FERC relicensing and annual licenses

What happens when the holder of a hydropower license applies to the Federal Energy Regulatory Commission for a new license, but the original license expires before the relicensing case is resolved?  Depending on which federal laws and regulations apply, possible outcomes can include the Commission issuing an annual license, or continued operation under the license terms, until a new license is issued or other disposition is ordered.

A recent FERC case illustrates this dynamic, involving the Don Pedro Hydroelectric Project, Project No. 2299, located on the Tuolumne River in California.  Turlock Irrigation District and Modesto Irrigation District are the licensees for Project No. 2299, under a license issued for a period ending April 30, 2016.

Just over 2 years before the Don Pedro project's license expired, on April 28, 2014 the licensees filed an Application for a New License pursuant to the Federal Power Act (FPA) and the Commission's regulations thereunder.  That relicensing application remains pending.

Section 15(a)(1) of the FPA, 16 U.S.C. 808(a)(1), requires the Commission, at the expiration of a license term, to issue from year-to-year an annual license to the then licensee under the terms and conditions of the prior license until a new license is issued, or the project is otherwise disposed of as provided in section 15 or any other applicable section of the FPA.  But some projects operate pursuant to licenses which include waivers of the applicability of Section 15 of the FPA.

In the Don Pedro project's case, on May 5, 2016, the Commission issued a Notice of Authorization for Continued Project Operation, including language covering both the scenario under which Section 15 applies, as well as the scenario under which the prior license waived Section 15's applicability.

If the project is subject to section 15 of the FPA, the Commission gave notice that an annual license for Project No. 2299 is issued to the licensee for a period effective May 1, 2016 through April 30, 2017 or until the issuance of a new license for the project or other disposition under the FPA, whichever comes first.  If issuance of a new license (or other disposition) has not occurred by April 30, 2017, the Commission gave notice that, pursuant to 18 CFR 16.18(c), an annual license under section 15(a)(1) of the FPA is renewed automatically without further order or notice by the Commission, unless the Commission orders otherwise.

If Section 15 does not apply, the Commission gave notice that based on section 9(b) of the Administrative Procedure Act, 5 U.S.C. 558(c), and as set forth at 18 CFR 16.21(a), if the licensee of such project has filed an application for a subsequent license, the licensee may continue to operate the project in accordance with the terms and conditions of the license after the minor or minor part license expires, until the Commission acts on its application. If the licensee of such a project has not filed an application for a subsequent license, then it may be required, pursuant to 18 CFR 16.21(b), to continue project operations until the Commission issues someone else a license for the project or otherwise orders disposition of the project.

The irrigation districts' relicensing case remains pending.