Commissioner James Danly Statement
January 20, 2022
Project No. 9985-033

I concur with the finding that Rivers Electric LLC (Rivers Electric) is qualified to be the licensee for the Mill Pond Hydroelectric Project.  I dissent in part because the majority violates the Federal Power Act (FPA) by amending the license to reserve the Commission’s authority to impose financial assurance mechanisms in a transfer proceeding.[1]

Section 8 of the FPA provides that license transferees “shall be subject to all the conditions of the license under which such rights are held by [the license transferor] and also subject to all the provisions and conditions of [the FPA] to the same extent as though such successor or assign were the original licensee.”[2]  The Commission has interpreted this provision as meaning “when a license is transferred, the new licensee steps into the shoes of the old licensee . . . .”[3]

The old licensee, Rivers Electric Company, Inc., enjoyed the finality of its license order, knowing that the Commission could not reopen its license to impose new conditions absent an expressly stated reopening provision.  The FPA requires “[e]ach such license shall be conditioned upon acceptance by the licensee of . . . such further conditions, if any, as the Commission shall prescribe . . . which said terms and conditions and the acceptance thereof shall be expressed in said license.”[4]  The project license includes no provision authorizing the Commission to impose this reservation.[5]  As the Commission could not reopen the project license when Rivers Electric Company, Inc. was licensee, the majority cannot reopen the license now.[6]

The majority argues that it is permissibly conditioning the license transfer under FPA section 8.[7]  It is true that the Commission has conditioning authority—transfers cannot occur “without the written approval of the [C]ommission.”[8]  And as the majority indicates, transfer conditions often take the form of requiring documentation (i.e., a license acceptance sheet and instruments of title conveyance).[9]  These requirements make sense given that the transferee steps into the shoes of the old licensee, which was required to accept the license and obtain title over properties subject to the license.  The original licensee, however, was not required to accept a reservation of the Commission’s authority unilaterally imposed by the Commission.[10]  And while I appreciate the majority’s concern that the project will not be up for relicensing for another 5 years,[11] the Commission cannot reduce the statutory language in FPA section 8 to mere surplusage.

In addition to being unlawful, I am concerned about the response that will be occasioned by reserving our authority here especially in the broad terms by which the majority has articulated its reservation which appears on its face to be without any limiting principle.[12]  As I have previously stated,[13] this reservation may have the unfortunate effect of reinforcing uncertainty and limiting licensees’ access to the very financing we should seek to encourage.  I very much appreciate Chairman Glick’s announcement last month that Commission staff would be convening a technical workshop to discuss financial assurance mechanisms.[14]  It is imperative that the Commission take a hard look at our financial assurance requirements and deliberately determine what, if any, changes or improvements should be adopted.

For these reasons, I respectfully concur in part and dissent in part.

 

 


[1] See Rivers Elec. Co., Inc., 178 FERC ¶ 61,027 (2022) (Rivers Elec.).

[2] 16 U.S.C. § 801 (emphasis added).

[3] Pac. Gas & Elec. Co., 174 FERC ¶ 62,106, at P 11 (2021) (emphasis added).

[4] 16 U.S.C. § 799; see also Cal. Trout, Inc. v. FERC, 313 F.3d 1131, 1136 (9th Cir. 2002) (“Only where the original licenses contain provisions allowing introduction of new conditions does the Commission have authority to add conditions . . . without the licensee’s consent.”); Clifton Power Corp. v. FERC, 88 F.3d 1258, 1261-62 (D.C. Cir. 1996) (finding the FPA does not permit the Commission to impose conditions not expressly required in a license).

[5] See Rivers Elec. Co., Inc., 39 FERC ¶ 61,044 (1987).

[6] In addition to violating FPA section 8, the majority’s reopening of the license in a transfer proceeding also goes against the Commission’s own policy.  See Niagara Mohawk Power Corp., 31 FERC ¶ 61,054, at 61,106 (1985) (“With regard to the first question, the intervenors cannot use the transfer proceeding as a mechanism to reopen the initial licensing proceeding more than two years after the order issuing the license became final.”).

[7] See Rivers Elec., 178 FERC ¶ 61,027 at P 9 n.25.

[8] 16 U.S.C. § 801.

[9] See Rivers Elec., 178 FERC ¶ 61,027 at P 8, P 9 & n.25 & Ordering Para. (B).

[10] The majority appears to argue its unilateral amendment of the license is appropriate given that the transferee must agree to the terms of the license transfer.  Id. P 9 n.25 (“If the transferee accepts this order, it is thereby agreeing to the new condition.  It may decline to do so if it does not wish to accept the condition.”).  “Agree” includes an element of voluntary consent.  See Agree, Black’s Law Dictionary (11th ed. 2019) (“To unite in thought; to concur in opinion or purpose.”) (emphasis added).  In this case, how voluntary can Rivers Electric’s acceptance be when not accepting the transfer would mean it would be left holding an asset it could not operate.

[11] The Commission issued a 40-year license for the project, which will expire on April 1, 2027.  See Rivers Elec. Co., Inc., 39 FERC ¶ 61,044 at Ordering Para. (A). (establishing a 40-year term effective April 1, 1987).

[12] See Rivers Elec., 178 FERC ¶ 61,027 at Ordering Para. (C) (“The Commission reserves the right to require future measures to ensure that the licensee maintains sufficient financial reserves to carry out the terms of the license and Commission orders pertaining thereto.”) (emphasis added).

[13] See, e.g., Pub. Util. Dist. No. 1 of Pend Oreille Cnty., 177 FERC ¶ 61,183 (2021) (Danly, Comm’r, concurring at PP 1-3).

[14] See Transcript of the 1085th Meeting, FERC, at 51 (Dec. 16, 2021), https://www.ferc.gov/news-events/events/december-16-2021-virtual-open-meeting-12162021.

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