Lessons on licensing7 July 2010
Patricia Weslowski, director of international consulting firm The Louis Berger Group, helps readers to navigate through the hydro power licensing process in the US.
In the US, there is renewed interest in small scale hydro development and new interest in hydrokinetic and wave projects, driven in a large part by national policies that promote investment in renewable energy. For instance, the recent March 2010 MoU among the US Army Corps of Engineers (USACE), the Department of the Interior, and the Department of Energy focused on facilitating the development of private hydro facilities at federal dams. Non-federal hydro projects that meet certain criteria must be licensed by the Federal Energy Regulatory Commission (FERC). Licensing a project, however, can be a long and costly process that can be especially burdensome to small scale developers.
The question is, what can applicants of both small and large scale projects do within the current regulatory framework to help facilitate the licensing process? The Louis Berger Group (LBG) provides environmental and engineering support to FERC, including adequacy reviews of applications and preparation of environmental documents for compliance with the National Environmental Policy Act (NEPA). We have provided NEPA support to FERC for more than 150 licence applications since 1997. Over the past 13 years we have seen all types of applications, ranging from those with minimal information – typically small projects – to massive filings for the relicensing of large, complex multi-development projects.
Based on our experience with all types of applicants and projects for both FERC and private utilities, we can offer several observations about how to navigate the licensing process. First of all, FERC can act on applications relatively quickly (in less than two years). Secondly, early consultation and a concise and accurate licence application can facilitate the review and action on a licence application. And finally, proactive developers can find flexibility in the licensing process.
An example of FERC’s ability to act on applications relatively quickly is the Meldahl Project (FERC No. 12667), proposed by the City of Hamilton, Ohio, at the US Army Corps of Engineers’ Anthony Meldahl locks and dam.
The city filed an application in October 2006 for a 105MW project, including a new intake, approach channel, powerhouse, tailrace channel, and an 8km long transmission line. Before filing the application, the city thoroughly compiled the existing information about the resources in the project area, consulting early and often with resource agencies, and using that information to address resource agencies’ concerns. FERC staff conducted scoping and issued a request for additional information (AIR) in December 2006. The city replied in March 2007, but the ready for environmental analysis notice (REA) was not issued until November 2007. The delay in issuing the REA notice resulted from a combination of factors, including other projects having higher priority at the commission.
LBG was tasked to prepare a draft EA and final EA in early 2008. Shortly thereafter, FERC staff became aware that the city needed to commence construction by 1 July 2008 to be eligible for tax incentives. Asked to accelerate our schedule, we prepared the single EA in little over one month. The commission issued the EA in April 2008 and the licence in June 2008, meeting the deadline faced by the city. The project is now under construction.
In this example, early and frequent consultation with the resource agencies and submission of an adequate application helped to facilitate the proceeding. However, communication with FERC staff about the use of tax incentives earlier in the proceeding might have eliminated the six-month delay between submission of the AIR responses and issuance of the REA notice.
Concise and accurate
The Baker River project demonstrates the importance of early consultation and a concise and accurate licence application in facilitating the review and action on an application. Located in the Cascade Mountain Range, northeast of Concrete, Washington, the 170MW project includes two developments, Upper and Lower Baker Dams, currently operated for power generation, flood control and recreation.
Upper Baker Dam, located on Baker Lake, is approximately 95m high and 366m long. Water is conveyed from the intake at the dam via two 98m long penstocks to the powerhouse that discharges into Lake Shannon. Lower Baker Dam is approximately 87m high and 168m long. Water is conveyed from the intake at the dam via a 179m long penstock to the powerhouse, which discharges into a tailrace channel that extends almost 1.5km to the Skagit river.
LBG and Meridian Environmental Inc were retained by Puget Sound Energy (PSE) to review the initial consultation document that contains detailed information on the project facilities, operations and existing environmental impacts; to prepare the applicant-prepared environmental assessment; and to prepare the application for relicensing.
LBG joined the Baker Solution Team (composed of the resource agency and stakeholder representatives) and participated in the technical working groups addressing aquatic, cultural, historical, wildlife, terrestrial, recreational and aesthetic issues. We also provided key stakeholders, tribes, non-governmental organisations and government agencies with guidance and insight into the relicensing process. Notably, the AIR issued by FERC contained only four items that PSE was able to address very quickly. In addition, FERC staff were able to use more than 90% of the applicant-prepared EA because it conformed to commission EA/EIS guidelines and objectively disclosed the potential effects of the proposed measures.
Every applicant should expect a request for additional information (we have not seen any that have escaped that step), but there is a huge difference in time and costs between a short AIR with a 30- or 90-day response deadline, and a request for additional information with a schedule calling for studies or other activities that could take 180 days or more to complete.
Finally, proactive developers can find flexibility in the licensing process. The Mississippi river hydrokinetics projects offer a lesson in proactively pursuing licensing, in addition to the importance of understanding the issues that drive concerns about resources.
LBG assisted FERC in scoping and developing study plans, and issuing a study plan determination for the multiple-project EIS involving 55 hydrokinetic projects proposed by Free Flow Power. If licensed as proposed in their pre-application document (PAD), the projects would span 1756km of the Mississippi river between St. Louis and New Orleans and would add 180,000 turbine-generators to produce 1800MW of average operating generation, with a total installed capacity of 7200MW. Each project would consist of multiple arrays of turbine-generators mounted on pilings below the depth required to avoid affecting river navigation in this key transportation corridor.
Only cursory information was provided in the PAD for these projects about the potential effects of electromagnetic fields (EMF) on fish, even though information about these effects is available. The applicant ended up having to conduct EMF studies when a more thorough search of existing literature and description of potential effects in the PAD may have eliminated that need. The PAD offers an opportunity to convey that the applicant understands the issues that drive the concern for specific resources, and to provide more detailed study plans that allow resource agencies to determine if the studies will meet their protocols.
In this unique approach to a multi-project EIS, Free Flow Power Corporation proposes to obtain licences for seven of the proposed projects located in Missouri, Illinois, Kentucky, Tennessee, Arkansas, Mississippi and Louisiana under the default integrated licensing process (ILP). This approach recognises the diversity of habitat along the Mississippi river and is designed to make sure all of the key issues are identified and, to the extent possible, that studies conducted at the ILP sites provide sufficient information to address these issues at the remaining sites.
The remaining projects would be approached using the traditional licensing process, and the EAs are expected to tier off of the multi-project EIS. This example demonstrates the flexibility available to proactive developers who communicate their concerns and objectives early with FERC staff.
Based on our experience, we suggest that if you want to facilitate approval of a licence application within the current regulatory framework, you should: engage in early and frequent consultation with the resource agencies and FERC; prepare a PAD that answers more questions than it raises; and file an application that is complete, accurate and objective. These steps should be especially helpful to developers of small scale hydro projects.
In a press release issued by FERC on 15 April 2010, it recognised the need to make its process more user friendly, introducing ‘a series of web-based tools to help [small hydro] developers understand the licensing process, help improve coordination with other agencies, and help applicants complete the licensing process more quickly and efficiently.’ The commission is also working to update its MOU with the USACE to address projects involving dams managed by the USACE. It is also working with other agencies, which have mandatory conditioning authority on MOUs, to better coordinate the NEPA and permit processes that need to be completed before a licence can be issued.
Patricia Weslowski, Director, The Louis Berger Group, Email: [email protected]