Commissioner James Danly Statement
September 23, 2021
Project No. 3251-010
I concur with the decision to issue Cornell University a new license to continue to operate and maintain the Cornell University Hydroelectric Project. I dissent in part because the Commission impermissibly dismissed the recommendation to monitor downstream water levels during the ice-free period that the Department of Interior filed under section 10(j) of the Federal Power Act (FPA).[1]
The statute is explicit on the process by which the Commission can reject fish and wildlife recommendations filed under FPA section 10(j)—after “a finding that adoption of such recommendation is inconsistent with the purposes and requirements of [the Act] or with other applicable provisions of law.”[2] There is no ambiguity in this process. Nowhere does the FPA state the Commission can reject a condition based on whether it “includes a request for a study which cannot be completed prior to licensing.”[3] The timing of a study does not make a recommendation “inconsistent with the purposes and requirements” of the FPA. The Commission instead should have relied on a finding that the recommendation is not consistent with the comprehensive planning standard of FPA section 10(a)(1), and the equal consideration provision of FPA section 4(e).[4]
In addition, I write to express my concern about the response that will be occasioned by Article 408, which reserves the Commission’s authority to impose financial assurance mechanisms without limiting principle.[5] I am convinced that the Commission must take a hard look at our financial assurance requirements and deliberately determine what, if any, changes or improvements should be adopted. It is imperative that licensees have the financial wherewithal to physically maintain their facilities and I have been gravely concerned about this subject for some time.[6] But how to go about achieving that goal is a complicated question and requires a great deal of thought. It is especially difficult for the Commission to chart a clear path based on the record we have compiled so far in our Notice of Inquiry, many of the submissions to which have raised compelling complexities.[7]
In my view, this reservation may have the unfortunate effect of reinforcing the uncertainty faced by licensees in light of what is nevertheless the necessary inquiry the Commission is conducting into financial assurance. Licensees do not know whether or when we will promulgate new financial assurance requirements, whether imposition of those requirements will require a hearing, what form they will take, or how much they will cost. This uncertainty may further chill investment and drive up risk premiums—limiting licensee’s access to the very financing we should seek to encourage.
My hope is that, when we move forward from the Notice of Inquiry, we will convene one or more technical conferences to offer more structured fora in which to explore these questions. It is my further hope that everyone with an interest participate in the Commission’s generic proceedings on financial assurance, to help us improve the record we have already begun compiling in the Notice of Inquiry and offer the best analysis they can regarding the extent of the Commission’s powers and the most responsible means by which to employ them.
For these reasons, I respectfully concur in part and dissent in part.
[1] Cornell Univ., 176 FERC ¶ 61,186, at P 41 (2021).
[2] 16 U.S.C. § 803(j)(2)(A).
[3] Cornell Univ., 176 FERC ¶ 61,186 at P 41 n.31 (quoting 18 C.F.R. § 4.30(b)(9)(ii)).
[4] 16 U.S.C. §§ 797(e), 803(a)(1).
[5] See Cornell Univ., 176 FERC ¶ 61,186 at P 87 (“Article 408 reserves the Commission’s authority 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).
[6] See Financial Assurance Measures for Hydroelectric Projects, 174 FERC ¶ 61,039 (2021) (Notice of Inquiry); see also Boyce Hydro Power, LLC, 175 FERC ¶ 61,049 (2021) (Danly, Comm’r, concurring at P 3).
[7] See South Carolina Department of Natural Resources (SCDNR) March 29, 2021 Comments in Notice of Inquiry Docket No. RM21-9 at 4 (“The SCDNR finds that bonds would only be appropriate for a term limited construction project or renovation associated with a FERC hydroelectric project.”); Public Power Licensee Group March 29, 2021 Comments in Notice of Inquiry Docket No. RM21-9 at 15 (“FPA section 10(e) does not authorize FERC to collect for costs that may be incurred by other licensees . . . .”); Four Lakes Task Force February 12, 2021 Comments in Notice of Inquiry Docket No. RM21-9 at 2 (“Four Lakes Task Force’s direct experience is this type of [insurance] coverage may not be available . . . .”) (emphasis omitted); United States Society on Dams March 26, 2021 Comments in Notice of Inquiry Docket No. RM21-9 at 6 of 9 (“Dam property insurance is prohibitively expensive and rare to find on the market.”); Kodiak Electric Association, Inc. February 9, 2021 Comments in Notice of Inquiry Docket No. RM21-9 at 2 (“The high administration cost needed to establish, manage, and distribute such funds would deplete the fund’s net value and diminish its purpose.”).