
the timing and type of measures), and whether the considered measures 
justify a 30-, 40-, or 50-year license term. The Commission seeks 
comment on this policy option and on the following questions:
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    \14\ ``Early'' measures could include: measures that the 
licensee implemented through an amendment of its existing license 
where such amendment did not extend the existing license term, and 
measures implemented by a licensee that were permissible under but 
not required by the existing license.
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    i. Why should the Commission consider early measures when 
establishing a license term?
    ii. What measures should be considered under ``early measures'' and 
why? Should the Commission consider all early measures, including 
developmental, environmental, recreation, and maintenance activities? 
Are there certain types of measures that the Commission should not 
consider?
    iii. How would the Commission's consideration of early measures 
affect whether and when licensees make non-developmental and 
developmental improvements?
    iv. How should the Commission limit the scope of early measures 
considered? Should the Commission only consider activities conducted 
within a certain number of years of relicensing?

C. 50-Year Default License Term

    9. The Commission could establish 50 years as the default license 
term. A lesser license term could be set to coordinate, to the extent 
feasible, the license terms for projects in the same river basin for 
future consideration of cumulative impacts or for other appropriate 
reasons. Under the 50-year default option, parties other than the 
licensee would bear the burden of arguing that the license term should 
be less than 50 years. The Commission seeks comment on establishing a 
50-year default license term and on the following questions:
    i. What would be the benefit(s) of the Commission establishing a 
50-year default license term?
    ii. What factors, other than the coordination of license terms for 
projects in the same river basin, would weigh against the presumption 
of a 50-year default license term?
    iii. How would the default term affect license settlements and 
negotiations?

D. Quantitative Cost-Based Analysis

    10. The Commission could include a more quantitative cost-based 
analysis that factors-in project size and capacity into its license 
term policy. The Commission seeks comment on using a more quantitative 
cost-based analysis to establish a license term and on the following 
questions:
    i. What costs should the Commission consider in a quantitative 
analysis?
    ii. How should cost be calculated? Should cost be calculated on a 
total cost or a on a cost per megawatt basis?
    iii. What weight should the Commission give to costs when 
establishing the license term?
    iv. The Commission licenses an array of small and large projects. 
How could the Commission account for project size and capacity when 
considering project costs?
    v. Commission staff relies on the cost information provided by the 
licensees. How could the Commission ensure the reliability of the cost 
information and to what extent would consideration of this type of 
information affect the licensing process?

E. Agreed-Upon Settlement Term

    11. The Commission could establish the license term based on the 
term negotiated in a settlement agreement when appropriate. The 
Commission seeks comment on this policy option and on the following 
questions:
    i. How would establishing the license term based on the term agreed 
upon in a settlement agreement affect settlement negotiations?
    ii. When should the Commission not defer to the license term agreed 
upon in a settlement agreement?

III. Comment Procedures

    12. The Commission invites interested persons to submit comments 
and other information on the matters, issues, and specific questions 
identified in this notice, and any alternative proposals that 
commenters may wish to discuss. Comments are due January 24, 2017. 
Comments must refer to Docket No. RM17-4-000, and must include the 
commenter's name, the organization they represent, if applicable, and 
their address.
    13. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents created electronically using word processing 
software should be filed in native applications or print-to-PDF format 
and not in a scanned format.

[[Page 85220]]

Commenters filing electronically do not need to make a paper filing.
    14. Commenters that are not able to file comments electronically 
must send an original of their comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    15. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

IV. Document Availability

    16. 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 the Commission's Home Page (http://www.ferc.gov) and 
in the Commission'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.
    17. From the Commission'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.
    18. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours from the Commission's Online 
Support at 202-502-6652 (toll free at 1-866-208-3676) or email at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
public.referenceroom@ferc.gov.

    By direction of the Commission.

    Issued: November 17, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2016-28195 Filed 11-23-16; 8:45 am]
 BILLING CODE 6717-01-P