Green River (WY/UT/CO) - Wyco Power and Water, Inc. (“Wyco”), proponents of the 500 mile-long water-supply pipeline from Wyoming to Colorado, has requested a rehearing from the Federal Energy Regulatory Commission (FERC) regarding the Commission’s Order dismissing the Preliminary Permit Application for the Regional Watershed Supply Project (aka: Flaming Gorge Pipeline).

Wyco has stated that the Order is inconsistent with Section 4(f) of the Federal Power Act. In addition, Wyco believes that the dismissal of the Preliminary Permit Application based on the reasons presented in the Order establishes precedents that will likely be detrimental to future development of hydroelectric facilities in the United States.

On September 1, 2011, Wyco filed a Preliminary Permit Application to study the feasibility of the Regional Watershed Supply Project. Wyco’s proposed Project would consist of:

(1) a proposed 501-mile-long, buried water-supply pipeline that would extend from two points of diversion in Wyoming (Flaming Gorge Reservoir and the
Green River) to a proposed reservoir near Pueblo, Colorado; and

(2) seven hydropower projects, including two pumped storage projects, that use water from the proposed pipeline, and five projects that would consist of turbines placed in the water-supply pipeline.

The proposed Project would occupy federal lands managed by the U.S. Department of Agriculture’s Forest Service, and the U.S. Department of the Interior’s Bureau of Land Management and Fish and Wildlife Service.

On October 18, 2011, the Commission issued public notice of Wyco’s proposal. Notices of intervention were filed by the Forest Service and the Wyoming Game and Fish Department. In addition, motions to intervene were filed by a number of additional parties including the Coalition of Local Governments; Colorado River Water Conservation District; Colorado Springs Utilities; Sweetwater County, Wyoming; Upper Yampa Water Conservancy District; American Rivers, American Whitewater, and Colorado River Outfitters Association, filing jointly; Colorado Environmental Coalition, National Parks Conservation Association, and Western Resources Advocates, filing jointly; Sierra Club, Center for Biological Diversity, Rocky Mountain Wild, Save the Poudre: Poudre Waterkeeper, Biodiversity Conservation Alliance, Wyoming Outdoor Council, Citizens for Dixie’s Future, Glen Canyon Institute, Living Rivers: Colorado Riverkeeper, and Utah Rivers Council, filing jointly; Trout Unlimited; and Wyoming Wildlife Federation, National Wildlife Federation, and Colorado Wildlife Federation, filing jointly. In addition, approximately 230 comments were filed in response to the public notice.

On February 23, 2012, the Commission issued the Order Dismissing the Preliminary Permit Application on the basis that the application was filed with the Commission prematurely. Stating that, “[U]ntil some certainty regarding the authorization of the pipeline is presented, Wyco will not be able to gather and obtain the information required to prepare a License Application for a proposed hydropower project.” In addition, the Order states that the “pipeline does not currently exist, and Wyco’s application does not provide any information about the timeline for seeking and obtaining the necessary authorizations for the construction and operation of such a pipeline.”

FERC has identified the following Issues in the Proposed Project's Permitting Review:

- Whether the Commission erred as a matter of fact by concluding that, “[U]ntil a water conveyance pipeline is actually built, authorizations have been obtained for a specific route, or the process to identify a specific route has been substantially completed, Wyco will be unable to prepare “[s]uch maps, plans, specifications, and estimates of cost as may be required for full understanding of the proposed [hydropower project“ during a three-year permit term, as required by section 9 of the FPA.

- Whether the Commission erred as a matter of fact by concluding that, “[U]ntil some certainty regarding the authorization of the pipeline is presented, Wyco will not be able to gather and obtain the information required to prepare a license application for a proposed hydropower project.”

- Whether the Commission erred as a matter of law and fact by concluding that, “there is no purpose under the FPA for issuing a permit to Wyco for its proposed hydropower project at this time.”

- Whether the Commission erred as a matter of law by dismissing a preliminary permit application that fulfilled the Commission’s requirements for the issuance of a preliminary permit.

- Whether the Commission erred as a matter of law by dismissing a preliminary permit application for a proposed project that does not meet any limitation criteria established by the Commission’s regulations.

- Whether the Commission erred as a matter of law by allowing the level of comments filed in regard to Wyco’s preliminary permit application to influence the issuance of a preliminary permit in order to provide Wyco priority of application for a license for up to three years.

The Commission’s Order implies that the final pipeline alignment, all authorizations to construct the pipeline, and even construction of the pipeline should be completed prior to filing an application for a Preliminary Permit. Wyco contends that upon filing of a License Application with the Commission, as well as pursuing additional permit requirements such as a Section 404 Permit and/or a Section 401 Water Quality Certificate for construction of the proposed Project, that additional details (e.g., construction authorizations) will be required; however, for the purposes of obtaining a Preliminary Permit, Wyco contends that sufficient information and maps associated with the pipeline alignment have been provided to the Commission.

In addition, Wyco contends that it will be counterproductive and cost-prohibitive to secure all necessary permits and authorizations to construct the pipeline without confirming the locations of the associated hydroelectric facilities. In particular, given the anticipated studies and consultation associated with the two proposed pumped storage facilities, Wyco contends that it is essential to finalize the location of these two hydroelectric developments, as well as the additional facilities, prior to commencing construction of the pipeline. Wyco has recognized that the proposed Project will require a considerable level of agency and stakeholder consultation, as well as associated studies and permitting; however, by forcing the firm to pursue all authorizations and permits for the pipeline prior to confirming the location of the hydroelectric facilities, Wyco is being forced to pursue an inefficient licensing and permitting process.

As compared to Wyco, the Commission has a far greater appreciation of the details of the projects for which Preliminary Permits have been granted under the FPA. Therefore, Wyco is not going to provide specific details or identify specific projects. However, based on a review of project descriptions for a number of proposed closed-loop pumped storage facilities and hydrokinetic energy (tidal and wave energy) projects, dismissal of the Wyco application is inconsistent with the issuing of permits for a number of these projects. Based on a review of a number of Preliminary Permit Applications, it is not uncommon for the Commission to issue a Preliminary Permit for a closed-loop pumped storage facility where the pipeline for the initial fill water or subsequent makeup water has yet to be authorized. In addition, Wyco believes that it is understood that during the period of time that a Preliminary Permit Application and a License Application is filed with the Commission, applicants will consult with the appropriate entities to finalize project details such as access roads, transmission lines, water intakes, and pipelines. To date, Wyco has not been able to identify a Preliminary Permit Application that has been dismissed for a closed-looped pumped storage project due to a lack of authorization to construct such project features. Based on a review of a number of hydrokinetic energy Preliminary Permit Applications and the resulting permits, a common theme is the issuance of permits for projects where (1) the technology to generate electricity is still under development, (2) the final location of the turbines
 is yet to be defined, and (3) a list of the other permits and authorizations required to deploy the technology are not defined in the Preliminary Permit Application, much less, any information about the timeline for seeking and obtaining the necessary authorizations. Based on the premise for dismissal of Wyco’s application, “[W]yco will be unable to prepare “[s]uch maps, plans, specifications, and estimates of cost as may be required for a full understanding of the proposed [hydropower] project,” during a three-year permit term, as required by section 9 of the FPA,”

Wyco questions how the Commission has been able to issue Preliminary Permits for a variety of the proposed hydrokinetic energy projects for which such permits have been granted. Wyco is not advocating that the bar be raised for the level of information to be provided for these other projects; however, Wyco does request that the same standard be applied to the proposed Project.

Wyco contends that issuance of a preliminary permit for the proposed project would be consistent with the issuance of the preliminary permit for the proposed Lake Powell Pipeline Project (Project No. 12966). It is Wyco’s understanding that the Lake Powell Pipeline Project has been issued two consecutive Preliminary Permit Applications and is currently proceeding with licensing of the proposed project.

Based on a review of the Commission’s Order, Wyco could appreciate the Commission’s reasoning in support of the dismissal if ultimately Wyco were to pursue conduit exemptions for one or more of the proposed hydroelectric developments. However, Wyco will not be pursuing a conduit exemption and will be submitting a License Application for construction and operation of the proposed Project as presented in the Preliminary Permit Application.

As presented in the Preliminary Permit Application filed with the Commission, and as recognized in the Commission’s Order, Wyco proposes to generate electricity using an unused portion of water associated with the Green River Basin. Therefore, Wyco is seeking priority of application to use this unused portion of water. Wyco cannot risk the financial investment of pursuing a license for the development of the proposed Project only to have another entity granted priority of application for this water. Wyco requests clarification as to how other potential applicants would be precluded from obtaining priority of application for the unused water under the scenario proposed through the Commission’s dismissal of the application as being premature.

Consistent with other hydroelectric development projects that have pursued and received Preliminary Permit Applications, the inability to secure the priority of application over the next 3 years (to perform the necessary study and consultation activities) would have significant adverse impacts on project financing. The purpose of the purpose of a preliminary permit is to grant the permit holder priority to file a subsequent license application. It does not convey any specific rights to build the project,13 rather, it is preliminary and merely provides the applicant with time to conduct feasibility studies, etc. Therefore, it is not necessary to have obtained authorization for the pipeline in advance of applying for the preliminary permit as the Commission states in its Order.

Wyco appreciates the level of stakeholder interest in this proposed Project and respects the organizational capabilities of the stakeholder groups who responded to the Commission’s public notice of the proposed Project. Wyco looks forward to working with these stakeholder groups to perform the studies necessary to evaluate the viability of the Project. Although the proposed Project has been the subject of public consultation through a U.S. Army Corps of Engineers led National Environmental Policy Act process, given the interest to include the hydroelectric developments in the proposed Project, Wyco understands that the Commission must eventually issue a license for the Project. With this understanding, Wyco has refrained from additional consultation with stakeholders until the process is further defined (e.g., the Commission’s licensing process). Therefore, Wyco believes that its desire to consult with the applicable agencies and stakeholders through the Commission’s licensing process is consistent with the FPA.

Furthermore, Wyco believes that the Commission’s evaluation of the proposed Project based on the information consultation record to be provided in the License Application is more appropriate than an evaluation of the proposed Project based on comments filed to date. Wyco has not had the opportunity to perform the anticipated consultation with applicable agencies and the proposed Project stakeholders. Wyco believes that dismissal of a Preliminary Permit Application due to the number of comments filed in response to the notice is inconsistent with the FPA.

For the reasons expressed above, Wyco has requested that the Commission grant rehearing of the dismissal of Preliminary Permit Application for the Regional Watershed Supply.

American Whitewater will remain fully engaged in the FERC proceedings moving forward!