FERC issues guidance for hydro license settlements

The Federal Energy Regulatory Commission issued a policy statement Sept. 21 giving guidance on the types of settlement agreement terms that can be included in FERC hydropower licenses without incurring subsequent modification by the commission.

“The policy statement recognizes the limits on what can be included in a hydropower settlement,” FERC Chairman Joseph Kelliher said. “A hydropower settlement is incorporated into a license; it becomes part of the license. There is a limit as to what can be legally incorporated into a FERC hydropower license, since the scope of a FERC license is not unlimited.”

The policy statement, PL06-5, cites precedent from previous cases and outlines broad principles. In general, the statement said settlement conditions must be specific, based on substantial evidence, consistent with the law, within FERC jurisdiction, and relevant the hydro project’s effects and purposes.

The commission said settlements save time and money, avoid the need for protracted litigation, and promote positive relationships among parties. However, Kelliher noted, parties have asked for guidance on the kinds of terms that cause problems requiring FERC modifications.

Kelliher said if parties can agree on desirable settlement terms that cannot be included in a license, then those terms can be included in side agreements that, while outside FERC jurisdiction, would be enforceable in court.

While the 19-page document does not change FERC policy, it summarizes commission precedent and case law, draws broad principles, explains the law, and provides clarity.

Parties should examine record, review precedent, explain terms

When considering a settlement, FERC said, parties should consider existing information and pre-license studies to determine the environmental effects of the proposed project. Based on that record, parties should develop environmental measures to address those effects.

In addition, FERC said, parties should take into account recent commission precedent and prepare an explanation of the settlement to enable the commission to better understand the parties’ intent.

FERC said the following principles should be taken into account:
o Measures must be based on substantial evidence in the record of the licensing proceeding;
o Measures must be consistent with the law and enforceable, and within the scope of FERC jurisdiction;
o A relationship must be established between a proposed measure and project effects or purposes;
o Measures should be drafted as narrowly as possible, with specific measures preferred over general measures;
o Required actions should occur physically or geographically as close to the project as possible; and
o Measures must reserve the commission’s compliance authority, and its authority to review and modify, as necessary, proposed resource or activity plans.

FERC called for comments for 45 days on the document, www.ferc.gov/EventCalendar/Files/20060921164820-H-1.pdf, on FERC’s Internet site: www.ferc.gov.

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