Published on The National Law Review https://natlawreview.com

Hydro Newsletter - Volume 8, Issue 12

Article By:
Xena Burwell
Ani M. Esenyan
Rachael L. Lipinski
Mealear Tauch

Bipartisan Infrastructure Bill Includes Substantial Appropriations for Hydropower

The Infrastructure Investment and Jobs Act, signed into law November 15, 2021, includes over $700 million in new spending for hydropower. The Act appropriates $200 million for hydropower production and efficiency incentives, with an additional $550 million available for projects that improve grid resiliency, dam safety, or environmental performance at existing dams. It also invests $200 million in rebalancing the Columbia River Treaty, with half of that appropriation for enhanced water storage and half for improved coordination on cross-border river and power flows. The Act also appropriates about $145 million for water and marine power research and development, including hydropower. Additionally, the bill appropriates $2 million per year for each fiscal year (“FY”) between 2022 and 2026 for pumped storage demonstration projects. A summary of relevant hydropower provisions is included below.

Hydroelectric production incentives (Sec. 40331)

Hydroelectric efficiency improvement incentives (Sec. 40332)

Maintaining and enhancing hydroelectricity incentives (Sec. 40333)

Pumped storage hydropower wind and solar integration and system reliability initiative (Sec. 40334)

Authority for pumped storage hydropower development using multiple Bureau of Reclamation (BOR) reservoirs (Sec. 40335)

Limitations on issuance of certain leases of power privilege (Sec. 40336)

Willie Phillips Sworn in as FERC Commissioner

On November 16, 2021, Van Ness Feldman alumnus Willie Phillips was unanimously confirmed by the U.S. Senate to the Federal Energy Regulatory Commission, and was sworn in on December 1, 2021. Phillips has served as Chairman of the District of Columbia Public Service Commission since 2018. With Phillips’ confirmation, FERC is now at its full complement of five Commissioners, three Democrats and two Republicans. Congratulations Commissioner Phillips!

EPA and Army Corps Announce Latest Update to Definition of “Waters of the United States”

On November 18, 2021, the Environmental Protection Agency (“EPA”) and U.S. Army Corps of Engineers (collectively, the “Agencies”) released a pre-publication version of their proposed rule defining “Waters of the United States” (“WOTUS”) under the Clean Water Act (“CWA”) (the “Proposed Rule”).  The Proposed Rule unwinds much of the 2020 Navigable Waters Protection Rule (“2020 NWPR”), issued during the Trump administration and restores the regulations in effect prior to the Obama Administration’s 2015 rule. 

The Proposed Rule defines WOTUS as those waters identified as WOTUS before the 2015 rule, as informed by U.S. Supreme Court case law.  In the Proposed Rule, the Agencies interpret WOTUS to include:

The Proposed Rule is part of a two-part rulemaking process to revise the definition of WOTUS.  This first part is designed to restore the pre-2015 regulations, as amended to be consistent with U.S. Supreme Court decisions.  The Agencies also anticipate developing a second rule that builds upon the regulatory foundation in this Proposed Rule with the benefit of additional stakeholder engagement.  The second rule could consider more categorical approaches to jurisdiction as well as potentially defining key terms in the significant nexus standard.  More information about the Proposed Rule is in our recent alert.

Comments on the Proposed Rule are due 60 days after publication in the Federal Register.

FERC Found Not Liable for Michigan Dam Failure

In response to the failure of the Edenville Dam on the Tittabawassee River in Michigan on May 19, 2020, two residents sued the federal government under the Federal Tort Claims Act (“FTCA”), alleging that FERC failed to ensure that the dam was being operated safely and should be responsible for the harm caused by the dam’s failure. The Government filed a motion to dismiss the lawsuit on the grounds that the Government is entitled to sovereign immunity and is exempt from liability for the plaintiffs’ damages.  The U.S. District Court for the Eastern District of Michigan agreed and dismissed the lawsuit on November 16, 2021.

After a prior operator of the Edenville Dam became insolvent, the dam and license were purchased by Boyce Hydropower, LLC (“Boyce”).  Boyce was unable to fund FERC-required improvements to the dam’s spillway capacity, and FERC ultimately revoked Boyce’s license in September 2018. The Michigan Department of Environment, Great Lakes, and Energy then assumed jurisdiction over the dam, though Boyce continued to operate it as a nonpower dam and was in the process of selling the property to a local governmental entity in 2019. Leading up to the dam failure in May 2020, the Tittabawassee watershed experienced unusually heavy rain and flash floods, leading to the collapse of the Tittabawassee portion of the Edenville Dam and the cascading failure of the downstream Sanford Dam.  Thousands of people were evacuated from their homes and substantial property damage occurred.

The plaintiffs brought suit under the FTCA which waives sovereign immunity for certain tort actions and provides district courts with exclusive jurisdiction over these actions.  Sovereign immunity is the principle that the United States cannot be sued without its consent, and for suit to be brought against the Government, there must be an unequivocal express waiver of this immunity.  In a lengthy footnote explaining the history and various judicial views on sovereign immunity, the Court wrote: “In a nation built on liberty and the rule of law, the notion that the Government can harm its citizens with impunity is generally viewed with disdain—and not just by those who lack legal training….In a case such as this, it is helpful to remember that the law has its reasons, even if they seem uncompelling to some.”

The plaintiffs alleged that FERC violated at least two statutory duties imposed by the Federal Power Act (“FPA”): (1) the duty to determine whether Boyce had the ability to manage, operate, and maintain the dam safely, and (2) the duty to monitor and investigate Boyce’s compliance with the license.  The Government raised three arguments in defense, but the Court ultimately dismissed the lawsuit based on the first defense, that section 10(c) of the FPA expressly exempts the Government from liability for the plaintiffs’ damages. Section 10(c) exempts the Government from liability for damages caused by the construction, maintenance, or operation of projects works.  The parties disagreed about the construction of section 10(c) and whether the Government would be exempt under the statute, and in analyzing the text under cannons of statutory construction and legislative history of section 10(c), the Court ultimately found that section 10(c) holds licensees, not the Government, liable for damages.

Administration Proposes First Wave of Endangered Species Regulatory Revisions

On October 27, the Biden Administration proposed to rescind two final rules that were promulgated in December 2020 to improve and clarify the process for designating or excluding areas from critical habitat under the Endangered Species Act (“ESA”). The deadline for comments on the proposed rescissions has been extended to December 13, 2021.

Proposed Rescission of the Definition of “Habitat”

The U.S. Fish and Wildlife Service (“FWS”) and the National Marine Fisheries Service (“NMFS”) (collectively, the “Services”) are proposing to rescind the Trump Administration final rule that established a regulatory definition of “habitat.” 86 Fed. Reg. 59,353. The Services previously promulgated the definition of habitat on December 16, 2020, in response to the Supreme Court’s decision in Weyerhaeuser Co. v. U.S. Fish & Wildlife Service, 139 S. Ct. 361 (2018), which held that an area must be “habitat” before it can meet the ESA’s narrower definition of “critical habitat.” As applied to critical habitat designations, the Services defined habitat as “the abiotic and biotic setting that currently or periodically contains the resources and conditions necessary to support one or more life processes of a species.”

As justification for the rescission, the Services assert that the definition of “habitat” inappropriately constrains their ability to designate areas that meet the definition of “critical habitat” under the ESA. The Services also found that the earlier attempt to create a “one-size-fits-all” definition of “habitat” resulted in the use of overly vague and unclear terminology (i.e., the phrases “biotic and abiotic setting” and “resources and conditions”), and that the definition is inherently confusing to implement. Finally, despite the express limitation on application to critical habitat, the Services expressed concern that the “habitat” definition may create conflicts or inconsistencies with other federal agency statutory authorities or programs that also have definitions or understandings of habitat.

Implications of the rule rescission:  Without the prior definition of “habitat,” there will be increased uncertainty for the regulated community, and the greater possibility of areas being designated as critical habitat that have no ability to support listed species or contribute to their recovery.

Proposed Rescission of Critical Habitat Exclusion Procedures

FWS is proposing to rescind its December 18, 2020, final rule that clarified how the agency would consider and evaluate particular areas for exclusion from a critical habitat designation pursuant to ESA Section 4(b)(2) due to economic, national security, and other relevant impacts. 86 Fed. Reg. 59,346. A previous 2016 joint policy issued by the Services described how they implement their authority to exclude areas from critical habitat (“2016 Policy”). The 2020 final rule expanded on the 2016 Policy, and sought to provide “transparency, clarity, and certainty to the public and other stakeholders” on how conducts its discretionary exclusion analysis given the Supreme Court’s conclusion in Weyerhaeuser that decisions not to exclude areas from critical habitat are judicially reviewable. proposes to revert to making critical habitat exclusion determinations based on the 2016 Policy and its joint regulations with NMFS at 50 C.F.R. § 424.19.

As justification for the proposed rescission, FWS states that the 2020 final rule undermines its role as the expert agency for ESA implementation because it gives undue weight to outside parties, including proponents of particular exclusions, in guiding FWS’s authority to exclude areas from critical habitat designations. FWS also is concerned that the final rule employs an overly rigid ruleset for when FWS will enter into an exclusion analysis, how weights are assigned to impacts, and when an area is excluded, regardless of the specific facts at issue or the conservation outcomes. Finally, FWS opines that the final rule does not fulfill its stated goal of providing clarity and transparency to the critical habitat exclusion process because it is now different than the processes and standards utilized by NMFS, which is still implementing the 2016 Policy. 

Implications of the rule rescission: Ultimately, FWS’s proposal would expand its discretion not to exclude areas from critical habitat by rescinding the recently adopted regulatory framework that would have guided the exercise of that discretionary authority.

In addition to the two proposed rule rescissions, in the coming months, the Services also anticipate:

Update of CWA 401 Litigation

A plethora of cases are working their way through the U.S. district courts and courts of appeals challenging FERC decisions regarding state waiver of CWA section 401 certification authority. The cases arise out of FERC’s implementation of Hoopa Valley Tribe v. FERC (“Hoopa Valley”), in which the U.S. Court of Appeals for the D.C. Circuit held that a hydroelectric licensee’s repeated withdrawal and resubmission of water quality certification requests under section 401 pursuant to a written agreement with state water quality agencies does not trigger a new one-year period for state water quality review and results in waiver of the state’s authority. FERC has applied the Hoopa Valley ruling in a number of hydroelectric licensing and natural gas pipeline certification cases, in some instances finding waiver and in other instances finding that the state agency did not waive its authority.

Here is a current rundown of the cases in the U.S. courts of appeals:

Here is a current rundown of the cases in U.S. district court:

In other CWA section 401 litigation:

Notice of RFI on Energy Sector Supply Chain Review

In response to Executive Order 14106 “America’s Supply Chain” issued February 24, 2021, the DOE is seeking public input to inform DOE on approaches and actions needed to build resilient supply chains for the energy sector.  To meet the U.S jobs, economic, and emissions goals, DOE has identified technologies and crosscutting topics for analysis to meet the timeframe established by Executive Order 14106.  These technology sectors include: solar photovoltaic; wind; electric grid, including transformers and high-voltage direct current; energy storage; hydropower, including pumped storage hydropower, and several others.

For each technology sector, DOE will be taking in-depth looks at: its supply chains; existing and future threats, risks, and vulnerabilities; major barriers including financial and commercial, scientific, technical, regulatory and market; how to help incentivize the energy sector to transfer energy manufacturing back to and scale up domestic supply chains; and areas of possible collaboration between the government and private sector.

In particular to hydropower and pumped storage technology, the DOE is focused on several questions, including:

Responses are due no later than 5 p.m. (ET) on January 15, 2022.


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National Law Review, Volume XI, Number 337

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