On March 21, 2013, FERC reversed its policy of assessing annual charges to hydropower licensees for use of their own land that is subject to a power site reservation.
Under section 10(e)(1) of the Federal Power Act (“FPA”), FERC sets annual charges to licensees for the use, occupancy, and enjoyment of federal lands. In addition, section 24 of the FPA allows the United States to sell or transfer the federal lands that are part of a proposed power project so long as the “power development value” remains. When selling or transferring these federal lands, the United States retains the power development value by including a power site reservation requirement within any such disposal contract. The power site reservation allows for a right of entry to the land for any purpose of a hydropower project. FERC’s practice has been to assess the annual charges under section 10(e)(1) of the FPA for lands that have been sold or transferred because of the power site reservation attached to the land.
A collection of hydropower licensees (“Power Site Preservation Fees Group”) challenged FERC’s practice of assessing these annual charges for the use of former federal land with power site reservation requirements. Among other arguments, the Power Site Preservation Fees Group stated that the licensees had paid valuable consideration to obtain ownership of the land, and did so with the intent of constructing hydropower projects on the land – consistent with the very purpose of the power site reservation and nullifying the need for an annual charge.
FERC agreed with the Power Site Reservation Fees Group and eliminated the assessment of annual charges “with respect to former federal lands included within the boundaries of hydropower projects as to which a section 24 reservation obtains.” Additionally, FERC declined to implement any special procedures for hydropower licensees to document such lands that are now exempt from annual charges, instead allowing licensees to submit documentation whenever they see fit. However, FERC recommended licensees contact Staff before the submission of documentation to ensure the submission is appropriate.
A copy of the order is available here.