trending Market Intelligence /marketintelligence/en/news-insights/trending/xhimv1uqi0ltaxbxna_76a2 content esgSubNav
In This List

US appeals court vacates FERC license for large Southern Co. hydro project


Japan M&A By the Numbers: Q4 2023


See the Big Picture: Energy Transition in 2024


IR in Focus | Episode 10: Capital Markets Outlook


Infographic: The Big Picture 2024 – Energy Transition Outlook

US appeals court vacates FERC license for large Southern Co. hydro project

A U.S. appeals court vacated the Federal Energy Regulatory Commission's approval of a 30-year license for the Coosa River hydropower project, saying FERC did not factor in past and continuing environmental damage in the project area.

FERC's decision in 2013 to grant the license was arbitrary and capricious because the agency's environmental review and a biological opinion it relied upon from the U.S. Fish and Wildlife Service were "unreasoned and unsupported by substantial evidence," according to a July 6 decision from a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit. The court therefore vacated the licensing decision and remanded the matter to FERC for further proceedings.

The Coosa River project is made up of seven hydroelectric generation and storage facilities primarily in Alabama and owned by Southern Co. subsidiary Alabama Power Co.

In granting a new 30-year operating license for the 961-MW hydropower project (FERC Project No. 2146) in June 2013, FERC issued an environmental assessment that concluded that the license would not constitute a major federal action significantly affecting the environment. In addition, the Fish and Wildlife Service formed a biological opinion that said the project was not likely to jeopardize any threatened or listed species or destroy or harm critical habitats.

Three years later, FERC also granted Alabama Power's request to ease the project's water quality standards. Conservation groups later asked the D.C. Circuit to review the weakened water quality standards and the Fish and Wildlife Service's biological opinion.

In its July 6 opinion, the D.C. Circuit found that the biological opinion FERC relied upon largely omitted fish passage and season flows from its analysis and did not incorporate an environmental baseline into its jeopardy analysis.

The court also said the Fish and Wildlife Service did not defend its finding that the Coosa River project would not jeopardize listed species or harm critical habitats. It noted that 90%-100% of some species in certain project sections would be subject to incidental takes, which the Endangered Species Act defines as anything that could harass, harm, wound, kill or collect a listed species.

The D.C. Circuit also determined that FERC's National Environmental Policy Act analysis of the project was insufficient. The court said the record shows that the project would have significant environmental effects, meaning that FERC's decision to forgo a more extensive Environmental Impact Statement, or EIS, for the project "does not hold water."

First, the court said the commission failed to fully consider and address indications that the project would significantly affect fish passage and mortality rates and dissolved oxygen levels along the river to the point where an EIS would normally be required. Writing for the court, judges Patricia Millett and David Sentelle jointly said that FERC "just shrugged off" that the project could kill up to 1.3 million fish per year and relied on a more than decade-old survey provided by Alabama Power to estimate fish deaths.

Second, the two judges wrote that FERC "misanalyzed" the cumulative environmental effects of the Coosa River project, in large part because the commission's environmental assessment relied heavily on the Fish and Wildlife Service's flawed biological opinion. Among other shortcomings, the judges faulted FERC for giving "scant attention" to past actions in the project area that "were perpetuating the Coosa River's heavily damaged and fragile ecosystem."

Those errors "fatally infected the licensing order," the ruling said, causing FERC to violate its obligations under Sections 797 and 803 of the Federal Power Act when it granted the new 30-year license. "We accordingly vacate the licensing decision, and remand to the agency for further proceedings," the ruling concluded.

Judge Sri Srinivasan joined in the decision. American Rivers v. FERC (No. 16-1195).