Introduction

FERC and Hydropower Licensing

FERC Overview

FERC is a federal agency in the United States responsible for regulating the interstate transmission and generation of electricity, natural gas, and oil. When it comes to hydropower, FERC plays a vital role in issuing licenses, amendments, and ensuring compliance with dam safety and environmental regulations. FERC regulates over 1,600 hydropower licenses and exemptions across the United States, ensuring that these projects operate safely while balancing the need for energy production and environmental conservation. FERC’s Office of Energy Projects (OEP) handles hydropower licensing and compliance matters. FERC OEP is currently organized into six divisions, of which three are related to hydropower: Division of Hydropower Licensing (DHL), Division of Hydropower Administration and Compliance (DHAC), and Division of Dam Safety and Inspections (D2SI).

FERC 101

FERC’s jurisdiction includes authorizing the construction and operation of hydropower projects,

amending project licenses and exemptions, and approving or enforcing environmental protection measures. This includes oversight of new developments and operational changes to existing projects. FERC ensures that all projects meet federal standards for dam safety, environmental protection, and are in the public interest. Pursuant to Part I of the Federal Power Act (FPA), FERC issues preliminary permits, licenses, and exemptions from licensing; ensures dam safety; enforces compliance with license terms and conditions; and coordinates with other agencies on issues related to hydropower projects. Rules for licensing and regulating hydropower projects are codified in Title 18, Conservation of Power and Water Resources, of the Code of Federal Regulations (CFR) eCFR: Title 18 of the CFR - Conservation of Power and Water Resources.

WHY LICENSES MATTER:

Licenses issued by FERC grant operators the legal authority to build and operate hydropower projects. Licenses are crucial for maintaining compliance with federal and state regulations, including environmental protections for water quality, fish and wildlife considerations, public access (recreation), and public safety. Without a license or proper amendment, projects cannot operate legally.

Important Definitions for Hydropower Operators

License: A federal authorization to operate a non-federal hydropower project pursuant to the FPA granted by FERC for a maximum term of 50 years.

Exemption: A federal authorization to operate a hydropower project that is not subject to certain provisions within the FPA. Exempted hydropower projects must be located at existing dams with a maximum of 10 megawatts (MW) of installed capacity; FERC issues exemptions in perpetuity (i.e., they have no term).

Conduit Exemption: Issued for projects less than 40 MW but must be located on a conduit used for agricultural, municipal, or industrial consumption. They cannot be located at an impoundment. Conduit exemptions are issued in perpetuity like hydropower exemptions.

Qualifying Conduit: Does not require a FERC authorization if it is less than 5 MW and located on a conduit used for agricultural, municipal, or industrial consumption along with other restrictions.

Surrender of License or Exemption: The formal process by which a licensee or exemptee voluntarily gives up their FERC authorization, often because the project is no longer economically viable. This process may or may not require environmental restoration but in all cases, must be approved by FERC.

The National Environmental Policy Act (NEPA): This federal act mandates that all federal actions (such as FERC license amendments) consider their environmental effects. Compliance with NEPA often requires FERC staff to prepare an Environmental Assessment (EA) or Environmental Impact Statement (EIS).

Consultation: The process of engaging with federal and state agencies, tribes, and other stakeholders to gather feedback on proposed project changes. For capacity-related amendments, this consultation is required in three stages.