The Federal Energy Regulatory Commission (FERC) is seeking public comment on possible changes to its practices for requiring financial assurance measures in hydroelectric licenses. Such measures are intended to ensure that a licensee has the capability to carry out license requirements and maintain its projects in a safe condition.
In this Notice of Inquiry, FERC noted there are projects that are non-operational or out of compliance with their license conditions, and where licensees have stated that they cannot afford to operate or maintain their projects or implement required environmental or safety measures. These projects can pose public safety hazards in the event of a dam failure or breach, as demonstrated by failure of the Edenville and Sanford dams near Midland, Mich., on May 19, 2020.
With these environmental and safety concerns in mind, FERC is considering whether to take additional measures to ensure licensees have the financial resources to operate and maintain their projects, including under unforeseen circumstances.
To launch this discussion, FERC outlined three potential options for establishing financial assurance mechanisms in hydroelectric licenses:
- Requiring licensees to obtain bonds to cover the costs of safety measures and project operation and maintenance;
- Establishing an industry-wide trust or remediation fund or requiring licensees to maintain individual trust, escrow or remediation funds; or
- Requiring licensees to obtain insurance policies for unforeseen safety hazards or dam failures.
Comments on the three options and additional questions on the NOI are due 60 days after publication in the Federal Register.