The rules mark the first time that the three departments have established joint procedures for dispute resolution regarding hydro licensing. The new rules will be effective immediately as mandated by the Energy Policy Act of 2005. The public will have 60 days to review and submit comments on the rules, which could result in changes in a revised Final Rule.

The Energy Policy Act of 2005 (Sec. 241) requires the Departments of the Interior, Commerce, and Agriculture to jointly develop a rule in consultation with the Federal Energy Regulatory Commission (FERC), that enables hydro power license applicants and other parties to license proceedings to request trial-type hearings on disputed issues of material fact, such as whether fish were historically present in a river. These issues relate to conditions or prescriptions that may be developed by one or more of the departments to address the above mentioned concerns. The Energy Policy Act passed by wide margins in both Houses of Congress after years of congressional consideration of ways to improve hydro power licensing.

Hydro licenses authorise operations for a number of years, after which the facilities must be relicensed for operations to continue. Relicensing is an opportunity to deal with specific resource protection concerns, such as enabling fish passage for species listed as threatened or endangered or to improve water quality. However, conditions or prescriptions may require utilities to incur significant costs that may in turn affect their consumers. In some cases, utilities have expressed concern that these costs are excessive. Other stakeholders have on occasion argued that some conditions are not stringent enough to protect important natural resources such as native salmon and trout.

The Act also allows applicants and other parties to license proceedings to submit alternative conditions or prescriptions for consideration by the respective federal departments, which will accept them unless they make specific findings as to why they cannot. Such alternatives might propose ways to lower costs to utilities and consumers while still protecting critical resources. The Interim Final Rules include details on how and where to submit alternative conditions or prescriptions for consideration.

Although the new rules are an improvement on the previous rules, conservationists contend that the new rules allow utilities to retroactively challenge protection measures – even after they have been finalised as part of the licensing process – and despite years of negotiations over environmental standards for dam operations conducted by states, local governments, tribes, and federal agencies.

They warn that utilities will be able to exploit this unfair advantage to evade the installation of fish ladders, avoid improving water flow and ignore fish and wildlife up and downstream of their dams on rivers across the country. Hydro power licenses for non-federal operations, including many dams, are issued by FERC.

The conservation group American Rivers objects to the measure, saying it favors electric utility lobbyists at the expense of states, tribes, communities, and the environment.