FERC

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In an order dated May 20, 2021, the Federal Energy Regulatory Commission (FERC, or the Commission) terminated the hydropower licenses for three projects located on the Tittabawasee River in Michigan—the Secord (P-10809), Smallwood (P-10810) and Sanford (P-2785) dams.  The termination by implied surrender follows a May 2020 breach at the Sanford dam and the breach and failure of the upstream Edenville dam, which was also operated by the same licensee before the Commission revoked the Edenville license in 2018 due to the licensee’s repeated noncompliance with FERC dam safety orders.  The resultant floods caused significant damage in the communities surrounding the dams and have been estimated by the State of Michigan to have caused economic harm exceeding $190 million.

Addressing environmental justice (EJ) has been an immediate priority for the Biden administration. Within a week of taking the oath of office, President Biden issued a sweeping executive order with a number of EJ initiatives, including creation of a White House Environmental Justice Interagency Council consisting of the heads of each Cabinet-level and independent federal agency. The order also directed federal agencies to “make achieving environmental justice part of their missions” through development of programs and policies aimed at addressing disproportionately high adverse environmental impacts on disadvantaged communities.

On March 23, 2021, the United States Court of Appeals for the Second Circuit (the “Second Circuit” or the “Court”) agreed with FERC’s determination that the New York State Department of Environmental Conservation (“DEC”) had waived its certification authority under the Clean Water Act (“CWA”) by failing to act within the one-year statutory deadline. Notably, the Second Circuit held that a state agency cannot revise a certification request date by written agreement with the applicant, thereby altering the one-year statutory deadline for state action. Denying the petitions for rehearing by DEC and the Sierra Club, the Court applied the same reasoning it applied in New York State Dep’t of Env’t Conservation v. FERC (“New York I”), 884 F.3d 450, 455-56 (2d Cir. 2018) (see March 20, 2018 edition of the WER) where the Second Circuit determined that DEC could not unilaterally alter the application date based on when it considered an application complete “because that approach would allow a state agency not only to dictate when the review process can begin but also to delay it indefinitely.” There, to avoid such a subjective standard, the Second Circuit established a bright line rule that the beginning of the review is determined by the date “of receipt of such request.”

On March 23, the Second Circuit issued its opinion in N.Y. Dep’t of Enviro. Conservation v. FERC, Case No. 19-1610 (i.e., the “Empire Pipeline” case). The case concerns the Federal Energy Regulatory Commission’s (FERC or Commission) determination that the New York State Department of Environmental Conservation (NYSDEC) waived its water quality certification authority with regard to FERC’s issuance of a gas pipeline certificate when NYSDEC sought to extend its review period beyond the one-year deadline under Section 401 of the Clean Water Act (CWA or Act) by agreeing with the applicant to “post-date” the filing date of its water quality certification application by several weeks.

On March 18, 2021, FERC issued a Final Rule amending its regulations to establish a one-year period for states, tribes, or other certifying authorities (“Certifying Agencies”) to act on a Clean Water Act (“CWA”) Section 401 water quality certification request for proposed natural gas and liquefied natural gas projects.

In 2019, the D.C. Circuit in Hoopa Valley Tribe v. FERC  held that the plain language of Clean Water Act (CWA) Section 401 establishes a bright-line maximum period of one year for States to act on a request for water quality certification and that the Federal Energy Regulatory Commission (Commission) was arbitrary and capricious when it failed to enforce the statutory time-limit.  Since the Hoopa Valley Tribe ruling, the Commission has repeatedly held that a State waives its authority under Section 401 when it has sought to extend the one year review period by requesting or directing the applicant to withdraw and resubmit its application to afford the state reviewing agency more time.  In several recent cases, however, the Commission has found that there may be instances where a withdrawal and resubmission of a water quality certification by the applicant does not result in a State’s waiver of Section 401 certification authority.

The Federal Energy Regulatory Commission (FERC) has issued an order proposing a $15 million civil penalty in response to the failure of a licensee to respond to FERC dam safety orders in the wake of the failure of the Edenville dam and downstream FERC-licensed Sanford Dam (Project No. 2785) in Michigan in May 2020 (see June 1, 2020 edition of the WER).  The December 9, 2020 Order to Show Cause and Notice of Proposed Penalty followed months of FERC orders and directives to the licensee related to the catastrophic failure of the two dams, which resulted in the evacuation of 10,000 people, an estimated $190 million in economic damages to local residents, and $55 million in response costs, prompting Governor Gretchen Whitmer to request a disaster declaration from the federal government.

In light of the coronavirus disease (“COVID-19”), the Office of Personnel Management (OPM) issued guidance directing that all Federal Executive Branch departments and agencies within the National Capital Region (Maryland, Virginia, and Washington, D.C.) allow maximum telework flexibilities to all current telework eligible employees. This guidance applies to the headquarters of the agencies most involved in regulating hydroelectric projects, such as the Department of Energy (DOE), Department of the Interior (DOI), including the National Park Service (NPS), Fish and Wildlife Service (FWS), Bureau of Land Management (BLM) and Bureau of Indian Affairs (BIA), the Department of Agriculture (USDA), including the Forest Service (FS), and the National Oceanic and Atmospheric Administration (NOAA), including the National Marine Fisheries Service (NMFS). The Federal Energy Regulatory Commission (FERC), an independent agency within DOE, and the United States Army Corps of Engineers (USACE), housed within the Department of the Army, have also taken significant steps to respond to COVID-19.