On October 18, 2018, FERC denied several motions to stay an order issued on September 10, which invoked FERC’s rarely used authority under section 31 of the Federal Power Act to revoke the license for the existing 4.8-Megawatt Edenville Project No. 10808 (“Edenville Project”), located on the Tobacco and Tittabawassee Rivers in Gladwin and Midland Counties, Michigan. Motions to stay FERC’s revocation order were filed by licensee Boyce Hydro Power, LLC’s (“Boyce Hydro”), Sanford Lake Preservation Association, Wixom Lake Association, and the Gladwin County Board of District Commissioner (together, the “Lake Associations”). FERC denied the motion to stay because Boyce Hydro and the Lake Associations did not show that they would suffer irreparable non-economic harm if the stay were not in place. FERC also held that the stay did not violate the public interest.

As summarized in its September 10 order, FERC staff began notifying Boyce Hydro and its predecessor of noncompliance issues at the Edenville Project in 2004, focusing in particular on the project’s spillway capacity and its inability to pass the Probable Maximum Flood (PMF)—the most severe flood reasonably possible in the area, given its meteorologic and hydrologic conditions. In 2017, FERC staff issued a Compliance Order, specifying a number of allegations against Boyce Hydro regarding its failure to comply with FERC’s licensing requirements in operating the Edenville Project. In the order, FERC staff stated that Boyce Hydro failed to report the Edenville Project’s structural instability, undertook unauthorized dam repairs, failed to construct approved recreation facilities, and neglected to acquire all the necessary property rights. The Compliance Order required Boyce Hydro to provide the specific plans, specifications, reports, and other information needed to address the various license violations.

Over the next year, Boyce Hydro requested, and FERC staff granted, two additional extensions of time to remedy the violations described in the Compliance Order. On February 15, 2018, after Boyce Hydro failed to meet those additional deadlines, FERC issued an Order Proposing Revocation of Boyce Hydro’s license to operate the Edenville Project. On September 10, 2018, FERC revoked the license. Subsequently, Boyce Hydro and the Lake Associations filed motions at FERC and the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) to stay the Revocation Order. On September 25, 2018, the D.C. Circuit denied the motion to stay.

In denying Boyce Hydro’s and the Lake Associations’ motions to stay, FERC explained its standard set forth under the Administrative Procedure Act, stating that, “[A] stay will be granted if the Commission finds that ‘justice so requires.’” FERC also stated that it considers numerous factors in determining whether to stay one of its orders, such as “whether the movant will suffer irreparable injury in the absence of a stay” and “where the public interest lies.” Boyce Hydro argued that absent a stay it would suffer irreparable injury because it would still be required to operate and maintain the project’s dam without revenues from power generation to offset its expenditures. The Lake Associations stated that they would suffer irreparable injury because they had taken actions in order to acquire the project and existing FERC license from Boyce Hydro and that a revocation of that license would require the Lake Associations to obtain a new license from FERC at significant cost.

In response to Boyce Hydro’s argument, FERC stated that economic harm or monetary losses do not constitute irreparable harm, unless such economic harm “threatens the very existence of the movant’s business.” FERC determined that revoking Boyce Hydro’s license would not threaten Boyce Hydro’s business. In rejecting the Lake Associations’ argument, FERC stated that “nothing in Revocation Order prevents the Lake Associations…from acquiring the project and subsequently applying for a license from the Commission, nor is it certain how expensive such a process would be.” FERC also reasoned that “[i]t is also possible that an entity…could acquire the project assets and elect not to seek a license” because it was not clear whether Lake Associations would use the dam to generate electricity. In any event, FERC stated that the potential cost of applying for a license, if one is needed, is purely economic and does not represent irreparable harm.

Finally, FERC rejected Boyce Hydro’s argument that a stay would serve the public interest. Boyce Hydro contended that in the absence of a stay, it will be required to pass flows over spillways, which may damage the environment. FERC disagreed and gave many counterexamples of what Boyce Hydro could do to mitigate environmental harm.

FERC’s order denying a stay can be found here.