Court: FERC may reject interim conditions for annual license

A federal appeals court has upheld authority of the Federal Energy Regulatory Commission to reject the imposition of interim conditions on a temporary annual license for a hydroelectric project.

The U.S. Court of Appeals for the District of Columbia Circuit denied an appeal by the Hoopa Valley Tribe of a FERC order refusing to impose interim conditions on the annual license of the 161.338-MW Klamath hydroelectric project (No. 2082) in Oregon and California. The project has been operating under annual licenses since its original license expired in 2006.

"The D.C. Circuit's opinion provides certainty to licensees that new (Federal Power Act) Section 4(e) conditions or other relicensing conditions will not be automatically imposed on an annual license as interim conditions," said Washington law firm Van Ness Feldman, which represented licensee PacifiCorp.

"Instead, FERC can exercise its discretion when determining whether continued operation of a project pending relicensing will cause 'unanticipated serious impacts' to resources in the area. ... Consequently, licensees operating under an annual license will be protected from costly and unanticipated interim conditions that are not justified by the record."

PacifiCorp originally tried to relicense the project, but eventually agreed to project removal in the face of regional opposition. PacifiCorp and other parties approved a settlement agreement providing for removal of the Klamath project's four major hydro plants and dams to resolve Klamath River resource issues.

Project to be removed by 2020 if U.S. approves

The 90.338-MW J.C. Boyle, 20-MW Copco 1, 27-MW Copco 2, and 18-MW Iron Gate developments would be removed by 2020 if Congress and Interior Department scientists approve. The Bureau of Reclamation awarded a contract in 2010 to CDM Federal Programs Corp. for an economic study of the agreement to remove the project.

During settlement negotiations, the Hoopa Valley Tribe had asked FERC to impose new interim environmental conditions on the annual license, including a flow release ramping rate and minimum flow conditions originally proposed by the Interior Department on the now-sidetracked relicense application under FPA Section 4(e).

FERC rejected the request, using the same standard it would use for reopening an original license -- that the project would have "unanticipated serious impacts" on fishery resources. While FERC found the Klamath River trout fishery was sustaining certain adverse effects, it found the fishery was "nevertheless thriving."

In a Dec. 28, 2010, order, the appeals court rejected the tribe's arguments that FERC's ruling was "standardless," required too stringent a standard before imposing interim conditions, and was inconsistent with FERC's precedents and regulations.

"Agencies have authority to establish legal standards 'by rule or by individual, ad hoc litigation...'" the court said. "That is all FERC has done here, and we find its decision reasonable and reasonably explained."

The settlement calls for PacifiCorp customers to pay $200 million of the dam removal costs. The state of California is to provide up to another $250 million, with total project costs not to exceed $450 million.

The full hydroelectric project also includes the 3.2-MW East Side and 600-kW West Side developments, which PacifiCorp proposed to decommission voluntarily, and the 2.2-MW Fall Creek development, on a Klamath River tributary.

For more FERC news, click here.

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