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The Federal Energy Regulatory Commission (FERC) has adopted a policy statement on hydroelectric plant decommissioning, claiming authority to deny new project licenses when existing licenses expire and to order owners to remove a dam during the relicensing process. These measures would only be applied if the FERC concludes that a project, no matter how many conditions were imposed, could no longer meet the comprehensive development standard of the Federal Power Act (FPA) (Docket No. RM93-23-000).

The statement was one of three hydroelectric orders considered as a group. The FERC's authority to deny new licenses, and thereby close down generating facilities, had been questioned by a Maine license holder, Edwards Manufacturing Co. Inc., a co-licensee with the City of Augusta on the Augusta Hydroelectric Project.

In its policy statement, the FERC claimed the authority to determine what features, beyond turbines and generators, should be removed if a project is decommissioned. However, it refused to establish a national or dam-specific decommissioning fund. The FERC expects most decommissionings will reflect a licensee's desire to abandon an uneconomical plant, rather than a FERC decision to shut a project down. Commissioner Vicky A. Bailey dissented, arguing that the FPA does not authorize the FERC to order dam removal, because its seeks rather to encourage development. Bailey added that the decommissioning authority is too broad, with potential social and economic consequences.

The FERC also has issued a policy statement on using reserved authority in hydropower licenses to ameliorate the cumulative impacts of multiple dams on one river. Where it is not possible to explore all aspects of a project's cumulative environmental impact at relicensing, the FERC reserves the right to address them later date (Docket No. RM93-25-000). The FERC plans to define this reserved authority as narrowly and precisely as possible. It also promises to notify licensees and give them the opportunity for a hearing before using the reserve authority.

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