Originally published November 22, 2005
On November 17, 2005, the Departments of Agriculture, the Interior, and Commerce jointly released procedures for new expedited trial-type hearings to resolve disputed issues of material fact that arise in hydroelectric licensing proceedings with respect to preliminary conditions or prescriptions developed by the Departments and in consultation with the Federal Energy Regulatory Commission (FERC) under the Federal Power Act. 70 Fed. Reg. 69804 (Nov. 17, 2005) (Interim Final Rule).
Effective immediately, these new procedures were developed to comply with the mandates set forth in section 241 of the Energy Policy Act of 2005. The public has been provided a 60-day period for comment and, based on the comments received, the Departments will consider promulgation of revised final rules within 18 months after the date of publication of this Interim Final Rule.
The Energy Policy Act Section 241 Requirements
Section 241 of the Energy Policy Act (EPAct) amends section 4(e) and section 18 of the Federal Power Act (FPA) to provide that a license applicant and any party to a license proceeding is entitled to a determination on the record on any disputed issue of material fact with respect to mandatory conditions or prescriptions filed pursuant to section 4(e) or section 18, after a trial-type hearing of no more than 90 days. Section 241 of the EPAct also added a new section 33 to the FPA that allows the license applicant or any other party to a license proceeding to propose an alternative condition or prescription. The legislation requires the Secretary of the relevant agency to accept the alternative if it meets certain criteria.
The New Trial Type Hearing and Alternative Condition Regulations
As noted above, the new joint regulations issued by the Departments of Agriculture, the Interior, and Commerce take effect immediately and are available to any license applicant or party to a license proceeding for which the license has not already been issued as of the effective date of the rules. For license proceedings that have already commenced, the Departments note that FERC may need to suspend or extend the remaining steps to accommodate the hearing process and alternative analysis required by the EPAct, depending on how far the proceeding has progressed. If hearing requests are filed in numerous cases with pending applications, the Interim Final Rule clarifies that it may be necessary to work out timeframes with FERC to provide for staggered hearing processes, with priority being given to cases where the applications are closest to issuance.
Proposed Hearing Procedures
The Interim Final Rule requires that requests for a hearing on disputed issues of material fact must be filed within 30 days following the Departments' issuance of preliminary conditions and prescriptions. Alternatives must also be proposed at the same time. The Interim Final Rule explains that the intent is that the Departments will be able to consider whether to accept a proposed alternative at an early stage and thus avoid the need for a hearing. In addition, the Departments intend that this will allow them to consider whether to stipulate to some alleged disputed facts or otherwise narrow the issues to be heard.
Hearings on preliminary prescriptions and conditions may be requested by any party to a FERC license proceeding. Similarly, responses and notices of intervention in the requested hearing may be filed by any other party to the proceeding. Generally, the Departments must file an answer to the request for a hearing within 15 days after the request is filed. If no answer is filed, the Department is deemed to agree that the issues listed by the requester are factual, material, and in dispute. The Interim Final Rule also provides that each Department will confer with the other Departments upon receiving hearing requests to decide whether to consolidate them if there are common issues of material fact. If the requests are consolidated, one Administrative Law Judge (ALJ) will be assigned to the hearing and will conduct it on behalf of all agencies involved.
The standard of proof for the proceedings is a preponderance of the evidence, which generally has been determined to be the applicable standard in administrative hearings conducted under the Administrative Procedure Act (APA). The Departments are seeking comment on which party bears the burden of proof.
The Interim Final Rule requires the ALJ's decision to be issued either within 30 days after the close of the hearing, or within 90 days after the matter is referred for hearing to the ALJ, whichever date is reached first. Thus, within a 90-day period, the hearing must encompass one prehearing conference, discovery, direct testimony, cross-examination, post-hearing briefs and the final ALJ decision.
The Interim Final Rule provides that the ALJ's decision is final with respect to disputed issues of material fact and is not subject to immediate appeal. The Departments explain the reasons for denying immediate appeals of the ALJ decision, noting that the ALJ is not issuing a typical decision reviewable under the APA because the decision is limited only to findings of fact and does not include conclusions of law. In addition, the Departments note that as a practical matter, because section 241 of the EPAct requires that the trial-type hearing be conducted within 90 days, there is not enough time available to include an appeals process. The Departments also explain, however, that to the extent that the ALJ's decision forms the basis for any condition or prescription subsequently included in the license, it may be subject to judicial review under 16 U.S.C. 825l(b).
Alternative Prescriptions and Conditions
In accordance with the new FPA section 33, any party to a FERC license proceeding may submit proposed alternative prescriptions or conditions within 30 days following the Departments' issuance of preliminary conditions and prescriptions. Section 33 requires the Secretary of the relevant Department to accept the proposed alternative if the Secretary determines, based on substantial evidence provided by the license applicant or other party or otherwise available to the Secretary, that the alternative: (a) provides for the adequate protection and utilization of the reservation; and, (b) either will cost significantly less to implement, or will result in improved operation of the project works for electricity production. Parties proposing alternatives must explain how the alternative meets the FPA section 33 criteria, and the Department has 60 days after the close of the comment period on the FERC NEPA document to analyze the alternatives received and file modified conditions or prescriptions. The Department must submit a written statement into the record explaining the basis for the modified prescriptions or conditions that it files, along with the reason for not accepting any proposed alternatives. Section 33 requires that this written statement must demonstrate that the Department gave "equal consideration to the effects of the condition adopted and alternatives not accepted on energy supply, distribution, cost, and use; flood control; navigation; water supply; and air quality." In the Interim Final Rule, citing California v. FERC, 966 F.2d 1541, 1550 (9th Cir. 1992), the Departments explain their belief that "equal consideration" of energy supply distribution, cost and use, flood control, water supply and the other factors listed in section 33 is not the same as "equal treatment," but instead requires that the agency "balance the public interest in all of its stated dimensions, give equal consideration to conflicting interests, and reach a reasoned factual decision." 70 Fed. Reg., at 69808.
The new section 33 also allows FERC to refer matters to the FERC Dispute Resolution Service if FERC finds that the modified conditions or prescriptions submitted by the Departments would be inconsistent with the purposes of the FPA. The Dispute Resolution Service ultimately issues a non-binding advisory to the Secretary of the relevant resource agency, and the Secretary must consider this advisory in making final written determinations on the conditions or prescriptions.
The agencies have issued three different versions of the regulations for trial-type hearing and the alternative process that will be published in the Code of Federal Regulations in the relevant title containing the regulations for each agency. The structure and content of the regulations for each agency are essentially the same, with minor variations to account for organizational and jurisdictional differences.
Public comments on the Interim Final Rule are due by January 17, 2006, and may be filed online, by e-mail, fax, mail, or hand delivery to the various Departments.
If you have questions about this Alert, please contact Thomas M. Berliner or Karen L. Donovan in our San Francisco office, Jennifer D. Cook in our Washington, D.C. office, or any other members of Duane Morris' Energy and Resources Practice Group or Environmental Practice Group, or the attorney in the firm with whom you are regularly in contact.
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