Emerging Legal Issues
Chuck Sensiba, Van Ness Feldman LLP
Northwest Hydroelectric Association Annual Conference
February 18, 2014
Key Cases and Orders
Simmons v. Sabine River Authority
State of Louisiana, 732 F.3d 469 (5th Cir. 2013)
FFP Qualified Hydro 14, LLC,
145 FERC ¶ 61,255 (2013)
Power Site Reservation Fees Group,
142 FERC ¶ 61,196 (2013)
Simmons v. Sabine River Authority
State of Louisiana, 732 F.3d 469
◘ In October 2013, the Fifth Circuit rules that statelaw tort claims that seek to alter operations of a
FERC-licensed hydro project are preempted by
the Federal Power Act (FPA).
Simmons v. Sabine River Authority
State of Louisiana, 732 F.3d 469
◘ Despite FPA § 10(c), which preserves state law
claims for damages inflicted on the property of
others, the Fifth Circuit held that state tort laws
impeding FERC’s operational control over dam
operations are preempted.
• Prior FERC proceeding
• FERC findings of fact
◘ Plaintiffs filed a Petition for a Writ of Certiorari
with the U.S. Supreme Court on January 7, 2014.
FFP Qualified Hydro 14, LLC,
145 FERC ¶ 61,255 (2013)
◘ FERC holds that municipal preference under FPA
§ 7(a) applies only to hydropower projects located
in the “vicinity” of the municipality.
◘ Muni should receive preference to develop
“nearby hydropower sites” but not in public interest
to grant preference for project “far from the site of
the municipality.”
◘ Muni in case was located almost 400 miles from
the project site – deemed to be outside of vicinity.
FFP Qualified Hydro 14, LLC,
145 FERC ¶ 61,255 (2013)
◘ Order ends FERC’s existing practice of applying
muni preference to any state or municipal
application for preliminary permit or original
license without regard to location of project.
◘ Could significantly reduce the use of muni
preference in future permitting and licensing
decisions.
◘ Rehearing is pending. Project Nos. 13579 and
14491.
Power Site Reservation Fees Group,
142 FERC ¶ 61,196 (2013)
◘ FERC holds that it will no longer assess annual
charges for non-federal lands at hydropower
projects that are subject to a federal power site
reservation under FPA § 24.
◘ Changes longstanding FERC policy dating to
1981.
◘ Will result in significant reductions in federal land
use annual charges for numerous projects,
particularly in Alaska and other areas in the West.
Major Policy Initiatives
HREA Implementation
Columbia River Treaty Renewal
Implementation of Hydropower
Regulatory Efficiency Act
◘ On August 9, 2013, the President signed into law
H.R. 267, the Hydropower Regulatory Efficiency
Act of 2013 (HREA).
◘ First energy law passed by Congress in more
than 5 years.
◘ Significant update in FERC’s regulation of small
hydropower development.
Implementation of Hydropower
Regulatory Efficiency Act
◘ HREA provisions:
• 2-Year Pilot Licensing Process: Mandated FERC to
investigate a 2-year licensing process for certain projects
• Qualifying Conduit Facilities: Created new class of 5 MW
facilities that are excluded from FERC jurisdiction
• Extended Preliminary Permit Terms: Authorized FERC to
extend by 2 years permit terms at its discretion
• Conduit Exemptions: Increased capacity limit (from 15 to
40 MW) for FERC conduit exemptions sought by nonmunicipalities
• Small Hydropower Exemptions: Increased the capacity
limit (from 5 MW to 10 MW) for small hydro project
exemptions
Implementation of Hydropower
Regulatory Efficiency Act
◘ Two-Year Licensing Process
◘ Eligible projects must:
• (1) be located at a non-powered dam or be a closed-loop pump storage
project;
• (2) cause little to no change to existing surface and groundwater flows and
uses; and
• (3) be unlikely to adversely affect federally listed threatened and endangered
species.
◘ Additional Requirements for some projects:
• Located at or will use a federal dam – include a letter from the dam owner that
the applicant’s plan of development is conceptually feasible
• Use any public park, recreation area, or wildlife refuge established under state
or local law – include a letter from the managing entity indicating its approval
of the site’s use for hydropower development
• Closed-loop pumped storage – not continuously connected to a naturally
flowing water feature
Implementation of Hydropower
Regulatory Efficiency Act
◘ Two-Year Licensing Process
◘ Requests to use the 2-year licensing process must be filed between February 5 –
May 5, 2014.
◘ Requests must include:
•
•
•
•
•
An adequate consultation record,
Pre-application document,
Proposed study plan,
Potential environmental impacts of the project, and
Process plan and schedule.
◘ Keys to Success:
• Solid project proposal
• Early outreach to Federal and State regulators
• Early outreach to FERC
◘ FERC staff has signaled a willingness to work with developers after the May 5th
deadline to develop an efficient process.
Implementation of Hydropower
Regulatory Efficiency Act
◘ Qualified Hydropower Conduit Facilities
• Qualifying Criteria

Must use only the hydroelectric potential of a non-federally owned
conduit

Conduit must be operated for the distribution of water for
agriculture, municipal, or industrial consumption and not primarily
for the generation of electricity

Installed capacity does not exceed 5 MW

Facility is not licensed or exempted by FERC at time the law was
enacted
Implementation of Hydropower
Regulatory Efficiency Act
◘ Qualified Hydropower Conduit Facilities
• Statistics to Date:
•
23 Notices of Intent to Construct Qualifying Conduit Facilities filed
•
19 approved
•
3 rejected (1 later re-filed and approved)
•
1 is pending
•
FERC says average processing time is 63 days
Implementation of Hydropower
Regulatory Efficiency Act
◘ Preliminary Permit Extensions
• FERC may extend permits by two years (total of five years)
• Standard for extension (additional two years) is “good faith and with
reasonable diligence”

No notice or opportunity for competing application, comment, or
intervention

Issued very quickly

Must be filed “not less than 30 days prior to the termination of the
permit.” 18 C.F.R. § 4.82
• FERC standard for successive permit “good faith and due diligence”

Filed after expiration of existing permit

Notice and opportunity for intervention and competing applications
Implementation of Hydropower
Regulatory Efficiency Act
◘ Preliminary Permit Extensions
• Appears as though FERC has applied same standard for extensions as
its long-standing standard for subsequent permits:
•
Case 1: In denying an extension, FERC found that the information
in progress reports was similar and doubts over economic viability
of project.
•
Case 2: In granting an extension, FERC noted that the permittee
had conducted economic and financial analysis and filed its NOI,
PAD, and request to use the TLP.
• It is unclear whether FERC will continue to issue successive permits, or
whether it interprets the HREA to limit a permit term to no more than five
years.
Columbia River Basin
Treaty Renewal
◘ 1961 Treaty between United States and Canada.
◘ Governs cooperative development and operation of
Columbia River basin water resources for flood control and
power.
◘ Requires Canada to provide reservoir storage for flood
control and generation, in exchange for one half of the
downstream power benefits, delivered as energy and
capacity, and currently valued between $250-350 million
annually.
Columbia River Basin
Treaty Renewal
◘ Either party can terminate Treaty on or after September
16, 2024, with minimum 10 years’ written notice (earliest
notification date: September 16, 2014).
◘ On December 13, 2013, the U.S. Entity delivered its final
recommendation to the U.S. Dept. of State.
◘ Recommended renegotiation of a “modernized” Treaty that
addresses power production, flood risk management, and
ecosystem-based function as the primary purposes of the Treaty.
◘ Next steps: Department of State coordinates federal,
interagency review under direction of National Security
Council on behalf of President.
For more information:
Chuck Sensiba
202-298-1801
crs@vnf.com