US Federal permitting reforms for major infrastructure - will they provide relief for new hydro projects? Mike Swiger and John Clements report.
In December 2015, President Obama signed into law the FAST/DRIVE Act (H.R. 22) transportation bill. One component of H.R. 22 is the Federal Permitting Improvement Act (Act), which aims to expedite and improve the federal permitting process for major infrastructure projects, including water power projects, costing $200 million or more. The new law establishes a federal interagency council chaired by a Presidential appointee to develop permitting best practices, set deadlines, and enable the public to track the progress of major federal permitting actions. Two veteran FERC hydroelectric attorneys explain how these requirements will be implemented and share their perspectives on how the hydropower industry may benefit.
Provisions of the new law
The permitting streamlining provisions apply to construction of infrastructure for renewable or conventional energy production, including hydroelectric projects, electricity transmission, surface transportation, aviation, ports and waterways, water resource projects, broadband pipelines, manufacturing and other projects specifically found to be appropriate for application of the procedures by a new Federal Permitting Improvement Steering Council (Steering Council).
Steering council role and responsibilities
The Steering Council will track, coordinate and streamline permitting of covered projects and develop performance standards for permitting of different categories of projects. A covered project is any activity that requires federal agency authorization or environmental review involving the infrastructure categories mentioned above that is: i) subject to the National Environmental Policy Act (NEPA) and likely to require a total investment exceeding $200 million and does not qualify for abbreviated permitting under any other federal law, or ii) is subject to NEPA and in the opinion of the Steering Council is likely to benefit from enhanced permitting oversight and coordination.
To provide perspective, a 2014 report for the Western Electric Coordinating Council's Transmission Expansion Planning and Policy Committee recommended the use of capital costs for generic small (30MW and under) of $4 million/MW and $3.2 million/MW for large (>30MW) projects for planning purposes [1]. This suggests a range of project sizes within the $200 million threshold ranging from approximately 50-65 MW. However, because hydroelectric project capital costs are very site-specific, it is entirely reasonable to think much smaller projects may also meet the threshold.
Each federal agency named in the Act including, among others, the Federal Energy Regulatory Commission, the Departments of Agriculture, Interior, and Commerce, and the Environmental Protection Agency, all of which may play a role in hydroelectric permitting a hydroelectric project, must appoint a high ranking official to the Steering Council. The agency must also designate a Chief Environmental Review and Permitting Officer to assist the Council member, whose duties include making recommendations to improve the agency's permitting processes. The Steering Council's tasks include establishing an online database or "Permitting Dashboard" to track covered projects. This will enable the public to track the status of review and authorizations by all agencies that are cooperating agencies in development of the environmental review document or otherwise participate in the environmental review.
The Steering Council is directed to establish within six months (early June 2016) an inventory of covered projects for which environmental review or authorization by a federal agency is pending, categorize the covered projects based on sector and type, identify the types of environmental reviews and authorizations most commonly required for each category, and add a covered project to the inventory after receiving notice from the project sponsor. Also, within one year of enactment, the Steering Council is directed to issue recommendations for: i) performance schedules for environmental reviews and authorizations most commonly required for each category of covered project, and ii) best practices for enhancing early stakeholder engagement, ensuring timely decisions, improving interagency coordination, increasing transparency, reducing information collection and other administrative burdens, making technical information available, and developing training materials for agencies. Finally, the Steering Council must also submit an annual report to Congress on its progress in implementing the law.
Permitting agency responsibilities
A project proponent initiates the review process by providing notice of initiation of the project with supporting information to a facilitating agency appointed by the Steering Committee for the applicable category of infrastructure or, if a facilitating agency has not yet been appointed for that category of project, any agency with permitting authority for that project. The agency receiving the notice, or the lead agency for NEPA compliance once designated, then identifies all federal and non-federal agencies likely to have financing, environmental review, authorization, or other responsibilities for the proposed project and invites each such federal agency to become a participating or cooperating agency in the environmental review process. An invited federal agency is deemed to be a cooperating or participating agency unless it disclaims jurisdiction or authority or states that it does not intend to exercise its authority or otherwise participate in the environmental review. States may choose to have state agencies with permitting or review authority to participate in the Act's environmental review and authorization process.
Within 60 days of the posting of a covered project on the Permitting Dashboard, the lead NEPA agency must establish a Coordinated Project Plan (CPP) including timelines for review and approval by itself and cooperating or participating agencies based on the performance schedule and timetable for that category and type of project established by the Steering Council. The CPP is also posted to the Permitting Dashboard. To the maximum extent possible, agencies are required to carry out their tasks under the CPP concurrently and the federal review is required to be coordinated with applicable state, local or tribal agency processes. The Steering Council's Executive Director mediates any disagreements among agencies and the project proponent over the timetable. Extensions of the final completion date under the timetable must be approved by the Executive Director and cannot in total exceed half the time of the original timetable. Any further extensions must be approved by the Director of the Office of Management and Budget (OMB) and be accompanied by a report to Congress explaining the delays. Agencies are also authorized to establish by regulation fee structures for project proponents to reimburse the federal government for their reasonable costs to review and authorize covered projects.
Although cooperating agencies are required to coordinate their environmental reviews and adhere to the schedule, the Act provides no enforcement mechanism. Instead, the Act aims to "jawbone" agencies into compliance by requiring an agency that fails to meet the timeline to submit a notice for the Permitting Dashboard which must include an explanation for its failure to meet the timeline and provide an alternative completion date. In addition, each month thereafter until the agency takes final action it must submit for the Permitting Dashboard a status report describing its activity related to the project. The requirement for OMB approval and a report to Congress for extensions exceeding fifty percent of the original timeline should also create an incentive to complete permitting within a reasonable period.
Curbs on litigation
The Act attempts to curb litigation in two significant ways. First, it requires any challenge to a covered project's NEPA review to be filed within two years of the record of decision or approval or denial of a permit. Unless a statute provides otherwise, the United States Code requires civil actions against the United States to be filed within six years from the challenged action. Second, in considering whether to enjoin construction of a covered project pending a court challenge, the Act requires the court, among other things: i) to consider the potential for significant negative effects on jobs that would result from such an injunction, and ii) not to presume potential for negative effects on jobs are reparable.
Potential benefits for hydropower
The Act's regulatory reforms have the potential to improve hydroelectric permitting timelines by promoting best practices, standardizing the expectations for processing timelines, providing transparency on agency performance, establishing a continuing obligation to justify extensions of the timeline, and requiring OMB approval of particularly lengthy extensions. However, the Act does not amend any of the substantive laws that require federal hydroelectric permits and approvals, such as the Federal Power Act, NEPA, Clean Water Act, and Endangered Species Act. Thus, the overlapping federal and state permitting requirements that have hobbled efficient consideration of hydroelectric development proposals remain in place. The Act also does not establish legal deadlines for agency action. Rather, it creates a process for inter-agency negotiation of processing deadline expectations and relies on improved transparency and continuing administration and Congressional oversight to incentivize coordination of permitting processes and give substantial hydroelectric and other infrastructure projects appropriate priority. Finally, the Act includes a sunset provision which will eliminate the Steering Council and Congressional oversight seven years from enactment; i.e., December 2022. Because the program has a rather limited term it is only likely to be successful if the next administration and the affected agencies are committed to the goal of expedited federal permitting and Congress vigorously exercises its oversight authority. Whether these things will happen is a question that only time will answer.
Reference
1. Capital Cost Review of Power Generation Technologies, Recommendations for WECC's 10- and 20-Year Studies (March 2014), pp. 21, 27.
About the authors
Mike Swiger is a Partner and the Hydroelectric Practice Group Leader of Van Ness Feldman, LLP. He represents a broad cross-section of entities with interests in energy and water development before federal agencies, the presidential administration, Congress, and the federal courts. In more than 30 years of representing hydroelectric project operators and developers, he has been involved in several major hydroelectric license proceedings before the Federal Energy Regulatory Commission (FERC), appellate litigation in the U.S. courts of appeal and Supreme Court, and agency trial-type proceedings. Among others, Mike currently represents FirstLight Hydro Generating Company in relicensing of a 1,192 MW pumped storage project and a conventional project on the Connecticut River. Mike has served as Chair of the Renewable Energy & the Environment and the Hydroelectric Regulation Committees of the Energy Bar Association, is active in the National Hydropower Association (NHA), and has written and spoken extensively on regulatory and environmental issues affecting energy and water development. In 2014 he received NHA's Dr. Kenneth Henwood Lifetime Achievement Award.
John Clements has been Of Counsel at Van Ness Feldman, LLP since 2006 and specialized in hydropower licensing for 30 years. He is currently involved in relicense proceedings before FERC, development of new projects, license implementation and compliance, and appellate litigation in the D.C. Circuit Court of Appeals. Among others, John represents Missouri River Energy Services, which is constructing the Red Rock Project at a U.S. Army Corps of Engineers dam on the Iowa River. John is a regular panelist at industry conferences and seminars. Prior to joining the firm, John served as the Office Director and Director of Licensing in FERC's Office of Hydropower Licensing during an unprecedented wave of over 200 relicensings, as the legal and policy advisor on hydroelectric matters for three FERC Chairs, and as a senior hydroelectric attorney. John wrote the regulations for the Integrated Licensing Process, FERC's default licensing process rules.
