What happens when an individual person dies holding a Federal Energy Regulatory Commission license for a hydroelectric project? While their will may specify an heir for the dam and project works, the process of inheriting a licensed dam can involve both state estate law and a license transfer through FERC.
The Federal Energy Regulatory Commission licenses hydroelectric projects under Part I of the Federal Power Act. The Commission's most recent list shows over 1,000 projects with licenses. While most are held by corporate or public entities, about 25 licenses are held directly by named individuals. Most of these projects licensed to individuals have relatively small authorized generating capacities, but once licensed their operation and transfer are governed by federal processes.
State law usually controls what happens to property owned by an individual upon his or her death. Suppose the licensee's will provides that the licensed hydroelectric project is transferred to another person. That provision may be valid as a matter of state law, but as a matter of federal law the license only transfers if the Commission approves the transfer.
Practically speaking, this can mean that the estate of the licensee needs to file an application to FERC for the transfer of the project license. A recent application relating to the Pine Creek Hydroelectric Project in Montana illustrates this process.
The Commission initially issued a 50-year license for the Pine Creek project to Howard and Mildred Carter, on July 25, 1986, with a present authorized generating capacity of 373 kW. After Howard Carter's death, Mildred Carter was the surviving licensee on the project. After Mildred Carter's subsequent death, a Montana state court started the probate process through which the project would transfer to Mrs. Carter's son Allen. In October 2015, the Carter estate applied to the FERC for transfer of the license to Allen. The Commission issued a public notice of the application for transfer of license and solicited comments, motions to intervene, and protests, none of which were filed.
The Commission approved the Pine Creek project license transfer on January 8, 2016. The order includes a finding that transfer of the license for this project is consistent with the Commission's regulations and is in the public interest. Its approval of the transfer was contingent upon: (1) transfer of title of the properties under license, transfer of all project files including all dam safety related documents, and delivery of all license instruments to the inheriting licensee, which shall be subject to the terms and conditions of the license as though it were the original licensee; and (2) the heir acknowledging acceptance of the order and its terms and conditions by signing and returning an acceptance sheet. The license transfer order required the new licensee to submit certified copies of all instruments of conveyance and the signed acceptance sheet within 60 days.
While direct inheritance of FERC-licensed hydroelectric projects is relatively rare, similar issues can arise when corporate entities holding FERC licenses dissolve or otherwise "die." Depending on the specific facts, more common changes in ownership of an entity holding a FERC license may also require some activity to remain in compliance with federal law.