On February 20, 2020, FERC staff issued a letter to the licensee for the FERC-licensed Anderson Dam Project (“Project”), directing the licensee to immediately initiate a full drawdown of the Project’s reservoir by October 1, 2020. The Project is located south of San Francisco and serves as an important water supply resource, but has long been identified as vulnerable to flooding and seismic events that could result in the catastrophic spilling of floodwaters into Silicon Valley.  As such, the licensee has been operating the Project at a restricted reservoir level (as low as 58% of capacity in 2020) to mitigate flooding and seismic risks.
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On March 19, 2020, FERC granted Pacific Gas and Electric Company’s (“PG&E”), licensee for the Kilarc-Cow Creek Hydroelectric, Project No. 606 (“Project”), request for a Declaratory Order finding that the California State Water Resources Control Board (“California Board”) waived its authority to issue a water quality certification under section 401 of the Clean Water Act.  FERC’s recent opinion continues its application of the D.C. Circuit’s opinion in Hoopa Valley Tribe (see December 11, 2019 edition of the WER), which held that section 401 provides one year as the absolute maximum for a state to act on a water quality certification application and rejected an extension of the statutory deadline via a coordinated withdrawal-and-resubmission scheme between an applicant and the state certifying agency.
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On March 5, 2020, the United States Senate approved a motion to proceed on the American Energy Innovation Act (“AEIA”), S. 2657, after a cloture vote was called on the motion by Senate Majority Leader Mitch McConnell (R-Ky.) in order to move the bill to the Senate floor. However, on March 9, 2020, at least two measures to limit debate on the bill itself were rejected—opening the door for numerous floor amendments, including legislative language to limit greenhouse gas emissions that is projected to be offered by Senate Democrats.

The AEIA is a compendium of energy-related statutory provisions which was released in an omnibus, bipartisan legislative package on February 27, 2020 by Energy and Natural Resources Committee Chair Senator Lisa Murkowski (R-Alaska) and Ranking Member Senator Joe Manchin (D-W. Va.). Senators Murkowski and Manchin offered a substitute amendment featuring the full text of the AEIA (Amendment 1407) after the motion to proceed was voted-out affirmatively, and they are acting as floor managers for the bill.

Among other things, the bill focuses on advancements and development of energy storage and hydropower resources. In particular, as described in greater detail below, the bill directs FERC to initiate a rulemaking on cost recovery for energy storage assets and extends authorization for certain incentives to develop generation at non-powered or already-powered dams. The Committee held approximately 12 months of hearings on many of the proposed legislation’s components. If enacted, the bill would constitute the first major piece of national energy legislation since the Energy Policy Act of 2005, after a twelve-year hiatus in significant congressional activity.
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On January 10, 2020, the Council on Environmental Quality (CEQ) published the long-awaited proposed rule to amend its regulations implementing the National Environmental Policy Act of 1969 (NEPA).  The statute, sometimes pejoratively referred to as a “paper-tiger,” requires a federal agency to take a hard look at the environmental impacts of certain proposed projects, but

On December 9, 2019, the U.S. Supreme Court decided not to revisit the U.S. Court of Appeals for D.C. Circuit’s decision in Hoopa Valley Tribe v. FERC, 913 F.3d 1099 (2019), allowing the lower court’s ruling to stand.  The key holding of the D.C. Circuit’s opinion, which concerned the ongoing Federal Energy Regulatory Commission’s (“FERC”) relicensing of the Klamath Hydroelectric Project, is that the States of California and Oregon waived their authorities under section 401 of the Clean Water Act (CWA), 33 U.S.C. § 1341, by failing to rule on the applicant’s submitted request for water quality certification within one year.  The D.C. Circuit held that the plain language of CWA section 401 establishes a maximum period of one year for states to act on a request for water quality certification.  Accordingly, the court further held that FERC erred in concluding that the “withdrawal-and-resubmittal” of the water quality certification application on an annual basis resets the one-year statutory time period for state action under section 401.
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In the April 27, 2019 edition of the Energy Bar Association’s Energy Law Journal, FERC Commissioner Richard Glick and legal advisor Matthew Christiansen published an article titled “FERC and Climate Change,” describing that the actions of the Commission, as well as the family of federal and state agencies, have “substantial consequences” for climate change.  The authors argue that the threat of climate change does not necessitate “a wholesale reinterpretation of the Commission’s jurisdiction or a novel regulatory paradigm,” but rather a consistent application of FERC’s existing mandate.  In addition to discussing the Commission’s role in wholesale electric markets in enabling competition for zero-and-low carbon-emitting technologies (such as solar, wind, batteries and even distributed energy resources), the authors place emphasis on hydroelectric generation as an effective resource for grid decarbonization and that such benefits should be considered in FERC’s existing “public interest” analysis.
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On April 18, 2019, FERC issued a unanimous order, supported by all FERC Commissioners, ruling that the California State Water Resources Control Board (“SWRCB”) waived authority to issue a water quality certification under Section 401 of the Clean Water Act (“CWA”), 33 U.S.C. § 1641, in the pending hydropower relicensing of the Middle Fork American River Project (“Project”).  Applying the U.S. Court of Appeals for the D.C. Circuit’s (“D.C. Circuit”) seminal opinion in Hoopa Valley Tribe v. FERC issued in early 2019 (see January 30, 2019 edition of the WER), FERC held that SWRCB’s “active[] participation” in the applicant’s annual withdrawal-and-resubmittal of the license applicant’s request for Section 401 certification since 2012, “on occasion directly requesting the withdrawal and refiling,” constituted an agreement between the applicant and SWRCB that does not re-start the maximum one-year time period for states to act on a request for water quality certification under Section 401.
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On January 25, 2019, the U.S. Court of Appeals for the District of Columbia (“D.C. Circuit”) in a unanimous decision granted a petition for review in Hoopa Valley Tribe v. FERC, No. 14-1271 (D.C. Cir., Jan. 25, 2019).  The key holding in the case, which concerns the ongoing FERC’s relicensing of the Klamath Hydroelectric Project, is that the States of California and Oregon waived their authorities under section 401 of the Clean Water Act (“CWA”), 33 U.S.C. § 1341, by failing to rule on the applicant’s submitted application for water quality certification within one year from when it was initially filed in 2006.  The applicant for many years had followed, at the request of the States, the common industry practice of “withdraw-and-resubmit” of its water quality certification application in an attempt to annually reset the one-year time period for the States to act, as established under CWA section 401.  The D.C. Circuit in Hoopa Valley Tribe invalidated this practice as a means of resetting the statutory clock, instead holding that the clear text of CWA establishes that “a full year is the absolute maximum” time for a state to decide on a water quality certification application.
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On December 11, 2018, the Environmental Protection Agency (“EPA”) and the Department of the Army (together, “Agencies”) released their much-anticipated Notice of Proposed Rulemaking (“Proposed Rule”), which if adopted would scale back the jurisdictional reach of the Clean Water Act (“CWA”) by narrowing the definition of “Waters of the United States” (“WOTUS”) to include only those waters that are oceans, rivers, streams, lakes, ponds, and wetlands, and their “naturally occurring surface water channels.”  The practical implications of the Proposed Rule for hydropower project owners and energy project developers are that ephemeral streams and many ponds and ditches used in agricultural, industrial, and construction activities would no longer be within the jurisdictional reach of the CWA, alleviating the requirement for and uncertainty surrounding permitting requirements and related mitigation measures.
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Three recent FERC staff decisions (“Decisions”) confirm that, for purposes of establishing the mandatory licensing requirements under the Federal Power Act (“FPA”), groundwater is not a “non-navigable Commerce Clause stream.”  Thus, a hydropower project—and particularly a closed-loop pumped storage project—that uses only groundwater as its water source will not require FERC licensing if the project does not trigger other jurisdictional tests under the FPA.
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