[Federal Register Volume 61, Number 233 (Tuesday, December 3, 1996)]
[Proposed Rules]
[Pages 64031-64041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30715]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 61, No. 233 / Tuesday, December 3, 1996 / 
Proposed Rules  

[[Page 64031]]



DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission, DOE

18 CFR Parts 4 and 375

[Docket No. RM95-16-000]


Regulations for the Relicensing of Hydroelectric Projects; Notice 
of Proposed Rulemaking

November 26, 1996.
AGENCY: Federal Energy Regulatory Commission, Doe.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
proposing to revise its procedural regulations governing applications 
for licenses for hydroelectric projects. The proposed regulations 
respond to a petition for rulemaking filed by the National Hydropower 
Association and are intended to offer an alternative administrative 
process whereby in appropriate circumstances the pre-filing 
consultation process and the environmental review process can be 
integrated. This alternative process is designed to be tailored to the 
facts and circumstances of the particular proceeding. The proposed 
regulations would not delete or replace any existing regulations.

DATES: Comments on the Notice of Proposed Rulemaking are due February 
3, 1997 and March 3, 1997 for reply comments. Comments should be filed 
with the Office of the Secretary and should refer to Docket No. RM95-
16-000.

ADDRESSES: Federal Energy Regulatory Commission, 888 First Street, 
N.E., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT:

Edward Abrams, Office of Hydropower Licensing, 888 First Street, N.E., 
Washington, DC 20426, (202) 219-2773.
Merrill Hathaway, Office of the General Counsel, 888 First Street, 
N.E., Washington, DC 20426, (202) 208-0825.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of 
this document in the Federal Register, the Commission provides all 
interested persons an opportunity to inspect or copy the contents of 
this document during normal business hours in Room 2A, 888 First 
Street, N.E., Washington, DC 20426. The last page of Appendix A 
consists of a flow chart that is not being published in the Federal 
Register but is available from the Commission's Public Reference Room.
    The Commission Issuance Posting System (CIPS), an electronic 
bulletin board service, provides access to the texts of formal 
documents issued by the Commission. CIPS is available at no charge to 
the user and may be accessed using a personal computer with a modem by 
dialing (202) 208-1397 if dialing locally or 1-800-856-3920 if dialing 
long distance. To access CIPS, set your communications software to use 
19200, 14400, 12000, 9600, 7200, 4800, 2400 or 1200bps, full duplex, no 
parity, 8 data bits, and 1 stop bit. The full text of this document 
will be available on CIPS indefinitely in ASCII and WordPerfect 5.1 
format for one year. The complete text on diskette in WordPerfect 
format may also be purchased from the Commission's copy contractor, La 
Dorn Systems Corporation, also located in Room 2A, 888 First Street, 
N.E., Washington, DC 20426.
    The Commission's bulletin board system also can be accessed through 
the FedWorld system directly by modem or through the Internet. To 
access the FedWorld system by modem:

Dial (703) 321-3339 and logon to the FedWorld system.
After logging on, type: /go FERC

    To access the FedWorld system through the Internet, a telnet 
application must be used either as a stand-alone or linked to a Web 
browser:

Telnet to: fedworld.gov
Select the option: [1] FedWorld
Logon to the FedWorld system
Type: /go FERC

    Or:

Point your Web Browser to: http://www.fedworld.gov
Scroll down the page to select FedWorld Telnet Site
Select the option: [1] FedWorld
Logon to the FedWorld system
Type: /go FERC

I. Introduction

    The Federal Energy Regulatory Commission (Commission) is proposing 
to revise its procedural regulations governing applications for 
licenses for hydroelectric projects. The proposed regulations respond 
to a petition for rulemaking filed by the National Hydropower 
Association (NHA) and are intended to offer an alternative 
administrative process whereby in appropriate circumstances the pre-
filing consultation process and the environmental review process can be 
integrated. This alternative process is designed to be tailored to the 
facts and circumstances of the particular proceeding. The proposed 
regulations would not delete or replace any existing regulations.

II. Reporting Burden

    The regulations proposed herein would not impose any new 
information collection requirements.

III. Background

A. Order Nos. 513 and 533 Proceedings

    The Commission last made comprehensive revisions of its procedural 
regulations governing hydropower applications in two major rulemakings. 
In Order Nos. 513 and 513-A,1 the Commission revised its 
regulations governing the relicensing of hydropower projects to 
implement provisions added to the Federal Power Act (FPA) 2 by the 
Electric Consumers Protection Act of 1986 (ECPA).3 The Commission 
adopted more detailed regulations for applicants for new licenses to 
conduct pre-filing consultation with resource agencies, to specify the 
information to be contained in the applications, and to set forth 
procedures for processing and considering the applications. These 
regulations are principally contained in 18 C.F.R. Part 16. In Order 
Nos. 533 and

[[Page 64032]]

533-A,4 the Commission adopted further revisions to its procedural 
regulations for all applications for hydropower licenses, implemented 
other provisions of ECPA, especially Section 10(j) of the FPA, and 
streamlined the hydropower licensing process by making it more 
efficient, fairer, and more understandable for all participants. In the 
rule, the Commission codified and improved many of its regulations 
governing pre-filing consultation and hearing practices, explaining how 
most hydropower proceedings are conducted by notice and comment rather 
than by trial-type hearings. This rulemaking established deadlines for 
participation in hydropower proceedings, clarified a number of 
Commission practices in the conduct of such proceedings,5 required 
the Commission to resolve disputes concerning necessary scientific 
studies in the pre-filing consultation process for hydropower 
applicants, and provided greater opportunities for the public and 
Indian tribes to participate in the proceedings.
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    \1\ Order No. 513 (1989), 54 FR 23756 (June 2, 1989), FERC Stats 
& Regs., Regulations Preambles 1986-1990 para. 30,854; Order No. 
513-A (1989), 55 FR 4 (January 2, 1990), FERC Stats & Regs., 
Regulations Preambles 1986-1990 para. 30,869.
    \2\ 16 U.S.C. Secs. 791a-825r.
    \3\ Pub. L. No. 99-495, 100 Stat. 1243 (Oct. 16, 1986).
    \4\ Order No. 553 (1991), 56 FR 23108 (May 20, 1991), FERC Stats 
& Regs., Regulations Preambles 1991-1996 para. 30,921; Order No. 
553-A (1991), 56 FR 61137 (December 2, 1991), FERC Stats. & Regs., 
Regulations Preambles 1991-1996 para. 30,932.
    \5\ These related to the requirements governing pre-filing 
consultation for applicants for amendment of licenses, when a water 
quality certification must be obtained, and how the Commission 
begins its review of hydropower applications.
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    In one important respect, however, the Commission took no action in 
these rulemakings in response to comments made by some resource 
agencies and citizens' groups. They believed that in the revised 
regulations the Commission should have integrated the environmental 
review process pursuant to the National Environmental Policy Act of 
1969 (NEPA) 6 with the pre-filing consultation process required of 
hydropower applicants. The Commission stated that this was not the 
Commission's historical practice, and that the results of the pre-
filing consultation process and the comments, recommendations, 
conditions, and prescriptions of concerned parties were a necessary 
predicate to a successful NEPA review by the Commission of a hydropower 
application.
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    \6\ 42 U.S.C. Secs. 4321-4307a.
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B. Implementation of Energy Policy Act of 1992

    In section 2403 of the Energy Policy Act of 1992,7 Congress 
authorized the Commission, in preparing a NEPA document in hydropower 
licensing proceedings, subject to certain conditions, to permit the 
applicant or its contractor or consultant to prepare an Environmental 
Assessment (EA) or a contractor or consultant chosen by the Commission 
and funded by the applicant to prepare an Environmental Impact 
Statement (EIS).8 The provision left untouched the Commission's 
own responsibilities under NEPA.
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    \7\ Pub. L. No. 102-486, 106 Stat. 2776, 2905-21. Codified at 42 
U.S.C. Secs. 13201-13556 (Supp. 1993).
    \8\ Section 2403 provides:
    (a) ENVIRONMENTAL IMPACT STATEMENTS.--Where the Federal Energy 
Regulatory Commission is required to prepare a draft or final 
environmental impact statement . . . in connection with an 
application for a [hydropower] license . . ., the Commission may 
permit, at the election of the applicant, a contractor, consultant, 
or other person funded by the applicant and chosen by the Commission 
. . ., to prepare such statement for the Commission. . . . Nothing 
herein shall affect the Commission's responsibility to comply with 
the National Environmental Policy Act of 1969.
    (b) ENVIRONMENTAL ASSESSMENTS.--Where an environmental 
assessment is required . . . in connection with an application for a 
[hydropower] license . . ., the Commission may permit an applicant, 
or a contractor, consultant or other person selected by the 
applicant, to prepare such environmental assessment. The Commission 
shall institute procedures, including pre-application consultations, 
to advise potential applicants of studies or other information 
foreseeably required by the Commission. The Commission may allow the 
filing of such applicant-prepared environmental assessment as part 
of the application. Nothing herein shall affect the Commission's 
responsibility to comply with the National Environmental Policy Act 
of 1969.
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    The Commission has implemented this provision of the Act by 
permitting hydropower applicants to explore alternative licensing 
procedures. The Commission has received from potential hydropower 
applicants requests for guidance as to whether they could submit an EA 
or an EIS as part of their license applications. Applicants have asked 
whether they could integrate the NEPA process with the Commission's 
pre-filing consultation process, obtain greater involvement of 
Commission staff in this effort, and substitute such actions and the 
resulting NEPA document for the requirements for pre-filing 
consultation and filings set forth in the Commission's regulations.
    The Commission's staff has responded to such requests on a case-by-
case basis.9 Staff advised potential applicants that it could not 
participate unless entities that might reasonably have an interest in 
the contemplated hydropower application are invited to participate in 
the pre-filing process. Such entities included all resource agencies, 
Indian tribes, local governments, citizens groups, and members of the 
general public affected by the proposed project. Staff advised that 
following this process requires a number of waivers of the Commission's 
regulations, in order to achieve the purposes of the Act. The principal 
waivers required are:
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    \9\ The Office of Hydropower Licensing has developed 
``Guidelines for the Applicant Prepared Environmental Assessment 
(APEA) Process.'' See Appendix A.
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    (1) the requirement for the applicant to file Exhibit E, containing 
environmental information 10--the draft NEPA document prepared by 
the applicant or contractor or consultant, together with additional 
information, satisfies this requirement;
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    \10\ E.g.,18 CFR 4.51(f).
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    (2) the provision allowing parties to request additional scientific 
studies after the application is tendered for filing 11--the 
waiver procedures move this opportunity forward in time;
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    \11\ 18 CFR 4.32(b)(7).
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    (3) the requirement for issuing a notice that the application is 
ready for environmental analysis 12--integrating preparation of 
the draft NEPA document with the pre-filing consultation process should 
ensure that the necessary environmental data concerning the application 
have already been developed prior to filing; and
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    \12\ 18 CFR 4.34(b).
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    (4) the requirement for the applicant to document the pre-filing 
process in detail 13--this is replaced by periodic reports during 
the pre-filing process that are available to the public.
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    \13\ E.g., 18 CFR 4.38.
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    Before staff acts on a potential applicant's request for waiver of 
these regulatory requirements, the applicant must demonstrate that a 
cooperative atmosphere exists regarding the participation of concerned 
entities in the pre-filing process and that the applicant has reached 
an agreement with such entities on accepted procedures. Staff has 
advised the participants on procedures that have worked in similar 
circumstances to produce good NEPA documents or that show promise of 
working in this respect. Staff's objective has been to encourage the 
participants to focus analysis on a preferred environmental alternative 
and, insofar as possible, reach agreement on the issues raised by the 
application.14
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    \14\ The alternative process is designed to facilitate the 
negotiation of settlements in appropriate cases, that could be 
submitted to the Commission with the application as an offer of 
settlement.
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    The applicant is also required to develop a communications 
protocol, governing how the participants, including Commission staff, 
may communicate with each other during the pre-filing process. 
Oversight and technical committees may be formed. At least three public 
notices are required during this process, each of which consists of 
notice placed in the Federal

[[Page 64033]]

Register by the Commission, notice placed in local newspapers by the 
potential applicant, and notice mailed directly to a mailing list of 
interested entities.15 These notices are typically given: (1) at 
the beginning of the pre-filing process, when the applicant releases 
its initial information package, which may include a schedule for the 
first NEPA scoping meeting; 16 (2) when the results of the 
applicant's scientific studies are available, which may be combined 
with additional NEPA scoping and study requests; and (3) when the 
preliminary draft environmental document and related application have 
been prepared.
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    \15\ The mailing list is developed by the applicant under the 
guidance of Commission staff. The list will include federal and 
state resource agencies, Indian tribes, local governments, 
environmental groups and others that may be affected by the proposed 
hydropower project. The mailing list may expand as a result of 
responses to the applicant's initial pre-filing consultation meeting 
and public notices, including local newspaper notice.
    \16\ Scoping is the formal process to solicit comments to help 
determine the environmental issues and how they should be addressed 
in an EIS or EA.
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    Prior to the signing of the communications protocol, staff has not 
communicated with any interested entity other than on procedural 
matters. Once the protocol is executed, pursuant to its provisions 
staff may enter into substantive discussions with any entity on the 
merits of the potential applicant's proposal, so long as the results of 
those discussions are subsequently made available in the relevant 
public files. These consist of the Commission's files for the project 
in question and a file maintained by the potential applicant.
    For the majority of the many applications for new license currently 
undergoing pre-filing consultation, the applicants are using the 
process set forth in the Commission's rules. In 20 proceedings where a 
potential applicant is seeking a new or original license, the staff's 
alternative pre-filing procedures are being explored or are in use. In 
one proceeding, use of the alternative process has already resulted in 
an order issuing a license.17 In most of the pending proceedings 
the applicant or its agent is preparing an EA; in some of the cases a 
contractor funded by the applicant is preparing an EIS. Some of the 
proceedings involve multiple projects on the same river basin.
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    \17\ See Georgia Power Company, 74 FERC para. 62,146 (1996) 
(Sinclair Project No. 1951). No requests for rehearing were filed.
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C. NHA Petition for Rulemaking

    On July 10, 1995, NHA filed a Petition for Rulemaking Regarding 
Regulations for the Relicensing of Hydroelectric Projects.18 In 
its petition, NHA described its consultation with a large number of 
entities on how to improve the Commission's regulations in this area. 
NHA expressed its views on problems it perceives in the existing 
process for relicensing hydroelectric projects and proposed a 
comprehensive regulatory scheme for that purpose, which would replace 
the existing regulations governing the preparation, filing, and hearing 
process for hydropower applications for new licenses.
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    \18\ NHA is an association that represents the hydropower 
industry.
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    As described by NHA, its proposal is intended to integrate the 
application preparation process under the FPA with the environmental 
review process under NEPA, to provide an earlier start to the NEPA 
process, to involve Commission staff prior to the filing of an 
application, and to afford resource agencies and the public greater 
opportunity to participate in the pre-filing process. The goal is to 
shorten and simplify relicensing proceedings, which NHA claimed take 
too long to complete and impose unnecessary burdens on the 
participants, by eliminating repetitious steps in the pre-filing and 
post-filing stages. NHA also sought to promote settlements and to allow 
greater communication among parties and Commission staff by relaxing 
restrictions on ex parte communications. NHA proposed a ``collaborative 
option'' by which participants could agree to an alternative process 
for preparing and evaluating a hydropower application for new license.
    NHA proposed 49 pages of regulatory text, which would substitute 
for sections in Parts 4 and 16 of the Commission's rules governing 
relicensing proceedings. NHA's proposed regulations specify 52 steps in 
such proceedings, through the filing of a final license application. 
The applicant would prepare and file with the Commission a Notice of 
Intent Package, an Initial Information Package, a study plan, and an 
application for new license. Under detailed guidelines, the Commission 
would give public notice of each of these filings, review them to 
determine their adequacy, and either accept or reject them.\19\
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    \19\ See NHA Petition, Draft Regulations, at sections 6, 7, 18, 
23, 24, 27, and 29.
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    Under NHA's proposed regulations, a proceeding before the 
Commission would begin no later than the filing of the Initial 
Information Package, when interested persons could formally intervene 
in the proceeding as parties under Sec. 385.214 of the Commission's 
rules.\20\ The applicant's Initial Information Package would be 
``comprised primarily of baseline data from the exhibits in [existing] 
18 CFR Sec. 4.51.'' \21\ These requirements were spelled out in section 
19 of NHA's proposal, describing seven required ``schedules'' 
containing detailed information on the project, its operation and 
resource utilization, need for power and alternative sources of power, 
costs and financing, the environment, design drawings and other 
information showing the safety and adequacy of project structures, and 
a project map.
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    \20\ Id. at 5, section 8(c).
    \21\ Id. at 13.
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    The environmental schedule would contain seven major elements, 
including a description of the locale and reports on water use and 
quality; fish, wildlife, and botanical resources; historic and 
archeological resources; recreational resources; socio-economic 
impacts; and land management and aesthetics. This information would 
describe not only the existing project and its impacts but also 
mitigation and other measures proposed for the new license period. 
Unlike existing Sec. 4.51 and similar regulations (including Sec. 16.8) 
now governing the preparation of license applications, no consultation 
with resource agencies, Indian tribes, or the public would be required 
in the preparation of these proposals of the applicant.
    Under NHA's proposed rules, the Commission would conduct the NEPA 
process beginning immediately after the receipt of the Initial 
Information Package. The rules specify deadlines for the Commission and 
all participants defining ``the latest point at which a decision or 
action should be taken * * *'' \22\ The Commission would be required to 
publish public notice of the Initial Information Package within 30 days 
of its filing and at the same time issue and serve on each interested 
person a copy of ``Scoping Document I,'' pursuant to NEPA. This 
document would include: (1) a description of the scoping process, the 
project and its history; (2) a discussion of the applicant's proposal, 
reasonable alternatives, and competing proposals; (3) a discussion of 
resource and environmental issues (including cumulative impacts, other 
relevant projects and alternatives); (4) a schedule for preparing the 
NEPA document; (5) an outline for the final scoping document; and (6) a 
mailing list of recipients with intervenors identified.\23\
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    \22\ Id. at 33, section 22(b) (emphasis in original).
    \23\ Id. at 35, section 24.

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[[Page 64034]]

    Sixty days would be allowed for filing comments on Scoping Document 
I, and within 45 days the Commission would be required to hold a site 
visit and public scoping meeting.\24\ Within 45 days of the completion 
of the public comment period on Scoping Document I, the Commission 
would be required to issue Scoping Document II, reviewing all the 
issues identified and the comments provided.\25\ This document would 
identify all the data needs that must be satisfied by studies to be 
conducted by the applicant. Persons would have 45 days to file comments 
on Scoping Document II, including requests for additional or 
alternative studies. Not less than 14 days after issuance of Scoping 
Document II, the Commission would be required to issue public notice of 
a final public scoping meeting.
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    \24\ Id. at 37, section 26.
    \25\ Id. at 37, section 27.
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    Within 30 days after the final scoping meeting, the Commission 
would be required to issue a final scoping document, which would 
``identify all reasonable alternatives that need to be considered, 
identify cumulative effects and significant issues that need to be 
addressed in the environmental review process, document issues that 
were found not to be significant, and list all study and additional 
information requirements * * *'' \26\ At this point, applicants would 
have the right to elect to prepare an EA or to have a contractor 
prepare an EIS.\27\
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    \26\ Id. at 39, section 31.
    \27\ Id. at 39, section 32.
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    Pursuant to a set of detailed deadlines, NHA would allow a period 
of 150 days for the applicant to prepare a study plan, comments on it 
to be filed, and the Commission to resolve any disputes and review the 
plan.\28\ Agencies and citizens groups would have the burden of asking 
the Commission to resolve any dispute over the adequacy of the 
applicant's study plan.\29\ If the agencies or groups failed to request 
such a resolution, they would waive any right to raise this issue 
subsequently in the relicensing proceeding. The Commission would have 
60 days after the filing of the Final Study Plan for the first year's 
study to resolve any disputes presented to the Commission over the plan 
and to accept, reject, or modify the plan accordingly.\30\ The 
applicant would be required to submit a report summarizing the results 
of each study completed at the conclusion of the first year's study, 
and the Commission would hold a meeting to discuss the report.\31\ 
Similar steps would be required in reference to a study plan for the 
second year, with further restrictions on the ability of others to 
request additional studies, and deadlines for the Commission to resolve 
any disputes presented to it.
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    \28\ Id. at 40-47, sections 34-37.
    \29\ NHA's proposed rules do not recognize any right of Indian 
tribes to dispute the adequacy of the applicant's study plan.
    \30\ NHA Petition, Draft Regulations, at 43, section 34(e).
    \31\ Id. at 45, section 35(g).
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    The final stage of NHA's rulemaking proposal would require the 
applicant to prepare a ``final license application'' for filing with 
the Commission.\32\ This application would incorporate the Notice of 
Intent Package, the Initial Information Package, the scoping documents 
and the study reports made in the pre-filing process. This information 
would be updated as necessary, and recommendations of agencies or 
citizens groups that were rejected would be explained.\33\ This filing 
would ``constitute the complete application upon which the Commission 
will base its decision to accept, reject, or accept with modifications 
the final application submitted by the Applicant.'' \34\
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    \32\ Id. at 47-48, section 38.
    \33\ As in the pre-filing process, NHA's proposed regulations do 
not recognize any role for Indian tribes.
    \34\ NHA Petition, Draft Regulations, at 47, section 38(b).
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    NHA's proposed rules would also require the Commission to make more 
information about the relicensing process available on the Commission 
Issuance Posting Systems (CIPS); \35\ provide that the Commission's ex 
parte rule, Sec. 385.2201, does not apply to the proposed hydropower 
proceeding until after the filing of a final license application; \36\ 
and give an applicant the right to elect a collaborative option, by 
which the applicant and interested parties may jointly design rules--
different from the detailed rules proposed by NHA--to govern a 
hydropower proceeding.\37\
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    \35\ Id. at 6, section 9(a).
    \36\ Id. at 6, section 10.
    \37\ Id. at 6-7, section 12.
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    NHA acknowledged that there are a number of relevant subject areas, 
where it has not proposed regulations, that require further analysis. 
These areas include: \38\
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    \38\ NHA Petition at 12.
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    (1) the impact of the relicensing process on small hydropower 
projects;
    (2) the interaction of the Commission's process with administrative 
processes of other agencies, such as those conducted pursuant to the 
Endangered Species Act,\39\ and FPA sections 4(e) and 18;
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    \39\ 16 U.S.C. Sec. 1531, et seq.
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    (3) how to integrate cumulative impact analysis into an accelerated 
NEPA process;
    (4) how to evaluate the appropriateness of the time deadlines 
proposed for comment and Commission action; and
    (5) how to develop transition provisions regarding ongoing 
licensing proceedings.

D. Comments Received on NHA's Petition

    On October 31, 1995, the Commission issued a notice of NHA's 
petition and invited comment on it.\40\ The Commission received 43 
comments and four reply comments. The commenters are listed in Appendix 
B.
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    \40\ The notice was published in the Federal Register on 
November 8, 1995 (60 FR 56278). On January 4, 1996, the Commission 
issued a notice extending the deadline for comments and reply 
comments to February 5 and March 4, 1996, respectively.
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    A number of licensees of hydropower projects \41\ and other 
industry associations \42\ filed comments supportive of NHA's petition. 
A number of state agencies filed comments supporting NHA.\43\ A number 
of federal agencies supported NHA's petition,\44\ but other federal 
agencies, while approving of a Commission rulemaking that would 
integrate the NEPA and pre-filing consultation processes, objected to 
the short time frames and other aspects of NHA's proposed rules.\45\
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    \41\ E.g., Comments of Adirondack Hydro Development Corp., 
Alabama Power Co., Idaho Power Co., Minnesota Power & Light Co., 
Montana Power Co., Pacific Gas and Electric Co., and Southern 
California Edison Co.
    \42\ E.g., Comments of American Public Power Association and 
Edison Electric Institute.
    \43\ E.g., Comments of Idaho Public Utilities Commission and 
State of Washington, Department of Ecology.
    \44\ Comments of the U.S. Environmental Protection Agency and 
the U.S. Department of Energy.
    \45\ Comments of U.S. Department of Agriculture and U.S. 
Department of Commerce.
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    Many hydropower licensees filed comments critical of various 
aspects of NHA's petition, supporting the goal of greater integration 
of the NEPA and pre-filing processes but asking for more flexibility in 
the proposed rules in order to accommodate different circumstances.\46\ 
Questions about the appropriateness of the time frames established in 
NHA's proposal were raised,\47\ and the Commission was asked

[[Page 64035]]

to codify the alternative procedures staff had used on a case-by-case 
basis.\48\ Some licensees believed that NHA's Initial Information 
Package was too detailed, amounting to a draft license application.\49\
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    \46\ Comments of Duke Power Co., Georgia Power Co., Nebraska 
Public Power District, and Niagara Mohawk Power Co.
    \47\ Comments of Public Utility District No. 2 of Grant County.
    \48\ Comments of Power Authority of the State of New York.
    \49\ Comments of Georgia Power Co. and Safe Harbor Water Power 
Corp.
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    New England Power Company opposed adoption of NHA's proposed rule, 
except in situations where the parties agreed on such an approach as an 
alternative. The company doubted that NHA's proposal would help when 
there was no such consensus, especially in light of the importance of 
other related legal processes, such as those involving fishway 
prescriptions under section 18 of the FPA and certifications under 
section 401 of the Clean Water Act.\50\ New England Power did not 
believe that the Commission would have the resources to be as involved 
in the pre-filing process as NHA's proposed rule would require. The 
company thought that NHA did not recognize the importance of the 
flexible, case-by-case procedures the Commission's staff had been using 
in recent years when there was a consensus supporting this approach.
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    \50\ 33 U.S.C. Sec. 1341(a)(1).
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    Some commenters characterized NHA's petition as discouraging 
competing relicense applications, because the petition would seriously 
delay a potential competitor's access to project information that 
section 15(b)(2) of the FPA requires the incumbent licensee to make 
available, and that the potential competitor needs in order to decide 
whether to file an application.\51\
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    \51\ Comments of the Confederated Tribes of the Warm Springs 
Reservation and the City of Santa Clara, California, Holyoke Gas & 
Electric Dept., and the Northern California Power Agency.
    Section 15(b)(2) of the FPA provides that, at the time an 
existing licensee notifies the Commission whether it intends to file 
an application for a new license (which shall be at least 5 years 
before the expiration of the existing license), the existing 
licensee must make publicly available such information about 
construction and operation of the project as the Commission shall 
require. The Commission's regulations implementing this provision 
(18 CFR 16.7) require extensive and detailed information about the 
project.
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    A number of state agencies opposed adoption of NHA's proposed rule 
as unnecessary.\52\ They objected to its rigidity and to many of its 
features that in their view favored the applicant at the expense of 
other participants. They considered NHA's time deadlines on 
participants in the process unreasonable and opposed the elimination of 
draft applications and the shifting of responsibility from the 
applicant to others. A number of federal agencies, while supporting the 
goal of greater integration of the pre-filing and NEPA processes, made 
similar criticisms of NHA's petition and reminded the Commission of its 
trust responsibilities for Indian tribes, which they asserted NHA 
ignored.\53\
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    \52\ E.g., State of Washington Department of Fish and Wildlife 
and State of Wisconsin Department of Natural Resources.
    \52\ Comments of the U.S. Department of the Interior, Fish and 
Wildlife Service, and Bureau of Indian Affairs.
---------------------------------------------------------------------------

    Citizens' groups were very much opposed to adoption of the 
regulations NHA proposed.\54\ These commenters asked the Commission to 
continue its current practice of flexibly implementing the existing 
hydropower procedural regulations.
---------------------------------------------------------------------------

    \54\ Comments of the Adirondack Mountain Club, the Defenders of 
Wildlife, and the Hydropower Reform Coalition, which includes 
American Rivers, American Whitewater Affiliation, Appalachian 
Mountain Club, Conservation Law Foundation, Michigan Hydro 
Relicensing Coalition, Natural Heritage Institute, New England 
F.L.O.W., New York Rivers United, River Alliance of Wisconsin, Trout 
Unlimited, and Sierra Club Legal Defense Fund.
---------------------------------------------------------------------------

    Hydro Reform Coalition (HRC) stated that the Commission's current 
procedural regulations for hydropower applications were adopted for 
good reasons, to cure real problems in the licensing process, have been 
working reasonably well and are not the chief cause of any delays 
encountered in the process.\55\ Rather, HRC asserted that applicants 
have brought such delays on themselves by not conducting adequate 
studies of a project's resource impacts and not filing required 
information with their applications. Other delays are necessary to 
allow sufficient time to address such critical issues as cumulative 
impacts. HRC stated: ``NHA's package of changes drastically alters the 
equities of the relicensing process in favor of a front-end loaded, 
fast track, where licensees gain at the expense of all other 
participants--resource agencies, conservation groups, competing 
applicants * * *.'' \56\
---------------------------------------------------------------------------

    \55\ HRC at 3-8. HRC pointed to many recent relicense 
proceedings, primarily involving some kind of cooperative approach, 
that were expeditiously conducted under the current regulations.
    \56\ HRC at 4.
---------------------------------------------------------------------------

    HRC noted that a hydropower licensing proceeding is a learning 
process for most parties, who do not have the information and knowledge 
of the applicant. It takes some time for them to learn about and 
evaluate the proposed project's resource impacts so that they can 
usefully participate in the process and assist the Commission in 
considering reasonable alternatives and in compiling an adequate record 
for a decision in the public interest. While the current procedural 
regulations allow this process to unfold, in HRC's view NHA's proposal 
would replace them with new regulations designed to curtail this 
process and serve the interests of the license applicants.\57\
---------------------------------------------------------------------------

    \57\ HRC at 8.
---------------------------------------------------------------------------

IV. Discussion

A. NHA's Petition

    The Commission recognizes that the present procedures for licensing 
hydroelectric projects are complicated and can result in lengthy 
proceedings. We agree with NHA that every effort should be made to 
lessen the burden of such proceedings on the participants. To a 
considerable extent, however, we believe the burdens are an unavoidable 
product resulting from statutory mandates and the often conflicting 
objectives of the large number of parties, including state and federal 
agencies with overlapping roles, Indian tribes, and citizens' groups, 
interested in the licensing process. Nevertheless, we believe there 
continues to be room for taking reasonable measures to improve the 
efficiency of the process, while remaining faithful to the statutory 
mandates and public interest the Commission serves. Our hope is that 
the licensing process can be both expedited in time and improved in 
results, while treating all parties fairly.
    We commend NHA and the other representatives of the hydropower 
industry who devoted substantial time and effort in evaluating the 
Commission's hydropower licensing procedures. We appreciate NHA's 
consultation with other participants in the licensing process and the 
submission of a petition for rulemaking, and we welcome the comments of 
all those who responded. We believe that the comments show that 
everyone who has studied and addressed this subject shares common 
goals, making licensing proceedings more efficient while maintaining 
procedures that will protect the participatory rights of interested 
parties and compile an adequate record for decision.
    A critical difference between the avenues explored by the 
Commission staff in light of the Energy Policy Act and by NHA is in 
their basic design. The staff process was designed to supplement and 
not replace the existing procedures in licensing proceedings and can be 
flexibly applied on a case-by-case basis, with the alternative 
procedures tailored to the expressed needs and desires of the 
participants. This process places a lot of responsibility on the 
participants to come together and reach

[[Page 64036]]

a consensus on how the environmental impacts of the applicant's 
proposal should be evaluated. If such a consensus cannot be achieved, 
the standard procedures set forth in the Commission's regulations must 
be followed by the applicant.
    NHA has proposed enactment of comprehensive generic procedures that 
would apply to all relicensing proceedings, regardless of whether such 
a consensus exists and the prospect for success. NHA's proposal would 
require the Commission's staff to be involved in developing every 
application for a new license and to render decisions on the details of 
the steps required in that development. The Commission does not have 
the resources to carry out such an open-ended mandate. Furthermore, if, 
as NHA proposed, Commission staff assumed the role of decisionmaker in 
pre-filing consultation for all proceedings, concerned parties 
(including the applicant) could be discouraged from trying to form a 
consensus on how to study and resolve critical issues in a mutually 
satisfactory manner.
    We share with the critics of NHA's petition a concern that NHA's 
proposed regulations would not improve hydropower licensing 
proceedings. In effect, NHA's proposal would eliminate the pre-filing 
consultation process. NHA would have an applicant for a new license 
develop a detailed package, called the ``Initial Information Package,'' 
that is for all intents and purposes a draft license application. We 
think such proposals are best developed based on prior consultation 
with affected resource agencies, Indian tribes, and the public. Before 
doing such consultation and conducting the studies that are required as 
part of the pre-filing process, an applicant cannot know in detail what 
mitigation and enhancement measures it should propose.
    To require the Commission staff to step in to direct every 
hydropower relicensing proceeding prior to any pre-filing consultation 
would consume too much of the Commission's limited resources without 
providing any assurance that the process would be improved. The 
Commission did not have the resources to undertake this role in the 
past; we certainly do not have the resources to do so now, a time when 
federal agencies are being called upon to tighten their budgets.
    NHA has described as critical its proposal to waive the ex parte 
rule prior to the filing of what it calls the ``final license 
application'' with the Commission. But its proposal would have the 
Commission conducting a proceeding prior to that time, with the 
intervention of parties, and NHA itself also recognized that the 
proceeding may be highly contentious. Under those circumstances, it 
would be unwise and may be unlawful for the Commission to consider 
itself and its advisory staff as not subject to any ex parte restraint.
    We also share the concern of those who question how NHA's proposal 
would afford potential competitors the timely access to project 
information that section 15(b)(12) of the FPA calls for.
    Nor has NHA justified the short time frames it sets for responses 
and decisions during its proposed hydropower process. The periods 
allowed are much shorter than similar time frames in the existing 
regulations, whose deadlines have been considered strict by various 
participants in the licensing process. Any successful process will 
necessarily require more flexibility than may be contemplated in NHA's 
proposal.
    NHA's proposed rules might also not result in a more efficient 
proceeding if other state or federal agencies with related statutory 
responsibilities, such as Clean Water Act certification, do not wish to 
participate in the accelerated NEPA process that NHA would require in 
all cases. Lacking a consensus for an alternative approach to front-
load the NEPA process would risk wasting a large amount of resources by 
all participants and might require the NEPA process to be repeated, 
once the other agencies decided how they wished to proceed in reference 
to the applicant's proposal. The Commission cannot by rule mandate a 
positive spirit of mutual understanding and cooperation among the 
applicant, resource agencies, Indian tribes, and the public, or fully 
integrate related processes that occur under separate statutes.\58\
---------------------------------------------------------------------------

    \58\ NHA has also not explained its apparent omission of Indian 
tribes from its proposed rules. The Commission included the tribes 
in the pre-filing consultation process in recognition of their 
special interests and status. NHA claimed that it consulted with 
Indian tribes in developing its proposal, but NHA did not identify 
them or their positions.
---------------------------------------------------------------------------

    We do, however, believe there is considerable merit in the part of 
NHA's proposal called a ``collaborative option.'' This appears to be 
similar to the alternative procedures that the Commission's staff has 
been using on a case-by-case basis at the request of license 
applicants, where there is a consensus among the interested entities 
that such an approach would be fruitful. If an applicant is willing to 
devote itself to working on a cooperative basis with all the entities 
interested in its proposed hydropower project, including affected 
resource agencies, Indian tribes, and the public, and those entities 
have a similar attitude and commitment, the Commission is willing to 
commit its staff to active involvement in the proceeding prior to the 
filing of an application, to the extent our limited resources permit. 
In such cases, the staff's participation has been more as a resource 
and guide to the parties rather than as a decisionmaker.
    Such an approach, tailored to the needs and requirements of the 
particular circumstances and facts presented, has worked in many cases 
and in our view offers the best hope of achieving the goal of 
expediting the licensing process in a way that is fair to all parties 
and in the public interest. Such proceedings can front-load not only 
NEPA, but also the completion of other processes related to hydropower 
licensing that are not in the Commission's control, such as state water 
quality certification for the project.
    In the following section, we describe the Commission's proposed 
rule on this alternative process. The proposed rule is intended to 
refine, clarify, and codify the alternative procedures that the 
Commission's staff has evolved over the past few years on a case-by-
case basis. By articulating these procedures in the form of a notice of 
proposed rulemaking, we are providing a forum in which all interested 
persons will have an opportunity to comment on them, in light of 
experience with the alternative procedures as well as with the existing 
procedures. This rulemaking should provide an opportunity to consider 
how the alternative procedures have worked to date, and how they might 
be refined to improve the efficiency of the licensing process while 
preserving the rights of all of the participants in it.

B. Proposed Rule

    We propose to codify an alternative process that affords case-by-
case flexibility and opportunity for continued innovation for all 
concerned. We recognize that some of the procedures that participants 
may agree to use and that the Commission may approve in individual 
cases might well be similar to those that NHA has proposed in generic 
form. The proposal would leave intact the existing pre-filing and 
hearing procedures for use in all proceedings where there is neither a 
consensus on suitable alternative procedures nor any reasonable 
prospect for their success in expediting the proceeding.
    We see no reason to restrict the proposal to applicants for new 
licenses, but, consistent with Commission practice and the Energy 
Policy Act,

[[Page 64037]]

would extend the ability to apply for this option to all applicants for 
licenses, whether original, new or subsequent, and to amendments to 
existing licenses where pre-filing consultation is required (pursuant 
to Sec. 4.38(a)(4) of the regulations).59
---------------------------------------------------------------------------

    \59\ By revising Sec. 4.34 of the regulations, which governs the 
hearing process for all hydropower applications, the proposal would 
apply to all licensing proceedings, including those subject to Part 
16.
---------------------------------------------------------------------------

    The Commission proposes to revise Sec. 4.34 of the regulations, 
governing the hydropower hearing process, to add a new subsection (i). 
Under this subsection, a potential applicant could request that it be 
permitted to conduct the pre-filing consultation and hearing processes 
pursuant to an alternative procedure. Under this procedure, the pre-
filing consultation process and the NEPA process would be integrated 
and the applicant or its contractor or consultant would prepare a 
preliminary draft environmental assessment or a contractor or 
consultant chosen by the Commission and funded by the applicant would 
prepare a preliminary draft environmental impact statement, to be filed 
with the application.
    In appropriate circumstances, the Commission could approve the 
request and participate in the alternative process, if the applicant 
demonstrated that it had reached out to interested entities and a 
consensus exists supporting the use of alternative procedures. The 
requester would also have to submit a communications protocol, 
supported by interested entities, that would describe how the applicant 
and other participants in the pre-filing consultation process, 
including Commission staff, would communicate concerning the merits of 
the applicant's proposal.
    The alternative process would integrate the NEPA process and the 
pre-filing consultation process. The applicant, contractor or 
consultant would be required to conduct an initial information meeting, 
to scope environmental issues, to complete scientific studies and 
release them, to conduct further scoping if appropriate, and to prepare 
the preliminary draft environmental document for filing with the 
Commission. The process would allow for public participation, and 
public notice would be given of critical stages (including the filing 
of the request for alternative procedures) by the Commission in the 
Federal Register and by the applicant in a local newspaper.
    Every quarter, the applicant would be required to report to the 
Commission on the progress of the pre-filing consultation process. 
Public files of relevant documents would be maintained by the 
Commission and the applicant. The Commission's file would contain 
summary information while the applicant's file would contain all 
relevant information compiled during the process.
    Under the alternative process, the applicant could substitute a 
draft NEPA document for Exhibit E to its application, and the applicant 
would not need to document all the details of the pre-filing 
consultation process. Requests for scientific studies would be due 
during the pre-filing process, and requests for additional studies 
could be made after filing of the application only upon a showing that 
it was not possible to request them during the pre-filing process. 
Preliminary fish and wildlife recommendations, prescriptions, mandatory 
conditions, and comments would be due during the pre-filing period, to 
be finalized after the filing of the application. No notice that the 
application is ready for environmental analysis would be given by the 
Commission after filing of the application.
    The proposed rule would also reserve the Commission's authority, 
upon request and on a case-by-case basis, to participate in the pre-
filing consultation process and assist in the integration of this 
process with the NEPA process where, e.g., the applicant, contractor or 
consultant funded by the applicant would not prepare an environmental 
assessment or environmental impact statement. In such cases, the 
Commission could approve suitable modifications to the procedures 
otherwise applicable during the pre-filing and post-filing periods, 
similar to those made for alternative procedures set forth in the 
proposed rule.
    The Commission invites comment on all aspects of its proposal, as 
described above. The Commission particularly invites comment on what 
should happen if the consensus for use of alternative procedures 
disappears prior to the filing of an application. Should the Commission 
still allow alternative procedures to be followed in such a situation? 
If not, what procedures should apply?
    Would any transition provisions be necessary for the proposed rule, 
so as not to upset applications currently being prepared pursuant to 
staff-granted waivers?
    The Commission also proposes to add a new Sec. 375.314(u) to its 
regulations, to clarify and codify the authority of the Director of the 
Office of Hydropower Licensing to approve the use of the alternative 
procedures and to assist in the pre-filing consultation process. In 
appropriate cases, for example, the Director could decide to actively 
assist a potential applicant in the pre-filing consultation process, 
including the preparation of a NEPA document.

V. Environmental Analysis

    Commission regulations describe the circumstances where preparation 
of an environmental assessment or an environmental impact statement 
will be required.60 The Commission has categorically excluded 
certain actions from this requirement as not having a significant 
effect on the human environment.61 No environmental consideration 
is necessary for the promulgation of a rule that is clarifying, 
corrective, or procedural, or that does not substantially change the 
effect of legislation or regulations being amended.62
---------------------------------------------------------------------------

    \60\ Regulations Implementing National Environmental Policy Act, 
52 FR 47897 (Dec. 17, 1987), codified at 18 CFR Part 380.
    \61\ 18 CFR 380.4(a)(2)(ii).
    \62\ 18 CFR 380.4.
---------------------------------------------------------------------------

    This proposed rule is procedural in nature. It proposes alternative 
procedures that participants to a hydroelectric licensing proceeding 
may wish to use. Thus, no environmental assessment or environmental 
impact statement is necessary for the requirements proposed in the 
rule.

VI. Regulatory Flexibility Certification

    The Regulatory Flexibility Act of 1980 (RFA) 63 generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
Pursuant to section 605(b) of the RFA, the Commission hereby certifies 
that the proposed regulations, if promulgated, will not have a 
significant economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \63\ 5 U.S.C. Secs. 601-612.
---------------------------------------------------------------------------

    The procedures proposed herein are purely voluntary in nature, and 
are designed to reduce burdens on small entities (as well as large 
entities) rather than to increase them. More fundamentally, the 
alternative process we are proposing herein would be purely voluntary. 
The procedures proposed herein would be a potential alternative to the 
procedures currently prescribed in our regulations, and would not be 
adopted unless all of the persons and entities interested in the 
proceeding affirmatively agreed to use them. Under this approach, each 
small entity would be able to evaluate for itself whether the 
alternative procedures would be beneficial or burdensome, and could 
decline to agree to their adoption

[[Page 64038]]

if they appeared to be burdensome. Under these circumstances, the 
economic impact of the proposed rule would be either neutral or 
beneficial to the small entities affected by it.

VII. Information Collection Requirements

    The Office of Management and Budget's (OMB) 64 regulations 
require that OMB approve certain information collection requirements 
imposed by agency rules. The regulations proposed in this Notice do not 
require the collection or filing of any information, nor would they 
amend any existing information collection requirement.
---------------------------------------------------------------------------

    \64\ 5 CFR 1320.13.
---------------------------------------------------------------------------

VIII. Comment Procedure

    The Commission invites interested persons to submit written 
comments on the matters proposed in this notice. An original and 14 
copies of the written comments must be filed with the Commission no 
later than February 3, 1997, for comments and March 3, 1997, for reply 
comments. Comments should be submitted to the Office of the Secretary, 
Federal Energy Regulatory Commission, 888 First Street, N.E., 
Washington, D.C. 20426, and should refer to Docket No. RM95-16-000.
    Written comments will be placed in the public files of the 
Commission and will be available for inspection at the Commission's 
Public Reference Room, at 888 First Street, N.E., Washington, D.C. 
20426, during regular business hours.

List of Subjects

18 CFR Part 4

    Electric power, Reporting and recordkeeping requirements.

18 CFR Part 375

    Authority delegations (Government agencies), Seals and insignia, 
Sunshine Act.

    By direction of the Commission.
Lois D. Cashell,
Secretary.
    In consideration of the foregoing, the Commission proposes to amend 
parts 4 and 375 of chapter I, title 18, Code of Federal Regulations, as 
set forth below.

PART 4--LICENSES, PERMITS, EXEMPTIONS, AND DETERMINATION OF PROJECT 
COSTS

    1. The authority citation for part 4 continues to read as follows:

    Authority: 16 U.S.C. 791a-825r, 2601-2645; 42 U.S.C. 7101-7352.

    2. In Sec. 4.34, the heading is revised and a new paragraph (i) is 
added to read as follows:


Sec. 4.34  Hearings on applications; consultation on terms and 
conditions; motions to intervene; alternative procedures.

* * * * *
    (i) Alternative procedures. (1) An applicant may submit to the 
Commission a request to approve the use of alternative procedures for 
pre-filing consultation and the filing and processing of an application 
for an original, new or subsequent hydropower license, or for the 
amendment of a license that is otherwise subject to the provisions of 
Sec. 4.38.
    (2) The goal of such alternative procedures shall be to:
    (i) Integrate the pre-filing consultation process with the 
environmental review process;
    (ii) Facilitate the greater participation of the public and 
Commission staff in the pre-filing consultation process;
    (iii) Allow for the preparation of an environmental assessment by 
an applicant or its contractor or consultant or of an environmental 
impact statement by a contractor or consultant chosen by the Commission 
and funded by the applicant; and
    (iv) Encourage the applicant and interested persons to narrow any 
areas of disagreement and promote settlement of the issues raised by 
the hydropower proposal.
    (3) A potential hydropower applicant requesting the use of 
alternative procedures must:
    (i) Demonstrate that a reasonable effort has been made to contact 
all resource agencies, Indian tribes, citizens' groups and others 
affected by the applicant's proposal, and that a consensus exists that 
the use of alternative procedures is appropriate under the 
circumstances; and
    (ii) Submit a communications protocol, supported by interested 
entities, governing how the applicant and other participants in the 
pre-filing consultation process, including the Commission staff, may 
communicate with each other regarding the merits of the applicant's 
proposal.
    (4) As appropriate, the alternative procedures shall include 
provision for an initial information meeting, the scoping of 
environmental issues, the analysis of completed scientific studies and 
further scoping, and the preparation of a preliminary draft 
environmental assessment or environmental impact statement and related 
application.
    (5) The Commission will give public notice inviting comment on the 
applicant's request to use alternative procedures.
    (6) If the Commission accepts the use of alternative procedures, 
the following provisions will apply.
    (i) To the extent feasible under the circumstances of the 
proceeding both the Commission and the applicant will give public 
notice at each of the stages described in paragraph (i)(4) of this 
section. The applicant will also send notice of these stages to a 
mailing list approved by the Commission.
    (ii) Every quarter, the applicant shall furnish the Commission with 
a report summarizing the progress made in the pre-filing consultation 
process and referencing the applicant's public file, where additional 
information on that process can be obtained.
    (iii) At a suitable location, the applicant will maintain a public 
file of all relevant documents, including scientific studies, 
correspondence, and minutes of meetings, compiled during the pre-filing 
consultation process. The Commission will maintain a public file of the 
applicant's initial proposal and information package, scoping 
documents, periodic reports on the pre-filing consultation process, and 
the preliminary draft environmental document.
    (iv) An applicant authorized to use alternative procedures may 
substitute a preliminary draft environmental document and specified 
additional material instead of Exhibit E to its application and need 
not document the pre-filing consultation process.
    (v) The procedures approved may require all resource agencies, 
Indian tribes, citizens groups, and interested persons to submit to the 
applicant requests for scientific studies during the pre-filing 
consultation process, so long as additional requests may be made to the 
Commission for good cause after the filing of the application, 
explaining why it was not possible to request the study during the pre-
filing period.
    (vi) During the pre-filing process the Commission may require the 
filing of preliminary fish and wildlife recommendations, prescriptions, 
mandatory conditions, and comments, to be finalized after the filing of 
the application; no notice that the application is ready for 
environmental analysis need be given by the Commission after the filing 
of an application pursuant to these procedures.
    (7) The Commission may participate in the pre-filing consultation 
process and assist in the integration of this process and the 
environmental review process in appropriate cases where the applicant, 
contractor or consultant

[[Page 64039]]

funded by the applicant is not preparing a preliminary draft 
environmental assessment or environmental impact statement, but where 
staff assistance is available and will expedite the proceeding.

PART 375--THE COMMISSION

    3. The authority citation for part 375 continues to read as 
follows:

    Authority: 5 U.S.C. 551-557; 15 U.S.C. 717-717w, 3301-3432; 16 
U.S.C. 791-825r, 2601-2645; 42 U.S.C. 7101-7352.

    4. In Sec. 375.314, paragraph (u) is added to read as follows:


Sec. 375.314  Delegations to the Director of the Office of Hydropower 
Licensing.

* * * * *
    (u) Approve, on a case-specific basis, the use of alternative 
procedures for the development of an application for an original, new 
or subsequent license or of an application for a license amendment 
subject to the pre-filing consultation process, and assist in the pre-
filing consultation process.

    Note: The appendices will not appear in the Code of Federal 
Regulations.

Appendix A--Guidelines for the Applicant Prepared Environmental 
Assessment (APEA) Process

(November 26, 1996--Office of Hydropower Licensing Division of Project 
Review)

    Section 2403(b) of the Energy Policy Act of 1992 (Act) allows an 
applicant to file a draft environmental assessment (DEA), pursuant 
to the National Environmental Policy Act of 1969 (NEPA),65 with 
its license application. The Act also requires the Federal Energy 
Regulatory Commission (Commission) to institute procedures to advise 
applicants who choose this route. This document provides general 
advice consistent with the statutory provisions.
---------------------------------------------------------------------------

    \65\ National Environmental Policy Act of 1969, as amended.
---------------------------------------------------------------------------

    We've divided the process into three stages, consistent with the 
Commission's three stage consultation regulations. In each stage, 
we: 1) highlight the objective; and 2) discuss the major milestones 
and work products. The process, as outlined by the bullet items and 
arrows, provides a framework for applicants, consultants, Commission 
staff and other interested entities to complete the process 
successfully. The guidance herein is intended to be flexibly 
administered, to suit the circumstances of specific cases.

Applicant Prepared EA (APEA) Process

    Commission Staff Goal: 1) front-load NEPA review and other 
licensing requirements (i.e., 401 water quality certification, 
section 106--historic preservation consultation, section 7--
endangered species consultation, etc.) by providing oversight for an 
applicant who prepares a DEA during the prefiling consultation 
period; 2) facilitate a process whereby the draft EA fully evaluates 
and balances the interests of all stakeholders involved; and 3) 
expedite the licensing process.

Stage 1 Consultation

    Stage 1 Consultation sets the tone for the process and has two 
important features: participation in the activities ancillary to the 
licensing process and the beginning of NEPA scoping, including a 
site visit. Part of the licensing process includes the applicant 
inviting the federal, state, and local agencies, nongovernmental 
organizations (NGOs), and other interested members of the public to 
participate in the process. Once the applicant has gathered a group 
to participate, the applicant and participants should prepare a 
communications protocol and a request for waiver of specific three-
stage consultation regulations. If a federal land managing agency is 
involved and desires cooperating agency status in the Commission's 
NEPA document, a Letter of Understanding (LOU) should be prepared by 
staff.
    NEPA scoping and a site visit may begin in Stage 1. Basically, 
there are two options: 1) the applicant can begin the NEPA scoping 
by combining the 1st Stage joint agency and public meeting [required 
in 18 C.F.R. Sec. 4.38(b)(3) and 16.8] with a NEPA scoping meeting; 
or 2) the applicant can hold the 1st Stage meeting and postpone NEPA 
scoping until Stage 2. The Commission and the Council on 
Environmental Quality (CEQ) prefer to scope the issues as early as 
possible.
    There are advantages and disadvantages of beginning NEPA scoping 
at the 1st Stage consultation meeting. The advantage is that the 
applicant and participants can focus on identifying the issues up-
front to develop study plans for the project. This may help 
eliminate the ``cart before the horse'' syndrome where the applicant 
is requested to study everything to find out if it's an issue. 
Another advantage is that the applicant can ask for input regarding 
project alternatives and ask the meeting participants to provide 
information, such as existing studies, that other agencies or NGOs 
might have. Most APEA efforts have completed NEPA scoping in Stage 
1.
    It may not be possible to combine NEPA scoping with the 1st 
Stage consultation meeting, because the participants may not be able 
to identify the issues owing to a lack of data.
    Consider combining the NEPA scoping and 1st Stage joint meeting 
when:
    1) applicants ask to begin the APEA process at the beginning of 
Stage 1, and
    2) project issues and potential impacts are fairly well-known. 
This option is most appropriate for relicenses or unlicensed 
projects (UL's).

Here Are the Milestones and Work Products for Stage 1 Consultation

     Applicant decides to do APEA--preferably at the 
preliminary permit stage (original license) or at the notice of 
intent to file stage (relicense) or earlier.66
---------------------------------------------------------------------------

    \66\ Applicant and interested stakeholders can request to meet 
with staff to discuss the process.
---------------------------------------------------------------------------

     Applicant generates a project mailing list (federal, 
state, local agencies, NGOs, and any other interested entities, such 
as property owners along the river).
     Applicant writes to the Commission (cc: the mailing 
list) requesting that the Commission agree to advise it in the APEA 
process.
     Commission responds to the applicant's letter and 
specifies staff's role in the process. Staff sends samples of 
communications protocol, if one hasn't been proposed, as well as 
samples of other EAs, scoping documents, etc.

==> Commission staff are selected to advise applicant

     Applicant requests a waiver of certain regulations 
(such as a waiver allowing the filing of the DEA in lieu of an 
exhibit E), as appropriate.
     The applicant, Commission staff, and other participants 
develop a Communications protocol (merits and procedures 
discussions) and a timeline (milestones). Participants are 
encouraged to sign the communications protocol. The applicant mails 
a copy of these documents to the mailing list.
     If applicable, the Commission or applicant will 
executes a Letter of Understanding (LOU) with cooperating federal 
managing agencies.
     Applicant mails Initial Stage Consultation Document 
(ISCD). The ISCD must be comprehensive and contain adequate 
information to provide a basis for participants to comment and make 
recommendations concerning study plans, etc.

-----------------------------------------------------------------------

BASED ON THE AMOUNT OF AVAILABLE PROJECT INFORMATION, THE COMMISSION 
STAFF WILL ADVISE THE APPLICANT TO: (A) HOLD THE 1ST STAGE MEETING 
ONLY; OR (B) COMBINE THE 1ST STAGE AND NEPA SCOPING MEETINGS.

-----------------------------------------------------------------------

    (A) Applicant holds joint agency and public meeting within 60 
days of mailing the ISCD; conducts a site visit; Applicant requests 
that the agencies, NGOs provide initial study needs.

==> Comments from agencies/NGOs on the ISCD are due 60 days after 
joint meeting. Agencies, NGOs, and the public should request initial 
studies.

     Applicant, agencies, or NGOs can, if needed, request 
dispute resolution on study requests.
    (B) Applicant prepares Scoping Document 1 (SD1) 67 and 
mails 30 days before joint agency/public meeting. Applicant can 
attach Scoping Document I to the ISCD and mail together.
---------------------------------------------------------------------------

    \67\ SDI can be very brief since the ISCD will provide a great 
deal of information.

==> Commission issues a notice of scoping.
==> Applicant holds NEPA scoping meetings (public and agency); 
conducts site visit.
==> Comments from agencies/NGOs on the ISCD and SDI are due 60 days 
after joint meeting. This includes requests for initial studies.

     Applicant, agencies, or NGOs can, if needed, request 
dispute resolution on study requests.
     Applicant issues Scoping Document II (SDII).

[[Page 64040]]

     Applicant should apply for the 401 WQC so that the WQC 
agency can determine whether it requires any additional information 
to act on water quality certification.

Stage 2 Consultation

    Several activities occur during Stage 2: 1) data collection and 
analysis [1-2 field seasons]; 2) scoping [if not completed in Stage 
1]; 3) final request for additional studies pursuant to 18 C.F.R. 
Section 4.32 (b)(7); 4) development of the preliminary DEA and draft 
license application; 5) request for agency/NGO/public preliminary 
recommendations, terms and conditions; and 6) issuance of the draft 
license application and preliminary DEA for comment [as required in 
18 C.F.R. Sec. 4.38(c)(4); Sec. 16.8].

Here Are the Milestones and Work Products for Stage 2

     Applicant will copy Commission and all participants on 
study plans (Commission staff reviews, advises, comments).
     Applicant completes first field season of studies.

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IF NEPA SCOPING WASN'T DONE IN STAGE 1, PROCEED WITH (A); IF NEPA 
SCOPING WAS DONE IN STAGE 1, FOLLOW (B).

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    (A) Applicant provides study results to all interested 
participants along with SD1.

==> In SD1, applicant issues a request for any further study 
recommendations.

     Applicant holds a Scoping meeting and site visit 30 
days after mailing SDI.
     Comments on scoping and additional study requests are 
due to the Applicant, with a copy to the Commission staff, 60 days 
after SD1 is mailed; 30 days after the NEPA scoping meeting.
     If a dispute regarding an additional study request can 
not be resolved, an applicant, agency, or NGO may request dispute 
resolution.

    (B) Since scoping meetings were held in Stage 1, the Applicant 
mails study results to all participants for 60-day review.

==> Applicant issues a request for any further study recommendations 
30 days after study results have been mailed and allows 60 days 
after issuance of that letter for agencies, NGOs, public, to request 
additional studies, if needed.

     If a dispute regarding an additional study request can 
not be resolved, an applicant, agency, or NGO may request dispute 
resolution.

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ALL APPLICANTS FOLLOW THE STEPS OUTLINED BELOW

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     Second field season of studies, if needed.
     Applicant begins preparing draft license application 
and preliminary DEA (PDEA).
     Applicant requests preliminary terms and conditions 
from the stakeholders to analyze in the PDEA.
     Applicant presents and analyzes its proposal for 
licensing/relicensing the project in the PDEA along with any 
preliminary terms and conditions, prescriptions and recommendations 
from the participants and sends to all participants for review and 
comment.68 The PDEA should contain the results of any 
additional studies that were completed in stage 2.
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    \68\ To allow sufficient time for the applicant to evaluate and 
balance the participants' recommendations and preliminary terms and 
conditions, the applicant should mail the PDEA about 8 months prior 
to the deadline date for filing the final license application and 
DEA with the Commission.

==>NOTE: The PDEA must include the applicant's proposal and 
reasonable alternatives.
==> Commission issues a notice of availability of the PDEA with a 
request for preliminary terms and conditions, prescriptions and 
recommendations.

     The applicant will incorporate comments, preliminary 
terms and conditions and recommendations from the participants into 
the DEA and final license application.

==> Comments from agencies, NGOs, and the public are due to the 
applicant 90 days from mailing the draft license application and 
PDEA.

     Hold a meeting, if needed, (not later than 60 days from 
the disagreeing parties' letter) to discuss the applicant's 
proposal, analyses, etc., that were presented in the PDEA and 
discuss any changes (such as settlement agreements, the preliminary 
conditions and recommendations) to be incorporated and analyzed in 
the DEA and final license application.
     Prepare final application and DEA.

Stage 3 Consultation

    At this stage, the Commission staff conducts an independent 
analysis and makes a recommended decision.

Here Are the Milestones for Stage 3

     Applicant files license application and DEA with 
Commission, and distributes it to the mailing list.

==> Staff reviews the application and DEA for adequacy.

     The Commission issues a notice of acceptance, provides 
opportunity for interested entities to request intervenor status, 
and requests final terms, conditions [including final 401 WQC 
conditions] recommendations, and 4(e) conditions if applicable, from 
participants.

==> 60-day period to file a motion to intervene with the Commission.
==> 105-day comment period (60 days for agency final 
recommendations; 45 days for the applicant's response to agency 
final recommendations.
==> This 60-day recommendation period is also an opportunity for 
agencies, NGOs, and other interested entities to comment on the 
applicant's license application and DEA.

     Commission staff receives final agency terms and 
conditions, prescriptions and participants' final recommendations.
     Commission staff modifies the DEA in light of responses 
to final agency and participants' recommendations.

==> Staff completes comprehensive development analysis; writes 
Finding of Significant Impact or of No Significant Impact.

     Commission issues staff DEA.

==> 30-day comment period on the DEA or 45 days comment if section 
10(j) issues apply.

     Commission staff revises DEA in light of comments 
received and the results of section 10(j) negotiations, if 
applicable.
     Commission issues Final EA.
     Commission requests Final 4(e) conditions, if 
applicable.69
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    \69\ Some 4(e) agencies have a practice of providing only 
preliminary terms and conditions before a final NEPA document is 
issued. However, Staff will work with cooperating agencies with the 
goal of expediting final 4(e) conditions so that they may be 
incorporated into the Final EA, rather than have those conditions 
provided afterward.
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     License order issued.70 Note: The Applicant-
Prepared EA Process flow chart that follows is not being published 
in the Federal Register but is available from the Commission's 
Public Reference Room.
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    \70\ Assumes 401 WQC has been received/waived and no intervenors 
in opposition.

    Note: The Applicant-Prepared EA Process flow chart that follows 
is not being published in the Federal Register but is available from 
the Commission's Public Reference Room.

Appendix B--Commenters

U.S. Department of Agriculture, U.S. Forest Service
U.S. Department of Commerce, National Marine Fisheries Service
U.S. Department of Energy
U.S. Department of the Interior, Bureau of Indian Affairs
U.S. Department of the Interior, U.S. Fish and Wildlife Service
U.S. Environmental Protection Agency
Environmental Council of States
Idaho Public Utility Commission
Minnesota Department of Natural Resources
Washington Department of Ecology
Washington Department of Fish and Wildlife
Wisconsin Department of Natural Resources
Confederated Tribes of the Warm Springs Reservation of Oregon
National Hydropower Association
Edison Electric Institute
American Public Power Association
Western Urban Water Coalition
Northwest Hydroelectric Association
Association of California Water Agencies
Hydro Reform Coalition
Adirondack Mountain Club
Defenders of Wildlife
Denver Water Department
Nebraska Public Power District
New York State Power Authority
Sacramento Municipal Power District
Santa Clara County, Holyoke Gas & Electric Company, and California 
Water Agency Alabama Power Company
Duke Power Company
Georgia Power Company
Idaho Power Company
Minnesota Power & Light Company

[[Page 64041]]

Montana Power Company
Niagara Mohawk Power Company
New England Power Services
Pacific Gas & Electric Company
Portland General Electric Company
Safe Harbor Power Company
Southern California Edison Company
Washington Water Power Company
TAPOCO
Adirondack Hydro Development Corporation

    Reply comments were filed by NHA, Hydro Reform Coalition, 
Georgia Power, and Niagara Mohawk.

[FR Doc. 96-30715 Filed 12-2-96; 8:45 am]
BILLING CODE 6717-01-P