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U.S. seeks to restrict appeals on dams
Administration plan could save money for hydropower firms

By Blaine Harden

Updated: 6:58 a.m. ET Oct. 28, 2004

SEATTLE - The Bush administration has proposed giving dam owners the exclusive right to appeal Interior Department rulings about how dams should be licensed and operated on American rivers, through a little-noticed regulatory tweak that could be worth hundreds of millions of dollars to the hydropower industry.

The proposal would prevent states, Indian tribes and environmental groups from making their own appeals, while granting dam owners the opportunity to take their complaints — and suggested solutions — directly to senior political appointees in the Interior Department.

The proposal, which is subject to public comment but can be approved by the administration without congressional involvement, would use the president's rule-making power to circumvent opposition to the idea among Senate Democrats. They killed an administration-backed energy bill that included similar language, for which the hydropower industry had lobbied.

The proposed rule comes at a pivotal time in the history of the hydropower industry. Most privately owned dams were built — and granted 30-to-50-year federal licenses — in an era before federal environmental laws required protection for fish and other riverine life. In the next 15 years, licenses for more than half of the country's privately owned dams will come up for renewal.

Response to industry concern
The hydropower industry has complained that to comply with the law and renew their licenses with the Federal Energy Regulatory Commission, dam owners are being forced to pay large settlements to mitigate the environmental harm that dams cause fish and communities that depend on fish. The typical settlement cost is about $10 million, the industry has said, but some settlements have been as much as $200 million. By allowing the industry the exclusive right to present alternative settlement ideas, the proposed appeal rule could substantially reduce the cost of renewing a dam license.

Dam owners "would be facing an extremely high cost and very uncertain benefits," said Lynn Scarlett, the assistant secretary at Interior for policy, management and budget who approved the proposed rule. "Giving them some ability to voice their concern and present alternatives seemed appropriate."

Scarlett said other interest groups, during earlier stages in the licensing process, would retain their right to be heard.

Democrats criticize proposal
The proposal has generated widespread criticism from Democrats in Congress and attorneys general in several states, from Indian tribes and environmental groups and from some high-level officials and scientists in the Interior Department.

"As was true of the failed Republican energy bill, the administration's hydro proposal would protect utility profits at the expense of fish, wildlife and conservation values," said Rep. John D. Dingell (D-Mich.), ranking member of the Energy and Commerce Committee. "The proposal disregards fundamental rules of procedural fairness, granting business unprecedented preferential status. States, Indian tribes, conservationists and the rest of the public are relegated to a much lesser role."

Indian leaders said the proposal would betray the federal government's legal responsibility to tribes.

"This undermines the very trust responsibility that Interior is supposed to be the lead department in protecting," said Tex G. Hall, president of the National Congress of American Indians, the nation's largest tribal advocacy group. "You would think they don't get it, or they are doing it on purpose."

'Discussions' over legality
Inside the Interior Department, some lawyers have argued that the appeals proposal — three years in the making before being published last month in the Federal Register — is unconstitutional because it violates due process and equal protection guarantees.

"It is not legal because one party is being treated very differently than another, and that is very much the opposite of what we have been trying to do for years," said one senior Interior Department official who is involved in the dispute and who requested anonymity for fear of retaliation. "Suddenly, a licensee can walk away from everybody else and have a private meeting with the assistant secretary and bring in new conditions that haven't been reviewed by anybody before."

The department acknowledged on Wednesday that there have been "discussions" among its lawyers on the legality of the proposal, which will be open to public comment until Nov. 8. The department can then, with the approval of the Office of Management and Budget, issue a final rule that has the power of law.

Scientists in the U.S. Fish and Wildlife Service, which is part of the Interior Department, have also said the proposal would limit the ability of states, tribes and private groups to influence resource management decisions in their own back yards while putting the decisions about dam operations into the hands of political appointees who may not understand the harm dams cause.

"It allows industry to go in and speak their piece without having to deal with the concerns of all the other stakeholders along a river," said an Interior Department official who has worked for many years on the dam relicensing process and who asked not to be identified by name, also for fear of retaliation.

The hydropower licensing law was written in 1920, and the industry had few problems with it for nearly six decades — until tribes and environmental groups figured out how to use the law in a way that cost the industry a lot of money.

In most nearly every recent relicensing, the industry has been on the defensive. "The process is broken," Julie Kiel, director of dam licensing for Portland General Electric in Oregon , said before a House subcommittee last year. "Almost every hydropower stakeholder wants to see it repaired."