United States: Congress Passes Hydropower Development Provisions In AWIA Bill

On October 10, 2018, the U.S. Senate passed S. 3021, the America's Water Infrastructure Act of 2018 ("AWIA"), which contains several hydropower provisions that seek to amend the Federal Power Act ("FPA") to promote hydropower development.  The Senate passed the AWIA by a 99-1 vote.  The AWIA was previously passed by the U.S. House of Representatives on September 14, 2018 and will now go to the President for his signature.

S. 3021 would promote hydropower development through five hydropower provisions pertaining to: (1) preliminary permit terms and statutory deadlines applicable to newly licensed projects, (2) proposed projects along water supply conduits, (3) project development at existing non-powered dams, (4) closed-loop pumped storage, and (5) infrastructure, environmental, and recreational investments at existing hydropower facilities.

AWIA § 3001 would extend preliminary permit terms and deadlines for starting construction of newly licensed hydropower projects, to give more time for a developer under a preliminary permit to study the feasibility of a site and prepare its license application, and to allow additional time post-licensing for a new licensee to complete other regulatory approvals, secure financing, and otherwise prepare for construction.  It also would reverse FERC's Order No. 815 (issued October 21, 2015) by ensuring that, for newly licensed projects, annual charges required under the FPA will begin no earlier than the deadline for commencing construction (including any extensions of the deadline granted by FERC).

AWIA § 3002 would shorten the approval timeline for projects developed along water supply conduits and place private and governmental entities on the same regulatory footing in the development of qualifying conduit hydropower facilities by replacing the 5 megawatt ("MW") cap that applied to private developers with a 40 MW cap that has long applied to governmental entities.

AWIA § 3003 directs FERC to establish, by rule, an expedited process for issuing hydropower licenses for facilities at existing, non-powered dams within two years of filing a completed application.  In developing this rule, FERC is required to convene an "Interagency Task Force" with federal and state regulators and Native American tribes to coordinate the process and to ensure that regulatory authorities will not result in a material change to the storage, release, or flow operations of the existing dam, to the extent practicable.  This section also requires FERC and the Secretaries of the Interior, Army, and Agriculture to develop a list of existing non-powered federal dams that have the greatest potential for non-federal hydropower development.

AWIA § 3004 requires FERC to establish, by rule, an expedited licensing process for issuing licenses for closed-loop pumped storage projects that would seek to result in a final decision on an application in two years or less.  The provision authorizes FERC, when issuing licenses for a closed-loop pumped storage project, to grant "exceptions" from the requirements of the FPA for any part of the closed-loop facility (not including any dam or other requirement), provided that the exception includes terms and conditions submitted by federal and state fish and wildlife agencies for the protection of fish and wildlife resources and other conditions FERC deems appropriate.

Finally, AWIA § 3005 seeks to encourage early action by hydropower licensees by directing FERC, when determining the term of a new license during relicensing, to consider any project-related investments made by the licensee during the expiring license term.  This provision, which refines and broadens FERC's recent Policy Statement on Establishing License Terms for Hydroelectric Projects (issued October 19, 2017), specifies that FERC is required to give equal weight to investments required by the new license, and investments that were made over the term of the existing license.  FERC is directed under this provision, upon request of a licensee, to determine whether an early action investment qualifies as a measure that FERC will consider as qualifying for a longer license term during relicensing.

The text of S. 3021 is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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