President Obama Signs Into Law Legislation To Advance Permitting Of Small Hydropower Projects

by Perkins Coie

On August 9, 2013, President Obama signed into law both H.R. 267, the Hydropower Regulatory Efficiency Act, and H.R. 678, the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act.  These landmark bills unlock the potential for increased hydroelectric project development by reducing the regulatory burdens of permitting such projects.  Both of these bills streamline the permitting process for small hydroelectric projects by excluding them from the jurisdiction of the Federal Energy Regulatory Commission (FERC), and in the case of small hydroelectric projects on Bureau of Reclamation land, from review under the National Environmental Policy Act (NEPA).   

Prior Regulatory Landscape for Small Hydropower Projects

FERC’s regulations currently provide two exemptions from the licensing process for small hydropower projects.   

  • The Small Hydropower Project Exemption.  The first exemption applies to small hydropower projects that are 5 megawatts (MW) or less and are either built at an existing dam, not owned by the U.S. or an instrumentality of the federal government, or utilize a natural water feature for the source without the need for a dam or man-made impoundment.  These facilities cannot retain water behind a structure for the purpose of a storage and release operation.  A project owner must apply to FERC for the exemption, but once granted, the exemption is for perpetuity.
  • The Conduit Exemption.  The second exemption applies to hydropower projects on existing conduits, such as an irrigation canal or aqueduct, which are either 15 MW or less for non-municipal projects or 40 MW or less for municipal projects.  The conduit must be constructed for a primary purpose other than power production and must be fully located on non-federal lands.  Like the small hydropower project exemption, project owners must apply to FERC for the exemption.  Projects falling under the existing conduit exemption qualify for a categorical exclusion under NEPA, although FERC may still require an environmental review if it finds the project would have adverse impacts.  Consultations with fish and wildlife agencies and affected tribes also are required. 

The Hydropower Regulatory Efficiency Act and the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act expand both of these existing exemptions.

The Hydropower Regulatory Efficiency Act of 2013

The Hydropower Regulatory Efficiency Act of 2013, H.R. 267 and companion Senate bill, S. 545, passed both the U.S. House of Representatives and the Senate unanimously.  This legislation expands the Small Hydropower Project Exemption by increasing coverage from 5 MW to 10 MW.  

The legislation expands the conduit exemption by removing conduit projects on private lands under 5 MW entirely from FERC jurisdiction.  These projects automatically qualify for a full waiver of FERC's licensing requirements and do not need to take any action.  The legislation also increases the threshold of the conduit exemption to 40 MW for all projects.  While projects over 5 MW do not automatically qualify for a full waiver, they may apply to FERC for such a waiver.  

Finally, the legislation also provides FERC authority to grant developers preliminary permit extensions to extend the preliminary permit period for priority of license applications when an applicant is proceeding in good faith and with reasonable diligence.  Further, the legislation directs FERC to examine the possibility of a two-year licensing process for certain low-impact hydropower projects, such as non-powered dams and closed-loop pumped storage projects, and to allow the Secretary of Energy to study whether pumped storage facilities can support intermittent renewable electric energy generation and provide increased grid reliability.

The Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act

The Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act, H.R. 678, and Senate companion bill, S. 306, further expands the conduit exemption by exempting from FERC jurisdiction hydropower projects of 5 MW or less that are installed on man-made conduits on Bureau of Reclamation land.  

The legislation also makes the Bureau of Reclamation’s Power Resources Office the lead permitting agency for these projects and provides for a NEPA categorical exclusion from FERC jurisdiction and review under NEPA via a categorical exclusion.  This legislation differs from the Hydropower Regulatory Efficiency Act of 2013 because it only focuses on streamlining the hydropower licensing process for small hydropower projects on existing conduits, including irrigation canals, tunnels and ditches, among other man-made conveyances operated for the distribution of water, on Bureau of Reclamation land.  Additionally, this legislation grandfathers existing FERC conduit applications on Bureau of Reclamation land, and makes the Bureau’s Power Resources Office the lead office for the permitting of these small conduit hydropower projects.  The legislation passed the Senate unanimously and passed the House by a margin of 416-7.

Both laws are likely to spur increased hydropower development by significantly reducing the regulatory burdens and permitting timelines.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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