Thanks Jan.

Re FERC process, R&M Consultants and others have said that if AEA wants to pursue Susitna it is imperative that a preliminary Notice of Intent be filed with FERC at the earliest possible date under the Alternative Licensing Procedure (ALP). Susitna RCC Dam Cost Evaluation November 16, 2009. R&M recommends a two-year precursor program to pursue the objective of achieving FERC and agency agreement for a short (fast track) licensing review. I dont think we have anything in writing from AEA but actions and statements so far seem consistent with this advice. So the consultants apparently equate ALP with fast track, and from the description of the processes that you sent around it does appear that a key difference with ALP is elimination of the timelines relating to environmental review of the project instead of being prescribed by the process these are agreed to, presumably by FERC and the project sponsor. Study plans arent transparent, as you noted (a preliminary draft EIS would precede the application and apparently not be the subject of much public discussion) and there appear to be fewer opportunities for public input in the ALP. This all has the effect of making an ALP skeptic of me, at least for a large project with significant impacts. Do you know the gist of the FERC guidance re whether/when the ALP or TLP is appropriate/not?
From: Jan Konigsberg [mailto:jan@hydroreform.org] Sent: Wednesday, January 19, 2011 2:31 PM To: Valerie Connor; Trish Rolfe; Toby Smith; Pat Lavin; Kiel Renick; Kate McKeown; Dave Theriault; Dan Lesh; Caitlin Higgins; Kaarle Strailey Cc: Bob Shavelson Subject: Some information on Susitna Dam licensing process (IPC)

Thanks for the opportunity to participate with IPC as it wades deeper into the murky waters of the proposed Susitna Dam. During this past Friday's IPC meeting, I mentioned it may not be too early for IPC to begin consideration of which of the three available licensing processes it could support (i.e., Integrated Licensing Process, Alternative Licensing Process, Traditional Licensing Process) -- assuming the state makes a decision to construct a Susitna project. As we know, in order to construct a Susitna hydropower dam, the state must apply for an operating license from the Federal Energy Regulatory Commission (FERC). Later on Friday, I received a call from Kiel asking me about the FERC licensing processes. I told him I would send some information about these processes, which I've attached to this email (the document elucidates and compares licensing processes, which I abridged from the Hydropower Reform Coalition's licensing handbook, available online). Understanding the FERC licensing program and process in all its complexity is not for the faint-hearted and

is/can be a lucrative business for consultants, yet it is not so complicated as to be inscrutable. To get started on the path to FERC enlightenment, here's a couple of cents worth of information (of course, there's a small fortune in information and analysis at the Hydropower Reform Coalition's website): Typically, a hydropower developer contemplating a particular project at a particular site, applies for the FERC preliminary permit. FERC requires only minimal information when applying for a preliminary permit, including a brief description of proposed project and its location. FERC reviews the application for adequacy; once FERC determines the application provides the necessary information, it almost always issues the permit. (FERC's issuing the preliminary permit is not a significant federal action triggering NEPA.) The purpose of the preliminary permit is to assure the developer that he/she is firstin-line to file a license application at that site. The preliminary permit, however, does not grant any type of property right to the site nor does the preliminary permit provide for access to the site. It is the developer's responsibility to then acquire whatever other permits or permissions are necessary from private parties, local government, state, and federal agencies to access and study the site. During the preliminary-permit period (three years, but the developer can apply to FERC for a consecutive permit), the developer acquires whatever information he/she believes is necessary to ascertain project feasibility, and assuming the project is feasible, the developer also prepares the FERC-license application (or, if unable to do it all in three years may request another preliminary permit). FERC requires the permitee to file 6-month progress reports to document the progress in consulting with agencies and identifying existing information relevant to the project. Once FERC grants a preliminary permit, stakeholders can file to intervene. (Intervention in the preliminary permit phase is not as crucial as intervention in post-license filing phase). Further, the permitee is subject to the Integrated Licensing Process (ILP). The ILP is the default licensing process adopted in 2003 by FERC, pursuant to the Federal Power Act (FPA authorizes FERC's hydroelectric licensing). FERC designed the ILP as a re-licensing process for projects whose original 40 to 50 year licenses would be expiring, so FERC did not give much thought about its suitability for new projects. The ILP requires r a licensee seeking license renewal or the developer seeking to build a new project to file their Notice of Intent (NOI)to submit a license application, accompanied by a Preliminary Application Document (PAD), which is the compilation of existing information about project operations, in the case of existing projects, or existing information about the site, in the case of a proposed, yet-to-be-built hydropower project, such as Susitna. Typically, a developer of a new project would hope to submit the NOI and PAD about two years into the preliminary permit. At the time of filing the NOI/PAD the permitee may then request the use of one of two other licensing processes -- Alternative Licensing Process (ALP) or the Traditional Licensing Process (TLP). The regulations provide guidance for making this request. Practically speaking, FERC will want to know if those federal agencies with mandatory conditioning authority under the FPA support the request for a different licensing process. Generally, the developer will seek the support of not just

the federal agencies with conditioning authority, but also the support of all other affected parties prior to making the request of FERC, in order to increase the likelihood of FERC approval. The choice of licensing process triggers how involved FERC is in the pre-license application period: the ILP has FERC is much more involved with more responsibility than in the ALP and TLP. Under the ILP, the NOI and PAD triggers FERC's formal pre-license application schedule, including (NEPA) scoping and study requests. If the permitee is granted use of the ALP or TLP, there is no substantial FERC involvement, as there is pursuant to the ILP, until the license application is actually filed. So, the question for ACA/IPC is: with respect to the potential Susitna Dam, which licensing process is preferred? Now, whether the ILP, ALP, TLP is in effect, FERC's quasi-judicial administration of the hydropower projects in both the pre-(license application)filing phase and the post-(license application)filing phase provides for a transparent process -- relatively speaking -- with the caveat that transparency alone does not ensure appropriate administrative decisions and license outcome. (In fact, the recent history of re-licensing, for all its transparency, is not especially uplifting from the perspective of non-power public benefits, albeit there is usually always some (intended) improvement in the operations of the project as ordered in the new license.) As soon as a preliminary permit application is filed, FERC creates a project docket. FERC's dockets are on-line and all subsequent filings are available on line -- all required filings from the developer, affected state and federal agencies and FERC as well as comments from interveners and other non-intervening parties. On the other hand, before a project come to FERC, transparency is problematic. In regard to Susitna, transparency is already exceedingly problematic: We know AEA is in the process of considering what studies it should undertake with its existing appropriation and with the anticipated additional funding requested by the governor, and apparently AEA is poised to make this decision before applying either for a preliminary permit. (The state may choose not to file for a preliminary permit instead wait to trigger FERC's involvement when it files the NOI/PAD is filed. The state doesn't need to a preliminary permit to make sure it is first-in-line to file a license application for Susitna!) There is no established process by which AEA will seek the advice of affected state and federal agencies and the public as it makes decisions about the studies it will contract for this summer. Also, from my communication with AEA, ADF&G, FWS, neither is there yet an informal process in place for inter-agency interaction. Moreover, there is no requirement for an administrative record of state agencies' actions and activities that take place prior to applying to knocking on FERC's door. I have suggested to AEA and ADFG that the state ensure a record of their pre-FERC, Susitna actions and activity, which IPC might consider recommending as well. Finally, I've attached Hydropower Reform Coalition's guide "Scientific Approaches for Evaluating Hydroelectric Project Effects," while focused on re-licensing, this guide elucidates the range of impacts from a

large hydropower project and ought to help with framing pertinent questions regarding about the proposed Susitna dam.

__________________________________________ Jan Konigsberg Alaska Waters Program Natural Heritage Institute Hydropower Reform Coalition 7511 Labrador Circle, Ste 100 Anchorage, AK 99502 907.248.3014 (p) 907.677-3626 (f) jan@hydroreform.org www.n-h-i.org www.hydroreform.org ~~~~~~~~~~~~~~~~~~~ ><{{{(>

Comparing FERC Licensing Process

The default licensing process is the Integrated Licensing Process (ILP). FERC still allows the use of the Traditional Licensing Process (TPL) and the Alternative Licensing Process (ALP). When promulgating the final rule to adopt the ILP, FERC considered when the TLP rather than the ILP might be appropriate, FERC states that the more likely it appears from the participants' filings that an application will have relatively few issues, little controversy, can be expeditiously processed, and can be processed less expensively under the traditional process, the more likely the Commission is to approve such a request. Traditional Licensing Process vs ILP The Traditional Licensing Process (TLP) is the old-timer of the processes available for a licensing decision. The TLP is a notice-and-comment process, which FERC has used in some form since the enactment of FPA Part I in 1935. In a TLP, the licensee drives the process until the filing of the license application. It consults with agencies and other participants in a limited and formal manner. It periodically holds meetings, receives written comments, and responds in kind. OEP participates in the process in a meaningful manner only after the licensee files its application. Then, it provides notices which trigger written responses by the participants. Because of the comparative efficiencies of the ILP (discussed in Section 4), after July 23, 2005 a licensee may use the TLP only if requests and receives FERC's permission.

Excerpted from Hydropower Reform Coalitions Citizen Toolkit for Effective Participation in Hydropower Licensing. June 2005.
June 2005

The TLP consists of the Notice of Intent; First-Stage Consultation (Study Plan Development); Second-Stage Consultation (Study Plan Implementation and Application Development); and Third-Stage Consultation (Application Filing and Environmental Review). These stages include 16 discrete steps, as shown in the attached diagram. (click on diagram to load it in your browser so you can read it)

The TLP specifies the deadlines for some, but not all, of these steps. In particular, it is silent as to the deadlines for steps during the Third-Stage Consultation (discussed below in Section 5.4), including the notices and documents that relate to environmental review. This table shows deadlines as provided in the relevant rule, 18 C.F.R 4.34. Timing of Steps in TLP Step Number Step Description Time (Relative To Prior Step, unless Otherwise Indicated) 5-5.5 years before license expiration

Step 1a (pre-filing activity) Notice of Intent (NOI), PreApplication Document (PAD), and Request to Use TLP Step 1b Public Notice of NOI, PAD, and TLP Request to affected resource agencies, tribes, and interested public Step 2 Comments on NOI, PAD, and TLP Request Step 3 Notice of Commencement (NOC) and approval of TLP Step 4 Joint Meeting for Consultation with agencies,

concurrent with NOI

30 days 60 days after Step 1b 30-60 days (notice of Meeting must be given at

least 14 days in advance) Step 5 60 days (interested parties may request an additional 60day extension for Comments) Step 6 Study Plans Produced during Steps 2-5 Step 7 Draft License Application and no deadline Study Results Step 8 Comments on Draft 90 days Application Step 9 Final Application no later than two years before expiration of license Step 10 (post-filing activity) Public Notice of Application 14 days Step 11 Additional Information/Study 60 days Requests (AIR) Step 12 FERC Decision on Adequacy no deadline of Application; Notice of Acceptance Step 13a Comments; Interventions 60 days Step 13b AIR; Applicant responds 90 days Step 14a NEPA Scoping, Scoping no deadline Document 1 (SD1) Step 14b Public Meeting 30 days Step 15 Comments on SD1; 30 days preparation of Scoping Document 2 (SD2) if necessary Step 16 Commission Issues AIR Step 17 Notice of Ready for 60-90 days Environmental Analysis (REA) Step 18 Comments on REA; Water 60 days Quality Certification; Final Conditions Step 19 Reply Comments 45 days Step 20a Non-draft EA no deadline Step 20b Draft EA or EIS no deadline Step 21 Final EA or EIS no deadline Step 22 Final License Order upon completion of all previous Steps

tribes, and the public Comments; Study Requests

Below, we describe the stages of the TLP. This section primarily highlights the differences with the ILP, in order to avoid repetition and recognize that the ILP will shortly be the default process. Notice of Intent An existing licensee must file a Notice of Intent (NOI) not less than five years before expiration of the existing license. Before July 23, 2005, the notice will merely state the licensee's intent to seek a new license and its choice of the TLP. After that date, the notice must include a PAD, discussed in Section 4.2.5, and a request for FERC's permission to use the TLP, addressing five criteria: (A) likelihood of timely license issuance, (B) complexity of resource issues, (C) level of anticipated controversy, (D) amount of available information and potential for significant disputes over studies, and (E) relative cost of the traditional process compared to the ILP. Reply comments to this request are due within 30 days of the NOI. FERCs Director of Office of Energy Projects (OEP) will issue a Notice of Commencement, including a decision on the request to use the TLP, within 60 days of the NOI. That decision is not subject to interlocutory review or appeal (see Section 3.2.4(D)). First-Stage Consultation In First Stage Consultation, the licensee prepares a Study Plan by undertaking a joint meeting with agencies and other participants, and then considers written study requests and comments. A study plan dispute may be referred to the OEP Director for voluntary resolution. Consultation Meeting The licensee holds a pubic meeting with agencies, tribes, and other participants, in order to begin development of the Study Plan. The meeting will occur 30 to 60 days after OEP approves the request to use the TLP. The licensee will establish an agenda for the meeting, organize a site visit; publish notice of the meeting and the site visit; and prepare a meeting summary thereafter. Unlike the ILP, the TLP does not provide for OEP staff participation in such consultation. Comments and Study Requests Participants must provide to the licensee any study requests1 within 60 days of the consultation meeting, or 120 days if an extension is timely requested to the licensee and the Commission. The criteria for a TLP study request largely duplicate those required in an ILP. See Section 4.2.5 Study Plan The licensee must publish a Study Plan. The plan must document the results of consultation, including the basis for rejection or modification of any study request. This step is different than the ILP in several critical respects. The OEP Director does not review or approve the Study Plan, and OEP staff do not participate in the plan development. Further, NEPA scoping is not concurrent with study plan development and instead commences after application filing.

Referral of Study Dispute to OEP Director The licensee, agency, or tribe may refer a study dispute to the OEP Director, by filing a written request. Any participant may respond with comments within 15 days thereafter. The OEP Director will resolve the dispute on the basis of two criteria: (A) whether the request is reasonable and necessary in relation to the management objectives for the affected resources, and (B) whether it is generally accepted practice. The OEP Director will issue a resolution in letter form. The licensee may choose not to follow the resolution, just as it may choose to reject or modify any study request during First-Stage Consultation, although it then assumes the risk that the license application will be deemed deficient as a result. This step is substantially different than the ILP. Such referral is discretionary, in that a licensee or agency may elect to leave a study dispute unresolved. There is no deadline for resolution after referral. The OEP Director is solely responsible for any resolution and does not undertake peer review. The resolution is non-binding on the licensee. Second-Stage Consultation Second Stage Consultation involves implementation of the Study Plan and the preparation of a draft License Application. Study Plan Implementation The licensee will implement its Study Plan and, at its discretion, the OEP Director's resolution of any study dispute. The results must be available before the deadline for application filing, unless the results are not necessary for the licensing decision. An agency or other participant may request an additional study or information, using the same criteria as before. If requested by an agency, the licensee must undertake the study or gather the information, unless it determines the request is not reasonable or necessary for the licensing decision or involves a method that is not generally accepted. The agency or licensee may refer any new study dispute to the OEP Director, as before. The TLP does not provide for an Initial or Updated Study Report, as required in the ILP. Further, OEP staff are not involved in the implementation of the Study Plan, unless a referral is made to the OEP Director. Draft License Application Not later than 27 months before license expiration, the licensee must publish and file a draft license application, in the form of the final application. It must report the study results as exhibits and discuss any proposed environmental measures. After July 23, 2005, Exhibit E must be in the same form required in the ILP. Agencies and other participants have 90 days to provide written comments on the draft application. If any such comment states a substantive disagreement with the factual findings regarding project impacts or the proposed environmental measures, the licensee must meet with the agency within 60 days in an attempt to resolve the disagreement. The

licensee will prepare a meeting report, which states whether the disagreement was resolved. Third-Stage Consultation During Third-stage Consultation, the licensee will file a license application. FERC will issue tendering and other notices, as in the ILP. It will then undertake scoping and preparation of the environmental document. New License Application As required by the FPA, the license application must be filed not less than 24 months before expiration of the existing license. Content and other requirements for the application track the ILP. Notices of Tendering, Deficiency, Additional Information Requests, Acceptance, and Readiness for Environmental Analysis These steps (including the deadlines for comments, submittal of mandatory or other conditions, or other responses which vary by notice) largely track the ILP process as discussed in Section 4, except that the Notice of Acceptance in the TLP precedes the Ready for Environmental Analysis (REA) Notice. Scoping Document Sometime after the Tendering Notice, FERC will typically issue a Scoping Document for its environmental review. This will include the expected date for publication of the REA Notice. The TLP differs substantially from the ILP at this critical step. In the TLP, OEP has discretion not to publish a Scoping Document, hold a site visit, or revise any such document in response to public comments. Any such document will be published after the application is filed, while the ILP requires FERC to publish a SD-1 nearly 2.75 years earlier, just after the NOI. In the TLP, OEP does not have any obligation to consider cooperative arrangements with other agencies or tribes with jurisdiction over the affected resources. Environmental Document The environmental document here tracks the ILP requirements as discussed in Section 4.5.2. Section 10(j), ESA, Certification, and CZMA Processes These processes track the ILP requirements as discussed in Section 4.5.3 License Issuance The TLP concludes on license issuance. Alternative Licensing Process vs. ILP

The ALP encourages collaboration between the licensee, agencies, tribes, and other participants, in the development of the Study Plan, and license application. Its primary purpose is to facilitate the negotiation of a settlement that, when filed with FERC, may serve as the basis for a new license. Adopted in 1997, the ALP functions as an overlay of the TLP's stages and steps. (click on the diagram and it will load in your browser so you can read it!)

The ALP specifies the deadlines for some, but not all, of these steps. In particular, it is silent as to the deadlines for steps following application filing, including the notices and documents that relate to environmental review. This table shows deadlines as provided in the relevant rule, 18 C.F.R 4.34(i).

Timing of Steps in ALP

Step Number Step Description Time (Relative To Prior Step, Unless otherwise indicated) Notice of Intent (NOI), Pre- 5-5.5 years before license Application Document expiration (PAD), Request for ALP Comments on NOI and ALP 30 days Request Commission Response on use pursuant to agreed upon ALP of ALP schedule Scoping Document 1 (SD1) pursuant to agreed upon ALP schedule Initial Information Meeting pursuant to agreed upon ALP schedule Studies Conducted pursuant to agreed upon ALP schedule Preliminary Draft EA; pursuant to agreed upon ALP Preliminary Conditions schedule

Step 1 (pre-filing activity)

Step 2a Step 2b Step 3a Step 3b Step 3c Step 4

Step 5 (post-filing activity) Step 6

Step 7 Step 8 Step 9

Application Filed, including no later than two years before Preliminary Draft EA expiration of license Public Notice of Application no deadline and Solicitation of Terms and Final Conditions Comments on Application 60 days Final EA or EIS no deadline Final License Order upon completion of all previous Steps

The discussion below is limited only to those steps where the ALP differs from the TLP. This section highlights the differences between the processes, in order to avoid repetition and recognize the ILP will shortly become the default process. Notice of Intent An existing licensee must file a NOI not less than 5 years before expiration of the existing license. After July 23, 2005, the NOI must include a PAD, and any request to use the ALP will be subject to the same requirements. Reply comments to this request are due within 30 days of the NOI. The OEP Director will issue a Notice of Commencement, including a decision on the request to use the ALP, within 60 days of the NOI. That decision is not subject to interlocutory review or appeal. We now describe the material differences between the TLP and ALP. We do not repeat the description of the individual steps that are identical in the two processes. Initial Information Package (IIP) Today, the licensee must publish an Initial Information Package (IIP) subsequent to FERC's approval of the ALP and prior to the filing of the draft license application. The IIP serves the same function as the PAD: namely, early disclosure of existing information about project impacts. After July 23, 2005, the NOI must include a PAD, regardless of which process is used. Pre-Filing Schedule Although a Process Plan is not required prior to July 23, 2005, the licensee and other participants must agree to reasonable deadlines for the submittal of study requests and other steps preparatory to application filing. Study Plan Development and Implementation Under the ALP, the licensee and other participants cooperate in the development and implementation of the Study Plan. While any participant may file a study request for resolution by the OEP Director (see Section 5.2.2), reasonable efforts must be made first to resolve the dispute within the collaborative group. OEP staff may participate in

this stage and informally assist in resolving any such study dispute. The licensee must file a Progress Report every six months. The ALP provides for the collaborative group, with assistance from OEP staff, to undertake cooperative scoping of environmental issues. They will prepare an informal scoping document. Although any such document is not binding on FERC as lead agency, OEP tends not to publish its own Scoping Document on application filing or otherwise. Process Failure The licensee or other participant may request that the ALP terminate if consensus supporting the use of the process no longer exists. Any such request must include a recommendation for an alternative procedure to allow the licensee to timely file its application. Such procedures may be a switchover to the TLP or some alternative in the specific circumstances of this project. Draft License Application The draft license application contains a Preliminary Draft Environmental Assessment (PDEA) in lieu of Exhibit E.1 FERC will request that agencies and other participants file preliminary conditions in response to the draft application. License Application The licensee must file the application not less than 2 years before expiration of the existing license. The required content tracks the TLP, except that the PDEA will substitute for Exhibit E. The notices that FERC will issue on application filing track the TLP, except that: FERC will not issue a REA Notice, and the Notice of Acceptance will instead trigger the 60-day period for submittal of recommended and mandatory conditions. Environmental Review, Section 10(j) and other Processes These steps track the TLP counterparts. License Issuance The ALP concludes when FERC issues the licensing order.