How Hydroelectric Projects Are Regulated

Over the last hundred years, a set of complex laws, treaties and agreements were enacted to guide the operations of hydroelectric projects. And those responsible for carrying out these laws, treaties and agreements include not only the owners of hydroelectric projects, but federal, state, local and tribal agencies.

In addition, there are a host of non-government organizations that utilize the river in one way or another. These organizations actively work to influence how projects operate and how laws, treaties and agreements are carried out.

To understand the regulatory structure, it is helpful to follow two tracks of activity. One track is concerned with development and regulation of public and private utilities. What is now referred to as the Federal Energy and Regulatory Commission (FERC) started with the Federal Power Act of 1930. By establishing a commission that could choose to issue or not issue a license for building and operating a project, the federal government began to regulate how hydropower could best be integrated into comprehensive development of public waterways.

Licenses, which are granted for up to 50 years, seek to protect the public’s interest by assuring a balance between a facility’s operation, the multi-use nature of a river and environmental concerns. The commission’s regulatory authority also grew over time because of a series of laws concerning the environment and how hydroelectric projects can generate and transmit electricity.

Some of these laws are briefly described in the glossary section. Over the past 60 years, some of the most important federal laws include the Flood Control Act, the Rivers and Harbors Act, the Water Resources Planning Act, the Wild and Scenic Rivers Act, the Electric Consumers Protection Act, the Public Utility Regulatory Policies Act (PURPA), the Public Utility Company Holding Act (PUCHA), the Energy Policy Act, the Endangered Species Act, the Clean Water Act, the National Environmental Policy Act (NEPA), and the Pacific Northwest Electric Power Planning and Conservation Act. A number of state and local laws also began to affect hydropower operations.

As many of these laws took effect, the relationship between those who owned and operated projects and FERC was considered relatively calm until the late 1960s. Since then, more stringent environmental laws began being enacted, the production and distribution of electricity became increasingly deregulated, and the process for “relicensing” projects began as the original licenses started to expire. For instance, during the 1990’s 34 licenses were scheduled to expire in Idaho, Montana, Oregon and Washington. Still more are scheduled to expire during the next 10 years.

In concert with enacting environmental laws has also come increased regulation from state and local water, fish and wildlife agencies. For instance, in 1994 the U.S. Supreme Court ruled that states have the authority under the Clean Water Act to establish minimum streamflows at hydro projects. Such authority can significantly affect how a project operates and the amount of electricity it can generate. In addition to the state and local regulatory agencies being mentioned, a listing of federal and state agencies that may become involved includes the Bureau of Land Management, the National Park Service and the U.S. Forest Service.

On a second track is development of the federally owned and operated systems. Rather than receiving licenses, these systems receive authorizing legislation from the United States Congress to develop and operate projects. Because such authorization generally does not provide specific guidelines, the Corps and Bureau of Reclamation rely on their agency charters, interaction with the public and applicable federal laws and treaties to guide their operation.

The Bonneville Power Administration (BPA) also plays a critical role in federal operation of projects. Created in 1937, BPA markets and distributes power generated at federal dams in the region. BPA also builds and operates transmission lines that bring this power to market. These transmission lines extend over 15,012 circuit miles, accounting for three-fourths of the region’s transmission capacity, and can be used (for a fee) by all generators of hydropower.

Like public and private utilities, how federal projects are now operated and regulated is being dramatically impacted by new legislation and environmental laws. In the case of BPA, its charter was expanded in 1980 to finance conservation programs and improve fish and wildlife resources affected by power projects. Since that time, BPA has spent over a billion dollars on conservation, fish and wildlife programs. These expenditures include funding the cost of the Corps and Bureau of Reclamation to modify their facilities to assist fish and wildlife. Funding for these programs has been absorbed by BPA’s annual budget, which is funded through its sale of power.

BPA’s funding of fish and wildlife activities is also guided by the Northwest Power Planning Council. The Council was formed as part of The Northwest Power Act of 1980. Two of the Council’s most important functions are to 1) forecast how much energy the region will need over a 20-year period and develop a power plan to meet those needs, and 2) develop plans to protect, mitigate and enhance the region’s fish and wildlife species.

Within this context, the Council develops, updates and monitors a fish and wildlife program. But because the Council is a planning, policy-making and reviewing body, it does not directly fund or implement projects. Rather, the Council relies on BPA, the Corps, the Bureau of Reclamation, FERC and public and private utilities to carry out the program.

This complex mix of regulatory authorities has become even more complex as the effect of the Endangered Species Act (ESA) is felt in the Columbia River basin. Specifically, in the early 1990s the National Marine Fisheries Service (NMFS) acted on its authority to place salmon species on the endangered species list. Under actions required by the Endangered Species Act (ESA), NMFS was then required to prepare a “biological opinion” on any proposed federal action that may adversely affect a threatened or endangered species and/or its habitat. Further, the ESA requires the development of recovery plans for threatened and endangered species. Federal agencies that operate hydroelectric projects must then consult with NMFS each year to ensure that their actions will not further the decline of species that have been listed as endangered.

By carrying out the requirements of the ESA, the 1995 Biological Opinions released by NMFS and the United States Fish and Wildlife Service became the driving force for the System Operation Review (SOR) that was released by the Corps, the Bureau of Reclamation and BPA. The SOR is a critical piece of developing system-wide plans for federally owned projects, establishing guidelines for these projects to continue coordinated activities with non-federal projects, and for allowing public input into system planning.

Finally, Indian tribes play a crucial role in the regulatory process because of their sovereignty and treaties that provide them with water rights, including access to and the taking of fish from the river. As a result, the tribes are an essential piece of both appropriate planning for multiple use of the river, operation of hydroelectric projects, and development of associated fish and wildlife programs. Examples of tribal agencies and coalitions involved are the Bureau of Indian Affairs, the Columbia River Inter-tribal Fish Commission, the Northwest Indian Fisheries Commission and the Upper Columbia United Tribes.

And for every agency involved in regulating the system, it is important to remember there are many more non-government authorities trying to influence this process. Groups and organizations range from industry and tribal associations, to environmental advocates, to commercial fisheries, to service organizations representing various recreational interests, e.g.– fishing and boating.

As complex as all these interactions are, for the Columbia to be used effectively as a multiple purpose system, coordination must and does occur throughout the Basin.