Laws Governing Hydropower Licensing

Although not comprehensive, the following are the major statues governing hydropower licensing in the United States.

1. Federal Power Act (FPA)

The Federal Power Act, enacted by Congress in 1935, was the result of a long debate over whether the Federal Government should permit private interests to develop the hydroelectric potential of the waters of the United States, or whether it should reserve such development for itself for the public benefit. The Federal Power Act resolved this question by creating an independent commission (The Federal Power Commission, now known as the Federal Energy Regulatory Commission or FERC) with the exclusive authority to grant licenses permitting private and municipal developers to construct and operate hydropower projects. FERC’s decision to license a hydroelectric project must be in the public interest and must be “best adapted to a comprehensive plan for improving or developing a waterway” that considers multiple uses of that waterway, an evaluation that FERC describes as “balancing.” These licenses are granted for terms of up to 50 years, after which the licensee is presumed to have recouped its initial investment and must apply for a new license, subject to competing applications.

The Federal Power Act has been amended several times throughout its history. Two sets of amendments are particularly relevant today:

The 1986 Electric Consumers Protection Act (ECPA) amended the FPA in three key ways. First, it revisited the old public-private power debate, removing a provision that gave preference to municipal utilities when evaluating competing relicensing applications in order to address private utilities’ fears that they would lose their projects to municipalities. Second, it required that FERC issue new licenses for existing projects with terms of at least 30 years. Third, and most important from a river protection perspective, it addressed concerns that FERC was not adequately addressing environmental issues. ECPA required FERC to give “equal consideration to the purposes of energy conservation, the protection, mitigation of damage to, and enhancement of, fish and wildlife (including related spawning grounds and habitat), the protection of recreational opportunities, and the preservation of other aspects of environmental quality.” It also required FERC to solicit and address recommendations to benefit fish and wildlife from Federal and State natural resource agencies.

The 2005 Energy Policy Act eroded key environmental protections in the FPA, addressing the hydropower industry’s concerns over the costs associated with mandatory conditions imposed by other Federal agencies. Agencies have the power to impose mandatory license conditions (which FERC may not modify or reject) in order to protect federal reservations (e.g. the Forest Service protecting a national forest) or to provide fish passage. The 2005 act amended the Federal Power Act, giving any party to a licensing the right to request a trial-type hearing to challenge the material facts on which those conditions are based. Stakeholders may also propose alternative conditions that either cost less or allow for more power generation.

Learn more about the Federal Power Act, FERC, and how they relate to hydropower by reading our Hydropower Licensing Guide.

2. National Environmental Policy Act (NEPA)

NEPA requires all federal agencies to analyze the environmental impacts of their actions along with alternatives to those actions. As a Federal agency, FERC is required to prepare an environmental document analyzing the consequences of issuing a license for a hydropower project along with reasonable alternatives to issuing a license. FERC staff’s environmental analysis informs the development of the Commission’s ultimate licensing order. FERC generally prepares an Environmental Assessment (EA) instead of a full Environmental Impact Statement when relicensing an existing hydropower project, although the choice of EA or EIS is case-specific and depends on the complexity of the resource issues to be analyzed. FERC typically analyzes only three complete alternatives in an environmental document: 1) the applicant’s proposal, 2) FERC staff’s preferred alternative, and 3) the no-action alternative. Other proposed alternatives to the proposed action are broken apart into components (e.g. fish passage alternatives or alternative instream flow regimes) and analyzed in the context of FERC staff’s preferred alternative.

3. Endangered Species Act (ESA)

The Endangered Species Act (ESA) was created to prevent the extinction of plants and animals while helping to recover those species that have been listed as being threatened or endangered. As a federal agency, FERC must protect and contribute to the recovery of all threatened and endangered species affected by their actions. During hydropower licensing, FERC has to consult with the U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) to ensure that its decisions will not jeopardize the continued existence of listed species or result in adverse impacts to listed species or their habitat. If FWS or NMFS determines that FERC may cause jeopardy to a listed species or adversely affect critical habitat by issuing a license, those agencies can also establish reasonable and prudent alternatives (RPA) or measures (RPM) to protect and recover the ESA listed species. While FERC is not strictly required to include those measures in a license, it typically does so.

4. Clean Water Act (CWA)

Section 401 of the Clean Water Act (CWA) bars FERC from issuing a license for a hydropower project until the state or states where the project is located certify that the project will comply with applicable state water quality standards. These water quality certifications often contain conditions as a condition of certification, which FERC must include as license conditions.

5. Coastal Zone Managemnt Act (CZMA)

Section 307 of the Coastal Zone Management Act (CZMA) requires licensees to obtain a valid certification approved by the State to assure that project construction and operation will be consistent with the State's coastal zone management program. FERC may not issue a license if the State, subject to approval by NOAA, determines that the project is inconsistent with that program.

6. Rivers and Harbors Act

This Act enacted in 1899 requires that authorization be obtained from the US Army Corps of Engineers (USACE) for the construction of any structure, such as dams, in or over any navigable water of the United States.

7. Wild and Scenic Rivers Act (WSRA)

The Wild and Scenic Rivers act was enacted by Congress in 1968 to serve as a counter to an era of dambuilding, protecting some of the Nation’s greatest remaining free-flowing rivers. Section 7 of the WSRA strictly prohibits FERC from authorizing the construction of any project within the boundary of river that has been designated under the Act or that is under study for designation.