Exelon seeks FERC waiver

Exelon is seeking a federal waiver of Maryland’s water quality certificate, arguing the state has prolonged the relicensing process in violation of federal law.

WASHINGTON — Tired after years of legal and regulatory wrangling with Maryland over long-term relicensing of the Conowingo Dam, Exelon recently filed what amounts to a federal end-run around the state’s stringent conditions.

Specifically, Exelon filed a request with the Federal Energy Regulatory Commission for a waiver of the Clean Water Act’s Section 401, which requires that applicants for federal licenses and permits provide a certification that any discharges from their facility will comply with the act, including state-established water quality standard requirements.

The dam’s operating license expired in 2014, and Exelon has since been operating it on year-to-year renewals while seeking a new 50-year license. While the Maryland Department of the Environment issued its water quality certificate (WQC) in April 2018, it did so with a number of costly environmental protection requirements that the Chicago-based energy corporation has been fighting ever since.

With the 90-year-old dam’s capacity to trap sediment exhausted, major storms scour the built up dirt behind the dam and flood it far down into the bay, depositing harmful nutrient pollution that can cause algae blooms and hypoxia, or oxygen depletion, that are harmful to bay organisms. Eager to address the issue, MDE placed conditions on the WQC that include reducing of millions of pounds of nitrogen and phosphorus pollution that flows past the dam annually, or an annual payment to the state of more than $170 million per year.

After an October loss in a state circuit court over the issue and continued waiting on administrative appeals and federal court hearings, Exelon is now arguing that it has waited too long on Maryland to issue a final opinion, asking federal regulators to toss out Maryland’s WQC and proceed under previous requirements.

In a statement released to the Whig on Thursday concerning the timing of the FERC waiver request, the company reiterated its commitment to “doing our part and working alongside community and government partners to support water quality,” as well as its stance that the dam doesn’t produce pollution, but rather benefits the bay by removing debris and reducing the effect of pollutants.

“We have filed a petition with FERC requesting that it follow prevailing law and find that the Maryland Department of Environment has waived its ability to act on Exelon’s 401 Water Quality Certification (WQC) application because of significant delays,” the company said. “Our 401 WQC application, originally filed in 2014, demonstrates that Conowingo’s operations comply with water quality standards and will continue to do so.”

For local advocates who have been looking at the relicensing process as a once-in-a-lifetime opportunity to hold Exelon at least partially responsible for water quality improvements to the Chesapeake Bay, the waiver request was a move they had long feared.

“This has always been a concern of the Clean Chesapeake Coalition — that is, while the State of Maryland fiddled under the O’Malley administration downplaying the Conowingo Dam factor and subsequently the Hogan administration working to put the state in a position to place legally and scientifically defensible conditions on the federal relicensing of the dam, Exelon Corporation would accuse the state (under a provision in the Clean Water Act) of enough foot-dragging and delay to waive the state’s right/authority to issue a water quality certification,” said Chip MacLeod, general counsel of the Clean Chesapeake Coalition, a coalition of Eastern Shore counties, including Cecil County, that are pursuing bay water quality improvement in a fiscally responsible manner.

In a statement provided to the Whig, Maryland Environment Secretary Ben Grumbles vowed to fight for the conditions put forth by the state.

“The water quality certification for the proposed relicensing of the Conowingo Dam is an important part of the Hogan administration’s holistic environmental strategy to protect the river and restore the bay. We will continue to vigorously defend Maryland’s water quality certification,” he said.

In its request, Exelon argues that it has fulfilled the federal requirements for relicensing and that the state has drug out its process in order to tack higher restoration costs onto its operations.

The company asserts that Maryland has waived its right to contribute because it exceeded the one-year window that the Clean Water Act’s Section 401 designates and because it failed to act in issuing its WQC, noting that state law allows it to change through appeals processes long after the yearlong limit expired.

“Simply put, it has been over five years since Exelon filed its 401 application. Yet the state action required under Section 401 still has not occurred,” the company said in its request.

According to the FERC request, Exelon actually started its relicensing process in March 2009, when it filed notice of its intent. That was subsequently followed by a three-year scientific study and review period, which the company notes included a study regarding “sediment and nutrient loading and distribution.”

Although MDE raised some objections to the scope of the studies to be submitted by Exelon, federal regulators ultimately sided with the company. In the end, 33 detailed reports and studies on a variety of environmental aspects connected to the dam were filed with Exelon’s official federal relicensing request in August 2012.

On Jan. 30, 2014, Exelon submitted its WQC request to MDE, which is where the basis of the recent waiver comes into play.

The company argues that Maryland never intended to issue its decision within a year’s time, because it was prolonging the issue in order to address its own obligations under the Chesapeake Bay Total Maximum Daily Load, a water-pollution-control framework administered by the U.S. Environmental Protection Agency on states that contribute to the bay’s watershed.

At the time of Exelon’s 2014 filing, MDE officials “knew that EPA would likely correct an undercounting of Maryland TMDL obligations,” citing the results of a MDE and U.S. Army Corps of Engineers report released later in the year. That report confirmed for the first time that the dam’s storage capacity was exhausted, and that further efforts would likely be needed to address nutrient pollution.

With the EPA recalculating states’ TMDL requirements in a 2017 Midpoint Assessment, Exelon argues that MDE dragged out the process by requesting a three-year study in 2014 “to understand the impacts of sediment transport.”

Although the company disagreed with the need for another study, it agreed to fund it and subsequently withdrew and resubmitted its relicensing request each year from 2015 to 2017 to ensure the process continued uninterrupted while also not violating the one-year window provision.

“The 2017 Midpoint Assessment had disclosed that achieving the Bay TMDL’s goals would require, under the most efficient scenario, reducing nutrient loads in the Susquehanna River by an additional 6 million pounds of nitrogen and 260,000 pounds of phosphorus per year. In turn, MDE’s April 2018 document required Exelon to reduce nutrient loads in the water flowing through the Project by the precise same amounts. MDE’s delay allowed it to pursue this result,” the company argues.

In arguing for a waiver, Exelon leans heavily upon a federal court case decided just seven weeks ago, Hoopa Valley Tribe v. FERC, which decided that repeated withdrawals and resubmissions does not restart the one-year clock on a request.

“As Hoopa Valley makes clear, Section 401 says what it means and means what it says. Under Section 401, a State waives when it ‘refuses to act’ within a year,” Exelon argues. “A State wishing for more time than the one year Congress provided in Section 401 would need only to identify some study that would take the desired time to complete — a year, five years, a decade — and so extend Section 401’s deadline as it pleased.”

Furthermore, Exelon uses Hoopa Valley to essentially pit the federal commission against the states, questioning who should wield the greater power in the deliberations.

“Deciding whether to issue a federal hydropower license is a critical judgment vested exclusively in the Commission. The Commission cannot responsibly discharge that duty when states issue ‘certifications’ yet reserve the right to readjust the conditions, up or down, via de novo reconsideration, further hearings, and development of record evidence within the very agencies that issued them,” the company argues.

That strategy could be persuasive as Hoopa Valley also notes that such withdrawal-and-resubmit schemes are commonplace around the country.

“According to FERC, it is now commonplace for states to use Section 401 to hold federal licensing hostage,” the U.S. Court of Appeals for the District of Columbia Circuit wrote in its opinion. “At the time of briefing, 27 of the 43 licensing applications before FERC were awaiting a state’s water quality certification, and four of those had been pending for more than a decade.

MacLeod, the Clean Chesapeake Coalition’s legal counsel, said he believes the state has a strong argument against the waiver request in that data was developing during the withdraw-and-resubmit period, and he expects to enter testimony to FERC in the matter.

“What we’re most interested in is how the state will respond. We would certainly hope that the Attorney General is focused on this issue due to how much is at stake,” he said. “If Maryland misses its chance to place some conditions on the future of the dam, all this work was for naught.”

MacLeod is worried, however, that FERC may bite on Exelon’s federalist argument that states are weakening their regulatory power.

“Wouldn’t it be a terrible timing for FERC to try to set a precedent in these cases with the Chesapeake Bay on the line,” he said. “(Exelon) is definitely baiting them on that and then on that you layer the fact that at FERC, utilities rules. FERC’s mission is not to protect the environment, but to manage and further energy production.”

Officials at FERC’s Washington offices told the Whig that with a petition for declaratory order, there aren’t statutory deadlines for action, and as Hoopa Valley demonstrated, a decision by FERC on the matter could be appealed to federal courts, meaning the process will be delayed even longer.

“At the very least, by filing this it gives them more leverage in negotiations,” MacLeod said of Exelon.

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