2.3.2 What is Included in the "Project"?

FERC licenses a “complete unit of development.”[1]  This consists of all dams, reservoirs, other engineered structures, as well as property rights in lands and waters as necessary for construction, operation, and maintenance of a project.  Consequently, a licensee must acquire and retain title in fee to, or the right to use in perpetuity, such lands and waters.[2]  The license establishes a project boundary which includes all such structures, lands, and waters.  Under FPA section 9,[3] a license incorporates the approved “maps, plans, and specifications” which establish that boundary. 

The project boundary is an essential element of the project definition.  At a minimum, the boundary includes any dam, powerplant, or other structure used for generation of electricity.  However, the selection of which lands and waters to include is somewhat discretionary, as a function of FERC’s determination of which are necessary for mitigation of project impacts.  FERC’s policy is that its jurisdiction and thus enforcement capability extend only over those lands and waters within the project boundary.  This policy means that the selection of lands and waters determines the scope of the licensee’s mitigation duty.  Thus, it effectively means that a license does not include off-site mitigation measures even if the project’s adverse impacts may not be fully mitigated within the project boundary.[4] 

As a matter of policy, the HRC believes that the project boundary should include: (i) any bypass river reach between a dam and powerhouse; (ii) reservoir shoreline up to the high water mark; (iii) all other lands needed for protection, mitigation, and enhancement of resources adversely affected by the project.[5] 

In some proceedings, FERC has allowed a bypass river reach to be removed from a project boundary, on the ground that the dry channel is not a project work.[6]  The HRC disagrees with this position, since the bypass reach is plainly integral to a plan of development which separates the dam and powerhouse.  We have defeated other such amendment applications attempted late in the license term, on the ground that the project boundary is a relicensing issue.[7]

In other instances, FERC has approved applications to remove transmission lines from a project boundary when the character of the line changes from primary to secondary[8] – even though that reclassification may affect jurisdiction over the project as a whole (e.g., where the only basis for jurisdiction is the occupancy of federal lands by the transmission line).[9] The HRC has opposed such reclassification where apparently motivated to eliminate jurisdiction over the project as a whole. 

In sum, project boundary is not a legal nicety – instead, it is an essential element of the license which directly affects non-power benefits.  Consider specifying the project boundary in any settlement agreement.

[1]               This project description results from a daisy-chain of legal authorities.  Under FPA section 4(e), FERC licenses “project works.”  Under FPA section 3(12), 16 U.S.C. § 796(12), such works are defined as the physical structures of a “project.”  Under FPA section 3(11), 16 U.S.C. § 796(11), a project is a “complete unit of improvement or development” consisting of, among other things,

“a power house, all dams and appurtenant works and structures (including navigation structures)… and all storage, diverting or forebay reservoirs… all miscellaneous structures used and useful in connection with said unit or any part thereof, and all water rights, rights-of-way, ditches, dams, reservoirs, lands, or interest in lands the use and occupancy of which are necessary or appropriate in the maintenance and operation of such unit….”

16 U.S.C. §§ 796(11)-(12), 797(e).

[2]               Standard Article 5 requires a licensee to acquire and retain title in fee to, or the right to use in perpetuity, project properties sufficient to accomplish all project purposes.  Under the article, the licensee has five years from the issuance of the license to obtain these properties.   See Standard Article 5, Forms L-1 through L-21, 54 FPC 1799-1923 (October 1975), supra.   Such rights in land and water must be adequate for the performance of all duties under the license.  From a legal perspective, the rights must enable FERC, through the licensee, to protect the public interest affected by a project.  Any non-licensee who owns or controls rights necessary for project operation must become a co-licensee or must transfer such rights to the licensee.  For example, FERC required the Hudson River-Black River Regulating District (HRBRRD) to obtain a license for the Great Sacandaga Reservoir, which had been constructed for flood control and recreation, since the downstream licensee of the E.J. West Project had a contractual right to draw on lake storage for energy generation.  See letter to Jerry L. Sabattis, Niagara Mohawk Power Corporation, from Dean L. Shumway, FERC re Project No. 2318-002 (Aug. 27, 1992) (eLibrary 19920909-0285).

[3]               16 U.S.C. § 802.

[4]               See, e.g., PacifiCorp, 80 FERC ¶ 61,334 (1997); Indiana Michigan Power Company, 103 FERC ¶ 61,286 (2003).

[5]               This position is restated in the HRC April 21, 2003 comments on FERC’s “Notice of Proposed Rulemaking for the Integrated Licensing Process (ILP)” (Docket No. RM02-16).

[6]               See, e.g., Duke Power, 100 FERC ¶ 61,294 (2002).

[7]               See “Letter Order Dismissing Duke Power Co's Application To Amend The License For The Catawba-Wateree Project, & Advises That Duke Power Pursue The Amendment Proposal As Part Of The Licensing Proceeding Under P-2232” (April 18, 2003) (eLibrary 20030424-0331).

[8]               Primary lines are “those necessary to ensure the ‘viability’ of the project in the event of Federal takeover.  If a line is ‘used solely to transmit power from [Commission] licensed projects to load centers,’ and if, without it ‘there would be no way to market the full capacity of the project,’ then that line is a primary to the project.”  See Pacific Gas and Electric Company, 85 FERC ¶ 61,411 (1998); Portland General Electric Company, 100 FERC ¶ 62,147 (2002).

[9]               See Puget Sound Hydro, 109 FERC ¶ 61,039 (2004).