FERC rejects challenge to hydrokinetic permit issuances

WASHINGTON 6/15/12 (PennWell) — The Federal Energy Regulatory Commission has rejected a challenge by Northland Power Mississippi River LLC to the issuance of preliminary permits to competitor Free Flow Power Corp. for hydrokinetic projects on the lower Mississippi River.

Between them the two developers hold, or have applied for, preliminary permits to study more than 140 project sites covering all but a few miles of the 850-mile reach of the river between Cairo, Ill., and the Gulf of Mexico. In 2011, FERC considered, then dropped, plans to refuse to issue additional preliminary permits for hydrokinetic projects on the lower Mississippi due to the many projects proposed by the two developers.

In the latest dispute, Northland asked for rehearing of FERC staff orders issuing successive permits to Free Flow for projects whose three-year original permits had expired.

First-to-file policy challenged

As a number of Free Flow’s permits were to expire Dec. 31, 2010, both Free Flow and Northland filed competing applications for 11 of the sites on Jan. 3, 2011. However, FERC rejected all the filings as premature because, due to the Dec. 31 federal holiday, the original permits did not expire until the end of the day Jan. 3.

FERC notified both developers of the rejections by e-mail at 1:59 p.m. Jan. 11. Free Flow refiled applications by 2:13 p.m. that day, while Northland did not see the e-mail immediately and did not refile until 4:43 p.m. As a result, Free Flow was awarded the 11 permits under FERC rules favoring the first applicant to file, if all other factors are equal.

On rehearing, FERC rejected Northland’s contention that the 11 sites should have been allotted by lottery since the applications were all filed the same day. FERC cited its long-standing practice of awarding to the first to file, even if the difference is only by minutes.

On Feb. 1, 2012, Free Flow and Northland filed competing permit applications for 13 other sites that had been subject to Free Flow permits that expired Jan. 31, 2012. In this case, all the permits were time-stamped 8:30 a.m. at the opening of FERC’s office that day. Because of the simultaneous filings, FERC allotted those permits by lottery, nine to Free Flow and four to Northland.

Free Flow’s diligence challenged

On rehearing, Northland also argued Free Flow did not display sufficient diligence in studying the project sites during the original permit terms and that granting Free Flow successive permits is inconsistent with FERC precedent. The commission rejected both arguments.

FERC acknowledged Northland’s accusation that Free Flow had previously filed identical permit progress reports that did not provide information on the progress of individual projects. However, the commission cited portions of the entire record that showed many examples of Free Flow’s progress on individual projects.

In terms of diligence, Northland also argued that Free Flow has not conducted a meaningful on-site demonstration of its hydrokinetic technology. FERC disagreed

“All preliminary permits state specifically that the permit does not authorize the holder to conduct ground-disturbing activities or enter onto lands,” FERC’s June 1 order said. “Thus, in many cases it may not be possible for a permittee to test equipment at the proposed project site.”

Issue of FERC precedent raised

Northland said FERC’s grant of a total of 21 successive permits to Free Flow is inconsistent with FERC’s past dealings with holders of multiple permits. It noted FERC’s 2003 correspondence with multiple permit holder Symbiotics LLC, in which FERC encouraged the permit holder to evaluate its many sites for viability in order to decide whether to file license applications or surrender permits.

“The commission rarely encounters cases involving large numbers of permits held by one entity, and so has not developed a policy applicable to such instances,” FERC said. “In fact, other than the Symbiotics proceedings raised by Northland, we are aware of no other proceeding similar to this one. With regard to Symbiotics, staff encouraged the company to consider the viability of its proposed projects, but imposed no further requirements.”

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FERC rejects challenge to 401 conditions for 210-MW Yadkin

The Federal Energy Regulatory Commission has rejected a challenge by Alcoa Power Generating to North Carolina’s water quality certification for Alcoa’s 210-MW Yadkin hydroelectric project.

As part of Yadkin’s relicensing process, Alcoa has been embroiled in an attempt by the state of North Carolina to take over the project (No. 2197) on North Carolina’s Yadkin River. (HydroWorld 10/5/09) The state argued that Alcoa closed its Badin, N.C., aluminum smelter that had been powered by Yadkin and called for federal takeover of Yadkin to allow the state to assume control of the hydro project.

In a side issue, Alcoa had asked FERC to declare the state Division of Water Quality waived water quality certification for the project because the state did not issue final certification by a one-year deadline.

Alcoa needs water quality certification from the state under Clean Water Act Section 401 along with a relicense order from FERC to continue to operate the project. On Sept. 17, 2009, Alcoa asked FERC to declare the Division of Water Quality waived certification because it issued a certification, which was not final, on the deadline day.

Alcoa contended the state failed to meet the one-year deadline because the state said the order would not be final until Alcoa obtained a $240 million surety bond from the state commissioner of insurance within 90 days.

“By waiting until a couple of hours before the one-year statutory deadline was to expire, DWQ ensured that the required bond could not be posted (and, thus, that its certification could not become ‘effective’) prior to the expiration of the statutory deadline,” Alcoa’s motion said.

FERC disagreed, upholding the state certification.

“North Carolina acted by issuing its ‘APPROVAL of 401 Water Quality Certification with Additional Conditions’ within the one-year period,” FERC ruled Oct. 15. “The certification states that unless Alcoa requests an adjudicatory hearing ‘this certification shall be final and binding.’ … If Alcoa elected to satisfy the bond condition (and had the certification not been appealed), the certification would have been fully effective.”

Alcoa’s original license expired April 30, 2008. The project, which features the 31-MW Yadkin Falls, 108-MW Narrows, 38-MW Tuckertown, and 33-MW High Rock developments, is operating under its second temporary annual license.

Lawyers for North Carolina Gov. Beverly Perdue filed a motion in September urging FERC to reject Alcoa’s relicense application. The governor acted despite the refusal in August of the North Carolina House to create a Yadkin River Trust to operate the hydro project, if North Carolina were successful in wresting control of the project from Alcoa.

Alcoa said it negotiated a relicensing agreement with the support of local governments, lakefront property owners, recreational users, business groups, environmental organizations, and others. It added that FERC staff issued an environmental impact statement endorsing the relicensing.