FERC and microhydro licensing

Federal energy regulators have ruled that a micro-hydroelectric project proposed in New York cannot be constructed or operated without a license.

The proposed Henson Micro Hydroelectric Project would be located on the West Branch of Onondaga Creek, near Onondaga, New York.  It would include an existing 14-foot-high concrete dam, plus new construction including a penstock, a powerhouse, and a 10 kilowatt generating unit.  The dam was rebuilt in 2002, and had previously been used to power a grist mill.  The project developer, an individual, proposed to use the project power to provide electricity to his home and barn.
 
In his declaration of intention, the developer described himself and his approach to project development and compliance:

I would like to point out that I am not a corporation, or a rich man just a simple middle class Joe. I am an hourly employee at AT&T. Although blessed beyond what I actually deserve, I do not have a bunch of money that I could spend. In fact I am using funds recently obtained from a loss of use settlement from the NYS Workers Compensation Board to fund this. I am trying to do the right thing for the environment and save some money on my power bill. I am hoping that we can work this out to everyone’s satisfaction based upon the material and information that I currently have available. Of course, if additional information is required by you folks I will do everything to comply.

Identifying what approvals are necessary is a core step in developing any project.  Under section 23(b)(1) of the Federal Power Act, a non-federal hydroelectric project must be licensed by the Federal Energy Regulatory Commission (unless it has a still-valid pre-1920 federal permit) if it:

(a) is located on a navigable water of the United States;
(b) occupies lands or reservations of the United States;
(c) utilizes surplus water or waterpower from a government dam; or
(d) is located on a stream over which Congress has Commerce clause jurisdiction, is constructed or modified on or after August 26, 1935, and affects the interests of interstate or foreign commerce.

To reduce uncertainty over whether a project will require licensing, a developer may file a Declaration of Intention with the FERC describing the project.  Following public notice and an opportunity for protests, comments, and motions to intervene, FERC will rule on the jurisdictional questions raised by the declaration.

In the Henson project's case, the developer filed a Declaration of Intention on December 18, 2015.  That declaration was supplemented; after the second supplement, FERC issued its public notice of the declaration.  No protests, comments, or motions to intervene were filed.

On May 10, FERC issued its ruling on the declaration, finding that licensing is required.  FERC easily found that the project would not occupy any public lands or reservations of the United States or use surplus water or waterpower from a Federal government dam.  It found "insufficient evidence" to determine whether the West Branch of the Onondaga Creek is navigable.

However, FERC found that the West Branch of Onondaga Creek is a headwater or tributary of the Oswego River, a navigable water of the United States.  As a result, FERC concluded the project would be located on a "Commerce Clause stream."  FERC noted the project would be constructed after 1935.

FERC also concluded that the project would affect interstate commerce through its connection to the interstate grid, relying on precedent that "small hydroelectric projects that are connected to the interstate grid affect interstate commerce by displacing power from the grid, and the cumulative effect of the national class of these small projects is significant."  Thus even though the Hanson project's developer proposed using project power for the onsite home and barn, the fact that those buildings were grid-tied drove FERC to conclude that licensing was required. 

On this reasoning, FERC concluded that construction, operation, and maintenance would require a license.  As an alternative, FERC suggested the developer consider applying for an exemption from licensing as a small hydroelectric power project.


By contrast, another recent FERC decision concluded that a micro-hydro system proposed in Massachusetts did not require licensing, because (among other reasons) neither the project nor the structures it would serve would be grid-tied.  Thus whether or not the project and the facilities it serves are grid-tied or off-grid can be an important factor in whether a FERC hydropower license is required.