Commissioner James Danly Statement
November 18, 2021
Project No. 2487-048
I concur with the finding that Albany Engineering Corporation (Albany Engineering) is qualified to be the licensee for the Hoosick Falls Hydroelectric Project.[1] 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.[2]
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.”[3] The Commission has interpreted this provision as meaning “when a license is transferred, the new licensee steps into the shoes of the old licensee . . . .”[4]
The old licensee, Hydro Power, Inc., enjoys the finality of its license order, knowing that the Commission cannot reopen its license to impose new conditions unless there is an expressly stated reopening provision in the license. 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.”[5] The project license includes no provision authorizing the Commission to impose this reservation.[6] As the Commission could not reopen the project license when Hydro Power, Inc. was licensee, the majority cannot reopen the license now.[7]
The majority argues that it is permissibly conditioning the license under FPA section 8.[8] It is true that the Commission has conditioning authority—transfers cannot occur “without the written approval of the Commission.”[9] 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).[10] 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 license. The original licensee, however, was not required to accept a reservation of the Commission’s authority unilaterally imposed by the Commission. And while I appreciate the majority’s concern that the project will not be up for relicensing for another 18 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 limiting principle.[12] 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.[13] 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.[14]
I am concerned that 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 licensees’ 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] However, I am concerned that the prior licensee, Hydro Power, Inc., sold its property rights necessary to comply with its license obligations without Commission approval. See Hydro Power, Inc., 177 FERC ¶ 61,112, at P 3 (2021).
[2] See id. P 9.
[3] 16 U.S.C. § 801 (emphasis added).
[4] Pac. Gas & Elec. Co., 174 FERC ¶ 62,106, at P 11 (2021) (emphasis added).
[5] 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).
[6] See John M. Skorupski, 91 FERC ¶ 62,070 (2000). The license was transferred to Hydro Power, Inc. in June 2001. John M. Skorupski, 95 FERC ¶ 62,190 (2001).
[7] 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.”).
[8] See Hydro Power, Inc., 177 FERC ¶ 61,112 at P 9 n.24.
[9] 16 U.S.C. § 801.
[10] See Hydro Power, Inc., 177 FERC ¶ 61,112 at P 9 n.24 & Ordering Para. (B).
[11] The Commission issued a 40-year license for the project, which will expire on May 1, 2040. See John M. Skorupski, 91 FERC ¶ 62,070 at Ordering Para. (A) (establishing a 40-year term effective May 1, 2000).
[12] See Hydro Power, Inc., 177 FERC ¶ 61,112 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 Fin. 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).
[14] See, e.g., 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 . . . .”) (footnote omitted); 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.”).