[Federal Register Volume 60, Number 182 (Wednesday, September 20, 1995)]
[Notices]
[Pages 48704-48709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23314]



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DEPARTMENT OF ENERGY
[Docket No. EL95-35-000]


Order Establishing Hearing

Issued September 14, 1995.
    In the matter of Kootenai Electric Cooperative, Inc., Clearwater 
Power Company, Idaho County Light & Power Cooperative Association, 
Inc., and Northern Lights, Inc. v. Public Utility District No. 2 of 
Grant County, Washington
    On March 2, 1995, Kootenai Electric Cooperative, Inc., Clearwater 
Power Company, Idaho County Light & Power Cooperative Association, 
Inc., and Northern Lights, Inc. (collectively referred to as the Idaho 
Cooperatives or Complainants) tendered for filing a complaint against 
Public Utility District No. 2 of Grant County (Grant County). In their 
complaint, the Idaho Cooperatives request the Commission to determine 
and fix the applicable portion of capacity and output to be made 
available to the Idaho Cooperatives from the Priest Rapids Project upon 
relicensing and expiration of existing power sales contracts. Grant 
County and the Purchasers1 oppose this request.

    \1\The Purchasers are: City of Tacoma, Washington Water Power 
Company, Puget Sound Power & Light Company, Seattle City Light, 
Eugene Water & Electric Board, PacifiCorp, Portland General Electric 
Company, and Cowlitz County PUD No. 1.
    They provide retail electric service in the States of Oregon, 
Washington, Idaho and Montana, and also engage in wholesale 
purchases and sales of electricity and transmission services, 
including transactions with Grant County. The Purchasers each 
entered into similar contracts with Grant County for the purchase 
and sale of output of the Priests Rapids Development. The contracts 
terminate on October 31, 2005. Certain of the Purchasers also 
entered into contracts with Grant County for the purchase and sale 
of output of the Wanapum Development. These contracts terminate on 
October 31, 2009. Both of these forms of contract contain rights of 
first refusal entitling the Purchasers to further output of the 
Priest Rapids Project upon contract termination. 

[[Page 48705]]

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    As explained below, we set this matter for trial-type, evidentiary 
hearing.

I. Background

    Grant County is a municipal corporation organized under the laws of 
the State of Washington, and is the licensee of the Priest Rapids 
Project No. 2114. The license for the Priest Rapids Project No. 2114 
was issued on November 4, 1955, effective November 1, 1955, and expires 
by its terms on October 31, 2005.2 The Priest Rapids Project No. 
2114 consists of two hydroelectric developments on the Columbia River, 
the Priest Rapids Development with an installed capacity of 886 MW and 
the upstream Wanapum Development with an installed capacity of 1017 
MW.3

    \2\Public Utility District No. 2 of Grant County, Washington, 14 
FPC 1067 (1955).
    \3\64 FERC para.62,056 (1993).
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    The Priest Rapids Project No. 2114 had originally been authorized 
for Federal development by the Flood Control Act of 1950.4 In 1954 
Congress enacted Public Law No. 83-544, 68 Stat. 573 (1954), which 
expressly modified the Flood Control Act to permit the development of 
the Priest Rapids Project No. 2114 pursuant to a license issued under 
Part I of the Federal Power Act. Section 6 of Public Law No. 83-
5445 provided in pertinent part that, if any disagreements arise 
under the statute the Commission may be called on to ``determine and 
fix the applicable portion of power capacity and power output to be 
made available.''

    \4\64 Stat. 170, 179 (1950).
    \5\The full text of Section 6 is as follows:
    The operation and maintenance of a project under license 
pursuant to this Act shall be subject to reasonable rules and 
regulations by the Secretary of the Army in the interest of flood 
control and navigation. To assure that there shall be no 
discrimination between States in the area served by the project, 
such license shall provide that the licensee shall offer a 
reasonable portion of the power capacity and a reasonable portion of 
the power output of the project for sale within the economic market 
area in neighboring States and shall cooperate with agencies in such 
States to insure compliance with this requirement: Provided, That in 
the event of disagreement between the licensee and the power 
marketing agencies (public or private) in any of the other States 
within the economic market area, the Federal Power Commission may 
determine and fix the applicable portion of power capacity and power 
output to be made available hereunder and the terms applicable 
thereto. Power surplus to the requirements of the licensee and other 
non-Federal marketing agencies (public or private) within the 
economic marketing area, as may be economically usable to the 
Federal system, may be made available to and may be purchased by the 
Bonneville Power Administrator at rates not higher than the rates 
charged such non-Federal marketing agencies, and under such terms 
and conditions as shall be mutually agreeable to the licensee and 
the Secretary of the Interior. Such power may be co-mingled with 
power from Federal dams in the Columbia River system for which the 
Bonneville Power Administrator has been designated marketing agent 
and shall be sold by the Administrator in accordance with the 
provisions of the Bonneville Project Act at established rate 
schedules.
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II. The Complaint

    On March 2, 1995, the Complainants filed a complaint claiming, 
inter alia, that Grant County has violated section 6 of Public Law No. 
83-544, and asking the Commission to determine and fix an amount of up 
to 288 MW which Grant County should be required to make available from 
its Priest Rapids Project No. 2114 to the Idaho Cooperatives when Grant 
County receives a new license for the project.
    Specifically, the Complainants argue that Grant County has violated 
the terms of Public Law No. 83-544 and/or its existing license in the 
following ways:6

    \6\See Complaint at 11-13.
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    1. Grant County has not offered to make any portion of the capacity 
or output of the Priest Rapids Project No. 2114 available to the 
Complainants upon expiration of the existing contracts, after more than 
sixteen months of requests by the Complainants.
    2. Grant County has not cooperated with the Complainants, which are 
agencies in a neighboring state, to insure compliance with the 
requirement of Public Law No. 83-544 after 2005. To the contrary, Grant 
County has been unwilling to even consider the Complainants' request, 
and instead has proceeded with negotiations with the Purchasers7 
for the future sale of Priest Rapids Project No. 2114 power and energy 
to the exclusion of the Complainants.

    \7\See supra note 1.
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    3. Grant County may have made sales of power and energy from the 
Priest Rapids Project No. 2114 that are not surplus to the requirements 
of the licensee and other non-Federal marketing agencies.8

    \8\The question with regard to ``surplus power,'' according to 
Complainants, is whether power which is, in effect, surplus from 
Priest Rapids Project No. 2114 is being sold to other entities 
without first being made available to Complainants or other agencies 
within the economic marketing area of the neighboring states.
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    4. Grant County has contracted for the sale of power and energy 
from the Wanapum Development after expiration of the original license 
without obtaining requisite approval; Grant County has already entered 
into contracts for an allocation of power and energy from the Wanapum 
Development through October 31, 2009, four years after the original 
license expires.9

    \9\Section 22 of the Federal Power Act (FPA), 16 U.S.C. Sec. 815 
(1994), provides that contracts for the sale of power beyond the 
expiration date of a license require ``the joint approval of the 
[Federal Energy Regulatory Commission] and of the public-service 
commission or other similar authority in the State in which the sale 
or delivery of power is made. . . .''
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III. Notice and Responses to Complaint

    Notice of the filing of the complaint was published in the Federal 
Register,10 with responses due on or before April 21, 1995.

    \10\60 FR 18094 (April 10, 1995).
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    On April 21, 1995, Grant County filed in opposition to the 
complaint. Grant County asks that the Commission dismiss the complaint. 
Grant County states that it has fully complied with Public Law No. 83-
544 and, in any event, the complaint addresses matters not ripe for 
consideration.
    Specifically, Grant County states that Complainants themselves 
concede that they have no problem with the offer of Priest Rapids 
Project No. 2114 power to date under Grant County's existing 
license.11 Grant County states that what the Complainants are 
seeking from the Commission is that Grant County be ordered now to 
offer Complainants some yet to be determined amount of power upon 
relicensing.12 Grant County states that the Complainants' argument 
assumes that section 6 of Public Law No. 83-544 applies on relicensing 
and in any event there is no pending application for relicensing and, 
therefore, the matter is not ripe for consideration.

    \11\Grant County Response at 15, citing Complaint at 4 n. 3.
    \12\Id.
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    Finally, Grant County states that it is not required to offer to 
the Bonneville Power Administration (BPA), and BPA is not required to 
purchase, power from the Priest Rapids Project No. 2114 under the 
statute in question. Grant County argues that the language of the 
statute is permissive, giving local authorities the opportunity to sell 
surplus power. Furthermore, according to Grant County, the clause was 
added to facilitate project financing, not to dictate power 
sales.13

    \13\Id. at 17-18.
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    On April 21, 1995, the Purchasers14 filed in opposition to the 
complaint. The Purchasers state that the credit support provided by the 
Purchasers' contracts was essential to the ability of Grant County to 
construct the Priest 

[[Page 48706]]
Rapids Project No. 2114.15 The Purchasers further note that at no 
time prior to the March 2, 1995 filing by Complainants had any protest 
been made to the methodology utilized by Grant County or to the 
contracts negotiated to finance the Priest Rapids Project No. 2114 in 
accordance with Public Law No. 83-544.16 The Purchasers, like 
Grant County, state that in order for the Commission to be in a 
position to uphold Complainants' request for power, Grant County must 
first successfully relicense the Priest Rapids Project No. 2114. And 
Grant County has not yet even submitted an application for relicense 
and therefore the matter is not ripe for consideration.17 The 
Purchasers also state that, when the existing power purchase agreements 
expire, the Purchasers are entitled to renew their contracts under 
terms similar to those contained in the existing contracts.18 
Finally, the Purchasers are in agreement with Grant County on the 
``surplus power'' question raised by Complainants.19

    \14\On April 21, 1995, each of the Purchasers also filed 
separate motions to intervene.
    \15\Purchasers' April 21, 1995 Response at 4.
    \16\Id. at 4-5.
    \17\Id. at 9.
    \18\Id. at 11.
    \19\Id. at 13-14.
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IV. Complainants' Motion for Summary Disposition

    On June 9, 1995, Complainants filed a motion for summary 
disposition. Complainants move that the Commission issue an order 
granting partial summary disposition of the complaint at this time 
by:20

    \20\Complainants' Motion at 24.
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    1. Finding that the Idaho Cooperatives are agencies in neighboring 
states entitled to a reasonable allocation of power and energy upon 
expiration of the existing power sales contracts;
    2. Directing Grant County to provide copies of the existing draft 
power sales contracts for the Idaho Cooperatives' consideration without 
further delay;
    3. Directing Grant County to henceforth provide the Idaho 
Cooperatives with all revised drafts of the power sales contracts on an 
ongoing basis;
    4. Directing Grant County to enter into good faith negotiations and 
to otherwise cooperate with the Idaho Cooperatives as required by 
Public Law No. 83-544 for the sale of the Priest Rapids Project No. 
2114 power upon expiration of the existing contracts; and
    5. Directing the parties to report to the Commission by December 
31, 1996, regarding the progress of their negotiations and the status 
of any contracts executed or contemplated between Grant County and any 
prospective purchasers.
    On June 30, 1995, Grant County and the Purchasers filed in 
opposition to Complainants' motion for summary judgment, essentially 
restating their arguments as to why the Idaho Cooperatives' complaint 
should be dismissed.

V. Discussion

    Under Rule 214 of the Commission's Rules of Practice and 
Procedure,21 the timely, unopposed motions to intervene of Grant 
County, City of Tacoma, Washington Water Power Company, Puget Sound 
Power & Light Company, Seattle City Light, Eugene Water & Electric 
Board, PacifiCorp, Portland General Electric Company, and Cowlitz 
County PUD No. 1 serve to make them parties to this proceeding.22

    \21\18 CFR 385.214.
    \22\All of the above parties, except for Grant County, have also 
filed jointly in this proceeding as the Purchasers. See supra note 
1.
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    At the outset, we will address two issues important to the 
resolution of this complaint:
    A. Does Public Law No. 83-544 apply on relicensing (or just to 
initial licensing)?
    B. Did Grant County violate section 22 of the FPA by contracting 
for the sale and delivery of power beyond the date of termination of 
the license for Priest Rapids Project No. 2114 without obtaining the 
requisite approval of this Commission?

A. Public Law No. 83-544 (68 Stat. 573)

1. Background
    Public Law No. 83-544, enacted in July 1954, provided for the 
hydropower development of the Priest Rapids site on the Columbia River 
in Washington State ``under and in accordance with the terms and 
conditions of a license duly issued pursuant to the Federal Power Act 
and in accordance with this Act.'' Section 6 of Public Law No. 83-544 
states in relevant part:

    The operation and maintenance of a project under license 
pursuant to this Act shall be subject to reasonable rules and 
regulations by the Secretary of the Army in the interest of flood 
control and navigation. To assure that there shall be no 
discrimination between States in the area served by the project, 
such license shall provide that the licensee shall offer a 
reasonable portion of the power capacity and a reasonable portion of 
the power output of the project for sale within the economic market 
area in neighboring States and shall cooperate with agencies in such 
States to insure compliance with this requirement: Provided, That in 
the event of disagreement between the licensee and the power 
marketing agencies (public or private) in any of the other States 
within the economic market area, the Federal Power Commission may 
determine and fix the applicable portion of power capacity and power 
output to be made available hereunder and the terms applicable 
thereto.

    As discussed above, Complainants argue that the licensee is 
violating this provision by refusing to negotiate over the sale of 
power after the existing license expires in 2005.
    Grant County and the Purchasers respond that: (1) Public Law No. 
83-544 only applies to the original license and does not apply in the 
relicensing context; (2) Grant County's current allocation method 
already shares small amounts of project power with Idaho utilities and 
has already been approved as consistent with the law; (3) Complainants 
missed their opportunity when they turned down the option to purchase 
project power in 1955 (at the time of original licensing) because they 
viewed Grant County's project power as too expensive; and (4) 
Complainants' concerns are premature because an application for 
relicensing for the project has not yet been filed.
2. Discussion
    The first question to be addressed is whether section 6 of Public 
Law No. 83-544 applies after the initial license term for this project 
expires. We start with the language of the statute itself.23 
Nothing therein indicates that the provision applies only to the 
original license to be issued under Part I of the FPA, even though in 
the FPA Congress made distinctions between original licenses and 
``new'' licenses (i.e., relicenses). This would indicate that Public 
Law No. 83-544 was intended to comprehend both original and new 
licenses for the Priest Rapids Project.

    \23\Consumer Product Safety Commission v. GTE Sylvania, Inc., 
447 U.S. 102, 108 (1980).
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    We turn next to the legislative history of section 6.24 The 
legislative history is bare of any reference to or discussion of the 
applicability of section 6 after expiration of the initial license 
term.25 In the main, the committee reports and the debate on the 
floor of the House and Senate addressed the consistency of this 
proposal with the then-existing comprehensive Federal plan for 
development of the Columbia River, as set out in the Flood Control 
Act,26 and the requirement to utilize the water 

[[Page 48707]]
resources in the Columbia River Basin for the benefit of the people 
generally by making a reasonable portion of the power generated 
available for equitable distribution within the economic marketing area 
in adjacent states. Although there was frequent mention of the fact 
that the project would be issued a license under the FPA, the 
consequences of that action were not fully articulated.

    \24\INS v. Cardoza-Fonseca, 480 U.S. 421, 432 (1987); Mead Corp. 
v. Tilley, et al., 490 U.S. 714, 722 (1989).
    \25\See H.R. Rep. No. 1601, 83rd Cong., 2d Sess. (1954); S. Rep. 
No. 1656, 83rd Cong., 2d Sess. (1954); 100 Cong. Rec. 6846-50, 
10211-28, 10247-57 (1954).
    \26\See supra note 4.
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    We turn next to the order issuing the license for Project No. 
2114.27 The order identifies Public Law No. 83-544 as applicable, 
but there is no further discussion. The Commission found that Grant 
County submitted satisfactory evidence of its financial ability to 
construct and operate the project.28 The Commission also found 
that a portion of the energy generated would be used to meet Grant 
County's own requirements and the balance of the output and a 
reasonable portion of the power capacity would be sold to other 
electric utility systems in Washington and in neighboring states in 
accordance with the provisions of section 6 of Public Law No. 83-544. 
There is no discussion in the order regarding future relicensing or 
future allocation of power from the project.

    \27\See supra note 2.
    \28\The power sales contracts which provided the economic 
underpinnings for project financing took longer than anticipated to 
negotiate and resulted in a delay in the commencement of 
construction. See P.U.D. No. 1 of Grant County, Washington, 15 FPC 
1487 (1956).
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    We have also examined an analogous statute, the Niagara 
Redevelopment Act (NRA),29 to see if its power allocation 
provisions address future applicability or provide any other general 
guidance on the issue before us. The NRA was being considered by 
Congress at the same time the Senate was debating the Priest Rapids 
legislation, and in fact the Senate debates on Priest Rapids referred 
specifically to the NRA legislation.30

    \29\Public Law No. 85-159, 71 Stat. 401 (1957).
    \30\See 100 Cong. Rec. 10225-26 (1954).
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    As in the Priest Rapids case, Congress passed the NRA directing the 
Commission to issue a license for the Niagara Project to the Power 
Authority of the State of New York upon certain conditions contained 
therein. Two of those conditions, incorporated into the license, 
provide that ``at least 50 per centum of the project power shall be 
available for sale and distribution primarily for the benefit of the 
people as consumers, particularly domestic and rural consumers, to whom 
such power shall be made available at the lowest rates reasonably 
possible and in such manner as to encourage the widest possible use,'' 
and that the licensee ``shall make a reasonable portion of the project 
power subject to the preference provisions * * * available for use 
within reasonable economic transmission distance in neighboring 
States.'' In addition, those conditions also provide that ``[i]n any 
case in which project power subject to the preference provisions * * * 
is sold to utility companies organized and administered for profit, the 
Licensee shall make flexible arrangements and contracts providing for 
the withdrawal upon reasonable notice and fair terms of enough power to 
meet the reasonably foreseeable needs of the preference 
customers.''31

    \31\Power Authority of the State of New York, 19 FPC 186, 193-94 
(1958).
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    There are some important similarities (and differences) between 
these NRA provisions and the Priest Rapids provision in dispute here. 
Although both intend project power to be sold over a wide geographic 
area for the benefit of the people at low rates, the NRA provision is 
more detailed and restrictive. The licensee is required to write its 
contracts in such a way as to allow power to be withdrawn as the needs 
of the preference customers grow. However, the NRA provisions, like the 
provisions of Public Law No. 83-544, do not expressly address future 
relicensing or power allocations after the initial license ends.
    The Commission has interpreted the NRA allocation provisions in a 
number of decisions during a decade or more of litigation.32 The 
Commission has found, among other things, that this language requires 
reallocation of the power at the end of each contract term, and that 
these provisions could even justify rescission of a contract if the 
licensee had not reasonably foreseen, and thus reserved sufficient 
power to withdraw for, the needs of preference customers.33 
However, it has not expressly addressed whether the provisions apply 
after the initial license ends. Therefore, neither the NRA itself nor 
the Commission's orders explicitly addresses the analogous issue before 
us.

    \32\See generally Municipal Electric Utilities Association of 
the State of New York, et al. v. Power Authority of the State of New 
York, Opinion No. 151, 21 FERC para.61,021 (1982), order on 
rehearing, Opinion No. 151-A, 23 FERC para.61,031 (1983), affirmed, 
PASNY v. FERC, 743 F.2d 93 (2d Cir. 1984); Massachusetts Municipal 
Wholesale Electric Company, et al. v. Power Authority of the State 
of New York, Opinion No. 229, 30 FERC para.61,323, order on 
rehearing, Opinion No. 229-A, 32 FERC para.61,194 (1985), affirmed, 
Metropolitan Transit Authority, et al. v. FERC, 796 F.2d 584 (2d 
Cir. 1986), cert. denied, 479 U.S. 1085 (1987); Municipal Electric 
Utilities Association of the State of New York, et al. v. Power 
Authority of the State of New York, Opinion No. 329, 48 FERC 
para.61,124, rehearing denied, 49 FERC para.61,068 (1989), affirmed, 
Allegheny Electric Cooperative, Inc. v. FERC, 922 F.2d 73 (2d Cir. 
1990), cert. denied, 112 S.Ct. 55 (1991); Villages of Andover, et 
al., 64 FERC para.61,066, rehearing denied, 64 FERC para.61,358 
(1993), affirmed, Village of Bergen, et al v. FERC, 33 F.3d 1385 
(D.C. Cir. 1994).
    \33\Municipal Electric Utility Association of New York, et al., 
9 FERC para.61,128 at 61,249 (1979); reh'g denied, 10 FERC 
para.61,001 (1980); cf. Municipal Electric Utilities Association of 
the State of New York, et al., Opinion No. 151, 21 FERC para.61,021 
(1982), order on rehearing, Opinion No. 151-A, 23 FERC para.61,031 
(1983), affirmed, PASNY v. FERC, 743 F.2d 93 (2d Cir. 1984).
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    In these circumstances, we believe that the most reasonable 
construction of Public Law No. 83-544 is that section 6 applies after 
issuance of a new license as well as from the issuance of the original 
license. First, as discussed above, there is no indication in the 
statutory language or its legislative history that Congress intended 
section 6 to apply only during the initial license term. In fact, had 
Congress intended this policy to apply for only a limited period, it 
would have expressly said so.34 Second, to interpret the statute 
to be so limited would be inconsistent with Congress' intent to provide 
for the most widespread distribution and use of the project's power--
both as reflected in the statute's language which prohibits 
discrimination between states and expressly provides for power to be 
sold in neighboring states, quoted supra, and also as reflected in the 
legislative history which expressed a desire to utilize the water 
resources in the Columbia River Basin for the benefit of the people 
generally including the people of neighboring states.35 There is 
no indication whatsoever on the face of the statute or in the 
legislative history that this intent was to apply only during the 
initial license term and that after the initial license term the water 
resources of the Columbia River Basin were to be used differently. 
Accordingly, we find that section 6 applies after relicensing of the 
Priest Rapids Project No. 2114.

    \34\See 33 F.3d at 1389.
    \35\See H.R. Rep. No. 1601, 83rd Cong. 2d Sess. 3 (1954) 
(``Safeguards have been included in the bill to assure development 
of the Priest Rapids site for its optimum capabilities as a part of 
the comprehensive plan for the development and utilization of water 
resources in the Columbia Basin for the benefit of the people 
generally,'' and ``[i]t is desirable that the public benefits to 
accrue from power made available by this project be over as 
extensive an area as practical''); S. Rep. No. 1656, 83rd Cong. 2d 
Sess. 3-5 (1954) (Senate report contains similar language to House 
report); cf. 33 F.3d at 1389-90 (noting Congress' general intent in 
various statutes to use resources for benefit of people generally); 
796 F.2d at 591-95 (noting Congress' intent as to NRA); 743 F.2d at 
103-07 (noting Congress' intent as to NRA).
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B. Section 22 of the FPA (16 U.S.C. 815)

    The Complainants charge that Grant County has violated section 22 
of the Federal Power Act by contracting for the 

[[Page 48708]]
sale and delivery of power from the Wanapum Development beyond the date 
of termination of the project license, 2005, without obtaining the 
approval of the Commission.
    In response, Grant County argues that the language of section 22 is 
permissive instead of restrictive toward entering into contracts beyond 
the license term. Grant County reasons that the provision exists for 
the protection of investors and purchasers, and thus if these entities 
do not wish to seek that protection by obtaining Commission approval of 
a contract that extends beyond the term of the license, that is their 
prerogative. Grant County states that the willingness of its power 
purchasers to accept measured business risk is not a proper cause for 
concern by the complainants.36

    \36\In their response to the complaint (at 12), the Purchasers 
similarly state:
    When the Purchasers entered into their long-term contracts to 
purchase power, that power was more expensive than available 
alternatives in the short term and involved substantial financial 
risks. Therefore, the Purchasers insisted upon and received power 
purchase contracts not only for the term of the initial license, but 
rights of first refusal to purchase their proportionate part of the 
project's output at the termination of their contracts. Those rights 
of first refusal gave the purchasers enforceable contractual rights 
under Washington law, which would be jeopardized by the relief 
requested by the [Complainants].
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    Section 22 of the FPA states: Whenever the public interest 
requires or justifies the execution by the licensee of contracts for 
the sale and delivery of power for periods extending beyond the date 
of termination of the license, such contracts may be entered into 
upon the joint approval of the commission and of the public-service 
commission or other similar authority in the State in which the sale 
or delivery of power is made, or if sold or delivered in a State 
which has no such public-service commission, then upon the approval 
of the commission, and thereafter, in the event of failure to issue 
a new license to the original licensee at the termination of the 
license, the United States or the new licensee, as the case may be, 
shall assume and fulfill all such contracts.

    The legislative history is not extensive, but it demonstrates that 
the Commission was to use its sound discretion in approving contracts 
beyond the license term.37 The Commission has received only a 
small number of requests for approval of contracts under section 
22.38 While we agree that the purpose of section 22 is to remove a 
potential obstacle from a licensee's ability to finance the 
project,39 the section states that a licensee may enter into power 
sales contracts extending beyond the license term ``upon the joint 
approval of'' the Commission and the relevant state authority. The 
plain meaning of this text is that a licensee is not to enter into such 
a contract without the approval of the Commission and state authority, 
and there is no legislative history to the contrary.

    \37\See 58 Cong. Rec. 2240-41 (1919) (debate on H.R. 3184, which 
became the Federal Water Power Act of 1920).
    \38\See Swift Creek Power Company, Inc., 61 FERC para.61,227 
(1992), and the cases discussed therein; see also Department of 
Water Resources of the State of California, 39 FPC 292 (1968).
    \39\See, e.g., Susquehanna Power Company, et al., 32 FPC 826, 
830 (1964).
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    We therefore conclude that section 22 required that Grant County 
obtain Commission approval of the approximately four-year period that 
the power purchase contract for the Wanapum Development extended beyond 
the license term. Accordingly, we direct Grant County to file an 
application under section 22 in a separate docket for approval of any 
power purchase agreements for periods extending beyond the termination 
date of the license.40

    \40\See New York Irrigation District, et al., 58 FERC 
para.61,271 (1992) (when the Commission discovered, in the course of 
examining a contract for the sale of project power, that the term of 
the contract extended about eight years beyond the termination date 
of the license, it ordered the licensee to file a request under 
section 22 for approval of the power purchase agreement.)
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C. Setting the Matter for Hearing

    We have found above that section 6 of Public Law No. 83-544 applies 
to relicensing. We also have reaffirmed that power sales contracts that 
extend beyond the term of a license require Commission approval under 
section 22 of the FPA. All other questions raised in the pleadings in 
this proceeding are set for trial-type, evidentiary hearing. All 
entities who have an interest in this proceeding must participate in 
this proceeding or they will be foreclosed later as to matters at issue 
in this proceeding.
    Finally, we recognize that the license for Project No. 2114 does 
not expire until 2005, and under the Commission's regulations a 
relicense application is not due until at least 24 months before the 
existing license expires.41 However, the parties have indicated 
that a licensee must begin the process of consulting with the public 
and the relevant resource agencies, as well as conducting the necessary 
environmental and economic studies long before that date,42 and in 
this case, there is some indication that Grant County has already begun 
this process.43 Indeed, Grant County in its June 30, 1995 filing 
states as follows: 44

    \41\18 CFR 16.9(b).
    \42\See 18 CFR Part 16.
    \43\See Motion of Idaho Cooperatives for Summary Disposition at 
Attachment 2.
    \44\See Response of Grant County to Motion for Summary 
Disposition at 3.
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    Grant is in the early process of developing an application for a 
new license for its Priest Rapids Project in accordance with Part 16 
of the Commission's regulations. As part of that process, it 
commenced in 1992 negotiations with its existing power purchasers to 
determine, among other things, whether agreement could be reached on 
mutually beneficial terms and conditions for the sale of project 
power under any new license which might be issued for the Project.

    Additionally, the complainants have indicated that prompt action is 
important because BPA has begun renegotiating all of its regional power 
sales contracts including those with the complainants.
    Accordingly, we conclude that it is appropriate to take up the 
instant dispute at this time, rather than later. Moreover, we encourage 
the presiding judge and the parties to resolve the instant dispute 
expeditiously so that the relicensing proceeding may commence and be 
concluded in a timely manner.

The Commission Orders

    (A) The Secretary is hereby directed to publish a copy of this 
order in the Federal Register.
    (B) The Secretary is hereby directed to serve a copy of this order 
on all parties to this proceeding.
    (C) Within 30 days from the date of issuance of this order, Grant 
County shall file in a separate docket an application for approval of 
its power sales agreements with the Purchasers under section 22 of the 
Federal Power Act, as described in this order.
    (D) Pursuant to the authority contained in the Department of Energy 
Organization Act and in the Federal Power Act (particularly Sections 
4(g), 10(h), 306, 307(a), 308, and 309), and the license for Project 
No. 2114, a public hearing shall be held in conformance with the 
Commission's Rules of Practice and Procedure to consider all matters of 
fact and law, consistent with the provisions of this order, concerning 
those issues in Docket No. EL95-35-000 not summarily decided in this 
order.
    (E) A presiding administrative law judge, to be designated by the 
Chief Administrative Law Judge for that purpose, shall preside at the 
hearing in this proceeding, and shall convene a prehearing conference 
within 30 days of the date of this order in a hearing room of the 
Federal Energy Regulatory Commission, 810 First Street, N.E., 
Washington, D.C. 20426. The conference shall be held for the purposes 
of clarification of the positions of the 

[[Page 48709]]
parties, delineation of the specific issues to be litigated, discussion 
of procedures for expediting the hearing, and establishment by the 
presiding judge of any procedural dates necessary for this hearing.

    By the Commission.
Lois D. Cashell,
Secretary.
[FR Doc. 95-23314 Filed 9-19-95; 8:45 am]
BILLING CODE 6717-01-P