Hydroelectric Licensing Under the Federal Power Act

Federal RegisterAug 25, 2003

Ask Donna

What actually matters in this document.

Text

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 2, 4, 5, 9, 16, 375 and 385

[Docket No. RM02-16-000; Order No. 2002]

Hydroelectric Licensing Under the Federal Power Act

July 23, 2003.

AGENCY:

Federal Energy Regulatory Commission.

ACTION:

Final rule.

SUMMARY:

The Federal Energy Regulatory Commission (Commission) is revising its regulations pertaining to hydroelectric licensing under the Federal Power Act. The revisions create a new licensing process in which a potential license applicant's pre-filing consultation and the Commission's scoping pursuant to the National Environmental Policy Act (NEPA) are conducted concurrently, rather than sequentially. The revised rules also provide for increased public participation in pre-filing consultation; development by the potential applicant of a Commission-approved study plan; better coordination between the Commission's processes, including NEPA document preparation, and those of Federal and state agencies with authority to require conditions for Commission-issued licenses; encouragement of informal resolution of study disagreements, followed by dispute resolution, and schedules and deadlines.

The traditional licensing process is being retained, and modified by increased public participation and additional time before an application for water quality certification must be filed. No changes are being made to the Alternative Licensing Process (ALP).

For a period of two years from the date of issuance of the new rule, potential license applicants will be permitted to elect to use the traditional or the integrated licensing process, or to request authorization to use the ALP. Thereafter, the integrated process will become the default, and Commission approval will be required to use the traditional process or the ALP.

Under the revised rules, a new part 5 will be added to Title 18 of the Code of Federal Regulations and 18 CFR parts 2, 4, 9, 16, 375, and 385 will be amended to implement the new procedures.

EFFECTIVE DATE:

The rule will become effective October 23, 2003.

FOR FURTHER INFORMATION CONTACT:

John Clements, Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, 202-502-8070.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction

II. Background

III. Discussion

A. Need for New Integrated Process Confirmed

B. Number of Processes

C. Pre-NOI Activity

1. Filing Date for NOI and PAD

2. Advance Notice

D. Process Selection

1. Default Process

2. Standard for Approval of Traditional Process

3. Timing Issues

E. Pre-Application Document

1. In General

2. PAD Contents, Format, and Distribution

a. Contents

b. Distribution

F. NEPA Scoping and Study Plan Development

1. In General

2. Study Criteria

a. General Comments

b. Criterion (2)

c. Criterion (3)

d. Criterion (5)

e. Criterion (7)

f. Proposed Additional Criteria

3. Progress and Study Reports and Additional Study Requests

a. Progress Reports and Initial and Updated Study Reports

b. Modified Study Requests

c. New Study Requests

d. Comments on Study Reports

G. Study Dispute Resolution Process

1. Informal Dispute Resolution

2. Formal Dispute Resolution—Subject Matter and Eligibility

3. Advisory Panel

a. Need for Panel

b. Panel Membership

c. Non-Member Participation

d. Technical Conference

e. Activities of the Advisory Panel

5. Timing Issues

6. Third Party Technical Expert

7. Multiple Panels and Multi-Issue Panels

8. Panel Recommendation

9. Director's Determination

10. Study Plan Implementation

H. Compliance with Study Plan

I. Other Uses for Dispute Resolution

J. Evidentiary Hearings

K. Draft License Application Replaced

1. Need for Draft Application

2. Contents of Draft Application

3. Preliminary Draft Terms and Conditions

L. License Applications

1. Contents

2. Post-Application Study Requests

M. Consultation and Coordination with States

1. General Comments

2. Timing of Water Quality Certification Application

3. Coastal Zone Management Act

N. Tribal Issues

1. Consultation Policy

2. Tribal Liaison

3. NHPA Section 106

4. Other Matters

O. Environmental Document Preparation

1. Cooperating Agencies Policy

2. NEPA Document Contents

3. Endangered Species Act Consultation

4. Fish and Wildlife Agency Recommendations

P. Time Frame for Integrated Process

Q. Settlement Agreements

1. Time Outs

2. Other Matters Pertaining to Settlements

R. Original License Applications

S. Competition for New Licenses

T. Summary of Changes to Integrated Process—Regulation Text

U. Changes to Traditional Process and ALP

1. Traditional Process—Public Participation

2. Traditional Process—Mandatory, Binding Dispute Resolution

3. Traditional Process—Other Recommendations

4. Streamlined Process for Small Projects

5. Draft Applicant-Prepared Environmental Analyses

6. ALP—Applicability of Dispute Resolution

V. Ancillary Matters

1. Intervention by Federal and State Agencies

2. Information Technology

3. Project Boundaries and Maps

4. Miscellaneous Filing Requirements

5. Technical Changes

W. Delegations of Authority

X. Critical Energy Infrastructure Information

1. Order No. 630

2. Conforming Rulemaking

3. CEII in the Integrated Process

Y. Transition Provisions

IV. Environmental Analysis

V. Regulatory Flexibility Act

VI. Information Collection Statement

VIII. Document Availability

Appendix

Before Commissioners:

Pat Wood, III, Chairman; William L. Massey, and Nora Mead Brownell.

I. Introduction

1. In this final rule, the Federal Energy Regulatory Commission (Commission) amends its regulations for licensing of hydroelectric power projects by establishing a new licensing process. The amendments are the culmination of efforts by the Commission, other Federal and state agencies, Indian tribes, licensees, and members of the public to develop a more efficient and timely licensing process, while ensuring that licenses provide appropriate resource protections required by the Federal Power Act (FPA) and other applicable laws.

2. The new licensing process is designed to create efficiencies by integrating a potential license applicant's pre-filing consultation with

the Commission's scoping pursuant to the National Environmental Policy Act (NEPA).

Highlights of this “integrated” process include:

42 U.S.C. 4321,

et seq.

• Increased assistance by Commission staff to the potential applicant and stakeholders during the development of a license application;

• Increased public participation in pre-filing consultation;

• Development by the potential applicant of a Commission-approved study plan;

• Opportunities for better coordination between the Commission's processes, including NEPA document preparation, and those of Federal and state agencies and Indian tribes with authority to require conditions for Commission-issued licenses;

• Encouragement of informal resolution of study disagreements, followed by study dispute resolution; and

• Issuance of public schedules.

3. In response to oral and written comments on the Notice of Proposed Rulemaking (NOPR),

public drafting workshops, and additional consultations with other Federal agencies, the following significant modifications have been made to the integrated process in the final rule:

68 FR 13988 (Mar. 21, 2003); IV FERC Stats. & Regs. ¶32,568 (Feb. 20, 2003).

• The content and distribution requirements for the Pre-Application Document (PAD) have been changed to make it less burdensome on potential applicants and easier for recipients to use;

• More time has been provided for potential applicants and participants to develop and informally resolve differences concerning study needs;

• A technical conference open to all participants has been added to the formal dispute resolution process;

• The draft license application has been replaced by a less burdensome “Preliminary Licensing Proposal”;

• The deadline for filing a water quality certification application has been extended to 60 days after the ready for environmental analysis notice;

• The integrated process will become the default process in two years; in the interim license applicants may choose the integrated process or the traditional process as it is currently constituted; and

• We are withdrawing our proposal to permit a cooperating agency for NEPA document preparation to also intervene in the relevant proceeding.

We believe that the changes we are adopting will significantly improve the integrated licensing process.

4. We also proposed in the NOPR to modify the traditional process by increasing public participation in pre-filing consultation, adding mandatory, binding dispute resolution, and extending the deadline for filing an application for water quality certification. We have decided not to include mandatory, binding pre-filing dispute resolution, but are adopting the other proposals.

For the convenience of commenters on the proposed rule, a redline/strikeout version of the affected regulatory text will be posted on the hydroelectric page of the Commission's website.

5. To improve consultation with Indian tribes, we are establishing the position of tribal liaison, providing in the regulations for a meeting between the Commission and interested Indian tribes at the beginning of the licensing process, and issuing simultaneously with this final rule a Tribal Consultation Policy applicable to the hydroelectric, gas, and electric programs.

6. No changes will be made to the alternative licensing procedures (ALP).

7. The Commission appreciates the active participation and thoughtful comments provided by the industry representatives, Federal and state resource agencies, Indian tribes, and members of the public in this proceeding. We believe the provisions of the final rule, discussed below, fully take into consideration the interests of all of the stakeholders and will establish an integrated licensing process that serves the public interest.

II. Background

8. The background of this proceeding was set forth in detail in the NOPR, and need not be repeated here. Since the NOPR was issued on February 21, 2003, the Commission has held public and tribal regional workshops to hear and consider stakeholder concerns about the proposed rule, and to find stakeholder consensus on recommendations to resolve those concerns.

Written comments were due by April 21, 2003.

Thereafter, we held a four-day stakeholder drafting session from April 29, 2003 to May 2, 2003, at Commission headquarters. At the stakeholder drafting sessions, participants were divided into four groups: Studies, Overall Process, Dispute Resolution, and Tribal issues, with each group including members from all the major stakeholder groups. The goal of the drafting sessions was to develop consensus recommendations on final rule language.

The regional workshops were held in Portland, Oregon; Sacramento, California; Charlotte, North Carolina; Manchester, New Hampshire; Milwaukee, Wisconsin; and Washington, D.C.

Entities that filed comments in response to the NOPR are listed in the Appendix to the preamble. For administrative ease, the commenters' names are abbreviated in the preamble, as indicated on the Appendix. On April 21, 2003, the California Public Utilities Commission filed a notice of intervention. However, rulemaking proceedings do not have parties.

9. Following the drafting sessions, the Commission staff held additional discussion and drafting sessions with other Federal agencies before preparing the final rule.

III. Discussion

A. Need for New Integrated Process Confirmed

10. Many commenters commended the Commission for undertaking the rulemaking and indicated that the proposed integrated licensing process holds strong promise of accomplishing its objectives.

The commenters also provided hundreds of general and specific recommendations regarding how the proposed rule might be improved. After careful review of these comments, we affirm the need for the proposed rule and conclude that we should finalize it with certain modifications discussed below.

Virginia DEQ, WGA, WPPD, Interior, PCWA, EPA, Advisory Council, VANR, WPPD, Alabama Power, AmRivers, PG&E, Long View, NHA.

11. A few commenters

question the need for an integrated process. They are not convinced that it will simplify matters or reduce the time needed for licensing, and think it is certain to be more expensive for license applicants. WPSR is disappointed that the rule does not resolve their concerns about the exercise by federal and state agencies of mandatory conditioning authority. WPSR adds that the integrated process will be overly burdensome for small projects and that the dispute resolution provisions and proposed change in the cooperating agencies policy unreasonably diminish the role of the applicant. SCE and Georgia DNR state that the objectives of the integrated process could be achieved by modifying the traditional process, the consensus-based ALP,

or both.

These concerns are addressed in the following pages.

SCE, NEU, Xcel, Georgia DNR

See

18 CFR 4.34(i).

SCE's detailed recommendations for improvements to the traditional process are discussed in Section III.T.

Some commenters, such as WPSR, state that the rulemaking should have focused on a perceived unreasonable exercise of authority by agencies with mandatory conditioning authority. As we explained in the NOPR, this is a matter that should be addressed elsewhere.

12. We are committed to making the integrated process a success. Potential applicants who choose this process during the transition period may rest assured that the Commission will

dedicate the resources necessary to meet our goals for the process. To this end, the Office of Energy Projects has established outreach and training teams to promote the integrated process and educate participants in its implementation.

13. It is also our intention to conduct an effectiveness study of the integrated process in order to quantify the resulting reductions in processing time and costs.

B. Number of Processes

14. The NOPR proposed to retain both the traditional process and the ALP in light of comments by industry that a single process is not suitable for all projects and that the integrated process and ALP might be too time constrained or resource intensive for small projects. We also proposed to retain the ALP in light of its demonstrated track record of reducing license application processing times and fostering settlement agreements.

68 FR 13988 at p. 13991-992; IV FERC Stats. & Regs. ¶ 32,568 at pp. 34,698-699.

15. We discussed the concerns of environmental groups, and some agencies and Indian tribes, that multiple processes would confuse participants with modest resources, particularly those that rely on volunteers. We concluded that the benefits of having different processes that can be applied to differing circumstances outweighs this concern. We also proposed to require any potential applicant wishing to use the traditional process to obtain Commission authorization to do so, and to provide an opportunity for all stakeholders to comment on the request.

The requirement for a consensus to support approval of a request to use the ALP would be unchanged.

See

18 CFR 4.34(i).

16. Industry commenters and a few others continue to support retaining the traditional process and ALP. They state that flexibility is required by the diversity of project circumstances, issues, and stakeholders; the traditional process and ALP have both been shown to be effective under the right circumstances; the integrated process is too costly and labor-intensive for many small projects and for small stakeholders; and the integrated process is not suitable where stakeholders and the potential applicant are very polarized. They add that the integrated process is untested and that the traditional process needs to be retained as a backstop if an ALP or the integrated process break down.

NHA, Idaho Power, EEI, WUWC, SCE, Alabama Power, NEU, WPPD, WPSC, Snohomish, CSWC, FWS, CHI, Maryland DNR, Minnesota DNR. NF Rancheria states that the rules should clarify what would happen if the ALP or integrated process break down, and that any change of process should consider impacts to participants other than the potential applicant.

17. Agency and non-governmental organization (NGO) commenters continue overwhelmingly to favor one integrated process sufficiently flexible to accommodate the diverse circumstances of license applications. They, along with SCE, reiterate that the existing two processes are already confusing, making participants unclear about their rights and duties, and making it difficult for parties with few human and financial resources to effectively participate. A third process, they say, will make matters worse. Some also question the logic of retaining a traditional process which they say stakeholders agree does not achieve the goals of the integrated process.

Several note that one process would obviate the need for time in the process to comment on the potential applicant's process proposal.

MDEP, HRC, CRITFC, Nez Perce.

Wisconsin DNR, PFMC, CHRC, Whitewater, SC League, IRU, Interior, CRITFC, RAW, Georgia DNR, HRC.

18. California adds that there is no reason to retain the traditional process because the information requirements and scope and level of analysis are essentially the same as those of the integrated process, so costs should be similar; that polarization is irrelevant if both processes have mandatory, binding study dispute resolution; and project size is no indicator that the issues will be relatively simple or few.

19. SCE also asserts that the revised traditional process, if supplemented by the PAD, more early identification of issues and study design, study request criteria, and study dispute resolution, would differ from the integrated process and the ALP only with respect to the timing of NEPA process. This, says SCE, would make the integrated process needless, so the Commission should just make appropriate modifications to the traditional process.

20. Upon review of the comments, we remain convinced that having three processes is the most effective means of ensuring that the licensing process used is suited to the circumstances of the project, consistent with our intention to reduce the time required for the process without sacrificing resource protection standards. The process selection for each licensing proceeding will be made at the outset, so stakeholders should not be confused about which process they are in. We designed the integrated process to show the steps clearly in sequence from beginning to end and to be as self-contained (

i.e.

, with a minimum of cross-referencing to parts 4 and 16) as is practicable. To the extent stakeholders are concerned about process ambiguities in the ALP, they can negotiate the terms of participation. The Commission staff also stands ready to assist in clearing up any remaining ambiguities about what the regulations may require.

21. We also disagree with those who imply that the traditional process never works well. About one third of traditional license process proceedings are concluded before the existing license expires. The most common reason for delay in the remaining cases is lack of state water quality certification. As discussed below,

the integrated licensing process addresses this by providing opportunities and inducements for water quality certification agencies and tribes to participate from the beginning of pre-filing consultation.

See

Sections III.F, G, and M.2.

22. Some commenters recommend that we consider establishing a sunset provision to eliminate or phase out the traditional process, ALP, or both when the integrated process has become sufficiently established and fine-tuned in light of experience.

We agree this idea may have merit. It is our intention to conduct an ongoing review of the progress being made in realizing the goals of the integrated process. If it becomes clear in the future that the integrated process is substantially meeting these goals and the traditional process is not, then it may be appropriate to eliminate the traditional process at that time.

HRC, AmRivers, Washington, RAW, AMC, NPS, Georgia DNR.

C. Pre-NOI Activity

1. Filing Date for NOI and PAD

23. In the NOPR we rejected California's recommendation that the regulations be modified to move the deadline date for the notification of intent to seek a license (NOI) forward to 6.5 years before license expiration because it would be inconsistent with our goal of developing a more timely process. We stated that in the great majority of cases, a license applicant should be able to complete the pre-filing aspects of the integrated process in the three and one-half year period provided for in the regulations.

68 FR 13988 at pp. 13992-993; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,701.

24. Several commenters request that we reconsider our position, and specifically authorize licensees to voluntarily issue the NOI and circulate

the PAD prior to 5.5 years before license expiration.

They reiterate that the FPA requires only that the NOI be filed no later than five years before the license expires and that some cases simply take longer. They cite the diversity of stakeholder interests, development of complex study plans, and unpreventable gaps between approval of a study plan and commencement of studies owing to seasonal considerations and the time needed to negotiate contracts with consultants. They state that adding three to six months at the front end will, in many cases, permit an additional field season of studies before the application deadline, thus increasing the likelihood that the application will be complete when filed. They stress that the goal should be to conclude the licensing proceeding and put into place improved terms and conditions before an existing license expires, and that maintaining an unrealistic time frame for commencing the process will result in the continued issuance of unnecessary annual licenses.

California, Long View, MWH, PG&E, VANR, MHW, NOAA Fisheries, Process Group. VANR states that the NOI deadline date should be moved to six years before the license expires.

PG&E adds that in Order No. 513, Hydroelectric Licensing Regulations under the Federal Power Act, 54 FR at p. 31384 (June 2, 1989), FERC Stats. & Regs., Regulations Preambles 1986-1990 ¶ 30,854 (May 17, 1989), which promulgated the existing time frame for filing the NOI, the Commission specifically encouraged pre-NOI consultation. The rule we are promulgating today does not discourage pre-NOI activity. Indeed, the PAD cannot be prepared without it. Rather, we are declining to require provisions that could be construed to require or encourage consultation before the NOI is filed.

25. NHA and Longview suggest that an alternative would be to permit the applicant to issue the PAD before the earliest date the NOI can be filed if resource agencies and stakeholders approve. They state however that this is much less desirable because stakeholders could decline to participate before the NOI is filed, forcing the potential applicant to repeat steps already completed with some stakeholders after the NOI is filed.

26. These advocates of commencing the licensing process before the NOI is issued are correct that some proceedings will exceed 5.5 years, notwithstanding the best efforts of all participants. They base their comments however on experience under the traditional process, which lacks the crucial features of the integrated process designed to minimize delays. If all stakeholders work together in good faith, the integrated process should minimize the number of instances where a new license application proceeding cannot be concluded before the existing license expires by integrating pre-filing consultation and development of the Commission's NEPA document and resolving study disputes early in the process.

2. Advance Notice

27. In the NOPR we proposed to issue to licensees an advance notice of license expiration. This would be done sufficiently in advance of the NOI deadline date to ensure that the existing licensee is alerted to the requirements for the NOI, PAD, and any potential request to use the traditional process or ALP. We noted that because the advance notice is an administrative action which requires no action on the part of any other entity, and which will be undertaken regardless of the process selected, there is no need to include this action in the regulations.

68 FR at pp. 13992-993; IV FERC Stats. & Regs. ¶ 32,568 at pp. 34,700-701.

28. Some commenters state that the advance notice should be included in the regulations because it notifies stakeholders as well as the existing licensee. Barring that, some request publication of a written policy on when the notice will be issued and its contents.

Suggestions in this regard include reminding the licensee that seasonal study considerations may be relevant to timely application development

and giving directions to contact resource agencies and assemble a list of entities to be consulted and potential issues to address.

CHRC and Whitewater similarly recommend that the Commission issue public notice when the advance notice is issued.

NOAA, HRC, NHA, NEU, CRITFC, Interior, SCE.

PG&E.

Wisconsin DNR.

29. There is no need to put the advance notice in the regulations. The Commission has for many years published in its annual report and annually in the

Federal Register

a table showing the projects for which the license will expire during the succeeding six years and providing essential information about each project's physical and geographical characteristics.

The Commission's annual report is posted on the Commission's Web site.

See

18 CFR 16.3.

30. A written policy on the content of the notice would be superfluous. As stated above, the purpose of the notice is to alert licensees to the requirements for the NOI, PAD, and any potential request to use the traditional process or ALP. These requirements are found in the regulations.

31. Recommendations for when the advance notice should be made range from one to three years before the NOI deadline date.

We intend to issue the notice approximately 1.5 years before the NOI deadline date. This should provide adequate time for existing licensees to make decisions concerning process selection and to gather existing information for the PAD.

Wisconsin DNR, SCE.

D. Process Selection

1. Default Process

32. The NOPR proposed to make the integrated process the default process. A potential applicant would have to request Commission approval to use the traditional process or ALP when it files the NOI and PAD.

68 FR at pp. 13992, 14009; IV FERC Stats. & Regs. ¶ 32,568 at pp. 34,699, 34,730.

33. Licensee commenters question the need for a default process and Commission approval of the potential applicant's choice of the integrated and traditional process.

PG&E, SCE, and WUWC state that no rationale has been offered for eliminating the applicant's existing right to choose the traditional process and others say that applicants should not have to show good cause to use the traditional process because it has been tested and shown to be effective in many cases.

Licensee commenters also emphasize that the integrated process is untested, and that the ALP was formally adopted by the Commission only after several years of case-by-case experience based on requests for waiver of the of the traditional process requirements.

Troutman, Snohomish, WPPD, Idaho Power, EEI, Alabama Power, Xcel, NEU, WUWC, SCE, NHA. No commenter appears to advocate a change in the requirements for use of the ALP, and the Process Group at the drafting sessions agreed that the existing criteria are satisfactory.

WUWC, Snohomish, EEI, SCE.

34. WPPD suggests that stakeholders will threaten to withhold support for the applicant's potential process proposal in order to pressure potential applicants into making other procedural or substantive concessions, and that there would be more certainty if potential applicants had unfettered process choice.

35. Several licensees state that the potential applicant has the most knowledge of the complexity, level of stakeholder involvement, and the resources available to itself and others, so the Commission should defer to its judgment.

Other reasons offered in support of applicant choice are that the applicant bears the cost of the process, a lack of choice will inhibit

commitment of the potential applicant to the success of the process, and the cooperation of stakeholders can be achieved without Commission approval.

NHA, EEI, SCE, Long View, PG&E, B&B.

NHA, EEI, SCE, Long View, PG&E, B&B, M&H.

36. Several of these commenters suggest that if the integrated process is to be made the default, that it be done only after a 5-6 year test period, during which there would be a presumption that the applicant's choice is appropriate. If the potential applicant chooses the traditional process, proponents of the integrated process would have the burden of showing that the integrated process would be significantly better or significantly disadvantage non-applicant stakeholders. If, at the end of this period, the integrated process appeared successful, it would be made the default process, with any modifications needed in light of experience.

In this regard, AEP and GKRSE state that the goal should be to use the process that is likely to yield the best results, procedurally, economically and environmentally, and that if the integrated process appears to satisfy this goal, potential applicants and stakeholders will use it.

NHA, Long View, PG&E, B&B.

37. A few industry commenters assert that the traditional process, either in its current form or with the proposed modifications, should be the default because it has been tested by years of experience and is satisfactory in most cases.

They add that it works best for small projects, which are a substantial portion of licensed projects.

Xcel, WPSR, Alabama Power. Other industry commenters, while not recommending the traditional process as a default, also assert that it generally works well. GKRSC, AEP, CHI, Long View, Consumers, WPSC.

Approximately half of Commission-licensed projects are 5 MW or less.

38. Several non-industry commenters favor making the integrated process the default with the potential applicant's choice requiring Commission approval.

The Minnesota DNR, while not apparently objecting to the integrated process as the default, states that there should also be a means for other entities to oppose an applicant's election to use the default process.

RAW, ADK, CHRC, Whitewater, SC League, IRU, California, AmRivers. PFMC recommends that approval of the applicant's process proposal should remain with the full Commission, rather than be delegated to the Director of the Office of Energy Projects. California states that an applicant may show good cause to use the traditional process, yet other reasons may exist to deny the request, so the regulation should read “may” approve, instead of “shall.” Any good cause determination will take account of any objections raised by commenters.

39. We continue to think the integrated process should be the default because it addresses as fully as we can within the confines of the statutory scheme the problems that participants in licensing from every perspective have identified with the traditional process. It merges pre-filing consultation and the NEPA process, brings finality to pre-filing study disputes, and maximizes the opportunity for the Federal and state agencies to coordinate their respective processes.

40. The best means of gaining acceptance for the integrated process however is to demonstrate that it works. We agree with commenters that some period of transition is appropriate. Accordingly, we have decided that the integrated process should become the default process on July 23, 2005. During this two year period, potential license applicants will be able to select the integrated process or the traditional process as it currently exists, or request authorization to use the ALP. At the end of the two-year period, the integrated process will become the default process, and potential applicants will have to obtain approval to use the traditional process.

41. We disagree with those who believe we should defer to the potential applicant's process choice on the ground that it has the most relevant knowledge. The comprehensive development standard of the FPA requires us to consider all issues pertaining to the public interest and establishes important roles and responsibilities for other federal and state agencies. We also have a trust responsibility to Indian tribes. The appropriate process must be selected with the interests of these entities and other members of the public, not simply those of the potential applicant, in mind.

2. Standard for Approval of Traditional Process

42. The NOPR proposed to grant requests to use the traditional process upon a showing of “good cause.”

Several commenters state that this standard should be replaced by specified criteria, or at least that certain factors should be considered before the Director acts on a request to use the traditional process.

Alabama Power and WUWC, however, state that “good cause” is sufficient if construed liberally and with deference to the potential applicant.

Proposed 18 CFR 5.2(f)(5). The criteria for approval of the ALP would not change. Proposed 18 CFR 5.2(f)(5) states that requests to use the traditional process or ALP will be granted “for good cause shown.” NHA asserts that the good cause standard is something new and unnecessary as applied to the ALP. While the regulatory text of 18 CFR part 4, from which the requirements for support of a request to use the ALP were transposed, do not explicitly state that a good cause standard applies, it should be obvious that good cause is the minimum standard for Commission approval of any authorization not subject to a more specific standard. We are merely making explicit what is plainly implicit.

Interior, PG&E, NF Rancheria, NPS, Washington, AmRivers, Wisconsin DNR, CHRC, Whitewater, NOAA Fisheries, HRC, SC League, TU, VANR, PFMC, AW/FLOW.

43. The recommended criteria predictably differ depending on whether they come from industry commenters or others. Industry commenters suggest that the traditional process should be readily approved for small projects with relatively few issues. This, they suggest, includes some or all of: a project operated in run-of-river mode; no substantial changes are proposed in operations or structures; there are no anadromous fish; generating capacity is modest; or the existing project boundary includes little or no land above the high water mark.

Other recommended criteria for approving the traditional process include where the potential applicant and stakeholders are too polarized to work well together;

if, all things considered, it appears likely that the licensing process can be completed before the license expires;

and the potential applicant thinks the integrated process would be too costly.

GKRSC, AEP, CHI, Long View, Consumers, WPSC.

NHA, Idaho Power, EEI, WUWC, SCE.

Consumers.

M&H.

44. Non-licensees contend that the bar for approval of the traditional process should be set high. Criteria for approval recommended by these commenters include: (1) A consensus favoring the traditional process;

(2) lack of opposition from any Federal or state agency;

(3) the public or resources affected by the project will benefit from using the traditional process compared to the integrated process;

(4) the traditional process will maximize coordination of all pertinent regulatory processes and more timely resolve potential disputes;

(5) it will be the most efficient process with the highest level of resource protection;

(6) the project does not have significant environmental impacts;

or (7) the

licensing is uncontroversial.

Others factors identified by Washington and American Rivers for consideration include the potential for time savings, benefits to the environment, and public participation needs.

CHRC, Interior, Whitewater, NOAA Fisheries, AmRivers.

HRC. HRC, consistent with its recommendation for one flexible process, would also apply these criteria to requests to use the ALP.

SC League, Wisconsin DNR.

TU, VANR.

PFMC, HRC.

NOAA Fisheries. California agrees that the bar for using the traditional process should be very

high, but makes no specific recommendations in this regard.

AW/FLOW.

Washington, AmRivers.

45. Regarding original license applications, Consumers contends that the traditional process is appropriate because there is likely to be little relevant data available, which will cause the information gathering and study period to be extended, which is incompatible with the compressed time frames of the integrated process. NOAA Fisheries states that the same circumstances cited by Consumers should bar an applicant from using the traditional process.

46. The Process Group agreed that the “good cause” standard is vague, but did not identify criteria that would favor or disfavor use of the traditional process. Instead, they identified various factors for the Director to consider in each case in light of the goal of a timely, well-informed decision that protects the public interest. These factors include:

• Project size;

• Characteristics of the river basin, including the presence or absence of other dams;

• The likely level of controversy, including disputes over studies;

• The level of involvement and interest by resource agencies, any expressed intent on their part to exercise applicable mandatory conditioning authority, and the anticipated resource issues, including ESA;

• Whether there are tribal issues;

• The physical characteristics of the project and known biological impacts of project operations;

• Stakeholder and tribal views on process choice;

• Resource constraints on Commission staff and participants;

• Reasonableness of project costs;

Also suggested by NF Rancheria and NPS.

Also suggested by Wisconsin DNR.

Also suggested by Washington and AmRivers.

Also suggested by Washington, AmRivers, and PG&E.

• Whether the potential applicant has a history of positive or negative relationships with stakeholders and Indian tribes; and

• The amount and usefulness of existing, relevant information.

47. Although there was general agreement in the Process Group about which factors should be considered, this does not reflect a consensus on how the factors should be considered. For instance, industry commenters tend to think small projects are better suited to the traditional process because they are likely to have fewer environmental impacts, be less controversial, and be less well able to bear the transaction costs of relicensing. Agencies, NGOs, and Indian tribes, tend to think project size is only coincidently related to environmental impacts and controversy, and view transaction costs as a cost of doing business and a much lower concern than development of a complete record and improvements in environmental protection.

48. This fundamental difference of viewpoints leads us to conclude that the Process Group approach, somewhat modified, is the most sensible approach to this issue. We conclude that five factors are most likely to bear on whether use of the traditional process is appropriate. These are: (1) Likelihood of timely license issuance; (2) complexity of the resource issues; (3) level of anticipated controversy; (4) the amount of available information and potential for significant disputes over studies, and (5) the relative cost of the traditional process compared to the integrated process. The more likely it appears from the participants' filings that an application will have relatively few issues, little controversy, can be expeditiously processed, and can be processed less expensively under the traditional process, the more likely the Commission is to approve such a request. In recognition of the uniqueness of licensing proceedings, participants who comment on requests to use the traditional process may identify other factors they think are pertinent to the proceeding in question.

See

18 CFR 5.3(d)(1). PFMC states that this decision should be made by the Commission rather than delegated to the Office Director.

3. Timing Issues

49. The NOPR proposed to require a potential applicant to serve a copy of its request, if any, to use the traditional process or ALP on all affected resource agencies, Indian tribes, and members of the public likely to be interested in the proceeding, and to give appropriate newspaper notice to the general public. Responses would be due to the Commission within 15 days.

Proposed 18 CFR 5.1(f).

50. Many commenters respond that this is insufficient time to respond on a matter of such importance.

We agree that additional time may be appropriate for this step because it relies in part on newspaper notice and occurs at the commencement of the proceeding. Accordingly, we have increased the time allowed to respond to these requests to 30 days.

NPS, NYSDEC, Interior, AmRivers, Wisconsin DNR, Consumers.

E. Pre-Application Document

51. The NOPR concluded that NEPA scoping will be greatly assisted by the availability to the participants of as much relevant existing information as possible when scoping begins. To this end, we proposed to supplant the current requirements for existing licensees to make project information available to the public when the NOI is filed, and for all potential license applicants to provide an initial consultation document (ICD) to consulted entities during first stage consultation, with the PAD.

68 FR at pp. 13993-994; IV FERC Stats. & Regs. ¶ 32,568 at pp. 34,699, 34,730.

52. The PAD should include all engineering, economic, and environmental information relevant to licensing the project that is reasonably available when the NOI is filed. It is a tool for identifying issues and information needs, including NEPA scoping, developing study requests and study plans, and providing information for the Commission's NEPA document. The PAD would be a precursor to Exhibit E, the environmental exhibit in the license application. In the integrated process, the PAD would evolve directly into a new Exhibit E that has the form and contents of an applicant-prepared draft NEPA document.

See

proposed 18 CFR 5.16(b). Applicants using the traditional process would continue to use the existing Exhibit E in their license application, and applicants using the ALP could use the existing Exhibit E or file with their application in lieu thereof an applicant-prepared environmental analysis. As discussed in Section III.U.5, we are changing our policy to permit applicant using the traditional process to file an applicant-prepared environmental assessment.

53. The PAD proposal was widely supported, and many comments were received concerning the appropriate contents, format, and distribution requirements.

A great many specific recommendations regarding the detailed requirements of the PAD were filed. All of these have been considered, but it would be needless and impractical to discuss each comment individually.

1. In General

54. Industry commenters generally agree that the PAD is a good idea in principle, but that the requirements need to be significantly reduced to ensure that the contents are relevant to the licensing proceeding and useful to the participants. Some industry commenters believe the PAD requires significantly more information and a

higher level of effort than the existing public information and ICD requirements,

and suggest that the incremental burden on applicants is unnecessary.

Several commenters also indicate that much or all of the historical information currently required to be made available to the public is never requested and represents a needless burden and expense.

The initial consultation document is required by 18 CFR 4.38(b) and 16.8(b)(1). The public information requirement for existing licensees seeking a new license is at 18 CFR 16.7(d).

SCE, Alabama Power, NEU, Xcel, Consumers, Oroville.

PG&E, SCE, Consumers.

55. Consumers recommends that we allow any applicant that uses the traditional process to meet only the existing public information and ICD requirements instead of filing the PAD. NEU makes the same recommendation for existing projects of 5 MW or less. Consumers also recommends that information requirements be made flexible to accommodate different types of projects; for instance, some data that is useful for unconstructed projects greater than 5 MW may not be needed to evaluate a smaller existing project. MWH and WPSR similarly indicate the PAD requirements should be reduced for small projects because of the asserted connection between small projects with minor impacts.

56. Various industry commenters also seek affirmation or clarification of our intention that only existing information relevant to project impacts is required, and that the scope of and level of effort to obtain existing data should be commensurate with project impacts.

Consumers, Long View, MWH, WPSR, EEI, NHA, Xcel, NEU, SCE, CHI.

57. Resource agencies and NGOs support the PAD and state that a high quality PAD is essential to the success of the integrated process in light of the short time frames contemplated in the NOPR, and that an applicant's failure in this connection would interfere with the ability of other parties to timely and effectively participate in licensing.

VANR, WUWC, Interior, California, CHRC, Whitewater, SC League, IRU, NYSDEC, CSWRCB, Long View, HRC, AmRivers, SC League, Oregon, AMC.

58. California agencies and a few other commenters believe that the PAD contents should not be limited to existing information, but should include all information needed to evaluate potential effects of project operations, and that the applicant should be required to conduct whatever studies or information searches are necessary to fill in any gaps in the existing information before the PAD is filed. They assert generally that NEPA scoping cannot be done unless there already exists a complete baseline of existing environmental data, and suggest that existing licensees should have acquired such data during the term of the existing license.

CDWR, Cal A-G, CSWRCB, AMC.

59. HRC similarly states that the PAD should include a systematic discussion of the project's resource impacts, so that post-NOI information gathering and studies are minimal, even if that requires potential applicants to conduct environmental monitoring or original studies not required under the existing license.

60. Agency and NGO commenters generally recognize however that complete information on all resource impacts attributable to a project is unlikely to be available when the NOI is issued and the PAD is filed. These commenters recommend that potential applicants be subject to a due diligence standard with respect to obtaining existing information; that is, make a good faith effort to determine what relevant information is available and to obtain it.

CDFG, HRC. At least one licensee, PG&E, agrees that a due diligence standard is reasonable.

61. We agree that a due diligence standard will apply to the development of the PAD. The regulations we are adopting provide some guidance on what constitutes due diligence, but we are not able to provide a detailed definition. Rather, the determination of whether due diligence is exercised will have to be made on case-by-case basis.

2. PAD Contents, Format, and Distribution

a. Contents

62. There is a considerable gap between the industry and other commenters on the range and level of detail that should be required in the PAD. PG&E and Georgia Power for instance, suggest that instead of specific requirements, the content requirements should be stated as broad subject matter categories, with information required to the extent reasonably known, available, and applicable. Troutman similarly recommends that specific requirements in the regulations be replaced by a policy statement or guidance document from which applicants would determine what information is relevant and appropriate.

63. In contrast, agencies and NGOs generally prefer explicit and detailed requirements. For example, Wisconsin DNR and VANR recommend that the PAD include the original license order and all amendment orders and management plans; any document that explains the existing license requirements; a layman's summary of all of the license and management plan requirements; and a list of every entity consulted by the potential applicant prior to filing the NOI and the issues those entities raised. Another recommendation is that the PAD include study plans for restoration of essential fish habitat; data needed for water quality certification; information on cumulative environmental impacts throughout the river basin; and studies of fish passage conditions and plans for improvements thereto, including restoration of historic fish habitat. CHRC states that flow data should be provided on the finest available scale, even to daily or hourly flow for the entire historical record.

64. HRC suggests that licensee compliance with the requirements can best be ensured by having the Commission evaluate whether the PAD meets certain standards for completeness and commiting to taking measures to enforce compliance with the standards beyond finding that an application is deficient. These might include requiring the applicant to file a revised PAD before the proceeding continues, and interim environmental measures in annual licenses, or civil penalties.

65. Because these disagreements relate to how the document is formatted and distributed, we will defer their resolution to the conclusion of the following section concerning those matters.

b. Distribution

66. Several industry commenters made recommendations with respect to the format and distribution requirements for the PAD.

NHA proposes that the PAD be reformatted, some of the content requirements be deferred to the license application, and the distribution requirements modified. The PAD itself would contain basic information about the licensee, project description and existing and proposed operations, a general description of the river basin, including pertinent information about land use, other dams, and management plans, a discussion of environmental impacts based on existing information, a list of issues in the form of a scoping document, and a plan and schedule for pre-application activities.

Exhibits showing project structures and features, historical information on amendments,

compliance, and generation, and information pertaining to dam and project safety would be located in the potential applicant's project files and would be provided to anyone who requested it at a reasonable cost of production.

Distribution of other generally uncontroversial information would be deferred until the license application is filed.

NHA contends that these changes would reduce the burden on applicants, make the document better suited to its purpose, and make it more accessible to stakeholders. Georgia Power and Duke support NHA's proposal.

Duke, PG&E, Troutman, WPPD, Xcel, CHI, Sullivan, NHA, SCE.

See

proposed 18 CFR 5.4(c)(2)(A)-(B), (D)-(G), (J) and (P).

See

proposed 18 CFR 5.4(c)(2)(H), (I), (K), and (L). NHA adds that critical energy infrastructure information (CEII) would be viewable only at the potential applicant's offices. CEII is discussed in Section III. X below.

See

proposed 18 CFR 5.4(c)(2) (M) and (O), and (G)(xi).

67. NHA's concerns are shared and the essence of its proposal supported by many licensees. They acknowledge the importance of explaining the current license requirements based on the original license and any amendments, existing management plans, and other requirements, but state that the expense of producing, packaging and distributing the underlying licensing documents and existing studies to many recipients will be burdensome in general and enormous in some cases. They say that study results are generally useful only to a few stakeholders with appropriate expertise, such as resource agencies. The common thread of these comments is that general information about existing project facilities and operations would be broadly distributed, while more detailed information would be identified and made available on request, via the internet or another means of distribution.

PG&E, Suloway, Normandeau, M&H, Consumers, Long View, Reliant, AEP, Oroville, SCE.

68. SCE has a somewhat different proposal. It recommends that the PAD be limited to: (1) A general description of the project, similar to existing Exhibit A;

(2) monthly energy data for the prior five years;

(3) five years of existing streamflow data;

(4) a description of existing recreation facilities and use based on the most recent Form 80, and of the applicant's policies, if any, with respect to management of project lands and waters; (5) a single line diagram showing the electrical path between all project components; (6) existing and available environmental data obtainable from resource agencies or in the applicant's possession.

See e.g.

, 18 CFR 4.41(b).

SCE states that licensee's methods of maintaining information on dependable capacity are not consistent and would therefore be misleading if required to be included. At the least, SCE suggests, the term should be defined if it is required to be reported.

SCE does not specify how the required information would be reported; for instance the vintage of the data or its periodicity (

e.g.

, hourly, daily, monthly).

SCE's rewrite of proposed 18 CFR 5.4 is at pp. 8-18 of its comments. SCE would also have us put language in the regulations encouraging agencies to cooperate in the development of the PAD by providing available environmental data to the applicant. Given the concerns expressed by agency commenters about the potential for an incomplete PAD and, in general, the importance of a quality evidentiary record, we think agencies and other potential participants have sufficient incentive to assist potential applicants in this regard.

69. Long View and Xcel recommend that the PAD have the same format as license application requirements for the classification of the project;

e.g.

, major unconstructed project, major project-existing dam, or major water power project-5 megawatts or less, with the gaps to be filled in as the prefiling consultation and information gathering process proceeds.

Long View, Xcel.

70. Agency and NGO commenters appear to be less concerned with the format of the document than with its contents. They generally contend that the range of data and level of detail set forth in the NOPR should be affirmed in the final rule.

71. WPSR opposes having to provide the PAD at all. It recommends instead that the existing requirement to make public information viewable by the public in various locations, such as company headquarters and public libraries, be retained.

72. AW/FLOW states that internet or CD distribution is good in theory, but that people attending meetings generally have paper, so this means of distribution would unfairly force cash-strapped NGOs to bear the cost of printing materials.

73. The Documents Group agreed that it makes sense for a potential applicant to incorporate into the PAD by reference voluminous information such as raw data and existing studies. They agreed that the substantial effort and expense does not necessarily make the document more useful and may, owing to sheer volume, make it less useful. This information could be summarized in the relevant section of the PAD using appropriate methods. In addition, the PAD would contain an appendix describing all materials summarized in the text, and explaining how to obtain those materials from the potential applicant.

74. The Documents Group agreed that the goal is to target insofar as is practicable the needs of various stakeholders, agencies, and Indian tribes. To that end, the potential applicant would have to deliver the summarized information upon request to any agency, Indian tribe, NGO, or other stakeholder within 20 days of the request, in a mutually agreeable format that does not require conversion by the potential applicant from paper to an electronic format. Potential applicants would have to be able to deliver electronically formatted materials in a variety of formats.

75. We are adopting requirements for the PAD that substantially incorporate the recommendations of the Documents Group. The purpose of the PAD is to provide the Commission and the consulted entities with existing information relevant to the project proposal that is in the potential applicant's possession or that it can obtain with the exercise of due diligence. Distribution of the information will enable the consulted entities to identify issues and related information needs, develop study requests and study plans, and help the Commission to analyze any application that may be filed. We will not require a potential applicant to conduct studies in order to generate information for inclusion in the PAD. The basic content requirements will be a description of the existing and proposed project facilities and operations, a description of the existing environment, existing data or studies relevant to the existing environment, and any known and potential impacts of the proposed project on relevant resources.

76. A potential applicant will not be required to include all of the studies and information sources on which the descriptions in the PAD are based, but will be required to provide these materials upon request to recipients of the PAD. Potential applicants and participants in pre-filing consultation are encouraged to accomplish such distribution by electronic means, including compact disks, but a requester is entitled to receive such materials in hard copy form. The PAD will also be required to include a process plan and schedule, a preliminary issues and studies list, and an appendix summarizing any contacts with agencies, Indian tribes, and others in obtaining relevant information. We think that the foregoing format, content, and distribution provisions should result in PADs that serve the purpose for which this document is established and

reasonably balance the competing interests of the participants.

We cannot do away with the “library” requirement, as it is required by FPA Section 15(b)(2). In part 5, it appears at 18 CFR 5.2(a).

F. NEPA Scoping and Study Plan Development

1. In General

77. Most commenters support having a Commission-approved study plan in the integrated process,

but many request clarifications of or modifications to the proposed study plan development process. Only Idaho Power objects to this feature. It asserts that the current study planning and dispute resolution provisions generally work well, and are less costly and labor-intensive than what is included in the integrated process. We do not dispute that there are instances where the current study planning and dispute resolution processes are adequate. They undeniably contribute in many cases however to the undue length of the licensing process by deferring identification and resolution of fundamental issues about what information gathering and studies are necessary until after the application is filed. The integrated process is designed to eliminate that problem.

78. HRC requests that we affirm that the purpose of an approved study plan is to develop a record that allows for the adequate evaluation of reasonable alternatives to mitigate ongoing impacts to resources from project operations, and not to prejudge potential mitigation measures. The purpose of an approved study plan is to bring, to the extent possible, pre-filing finality to the issue of what information gathering and studies will be required by the Commission to provide a sound evidentiary basis on which the Commission and other participants in the process can make recommendations and provide terms and conditions. The study plan is developed in conjunction with NEPA scoping, and the latter inevitably involves judgments about which potential alternatives are reasonable to consider, and which alternatives will be eliminated from detailed consideration. It therefore follows that the Commission-approved study plan will reflect those determinations.

E.g.

, NYSDEC, S-P, California, Interior. S-P states that approved study plans are needed to ensure confidential treatment of tribal cultural practices. This matter is addressed in Section III.N.

79. Washington states that study requests should not be rejected merely because they do not employ generally accepted practices, because new methodologies or techniques may be appropriate in some cases. We agree. As noted elsewhere, with the exception of the establishment of a nexus between the study request and operation of the project, no one criteria establishes a “litmus test” for study requests.

80. Georgia DNR states that study plans should be project-specific and that the study criteria should not be interpreted so as to mandate standard form study plans. We agree. Although we would expect specific study plans for projects with features identical or similar to one another to have the same or similar components, every project is likely to have unique features that need to be accounted for in the development of the study plan.

81. NYSDEC states that the unique aspects of individual projects make extrapolated data acceptable, if at all, only if it is technically infeasible to produce site-specific data. We do not agree with blanket assertions of this nature. We agree with Oregon that the appropriateness of extrapolated data is a decision properly made on a case-by-case and issue-by-issue basis.

82. Under the proposed rule, the NEPA scoping meeting and site visit would be followed by an opportunity for participants to make comments and preliminary study requests before the potential applicant files its draft study plan.

Interior would insert after the comments and preliminary study requests a six-month period for the participants to negotiate a mutually agreeable study plan. Interior reasons that this might permit elimination of the following steps up to the potential applicant filing a revised study plan for approval,

and thereby minimize the need for formal dispute resolution, eliminating as much as 200 days from the pre-filing process. PG&E and SCE think the proposed study plan development process is weighted too heavily toward notice and comment and not enough toward interaction between the participants. PG&E and SCE would also like to see more time for the participants to resolve their study differences. The Process Group agreed in general with these commenters that there should be more time in the process for such interaction.

Proposed 18 CFR 5.5 and 5.6.

Interior refers to proposed 18 CFR 5.7 through 5.12.

83. As discussed below, we have modified the process to extend the time for participants to discuss the potential applicant's proposed study plan and to provide more flexibility concerning interactions during that period.

See

Section III.T below, and 18 CFR 5.12.

2. Study Criteria

84. The NOPR proposed that an information-gathering or study request be required to address seven criteria:

(1) Describe the goals and objectives of the study and the information to be obtained;

(2) If applicable, explain the relevant resource management goals of the agencies or Indian tribes with jurisdiction over the resource to be studied;

(3) If the requester is not a resource agency, explain any relevant public interest considerations in regard to the proposed study;

(4) Describe existing information concerning the subject of the study proposal, and the need for additional information;

(5) Explain any nexus between project operations and effects (direct, indirect, and/or cumulative) on the resource to be studied;

(6) Explain how any proposed study methodology (including any preferred data collection and analysis techniques, or objectively quantified information, and a schedule including appropriate field season(s) and the duration) is consistent with generally accepted practice in the scientific community or, as appropriate, considers relevant tribal values and knowledge;

(7) Describe considerations of cost and practicality, and why any proposed alternatives would not be sufficient to meet the stated information needs.

See

proposed 18 CFR 5.10.

a. General Comments

85. Commenters generally approved of the proposed study criteria subject to various recommendations for minor changes.

With the exception of issues concerning what consideration should be given to study costs, few had criterion-specific comments. Commenters also offered a variety of more general comments on how the study criteria should be applied. We consider the general comments first.

VANR, Normandeau, HRC, NHA, Long View, Duke, PG&E, Advisory Council, Oregon. In contrast to the broad expression of support from all stakeholder perspectives, Minnesota DNR states that Criteria (2), (5), (6), and (7) are either exceedingly general or unduly specific and speculates that they were designed to obstruct or limit resource agency study requests.

86. PG&E, SCE, and Duke request that we affirm in the preamble that the study criteria are not a check list; rather, they need to be considered as a whole, with each criterion addressed, and that no single criterion is determinative. The Studies Group agreed. We so stated in

the NOPR,

and affirm that statement here.

68 FR at p. 13995; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,705.

87. Long View states that the preamble should clarify that requesters' desires for information must be tempered by practical considerations of relevancy, the value of the information sought in the context of the proceeding, and the complexity and effort required to obtain the information. NHA states that requesters should be required to explain the merits of their requests in the context of the case and the FPA. We think a practical application of the proposed criteria, with the minor modifications we are making in this rule, should result in the adoption of study requests that have merit, and the exclusion of those that do not. As we stated in the NOPR, “the * * * criteria implicitly require that study requests not be frivolous and add some appreciable evidentiary value to the record.”

68 FR at p. 13996; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,706.

88. HRC asks us to clarify how ongoing environmental impacts will be considered in light of our policy that the baseline for environmental analysis is current conditions.

The study criteria should be applied in the same manner regardless of whether an impact from project operations on a resource is characterized as ongoing or otherwise. The requesting party would have to reasonably demonstrate the nexus between project operations and resource impacts and, in the context of addressing the other criteria, show how the proposed study reasonably relates to the development of potential mitigation or enhancement measures.

S-P and PFMC state that the environmental baseline for studies should be pre-project conditions. Georgia DNR states that pre-project baseline studies may be appropriate in some cases. SCE, Duke, and PG&E ask us to restate in the regulations our policy that the baseline is current conditions. We are not changing our well-established and judicially approved policy, and see no need for it to be written into our procedural regulations.

89. Duke wants us to emphasize that decisions on study requests will be consistent with Commission policy and practice. We think the regulation text is sufficiently clear in this regard.

See

18 CFR 5.14(l).

90. The Advisory Council states that it would be helpful to include a more complete definition of what cultural resources studies are needed. The Advisory Council makes no specific suggestions in this connection, and we continue to believe that the best forum for determining appropriate data needs and study requirements is in individual cases.

91. Oregon suggests, particularly in light of the time frames, that participants' study requests should only need to be general in nature, with the burden on potential applicants to produce detailed study plans. We disagree. As discussed below,

we have modified the process in response to comments by moving NEPA scoping, including the issuance of Scoping Document 1, to a place prior to the participants' submittal of their study requests. Under the revised process, these study requests should be as detailed as possible.

See

Section III.T and 18 CFR 5.8(c).

92. The NOPR states that judgment calls on study requests will be made “in light of the principle that the integrated licensing process should to the extent reasonably possible serve to establish an evidentiary record upon which the Commission and all agencies or Indian tribes with mandatory conditioning authority can carry out their responsibilities.”

Duke states that this is inconsistent with a prior order in which Duke asserts that the Commission stated that it will not require data that other agencies deem necessary to support the exercise of their mandatory conditioning authority. In fact, in the order cited by Duke,

Curtis/Palmer Hydroelectric Company LP and International Paper Company,

we merely restated our judicially affirmed position that the Commission has no statutory obligation to provide a record to support other agencies' decision making, or to require studies that it does not deem necessary to evaluate the public interest in light of the record evidence and argument provided by other parties.

The principle underlying the integrated process expressed above is not inconsistent with that position.

68 FR at p. 13995; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,705.

92 FERC ¶ 61,037 (2000).

92 FERC at p. 61,089.

93. No comments were filed on proposed criteria (1), (4), and (6). Comments on the other proposed criteria are considered below.

b. Criterion (2)

(2)

If applicable, explain the relevant resource management goals of the agencies or Indian tribes with jurisdiction over the resource to be studied.

94. NYSDEC states that the relationship of a study request to agency management goals should not be the sole or even the primary measure of the need for a study because agencies may request studies that do not relate directly to agency management objectives, but do relate to mandates established in law or regulation or derive from agency policy. A statement by an agency connecting its study request to a legal, regulatory, or policy mandate is, of course, entitled to appropriate consideration. Any requester should however appreciate that the more broadly stated the legal, regulatory, or policy mandate is, the more clearly the requester needs to explain how the mandate relates to the study request and, in turn, project impacts.

95. Massachusetts DER states that only a resource agency may appropriately determine what study requests apply to its management goals, so neither the Commission nor potential applicants should make determinations of applicability. As explained in the NOPR, the Commission does not intend to second guess the appropriateness or applicability of resource agency management goals.

A requesting agency is required however to establish the connection, if any, between its study request and its management goals. In the great majority of cases, the connection should be obvious.

68 FR at p. 13995; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,705.

c. Criterion (3)

(3)

If the requester is not a resource agency, explain any relevant public interest considerations in regard to the proposed study.

96. NYSDEC states that the requirement to explain relevant public interest considerations should also apply to agencies. It would be desirable for any entity requesting a study to explain how its study request relates to the public interest, but it should suffice for an agency requester to explain the connection of the study request to its resource management goals.

d. Criterion (5)

(5)

Explain any nexus between project operations and effects (direct, indirect, and/or cumulative) on the resource to be studied.

97. EEI requests us to state that a nexus between project operations and effects on the resource in question is a threshold requirement that must be demonstrated in every case.

This issue was discussed by the Studies Group, which agreed with EEI's request, as do we. Otherwise, the door would be open

to study requests having nothing to do with project impacts.

Duke and PG&E similarly state that the Commission should affirm that it will strictly apply this criterion.

Geosyntec appears to state that a requester should only have to show a nexus between the study request and an issue, rather than a nexus between a study request and the project. We think this is a distinction without a difference, because the impacts of the project on resources creates the issues, which in turn are the basis for study requests.

98. CHRC counters that a study might be required to establish the existence of a nexus. Taken to its extreme, CHRC's position would have us approving study proposals that amount to mere speculation. We think a common sense approach to demonstrating a nexus between project operations and resource impacts, informed by the professional judgment of qualified agency, Commission, and tribal staff, should ensure that this criterion is reasonably applied.

99. Oregon approaches the nexus issue from a different perspective; that is, if a nexus is demonstrated between project operations and resource impacts (

e.g.

, fish entrainment mortality), then related study requests must be approved. We do not agree. As stated above, the criteria are to be considered as a whole, in light of the circumstances of the individual proceeding, and any applicable Commission policies and practices.

100. NHA and PG&E also request that we add an additional criterion requiring requesters to describe how the information would be used in the proceeding in relation to resource management measures. This proposed criterion appears to be intended to elicit an explanation how the information could be used to develop protection, mitigation, or enhancement measures by the Commission or agencies with conditioning authority. The Studies Group discussed this matter and recommended that the following phrase be added to the end of Criterion (5): “and how study results would inform the development of license conditions.” We agree that this is an important aspect of study requests and are adopting the proposed modification.

e. Criterion (7)

(7)

Describe considerations of cost and practicality, and why any proposed alternatives would not be sufficient to meet the stated information needs.

See

proposed 18 CFR 5.10.

101. This proposed criterion received the most comments. Several state agencies state that resource agencies should not be required to provide detailed cost estimates of proposed studies because specific knowledge concerning study costs lies with applicants or their contractors. They contend that potential applicants should have the burden of addressing cost and practicality. They also add that this may be a difficult matter on which to reach a merits conclusion, because the value of the information developed is not always known until after a study is completed.

Georgia DNR, Minnesota DNR, NCWRC, PFBC, MPRB. MPRB would eliminate this criterion altogether on the ground that once a need for information is established, cost is irrelevant. We rejected such assertions in the NOPR. 68 FR at p. 13995; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,705.

102. NYSDEC states that the criterion should be modified to require a requester to address the proposed study's scope and level of effort. We conclude the proposed modification is not necessary because there is a built-in incentive for requesters to do so. It is implicit that cost and practicality can be addressed only to the extent the study request includes a description of the scope and level of effort. The less specificity a requester provides, the more difficult it will be to apply the criterion in its favor.

103. Finally, various Indian tribes and agencies state that where protection of tribal trust resources is at issue, the Commission's trust responsibility prohibits it from considering factors of cost and practicality, or that such factors are entitled to minimal weight. They state that the only applicable considerations are consistency with treaties, statutes, and case law defining obligations to protect the trust resources. Some add that the FPA requires the Commission to protect non-developmental resources, so matters of study cost and practicality are entitled under that Act to minimum weight.

As we stated in the NOPR, our responsibility to balance all aspects of the public interest with respect to any project proposal necessarily encompasses the exercise of independent judgment concerning the relative cost and value of obtaining information.

Menominee, Wisconsin DNR, MPRB, Interior, Skokomish.

68 FR at p. 13995; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,705.

104. The NOPR also discussed certain additional criteria proposed by NHA and SCE,

and requested comments on whether their proposed criterion (3) (“The cost of the study must be justified relative to the value of the incremental information provided”) or the Commission's proposed Criterion (7) more appropriately deals with the issue of study costs.

100

68 FR at pp. 13995-996; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,706.

100

68 FR at p. 13995; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,706.

105. Industry commenters preferred the NHA/SCE language because it requires a conclusion concerning whether the cost of the study is justified by the expected value of the information.

101

Agency and NGO commenters aver that the NHA/SCE language is more theoretical than practical and likely to cause more disputes than it prevents because the full value of a study cannot be known until it is completed. They add that any criterion that purports to measure study results against dollars is an apples to oranges comparison and prejudices everyone's interests but the applicant's. They therefore favor the Commission's Criterion (7).

102

Interior and MPRB state that scientific standards should be paramount. Interior adds that cost and practicality can be assessed by the proposed Advisory Panel, if the study request goes to dispute resolution.

101

NHA, Normandeau, WPPD, SCE, PFMC, EEI, NEU, Duke, PG&E, CSWC.

102

California, Oregon, HRC, NCWRC, Interior, MPRB.

106. California recommends that if Criterion (7) is not adopted, a better alternative than the NHA/SCE language would be to follow California's requirement that the burden of studies, including their costs, must bear a reasonable relationship to the need for the study and the benefits to be obtained therefrom. PG&E and NHA in their comments also attempt to find some middle ground by recommending that NHA/SCE criterion (3) be revised to require the requester to “Assess the relative value of the anticipated incremental information compared to the effort, including time and cost, required to obtain it.” There is clearly no agreement between the industry on the one hand, and agencies, Indian tribes, and NGOs on the other hand about how to consider cost and practicality.

107. The Studies Group considered this question at length and agreed that this criterion is not concerned solely with cost, but also generally with the level of effort the potential applicant should have to make to gather information or conduct studies with respect to an issue. They proposed to insert the words “and/or level of effort” after the word “cost” to reflect that agreement. After considering all the comments, we conclude Criterion (7), modified as recommended by the Studies Group, provides an appropriate basis for consideration of cost and

practicality in weighing the merits of any study request.

103

See

18 CFR 5.9(b)(7).

f. Proposed Additional Criteria

108. Various industry commenters recommend that we add a criterion requiring a requester to discuss whether or a not a resource problem has been identified that relates to the request.

104

This proposed criterion is too subjective. A principal feature of hydroelectric licensing in recent decades has been disagreements between license applicants and others concerning the extent to which proposed or existing projects have negative effects on natural and other resources. Whether an identified impact is or is not a problem, and the extent of the problem, are often matters of perspective. Moreover, the finding of a “problem” is not a required predicate for Commission action under the comprehensive development standard of FPA Section 10(a)(1). Rather, that standard contemplates license conditions for the “protection, mitigation, and

enhancement

” of fish and wildlife * * *, and for other beneficial public uses, including irrigation, flood control, water supply, and recreational and other resources.” [emphasis supplied]

105

104

PG&E, SCE, NHA, WPPD, EEI. Other additional criteria were suggested, which were considered above in the context of modifications to the existing proposed criteria.

105

16 U.S.C. 803(a)(1).

109. Normandeau suggests that we consider adding a criterion that requires a requester to address the effect the information gathering or study would have on timely completion of the overall process. Criterion (6) requires each proposed study to include a schedule, including appropriate field season(s) and the study duration, so all parties should be able to assess the potential effect of the request on the timeliness of the proceeding. The appropriate length of a proposed study will, of course, be a matter best determined in the context of the specific case.

110. Menominee recommends that we add a criterion to recognize study requests made in connection with the Federal government's trust responsibility to protect the resources of Indian tribes. This does not appear to be necessary because the relationship between a study request and the trust responsibility can be addressed in Criteria (2) or (6).

111. The study criteria, modified in accordance with the foregoing discussion and as set forth in the regulations we are adopting, are set forth here:

(1) Describe the goals and objectives of each study proposal and the information to be obtained;

(2) If applicable, explain the relevant resource management goals of the agencies or Indian tribe with jurisdiction over the resource to be studied;

(3) If the requester is a not resource agency, explain any relevant public interest considerations in regard to the proposed study;

(4) Describe existing information concerning the subject of the study proposal, and the need for additional information;

(5) Explain any nexus between project operations and effects (direct, indirect, and/or cumulative) on the resource to be studied, and how the study results would inform the development of license requirements;

(6) Explain how any proposed study methodology (including any preferred data collection and analysis techniques, or objectively quantified information, and a schedule including appropriate filed season(s) and the duration) is consistent with generally accepted practice in the scientific community or, as appropriate, considers relevant tribal values and knowledge; and

(7) Describe considerations of level of effort and cost, as applicable, and why any proposed alternative studies would not be sufficient to meet the stated information needs.

3. Progress and Study Reports and Additional Study Requests

a. Progress Reports and Initial and Updated Study Reports

112. The proposed rule would have required the potential applicant to file an initial status report with study results and analyses following the first season of studies, or at another appropriate time following the date of the study plan order. The report would be followed by a meeting with parties and Commission staff. The potential applicant would file a meeting summary and, if necessary, a request to modify the study plan and schedule. The request to modify the plan, if any, would be deemed approved unless any party filed a notice of disagreement. Disagreements would be resolved based on written submissions to the Director. Any request for new information or studies following the initial status report would have to address the study criteria and show good cause why the request should be approved.

106

Proposed 18 CFR 5.14 (Conduct of studies).

113. An updated status report would follow after a second season of studies or at another appropriate time. It would be subject to the same review, comment, and disagreement resolution procedures, except that any request for new information or studies must address the study criteria and show extraordinary circumstances why the request should be approved.

107

Id.

114. SCE states that this is unduly burdensome for all participants. It questions the practicality of one report at a specified time because of the likelihood of multiple studies conducted on different schedules, and states that preliminary results could lead participants to false conclusions. SCE also objects to sending study results to entities that have not previously requested to be involved in the issue under study. SCE and NHA would instead require the potential applicant to distribute a status report explaining actions taken to date, any unexpected findings, and a schedule for completing the studies.

115. SCE adds that the meeting following the initial status report would be unworkable because of the large numbers of studies required to be reported in detail, and because most participants will be interested in a limited number of studies. SCE would have the potential applicant determine the need for study review meetings based on comments received on the abbreviated status report, unless a majority of participants requested a meeting with respect to a particular study. NHA would also make the meeting optional for the potential applicant. If participants wanted a meeting not proposed by the potential applicant, they would so request in their comments on the initial status report, and the Commission staff would decide if it is needed.

116. Long View shares NHA's and SCE's concerns about the status reports and meetings. It would modify the rule to allow potential applicants to issue study-specific status reports and hold study-specific meetings at appropriate times with appropriate people.

117. NYSDEC would modify the rule to state that the potential applicant's meeting summary must include a brief statement that the meeting summary is deemed to be approved unless a party files a notice of disagreement.

118. These and other concerns about the status report proposal were considered at length by the Studies Group, including the fundamental issue of whether it makes more sense to have one status report and meeting, or to issue separate reports for each study or group of related studies at different

times. The Studies Group concluded that it would be best for the participants to negotiate the timing of periodic progress reports on studies,

108

including the manner and extent to which information will be shared, which may include meetings, and sufficient time for technical review of the analysis and results, when the study plan and schedule is developed. The progress reports would have to describe the study progress and data collected to date in a manner that enables participants to determine if the study plan is being followed, and to describe any proposed changes. Documentation of study results would be provided to participants upon request. An annual study report would be issued, but would be in the form of a summary of the overall progress of study plan implementation and would serve as a trigger point for requests, if any, to modify existing studies or conduct additional studies.

108

For clarification, here and in the regulations we are referring to the potential applicant's comprehensive annual report as the “study report,” and to other periodic reports on studies as “progress reports.”

119. These modifications should make it easier for individual participants to focus on issues of concern to them, should result in early identification of any implementation issues, and should ease the distribution and consultation burden on the potential applicant. Accordingly, this is a reasonable approach to the matter of study plan implementation and is reflected in the final rules.

109

18 CFR 5.11 and 5.15.

120. Finally, the Studies Group and Minnesota DNR recommend that parties have 30 days to respond to the initial and updated study reports, instead of the 15 days proposed. We have so provided.

110

18 CFR 5.15.

b. Modified Study Requests

121. NHA also addressed the standard for requesting modifications to the approved study plan in response to the initial study report. NHA would require a requester to address each of the study criteria and subject the request to the same good cause standard as a request for new information or new studies. We think such a requirement is unnecessary. Requests for modifications to an ongoing study are likely to be focused on specific concerns about how the study was conducted, or straight forward matters such as whether to extend the study for an additional field season because of drought conditions. A participant with such concerns should not have to reestablish the need for the study in the first instance. Rather, it should only be required to show good cause for the proposed modification.

122. We also think good cause standard should apply to proposals to modify ongoing studies following the updated study report. The proposed regulation text was not clear on the distinction between the standards applicable to requests for modifications to existing studies versus requests for new information gathering or studies. We have modified the regulation text to make the applicable standards clear.

111

See

18 CFR 5.15.

c. New Study Requests

123. We requested comments on whether participants should be permitted to make new information-gathering or study requests (as opposed to requests for modification of, or disputes concerning the implementation of, existing studies) following the updated study report.

112

68 FR at p. 14010; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,731.

124. NHA and Long View would like the rules to provide more certainty regarding the potential applicant's study obligations. They propose that after the updated study report participants would be permitted to make recommendations regarding the implementation of previously approved studies, but not permitted to make new information gathering or study requests. They state that participants should know when the initial study report is made whether any new studies are needed, and allowing new study requests after the updated study report would make participants less likely to focus their efforts on developing study requests at the beginning of the process.

125. Other licensees share the desire for certainty, but support the “extraordinary circumstances” standard as an alternative to a prohibition on new study requests.

113

SCE would permit a new study request only if: first year studies reveal unexpected results that require further review not possible under the current study plan; a change in applicable law that requires another goal to be considered; or there is a valid dispute regarding implementation of the plan.

113

PG&E, Springer, NEU, Idaho Power, EEI.

126. Agencies and NGOs support the opportunity to request new studies at this point.

114

Interior and MPRB state that many unanticipated events could cause a change in circumstances or that study results could show that more information is needed. Oregon and PFBC similarly state that studies may reveal specific sources of project impacts, and that follow-up studies may be needed to determine if negative impacts can be corrected without extensive mitigation.

114

California, Oregon, PFMC, Menominee, Interior, MPRB, Skagit.

127. Some agencies and NGOs accept the premise that the standard for new study requests should increase as the proceeding progresses, and do not oppose an extraordinary circumstances standard at this point.

115

Examples of extraordinary circumstances proffered by these entities include:

115

California, HRC, NYSDEC, NCWRC.

• A finding late in the study of a listed species in the area affected by the project;

116

NCWRC, PFBC, Georgia DNR.

• Initial studies uncover information that must be considered to ensure agency mandates and important management objectives are met.

117

NCWRC, PFBC, Georgia DNR.

• A nexus between project impacts and the study request is shown;

• A good reason is offered why the study was not previously requested;

• Circumstances have changed;

• Study results indicate a new study is necessary; or

• There are changes in laws, regulations, or environment.

118

The last five examples were provided by NYSDEC. Minnesota DNR states that study requests should not be foreclosed simply because they may not have been identified early in the consultation process, and MPRB contends that the proposed limitations should be relaxed to ensure that project proposals are fully understood.

128. After considering the comments, we have decided to adopt the proposed rule in this regard. We appreciate the desire of potential applicants for certainty when the study plan is approved, but until the study plan is completed, it appears premature to prohibit any additional study requests. An extraordinary circumstances standard, conscientiously applied, is sufficiently strict to provide ample incentive for participants to make their study requests early on, during development of the study plan. We will not attempt to further specify in the rules what constitutes extraordinary circumstances. This is the kind of decision that needs to be made in the context of a specific proceeding.

119

New study requests made at later points in the process are considered in Section III.L.2 below.

129. Finally, HRC, apparently fearing that the “good cause” standard will be too restrictive, requests clarification of that term. Troutman, apparently fearing that “good cause” and “extraordinary circumstances,” will be interpreted too broadly, requests clarification of both terms. We think it inadvisable to attempt more specificity at this point. The only practical approach is to apply

these standards in the light of case-specific facts.

d. Comments on Study Reports

130. We also requested comments on whether parties should be required to file written comments on the potential applicant's initial and updated study reports prior to the required meeting to discuss the report(s).

120

Most commenters oppose such a requirement. Long View, Oregon, and ADK say that the written comments are likely to reflect misunderstandings or misinterpretations and the best place to clear such things up is in a face-to-face meeting. These parties suggest that written comments be filed after the meeting. California, PFBC, ADK, Georgia DNR also think it would be unproductive and would allow anyone who cannot attend the meeting to file their comments in lieu thereof. On the other hand, HRC, PFMC, and NEU think such a requirement would encourage effective preparation by the potential applicant for the meeting. Interior and Skokomish think pre-meeting comments should be optional.

120

68 FR at p. 14010; IV FERC Stats. & Regs. ¶ 32,568 at pp. 34,732-733.

131. In light of these comments, we will not impose such a requirement. Instead, we will leave it to the parties to determine individually whether they think the time and effort to file comments before the meeting will be beneficial in the circumstances of the proceeding.

132. Finally, S-P seeks assurance that the study development process will include consultation on means of keeping confidential sensitive Indian cultural practices. Our regulations and practices ensure that Indian tribes' confidentiality concerns will be appropriately addressed.

121

See

discussion of this issue in the NOPR; 68 FR at p.14002; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,717.

G. Study Dispute Resolution Process

133. The NOPR proposed to establish a dispute resolution process that serves two purposes. In the informal stage, the applicant files a draft study plan for comment; the participants (including Commission staff) meet to discuss the draft plan and attempt to informally resolve differences. The Commission then approves a study plan with any needed modifications after considering the applicant's proposed plan and the participants' comments (study plan order).

122

This was referred to in the NOPR as the “Preliminary Determination.” We have change the name to Study Plan Order to recognize that it is not preliminary with respect to study requests that do not directly involve the exercise by agencies or Indian tribes of mandatory conditioning authority.

134. In the formal dispute resolution process, resource agencies with mandatory conditioning authority under FPA sections 4(e) and 18, and states or Indian tribes with water quality certification authority under Clean Water Act section 401, would be able to file a notice of study dispute with respect to studies pertaining directly to the exercise of their authorities under the aforementioned sections of the FPA or CWA. An Advisory Panel considers the dispute and makes recommendations to the Director of Energy Projects, who resolves the dispute.

135. We also proposed that the applicant, by virtue of the fact that it must conduct any studies required by the Commission and implement the license, has a special interest in the outcome of study dispute resolution, and should be afforded the opportunity to submit to the panel information and arguments with respect to a dispute.

123

Proposed 18 CFR 5.1213(i).

136. The NOPR requested comments on what modifications, if any, should be made to the proposed study dispute resolution process and, in particular, the proposed advisory panel.

124

Responses were received on nearly every aspect of the proposed process. Most commenters supported the proposed study dispute resolution process, but nearly all requested clarifications or modifications to cure perceived deficiencies. A few commenters opposed the panel and made alternative recommendations. All of these comments are considered in this section.

124

68 FR at p. 13998; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,711.

1. Informal Dispute Resolution

137. NHA and WPPD recommend that a peer review process be added for study disagreements prior to issuance of the study plan determination, to provide unbiased expert opinion on establishment of study request goals and objectives, technical design in relation to goals and objectives and the state of the art, and the anticipated utility of the study results to meeting the study goals and objectives. If the disagreement was not resolved as a result of consultation with the peer reviewers, the peer reviewers' comments would become part of the record, which would be available to the panel in formal dispute resolution, if any.

138. We will not adopt this recommendation. A peer review process would add additional time and expense to the process, and would largely replicate the formal dispute resolution process, which would be inconsistent with our goal of having a study plan development process that ensures, as best the Commission can, that the participants come together for the purpose of resolving study disagreements themselves.

2. Formal Dispute Resolution—Subject Matter and Eligibility

139. Many commenters recommend that the formal process be made available to any participant for study requests regarding any matter.

125

California states that the formal process should be available for all study disputes raised by agencies and Indian tribes. Some agencies suggest that the fact that they have a statutorily established role in licensing process, such as making fish and wildlife agency recommendation pursuant to FPA Section 10(j), establishes an obligation on the part of the Commission to ensure that the record contains information to support their recommendations.

126

Others suggest that eligibility for informal dispute resolution only undermines state agency management of state fish and wildlife resources.

127

125

Interior, ODFW, Duke, Nez Perce, S-P, AW/FLOW, AMC, MDEP, Washington, AmRivers, ADK, RAW, EPA, MPRB, PFBC, CRITFC, SC League, MPRB, WGA, Skagit.

126

Interior, IDFG, Oregon, Washington.

127

Oregon, IDPR, PFMC, WGA, California, IDFG.

140. The NOPR explained that agencies and Indian tribes with mandatory conditioning authority, to extent they are exercising that authority, are differently situated than participants whose role is to make recommendations pursuant to FPA sections 10(a) and 10(j), National Historic Preservation Act (NHPA) Section 106,

128

or other applicable statutes. The former have a duty to make reasoned decisions based on substantial evidence, and their decisions are subject to judicial review. Those making recommendations have no such responsibility.

129

None of the proponents of broadening eligibility for the formal process addresses this fundamental distinction. They also gloss over the fact that the study plan determination is the culmination of the study plan development process in which potential applicants, study requesters, and the Commission staff consult intensively on what information gathering and studies are needed, study requests and responses thereto are accompanied by discussion of the study criteria, and the study plan determination must explain its decision

on each disputed study with reference to the study criteria and any applicable Commission policies and practices. We think this provides ample opportunity for development of the record and consideration of study requests related to recommendations.

128

16 U.S.C. 470f.

129

See

68 FR at p. 13998; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,710.

141. Interior contends that the National Park Service should be eligible for formal dispute resolution with respect to study recommendations that relate to potential project impacts on a unit of the National Park System or other areas of special management concern, such as National Recreation Areas. Interior offers no basis for distinguishing these studies related to FPA Section 10(a) recommendations from those of other entities, and we

see

none.

142. GLIFWC, Menominee, and Nez Perce suggest that the Commission's trust responsibility requires Indian tribes to be eligible for formal dispute resolution with respect to studies related to impacts to reservation lands within the project boundary and ceded lands on which tribes have treaty reserved rights. We do not agree. The study plan development and formal dispute resolution components of the integrated process are not required by any treaty or statute, and are being created solely to provide a means of creating an evidentiary record to support, to the extent reasonably possible, the actions of agencies or Indian tribes with decisional authority.

143. Finally, NHA and PG&E request that the regulations make more clear that the formal process is available only to agencies or Indian tribes with respect to their study requests related directly to exercise of their mandatory conditioning authority, and not for study requests relating to matters wherein these entities may only make recommendations, such as FPA Section 10(j) fish and wildlife agency recommendations. We have clarified the regulatory text in this regard.

130

See

18 CFR 5.14(a). EPA requests that we modify the regulation text to make eligible any agency that has water quality certification authority, so as to permit EPA to file notices of dispute in instances where it, rather than the state, is responsible for issuing water quality certification. We agree to this modification, and modified the regulatory text accordingly.

3. Advisory Panel

a. Need for Panel

144. Several commenters object to, or express concerns about, the efficacy of, the Advisory Panel. Some licensee commenters assert that the existing dispute resolution provisions work well enough.

131

They assert generally that allowing the disputing agency to be represented on the panel violates fundamental fairness, accepted notions of due process, and the Administrative Procedure Act (APA).

132

131

EEI, Idaho Power, Alabama Power, Xcel, NEU.

132

5 U.S.C. 551-559.

145. Some commenters also fear that the panel proposal is not practical, citing the lack of monetary compensation for the third-party panelist's time and effort; and the short time frames, particularly in light of the panelists' lack of familiarity with the project and background of the issues.

133

They recommend instead a technical conference, narrowly focused on the specific dispute, with input from the potential applicant and any other interested participant, and that the record of the technical conference be filed with Director to inform his decision on the dispute. The Skokomish Tribe fears that the panel process will be unwieldy, take longer than the existing process, and increase costs. VANR recommends that eligible study disputes be resolved by the Director using the existing process and, if the panel is used at all, it be only as a forum for appeals from the Director's decision. Duke recommends instead a modified version of the existing dispute resolution process; written submissions followed by a technical conference including Commission staff, or a panel including a representative of the applicant. PFBC recommends that the formal process be used only after the disputants have first attempted to resolve the matter using the ALP dispute resolution process.

133

Suloway, NPS, Long View, VANR.

146. These alternative recommendations generally have the virtue of being less complicated than the Advisory Panel proposal. They lack however the presence of a third party technical expert and panelists from Commission staff and the disputing agency who have no prior connection to the proceeding, and must work cooperatively with the third party expert and one another. We have also provided for a technical conference, discussed below, at which the potential applicant may directly address the Advisory Panel. For these reasons, we will adopt the Advisory Panel proposal.

b. Panel Membership

147. Many comments were received on the membership of the Advisory Panel. Various licensee commenters contend that the Advisory Panel is unfair because it includes a panelist from the disputing agency, but not the potential applicant.

134

They assert that requiring the agency representative to be someone not previously involved with the proceeding,

135

or even from another agency, will not obviate an institutional bias that resource agency staff have in favor of other resource agency staff.

136

Others contend that the panel would be more fair without a disputing agency representative because the disputing agency is a party to the dispute, while the Commission is the decisional authority.

137

Troutman expresses skepticism that resource agencies will be able to find qualified representatives who have not been involved in the proceeding and suggests that agency representatives will be unwilling to act independently of higher level agency officials who support the agency's position in the dispute.

134

Duke, Long View, Xcel, Snohomish. These entities reiterate assertions previously made that the Advisory Panel abdicates the Commission's responsibility to decide the issues before it. The Advisory Panel has no decisional authority; it is limited to making recommendations concerning the consistency of the study request with the study criteria.

135

This is required by 18 CFR 5.14(d).

136

WPSC, WPSR.

137

Duke, Progress, Troutman.

148. Suggested remedies for this alleged bias include having two Commission staff members not previously associated with the proceeding and one third party expert,

138

replacing the disputing agency on the panel with a licensee representative,

139

adding a licensee representative to the panel,

140

and replacing the third party expert with a third member designated by the potential applicant.

141

138

Duke, Progress, Troutman.

139

WPSR.

140

Xcel.

141

Snohomish.

149. We do not agree that the proposal for panel membership is unfair to potential applicants. Again we remind industry commenters that the purpose of the Advisory Panel is to help resolve a dispute between the Commission staff and an agency or Indian tribe with mandatory conditioning authority concerning the adequacy of the record to support agency decision-making. Potential applicants will have ample opportunity through their written submission and participation in the technical conference to make their case to the Advisory Panel and the Office Director. A potential applicant that believes the Advisory Panel recommendation and study plan determination are not based on substantial evidence or are otherwise improper may file a request for rehearing.

150. EEI states that the agency representatives are not bound by the

Commission's

ex parte

rules and suggest that they will consult in private with the agency staff who filed the dispute. The Process Group considered this issue and agreed that as a condition of serving on a panel, all panelists would have to agree to be strictly bound by the Commission's prohibition on

ex parte

communications. This is unnecessary however, as the regulations state that all communications to and from the Commission staff concerning the merits of the potential application shall be filed with the Commission.

142

18 CFR 5.8(b)(3)(v).

151. The few agency commenters on panel membership state that fairness and balance require the disputing agency to be on the panel because that is the only way to ensure that its position on biological and technical issues is properly represented.

143

Their principal concern is that the panel members have appropriate technical expertise relative to the specific issues in dispute.

144

NOAA Fisheries, for instance, contends that the expertise must be very specific to the issues; for instance, a study dispute involving gas bubble disease in fish would require experts on that topic, not merely general expertise in fisheries or other related specialized knowledge. Wisconsin DNR similarly argues that regional-specific expertise is needed; for instance, an expert in west coast anadromous fish would be unsuitable for a dispute concerning the study of resident, freshwater fish in Wisconsin.

143

Catawba, SC League, Wisconsin DNR.

144

Interior, Oregon, NOAA Fisheries.

152. We think it would be a sterile exercise to try to craft regulatory language that more precisely defines the type or degree of expertise that may be necessary for the myriad of potential dispute resolution issues. The most practical approach is to leave the selection of an appropriate third party expert from the list of technical experts to the agency or tribe and Commission staff panel members in light of the facts of the case.

153. Interior requests that the requirement that the Commission and disputing agency panel members be “not otherwise involved in the proceeding”

145

be modified to bar only persons not “directly” involved. In this way, Interior would make eligible a supervisor in the same office as the agency staff who invoked the formal dispute resolution process. California would exclude only those who have not been “actively involved in the proceeding as an advocate or negotiator for the agency or tribe's position.”

146

This, too, would allow supervisory employees with direct responsibility for the agency's participation in the case to serve as a panel member. We decline to add this qualification because it would blur the line between those who are eligible to serve and those who are not, and would undercut the appearance, and probably the reality, that the panel is composed of technical experts using their independent judgment. The best way to ensure acceptance of the Advisory Panel approach is to ensure that the panel members are working on a clean slate with respect to the specific proceeding.

145

18 CFR 5.14(d).

146

California, p. 13.

154. Oregon and IDPR state that the Advisory Panel should not be limited to three members because every agency that objects to the study plan determination on a particular study needs to have its own representative. We have limited the panel to three for two reasons. First, we seek to minimize the possibility of deadlock. Second, the larger the panel is, the greater are the logistical challenges associated with the panel convening, meeting, and making a recommendation. To these we add the concern that the panel not appear to be weighted in favor of disputing agencies. We see moreover no reason why two Federal agencies with disputes concerning the same or similar study requests cannot be represented by one individual with the requisite expertise.

155. The NOPR proposed that if there is no timely agreement on a third party expert, the two existing panel members carry out the panel's functions.

147

Mr. Groznik recommends that in such a case the Director should be required to appoint a third party expert. Interior contends that three panel members are needed to ensure that there is either a majority or unanimous recommendation. Oregon states that the panel should not be allowed to proceed in the absence of a technically-qualified third party, principally to ensure that there is appropriate technical expertise on the panel.

147

Proposed 18 CFR 5.13(d).

156. We expect instances where a third panel member cannot timely be selected by the Commission staff and disputing agency representatives to be rare. We recognize however the importance of the third panel member in providing assurance that the impartiality of the panel's recommendations. We have therefore amended the rule to provide that in such an event, an appropriate third panel member will be selected at random from the list of experts maintained by the Commission.

148

18 CFR 5.14(d).

157. Washington thinks a state agency expert should be able to serve on the Advisory Panel. We agree. A Federal agency or Indian tribe that initiates a dispute resolution could request a state agency expert to represent it on the Advisory Panel. Likewise, for instance, a state water quality certification agency could certainly appoint as its representative a member from its own ranks, or from another state or Federal agency, or Indian tribe. There is also no reason a qualified state agency employee could not serve as a third party expert if that person was selected by the other panel members and the state's regulations and policies permit that person to engage in such activities. We think this flexibility should make it easier to quickly assemble panels with the right expertise.

158. The Studies Group agreed that it would be appropriate for the Commission staff representative to initially organize the Advisory Panel and serve as chair. We think this makes sense because the notice of dispute will first be filed with the Commission, which will maintain the list of eligible technical experts, and some individual needs to be responsible to ensure that the process starts quickly and stays on track. We have so provided in the regulation text.

149

See

18 CFR 5.14(d)(1). To further assist the rapid formation of the panel, the disputing agency is required to identify its panel member in its notice of dispute. 18 CFR 5.14(b).

c. Non-Member Participation

159. Some commenters contend that parties other than the potential applicant should be allowed to respond to the notice of dispute, even if they cannot initiate a dispute resolution, because they may have an interest in the outcome of the process not represented by the disputing agency or the potential applicant.

150

To do otherwise, suggests HRC, violates fundamental due process. SCE asserts that a potential applicant should be permitted to meet face-to-face with the Advisory Panel instead of being limited to written submissions. We believe the concerns of these parties are addressed by our decision in the following section to include the technical advisory meeting in the formal dispute resolution process.

150

HRC, CHRC, Whitewater, Advisory Council, TU.

160. The Advisory Council, citing 36 CFR 800.4, seeks assurance that State Historic Preservation Officers (SHPO), Tribal Historic Preservation Officers (THPO), and Indian tribes have an

opportunity to participate in formal dispute resolution before any dispute pertaining to implementation of NHPA Section 106 is resolved. Subsection 800.4(a) provides for the action agency to determine whether the action could result in changes to any historic properties located in the area of potential effects. If so, the agency is to review existing information on potentially affected historic properties, request the views of the SHPO or THPO on further action to identify historic properties that may be affected, and seek relevant information from local governments, Indian tribes and others. Based on its assessment, the action agency is to determine the need for further actions, such as field surveys, to identify historic properties. Subsection 800.4(b) requires the action agency to make a good faith effort to identify potentially affected historic properties and to evaluate their eligibility for the National Register in consultation with the SHPO or THPO.

161. The integrated process is fully consistent with this requirement. The study plan and schedule development process discussed above contemplates the active participation of the SHPO or THPO, local governments, Indian tribes, and any interested agency or member of the public in determining what information needs to be gathered or studies conducted with respect to historic properties. Because these entities do not have mandatory conditioning authority, they would not be eligible to initiate the formal dispute resolution process. They would however have the benefit of informal dispute resolution and be eligible to participate in the technical conference.

162. We emphasize in this connection that the study plan development process merely determines, in consultation with the participants in the Section 106 process, which information gathering and studies the potential applicant should undertake. It assists the Commission in obtaining the information needed to identify what historic properties may be present. It makes no determination whether any aspect of the potential license application or reasonable alternatives would have an adverse effect on historic properties. That determination is made later in the context of the environmental document and other elements of the Section 106 process; specifically, the Commission must, when applying the criteria of effect and, if necessary, consult with the SHPO/THPO on ways to avoid or mitigate these effects, usually by entering into a PA.

d. Technical Conference

163. NHA recommended inclusion of an “Advisory Technical Conference (ATC),” which would convene just prior to the meeting of the Advisory Panel. The ATC would include representatives of the Commission staff, the agency or Indian tribe with the dispute, the potential applicant, and a neutral expert or experts. It is not clear from NHA's submission how the Advisory Panel would interact with the conferees. Commission staff with appropriate expertise would moderate the ATC,

151

and the Commission staff would be responsible for maintaining a conference record.

151

It is not clear if NHA intends for the Commission staff moderator to be someone other than the Commission staff panel member.

164. Prior to the ATC, the potential applicant and the resource agency that filed the dispute would file information and arguments. During the ATC, the agency or Indian tribe would summarize its arguments based on the study criteria, the potential applicant would respond, and the conferees would then discuss the issue in dispute relative to the study criteria. NHA would, to the extent feasible, have all studies in dispute addressed at one ATC. Following the ATC, the Advisory Panel would meet without the applicant, then make its recommendation to the Director, who would also have available the record of the ATC, including the opinions of the third party technical experts.

165. The Studies Group agreed that it would assist the formal dispute resolution process to add a technical conference, to be presided over by the Advisory Panel. This meeting would be held after the written submissions to the Advisory Panel by the disputing agency and the potential applicant are made by disputing agencies and the Commission staff, and just prior to the deliberative meeting(s) of the Advisory Panel. The meeting would be open to all parties, but the topics would be restricted to the specific studies in dispute and the applicability to them of the study criteria. The Advisory Panel would determine how it wished to receive information, but we anticipate that a question and answer format would work well.

166. The NHA proposal has merit in the sense that it would bring in additional technical expertise, but it also would entail additional steps requiring more time, additional Commission resources to provide a moderator and to keep a record, and would add to the overall burden by creating additional written record material of questionable incremental utility. NHA's proposal also does not provide an avenue for other participants with an interest in the outcome of the dispute to participate in the process.

167. We conclude that a technical conference based on the Studies Group's recommendation would benefit the process. The opportunity for the members of the Advisory Panel to hear directly from and be able to question the disputing agency or Indian tribe, the potential applicant, or other participants who have an interest in the outcome of the dispute should enable them to clear up any questions about the written submissions and quickly focus on the most important elements of the dispute. This should, in turn, assist the Advisory Panel to develop its recommendation in a timely fashion.

152

See

18 CFR 5.14(j). EEI recommended that we consider turning over disputes to the Commission's Dispute Resolution Service (DRS). The DRS is not an appropriate alternative to the formal dispute resolution process because the DRS is not a decision-making body and cannot ensure a resolution of the dispute through voluntary mediation. The DRS' role as a mediator or facilitator is more appropriate at other points in the process.

e. Activities of the Advisory Panel

168. Various comments were received about the role of the Advisory Panel and how it should go about its work. EEI urges us to require the Advisory Panel to specifically address the potential applicant's submissions. An explicit direction in this regard is unnecessary; particularly in light of our decision to include the technical conference.

169. Troutman and Oregon request generally more definition of how the Advisory Panel will do its work, including with whom it will communicate, and how. The technical conference proposal and clarification that strict application of the prohibition on

ex parte

communications will apply should address these commenters' concerns. Also, as discussed above, we have determined that the Commission staff panel member should chair the panel. These provisions provide sufficient guidance to panelists and assurance to others that the panel will make its recommendations through procedures that are fair and reasonable.

170. EEI believes the disputing agency representative should be barred from writing the Advisory Panel's report on the ground that this person is likely to be biased in favor the disputing agency's position and, by having control over the drafting, will wield undue influence. We reject this suggestion. First, we trust that the panelists will apply their expertise in a professional manner consistent with the purpose of the

panel. We are moreover confident that no single panelist will be able to dictate the recommendation to the other panelists. The panel chair should have the leeway to make this assignment in consultation with the other panelists.

171. California contends that it is important for the Advisory Panel to convene in the vicinity of the project (and perhaps to visit the project) in order for the panel to better understand the disputed issues and so that state agencies and local entities with limited budgets are more likely to be able to appear before the panel. Whether it is necessary for the panel to meet in the project vicinity or visit the project is a matter best determined in light of the facts and circumstances of each case.

5. Timing Issues

172. Some commenters state that some or all of the time frames for the formal dispute resolution process are insufficient.

153

OWRC is particularly concerned that if more than one agency brings the same dispute, insufficient time is allowed for the agencies to agree on who should represent both of them. We disagree. This is a matter that agencies should be able to quickly settle over the telephone.

153

OWRC, California, NYSDEC, IDEQ, HRC.

173. HRC suggests that the response times can be alleviated and the panel's deliberations better focused if the notice of dispute and potential applicant's responsive comments, if any, are required to include proposed findings and recommendations. The agency or Indian tribe's notice of dispute is already required to address the study criteria, which we expect would encompass its proposed findings and recommendations, but only from its own perspective. Any response from the potential applicant is likely to similarly address the criteria from its perspective. The task of the Advisory Panel will be to discuss and attempt to resolve differences between the submissions. The addition of the technical conference is also likely to result in clarifications to the written submissions that will influence the opinions of individual panelists. Thus, the proposed findings and recommendations are largely included in the record. Although we are not inclined to require the disputing agency or Indian tribe, or the potential applicant, to separately state its proposed findings and recommendations, they are encouraged to do so if they think it will benefit the record.

174. The NOPR proposes to require a notice of study dispute resolution to be filed within 20 days of the study plan determination.

154

NYSDEC and Interior state that this is not sufficient time to assemble the supporting evidence. NYSDEC would give the disputing agency at least the 25 days afforded to the potential applicant to submit responsive comments.

155

Interior recommends 30-60 days. Twenty days is not a great deal of time, but a disputing agency will have written out the support for its notice of dispute when it makes its study request prior to the study plan determination.

154

Proposed 18 CFR 5.13(a).

155

The 25-day period for potential applicants to respond to the notice was not selected to give the potential applicant an advantage, but to provide time following convening of the panel for the service addresses of the panelists to be posted on the Commission's Web site in order that the potential applicant will be able to serve the panel members.

See

proposed 18 CFR 5.13(h).

175. IDEQ recommends a 90-day period for the participants to informally resolve remaining differences after the study plan determination before a notice of dispute must be filed. We decline to adopt this recommendation. As discussed below, we have modified the rules to provide a 90-day period before comments are filed on the potential applicant's draft study plan for this purpose.

156

Participants in the formal dispute resolution process may also try to resolve differences during that process as a result of reviewing one another's written submissions, or following the technical conference.

156

18 CFR 5.12 and Section III.T.

6. Third Party Technical Expert

176. The principal concern raised about the third party technical expert is whether qualified persons will be willing to serve. Some commenters think the absence of compensation for professional time beyond reimbursement of expenses will make recruiting difficult.

157

Washington states that this is inequitable, but does not explain why, in light of the fact that panelists would be volunteers. Others suggest that unpaid panelists won't invest the necessary time and effort to result in a well-reasoned recommendation. They also think that a compensated third party expert is more likely to be truly neutral. These commenters recommend that third party experts be paid for their services as part of the cost of the hydropower program.

158

SCE recommends that the Commission and the disputing agency share the cost to compensate the third party expert.

157

Wisconsin DNR, Washington, HRC, Idaho Power, EEI, NEU, SCE.

158

HRC, Washington.

177. We believe potential third party technical experts may be motivated to volunteer their services for reasons other than financial gain. One reason would be that service on the panel would enhance that person's professional standing as a technical expert, or in the area of alternative dispute resolution. It would also be an opportunity to provide a public service.

178. IDFG is concerned that there may not be a sufficient number of qualified people in the pool for certain issues due to lack of familiarity with local resources or limited field level experience with the resources. We think the Commission staff and disputing agency panelists will be competent to determine who among the pool of experts is qualified to serve.

179. The other principal concern of commenters is how to ensure that third party experts are truly neutral. Minnesota DNR indicates that technical experts employed by consulting firms are biased in favor of the industry and recommends using only experts from academia who have no recent ties to the industry. EEI, on the other hand, would have us prohibit the use of academics, on the ground that they are biased in favor of expansive and expensive studies. We decline to make any such blanket characterizations about large and very diverse classes of persons. This is the kind of concern that is best dealt with by the Commission staff and agency representatives to the panel in the context of a specific proceeding.

7. Multiple Panels and Multi-Issue Panels

180. A few commenters favor the use of multiple panels. NOAA Fisheries, for instance, states that there should be a separate panel for each issue relating to each study dispute;

e.g.

, if NOAA Fisheries and the U.S. Fish and Wildlife Service each had different issues with respect to the same study, they would file separate notices and there would be separate panels.

181. We hope that the formal dispute resolution process will rarely be invoked, but must take care to structure it so as to ensure that when it is, it can accomplish its purpose of timely bringing finality to study disputes. The regime favored by NOAA Fisheries is simply not practical. A contentious case with multiple study requests and disputes could paralyze the dispute resolution process for months. The more resources, studies, and agencies involved in a proceeding, and the more integrated processes being undertaken in the same general time frame, the more panels would be required, and the more difficult it would be to timely recruit panel members.

182. The majority of commenters on this issue, and the Process Group, support the use of a single panel to deal with related resource issues in the same proceeding, subject to various caveats. They indicate that it may be necessary to reduce costs, avoid delay, and prevent sequential disputes over the same study. For instance, one panel would consider all issues relating to fishery studies in a single proceeding or, perhaps, in a multi-project proceeding.

159

A few commenters suggest that one panel ought to suffice for all disputes in a proceeding, without regard to resource differences.

160

In this regard, Troutman likens the role of the panelists to that of judges in a court, and states that expertise is less important than a good record.

159

HRC, NYSDEC, NCWRC, PFMC, NEU, SCE, Alabama Power, GLIFWC, IDFG, Troutman, Interior, California.

160

B&B, Troutman, Alabama Power.

183. The most frequent caveat of those who agree that a single panel may consider more than one dispute is that the panelists have appropriate expertise.

161

Interior adds that the decision to have one panel for multiple disputes needs to be made on a case-by-case basis, and that it needs to be clear at the outset what issues the panel will consider so that disputing agencies can appoint an appropriate representative and identify appropriate technical experts. We agree.

161

Interior, IDFG, NYSDEC, NCWRC.

184. California would have the panel chair determine which disputes the panel will hear. In light of the goal of expeditious resolution, we think it falls to the Commission staff, under the direction of the Director of Energy Projects, to quickly assess the disputes and determine how many panels are needed and which issues each will consider.

185. Oregon requests clarification as to whether there will be standing panels for various resources that are likely to be the subject of many study requests at many projects, such as anadromous fisheries, or project-specific panels. Oregon does not appear to support this, but rather to recommend project-specific panels in order to help ensure that appropriate technical expertise is brought to bear. We agree.

162

We note however that the concept of standing panels is worth considering, as it may be more administratively efficient. As experience is gained with the integrated process we will further consider this idea and, if experience indicates that it would be beneficial, will consult with stakeholders concerning whether modifications to the rule are necessary.

186. GLIFWC indicates that if a panel is to consider issues pertaining to different resources, it should be supplemented with a technical expert for each resource. We do not envision that the same panel would consider issues relating to, for instance, the need for a requested turbine entrainment study and the need for additional or modified recreational use surveys. The same panel might however consider disputes concerning studies requested on turbine entrainment and bypass reach flows for fishery habitat purposes. It would be a matter for the Commission staff and agency or tribal panel members to determine which persons on the list of potential technical experts are qualified and able to serve with respect to the subject of the dispute(s).

8. Panel Recommendation

187. The proposed rule provides for the Advisory Panel to make a finding “as to whether the criteria * * * are met or not, and why.”

163

PG&E and GLIFWC state that the Advisory Panel should be required to determine whether each of the study criteria has been met. This is a reasonable recommendation, and we are modifying the regulation text accordingly. We make however two observations. First, not all the criteria necessarily apply to all the requesters. For instance, a requester may not be an agency or Indian tribe with established resource management goals for the relevant resource (Criterion 2). There is moreover no bright line by which to determine if some of the criteria have been met.

163

Proposed 18 CFR 5.13(j).

188. PG&E also suggests that the Advisory Panel should address, in addition to the study criteria, “any other relevant consideration.”

164

SCE recommends that panel's recommendation be explicitly limited to whether the criteria have been satisfied. We agree with SCE. The study criteria were carefully developed with the intention that every participant in a dispute resolution proceeding would understand the criteria by which study requests should be formulated and would be judged. PG&E's recommendation would introduce substantial uncertainty into the process.

164

PG&E, p. 24.

189. NEU states that if all three panelists do not support a recommendation, the disagreeing panel member should be required to provide a statement of the reason for their disagreement, in order to ensure a more complete record. We think this decision is best left to individual panelists. We could not, in any case, require compliance with such a provision.

9. Director's Determination

190. The Director's determination is to be made “with reference to the study criteria * * * and any applicable law or Commission policies and practices.”

165

Several commenters think the Director has too much discretion regarding whether or not to accept a panel's recommendation.

166

NOAA Fisheries, Interior, and MPRB would have the Director bound by a majority vote of the panel. GLIFWC indicates that a requirement for deference to panel recommendations should be written into the rules. The commenters identify no deficiency with these requirements or other specific concern, but evince only a desire to make the panel recommendation binding. The Commission cannot delegate its decisional authority to the Advisory Panel. We have however modified the regulations to clarify that the Director will take into account the technical expertise of the panel, and will explain why any panel recommendation was rejected if that occurs.

165

See

proposed 18 CFR 5.13(k).

166

NOAA Fisheries, Interior, MPRB, GLIFWC, FWS.

191. Some licensee commenters suggest that a potential applicant should be permitted to file a response to the panel recommendation before the Director's determination is made.

167

We think that the study plan development process, plus the right in formal dispute resolution to make a written submission to the Advisory Panel and to participate in the technical conference provide sufficient opportunities for potential applicants to plead the merits of their study proposals.

167

CWRC, NEU, SCE.

192. Interior recommends that the Director be required to obtain Commission approval before issuing a decision that does not adopt the Advisory Panel's recommendation. We

see

no reason why such a decision needs to be elevated to the full Commission.

193. Interior also states that it does not know which technical experts the Director may consult before the decision is issued, which could result in the Director's objectivity being compromised. The regulations provide that all communications to or from the Commission staff, which includes the Director, related to the merits of the potential application shall be placed into the record.

168

18 CFR 5.8(b)(3)(v).

194. Finally, several states request that we reaffirm that the Commission's dispute resolution process does not bind state water quality certification agencies

in the sense that participation by a such agencies in the Commission's processes does not affect whatever independent authority it has to require a potential license applicant to produce data or information in the context of the water quality certification application.

169

Alaska states that this holds for state CZMA processes as well. We affirm our prior statement.

170

169

Washington, Massachusetts DER, Georgia DNR, NYSDEC, California, WGA.

170

California requested that this statement be included in the regulations. We think it is unnecessary to do so, as the authority of states and Indian tribes in this connection is not affected by anything in our regulations.

10. Study Plan Implementation

195. Several commenters

171

state that a dispute resolution panel should be convened to resolve any disagreements over the interpretation of study results, whether study plans need to be modified, and whether any additional studies are needed. They contend that such disagreements are no less important than disputes over what the study plan requirements should be in the first instance. Interior and RAW add that disagreements concerning a matter which was previously the subject of a panel recommendation should be considered by the same panel.

171

HRC, AmRivers, Wisconsin DNR, Interior, and RAW.

196. Our decision to limit formal study dispute resolution to development of the study plan does not imply that any subsequent decisions with respect to studies are less important. Rather, it reflects the fact that convening an Advisory Panel at every point in the overall process where there are likely to be disagreements would severely hamper the timely conclusion of the proceeding. Subsequent resolution of disagreements over study results, modifications to the approved plan, and additional study needs are also not likely to result in substantial changes to the overall study plan. Interior's and RAW's recommendation to reconvene an Advisory Panel for later disagreements pertaining to matters previously considered by that panel is impractical. There is no assurance that the same panelists would be available in a timely manner, or at all, and it would likely hamper the recruitment of third party technical experts if by committing to serve on one panel they were also committing to serve on an undetermined number of future panels at undetermined times.

H. Compliance With Study Plan

197. As proposed, the study plan order would require the potential applicant to proceed with the approved study plan. The Director's order in formal dispute resolution could amend the study plan order and, if so, would require the potential applicant to carry out the study plan as modified.

172

Proposed 18 CFR 5.13(k).

198. SCE and others

173

request that we clarify in the rules whether the proposed study plan order (if no dispute resolution is initiated) and the proposed Director's order following formal dispute resolution are final orders to which rehearing applies. SCE seeks certainty on this point so that it may know whether a potential license applicant is subject to the compliance provisions of FPA Section 31. Duke and SCE request that we make these orders non-binding so that potential applicants are not forced to file requests for rehearing or judicial review to protect themselves against the possibility of sanctions under Section 31

174

or, at least, that we permit the plan and schedule to be modified based on unforeseen circumstances. PG&E suggests that the rules state that an application lacking the required information “may” be found deficient, rather than “will” be found deficient, since an existing licensee might want to avoid doing pre-filing studies to prevent potential competitors from copying the results. WUWC similarly requests that we make clear that any failure to comply with a study plan determination will not result in civil penalties, but will be treated as a deficiency in the application.

173

Long View and PG&E recommend that the Director's decision in formal study dispute resolution be appealable to the Commission or an administrative law judge. PG&E would extend this right to agencies, tribes, and the potential applicant, but states that it should be limited to alleged errors of fact. Long View would allow an appeal in “extraordinary circumstances,” which it indicates would include a study recommendation that significantly increases the cost of the study plan over the applicant's budget.

174

Duke adds that if rehearing is requested, the Commission would have to suspend the study requirements in dispute pending rehearing or judicial review in order to preserve the potential applicant's rights.

199. California, Interior, and AmRivers request that the rule be amended to ensure that there are consequences for the potential applicant if study requirements, objectives, and expectations are not met. Menominee requests that applicants be required to develop a “Quality Assurance Project Plan” prior to implementation of the study plan.

200. Orders regarding studies plans will be binding on potential license applicants, and we expect that they will comply with them. Failure to do so will put potential applicants at risk of having their applications, when filed, found to be deficient or rejected. The question of whether such orders are subject to rehearing and appellate review may have differing answers, based on the facts of individual cases. In addition, review of study plan orders could significantly lengthen the licensing process, and thus is to be avoided to the extent possible.

201. More to the point, it is crucial to the success of the integrated process that issues regarding development of the record be identified and resolved at an early stage in the licensing proceeding. To this end, the process has been designed to give all participants the opportunity to examine existing information, make proposals regarding necessary studies, work with other participants to achieve consensus regarding information-gathering and, on matters that cannot otherwise be resolved, to obtain the opinion of a three-person panel of experts and a determination from the Director based on the record compiled by the participants. It is our hope and expectation that this consensus-building process will succeed, as has the collaborative alternative licensing process, in keeping disputes regarding studies to an absolute minimum, such that all participants can meet their information needs with the study plan as approved by the Director, without the need for further proceedings.

202. Some licensee commenters

175

state that it is unfair that an existing licensee which is a potential applicant could be sanctioned under Section 31 for failing to comply with study plan determinations, while non-licensee potential competitors for the same project license could not.

176

PG&E and others fear that non-licensee potential competitors might fail to comply with the study orders, then submit an application that relies on the studies undertaken by the existing licensee. They recommend that the Commission address this imbalance by specifying that the penalty for failure to comply with the study plan determinations will be the same for licensee and non-licensee potential applicants; that is, the application will be found deficient.

177

Alternatively, SCE states that a non-licensee potential competitor should also be required to have a formal study plan and schedule, and that its

application should be found deficient and rejected if it attempts to use the licensee's studies for that purpose.

175

Duke, PG&E, NHA, SCE.

176

SCE evidently has in mind Wolverine Power Co. v. FERC, 963 F.2d 446 (D.C. Cir. 1992), which holds that the civil penalty provisions of FPA section 31 apply only to licensees, permittees, and exemptees, not to unlicensed project operators.

177

They refer to 18 CFR 4.38(b)(6)(I) and 16.8(b)(6)(I).

203. Given that the thrust of Section 31 is the enforcement of Commission requirements with respect to the construction, operation, and maintenance of licensed projects, and not the license application process, it is not clear that the section is applicable to licensees as potential applicants. In any event, we consider imposing civil penalties to be inappropriate in this context and do not propose to do so.

204. With respect to the concern raised by PG&E about the unfair use by a competitor of another competitor's work product, the Commission has pointed out that any improper use of a copyrighted filing is subject to remedy in an appropriate judicial forum.

178

There has not been an instance of a potential competitor copying another applicant's license application since the late 1980s,

179

and since ECPA was enacted in 1986, there have been but two instances of competing applications for a new license.

180

We are aware of only one instance where a potential competitor and an existing licensee have been involved in a dispute over whether an existing licensee should have to share with a potential competitor information required to be made public.

181

178

See

WV Hydro, Inc. and the City of St. Mary's, WV, 45 FERC ¶ 61,220 (1988).

179

Id.

180

One case was N.E.W. Hydro, Inc. and City of Oconto Falls, WI, 81 FERC ¶ 1,238 (1997),

order on reh'g

, 85 FERC ¶ 61,222 (1998),

aff'd, sub nom.

City of Oconto Falls, WI v. FERC, 204 F.3d 1154 (D.C. Cir. 2000). The other was Holyoke Water and Power Co.,

et al.

, 88 FERC ¶ 61,186 (1999). In neither case did the competitor prevail.

181

See

P.U.D. No. 2 of Grant County, WA, 96 FERC ¶ 61,211 (2001) and ¶ 61,362 (2001). In that instance, the non-licensee potential competitor elected not to file a license application.

205. In any event, as discussed below, we are requiring non-licensee potential applicants for a new license to file the NOI and PAD no later than the statutory deadline for an existing licensee to file its NOI.

182

Under these circumstances, it will be difficult for a potential non-licensee competitor to game the regulations.

182

See

Section III.S and 18 CFR 5.5(a).

206. NHA similarly requests that we add to the regulations a requirement that as a condition of invoking the formal dispute resolution process agencies must agree to be bound by the Director's decision. This, NHA states, would ensure that the cost and effort of formal dispute resolution is not wasted. As just stated, we cannot bind states or Indian tribes with respect to the administration of their water quality certification programs under the Clean Water Act. NHA does not moreover speak for a united industry on this issue. Several licensee commenters indicate that they may feel compelled to seek rehearing of the Director's decision, and we can see no distinction between a potential applicant, agency, or Indian tribe in this regard.

207. Finally, PG&E and SCE request that we modify the proposed rule to make clear that agencies and Indian tribes with mandatory conditioning authority may not invoke the Commission's dispute resolution processes and then use authorities they have under other statutes to require potential applicants to do information gathering or studies in addition to those the Commission requires. We cannot do this, for we have no authority to control the activities of these entities under other statutes. We do however fully expect these entities to participate in the integrated process in good faith in order that the Commission's decisional record will, to the extent reasonably possible, serve as the basis for the decisions of entities with conditioning authority, and that any additional information these entities may require is known early in the process.

I. Other Uses for Dispute Resolution

208. Washington DNR recommends that the Commission establish a conflict resolution process for disputes between potential applicants and the owners of lands on which a project would be located, and that the license application not be accepted until the conflict resolution process has run its course. Such a conflict is likely to occur only in the case of a new project proposal. We think it is inappropriate to hold processing of the application in abeyance until the concerns of one party are resolved. Affected landowners, like all interested entities, are encouraged to participate in the pre-filing consultation process and to intervene if a license application is filed. If the potential applicant and the landowner are not able to resolve any differences,

183

the Commission will do so in the context of its public interest analysis under the FPA.

183

We note that the Commission's Dispute Resolution Service is available to assist willing parties to resolve disagreements.

209. Skagit recommends that we require tribal approval of consultants engaged by potential applicants for tribal cultural resources analysis. Nez Perce recommends that a dispute resolution process be made available for disagreements between Indian tribes and potential applicants over the identity of consultants engaged by the potential applicant to do information gathering or studies related to tribal cultural resources because potential applicants sometimes engage persons who are not acceptable to the Indian tribe. As discussed in the NOPR, we agree that it is appropriate for potential applicants to consult with interested tribes concerning the identity of consultants and, indeed, it is in their best interest to do so, but we also think that applicants need flexibility in this regard and should not be required to obtain tribal approval before engaging a consultant.

184

We note however that our regulations require potential applicants and those in their service to protect sensitive cultural resources information from disclosure.

185

184

68 FR at p. 14003; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,718.

185

See

discussion of this issue in the NOPR; 68 FR at p. 14002; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,717.

J. Evidentiary Hearings

210. A few licensee commenters

186

want the rules to provide that a party is entitled to an evidentiary hearing before an administrative law judge (ALJ) whenever there are disputed issues of fact.

187

They indicate that such hearings would not be for resolving study disputes, but for “disputed issues of fact material to disputed mandatory terms and conditions.”

188

They state that such hearings would help foster settlements, and improve the quality and probative value of the record by encouraging resource agencies to support their terms and conditions, and help to limit post-license litigation. They add that such hearings should not delay the process because they would be narrowly focused on specified factual disputes and an ALJ decision could be rendered in about six months.

186

NHA, WPPD, Idaho Power, EEI, NEU.

187

EEI recommends that the regulations include the following language from APA Section 556(d): “a party is entitled to present his case or defense by oral or documentary evidence, and to conduct such cross-examination as may be required for a full and true disclosure of the facts.”

188

EEI, p.15. Such a rule would however also logically apply to disputed facts pertaining to license conditions originating with the Commission staff.

211. Substantially the same recommendation was made by some of the same commenters prior to the NOPR. We there stated that while we do not intend to change our general practice of resolving most hydroelectric licensing matters by means of notice and comment procedures, we are open to setting discrete issues of fact for hearing before an ALJ in appropriate circumstances, and will give due

consideration to such requests.

189

We also included a provision in the proposed rules providing for such hearings.

190

189

68 FR at p. 13998; IV FERC Stats. & Regs. ¶ 32,568 at p. 34,711.

190

See

proposed 18 CFR 5.28(e). The provision is now at 18 CFR 5.29(e).

212. In the Final Rule, we retain the proposed language on this issue. Resolving factual disputes before an ALJ is a time-tested means of decision making; factual records developed in such hearings are useful to courts which may be called upon to review the final decision on the license.

K. Draft License Application Replaced

213. The integrated process was proposed to i

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.