FERC ceases land use fees for hydro projects on non-federal land

The Federal Energy Regulatory Commission has granted a petition by eight hydropower licensees with projects in four states that challenged the levying of federal land use fees on hydroelectric projects for land the federal government no longer owns.

The FPA requires non-federal hydroelectric project licensees to pay the United States reasonable annual charges to compensate for the use of federal lands. The revenues are allocated 12.5 percent to federal miscellaneous receipts, 50 percent to the Reclamation Fund, and 37.5 percent to the state or Indian reservation in which the project is located.

The Power Site Reservation Fees Group, representing projects in Alaska, Washington, Texas, and Louisiana, filed in November 2012, seeking a declaratory order that such charges violate the Federal Power Act. The challenge relates to those situations in which the federal government actually transferred some lands to the licensee or another owner but retained a power site reservation.

The petition asked that “the commission find that collection of annual charges under Section 10(e)(1) of the Federal Power Act, 16 USC 803(e)(1), for hydropower licensees’ use and occupancy of lands that they own but that are subject to a power site reservation under FPA Section 24, 16 USC 818, is inconsistent with the language, structure, and purpose of FPA Part 1, including Section 10(e)(1).”

In a March 21 order, FERC disagreed, saying there is nothing unlawful about its practice of assessing charges for lands subject to a power reservation. However, the commission said the petitioners made “a more compelling equitable argument.”

“The group argues that licensees have given valuable consideration to obtain fee ownership of federal lands, and have done so for the development of hydropower, the very purpose for which the power site reservation was created,” FERC said. “We agree. Accordingly, we grant the petition and will no longer assess annual charges with respect to former federal lands included within the boundaries of hydropower projects as to which a Section 24 reservation obtains.”

FERC said licensees may submit information to the commission to document the extent of such lands within their projects. FERC Deputy Associate General Counsel John Katz testified before Congress in 2012 that FERC has no record of the amount of acreage that falls into the category.

Hydro operators seeking the declaratory order include Alaska Electric Light and Power Co.; Alaska Energy Authority; City and Borough of Sitka, Alaska; Chelan County, Wash., Public Utility District; Snohomish County, Wash., Public Utility District; Grant County, Wash., Public Utility District; Sabine River Authority of Texas-Sabine River Authority of Louisiana; and Southeast Alaska Power Agency.

FERC issued a final rule in January revising its formula for calculating government land use fees for FERC-licensed hydroelectric projects.

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