On March 24, 2022, FERC issued an Order Addressing Arguments Raised on Rehearing and Denying Motion for Temporary Stay regarding The Nevada Hydro Company, Inc.’s (Nevada Hydro) October 2017 license application for its proposed Lake Elsinore Advanced Pumped Storage (LEAPS) Project.

In its October 2017 license application, Nevada Hydro proposed to construct and operate the LEAPS Project on Lake Elsinore and San Juan Creek in Riverside and San Diego Counties, California.  As proposed, the Project would have included a new upper reservoir, a concrete power tunnel with two penstocks, an underground powerhouse with a total installed capacity of 500 megawatts (MW) and would use Lake Elsinore as a lower reservoir.  Between October 2017 and June 2019, Commission staff issued several requests for additional information in response to deficiencies and study requests filed by various stakeholders, including resource agencies, conservation groups, and Tribes.  In response to the Commission’s July 2019 Notice that the application had been accepted for filing, the U.S. Forest Service (USFS) requested additional information and studies regarding the proposed Project’s anticipated effects on Cleveland National Forest and provided that it would be unable to issue a Special Use Authorization for the Project’s use and occupancy of USFS land until the studies were complete.  FERC staff directed Nevada Hydro to consult with USFS on the additional studies, and to provide anticipated filing dates to the Commission so it could complete its environmental review under the National Environmental Policy Act (NEPA).

In November 2021, USFS informed FERC staff that, despite engaging in consultation with Nevada Hydro over the prior three years, the parties were unable to reach resolution on the outstanding studies requested USFS, the studies remained incomplete, and USFS was unable to issue a Special Use Authorization.  In light of this, FERC staff determined that the Project could not be constructed and on December 9, 2021, it issued an order dismissing the license application because “the Forest Service’s inability to further consider the project’s use of Forest Service land would significantly hinder review of the license application.”  The order dismissed the application without prejudice and noted that Nevada Hydro could re-file its application with the requested information.

In its January 2022 request for rehearing, Nevada Hydro stated that it had been placed in a court-appointed receivership and that the receiver had been authorized to conduct “all ordinary-course business activities including development and advancement of the [LEAPS] Project,” as well as retention of counsel and consultants to perform the outstanding studies and preserve the license application.  It also provided that new information, including recent outreach to USFS, funding to complete the outstanding studies, and retention of consultants should cause the Commission to reconsider its dismissal, and that failure to do so would be arbitrary and capricious and a violation of due process.  Nevada Hydro requested that the Commission reinstate its license application or, in the alternative, stay the dismissal date until July 1, 2022, the date by which Nevada Hydro stated it would be able to fully respond to USFS’s initial request for studies.

In its order denying rehearing, the Commission found that Nevada Hydro’s arguments amounted to a request for consideration rather than a request for rehearing alleging legal error in the underlying order.  Rather, the Commission found that Nevada Hydro’s argument “appears to be that failure to reinstate the license application would imperil its multi-million dollar investment.”  The Commission also acknowledged that it was troubled by the appointment of a receiver, apparently as a result of ongoing litigation between Nevada Hydro and a minority shareholder, as well as the “contentious nature” of that dispute, which is underway in three different venues.  It concluded that “we do not find that a court-supervised change in management rises to the level of material change in circumstances that would cause us to reconsider the dismissal of the license application.”

The Commission noted that Nevada Hydro was on notice about the outstanding studies for over three years and that its recent committal to completing the studies over the next few months provides “little comfort” that the requested information would be provided on schedule.  Finally, the Commission denied Nevada Hydro’s request for stay of the dismissal, noting that it only grants a stay when “justice so requires,” a standard that Nevada Hydro failed to meet in this case.

The Commission’s order is available here.