[Federal Register Volume 69, Number 174 (Thursday, September 9, 2004)]
[Proposed Rules]
[Pages 54602-54612]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-20392]


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DEPARTMENT OF THE INTERIOR

Office of the Secretary

43 CFR Part 25

RIN 1090-AA91


Procedures for Review of Mandatory Conditions and Prescriptions 
in FERC Hydropower Licenses

AGENCY: Office of the Secretary, Interior.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of the Interior (Department) proposes a public 
review process for conditions and prescriptions of the Department 
pursuant to its authority under the Federal Power Act. The Department 
also proposes to create an administrative appeals process for review of 
such measures. The Federal Power Act authorizes the Department to 
include in hydropower licenses issued by the Federal Energy Regulatory 
Commission conditions and prescriptions necessary to protect Federal 
and tribal lands and resources and to provide fishways when navigable 
waterways or Federal reservations are used for hydropower generation. 
The public review process will enable the public and the license 
applicant to comment on the Department's preliminary conditions and 
prescriptions, and to provide information to assist the Department in 
its formulation of modified conditions and prescriptions. The 
information obtained through this process will help the Department in 
refining and developing its conditions and prescriptions, which an 
applicant may appeal using the proposed appeals process to obtain an 
expeditious policy level review. These proposed processes are designed 
to coincide with and complement the Commission's overall licensing 
process. The Department recently worked with the Commission to develop 
a new integrated licensing process, see Federal Energy Regulatory 
Commission Order 2002, July 23, 2003, 104 FERC ] 61,109.

DATES: Comments should be received no later than November 8, 2004, late 
comments will be considered to the extent practicable.

ADDRESSES: You may submit comments, identified by RIN 1090-AA91, by any 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include RIN 1090-AA91 
in the subject line of the message.
     Fax: 202-208-4867.
     Mail: Office of the Secretary, Office of Policy Analysis, 
MS 4426-MIB, U.S. Department of the Interior, 1849 C Street, NW., 
Washington, DC 20240.
    Your comments on the information collection provisions of this 
rulemaking should be sent to the attention of the desk officer for the 
Department of the Interior at the Office of Management and Budget via 
facsimile (202-395-6566) or by e-mail ([email protected]). 
Please also send a copy of these comments to the Office of Policy 
Analysis, U.S. Department of the Interior, at the address provided 
above.

FOR FURTHER INFORMATION CONTACT: William Bettenberg, Office of Policy 
Analysis, MS4426-MIB, U.S. Department of the Interior, 1849 C St., NW., 
Washington, DC 20240; phone: 202-208-5978; fax: 202-208-4867; 
electronic mail address: [email protected].

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures
II. Background
III. Discussion of the Proposed Rule
IV. Commission Coordination
V. Procedural Requirements

I. Public Comment Procedures

    Our practice is to make comments, including names and home 
addresses of respondents, available for public review during regular 
business hours. Individual respondents may request that we withhold 
their home address from the rulemaking record, which we will honor to 
the extent allowable by law. There also may be circumstances in which 
we would withhold from the rulemaking record a respondent's identity, 
as allowable by law. If you wish us to withhold your name and/or 
address, you must state this prominently at the beginning of your 
comment. However, we will not consider anonymous comments. We will make 
all submissions from organizations or businesses, and from individuals 
identifying themselves as representatives or officials of organizations 
or businesses, available for public inspection in their entirety.

II. Background

Federal Power Act

    Subchapter I of the Federal Power Act (FPA), 16 U.S.C. 791-823c, 
vests in the Department of the Interior (Department), and other Federal 
resource agencies, the authority to include conditions and 
prescriptions in licenses for hydroelectric generating facilities 
issued by the Federal Energy Regulatory Commission (FERC or Commission) 
(see 18 CFR parts 4, 5, and 16). Under section 18 of the FPA, 16 U.S.C. 
811, the U.S. Fish and Wildlife Service may prescribe fishways, and 
under section 4(e) of the FPA, 16 U.S.C. 797(e), the Secretary of the 
Interior may establish conditions necessary for the adequate protection 
and utilization of reservations. ``Reservations,'' as used in the FPA, 
include lands and certain facilities under the jurisdiction of the U.S. 
Fish and Wildlife Service, National Park Service, Bureau of Land 
Management, Bureau of Reclamation, or Bureau of Indian Affairs. Through 
these sections, the FPA authorizes the Department to set conditions for 
the protection of public and tribal resources that may be affected when 
navigable waterways or Federal reservations are used for hydropower 
generation licensed by FERC.
    The Department's final conditions and prescriptions pursuant to 
sections 4(e) and 18 of the FPA are mandatory. Thus, once the 
Department has issued its conditions and prescriptions, the Commission 
must incorporate these measures into any hydropower license it issues 
under the FPA. This authority has been recognized and upheld by the 
Federal courts, including the Supreme Court. See Escondido Mut. Water 
Co. v. La Jolla Band of Mission Indians, 466 U.S. 765 (1984); American 
Rivers v. FERC, 201 F.3d 1186 (9th Cir. 1999); American Rivers v. FERC, 
129 F.3d 99 (2d Cir. 1997); Bangor Hydro-Electric Co. v. FERC, 78 F.3d 
659 (D.C. Cir. 1996). After a license has been issued, the license, 
including the Department's

[[Page 54603]]

conditions and prescriptions, is subject to rehearing before FERC and 
subsequent judicial review under the FPA's appeal procedures. The FPA 
gives the Federal appeals courts exclusive jurisdiction over such 
appeals. 16 U.S.C. 825l(b).

Mandatory Conditions Review Process (MCRP)

    On January 19, 2001, in response to requests for a review and 
comment opportunity prior to the issuance of conditions and 
prescriptions, the Department of the Interior established, through an 
interagency policy with the Department of Commerce (collectively 
``Departments''), the Mandatory Conditions Review Process (MCRP).\1\ 
The MCRP provides license applicants and interested parties an 
opportunity to review and comment on the Departments' preliminary 
conditions and prescriptions for specific hydropower licenses. In 
addition, commenters are encouraged to provide any additional 
information regarding the Departments' conditions and prescriptions. 
The MCRP was carefully crafted to work within FERC's deadlines and its 
process under the National Environmental Policy Act (NEPA), while 
affording interested parties an opportunity to comment on the record on 
the Departments' conditions and prescriptions.
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    \1\ See http://www.doi.gov/hydro/final_mcrp_policy.htm.
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    Prior to finalizing the MCRP, the Departments provided a public 
comment period on a draft MCRP. 65 FR 77889 (Dec. 13, 2000). The 
Departments received 18 sets of comments representing a broad range of 
interests. Many commenters proposed that the Departments provide, in 
addition to review and comment, an administrative appeals process. The 
Departments elected to forego the adoption of an appeals process at 
that time.
    The MCRP has now been in effect for three years. Upon review, the 
Department of the Interior has concluded that the policy has provided 
valuable information to inform the Department's conditions and 
prescriptions and has created important opportunities for the 
Department to work with license applicants and other interested 
persons. These positive results support the Department's current 
proposal to codify, and in some instances clarify, the MCRP in a 
regulatory framework.
    The proposed rule codifies the review process of the MCRP, but only 
as it relates to Interior authorities and actions, since it establishes 
the schedule, and underpins the proposed appeals process. At the same 
time, in a parallel proposed rule, the Department of Commerce is 
proposing to codify the existing MCRP policy, retaining the rehearing 
stage of the existing MCRP, while soliciting comments on the possible 
addition of an administrative review mechanism. In all other respects, 
the MCRP portions of the two proposed rules are essentially the same.
    After reviewing the public comments, the Department will determine 
if further revision is warranted and publish a final rule. The existing 
MCRP policy remains in effect until revised or superseded by the final 
rule.

Administrative Appeals Process

    In addition, the Department has determined that an administrative 
appeals process, that follows review and comment under the MCRP, would 
further benefit the Department's development of conditions and 
prescriptions in the licensing process. During the original comment 
period on the MCRP in 2000, some commenters requested that the 
Departments implement a more elaborate appeals process than is being 
proposed in this notice, including employing the use of administrative 
law judges and evidentiary hearings. That concept was again considered 
in development of the appeals process in this proposed rule, but 
rejected because of issues of timeliness. Both the current FERC 
licensing schedule and FERC's new hydropower licensing process barely 
provide time for the expedited appeals process being proposed by the 
Department in this proposed rulemaking. Additionally, the President's 
National Energy Policy criticized the current licensing process as too 
prolonged and costly, and called for making the process more clear and 
efficient. The Department uses a variety of processes for considering 
appeals under other programs and authorities. Those which include the 
use of administrative law judges and evidentiary hearings are managed 
by the Department's Office of Hearings and Appeals (OHA), which employs 
administrative law judges and is staffed to manage evidentiary 
hearings. That office, however, has substantial backlogs in appeal 
cases, and the average case currently takes approximately one and a 
half years from the date of receipt to resolution. While OHA is making 
progress in reducing its backlog, there appear to be no prospects that 
hydropower appeals cases could be processed by that office in the 
three-month period that appears to fit with FERC's decision schedule 
and is contemplated by this proposed rule. Prolonging the current 
licensing process by up to two years is considered untenable.
    The proposed appeals process would allow a license applicant to 
appeal mandatory conditions and prescriptions directly to the 
Department. The mechanics of the proposed appeals process are designed 
to accommodate the specific structure of the Department of the 
Interior, with five bureaus and five assistant secretaries involved in 
relicensing. The Department believes it is natural and appropriate for 
the Departments of Agriculture and Commerce to develop hydropower 
licensing conditions and prescriptions through different institutional 
processes given that each of those Departments have a single bureau 
with licensing responsibilities, as long as conditions and 
prescriptions are timely and consistent. The Department is mindful that 
if multiple agencies exercise conditions in the same proceeding, the 
applicant may need to participate in two or more different 
institutional processes. The Department notes, however, that it is rare 
for multiple agencies to exercise conditions in the same proceeding. In 
the 108 license orders issued between 2001 and 2003, 78 did not contain 
mandatory conditions, 24 contained conditions from one agency, and 6 
contained conditions from 2 or more agencies.

National Energy Policy

    Interior's proposed rule is consistent with the National Energy 
Policy Development Group's Recommendation in the National Energy 
Policy. This proposed rule will codify Interior's Federal Power Act 
processes as regulations. These regulations, which will be established 
subject to notice and comment, will be more clear to applicants and the 
public than Interior's existing guidance and policies. In addition, the 
proposed rule will help to make the FERC licensing process as a whole 
more efficient, by integrating the MCRP and appeals process into FERC's 
process. The Department is of the view that an administrative appeals 
process will advance efforts to streamline the overall licensing 
process while also expediting the implementation of effective license 
conditions. Therefore, in addition to the proposed MCRP regulations, 
the Department has developed an administrative appeals process that 
works in concert with the MCRP. These proposals are discussed below.

[[Page 54604]]

III. Discussion of the Proposed Rule

    The decision on whether to issue a license for a hydropower 
facility is solely under the jurisdiction of FERC. The general purpose 
of the Department's proposed rulemaking is to assure open and careful 
consideration of mandatory conditions and prescriptions developed by 
the Department in the licensing of hydropower generating facilities. To 
that end, the Department is proposing to codify, and in some instances 
clarify, the existing MCRP (section A, below), and to provide an 
opportunity for appeal by license applicants of mandatory conditions 
and prescriptions (section B, below). As discussed below, this proposed 
framework advances the hydropower licensing goals expressed in the 
President's National Energy Policy and further harmonizes the 
Department's processes with existing Commission regulations.

A. The Mandatory Conditions Review Process

    Proposed section 25.3 describes the MCRP as a process that allows 
the public to review and comment on preliminary conditions and 
prescriptions submitted by the Department for inclusion in hydropower 
licenses issued by FERC pursuant to the FPA. The process as proposed is 
open to all, but is limited to conditions and prescriptions issued by 
the Department under the authority of sections 4(e) and 18 of the FPA. 
Recommendations filed under sections 10(a) and 10(j) of the FPA, 16 
U.S.C. 803(a) and (j), are outside the scope of the MCRP.
    The MCRP is triggered when FERC issues a notice that a license 
application is ready for environmental analysis (REA). Proposed section 
25.5 makes clear that the Department will file its preliminary 
conditions and prescriptions within 60 days after FERC issues its REA 
notice. It is possible that this 60-day deadline may not be met if the 
Department lacks sufficient information, such as completed reports on 
required studies or information on technical feasibility, to support 
the need for conditions and prescriptions. In such event, the 
Department may exercise its authority under sections 4(e) and 18 of the 
FPA by reserving the authority to submit conditions and prescriptions 
at a later date.
    The MCRP ensures that preliminary conditions and prescriptions are 
publicly reviewed and can be modified if necessary by providing, at 
proposed sections 25.6(a) and (b), an initial 45-day review and comment 
period on preliminary conditions and prescriptions and an additional 
review and comment period in conjunction with review of FERC's draft 
NEPA document.
    As proposed at section 25.6(a), the first review and comment 
opportunity follows the Department's filing of preliminary conditions 
and prescriptions with FERC. In addition to filing with FERC, the 
Department sends its preliminary conditions and reference to supporting 
information to parties on FERC's service list. By letter to both the 
parties and FERC, the Department provides 45 days for comments and 
solicits new supporting evidence regarding the preliminary conditions 
or prescriptions. At this point in the licensing process, the 
Department has often worked with the applicant and other interested 
parties for well over two years through prefiling consultation. The 
Department notes that the existing MCRP provides 60 days for comments 
at this stage. In this rulemaking, 45 days has been selected to conform 
to the reply comments time period in FERC's integrated licensing 
process.\2\
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    \2\ See 18 CFR 5.23.
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    As proposed at section 25.6(b), a second review and comment 
opportunity coincides with the development of FERC's NEPA analysis. As 
part of the licensing process, FERC includes the Department's 
preliminary conditions and prescriptions in its draft NEPA document. 
Through the NEPA process, all interested parties--not only those on 
FERC's service list--have an opportunity to comment on the preliminary 
conditions and prescriptions.\3\ Following the close of the comment 
period on the NEPA document, the Department will respond to all 
comments received. By waiting until the close of the draft NEPA comment 
period, the Department is provided the opportunity to consider 
additional information developed in the NEPA process.
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    \3\ See 18 CFR 4.34, and 18 CFR 5.24 and 5.25.
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    Any modification of the Department's preliminary conditions and 
prescriptions occurs after the close of FERC's NEPA comment period. 
When considering whether to modify a preliminary condition or 
prescription, the Department coordinates with all of its bureaus, State 
and Federal resource agencies, and Indian tribes. Proposed section 
25.7(b) states that if commenters provide evidence indicating that the 
Department's preliminary conditions and prescriptions warrant 
modification, the Department will modify the conditions and 
prescriptions as necessary and file them with FERC within 60 days of 
the close of the NEPA comment period. Significantly, the MCRP provides 
for a higher level of internal review at the modification stage; 
modified conditions and prescriptions are reviewed and signed at a 
level at least as high as the State Director or Regional Director, 
depending on the bureau involved.
    The Department notes that the existing MCRP offers one additional 
opportunity after license issuance for parties to the FERC proceeding 
to obtain review of the Department's modified conditions and 
prescriptions. That additional review opportunity would be supplanted 
by the proposed administrative appeal process and is therefore not 
included in the proposed rule.
    The existing MCRP provides that if, after license issuance, a 
request to FERC for rehearing identifies substantial issues with the 
Department's conditions or prescriptions and provides supporting 
information, the Department would review the conditions or 
prescriptions and provide a written response within 30 days or within 
an established schedule. As discussed in more detail below, the 
proposed rule provides an administrative appeal directly to the 
Assistant Secretary with authority over the bureau imposing the 
conditions or prescriptions at issue. Such appeals are intended to be 
resolved in advance of license issuance. The proposed rule therefore 
eliminates the need for additional Departmental review at the FERC 
rehearing stage. Parties remain free to raise issues relating to the 
Department's conditions and prescriptions in their requests for 
rehearing.
    Proposed section 25.8 addresses how the Department will apply the 
MCRP in situations in which it is involved in settlement negotiations. 
Because settlements can occur at any stage during a license proceeding, 
the MCRP's application depends largely on the stage of the proceeding 
in which an offer of settlement is made, and on whether the Department 
files conditions and prescriptions that are part of an offer of 
settlement. Generally, the provisions of sections 25.6 and 25.7 apply 
if the Department files preliminary conditions or prescriptions that 
are not part of an offer of settlement. If, on the other hand, the 
Department files conditions that are part of an offer of settlement, 
the Department will follow the special provisions of section 25.8(b). 
If the Department is involved in ongoing settlement negotiations at the 
time FERC issues its REA Notice the Department may suspend the 
negotiations to prepare and file its preliminary conditions and 
prescriptions within 60 days of the REA

[[Page 54605]]

Notice. Similarly, the Department may enter into settlement 
negotiations after it has already filed preliminary or even modified 
conditions and prescriptions. If, in either of these situations, 
negotiations do not result in an offer of settlement, section 25.8(a) 
will apply. If, on the other hand, either of the above situations 
results in settlement, the Department will determine, depending on the 
stage of the proceeding and on a case-by-case basis, the best way to 
ensure adequate review and comment.

B. The Administrative Appeal

    Consistent with the National Energy Policy's goals of streamlining 
and improving the hydropower licensing process, the Department is 
proposing to create an expeditious appeals process for review of 
mandatory conditions and prescriptions. This process will ensure that 
high standards for resource conservation and economic efficiency are 
maintained. In the appeals process, the applicant is afforded the 
opportunity to appeal the conditions or prescriptions and propose 
alternative conditions or prescriptions. The information provided by 
the applicant, as well as any additional information that a State, 
Indian tribe, Federal agency, or the public may provide, will help to 
ensure that both the impacts and benefits of a hydropower generating 
facility are appropriately addressed in the licensing process.
    The appeals process is proposed to be available to applicants for a 
hydropower license in proceedings in which the Department establishes 
one or more mandatory conditions or prescriptions. The Department 
invites comments on whether the appeals process should be open to 
others as well.
    The appeal is limited by proposed section 25.53 to those issues 
raised by the applicant during the MCRP and in the FERC record, or 
issues resulting from the Department's modification of conditions and 
prescriptions based on new information that was not available for 
review by the applicant during the MCRP. The Department anticipates 
that these procedural limits will encourage interested parties to 
provide early and full information regarding the environmental, 
economic, and social issues and opportunities that accompany hydropower 
licensing. The proposed process will ensure that issues are fully 
briefed and considered, prior to the release of modified conditions, 
and could possibly reduce the number of appeals. Moreover, if an appeal 
is filed, the proposed process ensures that issues are well-developed 
for an Assistant Secretary's timely consideration.
    An efficient process is necessary given the multiple agencies with 
authorities and responsibilities under the Federal Power Act. The 
Department considers it important to adhere strictly to applicable FERC 
filing deadlines and schedules. Proposed section 25.54 therefore 
provides that an appeal must be received within 30 calendar days of the 
date the Department files its modified conditions and prescriptions 
with FERC. No extensions of this deadline will be granted, and untimely 
appeals will be dismissed.
    A 21-day period is provided to Indian tribes, States, Federal 
agencies, and the public to comment on an appeal. These requirements 
will help to ensure that the appeals process will be completed within 
60 days of receipt of the appeal.
    The Assistant Secretary (or Assistant Secretaries) with supervisory 
authority over the bureau establishing the conditions or prescriptions 
will review the appeal. Proposed section 25.59 states that the 
Assistant Secretary's review is to be de novo, i.e., nondeferential. In 
deciding the appeal, the Assistant Secretary will consider, among other 
things, comments submitted by States, Indian tribes, Federal agencies, 
and the public, materials submitted by the applicant in support of the 
appeal, and pertinent portions of the administrative record supporting 
the conditions or prescriptions, including, as appropriate, comments 
and information received during the MCRP. Proposed section 25.59 makes 
this clear.
    Materials submitted by the applicant in support of the appeal must 
include sufficient information consistent with a substantial evidence 
standard. The Supreme Court has held that mandatory conditions and 
prescriptions must be supported by substantial evidence in order to 
withstand judicial review. Escondido Mut. Water Co. v. La Jolla Band of 
Mission Indians, 466 U.S. 765, 778 (1984); see also 16 U.S.C. 825l(b). 
Proposed section 25.56 therefore provides that the applicant must 
include, for each condition or prescription appealed, the following:
    (a) A concise statement of the reasons for appeal;
    (b) A demonstration that the specific issues on appeal were raised 
with the Department during the Mandatory Conditions Review Process and 
in the FERC record;
    (c) A summary of consultation with the Department, including a 
statement of disagreements regarding studies, resource impacts, or 
proposed protection, mitigation, or enhancement measures, as 
appropriate to the matter or matters being appealed;
    (d) A proposed alternative for the appealed condition or 
prescription which is supported by substantial evidence in the record, 
is set forth in the same level of detail as the appealed condition or 
prescription, and is reasonably related to alternatives raised during 
the MCRP and in the FERC record;
    (e) An assessment of how the proposed alternative would affect 
fish, wildlife, and Indian trust resources; and
    (f) Supplementary information, as applicable, such as Form 1 or 
Form 412 filings, or system load data.
    The Assistant Secretary will use this information along with other 
available information, to assess whether the applicant has demonstrated 
that the appeal meets one or more of the three criteria set forth in 
proposed section 25.59(c):
    (a) The modified conditions or prescriptions conflict with 
conditions or prescriptions of another Department, or conflict with 
those of another bureau (or bureaus); or
    (b) An alternative mitigation measure, preferred by the applicant, 
is as effective as that of the Department, (i.e., the applicant's 
proposed alternative meets or exceeds the result that would be obtained 
by the modified condition or prescription filed by the Department);
    (c) The modified conditions or prescriptions are not reasonably 
related to the impacts of the project because they mandate a level of 
mitigation that is inappropriate given the level of impacts 
attributable to the project.
    In addition, before the Assistant Secretary adopts an alternative 
condition or prescription, he or she must also find that the 
alternative meets standards set forth in proposed section 25.59. Any 
proposed alternative must be:
    (a) Supported by the technical and scientific record submitted with 
the appeal or compiled in the FERC proceeding;
    (b) Consistent with the Department's trustee responsibilities for 
Indian trust resources;
    (c) Consistent with the Department's responsibilities for fish, 
wildlife, and cultural resources; and
    (d) Not in conflict with conditions of another Department or with 
those of another bureau (or bureaus).
    Upon receipt of the appeal, proposed section 25.55 states that a 
review team will be designated to prepare, as appropriate, a 
substantive assessment of the appeal for the reviewing Assistant 
Secretary (or Assistant Secretaries). As proposed, the professional 
review team will not include individuals who developed or approved the 
mandatory

[[Page 54606]]

conditions or prescriptions that are under appeal, although the review 
team may consult with those individuals or any others. The review team 
is directed to conduct a threshold evaluation to determine whether the 
appeal is appropriate for review. As proposed in section 25.55(c), the 
review team will determine whether the appeal is properly filed and 
contains the required documentation as set forth in section 25.56, and 
whether the Secretary has authority to issue the remedy requested by 
the appeal. For example, the review team will dismiss those appeals 
that are not timely filed.
    With respect to appeals that are reviewed, the Assistant Secretary 
(or Assistant Secretaries) will have several options pursuant to 
proposed section 25.59, including: substituting the applicant's 
proposed remedy for the condition or prescription previously submitted 
to FERC by the Department; not changing the modified condition or 
prescription; revision of a modified condition or prescription; or, in 
the case of appeals asserting a conflict between or among proposed 
conditions or prescriptions, initiating action to reconcile the 
conflict. In the unlikely event that a modified condition or 
prescription has the potential to conflict with the conditions or 
prescriptions of another Department or Interior bureau, the Assistant 
Secretary (or Assistant Secretaries) will take action to assure that 
such a conflict does not occur. This can take many forms but section 
25.59(d)(4) would ultimately require eliminating the conflict, either 
through conforming the modified conditions or prescriptions to the 
conditions or prescriptions of the other agencies, or the other agency 
choosing to modify its conditions or prescriptions so that no conflict 
would occur.
    The results of the review will be made public through the FERC 
docket system. Section 25.59(e) requires the Assistant Secretary to 
file the new conditions, or a notice that the conditions are unchanged, 
with FERC within 60 days of receipt of the appeal. Section 25.60(b) 
requires the Assistant Secretary to file additional findings and 
supporting information with FERC in another 15 days. By requiring these 
items to be filed with FERC the rule is providing public notification--
the parties to the FERC proceeding will get copies of the filing, and 
other members of the public will be able to access the filing through 
FERC electronic eLibrary (http://www.ferc.gov/docs-filing/elibrary.asp). This is the same means of publication as all other 
filings with FERC, including publication of the preliminary and 
modified conditions. FERC filing requirements are outlined in 18 CFR 
385.2001.
    In sum, the Department is of the view that this framework will 
ensure an expeditious, cost-effective, and informed process that 
advances the National Energy Policy's streamlining goals. The MCRP and 
the appeals components of the review process build from the same 
record. This ensures consistency and reduces the need for rehearing or 
judicial review of FERC licensing decisions. Also, by utilizing the 
record developed through the MCRP, the proposed appeals process imposes 
only specific, minimal burdens on applicants and other parties. Such 
efficiency helps to ensure that the process will be completed within 60 
days from the Department's receipt of an appeal. To ensure that the 
process is cost-effective and well-informed, the Department has 
developed appeal criteria that encourage innovation by license 
applicants, and ensure careful development of mandatory conditions and 
prescriptions. Also, the process provides for policy level review of 
mandatory conditions and prescriptions in a forum that is consistent 
with FERC's substantial evidence requirements and comports with the 
Department's statutory and Indian trust responsibilities. All of these 
mechanisms will benefit the Department's exercise of its Federal Power 
Act authorities as well as improve coordination with FERC's licensing 
process.

C. Pending Legislation

    The Department is aware of a proposal for amending the Federal 
Power Act that is currently being considered by Congress.\4\ The 
Department invites comment about whether elements of the legislative 
proposal should be incorporated into this rulemaking, specifically:
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    \4\ The above discussion centers on the hydropower title passed 
by the House in H.R. 6 and by the Senate in S. 14 in the 108th 
Congress. The same language also appears in S. 2095 which was 
introduced in the Senate on February 12, 2004. Language regarding 
alternative hydropower conditions was also included in bills that 
reached conference in the 107th Congress.
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    (1) Should the Department include a provision for an on-the-record, 
trial-type hearing on disputed issues of material fact? If not, why, 
and if so, why? If a respondent indicates support for a trial-type 
hearing on disputed issues of material fact, the Department requests 
that it provide specific examples of disputed material facts from past 
or present proceedings, and describe in detail how such a process would 
work in light of FERC schedules for the three hydropower licensing 
processes it has established;
    (2) The provisions of sections 25.56 et seq. cover the substantive 
requirements for appeals and standards by which appeals will be 
resolved. The record will document the basis for resolving the appeal. 
Are there other criteria that should be weighed, and are there tests 
that respondents suggest be considered in how to weigh such criteria? 
In the consideration of conditions and prescriptions should the 
Department give equal consideration to energy supply, distribution, 
cost and use; flood control; navigation; water supply; and air quality 
(in addition to the preservation of other aspects of environmental 
quality)? Should the Department consider other factors? How would the 
Department demonstrate that equal consideration was given to these 
factors? What would be the implications of providing equal 
consideration to such factors for the Department's duties to protect 
tribal resources, fish, wildlife, and cultural resources if this 
standard were applied?
    (3) Should the Department be required to accept an alternative 
condition proposed by a license applicant if it provides adequate 
protection and utilization of the reservation, costs less to implement, 
and results in improved operation of the project works for electricity 
production? Please provide the reasons for your response.
    (4) Should the Department be required to accept an alternative 
prescription proposed by a license applicant if it is no less 
protective than the fishway prescribed by the Department, costs less to 
implement, and results in improved operation of the project works for 
electricity production? Please provide the reasons for your response.
    (5) In questions (3) and (4) above, an element of the criteria 
required is that the alternative proposed by the applicant ``costs less 
to implement.'' If the applicant, for whatever reason, such as improved 
operations, favors an alternative that is more expensive than that in 
the Department's modified condition or prescription, is there any 
reason it should be rejected so long as it is ``equally effective?''

IV. Commission Coordination

    The Commission is on record supporting the MCRP and an appeals 
process. In comments on the MCRP dated June 26, 2000, Commission staff 
stated: ``Because decisions regarding mandatory conditions are 
essentially reserved to the Departments, public process before the 
Commission on these

[[Page 54607]]

issues is of very limited value. Creating a public process conducted by 
the Departments on draft mandatory conditions will ensure that public 
input is available to the Departments, and will help build an 
administrative record to support reasoned decision-making. Commission 
staff encourages the Departments to establish formal procedures, 
preferably in the form of a procedural rule that is codified in the 
Departments' regulations, for making draft mandatory conditions 
available to the public, and considering public comment received on 
those draft conditions.''
    The Commission has also encouraged the Department's establishment 
of an appeals process. In a February 20, 2003, Notice of Proposed 
Rulemaking, 102 FERC ] 61,185, FERC stated the following: ``We 
appreciate the collegial spirit in which the Departments of 
Agriculture, Commerce, and the Interior, in particular, have worked 
with us during the development of this proposed rule. We applaud the 
announcement of Interior's Assistant Secretary--Policy, Management, and 
Budget, at our joint hearing on November 7, 2002, in this proceeding, 
that Interior is developing an administrative appeals process for its 
mandatory conditions.''
    FERC's current schedule calls for initiating work on the final NEPA 
document upon the filing of modified conditions and prescriptions by 
resource agencies, and completing that document within 90 days. The 
Department is of the view that appeals of mandatory conditions and 
prescriptions should follow filing of modified conditions. This will 
provide regional officials with a full opportunity to consider comments 
filed during the MCRP comment period and on FERC's draft NEPA document. 
The regional officials can thus address various issues and concerns at 
the modified stage, thereby reducing disputes over conditions and 
prescriptions. This should cut down significantly on the number of 
licenses being appealed to assistant secretaries, and the number of 
requests for rehearing before FERC and subsequent litigation.
    The Department recognizes that the timing of the appeals process as 
proposed potentially could stretch FERC's schedule for completing final 
NEPA documents by up to 90 days in some cases. The Department's 
proposed process for filing of appeals and comments on them, and their 
consideration and resolution by assistant secretaries or other 
officials is a 90-day process which the Department considers to be the 
minimum amount of time in which appeals can be realistically managed 
given the flood of other business before assistant secretaries. The 
Department also notes that the new FERC integrated licensing process is 
scheduled to be conducted within a 17-month period of the two years 
allowed for timely consideration of license applications without 
requiring resort to license extensions, and that there are at least 
four options for dealing with the apparent timing conflict between the 
proposed appeals process and FERC's NEPA schedule. Those four final 
NEPA timing options are: (1) Continue with the current FERC schedule 
since, historically, only about 25 percent of licenses have included 
mandatory conditions or prescriptions and an even smaller proportion of 
proceedings would likely include an appeal, much less one in which the 
resolution rendered the final NEPA document inadequate, resulting in 
the final NEPA document being within proper scope; (2) delay the NEPA 
preparation schedule until the Interior appeal deadline (30 days), or 
if an appeal is filed, consider adding an additional NEPA alternative 
to better assure that the final NEPA document will be properly scoped; 
(3) delay the NEPA preparation schedule for 90 days to assure that the 
results of the appeals process are fully considered in the final NEPA 
document; or (4) prepare a supplement to the final NEPA document if it 
turns out that resolution of the appeal would render the final NEPA 
document inadequate for the decision before the FERC commissioners. 
Using any of these four options, the licensing process could still be 
completed within the two year limit without resort to license 
extensions. The Department, however, is sensitive to the issue of 
potentially extending the duration of the licensing process, and 
invites comment on how best to fit the appeals process into existing 
FERC hydroelectric licensing processes and the seriousness of a 
potential 90-day delay in those processes compared to an opportunity 
for consideration of appeals and further public comment at the policy 
level within the Department.

V. Procedural Requirements

1. Regulatory Planning and Review (E.O. 12866)

    This document is a significant rule. Though this rule will not have 
an adverse effect or an annual effect of $100 million or more on the 
economy, the preliminary assessment of the Office of Management and 
Budget (OMB) is that the provision for public participation through the 
MCRP process and the addition of an opportunity for an appeal under the 
rule may represent novel approaches to public input and review, may 
serve as a model for future rulemakings, and may have interagency 
implications. Therefore, the rule will be reviewed by the OMB under 
Executive Order 12866.
    (1) This rule will not have an annual effect of $100 million or 
more on the economy. The review and comment procedures of the MCRP are 
already in place, and codifying these procedures as a rule will not 
impose new costs. The Department expects about two appeals per year 
under the proposed rule, requiring about 200 hours of additional work 
by the applicant. Staff costs for two applicants per year clearly fall 
well short of $100 million. This conclusion also holds in a worst-case 
analysis; if every applicant appealed modified conditions and 
prescriptions, that would represent about eight appeals per year. 
Furthermore, since the decision to appeal is entirely at the discretion 
of the applicant, that cost will only be incurred when an applicant 
decides the cost will be justified by the benefits of the process.
    (2) This rule will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency. The 
proposed rule is designed to fit within the Commission's current and 
proposed rules for hydropower licensing. The Commission is on record 
supporting the MCRP and an appeals process (See part IV above).
    (3) This rule will not alter the budgetary effects of entitlements, 
grants, user fees, or loan programs or the rights or obligations of 
their recipients. This proposed rule concerns only public review and 
administrative appeal procedures for the Department's hydropower 
licensing conditions and prescriptions. The rule merely streamlines and 
improves the Department's participation in the licensing of hydropower 
generating facilities.
    (4) This rule does not raise novel legal issues. The preliminary 
assessment of the Office of Management and Budget (OMB) is that the 
rule may raise novel policy issues, in that it represents a potentially 
new approach to public input.

2. Regulatory Flexibility Act

    The Department certifies that the proposed rule will not have a 
significant economic effect on a substantial number of small entities 
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
    The proposed rule will not affect a substantial number of small 
entities. According to the Small Business

[[Page 54608]]

Administration, for NAICS code 221111 hydroelectric power generation, a 
firm is small if, including its affiliates, its total electric output 
for the preceding fiscal year did not exceed 4 million megawatt hours. 
Over half of the Commission-licensed projects are less than 5 megawatts 
of capacity (542 of 1009). Over 80 percent of Commission licensees hold 
only one license (483 of 598). Despite the fact that the regulated 
community of Commission licensees does include a substantial number of 
small entities, the number of affected entities in a given year is 
likely to be small. During the period from 2001 to 2003, of 108 
licenses issued by the Commission, 13 contained conditions or 
prescriptions from the Department of the Interior. Eight of these 13 
affected small entities.
    More important, the effect of the proposed rule will not be 
significant. The only action required of any entity under the proposed 
rule is the preparation and submission of an appeal. Applicants already 
prepare and submit comments on conditions pursuant to the MCRP, which 
is currently in effect as a policy.
    To file an appeal, the applicant would simply collect information 
already in the record of the proceeding before the Commission, and put 
it together in the format described in the proposed rule. Since the 
decision to appeal is entirely at the discretion of the applicant, that 
cost will only be incurred when an applicant decides the cost will be 
justified by the benefits of the process. For these reasons, the 
proposed rule will not have a significant economic effect.

3. Small Business Regulatory Enforcement Fairness Act

    This rule is not a major rule under 5 U.S.C. 804(2), the Small 
Business Regulatory Enforcement Fairness Act. This rule does not have 
an annual effect on the economy of $100 million or more. (See 
conclusion under Section 1 above.) This rule will not cause a major 
increase in costs or prices for consumers, individual industries, 
Federal, State, or local government agencies, or geographic regions. A 
public review process and administrative appeals process for the 
Department's hydropower conditions and prescriptions will not affect 
costs or prices. This rule will not have significant, adverse effects 
on competition, employment, investment, productivity, innovation, or 
the ability of United States based enterprises to compete with foreign-
based enterprises.

4. Unfunded Mandates Reform Act

    This rule does not impose an unfunded mandate on State, local, or 
tribal governments in the aggregate or on the private sector of more 
than $100 million per year. The rule does not have a significant or 
unique effect on State, local, or tribal governments or the private 
sector. State, local, and tribal governments routinely file comments on 
the Department's licensing conditions under the existing MCRP policy. 
The new appeal opportunity will only be available to the license 
applicant, and, as discussed above, the costs to the applicant will be 
small and the Department expects that there will be an improvement in 
ensuring consistency and transparency. Therefore, a statement 
containing the information required by the Unfunded Mandates Reform Act 
(2 U.S.C. 1531 et seq.) is not required.

5. Takings (E.O. 12630)

    In accordance with Executive Order 12630, the rule does not have 
significant takings implications. The Departmental conditions and 
prescriptions included in hydropower licenses relate to operation of 
hydropower facilities on resources not owned by the applicant (public 
waterways and/or public lands). Therefore, this rule will not result in 
a taking of private property, and a takings implication assessment is 
not required.

6. Federalism (E.O. 13132)

    In accordance with Executive Order 13132, the rule does not have 
sufficient federalism implications to warrant the preparation of a 
Federalism Assessment. There is no foreseeable effect on States of 
codifying procedures for public review of Departmental conditions and 
prescriptions, or providing the applicant with an opportunity for an 
administrative appeal of such. The rule, which governs only the 
Department's responsibilities in hydropower licensing, does not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or in the distribution of power 
and responsibilities among the various levels of government. The rule 
does not preempt State law. Therefore, a Federalism Assessment is not 
required.

7. Civil Justice Reform (E.O. 12988)

    In accordance with Executive Order 12988, the Office of the 
Solicitor has determined that this rule does not unduly burden the 
judicial system and meets the requirements of sections 3(a) and 3(b)(2) 
of the Order. The proposed rule has been reviewed and provides clear 
language as to what is allowed and what is prohibited. Litigation 
regarding Commission hydropower licenses currently begins with 
rehearing at the Commission, and then moves to Federal appeals court. 
By offering public review and an administrative appeal of conditions 
and prescriptions imposed by the Department, the rule will likely 
result in a decrease in the number of proceedings that are litigated. 
In addition, it is not anticipated that more than an average of two 
appeals will be filed in any given year.

8. Paperwork Reduction Act

    The proposed rule contains provisions that would collect 
information from the public and therefore requires approval by the 
Office of Management and Budget (OMB) under the Paperwork Reduction Act 
(PRA) of 1995. According to the PRA, a Federal agency may not conduct 
or sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid OMB control number 
that indicates OMB approval. For this approval, Form 83-I and 
supporting information have been submitted to OMB.
    The purpose of the information collection in this rulemaking is to 
provide an opportunity for license applicants to appeal mandatory 
conditions and prescriptions before licenses are issued by the 
Commission. It is estimated that an average of six new licenses with 
mandatory conditions will be issued each year for the next few years, 
and that an average of two license applicants will appeal the mandatory 
conditions each year. It is estimated that the burden for filing an 
appeal under Subpart B of the proposed rulemaking is 200 hours; thus, 
the total information collection burden of this rulemaking would be 
about 400 hours per year.
    As required by OMB regulations at 5 CFR 1320.8(d)(1), on behalf of 
OMB, the Department is requesting your comments on this information 
collection. In particular, your comments to OMB should address: (1) 
Whether the proposed collection of information is necessary and 
appropriate for its intended purpose; (2) the accuracy of our estimate 
of the burden; (3) ways to enhance the quality, utility, and clarity of 
the information collected; and (4) ways to minimize the burden on the 
respondents of the collection of information, including the possible 
use of automated collection techniques or other forms of information 
technology.
    OMB must make a decision concerning approval of this collection of 
information no sooner than 30 days, but no later than 60 days, after 
the proposed rule is published in the Federal

[[Page 54609]]

Register. Therefore, your comments on the information collection are 
best assured of having their maximum effect if OMB receives them within 
30 days of publication. Your comments should be directed to OMB via 
facsimile or e-mail as indicated in the ADDRESSES section of this 
rulemaking. Please also send a copy of your comments to us at the 
address indicated in the ADDRESSES section.
    If you wish to obtain a copy of our full submission to OMB 
requesting approval of this information collection, which includes the 
OMB form 83-I and supporting statement, please contact the person 
listed in the FOR FURTHER INFORMATION CONTACT section. A copy will be 
sent to you at no charge.

9. National Environmental Policy Act

    This rule does not constitute a major Federal action significantly 
affecting the quality of the human environment. The Department has 
determined that the proposed rule is categorically excluded from review 
under section 102(2)(C) of NEPA (42 U.S.C. 4332(2)(C)). The Department 
has made this determination pursuant to 516 Departmental Manual (DM), 
Chapter 2, Appendix 1, Item 1.10, which excludes ``policies, 
directives, regulations and guidelines of an administrative, financial, 
legal, technical or procedural nature; or the environmental effects of 
which are too broad, speculative or conjectural to lend themselves to 
meaningful analysis and will be subject later to the NEPA process, 
either collectively or case-by-case.'' In addition, the Department 
found that the proposed rule would not significantly affect the 10 
criteria for exceptions to categorical exclusion listed in 516 DM 2, 
Appendix 2. Therefore, a detailed statement under NEPA is not required.

10. Government-to-Government Relationship With Indian Tribes

    In accordance with the President's 1994 Executive Memorandum, 
Government-to-Government Relations with Native American Tribal 
Governments, 59 FR 22951 (April 29, 1994), supplemented by Executive 
Order No. 13,175, Consultation and Coordination with Indian Tribal 
Governments, 65 FR 67249 (November 6, 2000), and 512 DM 2, the 
Department has assessed the impact of the proposed rule on tribal trust 
resources and has determined that it does not directly affect tribal 
resources. The proposed rule is of a procedural and administrative 
nature. It should be clear, however, that individual Departmental 4(e) 
conditions and section 18 fishways may directly affect tribal 
resources, and the Department will consult with tribal governments when 
developing conditions and prescriptions that directly affect those 
tribal trust resources. The Department will consult with Indian tribes 
during the MCRP and at appropriate times during the appeal process.

11. Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    In accordance with Executive Order 13211, the Department has 
determined that the proposed rule will not have substantial direct 
effects on energy supply, distribution, or use, including shortfall in 
supply or price increase. Recent analysis by the Commission has found 
that on average installed capacity increased through licensing by 4.06 
percent, and the average annual generation loss, attributable largely 
to increased flows to protect aquatic resources, was 1.59 percent.\5\ 
Since the licensing process itself has such a modest energy impact, 
this proposed rule, which affects only the Department's review and 
appeal policies, is not expected to have a significant impact (i.e., 
reductions in electricity production in excess of 1 billion kilowatt-
hours per year or in excess of 500 megawatts of installed capacity).
---------------------------------------------------------------------------

    \5\ Report on Hydroelectric Licensing Policies, Procedures, and 
Regulations, Comprehensive Review and Recommendations Pursuant to 
Section 603 of the Energy Act of 2000, prepared by the staff of the 
Federal Energy Regulatory Commission, May 2001.
---------------------------------------------------------------------------

12. Clarity of This Regulation

    Executive Order 12866 requires each agency to write regulations 
that are easy to understand. The Department invites your comments on 
how to make this rule easier to understand, including answers to 
questions such as the following: (1) Are the requirements in the rule 
clearly stated? (2) Does the rule contain technical language or jargon 
that interferes with its clarity? (3) Does the format of the rule 
(grouping and order of sections, use of headings, paragraphing, etc.) 
aid or reduce its clarity? (4) Would the rule be easier to understand 
if it were divided into more (but shorter) sections? (5) Is the 
description of the rule in the SUPPLEMENTARY INFORMATION section of the 
preamble helpful in understanding the proposed rule? (6) What else 
could we do to make the rule easier to understand?
    Send a copy of any comments that concern how we could make this 
rule easier to understand to: Office of Regulatory Affairs, Mail Stop 
7229, Department of the Interior, 1849 C Street, NW., Washington, DC 
20240. You may also e-mail the comments to this address: 
[email protected].

List of Subjects in 43 CFR Part 25

    Administrative practice and procedure, Indians--lands; National 
parks, Public land, Water resources, Wildlife.

    Dated: September 2, 2004.
P. Lynn Scarlett,
Assistant Secretary--Policy, Management and Budget, U.S. Department of 
the Interior.

    For the reasons set forth in the Preamble, part 25 of Title 43 of 
the Code of Federal Regulations is proposed to be added, as set forth 
below.

PART 25--HYDROPOWER LICENSING; CONDITIONS AND PRESCRIPTIONS

Subpart A--Mandatory Conditions Review Process
Sec.
25.1 What is the purpose of this subpart?
25.2 What terms are used in this subpart?
25.3 What is the Mandatory Conditions Review Process?
25.4 When is the Mandatory Conditions Review Process triggered?
25.5 When will the Department file its preliminary conditions or 
prescriptions?
25.6 When may the public review and comment on the Department's 
preliminary conditions and prescriptions?
25.7 When will the Department submit modified conditions and 
prescriptions to FERC?
25.8 What process will be used to review conditions and 
prescriptions submitted as part of an offer of settlement, whether 
in an alternative licensing process or otherwise?
Subpart B--Procedures for Appeal of Mandatory Conditions and 
Prescriptions in FERC Hydropower Licensing
25.50 What is the purpose of this subpart?
25.51 What terms are used in this subpart?
25.52 Who may appeal?
25.53 What limits are there to raising an issue on appeal?
25.54 When is an appeal timely?
25.55 Where is the appeal filed?
25.56 What must the appeal include?
25.57 Who may comment on an appeal?
25.58 Who will review the appeal?
25.59 How will the appeal be reviewed?
25.60 How will results of the review be made available?

    Authority: 5 U.S.C. 301; 16 U.S.C. 3, 668 dd(d)(1); 25 U.S.C. 2, 
9; 43 U.S.C. 1201, 1740.

Subpart A--Mandatory Conditions Review Process


Sec.  25.1  What is the purpose of this subpart?

    This subpart describes the process for the public to review and 
comment on mandatory conditions and prescriptions

[[Page 54610]]

developed by the Department of the Interior for inclusion in a 
hydropower license issued under subchapter I of the Federal Power Act, 
16 U.S.C. 791-823c. The authority to develop these conditions and 
prescriptions is granted by sections 4(e) and 18 of the Federal Power 
Act, 16 U.S.C. 797(e) and 811, which authorize the Secretary to 
condition hydropower licenses issued by the Federal Energy Regulatory 
Commission and to prescribe fishways.


Sec.  25.2  What terms are used in this subpart?

    As used in this subpart:
    Bureau means the U.S. Fish and Wildlife Service, National Park 
Service, Bureau of Land Management, Bureau of Reclamation, or the 
Bureau of Indian Affairs.
    Department means the U.S. Department of the Interior or one or more 
of its constituent bureaus.
    FERC means the Federal Energy Regulatory Commission.
    FPA means the Federal Power Act, 16 U.S.C. 791-823c.
    REA Notice means a notice issued by FERC that states that a license 
application is Ready for Environmental Analysis.


Sec.  25.3  What is the Mandatory Conditions Review Process?

    The Mandatory Conditions Review Process is a process that allows 
the public to review and comment on preliminary conditions and 
prescriptions that the Department of the Interior submits for inclusion 
in a hydropower license issued under subchapter I of the FPA. The 
process is open to the license applicant, all participants in the 
licensing process, and the public generally, and is limited to 
conditions and prescriptions submitted pursuant to sections 4(e) and 18 
of the FPA, 16 U.S.C. 797(e) and 811. It does not apply to 
recommendations filed under sections 10(a) and 10(j) of the FPA, 16 
U.S.C. 803(a) and (j).


Sec.  25.4  When is the Mandatory Conditions Review Process triggered?

    The Mandatory Conditions Review Process is triggered when FERC 
issues a notice indicating that a license application filed pursuant to 
subchapter I of the FPA, is ready for environmental analysis (REA 
Notice).


Sec.  25.5  When will the Department file its preliminary conditions or 
prescriptions?

    (a) Unless the circumstances in paragraphs (b) or (c) of this 
section apply, the Department will file its preliminary conditions and 
prescriptions with FERC within 60 days after FERC issues its REA 
Notice. The Department will include a rationale for the conditions and 
prescriptions, reference relevant documents already filed with FERC, 
and provide a schedule of when the preliminary conditions and 
prescriptions will be modified. The Department's submission to FERC 
will enable the public to submit comments and new supporting evidence 
on the preliminary conditions and prescriptions within the comment 
period provided in Sec. 25.6(a).
    (b) Exceptional circumstances, such as the filing of competing 
applications for a hydropower license, may preclude the Department from 
filing preliminary conditions and prescriptions within 60 days after 
FERC issues its REA Notice. When exceptional circumstances occur, the 
Department will work with FERC and the applicant(s) on a case-by-case 
basis to ensure that an opportunity for public review and comment is 
provided.
    (c) If the Department determines that it does not have sufficient 
information, such as completed reports on required studies or 
information on technical feasibility, to support the filing of 
preliminary conditions and prescriptions, it may exercise its authority 
under sections 4(e) and 18 of the FPA by reserving the authority to 
submit conditions and prescriptions at a later date. In these 
situations, instead of filing preliminary conditions and prescriptions, 
the Department will file with FERC its reservation of authority within 
60 days after FERC issues its REA Notice and will provide the reasons 
for this action. The Department will accept comments on its reservation 
of authority.


Sec.  25.6  When may the public review and comment on the Department's 
preliminary conditions and prescriptions?

    (a) The first opportunity for the public to review and comment on 
the Department's preliminary conditions and prescriptions is the 45-day 
period immediately following the Department's submission of preliminary 
conditions and prescriptions to FERC.
    (b) A second opportunity for public review and comment on the 
Department's preliminary conditions and prescriptions can occur during 
the period(s) provided by FERC for public comment under the National 
Environmental Policy Act (NEPA), 42 U.S.C. 4321 et seq., on FERC's 
draft NEPA document for the license. All comments on the Department's 
preliminary conditions and prescriptions that are submitted along with 
comments on the draft NEPA document (or environmental assessment if no 
draft NEPA document is prepared) should be identified as such.
    (c) Comments, which should include supporting evidence, submitted 
under either paragraph (a) or (b) of this section should be sent 
directly to the office identified in the Department's submission of 
preliminary conditions and prescriptions.
    (d) Comments submitted during the comment period set forth in 
paragraph (a) of this section need not be resubmitted during the 
comment period set forth in paragraph (b) of this section.


Sec.  25.7  When will the Department submit modified conditions and 
prescriptions to FERC?

    (a) After reviewing FERC's draft NEPA document (or environmental 
assessment if no draft NEPA document is prepared) and all comments 
timely received on the Department's preliminary conditions and 
prescriptions, and after coordinating with Indian tribes and other 
resource agencies, the Department will modify its preliminary 
conditions and prescriptions, as needed, and respond to comments.
    (b) Based on this review, the Department will submit modified 
conditions and prescriptions to FERC within 60 days after the close of 
the comment period in Sec.  25.6(b) unless substantial or new 
information is received during this comment period that requires 
additional time for review. In those infrequent situations, the 
Department will inform FERC, all commenters, and all persons on the 
FERC service list for the proceeding why such additional time is needed 
and when it will submit the modified conditions and prescriptions.
    (c) The submission described in Sec.  25.7(b) will include the 
Department's response to comments, an index of the Department's 
administrative record, and a schedule for filing its administrative 
record with FERC.


Sec.  25.8  What process will be used to review conditions and 
prescriptions submitted as part of an offer of settlement, whether in 
an alternative licensing process or otherwise?

    (a) If the Department submits to FERC preliminary or modified 
conditions and prescriptions that are not part of an offer of 
settlement, the procedures in Sec. Sec. 25.6 and 25.7 respectively will 
apply.
    (b) If the Department submits to FERC conditions and prescriptions 
that are part of an offer of settlement, the following procedures will 
apply:
    (1) The Department will review any comments and supporting evidence 
submitted in response to FERC's notice calling for comments on the 
offer of settlement that directly address the Department's agreed-upon 
mandatory conditions and prescriptions.

[[Page 54611]]

    (2) If the comments are substantive, raise issues not previously 
identified, and may require changes to the agreed-upon mandatory 
conditions and prescriptions and/or the offer of settlement, the 
Department will, in accordance with any applicable settlement 
communications protocol, discuss the comments and their appropriate 
resolution with the other settlement participants. If the Department 
determines, after discussion with the other settlement participants, 
that the comments warrant a change in the agreed-upon mandatory 
conditions and prescriptions, the Department will modify the agreed-
upon mandatory conditions and prescriptions.
    (3) The Department will submit to FERC any changes to the agreed-
upon mandatory conditions and prescriptions that are made as a result 
of comments received under paragraph (b)(2) of this section.
    (4) The process described in this paragraph (b) will be the only 
opportunity for review of the Department's agreed-upon mandatory 
conditions and prescriptions submitted pursuant to an offer of 
settlement.

Subpart B--Procedures for Appeal of Mandatory Conditions and 
Prescriptions in FERC Hydropower Licensing


Sec.  25.50  What is the purpose of this subpart?

    The purpose of this subpart is to describe the appeals process that 
an applicant for a hydropower license may use to obtain administrative 
review of modified conditions and prescriptions.


Sec.  25.51  What terms are used in this subpart?

    Applicant means a person or legal entity applying to FERC for a 
hydropower license at a FERC jurisdictional facility under the Federal 
Power Act, 16 U.S.C. 791-823c.
    Bureau means the U.S. Fish and Wildlife Service, National Park 
Service, Bureau of Land Management, Bureau of Reclamation, or the 
Bureau of Indian Affairs.
    Department means the U.S. Department of the Interior or one or more 
of its constituent bureaus.
    FERC means the Federal Energy Regulatory Commission.
    Indian tribe means a federally recognized Indian tribe.
    Mandatory Conditions Review Process (MCRP) means the process 
described in 43 CFR Part 25, Subpart A.
    Modified conditions and prescriptions means mandatory conditions 
and prescriptions developed for inclusion in a hydropower license 
pursuant to sections 4(e) and 18 of the Federal Power Act, 16 U.S.C. 
797(e) and 811, as modified through the MCRP and filed with FERC after 
the close of the comment period on the draft National Environmental 
Policy Act (NEPA) document (or environmental assessment if no draft 
NEPA document is prepared).


Sec.  25.52  Who may appeal?

    This appeals process is available to applicants for a hydropower 
license in proceedings in which the Department establishes one or more 
modified conditions or prescriptions.


Sec.  25.53  What limits are there to raising an issue on appeal?

    The Department's issuance of one or more modified conditions or 
prescriptions for inclusion in a hydropower license pursuant to 
sections 4(e) and 18 of the Federal Power Act, 16 U.S.C. 797(e) and 
811, may be appealed if the specific issue was previously raised during 
the MCRP and in the FERC record, or if the modified condition or 
prescription was primarily based on new information, including 
technical and scientific data not available when the applicant 
commented on the Department's preliminary conditions and prescriptions. 
Modified conditions or prescriptions issued by the Bureau of 
Reclamation specifically concerning dam safety or security may not be 
appealed. Modified conditions or prescriptions agreed to in a 
settlement agreement may not be appealed through this process. Appeals 
will be reviewed pursuant to the process set forth in Sec. Sec.  25.55 
and 25.59.


Sec.  25.54  When is an appeal timely?

    (a) An appeal is timely if received by the Office of Environmental 
Policy and Compliance (OEPC) within 30 calendar days after the date the 
Department files its modified conditions and prescriptions with FERC. 
The date of the Department's filing with FERC is determined by the date 
stamp affixed by FERC to the modified conditions and prescriptions.
    (b) No extensions of this deadline will be granted.
    (c) An appeal not received in a timely manner will be dismissed.
    (d) In computing the period of time for filing an appeal, the first 
day shall be the day after the date affixed by FERC to the modified 
conditions and prescriptions. The last day of the 30-day period is 
included in the time period, unless it is a Saturday, Sunday, Federal 
legal holiday designated at 5 U.S.C. 6103, or other nonbusiness day, in 
which event the period does not close until the end of the next day 
which is not a Saturday, Sunday, Federal legal holiday, or nonbusiness 
day.


Sec.  25.55  Where is the appeal filed?

    (a) An appeal must be filed with the Office of Environmental Policy 
and Compliance (OEPC), U.S. Department of the Interior, MS 2342, 1849 C 
St., NW, Washington, DC 20240. The appeal is deemed filed when it is 
received by OEPC at this address. Upon receipt of the appeal, OEPC will 
date-stamp the appeal, forward it to the Assistant Secretary (or 
Assistant Secretaries) with supervisory responsibility over the bureau 
(or bureaus) that developed the modified conditions or prescriptions, 
and provide appropriate notice to FERC. The Assistant Secretary (or 
Secretaries) will designate a professional Departmental review team 
from a previously authorized, standing pool of Department hydropower 
professionals to prepare, as appropriate, a substantive assessment of 
the appeal. The professional review team cannot be comprised of 
individuals who developed or approved the preliminary or modified 
conditions or prescriptions that are under appeal, but may consult with 
Departmental staff.
    (b) The applicant shall simultaneously file an information copy of 
the appeal with FERC. The applicant shall serve a copy of the appeal on 
parties included on FERC's service list for the license proceeding. The 
applicant shall certify this service in the appeal filed with OEPC.
    (c)(1) The review team will conduct an initial evaluation to 
determine if the appeal:
    (i) Is properly filed consistent with Sec. Sec.  25.52, 25.53, 
25.54, and this section; and
    (ii) Contains the required documentation as set forth in Sec.  
25.56; and
    (iii) Proposes a remedy that is within the Secretary's authority.
    (2) If either paragraph (c)(1)(i), (ii), or (iii) is not the case, 
then the appeal shall be dismissed. Otherwise, the appeal shall be 
processed.


Sec.  25.56  What must the appeal include?

    For each condition or prescription challenged, the appeal must 
include the following components. Appeals that do not provide the 
following information may be dismissed.
    (a) A concise statement of the specific reasons for appeal, 
referencing and meeting at least one of the criteria in Sec.  25.59(c);
    (b) A demonstration that the specific issues on appeal were raised 
during the

[[Page 54612]]

MCRP and in the FERC record. If the Department's modified conditions 
were primarily based on new information that was not available when the 
applicant commented on the Department's preliminary conditions and 
prescriptions, a clear identification of the condition or prescription 
that was modified and the new information on which it was based;
    (c) A summary of consultation with the Department, including a 
statement of disagreements regarding studies, resource impacts, or 
proposed protection, mitigation, or enhancement measures, as 
appropriate to the matter or matters being appealed;
    (d) A proposed alternative for the appealed condition or 
prescription which is supported by substantial evidence in the record, 
is set forth in at least the same level of detail as the appealed 
condition or prescription, and is reasonably related to alternatives 
raised during the MCRP and in the FERC record;
    (e) An assessment of the effects of the proposed alternative on 
fish, wildlife, and Indian trust resources; and
    (f) Supplementary information that includes the following, as 
applicable:
    (1) The most recent Form 1 filing (if investor-owned utility) or 
Form 412 filing (if publicly-owned applicant) filing; and if all or 
part of the basis of the appeal is adverse effect on electricity 
generation, power revenues, and/or the economic viability of the 
project,
    (i) Data on the most recent five years of system load for the 
project, including an explanation of any anomalies attributable to a 
specific time frame or hydrologic condition; and
    (ii) An analysis that demonstrates, using historic cost and load 
data and documented pro forma adjustments for future operations, the 
impacts of the Department's proposed condition or prescription on the 
cost and operational characteristics of the system, and which provides 
a comparison to the applicant's proposal.
    (2) [Reserved]


Sec.  25.57  Who may comment on an appeal?

    Indian tribes, States, Federal agencies, and the public may comment 
on an appeal. Comments shall be sent to OEPC at the address specified 
in Sec.  25.55(a), and must be received by OEPC not later than 21 
calendar days from the date on which the appeal was served, as 
documented in the certification of service submitted by the applicant 
pursuant to Sec.  25.55(b).


Sec.  25.58  Who will review the appeal?

    The Assistant Secretary (or Assistant Secretaries) with supervisory 
authority over the bureau establishing the modified condition or 
prescription will review the appeal. If an applicant appeals the 
modified conditions or prescriptions of more than one bureau in the 
same licensing project, then the Assistant Secretaries with supervisory 
authority over the bureaus shall coordinate their consideration of 
appeals to assure consistency. If more than one Assistant Secretary is 
involved and agreement among them is not reached, the appeal will be 
resolved by the Secretary or the Secretary's designee.


Sec.  25.59  How will the appeal be reviewed?

    (a) The Assistant Secretary's review authority is de novo.
    (b) The Assistant Secretary will resolve the appeal after 
considering, among other things, the materials submitted by the 
applicant pursuant to Sec.  25.56, any substantive assessment prepared 
by the professional review team designated pursuant to Sec.  25.55(a), 
any comments submitted pursuant to Sec.  25.57, and any Federal, State, 
or tribal conditions, prescriptions, or water quality certifications, 
and pertinent portions of the administrative record filed with FERC in 
support of the modified conditions or prescriptions.
    (c) The Assistant Secretary will assess whether the applicant has 
demonstrated that:
    (1) The modified conditions or prescriptions conflict with 
conditions or prescriptions of another Department, or conflict with 
those of another bureau (or bureaus); or
    (2) An alternative mitigation measure, preferred by the applicant, 
is as effective as that of the Department; or
    (3) The modified conditions or prescriptions are not reasonably 
related to the impacts of the project because they mandate a level of 
mitigation that is inappropriate given the level of impacts 
attributable to the project.
    (d) Before an Assistant Secretary adopts an alternative condition 
or prescription, he or she must also find that the alternative:
    (1) Is supported by the technical and scientific record submitted 
with the appeal or compiled in the FERC proceeding;
    (2) Provides protection consistent with the Department's trustee 
responsibilities for Indian trust resources;
    (3) Provides protection consistent with the Department's 
responsibilities for fish, wildlife, and cultural resources; and
    (4) Will not conflict with conditions or prescriptions of another 
Department, or conflict with those of another bureau (or bureaus).
    (e) The Assistant Secretary will resolve the appeal and file new 
modified conditions or prescriptions or a notice that the previously 
filed conditions or prescriptions will not be changed with FERC within 
60 days of receipt by OEPC of the appeal.


Sec.  25.60  How will results of the review be made available?

    (a) Findings and results of the review of the Assistant Secretary 
will be collected and saved by OEPC in a retrievable format, and made 
available to the public.
    (b) Applicants and FERC will be informed promptly by the Department 
of findings made by the Assistant Secretary (or Assistant Secretaries). 
All relevant supporting information, to the extent not already part of 
the FERC administrative record, will be filed with FERC within 15 
calendar days of the Assistant Secretary's filing of the results of the 
review with FERC.

[FR Doc. 04-20392 Filed 9-8-04; 8:45 am]
BILLING CODE 4310-RK-P