Federal Register / Vol. 71, No. 187 / Wednesday, September 27, 2006 / Notices

Agency decision

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What actually matters in this document.

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obtained by agencies directly from the

Applicant. If an agency does not file

comments within the time specified for

filing comments, it will be presumed to

have no comments. One copy of an

agency’s comments must also be sent to

the Applicant’s representatives.

q. Comments, protests and

interventions may be filed electronically

via the Internet in lieu of paper. See, 18

CFR 385.2001(a)(1)(iii) and the

instructions on the Commission’s Web

site at http://www.ferc.gov under the ‘‘eFiling’’ link.

Magalie R. Salas,

Secretary.

[FR Doc. E6–15811 Filed 9–26–06; 8:45 am]

BILLING CODE 6717–01–P

DEPARTMENT OF ENERGY

Federal Energy Regulatory

Commission

Notice of Application for Amendment

of License and Soliciting Comments,

Motions To Intervene, and Protests

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September 21, 2006.

Take notice that the following

application has been filed with the

Commission and is available for public

inspection:

a. Application Type: Amendment of

License.

b. Project No: 6066–026.

c. Date Filed: June 8, 2006.

d. Applicant: McCallum Enterprises I,

LP.

e. Name of Project: Derby Dam

Project.

f. Location: The project is located on

the Housatonic River, in Fairfield and

New Haven counties, Connecticut.

g. Filed Pursuant to: Federal Power

Act, 16 U.S.C. 791a—825r.

h. Applicant Contact: Ms. Carol A.

Lacasse, Operations Manager, McCallum

Enterprises I, LP, 2874 Main Street,

Stratford, CT 06614, (203) 386–1745.

i. FERC Contact: Any questions on

this notice should be addressed to:

Anumzziatta Purchiaroni at (202) 219–

3297, or e-mail address:

anumzziatta.purchiaroni@Ferc.fed.us.

j. Deadline for filing comments and or

motions: October 6, 2006.

k. Description of Request: McCallum

Enterprises I, LP (McCallum) is

requesting the Commission’s approval

to fill an existing canal located within

the project boundary. McCallum is

proposing to fill a portion of a canal,

about 1,000 feet long, 92 feet wide and

5 feet deep, located on the west side of

the project. The canal provides water to

downstream commercial and industrial

users. McCallum is proposing to install

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a pipe in order to maintain the supply

of water to two existing users below the

area proposed for filling.

l. Locations of the Application: A

copy of the application is available for

inspection and reproduction at the

Commission’s Public Reference Room,

located at 888 First Street, NE., Room

2A, Washington, DC 20426, or by calling

(202) 502–8371. Information about this

filing may also be viewed on the

Commission’s Web site at http://

www.ferc.gov using the ‘‘eLibrary’’ link.

Enter the docket number excluding the

last three digits in the docket number

field to access the document. You may

also register online at http://

www.ferc.gov/docs-filing/

esubscription.asp to be notified via email of new filings and issuances

related to this or other pending projects.

For assistance, call 1–866–208–3676 or

e-mail FERCOnlineSupport@ferc.gov,

for TTY, call (202) 502–8659. A copy is

also available for inspection and

reproduction at the address in item (h)

above.

m. Individuals desiring to be included

on the Commission’s mailing list should

so indicate by writing to the Secretary

of the Commission.

n. Comments, Protests, or Motions to

Intervene: Anyone may submit

comments, a protest, or a motion to

intervene in accordance with the

requirements of Rules of Practice and

Procedure, 18 CFR 385.210, .211, .214.

In determining the appropriate action to

take, the Commission will consider all

protests or other comments filed, but

only those who file a motion to

intervene in accordance with the

Commission’s Rules may become a

party to the proceeding. Any comments,

protests, or motions to intervene must

be received on or before the specified

comment date for the particular

application.

o. Filing and Service of Responsive

Documents: Any filings must bear in all

capital letters the title ‘‘COMMENTS’’,

‘‘RECOMMENDATIONS FOR TERMS

AND CONDITIONS’’, ‘‘PROTEST’’, OR

‘‘MOTION TO INTERVENE’’, as

applicable, and the Project Number of

the particular application to which the

filing refers. All documents (original

and eight copies) should be filed with:

Magalie R. Salas, Secretary, Federal

Energy Regulatory Commission, 888

First Street, NE., Washington, DC 20426.

A copy of any motion to intervene must

also be served upon each representative

of the Applicant specified in the

particular application.

p. Agency Comments: Federal, state,

and local agencies are invited to file

comments on the described application.

A copy of the application may be

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obtained by agencies directly from the

Applicant. If an agency does not file

comments within the time specified for

filing comments, it will be presumed to

have no comments. One copy of an

agency’s comments must also be sent to

the Applicant’s representatives.

q. Comments, protests and

interventions may be filed electronically

via the Internet in lieu of paper. See, 18

CFR 385.2001(a)(1)(iii) and the

instructions on the Commission’s Web

site at http://www.ferc.gov under the ‘‘eFiling’’ link.

Magalie R. Salas,

Secretary.

[FR Doc. E6–15812 Filed 9–26–06; 8:45 am]

BILLING CODE 6717–01–P

DEPARTMENT OF ENERGY

Federal Energy Regulatory

Commission

[Docket No. PL06–5–000]

Before Commissioners: Joseph T.

Kelliher, Chairman; Suedeen G. Kelly,

Marc Spitzer, Philip D. Moeller, and Jon

Wellinghoff; Settlements in

Hydropower Licensing Proceedings

Under Part I of the Federal Power Act;

Policy Statement on Hydropower

Licensing Settlements

Issued September 21, 2006.

1. Hydroelectric licensing proceedings

under Part I of the Federal Power Act

(FPA) are ulti-faceted and complex.

These proceedings involve the

balancing of many public interest

factors, as well as consideration of the

views of all interested groups and

individuals. Moreover, since the

physical design, environmental impact,

and history of every project is different,

each licensing proceeding is, to at least

some extent, unique.

2. Given this backdrop, the

Commission looks with great favor on

settlements in licensing cases. When

parties are able to reach settlements, it

can save time and money, avoid the

need for protracted litigation, promote

the development of positive

relationships among entities who may

be working together during the course of

a license term, and give the

Commission, as it acts on license and

exemption applications, a clear sense as

to the parties’ views on the issues

presented in each settled case.

3. At the same time, the Commission

cannot automatically accept all

settlements, or all provisions of

settlements. Section 10(a)(1) of the FPA

requires that the Commission determine

that any licensed project is best adapted

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to a comprehensive plan for improving

or developing a waterway or waterways

for the use or benefit of interstate or

foreign commerce, for the improvement

and utilization of waterpower

development, for the adequate

protection, mitigation, and

enhancement of fish and wildlife

(including related spawning grounds

and habitat), and for other beneficial

public uses, including irrigation, flood

control, water supply, and recreational

and other purposes referred to in section

4(e).1

4. Consequently, in reviewing

settlements, the Commission looks not

only to the wishes of the settling parties,

but also at the greater public interest,

and whether settlement proposals meet

the comprehensive development/equal

consideration standard. Because of the

requirements of Part I of the FPA, the

Commission’s review of hydropower

licensing settlements is often different

from that accorded to other settlements

presented to us, such as those in rate

cases. In the latter type of cases, the

Commission may accept settlements as

a whole, given that it has authority

under section 5 of the Natural Gas Act

and section 206 of the FPA to examine

at any time whether rates, charges,

rules, regulations, practices, or contracts

are unjust, unreasonable, unduly

discriminatory, or preferential. Because

section 6 of the FPA precludes revision

of hydropower licenses without the

licensee’s consent, it is necessary that

the Commission examine proposed

license conditions in detail before

approving them. The Commission does

include reopener provisions in

hydropower licenses, but these are only

exercised where environmental

conditions have significantly changed.

Were the Commission to assert a broad,

general authority to reopen any part of

a license during its term, equivalent to

the authority provided by sections 5 and

206, this would sharply undercut the

certainty sought by parties to licensing

proceedings. As a separate matter, the

Commission’s role in overseeing license

compliance makes it important that

license conditions be clear and

enforceable.

5. The Commission must also ensure

that its decisions on settlements, like all

decisions under the FPA, are supported

1 See 16 U.S.C. 803(a)(1) (2000). FPA section 4(e),

16 U.S.C. 797(e), provides, in pertinent part, that

the Commission, in addition to the power and

development purposes for which licenses are

issued, shall give equal consideration to the

purposes of energy conservation, the protection,

mitigation of damages to, and enhancement of, fish

and wildlife (including related spawning grounds

and habitat), the protection of recreational

opportunities, and the preservation of other aspects

of environmental quality.

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by substantial evidence.2 To support a

proposed license condition, then, it is

necessary for the parties to develop a

factual record that provides substantial

evidence to support the proposed

condition, and demonstrates how the

condition is related to project purposes

or to project effects. The settling parties

should provide the Commission with

record support showing a nexus

between the proposal and the impacts of

the project, as well as to project

purposes, and also explain how the

proposal will accomplish its stated

purpose.

6. In addition, proposed license

conditions must be enforceable. By way

of example, the Commission is

precluded by law from assessing

damages, so any condition that would

do so would be unenforceable. To the

extent that the Commission does not

adopt proposed conditions that it has no

jurisdiction to enforce, this does not

evidence general opposition to

settlements or to the settlement at hand,

but rather recognition that the

Commission can only exercise that

authority given it by Congress. Also, the

Commission has jurisdiction over only

its licensees, and therefore cannot

enforce any condition to the extent that

it purports to place responsibility on a

non-licensee. In addition, conditions

that do not clearly outline the licensee’s

responsibilities and establish the

parameters governing required actions

may be difficult or impossible to

enforce. However, as discussed below,

contracts that the Commission cannot

enforce may well be made enforceable

by other means, such as binding

arbitration, or resort to State or Federal

court.

7. It should be noted that the fact that

the Commission does not, whether as a

matter of law or policy, include certain

provisions in licenses does not mean

that they are precluded from being

included in a settlement. Settling parties

are free to enter into ‘‘off-license’’ or

‘‘side’’ agreements with respect to

matters that will not be included in a

license. However, the Commission has

no jurisdiction over such agreements

and their existence will carry no weight

in the Commission’s consideration of a

license application under the FPA.

8. Based on the foregoing, the logical

process for arriving at an acceptable

settlement is for the parties to undertake

the following steps:

• Use existing information and prelicense studies to determine the

environmental effects of the proposed

project.

• Based on this record, develop

appropriate environmental measures to

address those effects.

• Craft settlement provisions based

on the record and the proposed

measures, taking into account recent

Commission precedent.

• Prepare an explanation of the

settlement that will enable the

Commission to understand the parties’

intent and what in the record they

believe supports their proposals.3

9. We are aware that settling parties

have a strong interest in knowing in

advance which provisions of proposed

settlements are likely to be acceptable to

the Commission. Precedent can serve as

a very useful guide in this regard. If

parties engaged in settlement

discussions wish to obtain additional

guidance as to particular concepts or

proposed provisions, it may be useful to

seek the advice of Commission staff, by

requesting that staff either participate in

an advisory role in settlement

discussions or review proposed

settlements before they are filed with

the Commission. While Commission

staff cannot speak for the Commission

itself, staff will be able to give parties

the benefit of its experience, as well as

advice regarding recent Commission

actions. Advice from experienced staff,

coupled with careful reading of recent

Commission precedent, is the best way

to predict the Commission’s likely

reaction to particular provisions

proposed in settlement agreements.

10. At the same time, we recognize

the value of more general guidance.

Therefore, we have prepared this

document, in an attempt to elucidate

certain principles regarding settlements.

Some of the matters discussed below

have been dealt with in Commission

orders; others represent application of

the principles enunciated in those

orders. While we hope that this

document will be useful to parties

engaged in settlement negotiations, we

caution that the Commission will

review every case on its facts and make

in each instance the public interest

determination required by the FPA.

Thus, the statements in this document

represent guidance, but not a guarantee.

It may be that the facts of a particular

case dictate a different result from that

in a previous proceeding where a

similar issue arose, or that policy

changes over time.

11. Certain general types of issues

have arisen with some frequency over

2 See FPA section 313(b), 16 U.S.C. 825l (2000)

(‘‘[t]he finding of the Commission as to the facts, if

supported by substantial evidence, shall be

conclusive’’) (emphasis added).

3 In its regulations, the Commission has set forth

details concerning the content of settlements, and

the procedures relating to their filing. See 18 CFR

385.602 (2006).

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the last several years. The following

discussion outlines some principles

with respect to these issues, in the hope

of providing general principles that may

assist settling parties. In the last section

of this guidance, we list more specific

settlement provisions that have been of

concern. While individual cases are

cited throughout this document, this

guidance is not intended to be an

encyclopedic reference to all cases

involving settlements.

12. The following basic principles,

which are discussed in more detail

below, apply to the consideration of

measures proposed to be included as

conditions in project licenses:

• Measures must be based on

substantial evidence in the record of the

licensing proceeding.

• Measures must be consistent with

the law and enforceable. In particular,

measures must be within the

Commission’s jurisdiction.

• A relationship must be established

between a proposed measure and

project effects or purposes.

• Measures should be as narrow as

possible, with specific measures (e.g.,

installing riprap to prevent erosion)

preferred over general measures, such as

creation of an aquatic resource fund.

• Actions required under measures

should occur physically/geographically

as close as possible to the project.

• Measures must reserve the

Commission’s compliance authority, as

well as its authority to review and

modify as necessary proposed resource

or activity plans (for example, a

provision that a stakeholder committee

can determine new measures during the

license term should also provide that

the proposed measures be filed with the

Commission for its review,

modification, and approval).

Substantial Evidence

13. As noted above, the FPA provides

that the Commission’s determinations

will be upheld if they are supported by

substantial evidence. In consequence,

the Commission must have substantial

evidence to support its licensing

decisions. If parties want the

Commission to accept the terms of a

settlement, they must provide

substantial evidence to support the

measures they ask the Commission to

impose. Thus, for example, it would not

be sufficient to ask the Commission to

set a particular minimum instream flow

solely because the parties have

compromised on that number. Rather,

the parties would need to provide a

scientific explanation, supported by

facts in the record, of how that level of

flows meets the needs of affected

resources and how it is consistent with

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the comprehensive development of the

waterway. Similarly, if there is no

showing of harm of a fishery, the record

will not support a measure requiring the

mitigation of harm to fish species. See

Allegheny Energy Supply Company,

LLC, 109 FERC ¶ 61,028 at P 6 (2004);

see also City of Centralia, WA v. FERC,

213 F.3d 742 (D.C. Cir. 2000).

Lawful And Enforceable

14. A settlement provision that

extends beyond the Commission’s

jurisdiction to require or to enforce

cannot become a lawful term in a

Commission license. It would seem

axiomatic that proposed settlement

provisions and license conditions must

be consistent with law. Yet, in some

instances, settlements include

provisions that purport to extend the

Commission’s jurisdiction. It is

important for parties to bear in mind

that the bounds of the Commission’s

jurisdiction are established by law and

cannot be expanded through an order

implementing a settlement. Thus, the

Commission has jurisdiction only over

its licensees and cannot enforce the

provisions of a settlement against other

parties, such as Federal and State

agencies, or private parties. See, e.g.,

Avista Corporation, 93 FERC ¶ 61,116 at

61,329 (2000). Matters that are beyond

the Commission’s jurisdiction can be

resolved by parties in ‘‘off-license’’

agreements that will not be included in

a license, see, e.g., City of Seattle, WA,

75 FERC ¶ 61,319 at 62,014, n.6 (1996).

As another example, because the FPA

does not allow the Commission to

impose damages, a damages provision

may not properly be included in a

license. See, e.g. Consumers Power

Company, 68 FERC ¶ 61,077 at 61,378–

80 (1994). In addition, the Commission

cannot expand its own jurisdiction.

Thus, even if parties agree that a license

should include measures that are

outside of the Commission’s

jurisdiction—for example, a

requirement that a State agency manage

a wildlife refuge—the Commission

could not enforce the measures.

Dispute Resolution/Enforceability

15. Parties to settlements often agree

as to the form of dispute resolution they

will use during the license term.

Initially, the Commission declined to

include in licenses dispute resolution

provisions that purported to bind

parties other than the licensee, on the

ground that those provisions were

unenforceable, given that the

Commission had jurisdiction only over

its licensees. See, e.g., Avista

Corporation, 93 FERC ¶ 61,116 (2000).

The Commission later modified its

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policy, to the extent of deciding that it

would require licensees to comply with

settlement provisions of this kind, even

though it could only enforce them

against licensees. See Erie Boulevard

Hydropower, LP, 100 FERC ¶ 61,321 at

62,502 (2002). Parties who want such

provisions in licenses should bear in

mind, however, the limited nature of the

Commission’s enforcement authority in

such matters. Thus, for example, the

Commission could require a licensee to

comply with notice provisions or to

attend meetings required by a dispute

resolution provision. It could not

require a Federal or State resource

agency or a non-governmental entity to

do so.

Relationship to the Project

Comprehensive Development

16. As noted above, pursuant to Part

I of the FPA, the Commission is

required to license projects that best

result in the comprehensive

development of a waterway. In order to

determine whether proposed settlement

provisions or license conditions meet

this standard, it is necessary for the

Commission to determine to what extent

these proposals relate to project effects

or project purposes. This is easier to do

if the provisions in question call for

specific measures (rather than a general

expenditure of funds), if the measures

call for actions in the project vicinity,

and if the settling parties document how

the measures are tied to project effects

or purposes. Thus, it may be easy to

understand and explain how

construction of a campground or a boat

put-in at a project reservoir is tied to the

project purpose of recreation. It is

harder to draw that connection if, for

example, a settlement measure calls for

recreation facilities many miles above or

below the project, or for facilities, such

as a snowmobile trail, that may not have

an obvious connection to the project.

Similarly, it is more difficult to explain

how paying a dollar amount for future,

unspecified enhancements is tied to a

project purpose. As the Commission

explained in Virginia Electric Power

Company, 110 FERC ¶ 61,241 at P 11

(2005):

We * * * note with approval the fact that

the many measures required by the

settlement and the corresponding license

articles appear to call for activities related to

project impacts and purposes. It is our strong

preference that measures required in a

license be clearly tied to the project at issue.

We are sometimes troubled by settlements

which require measures, such as general

funds to be used for unspecified measures,

that are not tied to either project impacts or

purposes. In addition, we prefer measures

requiring specific actions (i.e., the licensee

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shall construct a fish hatchery) to those

mandating general actions whose effects are

unclear (i.e., the licensee shall contribute

$100,000 to support fisheries enhancements).

It is much easier for us to conclude that a

project proposal based on specific measures

is in the public interest, as opposed to one

made up in large part of measures whose

impacts we cannot truly assess. We also note

that we have a preference for mitigation or

enhancement measures that are located in the

vicinity of the project unless this is

impractical or unless substantially increased

overall project benefits can be realized from

adopting off-site measures.

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Project Purposes

17. Instances of orders concluding

that settlement measures were not

sufficiently tied to project purposes or

project effects include: Portland General

Electric Company, 107 FERC ¶ 61,158 at

P 21, n.21 (2004) (disposition of nonproject lands and of water rights);

PacificCorp, 105 FERC ¶ 61,237 at P

113, n.27 (2003) (portions of settlement

not relating to project operations or

environmental effects not included in

license); Pacific Gas and Electric

Company, 97 FERC ¶ 61,084 at 61,409–

10 (2001) (monitoring of water

temperature, flows, and meteorological

conditions in reservoirs and river

reaches within boundaries of upstream

project; investigating feasibility of, and

possibly making, modifications to

upstream project); Northern States

Power Company, 111 FERC ¶ 62,212 at

P 31 (2005) (recreation enhancement

measures outside project boundary that

did not provide access to project lands

or waters, where adequate access

already provided at project); PacifiCorp,

104 FERC ¶ 62,059 at P 28 (2003)

(provisions providing for recreation

enhancements outside project boundary,

and for sale of non-project lands);

USGen New England, 99 FERC ¶ 62,025

at 64,060–61 (2002) (partially rejecting

proposal for enhancement fund, to

extent fund would cover activities

outside project boundary, with no nexus

to project, or, in case of mitigation for

tax revenue impacts, beyond

Commission’s jurisdiction).

Recreation

18. Many settlements contain

provisions regarding recreation. As with

other settlement provisions, it is

important that parties base proposed

recreation provisions on record

evidence supporting the need for the

proposed facilities and that they link the

measures in question to the project.

Thus, if a settlement proposes

enhancements to campgrounds in the

project area, parties should explain how

those facilities are used in connection

with the project and demonstrate the

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need for the facilities. For example, if

data show that existing campgrounds

are not greatly used, it may be hard to

justify expanding them or adding new

campgrounds.

19. Given that a project is primarily a

water-based facility, it may not be hard

to conclude that construction of a boat

ramp, a fishing pier, or a hiking trail

along the reservoir perimeter could be

an appropriate environmental measure

that serves a project purpose, if the need

for that facility is established. These

facilities would enable the public to

better use the project lands and waters.

It may be more difficult to justify

recreation that is more remote from the

project site (as in a campground located

20 miles away from any project works).

Similarly, it may be hard to draw a

public interest connection between a

project and a recreation feature that

does not appear to be tied to the nature

of the project. For example, a

community near a project might

consider itself to be in need of a public

auditorium. It would be difficult to

justify inclusion of such a requirement

in a license, unless the parties could

demonstrate, not just why the proposed

measure is generally worthwhile, but,

more specifically, how it is linked to the

effects and purposes of the project. See

Wisconsin Public Service Corporation,

104 FERC ¶ 61,295 at P 32–33 (2003)

(noting, with respect to decision not to

require retention of certain recreation

facilities within project boundary that

environmental assessment had found

‘‘these facilities are not directly

associated with public recreational

access to project waters or facilities,’’

and concluding that facilities not

included ‘‘have [insufficient] nexus to

reservoir-based recreation and [similar

facilities] are found elsewhere in the

area.’’); Northern States Power

Company, 111 FERC ¶ 62,212 at P 31

(2005) (declining to include proposed

recreation measures in license where it

is unclear how measures address access

to project lands or waters and when

adequate recreational access provided

by existing facilities).

20. Two other matters that can arise

in connection with recreation facilities

are inclusion within the project

boundary and cost-sharing, both

discussed below. If the licensee is

expected to undertake measures

throughout the license term, such as

ongoing maintenance with respect to a

recreation facility that the Commission

has determined is necessary for project

purposes,—and the Commission

consequently will have ongoing

responsibility to ensure compliance—

the licensee may be required to include

the facility within the project boundary.

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As noted, this means that the licensee

will have to obtain sufficient rights with

respect to the facility to ensure that it

can comply with Commission

requirements, but it does not mean that

the licensee must obtain fee ownership.

With respect to cost-sharing, settlements

occasionally provide that the licensee

will share the costs of maintaining a

facility with a State or Federal agency

(often the entity that owns the facility,

such as a campground owned by the

U.S. Forest Service). Again as noted

below, if the Commission requires that

a facility be maintained, it can look only

to the licensee to do so. Thus, a license

condition must place responsibility for

completion of a measure on the

licensee. As noted above, any costsharing agreement may have to be a

matter of contract between the licensee

and the third party, but will not be

something that Commission staff will

recommend including in a license. See

Alcoa Power Generating, Inc., 110 FERC

¶ 61,056 at P 31 (2005) (finding that,

although licensee agreed with U.S.

Forest Service and State agencies to

share costs of recreation areas and

facilities, ultimate responsibility for

performance of license obligations must

be borne by licensee).

Specific Measures

Cost Caps

21. In some settlements, parties place

financial limits on the licensee’s

obligation to perform certain tasks (for

example, ‘‘the licensee shall build a

campsite at a cost of $10,000’’) or limit

the licensee’s obligation to the payment

of funds to a third party (for example,

‘‘the licensee shall pay $10,000 to the

State to construct a fishing pier), rather

than the performance of a particular

measure. As the Commission has made

clear, a licensee cannot satisfy the

obligation to perform certain tasks by a

simple payment to another party, nor

can the obligation be limited by a

particular dollar figure. The

Commission will take an independent

look at proposed measures and their

costs, to determine if the proposals are

reasonable. If a measure is required,

however, it will be because the

Commission has determined that the

measure is required to meet the FPA’s

comprehensive development standard.

In consequence, although the

Commission sometimes includes in

license articles spending caps that

parties have agreed to, it does so to

memorialize the intent of the parties,

but not to approve the limit. The

Commission expects the required

measure to be performed by the

licensee, even if the cost exceeds the

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agreed-upon cap. As the Commission

stated in Virginia Electric Power

Company,

[s]ettlements filed with us often include

specific dollar limitations (i.e., the licensee

shall build a fishing pier, at a cost of up to

$15,000), and we sometimes include those

limitations in license articles at the parties’

request, in an effort to revise proposed

articles as little as possible. It is important for

all entities involved in settlements to know,

however, that we consider the licensee’s

obligation to be to complete the measures

required by license articles, in the absence of

authorization from the Commission to the

contrary. Dollar figures agreed to by the

parties are not absolute limitations.

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110 FERC ¶ 61,241 at P 10 (2005). See

also New York Power Authority, 105

FERC ¶ 61,102 at P 66 (2003) (reserving

Commission’s right to amend agreedupon funding requirements to ensure

that project is operated in public

interest); Allete, Inc., 107 FERC ¶ 62,036

at P 26 (2004); City of Sturgis, Michigan,

105 FERC ¶ 62,132 at P 37 (2003);

Charter Township of Ypsilanti,

Michigan, 105 FERC ¶ 62,019 at P 39

(2003); PacifiCorp, 105 FERC ¶ 62,207

at P 27 (2005).

Cost Sharing

22. As noted, the Commission has no

jurisdiction over any party to a

hydroelectric licensing settlement other

than the licensee. Some settlements

include agreement that the licensee and

some other party will share the costs of

performing certain measures, such as an

agreement that the licensee and a State

and Federal agency will jointly manage

a recreation area. The Commission

cannot enforce such an agreement

against a non-licensee. Another problem

can arise if the agreement is premised

on the receipt of matching funds; that is,

the licensee won’t be expected to make

a payment unless another entity also

does so. As discussed in regard to cost

caps, if the Commission requires the

licensee to undertake a particular

measure, it will look to the licensee

alone for the performance of that

measure. See, e.g., Virginia Electric

Power Company, 106 FERC ¶ 62,245 at

P 44 (2004) (finding that, while

settlement provisions require licensee to

provide funds to agency for construction

and maintenance of facilities, licensee is

ultimately responsible for compliance

with license conditions); PacifiCorp,

105 FERC ¶ 62,207 at P 28 (2005)

(noting, with respect to settlement

provision requiring licensee to designate

environmental coordinator, that, while

licensee may hire others to perform

required measures, burden of

compliance rests with licensee). While

licensees and other parties are free to

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enter into cost-sharing side agreements,

including such provisions in a license is

problematic because the Commission

has no ability to enforce them.

23. Similarly, the parties may agree

that a third party will undertake a

certain task, and perhaps be paid by the

licensee to do so. For example, it might

be agreed that the licensee will pay a

State agency or a tribe to operate a fish

hatchery. If the Commission finds that

operation of the fish hatchery is

required for the comprehensive

development of the affected waterway,

it will not include in the license a

provision requiring the licensee to pay

another entity to operate the hatchery,

but rather will require the licensee to

operate the hatchery and leave to it how

to fulfill that obligation. See Portland

General Electric Company, 114 FERC

¶ 61,137 at P 11, 15 (2006). This is

because the Commission has

jurisdiction only over its licensee, and

thus cannot ensure that a measure will

be carried out unless ultimate

responsibility for doing so rests with the

licensee.

24. Settlement provisions requiring

licensees to pay for the salaries of

personnel who work for other entities,

such as a State wildlife biologist or a

law enforcement officer, also raise

several issues. First, as noted, the

Commission prefers concrete measures

with measurable requirements and

impacts such as ‘‘construct and operate

a fish hatchery’’ to more indefinite ones

such as ‘‘pay the salary of a State

fisheries biologist.’’ In addition, the

Commission has no way of assuring that

the hiring of personnel paid for by the

licensee will actually accomplish a

project purpose or ameliorate a project

effect. Again, this is why measures that

require specific, direct, on-the-ground

actions are preferable to more general

ones. It makes most sense for the license

to establish what measures a licensee

must perform, and for any settlement

between the licensee and third parties

regarding the performance of those

measures to be addressed in off-license

agreements.

Funds

25. As noted above, in order to

include a specific environmental

measure in a license, the Commission

needs to be able to conclude that the

measure relates to project impacts or

project purposes. This is why the

Commission has expressed a preference

for specific measures and that, where

possible, such measures be

implemented within the project

boundary or close to the project and the

area that it affects. An increasing

number of settlements include funds

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intended to cover the costs of measures

to be undertaken during the course of

the license term. The principles

enunciated above apply to consideration

of such funds.

26. For example, where the record

shows that a project has an impact on

certain aquatic species or could enhance

such species, it may be possible to

obtain Commission approval of a fund

that is designated for the purpose of

enhancing and mitigating impacts on

those species within the project vicinity,

such as a fund to pay for a set of

specified fishery habitat enhancements

within the project boundary, provided

that the licensee retains sufficient

control over the fund that the

Commission can ensure compliance

with the related license article and

ensure satisfaction of the underlying

project purposes supporting the fund.

As the ties between the proposed fund

and record evidence and project effects

and purposes become more tenuous, as

with a fund to undertake unspecified

fishery measures within the basin where

the project is located, the propriety of

the fund may increasingly come into

question. Thus, if the record does not

show that the project has an adverse

effect on fishery resources or does not

demonstrate that effective enhancement

measures can be undertaken in the

project vicinity, it may be more difficult

to justify inclusion of a fishery fund in

a license. Similarly, a fund that may be

used anywhere in a State or in a broad

geographic area may be less likely to be

recommended than one more closely

tied to the project. To the extent that

parties feel measures should be

undertaken beyond the project vicinity,

they should explain in detail why those

measures are related to project

purposes, why they cannot be carried

out at the project site, and why their

proposals would satisfy the

comprehensive development standard.

Physical Proximity

Project Boundaries

27. In the course of Commission

action on settlements, issues often arise

with respect to project boundaries.

Specifically, parties may be concerned

about what facilities need to be within

project boundaries, and what the impact

of such inclusion will be. Therefore, a

brief discussion of this issue may be

helpful.

28. Part I of the FPA directs the

Commission, when issuing a license for

a hydroelectric project, to require the

licensee to undertake appropriate

measures on behalf of both

developmental and non-developmental

public interest uses of the waterway,

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including fish, wildlife, and recreation.4

These requirements, as set forth in a

license, constitute the ‘‘project

purposes.’’

29. The Commission has regulatory

authority only over the licensee, and

thus can administer and enforce the

terms of the license only through the

licensee and the licensee’s property

rights. Standard license Article 5

requires the licensee to acquire and

retain all interests in non-Federal lands

and other property necessary or

appropriate to carry out project

purposes.5 The licensee may obtain

these property interests by contract or,

if necessary, by means of Federal

eminent domain pursuant to FPA

section 21.6

30. A licensee’s property interests can

range from fee simple to perpetual or

renewable leases, easements, and rightsof-way. Thus, title to lands within the

boundary can be owned by someone

other than the licensee, so long as the

licensee holds the necessary property

interests (e.g., flowage easements) and

permits (e.g., a Forest Service special

use permit) to carry out licensed project

purposes. The license covers only those

property interests held by the licensee;

each license with a project boundary

states (in an ordering paragraph) that

‘‘the project consists [inter alia] of (1)

All lands, to the extent of the licensee’s

interests in those lands, enclosed by the

project boundary shown by [a

designated exhibit] * * *.’’

31. If the Commission requires

additional control in order to

accomplish a project purpose, or

amends the license to expand or add a

project purpose, it can direct its licensee

4 As discussed earlier, FPA section 10(a)(1) sets

forth the standard by which the Commission acts

on hydropower license applications, and

incorporates by reference those public purposes set

forth in FPA section 4(e).

5 Standard Article 5 appears in what are called

‘‘L-Forms,’’ which are published at 54 FPC 1792–

1928 (1975) and are incorporated into project

licenses by an ordering paragraph. See 18 CFR 2.9

(2006). Article 5 states in pertinent part: ‘‘The

Licensee, within five years from the date of

issuance of the license, shall acquire title in fee or

the right to use in perpetuity all lands, other than

lands of the United States, necessary or appropriate

for the construction, maintenance, and operation of

the project. The Licensee or its successors and

assigns shall, during the period of the license, retain

the possession of all project property covered by the

license as issued or as later amended, including the

project area, the project works, and all franchises,

easements, water rights, and rights of occupancy

and use; and none of such properties shall be

voluntarily sold, leased, transferred, abandoned, or

otherwise disposed of without the prior written

approval of the Commission, except that the

Licensee may lease or otherwise dispose of interests

in project lands or property without specific written

approval of the Commission pursuant to the then

current regulations of the Commission * * *.’’

6 16 U.S.C. 814 (2000).

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to obtain any necessary additional

property rights, whether inside or

outside the existing project boundary,

and amend the boundary as appropriate.

See, e.g., Upper Peninsula Power

Company, 104 FERC ¶ 62,135 at P 72

(2003) (finding that, notwithstanding

settlement provision that licensee’s

obligation to develop buffer zone and

wildlife and land management plan

applied only to license-owned lands

within project boundary, obligation in

fact extended to all lands within

boundary). Conversely, if the

Commission determines that less land is

needed to meet project purposes, or if it

redefines project purposes, it can

remove land from the boundary. If the

Commission deletes a parcel of land

from the project and its boundary, the

Commission is placing that land outside

of its jurisdiction and regulatory reach.

See, e.g., Pacific Gas & Electric

Company, 102 FERC ¶ 61,309 at P 21;

56–61 (2003) (rejecting portion of land

management plan agreement that would

have removed from project boundaries

lands needed for project purposes).

Compare Wisconsin Public Service

Corporation, 104 FERC ¶ 61,295 at P 29–

38 (2003) (approving in part application

to amend project boundaries).

32. Project boundaries are used to

designate the geographic extent of the

lands, waters, works, and facilities that

the license identifies as comprising the

licensed project and for which the

licensee must hold the rights necessary

to carry out project purposes. The

establishment of a project boundary

makes it easier for the Commission, the

licensee, and other interested parties to

understand the geographic scope of a

project. All facilities, lands, and waters

needed to carry out project purposes

should be within the project boundary.

A project boundary does not change

property rights, nor does the

conveyance of a property right change a

project boundary.

33. To an extent, the Commission has

allowed an exception for lands and

waters on which a licensee is to carry

out one-time measures. For example, if

a licensee is required once to place

material in a stream in order to create

fish habitat, but is not required to

undertake other measures in that area

during the license term, the Commission

may not include that reach within the

project boundary. If, however, the

licensee is obligated to undertake

measures throughout the license term,

such as implementing an ongoing

habitat restoration plan, the

Commission may require that the

affected lands be included in the project

boundary. See, e.g., PacifiCorp, 105

FERC ¶ 61,237 at P 114 (2003) (noting

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that licensee would have to amend

project boundary to include lands

previously outside of project

boundaries, on which activities required

by license).

34. Thus, if settling parties have a

desire to include or exclude certain

lands, waters, or facilities within project

boundaries, they should examine

carefully the licensee’s obligations and

how the lands or facilities in question

relate to project purposes. If lands or

facilities are to be included within the

project boundary, there must be a

showing of how they are needed for

project purposes; if they are to be

excluded there must be a showing of

why they are not needed for those

purposes, or that the measures affecting

project lands or facilities are one-time

measures that will not require

Commission oversight throughout the

life of the license.

Roads

35. One specific instance in which

project boundary issues arise is roads.

Some settlements require licensees to

pay for the upkeep of roads leading to

the project or to specific project works,

such as recreation areas. Several issues

can arise with respect to such measures.

First, in order to decide whether a

license should include a requirement

that road activities be funded, the

Commission must determine that the

road is necessary for project purposes,

as with a road that is needed in order

to reach the powerhouse or a road that

is the only way to reach a project

recreation site. If the road merely passes

near the project and is used only

incidentally for project purposes, it may

not be appropriate to require the

licensee to maintain it. The Commission

must also be able to determine what part

of the road is needed for project

purposes. Thus, it will be appropriate to

develop license conditions covering

only the relevant portion of a long road

that at some point provides necessary

access to a project, rather than the entire

road.

36. Finally, if a road is deemed

necessary for project purposes such that

the licensee is required to undertake

ongoing activities with respect to the

road throughout the license term, the

Commission may require that the road

be included within the project

boundary, so that the Commission can

exercise its compliance jurisdiction to

ensure that the required activities take

place. As indicated above, inclusion of

a road or a portion of a road within a

project does not mean that the licensee

must obtain fee title to the road, only

that it must obtain sufficient rights, such

as an easement, a lease, or a right-of-

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way, to ensure that it can implement the

required measures. There are instances

in which road owners, such as towns,

counties, or the U.S. Forest Service,

have been reluctant to have roads

included within project boundaries.

Parties should consider this issue

carefully when deciding to what extent

they want the Commission to impose

ongoing obligations on licensees with

respect to roads.

Reserve Commission Authority

Commission Approval

37. As the agency charged with the

administration of hydropower licenses,

the Commission must approve

licensees’ post-licensing plans. That

authority cannot be ceded to other

entities. Thus, settlement conditions

that provide that the licensee must file

specified plans after obtaining the

approval of other parties, such as

resource agencies, tribes, or nongovernmental organizations, are

acceptable if they provide that the plans

will be filed with the Commission for its

approval, and that the Commission will

have the right to revise the plans as it

deems necessary. Provisions that

envision plans (or operational changes

outside of the parameters approved in

the license) being approved by other

entities but not the Commission are not

acceptable. In Virginia Electric Power

Company, the Commission stated that:

* * * we are pleased that the settling parties

were able to develop means for carrying out

the goals of the settlement in a manner

consistent with the Commission’s

responsibilities under the Federal Power Act.

For example, Article 411, which calls for a

bypassed reach flow release plan, requires

the licensee to develop the plan in

consultation with State and Federal resource

agencies, and then to file the plan for

Commission approval, with the explicit

understanding that the Commission may

require changes in the plan.

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110 FERC ¶ 61,241 at P 35.

38. Where, on the other hand, the

parties establish a mechanism that

purports to give the licensee and other

parties the ability to alter license terms

or obligations without first obtaining the

Commission’s approval, the

Commission has revised proposed

license articles to include its approval

authority. See New York Power

Authority, 105 FERC ¶ 61,102 at P 65

(2003) (modifying proposed license

articles to require Commission approval

of fishway plans).

Adaptive Management

39. Settlement provisions often

contemplate that adjustments to

measures required during the license

term will be based on information

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gleaned from ongoing monitoring or