On October 25, 2017, FERC released a final report regarding whether its policies materially burden the development and use of domestic energy resources (“Final Report”). While FERC concluded that most agency actions are not materially burdensome or are necessary to administer its statutory mandates, FERC recommended certain changes to licensing processes, exemption processes, and determinations on deficient applications for hydropower resources.

On March 28, 2017, President Donald Trump signed Executive Order 13783, which required federal agencies to submit to the Office of Management and Budget (“OMB”) a review of their existing policies that potentially directly affect or have an indirect primary effect on the development or use of domestic energy resources. The Executive Order stated that reviews should consider the effect of actions on oil, natural gas, coal, nuclear energy resources, hydropower, and renewable generation resources. In a May 8, 2017 Guidance Memo, OMB clarified that independent agencies, including FERC, were not required to comply with the directive. Nonetheless, FERC submitted to OMB its plan for reviewing its policies on May 12, 2017 and a draft final report on July 26, 2017.

In the Final Report, FERC focused on agency actions related to: hydropower licensing; liquefied natural gas (“LNG”) facility, natural gas pipeline, and natural gas storage facility siting; centralized electric capacity market policies in PJM Interconnection, L.L.C., ISO New England, Inc., and New York Independent System Operator, Inc.; and generator interconnection policies. In general, FERC determined that most agency actions in these areas do not materially burden domestic energy resources or are necessary for FERC to administer its statutory mandates. With respect to LNG facilities, FERC considered whether the mandatory pre-filing process on LNG terminals and related pipeline projects constitutes a material burden on the transportation of domestic natural gas, but concluded that the pre-filing process ultimately results in a more timely application review. Regarding organized capacity market policies, FERC concluded that, by preserving the integrity of market price signals and revenue streams, the Minimum Offer Price Rule on balance facilitates the development of renewable energy resources. Moreover, FERC concluded that its generator interconnection policy orders establish a process by which generators can safely and reliably interconnect to the grid, thereby facilitating their development. Accordingly, FERC did not recommend revisions to its policies related to LNG facilities, capacity markets, or generator interconnections.

However, with respect to hydropower licensing, FERC determined that the development and use of domestic hydropower resources are materially burdened by, among other things: (1) assigning the Integrated Licensing Process (“ILP”) as the default process for all license requests; (2) requiring applicants to file a draft application and preliminary licensing proposal; (3) establishing a 3–3.5-year pre-filing schedule for the ILP; (4) subjecting hydropower projects between 5 MW and 10 MW to “onerous” minimum filing requirements; (5) requiring applicants to install or increase the capacity of a facility by not more than 10 MW to qualify for a license exemption; (6) failing to allow applicants to convert a small hydropower exemption application to a license application; and (7) rejecting a relicense application without providing the applicant the opportunity to refile.

A copy of the Final Report is available here.