FERC Hydrokinetic Energy Project Policy Statement

121 FERC ¶ 61,221

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

(Docket No. PL08-1-000)

Policy Statement on Conditioned Licenses for Hydrokinetic Projects

(Issued November 30, 2007)

AGENCY: Federal Energy Regulatory Commission.

ACTION: Policy Statement.

SUMMARY: The Federal Energy Regulatory Commission is giving notice of a new

policy with respect to the issuance of licenses for hydrokinetic projects. In the Policy

Statement, the Commission concludes that, in appropriate cases, where the Commission

has completed its processing of license applications for hydrokinetic projects, but where

other authorizations required under federal law have not yet been received, it will issue

conditioned licenses for hydrokinetic projects, predicated on the licensee being precluded

from commencing construction until the necessary authorizations are received.

EFFECTIVE DATE: This Policy Statement is effective November 30, 2007.

FOR FURTHER INFORMATION CONTACT:

Ann Miles

Federal Energy Regulatory Commission

888 First Street, N.E.

Washington, D.C. 20426

(202) 502-6769

Docket No. PL08-1-000

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John Katz

Federal Energy Regulatory Commission

888 First Street, N.E.

Washington, D.C. 20426

(202) 502-8082

SUPPLEMENTARY INFORMATION:

121 FERC ¶ 61,221

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Joseph T. Kelliher, Chairman;

Suedeen G. Kelly, Marc Spitzer,

Philip D. Moeller, and Jon Wellinghoff.

Policy Statement on Conditioned Licenses

for Hydrokinetic Projects

Docket No. PL08-1-000

POLICY STATEMENT ON CONDITIONED LICENSES

FOR HYDROKINETIC PROJECTS

(Issued November 30, 2007)

1

ssioners: Joseph T. Kelliher, Chairman;

Suedeen G. Kelly, Marc Spitzer,

Philip D. Moeller, and Jon Wellinghoff.

Policy Statement on Conditioned Licenses

for Hydrokinetic Projects

Docket No. PL08-1-000

POLICY STATEMENT ON CONDITIONED LICENSES

FOR HYDROKINETIC PROJECTS

(Issued November 30, 2007)

1.

The Commission is issuing this Policy Statement as part of its ongoing effort to

establish a regulatory climate that supports the development of innovative hydropower

projects that use the forces of currents, waves, and tides (generally referred to herein as

“hydrokinetic projects’) to generate clean, renewable electric energy. In the Policy

Statement, the Commission sets forth a new policy, applicable only to hydrokinetic

projects, pursuant to which the Commission will, in appropriate cases, issue licenses

pending actions by other entities under federal law. The goal of this action is to shorten

the regulatory process and speed the development of meritorious hydrokinetic projects.

I.

Background

2.

In recent years, the Commission has become aware of efforts by the hydrokinetic

industry to test and develop projects that harness the nation’s water resources to produce

new supplies of much-needed electric power. Estimates suggest that new hydrokinetic

Docket No. PL08-1-000

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technologies, if fully developed, could double the amount of hydropower production in

the United States, bringing it from just under 10 percent to close to 20 percent of the

national electric energy supply. Given the potential benefits of this new, clean power

source, the Commission has taken steps to lower regulatory barriers to its development.

3

technologies, if fully developed, could double the amount of hydropower production in

the United States, bringing it from just under 10 percent to close to 20 percent of the

national electric energy supply. Given the potential benefits of this new, clean power

source, the Commission has taken steps to lower regulatory barriers to its development.

3.

On December 6, 2006, the Commission held a technical conference on

Hydroelectric Generation from Ocean Waves, Tides, and Currents and from Free-

Flowing Rivers.1 At the conference, the Commission heard from state and federal

regulators, developers, and other stakeholders interested in hydrokinetic projects.

Following the conference, the Commission received public comments. A number of the

comments focused on issues relating to the issuance of preliminary permits for

hydrokinetic projects,2 while other comments discussed the licensing process for such

projects.

4.

On February 15, 2007, the Commission issued a notice of inquiry and interim

statement of policy with respect to preliminary permits for hydrokinetic projects.3 The

Commission explained that there had been a surge in applications for preliminary permits

1 Docket AD06-13-000.

2 Preliminary permits, issued for a term of up to three years pursuant to section

4(f) of the Federal Power Act, 18 U.S.C. § 797(f) (2000), allow a potential applicant to

develop sufficient information to prepare a license application and give the permit holder

a priority with respect to filing a license application, but confer no property rights in the

project site and no authority to conduct construction or other land-disturbing activity.

3 The notice of inquiry and interim statement of policy is published at FERC

Stats. & Regs. ¶ 35,555.

icant to

develop sufficient information to prepare a license application and give the permit holder

a priority with respect to filing a license application, but confer no property rights in the

project site and no authority to conduct construction or other land-disturbing activity.

3 The notice of inquiry and interim statement of policy is published at FERC

Stats. & Regs. ¶ 35,555.

Docket No. PL08-1-000

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to study potential hydrokinetic projects, and noted the potential for new energy

production from those projects. In consequence, the Commission proposed to implement

a “strict scrutiny” approach to reviewing preliminary permit applications, in order to

respond to issues that had been raised at the technical conference, and to encourage

thoughtful permit applications and promote competition.4 The Commission also sought

comment on this proposal, and the great majority of the commenters supported the

Commission’s approach.

5.

On October 2, 2007, the Commission held a Commissioner-led technical

conference, in Portland, Oregon, to discuss a Commission staff proposal for a pilot

licensing process regarding hydrokinetic projects. The staff proposal called for an

expedited licensing process, to be completed in as few as six months. Staff suggested

that pilot project licenses would be available only for proposed projects that are small

(five megawatts or less), are removable or able to be shut down quickly, are not located

in sensitive areas, and are for the purpose of testing new technologies or locating

appropriate sites.5 Staff proposed that pilot project licenses (1) have a short term (five

years), (2) include a standard condition requiring project alteration or shutdown in the

event that there was an unacceptable level of environmental effect, (3) provide the option

4 Id. at ¶ 14, 16.

5 See Notice of Technical Conference and Soliciting Comments, Docket

No. AD07-14-000 (issued July 19 2007).

ate sites.5 Staff proposed that pilot project licenses (1) have a short term (five

years), (2) include a standard condition requiring project alteration or shutdown in the

event that there was an unacceptable level of environmental effect, (3) provide the option

4 Id. at ¶ 14, 16.

5 See Notice of Technical Conference and Soliciting Comments, Docket

No. AD07-14-000 (issued July 19 2007).

Docket No. PL08-1-000

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of applying for a standard 30-50 year license, and (4) require decommissioning and site

restoration at license expiration, if a standard license is not sought. The comments filed

regarding the pilot project license proposal were largely supportive of a more expedited,

less burdensome process, and included a number of specific suggestions as to how the

process could be implemented.

II.

Discussion

6.

Based on the Commission’s experience, it has often been the case that

Commission staff has completed its processing of a hydropower license application,

including preparation of an environmental document, but that authorizations required

from other entities under federal laws including the Clean Water Act, the Coastal Zone

Management Act, and the Endangered Species Act, have not yet been received.

Typically, the Commission has not acted in such instances, sometimes resulting in

substantial delays in developers’ abilities to undertake non-construction activities. This

has a concomitant adverse impact on developers' abilities to move quickly with project

construction once the pending authorizations are filed with the Commission.

7.

The Commission has taken a different approach with respect to authorizations

issued under the Natural Gas Act. In those cases, the Commission has issued pipeline

certificates and authorizations to construct liquefied natural gas facilities while action by

act on developers' abilities to move quickly with project

construction once the pending authorizations are filed with the Commission.

7.

The Commission has taken a different approach with respect to authorizations

issued under the Natural Gas Act. In those cases, the Commission has issued pipeline

certificates and authorizations to construct liquefied natural gas facilities while action by

Docket No. PL08-1-000

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other entities is still pending, and included in the Commission order provisos that

construction may not commence until the necessary authorizations have been received.6

8.

In light of the nation’s interest in the development of its water power resources to

meet the growing need for clean, renewable energy, the Commission has decided to adopt

the natural gas procedural model with respect to new, hydrokinetic projects. Thus, for

new hydrokinetic projects only, we will, in appropriate cases, issue project licenses where

the Commission has completed processing an application but other authorizations remain

outstanding. In such cases, the license will include conditions precluding the licensee

from commencing construction until it has obtained all necessary authorizations.

9.

There are a number of policy reasons to consider adopting the gas pipeline

practice rather than the conventional hydropower practice with respect to conditioned

licensing of hydrokinetic technologies. First, issuing licenses as described will have no

environmental impacts. By the terms of the licenses, licensees will not be permitted to

commence construction until they have obtained all authorizations required by federal

law. When the authorizations are obtained, licensees will be required to file them with

the Commission, and the Commission then will review them and incorporate their terms

in the licenses, as appropriate.

10

have no

environmental impacts. By the terms of the licenses, licensees will not be permitted to

commence construction until they have obtained all authorizations required by federal

law. When the authorizations are obtained, licensees will be required to file them with

the Commission, and the Commission then will review them and incorporate their terms

in the licenses, as appropriate.

10.

Second, issuing an appropriately conditioned license would in no way diminish the

6 See, e.g., Crown Landing LLC, 117 FERC ¶ 61,209 at P 21 and n.19 and n. 36

(2006); Georgia Strait Crossing Pipeline LP, 108 FERC ¶ 61,053 at P 13-16 (2004);

Millennium Pipeline Company, L.P., 100 FERC ¶ 61,277 at P 225-231 (2002).

Docket No. PL08-1-000

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authority of the states or other federal agencies. Construction of a hydrokinetic project

could not start without any necessary state and federal authorizations under a conditioned

license. For that reason, states and federal agencies will fully retain their authority to

take action under relevant federal law.

11.

Third, the new procedure is suitable for demonstration projects. The Commission

can issue licenses quickly, leaving state and federal agencies that have not yet completed

their actions the opportunity to do so, ideally quickly, on their own timetable. While it is

not clear whether state and federal resource agencies will complete their actions on

hydrokinetic projects in a shortened timeframe, as suggested in the pilot project license

proposal drafted by Commission staff, issuance of conditioned licenses would likely give

the Commission a greater ability to respond quickly to innovative project proposals.

Also, early issuance of a Commission license will improve the ability of project

developers to secure financing of demonstration projects.

12.

Issuance of a conditioned license will be a final Commission action, as is the case

with other licenses that contain reservations of authority

es would likely give

the Commission a greater ability to respond quickly to innovative project proposals.

Also, early issuance of a Commission license will improve the ability of project

developers to secure financing of demonstration projects.

12.

Issuance of a conditioned license will be a final Commission action, as is the case

with other licenses that contain reservations of authority. Thus, these licenses will be

subject to rehearing, and, once accepted, their terms will be binding on licensees.

Licensees will be able, and required, to comply with all license terms that do not involve

construction, such as those which may require the development of plans and consultation

with stakeholders.

Docket No. PL08-1-000

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III.

Comments

13.

Interested persons may submit comments on this Policy Statement. Comments are

due on or before December 14, 2007. Comments must refer to Docket No. PL08-1-000,

and must include the commenter’s name, the organization they represent, if applicable,

and their address.

14.

Commenters are requested to use appropriate headings and to double space their

comments.

15.

Comments may be filed on paper or electronically via the eFiling link on the

Commission’s web site at http://www.ferc.gov. The Commission accepts most standard

word processing formats and commenters may attach additional files with supporting

information in certain other file formats. Commenters filing electronically do not need to

make a paper filing. Commenters that are not able to file comments electronically must

send an original and 14 copies of their comments to: Federal Energy Regulatory

Commission, Office of the Secretary, 888 First Street, NE, Washington, DC 20426.

16.

All comments will be placed in the Commission’s public files and may be viewed,

printed, or downloaded remotely as described in the Document Availability section

below. Commenters are not required to serve copies of their comments on other

commenters.

IV

omments to: Federal Energy Regulatory

Commission, Office of the Secretary, 888 First Street, NE, Washington, DC 20426.

16.

All comments will be placed in the Commission’s public files and may be viewed,

printed, or downloaded remotely as described in the Document Availability section

below. Commenters are not required to serve copies of their comments on other

commenters.

IV.

Document Availability

17.

In addition to publishing the full text of this document in the Federal Register, the

Commission provides all interested persons an opportunity to view and/or print the

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contents of this document via the Internet through the Commission’s Home Page

(http://www.ferc.gov) and in the Commission’s Public Reference Room during normal

business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, N.E., Room 2A,

Washington D.C. 20426.

18.

From the Commission’s Home Page on the Internet, this information is available

in the Commission’s document management system, eLibrary. The full text of this

document is available on eLibrary in PDF and Microsoft Word format for viewing,

printing, and/or downloading. To access this document in eLibrary, type the docket

number (excluding the last three digits of the docket number), in the docket number field.

User assistance is available for eLibrary and the Commission’s website during normal

business hours. For assistance, please contact FERC Online Support at (202) 502-6652

(toll-free at 1-866-208-3676) or e-mail at ferconlinesupport@ferc.gov, or the Public

Reference Room at (202) 502-8371, TTY (202) 502-8659. E-mail the Public Reference

Room at public.referenceroom@ferc.gov.

By the Commission.

( S E A L )

Kimberly D. Bose,

Secretary.