# 161 FERC ¶ 61,078: Policy Statement on Establishing License Terms for Hydroelectric Projects

> Federal · Agency guidance · In force

URL: https://www.frixlaw.com/law-library/statutes/FERC_PL17_3_000

## Section

- **Citation:** 161 FERC ¶ 61,078
- **Heading:** Policy Statement on Establishing License Terms for Hydroelectric Projects
- **Jurisdiction:** Federal
- **Kind:** Agency guidance
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** FERC Policy Statements / Policy Statement on Establishing License Terms for Hydroelectric Projects

## Text

161 FERC ¶ 61,078
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION

(Docket No. PL17-3-000)

Policy Statement on Establishing License Terms for Hydroelectric Projects

(Issued October 19, 2017)

AGENCY: Federal Energy Regulatory Commission.
ACTION: Policy Statement.
SUMMARY: The Federal Energy Regulatory Commission (Commission) is giving
notice of a new policy on establishing license terms for hydroelectric projects. In this
Policy Statement, the Commission adopts a 40-year default license term for original and
new licenses for hydropower projects located at non-federal dams. The Policy Statement
also sets forth when the Commission will consider issuing those projects a license with a
term for less or more than 40 years.
EFFECTIVE DATE: This policy statement will become effective [date of publication in
the Federal Register].
FOR FURTHER INFORMATION CONTACT:
Nicholas Jayjack
(Technical Information)
Office of Energy Projects
Federal Energy Regulatory Commission
888 First Street, NE
Washington, DC 20426
(202) 502-6073

Docket No. PL17-3-000
- 2 -
Carolyn Clarkin
(Legal Information)
Office of the General Counsel – Energy Projects
Federal Energy Regulatory Commission
888 First Street, NE
Washington, DC 20426
(202) 502-8563

SUPPLEMENTARY INFORMATION:

UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Neil Chatterjee, Chairman;
Cheryl A. LaFleur, and Robert F. Powelson.

Policy Statement on Establishing License Terms for Docket No
RMATION:

UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Neil Chatterjee, Chairman;
Cheryl A. LaFleur, and Robert F. Powelson.

Policy Statement on Establishing License Terms for Docket No. PL17-3-000
Hydroelectric Projects

POLICY STATEMENT ON ESTABLISHING LICENSE TERMS FOR
HYDROELECTRIC PROJECTS

(Issued October 19, 2017)

In this Policy Statement, the Commission sets forth a new policy on establishing
license terms for original and new licenses for hydropower projects located at non-federal
dams. The goal of this action is to provide more certainty for stakeholders regarding the
Commission’s regulatory process, reduce regulatory burden, increase administrative
efficiency for all stakeholders, and further encourage licensees to negotiate settlement
agreements and promptly seek authorization to implement voluntary environmental,
recreational, and developmental enhancements.
I.
Background
A.
Current License Term Policy

Section 6 of the Federal Power Act (FPA)1 provides that hydropower licenses
shall be issued for a term not to exceed 50 years. There is no minimum license term for

1 16 U.S.C. 799 (2012).

Docket No. PL17-3-000
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original licenses. FPA section 15(e)2 provides that any “new license”3 shall be for a term
that the Commission determines to be in the public interest, but not less than 30 years or
more than 50 years
s
shall be issued for a term not to exceed 50 years. There is no minimum license term for

1 16 U.S.C. 799 (2012).

Docket No. PL17-3-000
- 2 -
original licenses. FPA section 15(e)2 provides that any “new license”3 shall be for a term
that the Commission determines to be in the public interest, but not less than 30 years or
more than 50 years.

It is current Commission policy to set a 50-year term for licenses issued for
projects located at federal dams.4 For projects located at non-federal dams, the
Commission sets a 30-year term where there is little or no authorized redevelopment, new
construction, or environmental mitigation and enhancement; a 40-year term for a license
involving a moderate amount of these activities; and a 50-year term where there is an
extensive amount of such activity.5 The Commission previously established this policy
to ease the economic impact of new costs, promote balanced and comprehensive
development of renewable power generating resources, and encourage licensees to be
good environmental stewards.6

2 16 U.S.C. 808(e) (2012).
3 “New license” is the term used in the FPA to refer to a license issued to replace a
project’s expiring license.
4 City of Danville, Virginia, 58 FERC ¶ 61,318, at 62,020 (1992) (citing Little
Falls Hydroelectric Associates, 27 FERC ¶ 61,376 (1984)).
5 Id. (addressing original licenses); Consumers Power Co., 68 FERC ¶ 61,077, at
61,384 (1994) (addressing new licenses). Projects that entail construction of a new dam
have generally received 50-year licenses. City of Danville, Virginia, 58 FERC ¶ 61,318
at 62,020 (citing Little Falls Hydroelectric Associates, 27 FERC ¶ 61,376).
6 Consumers Power Co., 68 FERC ¶ 61,077 at 61,384.
6 (1984)).
5 Id. (addressing original licenses); Consumers Power Co., 68 FERC ¶ 61,077, at
61,384 (1994) (addressing new licenses). Projects that entail construction of a new dam
have generally received 50-year licenses. City of Danville, Virginia, 58 FERC ¶ 61,318
at 62,020 (citing Little Falls Hydroelectric Associates, 27 FERC ¶ 61,376).
6 Consumers Power Co., 68 FERC ¶ 61,077 at 61,384.

Docket No. PL17-3-000
- 3 -

Determining whether the measures required under a license are minimal,
moderate, or extensive is highly case-specific and largely based on a qualitative analysis
of the record before the Commission. In establishing the appropriate license term, staff
initially examines the nature and extent of the required measures in the context of the
project at issue,7 and then uses the cost of measures as a check on a qualitative conclusion
that the measures required under the license are minimal, moderate, or extensive. The
Commission’s current policy takes a forward-looking approach, such that any measures
adopted under a prior license term are not considered.8 It has also been the
Commission’s policy to coordinate, to the extent feasible, license terms for projects in the
same river basin to maximize consideration of cumulative impacts when the projects are
due to be relicensed.9

The length of an original license has not been contested on rehearing for some
time; however, licensees and other parties have recently contested the length of a new
license in several relicensing proceedings. The arguments raised in these cases include

7 For example, one type of fishway may be more expensive than another, and a
fishway type that might be considered extensive for a small project could be seen as
minimal for a larger one
, licensees and other parties have recently contested the length of a new
license in several relicensing proceedings. The arguments raised in these cases include

7 For example, one type of fishway may be more expensive than another, and a
fishway type that might be considered extensive for a small project could be seen as
minimal for a larger one.
8 See, e.g., Duke Energy Carolinas, LLC, 156 FERC ¶ 61,010, at P 19 (2016)
(Duke Energy) (stating Commission’s long-standing policy is to only consider measures
required in the new license) (citing Alabama Power Co., 155 FERC ¶ 61,080, at P 72
(2016); Georgia Power Co., 111 FERC ¶ 61,183, at P 12 (2005); Ford Motor Co.,
110 FERC ¶ 61,236, at PP 6-8 (2005)).
9 18 CFR 2.23 (2017); see also Public Utility of District No. 1 of Chelan County,
Washington, 127 FERC ¶ 61,152, at P 18 (2009) (Chelan PUD).

Docket No. PL17-3-000
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that the Commission, when establishing the license term, should have considered, or
given more weight to: previously-authorized capacity-related investments or
environmental enhancements made by the licensee before issuance of the new license;10
total cost of the relicensing process;11 losses in generation value related to environmental
measures;12 the license terms of projects that the license applicant states are similarly
situated to its project;13 and the license term provided for in settlement agreements.14
In each circumstance, the Commission declined to extend the length of the license.
B.
Notice of Inquiry on Establishing License Terms for Hydroelectric
Projects

On November 17, 2016, the Commission issued a notice of inquiry (NOI) to seek
comments on whether, and if so how, the Commission should revise its current license
term policy. The NOI invited comments on five potential license term policy options:
e, the Commission declined to extend the length of the license.
B.
Notice of Inquiry on Establishing License Terms for Hydroelectric
Projects

On November 17, 2016, the Commission issued a notice of inquiry (NOI) to seek
comments on whether, and if so how, the Commission should revise its current license
term policy. The NOI invited comments on five potential license term policy options:
(1) retain the current policy; (2) modify the current policy to consider voluntary

10 See, e.g., Duke Energy, 156 FERC ¶ 61,010 at P 12; Alabama Power Co.,
155 FERC ¶ 61,080 at P 71; Public Utility District No. 1 of Douglas County, Washington,
143 FERC ¶ 61,130, at PP 12-13 (2013) (Douglas PUD); Chelan PUD, 127 FERC
¶ 61,152 at PP 12-13; Georgia Power Co., 111 FERC ¶ 61,183 at P 10; Ford Motor Co.,
110 FERC ¶ 61,236 at P 6.
11 See, e.g., Duke Energy, 156 FERC ¶ 61,010 at P 12.
12 See, e.g., id.
13 See, e.g., id. P 20; Alabama Power Co., 155 FERC ¶ 61,080 at P 71; Duke
Energy Progress, Inc., 153 FERC ¶ 61,056, at P 39 (2015); Douglas PUD, 143 FERC
¶ 61,130 at P 15.
14 See, e.g., Duke Energy Progress, Inc., 153 FERC ¶ 61,056 at P 40; Douglas
PUD, 143 FERC ¶ 61,130 at P 18; Chelan PUD, 127 FERC ¶ 61,152 at P 16.

Docket No. PL17-3-000
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authorized actions implemented under the prior license (“previously-authorized voluntary
actions”); (3) replace the current license term policy with a policy for a 50-year default
license term unless a lesser license term would be in the public interest (for example, to
better coordinate the license terms of projects in the same river basin); (4) add a more
quantitative cost-based analysis to the current policy; and (5) alter the current policy to
accept license terms agreed upon in settlement agreements, when appropriate. Comments
on alternative policy options were also encouraged. The NOI established January 24,
2017, as the deadline for comments, which staff extended to March 24, 2017
erms of projects in the same river basin); (4) add a more
quantitative cost-based analysis to the current policy; and (5) alter the current policy to
accept license terms agreed upon in settlement agreements, when appropriate. Comments
on alternative policy options were also encouraged. The NOI established January 24,
2017, as the deadline for comments, which staff extended to March 24, 2017.

Industry members, federal and state resource agencies, environmental and
recreation groups, and individuals filed comments. Most commenters support revising
the current policy. Several commenters state that under the current policy stakeholders
lack certainty, and, consequently, license applicants lack guidance on what measures will
yield longer license terms and are deterred from proposing additional protection,
mitigation, and enhancement measures. Further, many commenters state that because the
policy is forward-looking, licensees delay seeking authorizations for capacity upgrades
and environmental and recreational enhancements until they apply for a new license.
Some industry commenters state that under the current policy, license applicants and
settlement parties cannot use the license term as a bargaining chip because the
Commission might reject that term in the license order. To address these concerns, many
commenters recommend that the Commission consider previously-authorized voluntary
actions and defer to the license term that was negotiated as part of a settlement
agreement.
under the current policy, license applicants and
settlement parties cannot use the license term as a bargaining chip because the
Commission might reject that term in the license order. To address these concerns, many
commenters recommend that the Commission consider previously-authorized voluntary
actions and defer to the license term that was negotiated as part of a settlement
agreement.

Docket No. PL17-3-000
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Commenters disagree on the 50-year default license term policy option. Industry
commenters generally support the 50-year default license term because they state it
would provide a clear, predictable standard. Industry commenters add that such policy
would eliminate the current “penalty” for efficient, well-maintained, and relatively low-
impact projects that do not require substantial environmental or developmental measures
and therefore only receive a 30-year license.

In contrast, environmental groups, individuals, and most resource agencies oppose
the 50-year default license term option. Several resource agencies argue that this option
would provide little incentive for a license applicant to voluntarily propose or agree to
mitigation measures because such measures would no longer factor into the
Commission’s license term decision. The resource agencies also contend that such policy
would result in applicants focusing their license application study efforts on disproving
project effects rather than on identifying potential mitigation measures.

Most commenters recommend against the policy option to adopt a more
quantitative cost-based analysis. Many commenters state that it would be difficult to
develop a quantitative cost-based analysis that takes into account the diverse hydropower
fleet and environmental and recreational values
dy efforts on disproving
project effects rather than on identifying potential mitigation measures.

Most commenters recommend against the policy option to adopt a more
quantitative cost-based analysis. Many commenters state that it would be difficult to
develop a quantitative cost-based analysis that takes into account the diverse hydropower
fleet and environmental and recreational values.

As an alternative to the five policy options, several industry commenters
recommend that the Commission adopt a 40-year default license term with credit (up to
an additional 10 years) for previously-authorized actions and deference to settlement
agreements. They state that under this alternative, licenses should be issued for less than
40 years only when a license applicant has agreed to a settlement agreement with a

Docket No. PL17-3-000
- 7 -
negotiated license term of less than 40 years, or voluntarily coordinates its license term
with other projects in a river basin.
II.
Discussion

The extensive comments received have given the Commission a deeper
understanding of the effects that the current license term policy has on stakeholders in
hydropower licensing proceedings. The Commission recognizes the importance of
providing license applicants and other stakeholders as much certainty as possible.
License applicants expend significant financial resources on preparing their license
applications and complying with their licenses thereafter. Further, stakeholders need
certainty to determine the protection, mitigation, and enhancement measures that they
will negotiate and license applicants will propose.

The current policy also affects the Commission’s staff and resources needed to
review and process license applications. Staff anticipate that over 300 projects will enter
the relicensing process through 2025. Under the current policy, staff would establish the
license term for each of those projects case by case
ment measures that they
will negotiate and license applicants will propose.

The current policy also affects the Commission’s staff and resources needed to
review and process license applications. Staff anticipate that over 300 projects will enter
the relicensing process through 2025. Under the current policy, staff would establish the
license term for each of those projects case by case.

After considering this matter and the comments on the NOI, the Commission has
decided it is in the public interest to change its license term policy. With this Policy

Docket No. PL17-3-000
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Statement, the Commission establishes a 40-year default license term policy for original
and new licenses for hydropower projects located at non-federal dams.15

There are three circumstances where the Commission will consider issuing a
license for less or more than 40 years. First, the Commission will establish a shorter or
longer term if necessary to coordinate license terms for projects located in the same river
basin. Second, the Commission will defer to a shorter or longer term explicitly agreed
upon in a generally-supported comprehensive settlement agreement, provided that such
term does not conflict with coordination. Settlement agreements that state the settlement
signatories would not oppose a certain term or would support a term within a range of
years will not be considered to include an explicitly agreed upon license term.16

Third, the Commission will consider a longer license term – provided that doing
so is consistent with coordinating license terms within a basin – when a license applicant
specifically requests a longer license term based on significant measures expected to be
required under the new license or significant measures implemented during the prior

15 This policy does not apply to pilot hydrokinetic projects, which have terms of
up to five years
ith coordinating license terms within a basin – when a license applicant
specifically requests a longer license term based on significant measures expected to be
required under the new license or significant measures implemented during the prior

15 This policy does not apply to pilot hydrokinetic projects, which have terms of
up to five years. See FERC, Licensing Hydrokinetic Pilot Projects,
www.ferc.gov/industries/hydropower/gen-
info/licensing/hydrokinetics/pdf/white_paper.pdf.
16 See, e.g., Chelan PUD, 127 FERC ¶ 61,152 at n.27 (settlement states that the
signatories do not oppose the licensee’s efforts to seek a 50-year term); Duke Energy,
156 FERC ¶ 61,010 at P 24 (settlement states the signatories agree to support a license
term that is not less than 40 years nor more than 50 years).

Docket No. PL17-3-000
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license term that were not required by that license or other legal authority17 and for which
the Commission has not already given credit through an extension of the prior license
term. The Commission will consider, on a case-by-case basis, measures and actions that
enhance non-developmental project purposes (i.e., environmental, project recreation,
water supply), and those that enhance power and developmental purposes, together with
the cost of those measures and actions to determine whether they are significant and
warrant the granting of a longer license term. Maintenance measures and measures taken
to support the licensing process will not be considered. As guidance, we note that the
Commission has found that measures including the construction of pumped storage
facilities, fish passage facilities, fish hatcheries, substantial recreation facilities, dams,
and powerhouses warranted longer license terms
arrant the granting of a longer license term. Maintenance measures and measures taken
to support the licensing process will not be considered. As guidance, we note that the
Commission has found that measures including the construction of pumped storage
facilities, fish passage facilities, fish hatcheries, substantial recreation facilities, dams,
and powerhouses warranted longer license terms.

There are a number of reasons for establishing a 40-year default license term with
exceptions for coordination, deference to generally-supported comprehensive settlement
agreements, and consideration of previously-authorized voluntary actions. This policy
will provide significant certainty to licensees, resource agencies, and other stakeholders.
A 40-year default license term will provide a simpler method for Commission staff to
establish license terms, and, thus, increase administrative efficiencies. A case-specific
assessment will only be required for those license applications that request a longer
license term, and are not explicitly supported by a generally-supported comprehensive

17 See, e.g., Chelan PUD, 127 FERC ¶ 61,152, at P 14 (stating that the licensee
acted in order to comply with the Endangered Species Act, not to simply voluntarily
resolve relicensing issues early).

Docket No. PL17-3-000
- 10 -
settlement agreement. Because many projects would be relicensed less frequently, the
policy would also lower administrative costs for all stakeholders, provide licensees longer
license terms to recoup costs, and reduce regulatory burden. Further, the policy will
place efficient, low-impact projects that require minimal measures – and thus, would
receive a 30-year term under the current policy – on more equal footing with projects that
require more measures.

The policy may also encourage licensees to voluntarily make capacity upgrades
and enhance recreational and environmental resources during the prior license term
urden. Further, the policy will
place efficient, low-impact projects that require minimal measures – and thus, would
receive a 30-year term under the current policy – on more equal footing with projects that
require more measures.

The policy may also encourage licensees to voluntarily make capacity upgrades
and enhance recreational and environmental resources during the prior license term.
Affected resources will benefit from licensees undertaking preventative or remedial
measures sooner rather than later. In addition, the policy may further encourage license
applicants to engage with stakeholders to negotiate a license settlement agreement.
Because a generally-supported comprehensive settlement agreements represent
stakeholder values, terms negotiated as part of those agreements are in the public interest,
provided they do not conflict with coordination.

A 40-year default license term will not adversely affect environmental and
recreation resources. All of our licenses contain extensive environmental and recreation
measures. While under our new policy some projects may be relicensed less frequently
and unanticipated project effects on environmental resources may go unmitigated for
longer durations of time than before, there are many tools available to address these
unanticipated effects in a timely manner. The Commission may address serious,

Docket No. PL17-3-000
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unanticipated environmental effects using its standard reopener article,18 and licensees
often file applications for license amendments to address significant, unanticipated
environmental issues. Further, resource agencies frequently reserve authority to address
those effects under FPA section 4(e) (federal reservation)19 and section 18 (fishway
prescription),20 and in water quality certifications issued under section 401 of the Clean
Water Act
reopener article,18 and licensees
often file applications for license amendments to address significant, unanticipated
environmental issues. Further, resource agencies frequently reserve authority to address
those effects under FPA section 4(e) (federal reservation)19 and section 18 (fishway
prescription),20 and in water quality certifications issued under section 401 of the Clean
Water Act. Stakeholders have also negotiated with or encouraged licensees to propose
measures that include adaptive management approaches to allow for appropriate
modifications as additional information is gathered, new technologies develop, and
societal and environmental needs change.

This Policy Statement will apply to all licenses issued following its publication in
the Federal Register with no retroactive application. License applicants with pending
license applications may file a comprehensive settlement agreement, or addendum to an
existing agreement, that includes an explicitly agreed upon license term or may make a
filing demonstrating why the Commission should award them a longer license term than

18 Each license incorporates a Commission L-Form that includes standard reopener
clauses to enhance fish and wildlife resources. See Standardized Conditions for Inclusion
in Preliminary Permits and Licenses Issued Under Part I of the Federal Power Act,
54 F.P.C. 1792 (1975).
19 16 U.S.C. 797(e) (2012) (licenses for projects located on federal reservations are
subject to and contain conditions as the Secretary of the department under whose
supervision such reservation falls shall deem necessary).
20 16 U.S.C. 811 (2012) (Secretaries of the Interior and Commerce may prescribe
fishway prescriptions).
r Part I of the Federal Power Act,
54 F.P.C. 1792 (1975).
19 16 U.S.C. 797(e) (2012) (licenses for projects located on federal reservations are
subject to and contain conditions as the Secretary of the department under whose
supervision such reservation falls shall deem necessary).
20 16 U.S.C. 811 (2012) (Secretaries of the Interior and Commerce may prescribe
fishway prescriptions).

Docket No. PL17-3-000
- 12 -
40 years. The Commission, however, will not entertain applications to amend existing
licenses to extend their license terms simply on the basis of this new license term policy.
Pursuant to current policy, licensees that seek to extend existing licenses with terms of
less than 50 years, must justify such requests, for example by proposing development,
environmental, and recreation enhancements in a license amendment application
accompanied by a request that the Commission extend their license term.21
III.
Document Availability

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
contents of this document via the Internet through FERC’s Home Page
(http://www.ferc.gov) and in FERC’s Public Reference Room during normal business
hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, NE, Room 2A,
Washington DC 20426.

From FERC’s Home Page on the Internet, this information is available on
eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft
Word format for viewing, printing, and/or downloading
(http://www.ferc.gov) and in FERC’s Public Reference Room during normal business
hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, NE, Room 2A,
Washington DC 20426.

From FERC’s Home Page on the Internet, this information is available on
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 this document in the

21 See, e.g., Idaho Power Co., 132 FERC ¶ 62,001 (2010) (10-year extension
of the license term due to the costs of replacing the project’s existing powerhouse and
increasing generating capacity); PPL Holtwood, LLC, 129 FERC ¶ 62,092 (2009)
(16-year extension of license term due to costs associated with the constructing a new
powerhouse, installing two turbine generating units at the existing powerhouse, and
various environmental measures).

Docket No. PL17-3-000
- 13 -
docket number field. User assistance is available for eLibrary and the Commission’s
website during normal business hours from FERC Online Support at 202-502-6652 (toll
free at 1-866-208-3676) or email 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 )

Nathaniel J. Davis, Sr.,
Deputy Secretary.

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