Mill Pond Dam P-2225

The Sullivan Creek Hydroelectric Project (P-2225) provides an example of a successful surrender proceeding. There, the Public Utility District No. 1 of Pend Oreille County, Washington (District) filed a Notice of Intent not to seek a new license.[1] No other Notices of Intent were filed. The District’s position was that it could walk away from the project upon license expiration without further regulatory obligation.[2] FERC staff initially agreed, based largely on the fact that the project no longer generated power, but reversed that decision in response to rehearing requests by Washington Department of Fish and Wildlife, U.S. Forest Service, and American Whitewater.

FERC eventually found that, in order to “ensure that the project site is left in an appropriate condition, the District cannot simply walk away at the conclusion of the license term, but must file a surrender application.”[3] As the project was located, in part, within the Colville National Forest, FERC required, “[a]s part of the surrender process, the District must obtain a special use authorization from the Forest Service for any project works that will remain on federal land after the effective date of the surrender.”[4] FERC cited its “longstanding practice … to consider the public interest in determining when, and in what manner, to bring the relevant part of a license to an end.”[5]

FERC also found that an Environmental Assessment (EA) was required for a license surrender where project works exist or ground-disturbing activity has occurred,[6] and that the need for an EIS would be evaluated based on the EA.[7] The surrender application’s proposal to remove the project’s Mill Pond dam also triggered the need for water quality certification under CWA section 401.

The District consulted with the resource agencies, tribes, and conservation groups to develop its surrender application.[8] That consultation resulted in “two comprehensive and interrelated settlement agreements filed on March 29, 2010 [approximately two years after the order requiring the District to file a surrender application], addressing the surrender of the District’s Sullivan Creek license and the relicensing of the City of Seattle’s Boundary Project No. 2144, as well as a request to consolidate the relicensing and surrender proceedings.”[9] FERC staff prepared an EIS due to the consolidation of the two proceedings.[10]

The surrender agreement proposed to remove some project features, leave others in place, and to implement a range of measures intended to mitigate impacts on fish and recreation.[11] FERC’s order largely adopted the surrender agreement.[12] The District applied to the Washington Public Utility Commission to pass the costs of surrender on to ratepayers.[13]

The surrender agreement included conditions relating to restoration of Forest Service lands until the surrender became effective and the Forest Service issued a special use authorization and required that the District obtain a special use authorization from the Forest Service before the license surrender became effective.[14] Implementation of the surrender agreement has occurred without major incident, and Mill Pond dam was removed in November 2017.[15]

[1] Public Utility District No. 1 of Pend Oreille County, Washington, 122 FERC ¶ 61,249, 62,422 (2008).

[2] Id. at ¶ 62,422.

[3] Id. at ¶ 62,423.

[4] Id. at ¶ 62,424.

[5] Id. (citing City of Phoenix, Arizona, 59 FPC 1061, 1070-71 (1977)).

[6] Id. at ¶ 62,427 (citing 18 C.F.R. § 380.5(b)(13)).

[7] See id. (citing 18 C.F.R. § 380.5(a)).

[8] See Public Utility District No. 1 of Pend Oreille County, Washington, 142 FERC ¶ 62,232 (2013).

[9] Id. at ¶ 64,610.  American Whitewater was a signatory to the settlement.  See https://www.americanwhitewater.org/content/Project/view/id/Sullivan/.

[10] Id. at ¶ 64,611.

[11] The Commission summarized the proposal:

“[T]he District proposes to remove Mill Pond dam; restore the portion of Sullivan Creek inundated by Mill Pond; install a cold water release structure on Sullivan Lake; modify the storage operation of Sullivan Lake; and once the license surrender becomes effective, continue to operate Sullivan Lake in accordance with the terms of a special use authorization that would be issued by the Forest Service. The principal objectives of the settlement agreement terms are to improve aquatic habitat conditions in Sullivan and Outlet creeks below Sullivan Lake; potentially provide fish access to 16 miles of spawning, rearing, overwintering, and foraging habitat in Sullivan Creek; improve access to habitat in Harvey Creek; provide for recreational use on Sullivan Lake and whitewater boating in Sullivan Creek below the site of Mill Pond dam; and minimize the costs of surrender on Pend Oreille County ratepayers.”

Id. at ¶ 64,613.

[12] See id. at ¶ 64,616.

[13] A Public Utility Commission is a state government entity that deals with rates and services provided by utility companies.

[14] Id. at ¶ 64,614.

[15] See http://www.spokesman.com/stories/2017/nov/24/mill-pond-dam-removed-as-restoration-project-shutd/.

Read this case study in our Citizens Guide to License Implementation.