The Federal Energy Regulatory Commission (FERC or the Commission) released a Notice of Inquiry (Notice) on January 19, 2021 to solicit public comments on whether FERC should impose financial assurance requirements on hydropower projects to ensure that licensees have adequate financial resources to maintain their projects in safe condition. The Notice comes on the heels of a significant and costly failure of two dams in Michigan in May 2020 following years of the licensee’s noncompliance with FERC dam safety orders, partly due to its alleged inability to pay for the work required. In the months since the dam failures, the licensee declared bankruptcy, leaving insufficient resources to conduct over $300 million in repairs to four different dams, reimburse neighboring property owners for damages caused by flooding, and pay the substantial civil penalty recently proposed by FERC.
Continue Reading FERC Floats Financial Assurance Requirements for Hydropower Projects To Ensure Funding for Dam Safety and Environmental Requirements
FERC Issues Order Proposing Substantial Penalty for Licensee in Michigan Dam Failure
The Federal Energy Regulatory Commission (FERC) has issued an order proposing a $15 million civil penalty in response to the failure of a licensee to respond to FERC dam safety orders in the wake of the failure of the Edenville dam and downstream FERC-licensed Sanford Dam (Project No. 2785) in Michigan in May 2020 (see June 1, 2020 edition of the WER). The December 9, 2020 Order to Show Cause and Notice of Proposed Penalty followed months of FERC orders and directives to the licensee related to the catastrophic failure of the two dams, which resulted in the evacuation of 10,000 people, an estimated $190 million in economic damages to local residents, and $55 million in response costs, prompting Governor Gretchen Whitmer to request a disaster declaration from the federal government.
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Hydropower Advocates and Environmental Groups Reach Historic Agreement
On Tuesday, October 13, the National Hydropower Association (NHA) announced its partnership with American Rivers, the World Wildlife Fund, and other environmental groups in a “Joint Statement of Collaboration on U.S. Hydropower: Climate Solution and Conservation Challenge.” The Joint Statement, which was facilitated over the last two and a half years through Stanford University’s Uncommon Dialogue process, is a collaborative effort to address climate change by encouraging “the renewable energy and storage benefits of hydropower and the environmental and economic benefits of healthy rivers.”
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FERC Continues Trend Finding State Water Quality Certification Waiver
At the June 18, 2020 and July 16, 2020 Commissioner meetings, FERC issued a combined five orders continuing its trend of finding that a state has waived its Clean Water Act (“CWA”) section 401 authority for failing to issue a water quality certification within one year from receiving the request for certification. Since the D.C. Circuit’s 2019 ruling in Hoopa Valley Tribe v. FERC (see December 11, 2019 edition of the WER), which held that the plain language of section 401 limited a state’s review to one year, the Commission has consistently found state waiver when the time period has been exceeded under a variety of circumstances. Below is a summary of FERC’s recent orders finding that a state certifying authority waived its section 401 authority.
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Aftermath of the Michigan Dam Failures: Licensee Delays and Possible ESA Concerns
In the two months since the failures of the Edenville Dam and the downstream FERC-licensed Sanford Dam (Project No. 2785) in central Michigan, there has been a flurry of correspondence between the Federal Energy Regulatory Commission (Commission or FERC) and the licensee, including a series of directives and the warning of potential enforcement actions from the Commission, as well as discussion of possible harm to protected species following the dam breaches.
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FERC Proposes Overhaul of Dam Safety Regulations
The Federal Energy Regulatory Commission (Commission or FERC) has proposed to revise its Part 12 dam safety regulations through a Notice of Proposed Rulemaking (NOPR) released at its monthly public meeting on July 14, 2020. There will be a 60-day public comment period once the proposed regulations are published in the Federal Register. The proposed revisions contain three major changes to the existing FERC dam safety regulations:
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FERC Issues Federal Power Act “Exemption” in Lieu of Relicensing to Colorado Hydropower Project
On July 2, 2020, FERC staff issued an order granting an exemption from licensing to the City and County of Denver, Colorado, through its Board of Water Commissioners (“Denver Water”) for its Strontia Springs Hydroelectric Project (“Project”). Prior to FERC issuing the exemption order, Denver Water held an original minor license for the Project, which is located on the South Platte River in Douglas and Jefferson counties, Colorado.
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Federal Hydropower Legislative Proposals Introduced on Capitol Hill
Throughout June 2020, a number of legislative proposals poised to impact hydropower resources have been introduced in Congress. On Monday, June 22, Democratic members of the House of Representatives released H.R. 2, the Moving Forward Act, which aims to encourage investment in infrastructure and includes several provisions on hydropower and dam safety. On Monday June 29, Congresswoman Cathy McMorris Rodgers (WA-05) introduced the Hydropower Clean Energy Future Act which includes updates to the licensing process for non-federal hydroelectric projects and promotes innovation of new generation technologies that would protect the environment and natural resources while providing additional reliability services to the nation’s electric grid. Finally, on June 30, Democratic members of the House Select Committee on the Climate Crisis released a Climate Crisis Action Plan, which includes provisions on hydropower and marine energy facilities.
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Supreme Court Determines that Area in Northeastern Oklahoma Constitutes a Reservation
On Thursday, July 9, 2020 the Supreme Court, in a 5-4 decision, held that a large swath of northeastern Oklahoma, including most of the city of Tulsa, remains part of the Muscogee (Creek) Reservation and, as a result, that the state lacks jurisdiction to prosecute a major crime involving a tribal member within the reservation. Justice Gorsuch delivered the opinion for the Majority, confirming the durable principle of tribal sovereignty, despite significant efforts throughout history to dismantle tribal reservations and governments. Chief Justice Roberts filed a dissenting opinion, in which Justices Alito and Kavanaugh joined, and in which Justice Thomas joined, except as to one footnote. Some analyses have raised the possibility that this decision could have a significant impact on taxation and natural resources management in Indian Country throughout the United States, as discussed more fully below. However, because the direct holding of the Court is quite narrow, the full impact of this decision remains to be seen.
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Next Round of Hydroelectric Incentive Funding Now Available
On May 7, 2020, the U.S. Department of Energy (DOE) began accepting applications for the latest round of Hydroelectric Production Program funding under section 242 of the Energy Policy Act of 2005 (EPAct), and issued a notice updating its guidance.
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