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October 23, 2014

Lack of "Clear Path" Leaves FERC Unwilling to Break Relicensing Logjam

Multi-year delays in hydro-licensing proceedings are old news. While the FERC has striven to expedite those proceedings, the obstacles often prove formidable. A recent decision involving PacifiCorp shows how these obstacles can thwart Commission action, even when the Commission’s discretion to act is broad.

The case involves a project comprising eight developments on the Klamath River in Oregon and California. With the existing license due to expire in 2006, PacifiCorp filed for relicensing in 2004, proposing to continue operations at five of the developments and decommission the other three. Commission Staff issued a Final Environmental Impact in 2007 largely supporting the company’s position. However, the matter did not proceed to resolution as several parties hoped for a settlement that would lead to the removal of all of the dams. PacifiCorp reached such a settlement with most parties to the proceeding in 2010.

The settlement called for PacifiCorp to be compensated for the dam removals, which were to take place by 2020, and required action by the Secretary of the Interior and Congressional legislation. Meanwhile, beginning in 2006, PacifiCorp filed requests for water quality certification with authorities in Oregon and California, as required by the Clean Water Act for hydro licenses. As of 2014, PacifiCorp had withdrawn and re-filed those applications eight times (each time postponing the deadline for state action). It did so with the full support of the states, who shared the company’s interest in preventing FERC from taking final action on the license application until the settlement conditions (including Department of Interior approval and Congressional legislation) could be met.

The Hoopa Valley Tribe supported decommissioning of the dams, but was skeptical that the conditions for implementation of the settlement would ever be satisfied. In May 2012, they filed a petition asking FERC to require PacifiCorp to file a plan for decommissioning on the ground that it had failed to diligently pursue relicensing of the project. In the alternative, the Tribe asked the FERC to find that California and Oregon had waived water quality certification and issue a new license for the project (which would have subjected the project to fish passage and other requirements absent from the former license).

The Commission denied the Tribe’s petition in June 2014[1], following which the Tribe filed for rehearing. On October 16, 2014, the Commission issued an Order Denying Rehearing, in which it readily acknowledged that “lengthy delays in licensing proceedings are contrary to the public interest,” but concluded that the case offered no “clear path” to foreshorten the proceeding.[2]

The Tribe argued that PacifiCorp was not diligently pursuing the issuance of a new license or water quality certification, and that delay in relicensing is not in the public interest; that the FERC’s conclusion that a decommissioning plan would require water quality certification that the states would be unlikely to issue was unsupported by the record and an insufficient basis to deny the Tribe’s petition; that if the Commission were to dismiss PacifiCorp’s application, decommissioning would be the only appropriate course of action; and that the Commission should either dismiss PacifiCorp’s application for lack of prosecution or find that the states had waived water quality certification. The Commission rejected all of these contentions.

 The Commission observed that its discretion in this case was “considerable” and nothing in law or regulations or precedent required it to dismiss PacifiCorp’s application.  While agreeing that delay was undesirable, it concluded that granting the Tribe’s petition would only result in further delay and expense, largely because the states would be unlikely to grant water quality certifications for a decommissioning process that did not comport with the terms of the settlement to which they were parties. It also noted that dismissal of PacifiCorp’s application would not necessarily trigger decommissioning, as the Commission could invite other license applications or issue a non-power license to PacifiCorp.

 As to the argument that the states had waived certification, the Commission carefully parsed the language of the Clean Water Act and concluded that even though Congress intended the Act’s deadlines to prevent undue state delay in federal proceedings, the letter of the law permitted PacifiCorp to postpone those deadlines indefinitely by withdrawing and refiling certification requests as it had done. Interestingly, the Commission virtually invited a court challenge, noting that its interpretation of the Act was entitled to no judicial deference.

 The Order evidences the Commission’s mounting frustration over the ability of applicants to delay issuance of new licenses by repeatedly withdrawing and refiling water quality certification requests. New licenses, the Commission observed, better meet current-day conditions than those issued decades earlier. The Commission also remarked that it was continuing to explore possible actions or incentives to break these logjams. Given the Commission’s inability to find a solution to date, it may well take a court ruling or Congressional action to solve the problem.

[1] PacifiCorp, 147 FERC ¶ 61,216 (2014).

[2] PacifiCorp, 149 FERC ¶ 61,038 (2014).


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