SUMMERSVILLE HYDROELECTRIC POWER PLANT

THIS BOOK IS DEDICATED TO ALL THE PEOPLE WHO ARE WILLING TO WORK TO MAKE THEIR DREAMS A REALITY

Written and designed by Gwen Hagaman G. H. Bailey Company Mount Nebo, West Virginia

FIRST EDITION

Printed in the United States of America Copyright © 2007 by Noah Corp. All rights reserved Summersville Hydroelectric Project

SUMMERSVILLE HYDROELECTRIC POWER PLANT

INTRODUCTION

By Jim Price President of Noah Corporation

July 2004

We set up Noah Corp. in 1980 to benefit from the law that passed in 1978, which required utilities to buy power from small power producers, which included hydroelectric projects less than 80 MW. After searching for existing dams that could be developed, we began to focus on existing federal dams in the eastern U.S., particularly in the Appalachian Mountains, where there were a number of flood control dams which did not have power generation facilities in place. We looked at federal projects in Virginia, West Virginia, Pennsylvania, Kentucky, Ohio, Indiana, etc.

In considering the power generating features of these dams, Summersville Dam stood heads above the crowd. It was being examined by the Army Corps of Engineers for a federal project and was receiving some consideration by private companies for development of hydropower.

I first visited the site in July 1980. I was captured by the power potential as evidenced by the water rushing out of its penstocks (tubes) below the dam. It was so impressive. We did not know at that time how difficult, expensive and time-consuming the development would be Ð with so many setbacks. We also had no idea of the multiple uses of the lake and Gauley River. At that time whitewater rafting was unknown as a commercial venture with anything like the public participation that now exists.

The dream of developing power at that site, the potential profit and our feeling of accom- plishment sustained us through the next 21 years until the hydroelectric plant was operating commercially. The potential of the Summersville Hydroelectric Project has captured the imagination and enthusiasm of several other key parties and individuals. It has so much potential compared to other available projects that it eventually gained the support of the various parties necessary to make it a reality.

I am so pleased that our company was able to start it off and contribute importantly to its completion and successful operation.

i Table of Contents

SUMMERSVILLE HYDROELECTRIC POWER PLANT

TABLE OF CONTENTS

OVERVIEW

The Story of the Summersville Hydroelectric Project ...... 1

CHAPTER 1 Ð INITIAL PLANNING

The Public Utilities Regulatory Policy Act of 1978 (PURPA) ...... 5

Noah Corp.’s Early Hydropower Project Activity ...... 5

Building Public Support ...... 6

Defending Against Permit Suspension ...... 8

CHAPTER 2 Ð LICENSE APPLICATION

Competitive Opposition Continues ...... 11

Planning the Project ...... 12

The Army Corps of Engineers ...... 12

Citizens for Gauley River ...... 14

Wild and Scenic River Study ...... 16

Filing the License Application ...... 16

CHAPTER 3 Ð INTERVENTIONS

More Competition ...... 17

Interventions and Responses ...... 18

Wild and Scenic River Study Kills Licensing ...... 20

iii Table of Contents

CHAPTER 4 Ð STARTING OVER

Legislative Issues ...... 23

Permits and Licensing ...... 24

Project Financing Plan ...... 25

Interventions on the Second License Application (1988) ...... 26

CHAPTER 5 Ð LICENSING

Competing with Manassas ...... 29

Working Through Licensing Process Issues ...... 30

Finally a License is Issued! ...... 31

CHAPTER 6 Ð STRATEGIC AGREEMENTS

Selling Electric Energy ...... 35

Project Financing ...... 36

West Virginia Tax Law ...... 37

Project Design and Engineering ...... 37

Amending the License ...... 39

CHAPTER 7 Ð TRANSMISSION LINES

Public Protest ...... 43

Financing the Project ...... 47

CHAPTER 8 Ð CONSTRUCTION

Ground Breaking ...... 49

Legal and Contractual Details ...... 49

Catamount Sale to CHI ...... 50

Putting the Plant into Operation ...... 50

iv Table of Contents

APPENDICES

A. Excerpts of the Public Utilities Regulatory Policy Act of 1978 (PURPA) ...... a-i

B. Agreement between Town of Summersville, WV and Noah Corp. authorizing Noah Corp. to act as Agent to develop Hydroelectric Power at Summersville Dam ...... b-i

C. 1992 FERC Order Issuing License (Background and discussion) ...... c-i

D. References ...... d-i

v Overview OVERVIEW several purposes: flood control, low flow augmentation, lake recreation and fishing, enhancement of fish and wildlife, fishing in the river below the dam and whitewater rafting on The Story of the Summersville the Gauley River. The hydropower addition to Hydroelectric Project the dam had to be coordinated with these This document recounts the story of the existing activities without adverse impact. Summersville Hydroelectric Project from the The story begins with the concept and basic inception of the idea in 1980 until commercial actions described in the INITIAL PLANNING operation began in 2001. It is a story of the many chapter. This section describes the competition people involved in the project’s development for a preliminary permit to add hydropower at and construction. Some of their viewpoints are Summersville Dam. Obtaining a preliminary represented in the text. Many others contributed, permit from the Federal Energy Regulatory even though their names are not mentioned. Commission (FERC) is usually the first step in The details of the development history show developing a hydropower project. It provides a the difficulty of bringing a complex project, priority to the holder for up to three years to such as this, into being. conduct initial studies and prepare to file for a Now complete and operating, the license to construct and operate the project. Summersville Hydroelectric Plant provides many benefits to its community. It generates A preliminary permit was issued to the City about 220 million kilowatt-hours annually Ð of Summersville (the City) in 1981 after exten- enough energy to power 22,000 homes. It sive competition and a case in federal court. avoids the emission of about 221,000 tons of Then Noah Corp., the City’s agent, began carbon dioxide annually that would be emitted work on a LICENSE APPLICATION, which by an equivalent energy from fossil-fueled would allow construction of the plant, upon generation. The project has paid the federal FERC approval. The license application out- government over $2 million in annual fees lined specifics of the projects design, location, from initial operation in 2001 through 2007. operation and included extensive environmen- tal review. Summersville Dam was built by the federal government in 1967 and is operated by the During license application preparation, Army Corps of Engineers (the Corps) for there was further competition from other

due to Wild and Scenic River Study Summersville files 3rd license application July 28, 1989 Application for Preliminary Permit filed September 22,1980 Summersville files License Application November 1, 1982 Dept. of Interior halts License issuance 1984 January 11, FERC dismisses License Application May 9, 1984 Application Filed for 2nd Preliminary Permit August 7, 1984 License dismissal upheld by U.S. Court of Appeals January 10, 1986 FERC issues 2nd Preliminary Permit August 12, 1986 Summersville surrenders 2nd Preliminary Permit. December 1, 1986 Summersville/Noah file joint permit application January 2, 1987 Summersville/Noah file 2nd license application August 8, 1988 WV National Interest River Conservation Act passes October 26, 1988 FERC rejects 2nd license application December 5, 1989 FERC accepts 3rd license application January 11, 1991 FERC issues License to Summersville/Noah September 25, 1992 AEP Appalachian Power agrees to purchase energy December 16, 1994 Catamount contracts to develop and operate project July 31, 1995 FERC files application for license amendment October 16, 1995 Equipment and supplier selection complete April 17, 1996 FERC order amending license 1996 October 18, and property owners appeal to federal court AWA 21, 1997 March Federal court supports FERC approval May 1, 1998 FERC approves final transmission line design July 2, 1998 FERC authorizes project ground breaking December 26, 1998 appeal Federal court dismisses AWA February 26, 1999 “First Energy” generated at Summersville plant July 29, 2001 Catamount interest sold to CHI December 4, 2002

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

1 Overview potential developers and a federal hydropower project at Summersville Dam proposed directly by the Corps. These INTERVENTIONS caused a delay in the project’s construction plans, while competitive issues were resolved. The possibility of designating the Gauley as a wild and scenic river became a major obsta- cle. This possible designation, which never occurred, caused the license application filed in 1983 to be dismissed by FERC in 1984.

In 1985 Noah Corp. challenged the FERC in federal court to reinstate the license appli- cation on behalf of the City. But the court Planning and development of the Summersville upheld the dismissal. With the failure of this Hydroelectric Plant was a complex process taking remedy, Noah Corp. began STARTING OVER 21 years to achieve. in the development of the project. During 1986 early 1996. Catamount provided part of and through 1988, two preliminary permit and arranged all project financing and managed license applications (LICENSING) were filed. construction and operation. The need for multiple filings was created by competition for the license by a company and The project’s cost indicated that a change the City of Manassas, Virginia and FERC’s should be made in the equipment installation. failure to accept Summersville’s second Also, a new transmission line route was license application (filed in 1988). needed to deliver the power to AEP. An amendment to the license was filed with FERC A license was finally issued to the City in in Sept. 1995 to request the revised transmis- 1992, just about four weeks before the four- sion line route and the change in equipment. year deadline stipulated in the WV Rivers Bill, Catamount began arranging project financing which established the Gauley River National and took charge of the development and Recreation Area. If the license had not been construction of the project. issued before that deadline, the project would probably never have been built. The Rivers Bill The controversy that arose over the treated the Gauley as a wild and scenic river, TRANSMISSION LINES almost prevented the requiring approval of the Department of project from being built. It caused significant Interior for any hydropower license. Such a delays in construction. Several of the 25 requirement would likely have prevented any landowners along the new route opposed the hydro project from ever being built at line passing over their land. A necessary Summersville Dam. amendment to the transmission line and generating equipment was approved by FERC With the license issued, Noah Corp. began in late 1996. trying to sell the power and finance the project (STRATEGIC AGREEMENTS). These efforts Construction at the dam could have begun resulted in a power purchase agreement with immediately, but the transmission line route American Electric Power (AEP) and a devel- was challenged by a group of affected opment contract with Catamount Energy Corp. landowners and interested parties, including (Catamount), a subsidiary of Public Service of American Whitewater Affiliation, which Vermont. Both agreements were finalized in opposed the transmission line passing over

2 Overview the Meadow River. This controversy resulted in a federal court case that eventually sup- ported FERC’s approval of the amendment in early 1998.

CONSTRUCTION at the site began in early 1999 and was completed in July 2001, several months behind schedule. The delay resulted in penalties to the builder, Black and Veatch of Kansas City, MO. They claimed that actions by Catamount caused part of the delay. An arbitration was planned to resolve this dispute, but the parties agreed to a settlement.

After about a year of commercial operation, Catamount decided that it wished to focus on wind energy and sold its interest in the project to Consolidated Hydro, Inc., a subsidiary of the large Italian utility, Enel. Since start of production, the plant has performed as expected.

3 Chapter 1 Ð Initial Planning INITIAL PLANNING marginal generation cost (avoided cost). Qualifying facilities included small-scale producers, those generating power for sale or for their own needs but with surplus production, The Public Utilities Regulatory or those generating usable electric energy as Policy Act of 1978 (PURPA) a byproduct of other activity (cogenerators).

In 1928 the United States Congress autho- The revolutionary new law opened the rized the private development of hydropower door to competition by enabling non-utility at federal dams in the Federal Power Act. power producers to generate power for sale to However, such development was infrequent a utility at their avoided cost. This power sale until after passage of the 1978 Public Utilities possibility caught the attention of numerous Regulatory Policy Act (PURPA).This law stim- parties that established companies to exploit ulated development of renewable resources this opportunity, including Jim Price and his and cogeneration. One type of development associates who began Noah Corp. was adding hydropower to existing dams without power production. There were many such dams in the eastern United States, Noah Corp.’s Early Hydropower including Summersville Dam. Project Activity

The inspiration for PURPA? The United Noah Corp. was formed in early 1980, States was experiencing an energy crisis. The shortly after PURPA began stimulating new rising cost of crude oil and growing awareness power development. The company established of environmental pollution resulting from fossil- itself in South Carolina and West Virginia to fired power generation, spurred Congress to develop hydroelectric projects at existing enact legislation to encourage more energy- federal dams in the eastern United States. efficient and environmentally friendly energy Noah Corp. filed preliminary permits for hydro- production. PURPA was passed on Nov. 9, electric projects in Illinois, Indiana, Kentucky, 1978 (Excerpts in Appendix A). Oklahoma, Pennsylvania, Tennessee, Virginia and West Virginia. The new law created a market for power from non-utility power producers. It required Noah Corp. focused their efforts in the utilities to purchase power from independent states of Pennsylvania and West Virginia companies (qualifying facilities) that could because of the numerous federal flood control produce power for less than the utility’s dams, such as Summersville Dam.

ublic Utility Regulatory Noah Corp. representatives meet sign joint development agreement to single municipal applicant Preliminary Permit issued on Appeal by Virginia Cities reinstating Preliminary Permit

P Novmber 9, 1978 Formation of Noah Corp. Early 1980 City of Summersville and July 4, 1980 City of Summersville and Noah Corp. September 8, 1980 Application for Preliminary Permit filed September 22,1980 Application amended to change 1980 December 12, Renotice of Application for April 8, 1981 Preliminary Permit issued by FERC May 22, 1981 FERC Notice of Intent to Act July 22, 1981 FERC Order Denying Appeal and October 5, 1981

Policies Act of 1978 Passes

1978 1979 1980 1981

5 Chapter 1 Ð Initial Planning

Summersville Dam in West Virginia. It is the largest rolled-earth dam east of the Mississippi River and the largest lake in the State of West Virginia. The facility is owned and operated by the Corps for flood control, low flow augmentation and recreational purposes.

The Corps considered adding hydropower at Summersville Dam and some nearby loca- tions before dam construction concluded in 1967. And they proposed adding hydropower again in 1982.That proposal met considerable political opposition and was abandoned. Summersville Dam is a 390 foot rolled-earth dam built at the mouth of a deep canyon of Summersville Dam had the best potential the Gauley River. for a successful hydroelectric project of any dam examined by Noah Corp. Because the pipes were pressurized, its three release pipes could be adapted to pass flow through hydro turbines without disrupting the existing dam structure. The lake, held by the dam’s 390-foot height, gave impressive speed and power to released water flows. The setting was inspira- tional to whitewater rafters and kayakers who entered the Gauley River just below the dam.

Building Project Support

Noah Corp.’s business plan was to involve The three tunnels shown here are set at the cities as partners in its hydropower projects to bottom of the dam allowing strong capacity for hydroelectric power generation. take advantage of FERC rules which gave priority to issuing preliminary permits or licenses Noah Corp. and a related company, W.V. to government entities. They also planned to Hydro, Inc., filed license applications, using finance projects using industrial revenue bonds the priority of their preliminary permits, for which could be issued by cities or counties. Net hydropower projects at several existing dam revenues would be shared with the municipal sites in Kentucky, Illinois, North Carolina, partner on a 75 (Noah)/25 (City) basis. Oklahoma, Pennsylvania, Virginia and West Virginia. Licenses on 13 of the sites were The City of Summersville, led by Mayor issued Ð four were in West Virginia. One project Farrell Johnson and Councilman Steve LeRose, in Pennsylvania was licensed and sold in first met with Dr. Jim Price of Noah Corp. on July 4, 1980. The men were immediately 1985, as construction began. Five projects supportive of the Summersville Dam hydro- were still under development in 2005. electric project, visualizing both power supply After investigating dams in the eastern and earning potential for the City. Negotiations United States without existing power generating for a joint development agreement began on facilities, the new company focused on July 10, 1980.

6 Chapter 1 Ð Initial Planning

During the agreement negotiation process, hybrid application) would receive the same Noah Corp. began work on technical issues for preference in application competitions as an completion of a preliminary permit application. application by a governmental entity alone. A preliminary permit issued by FERC would Later policy clarification decided against equal allow the City of Summersville and Noah Corp. preference for hybrid applications. The request to secure their priority of application while to amend the Application for Preliminary feasibility studies, technical and operational Permit with the City as the sole applicant was planning, and other details were compiled for sent to the FERC on Dec. 12, 1980. completion of the FERC license application. Other parties were interested in developing Noah Corp. knew that competition was likely power projects at Summersville Dam. and it was important to act quickly. Competitors who filed applications for pre- At the City of Summersville Council meet- liminary permits included Mitchell Energy ing on Sept. 8, 1980, Councilman LeRose Company, Inc. of Boston, Massachusetts moved that the contracts with Noah Corp. for (P-3683) filed on Nov. 5, 1980; and, Old development of a hydroelectric power project Dominion Electric Cooperative of Richmond, at Summersville Dam be signed by Mayor Virginia (P-3809) filed on Dec. 3, 1980. A Johnson and that resolutions attesting to the Notice of Intent to File Competing Application subject be entered into the minutes. was filed on Jan. 16, 1981 by the Municipal Councilman Bernie Cogar seconded the Electric Power Association of Virginia, consisting motion and it passed unanimously. Thus of several cities with small power systems. began the endeavor of the City and Noah They later filed an application on March 18, Corp. that resulted in an operating power plant 1981 (P-4361). In addition, the Corps was almost 21 years later. studying its own development of hydroelectric power at Summersville Dam. The preliminary permit application was filed with the FERC on Sept. 22, 1980 and was In January of 1981, Mayor Johnson and assigned Project No. 3493. It was a joint appli- Dr. Price began a letter-writing campaign to cation between the City and Noah Corp. generate support from West Virginia legisla- proposing a three-year schedule of activities. tors. They wrote to Senators Byrd and The first year would be used to conduct feasi- Randolph and Congressman Mick Staton. bility studies and generate reports including: Letters went from Noah Corp. to Summersville, surveys, investigations and data collection, from Summersville to the Senate, from the alternative siting and power studies, cost Senate to the FERC. Letters went from the estimates and layouts, economic and financial Congress to the Army Corps of Engineers, studies, environmental assessment, and from the Corps to the FERC, from FERC back preparation of feasibility reports. The second to the Senate and to Summersville. The letters year would be spent preparing permit and contained statements of support, requests FERC License applications. The third year for information, clarifications on facts and would be used for the FERC review process. processes, and calls for action.

By November 1980, it was decided that the On April 8, 1981 the FERC issued an official Summersville/Noah Corp. application would “Renotice of Application for Preliminary Permit” have a stronger chance of FERC approval if it regarding the City’s application. This docu- were converted to a single municipal applicant. ment established procedures and a deadline The initial advice from FERC was that a joint of May 8, 1982 for competing applications, application with a governmental entity (a comments, protests, or petitions to intervene.

7 Chapter 1 Ð Initial Planning

The FERC issued a preliminary permit to Mayor Johnson and the Councilmembers the City of Summersville, West Virginia and immediately drafted a response and delivered an order denying competing applications on it to the appropriate FERC officials. The Virginia May 22, 1981. The FERC stated that there Cities had made accusations that the City of were no significant differences in the competing Summersville was not competent to operate plans and not enough information at this early the project under state law nor was the City stage to determine the best proposal. The City’s intending to own and operate the hydroelectric application was approved and a preliminary facility. Mayor Johnson answered each issue permit was issued, simply because it was the and reaffirmed that the City of Summersville first one filed. was the first municipal applicant and should be awarded the preliminary permit.

On Oct. 5, 1981, after a full discussion of Defending Against Permit the issues brought in the appeal, the Suspension Commission ruled that: Shortly after issuance of the City’s prelimi- ¥ Amendment of an application for prelimi- nary permit, on June 15, 1981, the FERC nary permit or license is governed by issued a Notice Granting Interventions which ¤1.11(a) of the Commission’s regulation. had been filed by the Cities and Towns of The amendment was accepted by the Bedford, Blackstone, Culpepper, Danville, Director as of the date of its filing by Noah Elkton, Franklin, Front Royal, Harrisonburg, Corp., and the application was modified Manassas, Martinsville, Radford, Richlands, accordingly. Salem and Wakefield (Virginia Cities) against each of the other applicants including the City of ¥ The Commission need not investigate the Summersville, West Virginia. A week later the relationships between an applicant and other FERC suspended Summersville's preliminary entities which may underlie the application permit pending action on the appeal for inter- for preliminary permit. The permit issued to vention filed by the Virginia Cities. the City of Summersville is not transferrable

Steve LeRose was one of the first supporters of the Summersville hydroelectric project as a City Councilman in 1979 and contributed to its development through the end of his Mayorship in 1999. He saw it as a feasible project that would contribute to Summersville citizens as a revenue source and power source for 30 to 50 years into the future. By helping to achieve the project, LeRose sought to fund the Muddlety fresh water project with the first $1 million earned and to eventually reduce the local tax load. “Once we had transmission lines in place,” Le Rose explained, “I had hoped we could develop additional power production facilities.” LeRose helped to keep communications open throughout the development process including meeting with dissenting local organizations, meeting with Senators, Delegates and other legislators, testifying Councilman before Congress, and speaking with the Reagan and Bush, Sr. Steve LeRose Whitehouses.

8 Chapter 1 Ð Initial Planning

and the applicant must adhere to all requirements in order to retain its priority for licensing.

The FERC issued an order denying appeal which reinstated the City’s preliminary permit and moved its issue date forward accordingly.

9 Chapter 2 Ð License Application LICENSE APPLICATION include a title and was not verified, as required by FERC regulations.

¥ The Virginia Cities argued that the FERC Competition Continues should have stated explicitly that they were a “municipality” under the Federal Power Act. On Nov. 4, 1981 the Virginia Cities contin- ¥ The Virginia Cities claimed that their motion ued their efforts to gain a preliminary permit to for initiation of an evidentiary proceeding develop their own hydro project at Summersville to investigate the arrangement between the Dam by filing for rehearing of the FERC’s City of Summersville and Noah Corp. to Order Denying Appeal. Their appeal challenged determine actual control of the project and issuing a preliminary permit to the City of distribution of its benefits was not addressed Summersville for five reasons: in an adequate manner by the FERC. ¥ Citing the need for FERC to investigate The Commission gave its reply on April 14, the contractual relationship between 1982 upholding their original ruling and issuing Summersville and Noah Corp., they alleged an order denying rehearing. The City’s prelim- that the City was not a true municipal inary permit was upheld for a second time. The applicant but was instead some sort of FERC answered each issue as follows: “hidden hybrid” partnership with Noah Corp. ¥ The Commission need not investigate ¥ They argued that in deciding among the allegations of a “hidden hybrid” at the competing applicants the FERC had relied permit stage. on facts regarding “control” of the project ¥ Facts on record are sufficient to decide which were conveyed in discussions between among competing applicants. staff and parties to the proceedings and were not part of the official record. ¥ Lack of title and verification is a harmless error. ¥ The Virginia Cities believed the amendment ¥ Municipal status of the Virginia group of to the preliminary permit application by towns and cities is not material. Noah Corp., to remove itself and retain Summersville as a sole municipal appli- ¥ The Commission’s denial of an evidentiary cant, was invalid because it failed to proceeding was proper.

Summersville Town Meeting Summersville Town license application, Noah submits rebuttal designation for the Gauley River opposition to hydro power at language for 1983 Appropriations Bill Petition for Review of Orders FERC comments to Noah Corp. on review of draft regarding study for Wild and Scenic River 404 Permit to conduct streambed construction Application P-3493 as a 95 MW hydroplant Virginia municipalities file Application for Rehearing Novmber 4, 1981 Citizens for Gauley River present April 8, 1982 FERC issues Order Denying Rehearing 1982 April 14, Citizens for Gauley River propose new April 30, 1982 Virginia municipalities file June 14, 1982 Army Corps of Engineers submits critcal July 13,1982 Department of Interior introduces concern August 27, 1982 Noah Corp. files application for Army Corps October 9, 1982 Summersville resolution to file license application October 18, 1982 City of Summersville files License November 1, 1982 Summersville/Noah enter exclusive agent agreement Devember 13, 1982

1981 1982

11 Chapter 2 Ð License Application

¥ A tailrace

¥ A new transmission line and switchyard

Approximately 150 energy calculations were made using monthly and daily data to examine different equipment installations. Exhibits and appendices were prepared for the license application, especially important was the coordination of releases with the growing whitewater recreation use of the Gauley River.

Summersville Dam’s valve house discharging water at 1700 cfs. The Army Corps of Engineers While PURPA encouraged installation of Planning the Project hydropower by non-federal entities at federal flood control projects, the Corps was conducting With a permit finally in place after April its own study to develop hydropower at 1982, the Noah Corp. team began conducting Summersville Dam as a federal project, which feasibility studies and collecting data needed it can do outside FERC authority. Their plan to establish the project’s feasibility. Energy used a “long tunnel” design that would bypass from the Summersville Project No. 3493 could three miles of the Gauley River directly down- be used for municipal power needs, or could be stream of the dam, raise the summer water sold to public and private utilities. The project level of the lake by 16 feet and raise the winter included construction of: level by 62 feet. ¥ Penstocks which would utilize the existing After completion of its studies, environ- outlet works mental impact statement and Army approvals, ¥ A powerhouse containing three large and the Corps was expected to seek funding for one small generating units the project in the next Appropriations Bill.

Working with Ken Halsted, District Hydropower Coordinator for the Army Corps of Engineers, C. J. Hamilton was the principal point of contact for Corps Operations at Summersville Dam. “As a co-op student from Slippery Rock University I did a study of the Corps’ long tunnel project in 1983 and got really interested in hydropower.” C. J. felt most challenged in the engineering area of the project. For example, there were complicated issues to resolve in the relocation of the third Howell-Bunger Valve. In a public/private joint project he feels that the private interests are primarily concerned with cost and production. He sees his role as the public interest is to insure that safeguards are built into the program with an eye toward future issues. “As the federal steward of this resource, we make sure the project operation is ‘run of river’ as the license dictates,” he said. “At C. J. Hamilton the same time, I take great satisfaction in knowing clean, renewable Resource Manager energy is another benefit of Summersville Dam.” Army Corps of Engineers

12 Chapter 2 Ð License Application

In contrast, the City’s plan was to utilize ¥ Removal of the Howell-Bunger valves the existing facility as much as possible, would severely limit downstream control particularly the existing tunnels, discharging and thereby would affect the safety and flow into the Gauley River at approximately the integrity of the dam. We cannot tolerate same location as the present dam outlet. removal of the valves. (Note: For a 12-month period in 1968 each of the three Howell- During the early part of the preliminary Bunger valves were removed in sequence studies by Noah Corp., the Corps and the FERC and machined to alter its critical dimension were still working to define their interacting for flow improvement. One valve was out of roles in determining the process that needed service for 12 months.) to take place to insure best use of facilities. On Nov. 2, 1981 the FERC and the Corps entered ¥ Details for installation of the penstock in a memorandum of understanding regarding the existing tunnel are insufficient for non-federal hydro-power development in an proper evaluation. It should be noted that effort to recognize the directives and responsi- the forces on the temporary plug, at winter bilities of each department and expedite pool level, are tremendous. The system to non-federal hydropower development. resist these forces will of necessity be complex and it is doubtful that a temporary The resulting procedure defined how the plug can be developed and constructed in Huntington District of the Corps of Engineers a reasonable time frame. would review Summersville’s draft license application and provide their approval and ¥ The intake gates are not designed to be recommendations to the FERC. operated under an imbalanced load condi- tion. They must be either fully closed or In May 1982 the City and Noah Corp. opened and the tunnel must be flooded submitted a draft license application to the when this operation is accomplished. Corps and other agencies requesting their review. In July the Corps responded with ¥ The proposed maximum flood release of specific comments on 11 points of technical only 9000 cfs is not in accordance with our judgements and requested a meeting with policy of evacuating flood storage as Noah Corp. to discuss them more fully. Their rapidly as possible in anticipation of future comments were as follows: storm events.

¥ Development of the Summersville Lake ¥ Any reallocation of storage in the project project as proposed in the draft application must be carefully considered for impact on would result in a less than optimum utiliza- project purposes and may be subject to tion of the resources. The Corps’ studies Congressional approval. have shown that about 70 percent more energy can be produced through alterna- ¥ The impact of rescheduling flows from the tive scenarios that would also enhance project on downstream industrial users other uses of the project particularly and recreationists must be evaluated. This recreation and fishing both in the lake and impact could be adverse to present hydro- in downstream areas. generating facilities on the Kanawha River and to water supply, sewage treatment and ¥ A minimum flow must be maintained from cooling facilities in downstream areas. The the project in order to avoid potential water quality augmentation requirements adverse impacts on recreation, water quality on the Kanawha River are ignored in the and the downstream ecosystem. proposed operating plan.

13 Chapter 2 Ð License Application

¥ Table B-3 indicates a flow of 6000 cfs is the federal government was in fact going to usable for whitewater boating while the fund development of hydropower at Summers- EIS indicates a range of 1800 to 3500 cfs. ville Dam. And, if not, to please inform the Table B-3 is misleading and should be Huntington District and thereby reduce the revised. level of bias for their own project in order to get an objective review of the impacts of the ¥ It is unlikely that the proposal to pump Summersville plan. 100 cfs from the lake, if construction interfered, could be implemented. There The rescheduling of flows referred to in are numerous questions unanswered with the Corps’ comments was a plan to increase this proposal. generation during the peak period of electrical demand, increase flow availability for whitewater ¥ Use of explosives near the control structure rafting during weekdays and weekends and for is unacceptable. tailwater and river fishing on weekends. Noah Corp. immediately penned a Noah Corp. initially designed the power response to each of the issues and pointed generation scheme to optimize on-peak out the bias of the concerns raised. It stated, generation and flows suitable for whitewater “The Huntington District initiates its comments rafting during the off-peak periods for rafting by what we feel is a most inappropriate com- and fishing. This proposal was abandoned parison between the total energy output of its because of opposition from the Corps and own proposal and the City’s... This appears to West Virginia Division of Natural Resources be an extreme position that may well have (WV DNR). been more flexible had the Corps not wished to develop the site itself.” The Corps’ use of terms such as “cannot tolerate” and “unac- Citizens for Gauley River ceptable” were particularly disturbing to the A recreation industry organization called City officials and to Noah Corp. Citizens for Gauley River (CGR) was formed to Mayor Tom Trent began a letter writing influence legislation and protect the interests of campaign to West Virginia’s Senators and downstream recreation, particularly whitewater Representatives asking for help to ascertain if boating. CGR was a coalition of West Virginian

Jeff Proctor was at the first public hearing in 1979 when the Army Corps proposed its long tunnel plan. He and other outfitters were very vocal, making sure that Congressman Rahall understood the economic potential of whitewater rafting and that local outfitters were willing to go “toe-to-toe” with the Corps. “I always felt Jim Price had integrity, but political activities left outfitters feeling unsure of the outcome,” said Proctor. “We wanted to make sure the focus didn’t shift to maximizing power production at the expense of the rafting industry.” The outfitters became Intervenors in the development process. Proctor was put in charge of working with Congressman Rahall and keeping the outfitters informed. Their goals were to: 1) retain ability to put-in at Summersville Dam, and 2) maintain usual river flows including the 20-day fall draw down. Proctor believes the outfitters’ discussion and Jeff Proctor input resulted in accomplishing both goals and establishment of the Class IV River Runners the Gauley River National Recreation Area.

14 Chapter 2 Ð License Application sportsmen including hikers, fishermen, CGR expressed its support for wild and backpackers, rafters (private and commercial), scenic river designation of the Gauley River kayakers, canoeists, and hunters who use, and its inclusion in the West Virginia Natural enjoy and appreciate the Gauley River. They Streams Preservation Act. They expressed were concerned with the responsible their opposition to hydroelectric development management of the river and the wild lands sur- at Summersville Dam if it would detract from rounding it. They did not want hydropower to the recreational or aesthetic potential of the interfere with these uses. lake or river. They also expressed opposition to any further development of the Gauley River CGR’s first action was a proposal to the canyon which would alter its wild nature. Corps to regulate weekend flow rates to provide dependability for whitewater rafting CGR also presented their proposal for trips. They estimated the economic benefit of regulated water releases to enhance the such regulated flows at $2-3 million a year. whitewater rafting use of the river and support- ing statistics. The group was quick to voice its concern over hydropower development at Summersville Jim Price presented Summersville’s plan Dam. On Apr. 8, 1982 a public meeting was to use the existing tunnels for hydropower held at the Summersville Municipal Building to development. The resulting facility would have discuss the City’s project and CGR’s concerns. very few alterations to the downstream section Mayor Tom Trent, Recorder Dale Bailes and of river. He outlined how the development Councilmen John Clevenger, Clarence Flesher would maintain the recreational opportunities and Steve LeRose represented the City of provided by the Gauley River. At that time Summersville. Jim Price of Noah Corp. was Noah Corp. was proposing flow rescheduling, there, along with eight representatives of the as stated above, to optimize recreational use whitewater rafting industry: Don Weidemann, and power generation of the dam release. Ed Rhett, Paul Breuer, Kathy Lukacs, Frank Lukacs, Kim Casto, Christopher Dragan, and On Apr. 11, CGR sent a letter to Noah P. R. Brisell. Corp. supporting the Summersville development

In 1982 Len Hanger was a river guide with New River Scenic Whitewater of Hinton (joined Songer Whitewater in 1987). He was also president of WV Professional Outfitters, an industry association to pro- mote whitewater rafting in the region. As president, Hanger’s personal role was to be the liaison between Noah Corp. and local outfitters. He kept the outfitters informed including construction tours. “The Corps’ long tunnel idea was a huge concern,” Hanger explains. “My initial reaction was concern for loss of the fall rafting season which is a sig- nificant part of our business. Although I remained skeptical, Noah’s development followed a reasonable process. The construction team was accommodating as to river access, use of parking lots and ramps during construction; and we were able to work out all major issues.” Hanger’s one regret is loss of the exciting put-in at the base of the dam Len Hanger with the tubes shooting out water. He does, however, acknowledge Songer Whitewater benefits of the new launch ramp and improved river access.

15 Chapter 2 Ð License Application and stating its opposition to the Corps’ plan. Mayor Trent requested that Secretary Watt They requested continued cooperation toward send acknowledgement of “no conflict” so that weekend flow regulation to provide a licensing review might proceed without delay. dependable whitewater experience to In response, the DOI explained that it enhance tourism. was premature for them to make a decision CGR began sending letters of opposition whether there was a conflict or not. They to the Corps of Engineers’ plan to legislators requested to be apprised of progress with and the press. They cited as reasons: ruin of project design and operation plans. In addition the east’s premier whitewater river, reduction they expressed concern for impact on fisheries of the area’s tourism economy, tremendous and wildlife. costs, and small amounts of power production. In addition, CGR expressed that the sentiment of citizens, locally and nationally, was against Filing the License Application the Corps’ project. On Oct. 18, 1982 Mayor Trent and the On April 30, 1982 the group proposed an Summersville City Council held a meeting and Amendment to the 1983 Appropriations Bill to decided to move ahead. A resolution was add language requiring the Corps to operate passed to authorize application for license Summersville Dam in such manner to to produce hydroelectric power at “enhance whitewater recreational opportuni- Summersville Dam. ties on the Gauley River downstream of the A few days later, on Oct. 21, work began Summersville Dam.” CGR met with on refinement of the agreement between Congressman Nick Rahall who issued his Noah Corp. and the City. Jim Price and encouragement to the Corps to consider Howard Hickey represented Noah Corp. weekend releases to regulate a dependable Councilmen Clarence Flesher and Steve flow in the Gauley River. LeRose, along with City Attorney Carroll Lay, Recorder Dale Bailes, and Secretary Jackie Keiffer represented Summersville. Tim Murphy, Wild and Scenic River Study President of the Chamber of Commerce also attended the meeting. It was agreed that Noah In August 1982, Mayor Trent opened com- Corp. would assume all financial and legal risk munication with the Secretary of the Interior, that might arise as the project proceeded or James Watt, regarding their wild and scenic was abandoned. river study of the Gauley River. The complica- tion was the timing. The City’s preliminary With the City’s approval, Noah Corp. filed a permit would expire in October 1983. That was license application with the FERC on Nov. 1, the same month the wild and scenic river 1982. It's FERC review process would finally study was to be completed. This study of the begin only eight days short of two years from Gauley River had been underway for a number the initial agreement between the City and of years and was not required to be completed Noah Corp. until 1985. After making the revisions required by the The City’s position was that their project City leaders, an agreement was signed on would not affect wild and scenic designation Dec. 13, 1982 authorizing Noah Corp. to act as should the Department of the Interior (DOI) Summersville’s agent (Appendix B). The decide to designate the Gauley River as such. agreement remains active.

16 Chapter 3 Ð Interventions INTERVENTIONS power due to a longer schedule, and in delay of job creation.

¥ Summersville’s plan has already worked More Competition through the complex environmental setting and usage issues of the lake and river to In 1983 the Corps continued to pursue the satisfaction of all involved. federal development of hydropower at the Summersville Dam site. A recommendation ¥ Income from power production will provide whether to authorize their proposal was needed the City of Summersville with funds to from the Subcommittee on Water Resources stabilize the area’s fresh water supply. and the U.S. Army’s Bureau of Engineers for Congressman Bob Wise led a town meeting Rivers and Harbors. The subcommittee held in Summersville in early March 1983. It was hearings to review support and opposition to held at Nicholas County High School and was the “Proposed Water Resources Projects of well attended. “It is obvious that many people the Army Corps of Engineers.” feel strongly about this issue,” said Wise. “This On Feb. 14, 1983 the Corps’ plan for meeting was important because the testimony Summersville Dam was publicly examined that was presented will provide the Public including testimony from Howard Hickey of Works Subcommittee on Water Resources, Noah Corp. “I am here on behalf of the City of which has jurisdiction over the project, a clear Summersville to oppose the Federal Author- record of the views of the people who live in ization of the Corps of Engineers’ proposal to the area.” produce hydropower at the Summersville Dam In May 1983, Citizens for the Gauley River in West Virginia,” he told members of the published a press campaign accusing the Subcommittee. He cited the following reasons Corps of overstating the economic benefits of for opposition: their development plan by 50 percent. They ¥ The City of Summersville was already presented contradictory power marketing working to develop non-federal hydropower projections from independent engineering at the site with a license to construct already consultants who questioned the power produc- pending with the FERC. tion levels and price projections for power sales.

¥ Federal development would cost much The House Public Works Committee more than the City’s project in lost sale of passed the 1983 Omnibus Budget Resources

FERC License and Virginia municipalities

Resources Hearing Requests Issuance of Application for filing Request for FERC Rehearing Subcommittee Hearing due to Wild and Scenic River Study Dam from Wild and Scenic River Study from Southeastern Renewable Resources to Wild and Scenic River Study issues water qaulity certification Preliminary Permit Subcommittee on Water 1983 February 14, Summersville Resolution 1983 April 11, FERC accepts License 1983 August 17, Virginia municipalities file 1983 September 16, FERC denies Rehearing September 30, 1983 Development Energy and Water 1983 October 18, Noah responds to Interventions November 23, 1983 Dept. of Interior halts License issuance 1984 January 11, Efforts begin to remove Summersville February 23, 1984 Noah responds to competing applications 26, 1984 March FERC dismisses License Application due May 9, 1984 Application filed for WV DNR 1984 May 18, FERC grants rehearing of Summersville Project July 6, 1984 Summersville/Noah file new Application for August 7, 1984 FERC upholds application dismissal August 24, 1984

1983 1984

17 Chapter 3 Ð Interventions

Legislation (H.R. 3678) on Aug. 3. The Corps’ notice of the Summersville application’s Summersville hydropower project was not acceptance. It states that the FERC erred in authorized or funded. But, according to issuing acceptance without first ruling on their Congressman Wise, the Corps would be motion to hold the proceedings in abeyance. moving ahead with project design in hopes The FERC rejecting the rehearing request that it would be approved in the future. only a few days later, on Sept. 30.

April 1, 1983 was the five-month mark from If persistence is a virtue, then virtue the day the City filed their license application abounds in the Virginia Cities. On March 1, 1984 with the FERC. Why the long delay in accep- the Virginia Cities once again took legal action tance? That’s exactly the question Mayor Trent to thwart the development of the project by the and other City leaders were asking. On April 11 City and Noah Corp. by filing a Petition for they passed a resolution encouraging Declaratory Order. In response, Noah Corp. accelerated review and acceptance from claimed that the Virginia Cities simply missed the FERC. the deadline for submitting a competing license application and were looking for a way to extend The City sent copies of their resolution with their filing opportunity and defeat Summersville’s letters requesting political help to all federal application without spending the risk money to and state legislators who represented the prepare their own application. region. FERC replied citing that Summersville had filed several supplements that were taking A competing application was filed by additional time to review, that the proposal Southeastern Renewable Resources (SRR), a was quite lengthy requiring extensive technical private developer from New York. Noah Corp. and environmental analyses, and that the reviewed the plan and filed its comments with Virginia Cities had made allegations that the FERC. In Summersville’s opinion the SRR needed to be resolved prior to acting on the project was a repackaging of a previous Corps license application. There was no indication of plan, including documents which were publicly how long their review might take. available. It also included two diagrams that August arrived and nine months had had been plagerized from Summersville’s own passed with still no decision from the FERC. November 1983 filing. Mayor Trent once again appealed to Senator Byrd and other legislators to push for licensing acceptance. Finally, on Aug. 23 the FERC Interventions and Responses announced that the City’s license application Once an application for license has been had been accepted for filing. Notices were filed with the FERC, any party with an interest sent to all the agencies that needed to review “which may be directly affected by the outcome” the plans, legislators and other involved parties. of a proceeding may petition for intervention. If A 60-day period began for comments to be intervention is granted, the FERC is required submitted to the FERC before issuance of a to consider the opinions presented before license to construct the facility. These same making a decision to issue a license. The agencies had commented on the draft license City’s accepted license application had many application before it was filed. interested parties, which requested to be The coalition of Virginia Cities, which had named as intervenors. been a competing applicant since the outset of ¥ Friends of the River Foundation the hydropower project, filed an Application for Rehearing on Sept. 30, 1983 after receiving ¥ Citizens for the Gauley River

18 Chapter 3 Ð Interventions

¥ State of West Virginia Department of Natural Resources

¥ WV Council of Trout Unlimited

¥ Friends of the Earth

In addition to the interventions, the FERC requested additional information, which was supplied by Noah Corp. on Jan. 5, 1984. The information included a copy of the contract between the City and Noah Corp., the City’s intended ownership of permits, land and equipment, proposed financing arrangements, duties and responsibilities of the City and To make fish attractants, brush is tied together with Noah Corp. and a copy of the City’s resolution nylon rope into bundles. Groups of 100 bundles are to construct the facility. placed in desired locations of the lake and river.

The Corps reviewed the Summersville Representatives of Noah Corp. and WV project and returned a long list of harshly DNR met on Jan. 31, 1984 to discuss project critical comments. In summary they stated, details. WV DNR agreed to issue state water “... we have serious reservations concerning quality certification and submit their project the applicant’s design proposal. Therefore, comments to the FERC in early March. They as presently formulated, this proposal is requested $500,000 in recreational enhance- unacceptable.” On March 8, 1984 the Corps ments be included when the project was built. requested that the FERC delay issuance of a The enhancements included two boat launch license to allow time for a study of whitewater facilities, fish stocking roads, fisherman boating below Summersville Dam. Noah Corp. access trails, a walkway crossing the river responded immediately stating the financial below the dam, fish attractant structures, and and job loss hardships that such a delay would game development areas. Noah Corp. agreed cause. Unemployment in Nicholas County in to these conditions, believing these were good 1983 was 26 percent. additions to the project.

“When I first learned of this project, adding hydro power produc- tion to Summersville Dam seemed reasonable. I became very interested because of the intensity of local support for the project,” said Governor Bob Wise. “Congressman Staton, Mayor LeRose and the community were enthusiastic.” Serving as a Congressman dur- ing early project development, Wise participated in town meetings to allow people’s questions and concerns about the hydro project to be answered. Working with Congressman Rahall, Wise made a strong case for the importance of the project in providing clean renewable energy and economic strength for the region. He was convinced that needs of concerned parties could be met. The two worked together to provide legislative opportunity for the project to be completed. “This project is an example of how many groups with a variety of Bob Wise interests can come together to accomplish something in the best Governor interest of their community,” Wise explained.

19 Chapter 3 Ð Interventions Wild and Scenic River Study Ironically, in DOI’s draft study their recom- Kills Licensing mendation was that the Gauley River not be designated a wild and scenic river, and The DOI reviewed Summersville’s license Congress did not designate the river after the application and submitted its comments on DOI study was complete. The moratorium on Jan. 11, 1984. DOI stated general support of the hydropower development expired in 1987, project and requested clarification on relatively because Congress had not acted to either minor points. The big problem was its position accept DOI’s recommendation of no designa- that the FERC could not legally issue a hydro- tion, or acted in opposition to designate the power license, as the Gauley River was under Gauley as a wild or scenic river. study for inclusion in the Wild and Scenic Rivers Act. The study period would end on Mayor Trent appealed to DOI for its help in Sept. 30, 1984 with a three year Congressional enacting legislation to remove the Summersville review period following. According to the DOI, Dam area of the Gauley River from their wild a license for Summersville’s project could not and scenic river study. Senator Byrd and be issued until Oct. 1, 1987, over three and a other legislators were also asked to help. half years after their comments. On March 6, 1984 the DOI responded to

Qualification and Classification of the

Gauley, Cranberry and Meadow Rivers River

Gauley Donaldson U.S. Forest Service Cranberry U Campground p rr y p Cranbe e r Swiss River R Dam Panther ive Gauley r Summersville Creek er w Lake Junction o

L U.S. Route 19

Meadow N

Meadow Creek Junction 05 Rainelle River MILES LEGEND Wild Segments Scenic Segments Non-qualifying Segments

20 Chapter 3 Ð Interventions

Mayor Trent, explaining that legislation could Regrettably, the District Court did not not be introduced to amend the study until the agree with Noah Corp. and found that FERC President had reviewed their recommendations. had acted within the jurisdiction of its discretion to dismiss the license application. So even In spite of diligent efforts to exclude though the Gauley River was never designated Summersville Dam from the wild and scenic as a wild river, the possibility brought three river study, the FERC dismissed the City’s years of work on the project to an unsuccess- license application on May 9, 1984. The SRR ful end. license application was also dismissed. Noah Corp. and the City, and SRR, appealed the dismissal and FERC granted rehearing on July 6.

Anticipating a loss of their appeal, the Summersville City Council passed a resolution on July 23, 1984 to file all appropriate docu- ments to continue its efforts to develop hydropower at Summersville Dam. A new preliminary permit application was filed with the FERC on Aug. 7 to preserve the City’s ability to develop the project.

On Aug. 24, 1984 the FERC upheld its decision to dismiss Summersville’s license application. With no other recourse, Noah Corp. sued FERC in federal court on behalf of the City to overturn their decision to dismiss the license application, citing the fact that DOI had indicated that the Gauley River was eligible for designation as a wild river despite Summersville Dam, but had not recommended designation. Noah Corp. also claimed that FERC had issued a preliminary permit to the City and accepted its license application; all this work would be wasted if the dismissal was upheld. Noah Corp. further claimed that FERC could have waited a few months until DOI had issued its report on the designation of the Gauley River, or even held the application in abeyance for three years to let the Presidential and Congressional action periods expire. FERC could have saved the license application in several ways, but they chose to dismiss it. The case was heard by the U.S. Court of Appeals on Oct. 10, 1985.

21 Chapter 4 Ð Starting Over STARTING OVER continued. In June 1986, Noah Corp sent letters encouraging legislators to take action. This round of letters explained that the delay in the development of hydropower Ð and resulting Legislative Issues delay in income Ð had prevented a fresh water Who could help? The City of Summersville supply project, which would provide drinking water to citizens of Nicholas County. launched intense efforts to raise political awareness and support for excluding the Mayor Steve LeRose, Councilman Mike project area from the wild and scenic river Hughes and Jim Price of Noah Corp. met with study.Their efforts focused on the federal level representatives of Senator Byrd and Congress- with Senators Byrd and Randolph and man Wise on June 9, 1986 in Washington, DC. Congressman Wise. Meetings were held and The Nicholas County Commission sent letters to letters were exchanged. However, the session the legislators in July asking for their support of Congress had ended, and the issue could of the project. not be introduced until January 1985. Congressman Nick Rahall was planning to 1985 was an election year. Congressman introduce a bill to create a National Recreation Wise was looking for re-election. On April 12, Area surrounding the Gauley River. Noah Corp. 1985, he brought a mobile office to the Nicholas and the City were hopeful that this legislation County Courthouse in Summersville where would eliminate the wild and scenic river members of the community could discuss moratorium period and allow immediate issues and ideas including the hydroelectric issuance of an FERC license. But like the wild development at Summersville Dam. The City and scenic river study, the version introduced of Summersville elected a new mayor, Steve to Congress on Jan. 10, 1987 would exclude LeRose. He had been serving as deputy mayor new development at Summersville Dam and under Mayor Trent, and had acted as mayor include the hydro power development area after Mayor Trent’s death from a heart attack. within park boundaries. Mayor LeRose had been a strong supporter of A Congressional hearing was held on the hydropower project from its beginning. April 23. Mayor LeRose made a statement Persistently, the legislative campaign to requesting an upstream boundary revision that revise the wild and scenic river legislation would allow construction of the hydropower

a Qualifying Small Power Production Facility Qualifying Small Power Producer recreation as a purpose of Summersville Dam Gauley River National Recreation Area License dismissal upheld by U.S. Court of Appeals January 10, 1986 FERC accepts Summersville permit application January 17, 1986 Summersville applies for FERC Certification as February 6, 1986 FERC notice of Summersville permit application filed February 25, 1986 FERC certifies Summersville as a April 3, 1986 FERC issues preliminary permit August 12, 1986 Legislation passes adding whitewater November 10, 1986 Summersville surrenders preliminary permit. December 1, 1986 Summersville/Noah file joint permit application January 2, 1987 FERC notice of Summersville permit application filed February 18, 1987 Subcommittee on National Parks hearing April 23, 1987 H.R. 900 presented to Congress 1987 May 18, FERC dimisses applications and appeals by all parties July 7, 1988 Manassas files permit application August 8, 1988 Summersville/Noah files license application August 8, 1988 WV National Interest River Conservation Act passes October 26, 1988

1984 1985 1986 1987 1988

23 Chapter 4 Ð Starting Over

On Sept. 17, 1984 a meeting took place in Senator Byrd’s office to discuss the impact the Wild and Scenic Rivers Study had made on development of hydroelectric power at Summersville Dam. Present are (left to right) Gerald Rader, owner Rader’s Flying Service, Councilwoman Donna Mazzei, Councilman Steve LeRose, Senator Robert C. Byrd, Mayor Thomas Trent, Summersville Fire Chief Joe Boso, and Jim Price of Noah Corp. facility and still support recreational uses of Congressman Bob Wise was instrumental in the dam and river. He requested that the com- getting this provision included in the WV Rivers mittee express its intent to allow the addition of Bill (West Virginia National Interest River hydropower at Summersville Dam in its report. Conservation Act of 1987, Public Law 100-534, 102 Stat. 2699). The WV Rivers Bill estab- Jeff Proctor of Class VI Whitewater also lished national recreation areas on the Gauley addressed the committee, focusing on the River below Summersville Dam and on the economic importance of whitewater rafting to New River, and provided restrictions on other the area. The issues he discussed were: rivers within the state. ¥ New River National River The uses of Summersville Dam grew more boundary modifications complex as time passed. On Nov. 10, 1986 ¥ The Cunard access Congress passed the Water Resources Development Act of 1986, which revised the ¥ Flow management of the New River project purpose of Summersville Dam to out of Bluestone Dam include whitewater recreation. ¥ Hydropower at the Summersville Dam

When submitted to Congress by the Permits and Licensing Committee, the bill provided a four-year time period to allow Summersville, or any other party, After the license application was dismissed to receive a license to construct a hydropower in 1984, Noah Corp. filed a preliminary permit facility, including opportunity for the City of application at the first opportunity. With an Manassas, Virginia to compete. The bill was application for preliminary permit pending, passed on Oct. 26, 1988 setting a deadline of Noah Corp. appealed to the FERC to issue a Oct. 26, 1992 for any license to be issued. three-year permit to coincide with the wild and

24 Chapter 4 Ð Starting Over scenic river study period. That would allow a permit as long as no ground disturbing license application to be accepted about the activities were to take place until after the time the three-year legislative action period moratorium period ended. would expire. WV DNR filed comments stating that, In December 1984 Noah Corp. received a although they had fully worked through all issues letter of application deficiencies from the FERC. with the identical project prior to its dismissal, The issues in question were immediately some regulations had changed and there were addressed with the issuance of revised exhibits new concerns to be addressed if a new permit and clarification of points in West Virginia law. was issued.

To receive benefits outlined in PURPA, the Comments were also received from the City needed to be recognized by FERC as a Corps. They requested close involvement “Qualified Small Power Production Facility.” with project engineering and construction On Jan. 17, 1986, Summersville submitted phases to assure uninterrupted operation of their application for certification by FERC. the dam. Certification went through the same process as a permit application, with opportunity for With the intervention period almost at an interested parties to intervene. On April 3 the end, the FERC extended the filing deadline for FERC granted certification, stating that the the Virginia Cities to intervene because a Summersville project met all criteria of the Section 4(f) notification may not have been Commission’s regulations. sent to them. The opportunity for comments, intervention or competing applications would FERC issued Notice of Application Filed expire on Aug. 4, 1986. for the Summersville Preliminary Permit on Feb. 25, 1986. Once again comments, protests and interventions were invited. Project Financing Plan The DOI reminded the FERC of the mora- torium period for legislative action on the wild On Aug. 12, 1986 FERC issued the City a and scenic river study ending April 26, 1988. preliminary permit, which was valid for a three- The DOI supported issuing a preliminary year period. This was a short-lived success.

From its beginning, Donna Mazzei was a continuous supporter of the City of Summersville’s group effort to construct the hydropower facility. “I never thought it would take so long,” said Ms. Mazzei. “Jim Price was very dedicated and kept everyone on board.” She remembers their important trip to Washington to ask for help overcoming the Wild and Scenic River Study from Senators Randolph and Byrd. “I didn’t see why the Gauley was being consid- ered as a wild and scenic river when it already had a dam on it,” she explained. Two of her most challenging issues were finding project funding and exercising the eminent domain process. “Now that it’s complete, the hydropower facility is a great project and runs very Donna Mazzei smoothly,” she said. “The City’s new fresh water project is a direct Summersville City result of income received from our hydropower plant.” Councilwoman

25 Chapter 4 Ð Starting Over

The original plan to finance the project from Staff Action of the City of Manassas, using municipal revenue bonds became Virginia. Their issue was still the timing of not impractical with 1985 changes in federal tax filing first. They wanted their application to be laws. Financing the project as a West Virginia considered “initial” instead of “competing”. The Limited Partnership would allow private same day they filed a Motion to Reject, Protest, financing and appropriate liability protection Comments, Motion for Waiver of Rules, Motion for the City. In addition, Summersville would to Intervene, and Better Adapted Statement of receive an annual royalty payment, which was the City of Manassas, Virginia. not dependent upon the financial performance The City and Noah Corp. answered the of the facility. issues raised by Manassas in a Response On Sept. 22, 1986, the Summersville City to the FERC on April 30, 1987. Noah Corp. Council decided to amend the permit applica- responded stating that the Manassas motion tion from a single municipal applicant to a joint “... was characterized as a request for expedited application between the City and Noah Corp. issuance, but was instead a restatement of the To accomplish this amendment, the City had competing applicant’s position.” Further, that to surrender its permit and reapply Ð again. Summersville was also eager for a FERC Once surrendered, it would be 30 days before decision, which could be made if Manassas a new permit application would be accepted removed their appeal. Manassas replied with a by the FERC. The first day Summersville could rebuttal letter. file again would be Jan. 2, 1987. On July 7, 1988 the FERC issued its This was just the opening that the City of decision to dismiss both the Summersville and Manassas, Virginia was waiting for. During a Manassas permit applications and appeals. telephone conversation, the Mayor of Manassas The decision was based on a case precedent had advised Mayor LeRose and Jim Price of where a license had been dismissed because Noah Corp. that Manassas was no longer of a Congressional study. FERC set a new intending to pursue the hydropower develop- date to accept permit applications for the ment at Summersville Dam. But when the day Summersville Dam site on Aug. 8, 1988, which came, the Summersville representative arrived was intended to give all parties fair opportunity at the FERC office first and filed only a few to file. minutes before the Manassas application was On Aug. 8 the City of Manassas filed a new filed. A complaint was filed with FERC by application for preliminary permit. On the same Manassas claiming that the check-in process date, the City and Noah Corp. filed an application had been unfair. Noah Corp. responded at the for licensing. Initially, a FERC docketing error request of the City, stating that they filed first indicated that Summersville had filed on Aug. 9, because they arrived earlier and waited for but that was later corrected based on the some time for the filing office to open. evidence of docketing provided by Noah Corp. On Feb. 18, 1988, the FERC issued Notice of Summersville’s Permit Application Filed with the commission. On April 7, the FERC Interventions on the Second issued Notice of Manassas' Permit Application License Application (1988) Filed with the commission. Once the Summersville/Noah and Manassas Two weeks later Manassas filed a Motion permit applications had been dismissed and for Clarification or, in the Alternative, Appeal the City’s license application refiled in August

26 Chapter 4 Ð Starting Over

1988, the City of Manassas filed a Motion to Intervene and to Reject or Deny License Application, which was sent to Summersville and Noah Corp. Their response was sent to FERC on Dec. 15, 1988.

Another intervention came from a local team of the Fayette County Chamber of Commerce, West Virginia Outfitters, and Eastern Professional River Outfitters (EPRO). Although members of these groups had been working closely with Noah Corp. throughout the planning process, they wanted to insure their position to negotiate, if needed, by being recognized as official intervenors.

27 Chapter 5 Ð Licensing LICENSING A few days later, Summersville was informed that the information it supplied to the FERC to cure deficiencies in its first license application (Project 10635) had not covered Competing with Manassas all the issues, and FERC dismissed that In early 1989, the FERC had two applica- application. The City appealed the decision. tions for development at Summersville Dam. The issues found deficient and the subse- One was for a preliminary permit from the City quent dismissal and appeal were, surprisingly, of Manassas, Virginia filed on Aug. 8, 1988. not about the development plan itself. The first Manassas’ permit application was accepted was a delivery issue. FERC had rejected both for filing by the FERC with a public notice on applications and reset a filing date of Aug. 8, Jan. 30, 1989. The other application was for a 1988. When Congress enacted the West Virginia license from the City and Noah Corp. The National Interest River Conservation Act of 1987, FERC found deficiencies in the application establishing the Gauley River National Recrea- and on Jan. 5, 1989 Noah Corp. filed the tion Area, it allowed a four-year window for requested information with the FERC. hydropower development. It also contained a Additional supplements were submitted to clause limiting development to project applicants FERC on Jan. 12 and 23. with a permit or license application on file as of Aug. 8, 1988. Together, these two rulings The FERC had not taken action to accept meant there was only ONE DAY that a permit the license application. The deadline was or license application could be filed. approaching for submission of license applica- tions competing with Manassas' accepted Manassas sent a messenger with their preliminary permit application, so on July 31, permit application and it was stamped received 1989 Noah Corp. filed an additional license by FERC personnel on Aug. 8. Summersville’s application on behalf of the City, docketed as license application was sent using courier deliv- Project 10813. It was similar to the previously ery by the U.S. Postal Service, who documented

filed license application, but had considerably s third delivery at 9:30 am on Aug. 8. However, the ’ more information resulting from recent consul- application was stamped received by FERC tation and studies. This license application was personnel on the following day, Aug. 9 Ð also the subject of a request for additional one day too late. FERC later corrected the information by the FERC on Dec. 1, 1989. docketing date to Aug. 8.

license application Manassas permit license application Summersville files third license application July 28, 1989 Agreement reached with WVDNR and NPS October 18, 1989 FERC rejects second license application December 5, 1989 Summersville appeals dismissal of second January 29, 1990 FERC grants appeal and dismisses November 26, 1990 FERC accepts Summersville January 11, 1991 WV DNR issues State 401 Certification September 18, 1991 FERC completes environmental assessment January 10, 1992 FERC issues License to Summersville September 25, 1992

1989 1990 1991 1992

29 Chapter 5 Ð Licensing

The next issue was about conformance to On the day after Christmas 1990, the City the consultation process outlined by FERC in of Manassas filed a Request for Rehearing, three stages. Although the City and Noah maintaining that the FERC was mistaken in Corp. had extensive consultation over eight dismissing the acceptance of their preliminary years with the key agencies and had, in fact, permit application. On May 23, 1991 the FERC achieved mutual understandings with all ruled on Manassas' rehearing, reinstating involved, they failed to put the steps taken acceptance of their preliminary permit but into the form FERC required. These issues taking no action against the Summersville were addressed and resolved to the FERC’s license application in progress. satisfaction in the Project 10813 application The tone of the decision was clearly in which was still pending at date of this appeal. favor of Summersville’s diligent and extensive Competition and FERC policy were efforts to develop the site. The ruling stated, addressed in the appeal. FERC policy is to “Summersville and Manassas have known of favor a development or license application each other’s interest in developing this site over the preliminary studies planned during since 1980, and have been competing with each the term of a preliminary permit. The question other ever since. Intervening legislation gave at hand was whether Manassas should have both applicants fresh and equal opportunities been issued a preliminary permit, while the to renew that competition on an equal footing Summersville license application was still in 1988. The inequality of their respective being examined by the FERC. present postures derives not from actions taken by this Commission but, fundamentally, The City of Manassas accused from the strategies pursued by the competitors Summersville of abusing Municipal Preference themselves. Manassas chose to file an and claimed that Noah Corp. was using the application for a preliminary permit, while City to obtain a license for the project that it Summersville chose to file an application for a would actually own and operate. This was not license. Since competition for the Summersville a new charge. It had been part of Manassas’ Project began in 1980, Summersville and competitive strategy since the first permit Manassas have each had 11 years in which to applications were filed in 1980. prepare and file an acceptable application for a license.” On Nov. 26, 1990, the FERC announced its decision on the appeals. The issues were resolved in this way. Working Through Licensing ¥ The docket entries for Project 10635 Process Issues were corrected to show submission for Summersville and Noah Corp. had spent filing on Aug. 8, 1988. 11 years preparing a development plan and ¥ Project 10813 would be accepted for filing. discussing project issues with interested parties and agencies. They had arrived at ¥ The notice accepting Manassas’ prelim- agreement, or were very close to agreement, inary permit application was rescinded; with most parties. However, among the most the application was dismissed two complex, was addressing environmental and months later. recreational concerns of the National Park ¥ FERC indicated it would examine project Service (NPS) and WV DNR. The NPS had ownership by Summersville during the been brought into the project by formation of license review. the Gauley River National Recreation Area in

30 Chapter 5 Ð Licensing the WV Rivers Bill, and they had authority over ing experience available on the Gauley River recreation issues downstream of the dam. including:

In addition, Section 401 of the Federal ¥ Locations, construction style and access Clean Water Act requires applicants for federal of commercial and public put-ins licenses or permits to conduct activities that ¥ Protection of access to the first rapid involve discharges into waterways to obtain certification from the appropriate state agency, ¥ Loss of access and intrusion of in this case WV Division of Environmental equipment into staging areas during Protection (WV DEP), which deferred to WV construction DNR on wildlife issues. ¥ Effects on river flows Memorandums of Understanding between ¥ Loss of nation’s most dramatic put-in the City and Noah Corp. and NPS and another with WV DNR were developed to minimize and ¥ Clarification of schedule compensate for any impacts of the hydropower construction and operation. A Mitigation, Compensation and Enhancement Plan, an integral part of the agreement with WV DNR, addressed operational procedures to reduce potential effects on fish and wildlife resources as well as providing cash for enhancement measures approaching $1 million.

The City passed a resolution approving the Memorandum and embedded Mitigation, Com- pensation and Enhancement Plan on July 22, 1991. WV DNR issued 401 Certification on Sept. 18, 1991.

Rafters participating in the growing whitewater industry carrying rafts down a gravel pathway to the original launch area. Finally A License Is Issued!

Motions to Intervene in the accepted license application for Project 10813, all filed on March 19, 1991, were received from the whitewater rafting community including: ¥ Fayette County Chamber of Commerce, West Virginia Professional River Out- fitters (WVPRO) and Class VI River Runners ¥ American Rivers, Inc. ¥ American Whitewater Affiliation Whitewater rafts were put-in just below the dam’s This group of intervenors shared concern release tubes providing an exciting start for their for protecting the quality of the whitewater raft- trip down the Gauley River.

31 Chapter 5 Ð Licensing

A meeting was held at Summersville City the project site and expressed willingness to Hall on April 30, 1991 to discuss and agree on work through the remaining issues, which recreational aspects of the project. It was they did. attended by the following: Frank Pelurie, An environmental assessment (EA) was Barbara Taylor, Dan Cincotta, Bert Pierce, and completed by FERC staff on Jan. 10, 1992. Mike Shingleton, all of WV DNR; Dan Haas, The FERC characterized the project as not Linda Romola, and Lorrie Sprague, all of NPS; being a “major federal action”; however, NPS Jody Hoffman, U.S. Fish and Wildlife Service; disagreed stating its position that an environ- Vince Yearick, FERC; Jim Price, and Anne mental impact statement should be required Price of Noah Corp.; Mayor Steve LeRose, rather than an assessment. The whitewater Gary Evans, Director of Public Service, and community also had comments regarding the Larry Persinger, Assistant Director of Public EA report. Noah Corp. answered their concerns Service, all of the City of Summersville; Jeff with a Response to the FERC dated May 7, Proctor, Class VI River Runners; Anita Adams, 1992. There was insufficient time for FERC to American Whitewater Affiliation; Matthew complete an environmental impact statement Huntington, American Rivers, Inc.; Roger before the legislative deadline for licensing; Harrison, WV Rivers Coalition; Keith Spangler, the choice of the level of study is determined New/Gauley Expeditions; and Skip Heater, by the authorizing agency, in this case the New River Adventures. FERC. Attendees discussed project economics On Sept. 25, 1992, only one month before including local tax revenues, location of the the legislative deadline imposed by the West transmission lines, establishing hours for Virginia National Interest River Conservation construction to avoid interference with raft Act of 1987 (WV Rivers Bill), the FERC issued launching, use of access roads, restroom and a License to the City of Summersville. other public facilities, fish stocking roadways Although pleased to accomplish licensing after and the elimination of a fish passage study. 12 years of effort, there were two license The group relocated to the site below the dam articles that Noah Corp. suggested should be and visually inspected affected areas. The revised. A Notice Requesting Rehearing of attendees left with a fuller understanding of these articles was promptly filed with the

Bert Pierce was Supervisor of Reservoir Management for West Virginia Division of Natural Resources (DNR) and later became the DNR Fisheries Chief. “It was my responsibility to review anything that impacted public waters,” explained Mr. Pierce. “When there is private use of a public resource, DNR’s goal is to enhance the resource, or to provide mitigation for unavoidable damages.” The DNR had done most of their investigation for this project during the earlier Army Corps feasibility study. Pierce admits that the DNR staff did not believe this project could be built because of the complexity of purposes already in place at Summersville Lake. “Always a gentleman, Jim Price was very persistent with questions and efforts to resolve issues,” said Pierce.“I believe we negotiated the best deal that could happen.” Mitigation enhancements that Pierce was pleased with include a Bert Pierce new fishing access trail that crosses the Gauley at the tailwaters and Summersville Lake Biologist, improved boating access to enter the lake at Persinger Creek. WV DNR Fishery Manager

32 Chapter 5 Ð Licensing

Upon receiving a license approval in 1991, Jim Price This photograph shows the development site in and a National Park Service representative visit the 1991 before any construction took place. hydropower site in preparation to begin construction.

FERC. Article 303 required a Board of Consultants to be hired to review project structures. This was redundant and expensive, because the Corps was already performing that function for Summersville Dam, which they operate.

Secondly, article 309 granted the Corps unlimited rights to modify the dam’s structures or operation. The broadness of this privilege was a concern as it potentially could decrease the ability to obtain a construction loan.

Rehearing was granted for reconsideration by the FERC on Nov. 25, 1992 and then denied on both requests on April 7, 1993.

The powerhouse and equipment arrangement is shown as it was approved in the Sept. 1992 license.

33 Chapter 6 Ð Strategic Agreements STRATEGIC mented with a gas-fired generator. The cost of AGREEMENTS a secondary power source made the energy cost too high to be practical.

During 1993 power sale proposals were Selling Electric Energy sent to Duke Power Co., Appalachian Power Co. (APCo), Carolina Power and Light Co., the The product of the planned hydropower City of Philippi, AMP-Ohio (a municipal group facility was electric energy. Selling power for in Ohio), and Blue Ridge Power Authority (a a price that would support the cost of con- municipal group in Virginia). struction was an economic necessity for this project, which was being financed as a private A proposal to purchase power was received venture. It was not supported or funded by any from Duke Power Company. However, Duke governmental funds; in fact, the project had to refused to pay as much as it paid to hydro- pay fees or taxes to state, local and federal power producers in North Carolina, because governments for the right to operate. The the Summersville power was delivered from project never received any governmental outside Duke’s system. Noah Corp.’s attorneys funds or grants. disagreed with this position and a complaint proceeding was filed with the North Carolina Finding a buyer for the energy produced Utility Commission (NCUC). Duke won that was a critical step. Because of their close case in early 1995, because the NCUC agreed proximity to Summersville Dam, Allegheny that the project was ineligible for the in-state Power Systems was approached. They were power price. not in the market for additional capacity at that On Jan. 11, 1994 Noah Corp met with Ray time, and declined the proposal. Maliczewski, senior vice president of American Several other utilities and large power users Electric Power (AEP) Service Corp. and his were approached about buying the power.In staff. AEP is the parent for APCo. Maliczewski, July 1993, Elkem Metals Company, operator of clearly a decision-maker, viewed the project in nearby Hawks Nest Hydropower facility, met a positive light because of the low price with Noah Corp. in hopes of supplementing offered and the renewable aspect of the power. their fall production. To insure the steady AEP was not currently purchasing power from 24 MW of power needed by Elkem, the any qualifying facilities and had opposed Summersville plant would need to be supple- PURPA before the Supreme Court in 1979.

issuance of license to Summersville/Noah site access priviledges purchasing energy Summersville Project for 25 years contracts for power sale and development FERC denies Manassas rehearing opposing April 7, 1993 Revised penstock layout supplied to Corps July 23, 1993 Corps grants Summersville August 31, 1993 AEP Appalachian Power offers terms for December 16, 1994 Catamount agrees to develop and operate July 31, 1995 Noah files application for license amendment October 16, 1995 Summersville passes Ordinance authorizing October 25, 1995 WV DNR grants entry for cofferdam construction 13 , 1996 March Payment in lieu of tax agreement signed April 1, 1996 Equipment and supplier selection complete April 17, 1996 FERC grants deadline extentions July 11, 1996 WV DNR grants entry for whitewater launch ramp July 19, 1996 of start construction filed at FERC Verification September 17, 1996

1993 1994 1995 1996

35 Chapter 6 Ð Strategic Agreements

In December 1994, AEP met with Noah equity. Their representatives visited the site Corp. and presented an alternative power and began feasibility studies. purchase proposal, which appeared to be A second interested party was Catamount feasible. On Sept. 5, 1995 representatives of Energy Corp., a subsidiary of Central Vermont Noah Corp., APCo and Catamount (a firm Public Service Company. Their representa- being contracted by the City and Noah Corp. tives visited the site in March 1995. to finance, construct and operate the facility for its first 25 years) met and discussed power Noah Corp. contacted the Jackson & Kelly sale. APCo requested a reduction in the cost Law Firm, which had been involved with paid for energy to 90 percent of their avoided negotiating financing for the hydropower energy after year 20 of the contract. This project at Hannibal Dam on the Ohio River. concern was resolved. By the end of They helped develop a simple financing struc- September, the power purchase agreement ture that would allow beneficial ownership to was nearing its final form. the investor and provide more cash flow to the City, which provided no equity and took no The City had their attorney, Dennis credit risk. Vaughan of Vaughan & Withrow, examine the contract. They engaged Southern Engineering By July 31, 1995 Catamount was chosen to review the design proposal and offer their and had agreed to finance and construct the comments. Suggestions to the power sale project. Catamount submitted an independent contract proposal were drafted and sent to contract to the City and Noah Corp. They were APCo. Most of the suggestions were prepared to provide $7 million as equity to the accepted. Lee Hill of Jackson & Kelly Law Firm project and arrange a commercial loan for the helped the parties find agreement on the few balance of costs estimated at $28 million. The remaining issues. City and Noah Corp. would receive royalty payments and Catamount would be benefi- The Power Purchase Agreement (PPA) cial owner with all tax benefits and net profits was authorized by passage of a City for the first 25 years of operation. Ordinance on Oct. 25, 1995. In early February 1996, the agreement was presented to the Summersville would own title to the project, Public Service Commission (PSC) for but Catamount would finance, construct, operate approval. Instead of the immediate approval and receive all revenues for the first 25 years. expected, it was denied on April 27. The Catamount would then exit the project with no issues found deficient were addressed in a further interest or income due. revised joint application to the PSC, and the Catamount president Bob Young flew into PPA was approved in early May 1996. Summersville to meet informally with City Councilmembers in early August 1995. But by Sept. 21 the City had still not taken action Project Financing to execute a contract with Catamount. Catamount wrote a letter to Noah outlining the A likely power purchase agreement made many tasks with deadlines to be met, cost the hydropower development attractive to increases associated with delay, and the need investors that would supply at least $5 million to resolve any issues keeping the City from in equity funds. The project needed funding signing an agreement. through commercial debt from a bank and equity providers. American Tractebel, a Belgian On Sept. 25, Jim Price wrote to Mayor utility, became interested in providing the LeRose with some facts. The City had hoped

36 Chapter 6 Ð Strategic Agreements to fund a new fresh water project with initial month’s end, Catamount was already shopping proceeds from the project. They needed for commercial lenders. about $1.5 million. Price said, “If we try to force a large initial payment for a water project on Catamount, there will be no hydro project; West Virginia Tax Law the project simply cannot afford it.” In mid-March 1995, the West Virginia On Oct. 25, 1995, the City passed an Legislature revised the B&O tax law, removing Ordinance authorizing many transactions which the exemption for utility property. The change were required for the development of the would add an expense of $725,000 a year, hydropower project. Among them were the crippling chances of financing the Summersville contracts for Catamount’s participation. By project. Jackson & Kelly Law Firm requested the

These 1993 drawings show details of the powerhouse design.

37 Chapter 6 Ð Strategic Agreements

A penstock in the valve house. A generator being placed on a turbine during pro- ject construction.

WV Tax Commission to rule on exemption from ule to Nicholas County was based on a fixed B&O taxes for the new hydropower project. amount that increased each year. The payment The exemption from B&O taxes was granted to Nicholas County in the first year was because the City was owner of the facility. $40,000, gradually increasing to $190,000 in year 21. The agreement was signed by all In addition, a Payment in Lieu of Taxes parties on April 29, 1996. (PILOT) agreement was needed to keep property taxes low during the early years of Nicholas County received no tax revenue the project, a period with initially lower power from Summersville Dam because it was sale prices. Although the project would be owned by the federal government. The PILOT owned in title by the City and potentially exempt agreement allowed the County to receive tax from property taxes, it would be used benefi- revenue on the hydropower facility, even cially by a private company, Catamount, acting though it was owned by a government entity, through its subsidiary Gauley River Power the City, and was located on federal property. Partners (GRPP). Nicholas County is the primary The Nicholas County Commission shares this taxing agent. Fayette County was also involved, income with the Board of Education. because two miles of transmission line crossed over the county boundary to connect with the closest APCo substation at Meadow Project Design and Engineering River Mining. Sogreah Engineering was working closely A draft PILOT agreement with the Nicholas with the Corps to finalize details of using a County Commission was prepared by Jackson temporary plug in an existing tunnel during & Kelly and sent to Noah Corp., Catamount construction of the powerhouse. Sogreah, a and the City in early 1996. The payment sched- French engineering firm, was chosen for this

38 Chapter 6 Ð Strategic Agreements

Drawing of the two-turbine powerhouse design which was approved in the 1996 license amendment and constructed.

39 Chapter 6 Ð Strategic Agreements difficult task by Noah Corp. because of their and used to acquire preliminary equipment extensive experience in hydropower projects. bids and revised constructions costs. Details of a concrete tunnel plug were submitted Catamount, acting as the project developer, to the Corps on March 18, 1992. The benefit of selected Kleinschmidt Associates of Maine to such a plan would be a cost saving, simpler pre-qualify suppliers and prepare technical powerhouse layout. The Corps liked the idea, specifications for a “water-to-wire” hydroelec- as did Noah Corp. tric generation package. In April 1996, the package was sent to several suppliers to Eventually, the plan was abandoned in receive bids and select the lowest costs. favor of using one of the three outlets from the dam. A new penstock would be attached to the existing pipe, just downstream of the closure valve and conduct water to a power- Amending the License house on the bank. The existing Howell-Bunger During the summer of 1995, a license valve on that pipe would be relocated to a new amendment was prepared and submitted to pipe ending beside the powerhouse. The new agencies for their comments regarding revi- design, with two turbines instead of four, sions to the powerhouse size, location and reduced the 1993 estimated construction costs generating equipment and to revise the trans- substantially. This simpler powerhouse and mission line route to deliver power to AEP. equipment installation allowed a competitive Changes in the powerhouse location and lay- price for the sale of energy that made the out proposed the simpler two-turbine plan, project feasible under the AEP power sale rather than the four turbines and extensive pip- contract. The design revision required going ing in the approved license. through FERC’s review process once again. Changing the transmission line route was The new layout plan was sent to the Corps more involved. The route had to connect to the on July 23, 1993 along with a letter requesting APCo substation about 10 miles south of the a meeting to discuss design options. The plan dam, so the route proceeded south from the contained options for a powerhouse with two dam rather than north. It needed to avoid the or three units. The least cost facility, based on National Recreation Area (NRA) as required the price per unit of energy, would be built. by the NPS. The West Virginia Division of When completed in 2001, the project cost Transportation (WV DOT) would not allow use about $58 million for an 80 MW plant. of their right-of-way along U.S. Route 19 south of the dam. Richard Woodruff, a hydropower consultant formerly of Southern Company Services, was The amendment application was filed with retained by Noah Corp. to review the Sogreah FERC in September 1995 with new plans for conceptual design and verify the cost estimates. the powerhouse and equipment and the new Mr. Woodruff also was invited to attend transmission line route. Letters showing the the meeting with the Corps. The Corps was proposed transmission line route were sent represented by their engineering, hydraulics to all affected landowners. and structural groups who were very positive in their review of the revised powerhouse A survey was conducted to avoid distur- and equipment. bance of endangered plants. The Gauley River NRA was avoided by locating the transmission By May 1995, more detailed designs of the line route within developed areas near the simpler, two-unit powerhouse were completed dam. On Oct. 16, 1995 the FERC sent out a

40 Chapter 6 Ð Strategic Agreements

Notice of Application Filed to initiate a period of comments and interventions regarding issues in the license amendment.

There were project benchmarks and FERC deadlines to meet. The FERC had granted several extensions of deadlines. In the July 1996 extension, the following deadlines were set:

¥ Final contract drawings by Sept. 16, 1996

¥ Start of construction by Sept. 24, 1996 (required by WV RIvers Bill)

¥ Filing of approved cofferdam construction drawings by Oct. 15, 1996

¥ Complete construction by Sept. 24, 1999

In March 1996, WV DNR issued an entry permit for the purpose of constructing a temporary cofferdam so the powerhouse could be built. In July, an entry permit was issued for constructing a new whitewater launch ramp facility.

Noah Corp. filed Verification of Commence- ment of Construction paperwork with the FERC on Sept. 17, 1996, one week before the critical deadline. This filing showed that GRPP (Catamount) had begun equipment fabrication by paying the equipment provider, IMPSA of Argentina, approximately $200,000 to begin manufacturing the initial equipment.

41 Chapter 7 Ð Transmission Lines TRANSMISSION LINE by about 30 residents, including some parties interested in whitewater rafting.

The amendment application was originally Public Protest published by FERC in October 1995 with comments due by December. No adverse When the draft license amendment appli- comments were filed. An agreement on the cation was circulated for comments, whitewater transmission line route was resolved with NPS, interests were concerned about changing from which insisted that the Gauley River NRA be four to two larger generating units believing it avoided by the transmission line and that the would reduce the amount of flexibility in flow view of the line be minimized from the NRA. released for power production. Potentially, FERC prepared an environmental assessment they stated, placing more importance on which was noticed in April of 1996. Comments power profitability might be at the expense of on the assessment were due by the end of May. recreational interests. Their concern was As the FERC began preparing a final envi- unfounded, because the license required the ronmental assessment, they began to receive project to operate with the flow normally questions from residents along and around the released by the Corps. The amount and timing transmission line route, who were concerned of flow releases is chosen solely by the Corps, about whether their comments were being not the licensee. heard. Numerous comments were filed. In an The most contentious issue was the change effort to be fair, FERC held a public meeting in in transmission line route, caused by the need to Summersville to allow public comments to deliver power to APCo. The revised transmission become part of the record. They sent notice line was almost two miles longer and ran in a to landowners by Priority Mail, which was different direction than the original plan, which delivered on Thursday, Sept. 12, one week was to connect with the Monongahela Power before the meeting date. The meeting was Company, the closest potential energy buyer. also announced in local newspapers.

To answer questions of affected property The public meeting was held on Thursday, owners, Catamount and Noah Corp. held a Sept. 19, 1996. Heather Campbell and public meeting in Mount Lookout in the spring Mohamad Fayyad, FERC representatives, of 1996 to discuss the expected location and conducted the meeting. Speakers making impact of the transmission line. It was attended comments were: Steve LeRose, Summersville

between project and landowners project amendment transmission line approval Public meeting in Summersville 1996 September 19, Visual Impact Improvement Plan sent to FERC September 23, 1996 FERC order amending license and lifting stay 1996 October 18, Requests filed for FERC rehearing 1996 November 15, FERC grants rehearing for further consideration December 5, 1996 FERC order denying rehearing January 21, 1997 FERC approves visual resource protection plan 1997 February 19, appeal to 4th Circuit Court and MMPPA AWA 21, 1997 March Nicholas County Commission mediates October 3, 1997 Oral arguments presented to 4th Circuit Court January 26, 1998 4th Circuit Court supports FERC approval of May 1, 1998 FERC lifts stay of construction June 1, 1998 FERC approves final transmission line design July 2, 1998 12 Requests filed for FERC rehearing of July 31, 1998 appeal Court of Appeals accepts AWA December2, 1998 appeal FERC moves for dismissal of AWA December 4, 1998 Financing agreement executed 1998 December 18, FERC authorizes project ground breaking December 26, 1998

19 9 6 1997 1998

43 Chapter 7 Ð Transmission Lines

44 Chapter 7 Ð Transmission Lines

Mayor; Jim Price, Noah Corp.; Councilman Mike Hughes; Jim Marsh, Associate Superintendent of Schools, Nicholas County; Councilwoman Mary McCallister; Spurgeon (Jenks) Hinkle, Nicholas County Commission; Len Hanger, WVPRO President; Dan Boone, local businessman and Chamber of Commerce member; Greg Johnson, Administrator Summersville Memorial Hospital; Roy Henderson, retired broadcaster and local resident; Donna Mazzei, local resident and

Councilwoman; Dale Jones, local resident; Photo courtesy McClung of Jack J. B. Boso, City of Summersville Fire Chief; Land owners along the transmission route placed Thomas Smith, county resident; Mike Mathews, high value on the pristine views of their properties. representing local trades unions; Steve The route crossed large areas of undisturbed forest. Fairchild, local resident and businessman; Kathy Zerkle, local resident and rafting guide; FERC, addressing many of the concerns Richard Lilly, local resident and rafting outfitter; expressed by property owners. Gary Normoyle, Catamount Energy Corp.; The MMPPA took their case to the West James Neil, WV DNR fishing and boating Virginia Public Service Commission (PSC) representative; and, Steve Ferguson, President and the NPS. The PSC was being pressured Summersville Convention and Visitors Bureau. to require the project to acquire a certification of public convenience prior to constructing the A firestorm of public protest was set off by transmission lines. The question was one of this meeting. Several landowners along the jurisdiction The FERC apparently had jurisdic- transmission line route presumably did not tion of transmission lines that were included in realize their properties would be affected until a federal hydropower license. On Sept. 28, notice of the public meeting was delivered. 1996, Governor Arch Moore issued Executive Some were upset by the short notice they had Order 12-88 to require the PSC to insist on received. On the following Monday, Sept. 23, certification. The PSC later conceded that 1996 more than 35 letters of protest were filed at the FERC Ð including a petition with more FERC had jurisdiction and dismissed the than 250 signatures. A group of landowners complaints on Feb. 7, 1997. had earlier formed a coalition called "Mount Congressman Rahall and West Virginia Nebo-Mount Lookout Property Protection Professional River Outfitters (WVPRO) began Association" (MMPPA). The group hired an to question the project’s compliance with the law attorney and began doggedly opposing the establishing the Gauley River National Recrea- new route of the transmission line. tion Area. Congressman Rahall asked the FERC A radio show, answering questions from to give him information about the project’s callers, was held by Gary Normoyle of compliance with established deadlines. Catamount, C. J. Hamilton of the Corps of American Whitewater Affiliation (AWA) filed Engineers, Mayor Steve Le Rose and Jim comments and a motion for late intervention Price of Noah Corp. with the FERC on Oct. 7, 1996 (this filing was Summersville, Noah Corp. and Catamount made almost a year after the deadline for were busy responding, too. On Sept. 23, they intervention). A similar intervention request was filed a Visual Impact Improvement Plan with filed by Attorney James McNeely, representing

45 Chapter 7 Ð Transmission Lines

MMPPA, who kept working on the PSC certifi- Dec. 5 rehearing was granted to AWA and cation issue. FERC granted the intervention MMPPA. Several deadline extensions were requests, which allowed the parties to later needed by the project, because of the challenge FERC’s amendment approval in appeals. On Jan. 21, 1997 the FERC denied federal court. both rehearings. On Feb. 19, 1997, the project’s visual resource protection plan was approved. In the meantime, FERC staff continued their MMPPA was quick to request rehearing of this work on the final environmental assessment. FERC decision, too. On Oct. 17, they issued notice of its availability. The next day the FERC issued an order allowing AWA and MMPPA both appealed to the the license amendment, lifting the stay of Circuit Court of Appeals challenging FERC’s construction and granting interventions for refusal to reverse its decision to authorize the AWA and MMPPA, even though the requests license amendment. Construction and financing were filed more than a year late. On Nov. 15, could not proceed with the potential regulatory both intervenors filed requests for rehearing reversal in the Court of Appeals, which could challenging FERC's order approving the license rescind FERC’s approval of the planned amendment on the grounds of inadequate installation. notice. All the delays resulting from continuous In his quarterly report to the City of appeals required updates in all the related Summersville, Dr. Price of Noah Corp. expressed agreements including the Power Purchase concern at the protest of landowners. He Agreement, WV DNR Rights of Entry, WV feared the appeals of FERC decisions could DNR Memorandum of Agreement, and the mean long delays in obtaining project financing. Independent Contract with Catamount Energy Mick Staton led a public information campaign Corp. After their renegotiation, the changes to for the project including political support, all of these agreements had to be approved by media advertising and an informational video. the various appropriate agencies… again.

The project continued to make required The FERC granted a rehearing for further filings during this period while FERC consid- consideration to MMPPA on approval of the ered the rehearing requests. On Nov. 22 the visual resource protection plan. Then denied recreation monitoring plan was approved. On their appeal on July 1, 1997.

“We got a puzzling letter that said the license was already granted,” explains Jack McClung, a Mount Lookout landowner who did not want transmission lines crossing his land. “Several landowners formed an association and we started to get attention.” McClung notes “crossing your land” means clear-cutting an 80-foot wide strip along with any branches or trees that reach into that area. The group of landowners did not feel that alternate routes were fully considered and that FERC was ready to approve the project regardless of dissent. Landowners found the public meetings informative but were dissappointed that the County Commission did not help represent their position. “We felt bullied,” said McClung. When it was clear the transmission route would not be changed, McClung and others negotiated their best deal and the project moved ahead. “I hope the City of Summersville makes good money from Jack McClung the hydro plant,” concludes McClung. “The structures are a sore spot in Mount Lookout Landowner the gorgeous view of my family’s homeplace.’

46 Chapter 7 Ð Transmission Lines

Nicholas County Commission contacted ating strategic contracts, additional mitigation the City, Noah Corp. and Catamount on Oct. 3, requirements, and legal fees to defend in court 1997.They had been asked by MMPPA to act as were all putting the project at financial risk. mediators to help negotiate alternate routes for Project costs had risen by nearly $5 million. the transmission lines. This was not successful, Catamount told the City and Noah Corp. that because there was no practical alternative to they had found a new lender, New York Life the route chosen, as stated in FERC’s order Insurance Company. But to make the project approving the license amendment. feasible, it was necessary to extend the debt term to 26 years. Oral arguments were presented to the Court of Appeals on Jan. 26, 1998. The Because Catamount was to exit the project Appeals Court’s May 1, 1998 ruling upheld at the end of 25 years, the new debt term was FERC's decision approving Summersville’s a problem. Catamount requested extension of license amendment. On June 1, the FERC their independent contract to 30 years to allow removed their stay of construction and on July 2 sufficient returns in the last five years to make approved the final transmission line design. the project feasible. In July 1998 Summersville, Noah Corp. and Catamount renegotiated the By the end of July 1998 there were a independent contract and participation agree- dozen requests for rehearing submitted to the ments to keep the project viable for financing. FERC including the AWA, MMPPA and several private citizens. They were all rejected on As a concession for the extended term, Aug. 28, 1998. Only AWA requested rehearing Catamount agreed to provide $800,000 to the on the rejection. In addition, AWA appealed to City for a water supply project when the hydro the U.S. Court of Appeals. The FERC filed a project was financed. The five-year extension motion to dismiss AWA’s federal appeal, as resulted in less revenue to the City and Noah they had not yet ruled on the most recent Corp. from year 26 through 30 of operation request for rehearing. because a portion would go to Catamount. A long awaited moment came, when Summersville’s funding of a water supply FERC authorized commencement of ground project was made more likely by the payment breaking on the day after Christmas 1998. The for the extension. persistent delays had seriously jeopardized On Sept. 1, 1998 Catamount gave draft the project’s feasibility. copies of a financial term sheet to Summersville from New York Life Insurance Co. The City and Noah Corp. both approved the agreement, first Financing the Project verifying that Summersville had not pledged Catamount Energy Corp. was looking for a any taxpayer assets or assumed any debt for lender to finance the balance of the project. the project. Before approval of the license amendment in New York Life Insurance Co. had a period October 1996, two lenders were interested of “due diligence” in making sure all the agree- pending the outcome of FERC’s decision. ments and amendments were acceptable and They were Canadian Imperial Bank of fully in place. By Dec. 18, 1998, the financing Commerce, Inc. and GE Capital Corporation. agreement was fully executed, and closing The long delays created by continuous took place on Jan. 15, 1999. Dr. Price of Noah appeals caused the cost of building the project Corp. told Summersville City Council that to climb. Not only were costs of material, Catamount Energy was to be commended equipment and labor rising, costs for renegoti- for their commitment to the project.

47 Chapter 8 Ð Construction CONSTRUCTION necessary bonds to the City of Summersville and began site work.

It was also time to recognize the great Ground Breaking achievement of the project team including personnel from the City, Noah Corp., After 19 years, it was time to start building. Catamount and many others Ð whose 19 years Black and Veatch Construction, Inc. (B&V) of efforts had been responsible for reaching was selected to construct the powerhouse and this important benchmark. A Ground Breaking transmission line. They were the successful Dedication was held on Wednesday, Feb. 17, bidder and had done some preliminary work. 1999. It began with a luncheon at Nicholas In early January 1999, B&V submitted the County Memorial Park Dining Room, followed by a ceremony at Summersville Dam. The invitation list held the names of more than 200 community and political leaders. A private dinner was held the evening before for core project participants.

Legal and Contractual Details

Although the project had a green light to get started building, FERC had not acted on the American Whitewater Affiliation’s (AWA) motion to intervene in and oppose the final transmission line design. Anticipating a nega- tive decision from FERC, AWA filed an appeal with the U.S. Court of Appeals to challenge rejection of their rehearing request. FERC ruled that the AWA appeal was premature, as they had not yet rendered a decision.

generated at Summersville plant

”

First Energy

FERC denies AWA appeals FERC denies AWA 1999 February 11, Groundbreaking ceremony for project held 1999 February 17, appeal U.S. Court of Appeals dismisses AWA February 26, 1999 WV DNR license agreements signed April 5, 1999 WV DEP water pollution control permit issued April 9, 1999 Stan Adkins appointed Mayor of Summersville June 28, 1999 Eminent domain suits filed against landowners June 30, 1999 Motions hearing for eminent domain suit 1999 September 13, FERC amends license November 5, 1999 FERC approves as-built transmission lines December 27, 2000 FERC authorizes construction to proceed January 24, 2001 “ July 29, 2001 Operating agreement signed by all parties November 6, 2002 Catamount interest sold to CHI December 4, 2002

1999 2000 2001

49 Chapter 8 Ð Construction

On Feb. 26, 1999 the U.S. Court of Appeals By 2001, deadline extensions and shifts in dismissed AWA’s case. responsibilities made it necessary to amend the Power Purchase Agreement between AWA challenged FERC’s refusal to grant GRPP, the City, Noah Corp. and APCo. intervenor status with a petition for review in the U.S. Court of Appeals in April 1999. The City intervened in their proceeding. Catamount Catamount Sale to CHI offered to take the cost they and AWA would together spend on legal fees and use it In February 2001, James Moore became instead to benefit kayaking and rafting. AWA President of Catamount Energy Corp. (CEC) agreed to this proposal and the funds were and Senior Vice President of parent Central Vermont Public Service Corp. In August he provided to NPS to augment whitewater boat- announced his strategy to pursue wind power ing on the Gauley River. projects exclusively. Negotiations for right-of-way easements In February 2002 CEC announced its along the transmission line route continued intent to sell its interest in the Summersville in 1999. Several property owners held out. project to CHI Energy, Inc. (CHI), a large The City began eminent domain suits in late hydroelectric company headquartered in June 1999. Mayor Stan Adkins, newly elected, Connecticut. CHI was owned by Enel, a large pursued the right-of-way agreements as Italian utility. The City and Noah Corp. would required. A hearing was held at the U.S. Court need to approve the sale, which they did. The in Charleston, WV on Sept. 13, 1999. By sale was finalized on Dec. 4, 2002. November, all of the right-of-way issues had been resolved. Putting the Plant into Operation In April 1999 the project received license agreements from WV DNR Public Land Design revisions and construction were a Corporation for the transmission line route collaborative effort. Each portion of the project and a water pollution control permit from required the review and approval of both the WV DEP. Corps and the FERC prior to its construction.

When the project began in 1980 Stanley Adkins was the City of Summersville’s independent accountant. He attended all the early discussion meetings. “It seemed like a pipe dream. It was like one man against the world,” Adkins explains his first impression of the project. “But if the hydropower project could happen, it would be really amazing.” Although completed and put into operation during Adkins’ tenure as mayor, he says the person that really made the project happen was Jim Price, who conceived and kept the project alive. Adkins is pleased to see a renewable energy source being operated in Summersville. He said early operational income will be used to pay the debt for construction, but that future income could fund fresh water projects, health care expansion, improved sewer facilities and environmental protection programs. “The people who Stanley Adkins started this project in the early 80’s provided benefits for our citizens Summersville Mayor that will continue more than 50 years into the future,” Adkins said.

50 Chapter 8 Ð Construction

51 Chapter 8 Ð Construction

On a site visit, FERC inspectors found ¥ Howell Bunger valve structure construction had moved ahead of the allowed ¥ Penstock pressure testing protocol with support piers for the penstock in place before the plans had been approved. On ¥ Ownership and maintenance of all April 28, 1999 FERC sent a stern warning new construction letter to Catamount reiterating the process of ¥ Corps of Engineers’ list of required plan submissions and required approvals. This submittals was corrected immediately. ¥ Other issues and concerns relevant to Project construction remained close to the completion of the project projected schedule until early 2000. Work on pouring concrete and installing embedded Difficulties in obtaining the Corps’ approval turbine parts was delayed by poor weather. of the concrete used in penstock anchor GRPP continued holding progress meetings with blocks caused significant construction delays the Corps and interested agencies to discuss by August 2000. GRPP became concerned the construction schedule and any other issues. about meeting the sunset date in the Power Purchase Agreement. There was concern among the rafting outfitters that construction might interfere with The schedule was really slipping by river access during the height of rafting season. September; there was little hope of meeting Construction activities were suspended on the November schedule for completion. B&V some weekends to avoid inconvenience during indicated to Catamount that they were entitled periods of heavy rafting traffic. to additional fees due to delays in construction and increased costs required by the Corps. A By April 2000, clearing was completed in second shift was added in an effort to get the preparation for construction of the transmission project back on schedule. line. B&V was testing for leaks on the scroll case of one turbine prior to pouring concrete The powerhouse and transmission line were around it. Several tests were required to deter- both essentially complete by February 2001. mine the strength of the concrete to be used In mid-May 2001 the concrete work and most prior to pouring penstock of the new piping had been anchor blocks.

B&V was having difficulty with the Corps’ approval process and requested a meeting to resolve a number of construction issues, including: ¥ Concrete mix design ¥ Marine support structures ¥ Encapsulation of existing marine support structures Summersville City Council constructed a plaque in 2005 to memorialize the effort and accomplishment ¥ Required anchorage of building the hydropower plant.

52 Chapter 8 Ð Construction completed. Final testing and commissioning of the generating equipment was complete in June. One structural part failed during testing and had to be replaced.

Catamount generated the “First Energy” required by the Power Purchase Agreement on July 29, 2001. It was about a month later than allowed by the agreement Ð a hefty penalty was paid by Catamount Ð but everyone was pleased to have the plant operating commercially. By August, all work except some minor finishing was complete.

From start of generation in early July 2001 through the end of June 2007 (six years of operation), the fully operational Summersville Hydropower Production Facility generated and delivered 1,264,000,000 kilowatt-hours of electric energy.

53 Appendix A PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978

(Act of November 9, 1978, Public Law 95-617, 92 Stat. 3117)

TITLE II Ð CERTAIN FEDERAL ENERGY REGULATORY COMMISSION AND DEPARTMENT OF ENERGY AUTHORITIES

SEC. 210 COGENERATION AND SMALL POWER PRODUCTION

(a) COGENERATION AND SMALL POWER PRODUCTION RULES Ð Not later than one year after the date of enactment of this Act, the Commission shall prescribe, and from time to time there- after revise, such rules as it determines necessary to encourage cogeneration and small power production, and to encourage geothermal small power production facilities at not more than 80 megawatt capacity, which rules require electric utilities to offer to Ð

(1) sell electric energy to qualifying cogeneration facilities and qualifying small production facilities and

(2) purchase electric energy from such facilities.

Such rules shall be prescribed, after consultation with representatives of Federal and State reg- ulatory agencies having ratemaking authority for electric utilities, and after public notice and a reasonable opportunity for interested persons (including State and Federal agencies) to submit oral as well as written data, views, and arguments. Such rules shall include provisions respecting mini- mum reliability of qualifying cogeneration facilities and qualifying small power production facilities (including reliability of such facilities during emergencies) and rules respecting reliability of electric energy service to be available to such facilities from electric utilities during emergencies. Such rules may not authorize a qualifying cogeneration facility or qualifying small power production facility to make any sale for purposes other than resale.

(b) RATES FOR PURCHASES BY ELECTRIC UTILITIES Ð The rules prescribed under subsec- tion (a) shall insure that, in requiring any electric utility to offer to purchase electric energy from any qualifying cogeneration facility or qualifying small power production facility, the rates for such pur- chase Ð

(1) shall be just and reasonable to the electric consumers of the electric utility and in the public interest, and

(2) shall not discriminate against qualifying cogenerators or qualifying small power pro- ducers.

No such rule prescribed under subsection (a) shall provide for a rate which exceeds the incre- mental cost to the electric utility of alternative electric energy.

(c) RATES FOR SALES BY UTILITIES Ð The rules prescribed under subsection (a) shall insure that, in requiring any electric utility to offer to sell electric energy to any qualifying cogeneration facil- ity or qualifying small power production facility, the rates for such sale Ð

(1) shall be just and reasonable and in the public interest and

a Ð i Appendix A

(2) shall not discriminate against the qualifying cogenerators or qualifying small power producers.

(d) Definition Ð For purposes of this section, the term “incremental cost of alternative electric energy” means, with respect to electric energy purchased from a qualifying cogenerator or qualify- ing small power producer, the cost to the electric utility of the electric energy which, but for the purchase from such cogenerator or small power producer, such utility would generate or purchase from another source.

(e) EXEMPTIONS Ð

(1) Not later than one year after the date of enactment of this Act and from time to time thereafter, the Commission shall, after consultation with representatives of State regulatory authorities, electric utilities, owners of cogeneration facilities and owners of small power pro- duction facilities, and after public notice and a reasonable opportunity for interested persons (including State and Federal agencies) to submit oral as well as written data, views, and argu- ments, prescribe rules under which geothermal small power production facilities of not more than 80 megawatt capacity, qualifying cogeneration facilities, and qualifying small power pro- duction facilities are exempted in whole or part from the Federal Power Act, from the Public Utility Holding Company Act, from State laws and regulations respecting the rates, or respecting the financial or organizational regulation, of electric utilities, or from any combina- tion of the foregoing, if the Commission determines such exemption is necessary to encourage cogeneration and small power production.

(2) No qualifying small power production facility which has a power production capacity which, together with any other facilities located at the same site (as determined by the Commission), exceeds 30 megawatt or 80 megawatt for a qualifying small power production facility using geothermal energy as the primary energy source, may be exempted under rules under paragraph (1) from any provision of law or regulation referred to in paragraph (1), except that any qualifying small power production facility which produces electric energy solely by the use of biomass as a primary energy source, may be exempted by the Commission under such rules from the Public Utility Holding Company Act and from State laws and regulations referred to in such paragraph (1).

(3) No qualifying small power production facility or qualifying cogeneration facility may be exempted under this subsection from Ð

(A) any State law or regulation in effect in a State pursuant to subsection (f),

(B) the provisions of section 210, 211, or 212 of the Federal Power Act or the nec- essary authorities for enforcement of any such provision under the Federal Power Act, or

(C) any license or permit requirement under part I of the Federal Power Act, any provision under such Act related to such a license or permit requirement, or the nec- essary authorities for enforcement of any such requirement.

(f) IMPLEMENTATION OF RULES FOR QUALIFYING COGENERATION AND QUALIFYING SMALL POWER PRODUCTION FACILITIES Ð a Ð ii Appendix A

(1) Beginning on or before the date one year after any rule is prescribed by the Commission under subsection (a) or revised under such subsection, each State regulatory authority shall, after notice and opportunity for public hearing, implement such rule (or revised rule) for each electric utility for which it has ratemaking authority.

(2) Beginning on or before the date one year after any rule is prescribed by the Commission under subsection (a) or revised under such subsection, each nonregulated elec- tric utility shall, after notice and opportunity for public hearing, implement such rule (or revised rule).

(g) JUDICIAL REVIEW AND ENFORCEMENT Ð

(1) Judicial review may be obtained respecting any proceeding conducted by a State reg- ulatory authority or nonregulated electric utility for purposes of implementing any requirement of a rule under subsection (a) in the same manner, and under the same requirements, as judicial review may be obtained under section 123 in the case of a proceeding to which sec- tion 123 applies.

(2) Any person (including the Secretary) may bring an action against any electric utility, qualifying small power producer, or qualifying cogenerator to enforce any requirement estab- lished by a State regulatory authority or nonregulated electric utility pursuant to subsection (f). Any such action shall be brought only in the manner, and under the requirements, as pro- vided under section 123 with respect to an action to which section 123 applies.

(h) COMMISSION ENFORCEMENT Ð

(1) For purposes of enforcement of any rule prescribed by the Commission under sub- section (a) with respect to any operations of an electric utility, a qualifying cogeneration facility or a qualifying small power production facility which are subject to the jurisdiction of the Commission under part II of the Federal Power Act, such rule shall be treated as a rule under the Federal Power Act. Nothing in subsection (g) shall apply to so much of the operations of an electric utility, a qualifying cogeneration facility or a qualifying small power production facil- ity as are subject to the jurisdiction of th COmmission under part II of the Federal Power Act.

(2) (A) The Commission may enforce the requirements of subsection (f) against any State regulatory authority or nonregulation electric utility. For purposes of any such enforce- ment, the requirements of subsection (f)(1) shall be treated as a rule enforceable under the Federal Power Act. For purposes of any such action, a State regulatory authority or nonregulated electric utility shall be treated as a person within the mean- ing of the Federal Power Act. No enforcement action may be brought by the Commission under this section other than Ð

(i) an action against the State regulatory authority or nonregulated electric utility for failure to comply with the requirements of subsection (f), or

(ii) an action under paragraph (1).

(B) Any electric utility, qualifying cogenerator, or qualifying small power producer may petition the Commission to enforce the requirements of subsection (f) as pro-

a Ð iii Appendix A

vided in subparagraph (A) of this paragraph. If the Commission does not initiate an enforcement action under subparagraph (A) against a State regulatory authority or nonregulated electric utility within 60 days following the date on which a petition is filed under this subparagraph with respect to such authority, the petitioner may bring an action in the appropriate United States district court to require such State regula- tory authority or nonregulated electric utility to comply with such requirements, and such court may issue such injunctive or other relief as may be appropriate. The Commission may intervene as a matter of right in any such action.

(i) FEDERAL CONTRACTS Ð No contract between a Federal agency and any electric utility for the sale of electric energy by such Federal agency for resale which is entered into after the date of the enactment of this Act may contain any provision which will have the effect of preventing the implementation of any rule under this section with respect to such utility. Any provision in any such contract which has such effect shall be null and void.

(j) DEFINITIONS Ð For purposes of this section, the terms “small power production facility”, “qual- ifying small power production facility”, “qualifying small power producer”, “primary energy source”, “cogeneration facility”, “qualifying cogeneration facility’, and “qualifying cogenerator” have the respective meanings provided for such terms under section 3(17) and (18) of the Federal Power Act. (92 Stat. 3144; ¤ 643(b), Act of June 30, 1980, 94 Stat. 770; 16 U.S.C. ¤ 824a-3)

TITLE IV Ð SMALL HYDROELECTRIC POWER PROJECTS

SEC. 401 ESTABLISHMENT OF PROGRAM

The Secretary shall establish a program in accordance with this title to encourage municipalities, electric cooperatives, industrial development agencies, nonprofit organizations, and other persons to undertake the development of small hydroelectric power projects in connection with existing dams which are not being used to generate electric power. (92 Stat. 3154; 16 U.S.C. ¤ 2701)

SEC. 402 LOANS FOR FEASIBILITY STUDIES

(a) LOAN AUTHORITY Ð The Secretary, after consultation with the Commission, is authorized to make a loan to any municipality, electric cooperative, industrial development agency, nonprofit orga- nization, or other person to assist such person in defraying up to 90 percent of the costs of Ð

(1) studies to determine the feasibility of undertaking a small hydroelectric power project at an existing dam or dams, and

(2) preparing any application for a necessary license or other Federal, State, and local approval respecting such a project at an existing dam or dams and of participating in any administrative proceeding regarding any such application.

(b) CANCELLATION Ð The Secretary may cancel the unpaid balance and any accrued interest on any loan granted pursuant to this section if he determines on the basis of the study that the small hydroelectric power project would not be technically or economically feasible. (92 Stat. 3154; 16 U.S.C. ¤ 2701)

SEC. 403 LOANS FOR PROJECT COSTS a Ð iv Appendix A

(a) Authority Ð The Secretary is authorized to make loans to any municipality, electric coopera- tive, industrial development agency, nonprofit organization, or other person of up to 75 percent of the project costs of a small hydroelectric power project. No such loan may be made unless the Secretary finds that Ð

(1) the project will be constructed in connection with an existing dam or dams,

(2) all licenses and other required Federal, State, and local approvals necessary for con- struction of the project have been issued,

(3) the project will have no significant adverse environmental effects, including significant adverse effects on fish and wildlife, on recreational use of water, and on stream flow, and

(4) the project will not have a significant adverse effect on any other use of the water used by such project.

The Secretary may make a commitment to make a loan under this subsection to an applicant who has not met the requirements of paragraph (2), pending compliance by such applicant with such requirements. Such commitment shall be for a period not to exceed three years unless the Secretary, in consultation with the Commission, extends such period for good cause shown. Notwithstanding any such commitment, no such loan shall be made before such person has complied with such requirements.

(b) Preference Ð The Secretary shall give preference to applicants under this section who do not have available alternative financing which the Secretary deems appropriate to carry out the project and whose projects will provide useful information as to the technical and economic fea- sibility of Ð

(1) the generation of electric energy by such projects, and

(2) the use of energy produced by such projects.

(c) INFORMATION Ð Every applicant for a license for a small hydroelectric power project receiv- ing loans pursuant to this section shall furnish the Secretary with such information as the Secretary may require regarding equipment and services proposed to be used in the design, construction, and operation of such project. The Secretary shall have the right to forbid the use in such project of any equipment or services he finds inappropriate for such project by reason of cost, performance, or fail- ure to carry out the purposes of this section. The Secretary shall make information which he obtains under this subsection available to the public, other than information described as entitled to confi- dentiality under section 11(d) of the Energy Supply and Environmental Coordination Act of 1974.

(d) Joint Participation Ð In making loans for small hydroelectric power projects under this section, the Secretary shall encourage joint participation, to the extent permitted by law, by applicants eligi- ble to receive loans under this section with respect to the same project. (92 Stat. 3155; 16 U.S.C. ¤ 2703)

SEC. 404 LOAN RATES AND REPAYMENT

(a) INTEREST Ð Each loan made pursuant to this title shall bear interest at the discount or inter- est rate used at the time the loan is made for water resources planning projects under section 80 of

a Ð v Appendix A the Water Resources Development Act of 1974 (42 U.S.C. 1962-17(a)). Each such loan shall be for such term, as the Secretary deems appropriate, but not in excess of Ð

(1) Ten years (in the case of a loan under section 402), or

(2) Thirty years (in the case of a loan under section 403).

(b) REPAYMENTS Ð Amounts repaid on loans made pursuant to this title shall be deposited into the United States Treasury as miscellaneous receipts. (92 Stat. 3155; 16 U.S.C. ¤ 2704)

EXPLANATORY NOTE

Reference in the Text Ð Section 80 of the Water Resources Development Act of 1974 (Act of March 7, 2974, 88 Stat. 12), referred to in subsection (a) of the text, adopts the discount rate formula published by the Water Resources Council on December 24, 1968 (33 F.R.19170; 18 C.F.R.704.39) for use in formulating and evaluating water resource projects. Extracts from the 1974 Act, including section 80, appear in Volume IV in chronological order.

SEC. 405 SIMPLIFIED AND EXPEDITIOUS LICENSING PROCEDURES

(a) ESTABLISHMENT OF PROGRAM Ð The Commission shall establish, in such manner as the Commission deems appropriate, consistent with the applicable provisions of law, a program to use simple and expeditious licensing procedures under the Federal Power Act for small hydroelectric power projects in connection with existing dams.

(b) PREREQUISITES Ð Before issuing any license under the Federal Power Act for the construc- tion or operation of any small hydroelectric power project the Commission Ð

(1) shall assess the safety of existing structures in any proposed project (including pos- sible consequences associated with failure of such structures), and

(2) shall provide an opportunity for consultation with the Council on Environmental Quality and the Environmental Protection Agency with respect to the environmental effects of such project.

Nothing in this subsection exempts any such project from any requirement applicable to any such project under the National Environmental Policy Act of 1969, the Fish and Wildlife Coordination Act, the Endangered Species Act, or any other provision of Federal law.

(c) FISH AND WILDLIFE FACILITIES Ð The Commission shall encourage applicants for licenses for small hydroelectric power projects to make use of public funds and other assistance for the design and construction of fish and wildlife facilities which may be required in connection with any develop- ment of such project.

(d) EXEMPTIONS FROM LICENSING REQUIREMENTS IN CERTAIN CASES Ð The Commission may in its discretion (by rule or order) grant an exemption in whole or in part from the requirements (including the licensing requirements) of part I of the Federal Power Act to small hydro- electric power projects having a proposed installed capacity of 5,000 kilowatts or less, on a case-by-case basis or on the basis of classes or categories of projects, subject to the same limita- tions (to ensure protection for fish and wildlife as well as other environmental concerns) as those which are set forth in subsections (c) and (d) of section 30 of the Federal Power Act with respect to a Ð vi Appendix A determinations made and exemptions granted under subsection (a) of such section 30; and subsec- tions (c) and (d) of such section 30 shall apply with respect to action taken and exemptions granted under this subsection. Except as specifically provided in this subsection, the granting of an exemp- tion to a project under this subsection shall in no case have the effect of waiving or limiting the application (to such project) of the second sentence of subsection (b) of this section. (92 Stat. 3156; ¤ 408, Act of June 30, 1980, 94 Stat. 718; 16 U.S.C. ¤ 2705)

EXPLANATORY NOTE

1980 Amendment Ð Section 408(b) of the Act of June 30, 1980 (Public Law 96-294, 94 Stat. 611, 718), known as the Energy Security Act, added subsection (d). Title IV of that act, in which sec- tion 408 is located, is know as the Renewable Energy Resources Act of 1980. The Act does not appear herein.

NOTE OF OPINION

1. Lease of power privilege charge Ð The Secretary of the Interior may, but need not, impose upon a non-Federal power development at a Reclamation facility a charge for the lease of power priv- ileges even though the Federal Energy Regulatory Commission has exempted the development from paying reasonable annual charges under the Federal Power Act for use of the Reclamation facility. Memorandum of Associate Solicitor Good, December 15, 1981. SEC. 406 NEW IMPOUNDMENTS

Nothing in this title authorizes (1) the loan of funds for construction of any new dam or other impoundment, or (2) the simple and expeditious licensing of any such new dam or other impound- ment. (92 Stat. 3156; 16 U.S.C. ¤ 2706) SEC. 408 DEFINITIONS

(a) For purposes of this title, the term Ð

(1) “small hydroelectric power project” means any hydroelectric power project which is located at the site of any existing dam, which uses the water power potential of such dam, and which has not more than 30,000 kilowatts of installed capacity;

(2) “electric cooperative” means any cooperative association eligible to receive loans under section 4 of the Rural Electrification Act of 1936 (7 U.S.C. 904);

(3) “industrial development agency” means any agency which is permitted to issue obli- gations the interest on which is excludable from gross income under section 103 of the Internal Revenue Code of 1954;

(4) “project costs” means the cost of acquisition or construction of all facilities and ser- vices and the cost of acquisition of all land and interests in land used in the design and construction and operation of a small hydroelectric power project;

(5) “nonprofit organization” means any organization described in section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1954 and exempt from tax under section 501(a) of such Code (but only with respect to a trade or business carried on by such organization which

a Ð vii Appendix A

is not an unrelated trade or business, determined by applying section 513(a) to such organi- zation);

(6) “existing dam” means any dam, the construction of which was completed on or before April 20, 1977, and which does not require any construction or enlargement of impoundment structures (other than repairs or reconstruction) in connection with the installation of any small hydroelectric power project;

(7) “municipality” has the meaning provided in section 3 of the Federal Power Act; and

(8) “person” has the meaning provided in section 3 of the Federal Power Act.

(b) The requirement in subsection (a)(1) that a project be located at the site of an existing dam in order to qualify as a small hydroelectric power project, and the other provisions of this title which require that a project be at or in connection with an existing dam (or utilize the potential of such dam) in order to be assisted under or included within such provisions, shall not be construed to exclude Ð

(1) from the definition contained in such subsection (a)(1), or

(2) from any other provision of this title, any project which utilizes or proposes to utilize natural water features for the generation of electricity, without the need for any dam or impoundment, in a manner which (as determined by the Commission) will achieve the purposes of this title and will do so without any adverse effect upon such natural water features. (92 Stat. 3156; ¤ 408, Act of June 30, 1980, 94 Stat. 718; 16 U.S.C. ¤ 2708)

a Ð viii Appendix B AGREEMENT BETWEEN TOWN OF SUMMERSVILLE, WEST VIRGINIA AND NOAH CORP. AUTHORIZING NOAH CORP.TO ACT AS AGENT TO DEVELOP HYDROELECTRIC POWER AT THE SUMMERSVILLE DAM

This agreement is made as of December 13, 1982 between the Town of Summersville, West Virginia, a municipality chartered by the State of West Virginia (“the Town”), and Noah Corp., a corporation under the laws of the State of South Carolina and domesticated in the State of West Virginia.

RECITALS

1. On September 22, 1980 the Town and Noah jointly filed with the Federal Energy Regulatory Commission (“FERC”) and application for a preliminary permit under Section 4(f) of the Federal Power Act for a hydroelectric project (“the Project”) to be installed at the U.S. Army Corps of Engineers’ Summersville Dam on the Gauley River in Nicholas County, West Virginia. The Summersville Dam is located near the Town.

2. Thereafter, Noah and the Town concluded that Noah’s participation as a joint applicant for the preliminary permit might imperil the Town’s entitlement to municipal preference under Section 7(a) of the Act. Believing that it was in the Town’s best interest that Noah not be a joint applicant, Noah withdrew its application on December 16, 1980, leaving the Town as sole applicant. Concurrently with the withdrawal, the Town and Noah reached an understanding that the Town would own, develop, manage and control the Project and would retain Noah as an independent contractor serving as its agent to develop and operate the Project.

3. On May 22, 1981, FERC, acting through its Director of the Office of Electric Power Regulation, issued a preliminary permit for the Project to the Town and denied competing applications for prelim- inary permits.

4. The Town desires to employ Noah Corp., acting as the Town’s agent under the Town’s direction and control, to manage and conduct the licensing, financing, construction and operation and main- tenance of the Project and the marketing of power and energy from the Project.

5. Noah Corp. desires to serve as the Town’s agent to manage and conduct the activities described above under the Town’s direction and control.

6. In conformance with West Virginia law, the Town shall not be obliged to pledge its full faith and credit in obtaining Project financing.

In consideration of the mutual covenants contained herein, the Town (hereinafter “the Principal”) and Noah Corp. (hereinafter “the Agent”) agree as follows:

SECTION ONE The Principal’s Commitment to Proceed with the Project

The Principal shall proceed with licensing, financing and construction and operation of the Project if economic and technical studies demonstrate that the Project is feasible.

b Ð i Appendix B

SECTION TWO Employment of the Agent; Scope of the Agency

The Principal hereby retains and employs the Agent to prepare and prosecute an application by the Town for a license for the Project and, if a license is issued, to develop and operate the Project for the Town.

The Agent hereby accepts the obligations involved in such agency and commits itself to carry out those obligations as an independent contractor serving as agent under the Town’s direction and con- trol.

The Agent is to be the Principal’s sole and exclusive agent for the purposes set out above.

SECTION THREE Specification of the Agent’s Obligations and Authority

In carrying out the agency created under this agreement, the Agent shall have the obligation and the authority, subject to the Principal’s direction and control, to take the following actions:

1. Provide overall management of all aspects of the licensing, financing, design, construction, operation and maintenance of the Project and the marketing of power from the Project. In particular:

2. Prepare and prosecute an application by the Town for a license for the Project under the Federal Power Act. Prepare and prosecute applications for such other permits or authorizations from Federal or State authorities as may be required or desirable for the Project.

3. In consultation with the Principal’s attorney, prepare pleadings and papers and otherwise participate in administrative or court proceedings involving the Project.

4. Prepare amendments to any application, license, permit or authorization as may be required or desirable from time to time.

5. Make arrangements for financing the Project.

6. Hire consultants, engineers, construction firms, accountants, attorneys, and other independent contractors and agents as may be required or desirable to provide services in connection with the Project and contract with the same as necessary or appropriate for purposes of the Project, including the securing of additional financial support and additional technical resources. Discharge independent contractors and agents as may be required or desirable. Review and approve the bonding of independent contractors and agents.

7. Purchase or contract to purchase equipment, materials and supplies and other goods and personal property as may be required or desirable for the Project. Sell or otherwise dispose of any goods no longer needed for the Project.

8. Conduct competitive bidding or other methods of procurement to insure the most reliable and economic construction, operation and maintenance of the Project.

9. Supervise the execution and performance of any contract entered into in connection with the Project.

b Ð ii Appendix B

10. Obtain insurance for the protection of the Principal and itself against various risks, hazards and liabilities of the Project. Obtain bonding of all employees of the Principal and the Agent who regu- larly handle cash.

11. In consultation with the Principal’s attorney, negotiate for and arrange for the Town to acquire such rights of way and other property or water rights as may be required or desirable for the Project and, in the event that rights cannot be acquired otherwise, arrange for the Principal to acquire such rights by eminent domain.

12. Arrange with the Corps of Engineers the terms and conditions on which the Project may be installed at Summersville Dam and determine the Corps of Engineers’ requirements for design, con- struction, and operation and maintenance of the Project at the dam. Enter agreements as may be required or desirable with the Corps of Engineers regarding such requirements.

13. Establish before FERC any payments to be made to the United States under Section 10(c) of the Federal Power Act for use by the Project of the Summersville Dam.

14. Undertake such consultation and coordination with Federal and State authorities and private par- ties as may be required or desirable in the process of licensing, constructing and operating and maintaining the Project. Enter agreements with such authorities and may be required or desirable.

15. Hire and train as employees of the Agent personnel to operate and maintain the Project. Discharge same as may be necessary or desirable.

16. Supervise operation of the Project to insure that it produces maximum revenues consistent with license obligations, Corps of Engineers’ requirements and any other requirements.

17. Arrange for routine and preventive maintenance of the Project.

18. Arrange for extraordinary repair and maintenance as may be required from time to time.

19. Provide for periodic inspection of the Project and reports of same.

20. Take any and all actions required to comply with the terms and conditions of the license and FERC regulations and requirements, with the terms and conditions of any other permits or authorizations and with any other applicable requirements of law.

21. Negotiate and enter into agreements to sell or to transmit and sell any power and energy from the Project.

22. If such sales are priced on the purchaser’s “avoided cost,” monitor the purchaser’s “avoided cost” to insure that the Principal receives the full price to which it is entitled.

23. Make reports to the FERC and other Federal or State authorities as may be required.

24. Take any and all actions necessary regarding any claims or causes of action that the Principal might have as a result of the Project or that might be asserted against the Principal as a result of the Project as a direct Project cost and take such further action as the Principal or its attorney might direct regarding those claims or causes of action.

25. Prepare and revise from time to time budgets for the Project.

b Ð iii Appendix B

26. As specified in Section Seven below, pay the expenses and receive the income of the Project, render to the Principal an accounting of expenses and income and pay to the Principal the net pro- ceeds of the Project.

27. Establish, maintain and use separate trust accounts in the name of the Principal in connection with the Project.

28. Render advice to the Principal on any subject affecting the Project on which the Principal must act or on which the Principal seeks advice.

29. Take any other actions, as may be required or desirable to accomplish the licensing, financing, construction and operation and maintenance of the Project and the marketing of power and energy from the Project.

SECTION FOUR The Principal’s Control

The Principal shall have the right to direct and control the Agent in each and every action under- taken pursuant to the agency. Any actions of the Agent within the scope of this agency that are not inconsistent with prior directions of the Principal shall be treated as actions of the Principal itself.

Unless exigent circumstances require otherwise, the Agent shall consult with the Principal or such officials of the Principal as the Principal may designate before the Agent:

1. Formulates a design for the Project,

2. Formulates an application for a license for the Project,

3. Submits any amendment to the application for a license or submits any application for amendment of a license,

4. Makes arrangements for financing the Project,

5. Hires or discharges consultants, accountants, or any other independent contractors and agents to provide major services in connection with the Project,

6. Purchases or contracts to purchase major equipment for the Project,

7. Establishes policies for any competitive bidding, if any, or other methods of best providing goods and services for the Project,

8. Takes actions significantly affecting the timing or cost of construction of the Project,

9. Takes actions affecting the structural integrity and safety of the Project,

10. Enters agreements with the Corps of Engineers significantly affecting the design, construc- tion or operation and maintenance of the Project,

11. Takes actions significantly affecting the amount of power and energy generated at the Project,

12. Undertakes extraordinary repairs or maintenance on the Project,

b Ð iv Appendix B

13. Arranges for litigation or appeals in connection with the Project,

14. Makes arrangements for the transmission or sale of power and energy from the Project, and

15. Takes any other action significantly affecting the Project or the Principal’s interest in it.

If the Principal, after consultation, does not direct the Agent to take a particular course of action, the Agent is authorized to take the course of action that it considers to be in the Principal’s best interest, consistent with requirements of law. If in exigent circumstances consultation in the areas specified above is impractical, the Agent is authorized to act on behalf of the Principal without consultation.

The Agent is authorized to act on behalf of the Principal without consultation in any matter that does not significantly affect the Project or the Principal’s interest in it.

The Agent shall promptly inform the Principal of any developments concerning the Project that significantly affect its licensing, financing, construction, operation and maintenance, structural integrity and safety, cost or profitability. The Agent shall render quarterly written reports to the Principal summarizing developments and operations at the Project during the preceding three months. In accordance with Section Seven, the Agent shall render a monthly accounting to the Principal of the expenses and income of the Project.

SECTION FIVE Project Financing

The Principal, acting through the Agent, shall arrange Project financing as early in the course of the Project’s development as is feasible. Such Project financing shall be sufficient to cover all costs of the Project. Promptly after the Project financing is obtained, the Principal shall reimburse the Agent for all of Agent’s time and overhead costs and out-of-pocket expenses of the Project, includ- ing but not limited to expenses incurred for such services as detail design, license preparation, power purchase contract negotiation, environmental consultations, legal work and project construction administration. Thereafter, the Agent from time to time shall call upon the Principal to advance funds acquire through the Project financing as needed to cover the expenses of the Project, and the Principal shall promptly advance such funds. In obtaining Project financing, the Principal shall not be obliged to pledge its full faith and credit.

SECTION SIX The Agent’s Risk

If the Project should be abandoned, the Agent shall absorb the loss of any expenses of the Project for which it has not been reimbursed.

SECTION SEVEN Accounting

The Agent shall issue bills for power and energy sold from the Project and shall receive on behalf of the Principal all income from the Project. The Agent also shall pay all expenses, including debts and obligations, of the Project. The Agent shall establish and maintain separate trust accounts in the name of the Principal for receipt and disbursement of funds for the Project.

b Ð v Appendix B

The Agent shall render to the Principal monthly statements of income and expenses of the Project and such other monthly accounting statements as the Agent or Principal may deem desir- able. The Agent shall render to the Principal an annual profit and loss statement and balance sheet for the Project.

The Agent shall pay to the Principal the monthly net proceeds of the Project, which shall consist of the gross monthly income of the Project received by the Agent less the monthly expenses of the Project incurred by the Agent. Gross monthly income shall consist of all revenues from sales of power and energy from the Project and any other income related to the Project. In the event that any of the power or energy generated by the Project is not able to be sold to a utility, and if in such event, the Principal elects to use some or all of such power to serve its own load requirement, then in such event the gross monthly revenues of the Project shall consist of the total of the revenue of sales of power and energy, to the utility and the value of the power used by the Principal, which shall be set at the fully allocated cost of such power. Monthly expenses shall consist of all expenses of the Project including, but not limited to, operation and maintenance expenses, all other business disbursements and expenditures, depreciation and amortization, contributions to contingency funds (including, but not limited to, contingency funds for working capital, low flow years and scheduled and unscheduled maintenance and repairs), taxes (if any) and payments on debt, including interest and scheduled repayment of principal, but monthly expenses shall not include capital expenditures. The Agent shall include in the monthly expenses of the Project any out-of-pocket expenses incurred by it in connection with the Project and all of the expenses of employing and training personnel to operate and maintain the Project. The intention is that the Agent shall be reimbursed, promptly after Project financing is obtained, for all of its true and overhead costs and out-of-pocket expenses incurred prior to the Project’s date of commercial operation (those costs to be capitalized as Project costs), but shall be reimbursed only for its out-of-pocket expenses and operating personnel expenses after the date of commercial operation.

The agent shall offset against the payment of net proceeds owing to the Principal any amounts owed by the Principal to the Agent, including the monthly Agent’s fee under Section Eight.

The payment of the monthly net proceeds of the Project to the Principal shall be made before the end of the month succeeding the month to which the payment pertains.

The Agent shall maintain such full and accurate books of account and records for the Project as are required under the Federal Power Act, the license, FERC regulations and requirements and any other statutes and regulations. The Agent’s books of account for the Project shall be kept in accor- dance with good accounting practice and shall be audited annually by an independent firm of certified public accountants, whose report and opinion shall be provided to the Principal. The Agent’s books of account and records for the Project shall be available at all reasonable times for inspection by the Principal.

SECTION EIGHT The Agent’s Fee

The Principal shall pay the Agent a monthly Agent’s fee as compensation for the services and risks undertaken in this agreement. The Agent’s fee shall be 49 percent of the monthly net proceeds of the Project as established under Section Seven.

b Ð vi Appendix B

In the event that the expenses of the Project exceed the gross income of the Project in any month, the Agent shall receive no Agent’s fee for that month; if in any later month the gross income exceeds the expenses, the Agent’s fee for that later month shall be computed without any offset to account for any net loss of the Project in the earlier month. The Agent shall bear, under Section Six, the risk of loss of its unreimbursed expenses if the Project is abandoned, but shall not participate in any net operating losses of the Project, either by reduction of monthly Agent’s fees or by any other means.

SECTION NINE Ownership

The Project shall be owned exclusively by the Principal. It is the parties’ intention that this agree- ment not create any joint venture, joint enterprise or partnership between them. Thus, the Principal, as sole owner of the Project, has the right to direct and control the Agent in each and every of the Agent’s actions undertaken pursuant to this agreement, and the Agent has not rights of management or control of the Project except those that derive from the Principal. Thus also, the agent does not participate in any net operating losses of the Project. The Agent’s participation, through the Agent’s fee, in the net proceeds of the Project is intended to compensate the Agent for the services rendered and risks assumed in undertaking the agency and does not imply any ownership interest.

SECTION TEN Insurance

The Agent shall obtain appropriate policies of insurance, satisfactory to the Principal’s attorney, against property damage, casualty loss, fire, liability, and workmen’s compensation and employer’s liability and may obtain insurance against such other hazards and risks of the Project as the Agent may deem desirable. The insurance shall include comprehensive general liability insurance with min- imum limits in amounts approved by the Principal’s attorney. The Principal shall be insured against loss occasioned by an act of the Agent or its employees or agents by virtue of its work in develop- ing and operating the Project. In all policies of insurance, the Principal and Agent shall be coinsured. The cost of insurance shall be treated as a cost of the Project. Further, the Agent shall assure the Principal, either through policies of insurance or contingency funds set up prior to initial operation of the Project and as a direct Project cost, that Principal’s risk of loss in the operation of the Project shall be borne by a third party or parties. For such purposes, the third parties may be insurers, under- writers of insurance or escrow agents entrusted with contingency funds. Such appropriate insurance or fund, or a combination thereof, shall be satisfactory to Principal’s attorney and such approval shall not be unreasonably withheld.

SECTION ELEVEN Terms of Agency

The agency created by this agreement shall commence as of the date first above written. The agency shall terminate as follows:

1. If the Principal receives a license for the Project and the Project is completed the agency shall terminate when commercial operation of the Project under the license and any successor license ter- minates,

b Ð vii Appendix B

2. If the Principal receive a license for the Project and the Project is not completed, the agency shall terminate when the license is surrendered or revoked,

3. If the Principal does not receive a license for the Project, the agency shall terminate when the Principal desists from any appeal or the Principal’s rights of appeal are exhausted, or

4. The agency may be terminated at any time by written agreement of the parties.

The Principal may revoke the agency at any time, but such revocation shall be only on the terms specified in Section Twelve.

The Agent may resign the agency, but such resignation shall be only on the terms specified in Section Thirteen.

This agreement shall continue in effect for the duration of the agency created hereunder except that the agreement shall remain in effect after the termination or revocation of the agency or the res- ignation of the Agent to any extent necessary to preserve, enforce or bring action upon any rights or obligations under the agreement not exercised or fulfilled at the termination or revocation of the agency or the resignation of the Agent.

SECTION TWELVE Revocation of the Agency

If the Principal revokes the agency at any time, the Principal shall make the following payments to the Agent within sixty days of the date of revocation:

1. The Principal shall reimburse the Agent for all of the out-of-pocket expenses that the Agent has incurred and for which the Agent is liable in connection with the Project but for which the Agent has not been previously paid. It is intended that such reimbursement shall include any unreimbursed expenses for which the Agent would otherwise be at risk under Section Six, and

2. The Principal shall pay the Agent a sum computed by these steps:

(a) Estimate the Agent’s fee for each month of the projected future period of commercial operation of the Project. In estimating the Agent’s fee for such period, assume escalation of the price of power and energy sold from the Project at 6 percent per annum from the average sales price from the previous 24 months.

(b) Apply a discount rate of 8 percent per annum to the estimated future stream of income from monthly Agent’s fees determined in step (a) to establish the estimated present worth of that future stream of income.

(c) Estimate the Agent’s expenses (including charges for the estimated time that the Agent’s employees or its agents would devote to the Project) for each month of the projected future period of commercial operation of the Project.

(d) Apply a discount rate of 8 percent per annum to the estimated future stream of Agent’s expenses determined in step (c) to establish the estimated present worth of that future stream of expenses.

b Ð viii Appendix B

(e) Subtract the amount found in step (d) from the amount found in step (b) to determine the Principal’s payment to the Agent under paragraph 2 of this Section Twelve.

In the event that there is any dispute between the Principal and the Agent about the amounts owing to the Agent upon revocation of the agency, they shall be resolved as provided in Section Fourteen. SECTION THIRTEEN Resignation of the Agent

The Agent may resign the agency upon six month’s notice without obligation to the Principal if the Agent’s fee, after the commencement of the commercial operation of the Project, is less than $5,000 per month in any 60 months, not necessarily consecutive, or is less that that amount per month in any 24 consecutive months.

If the Agent resigns the agency in circumstances other than those described above, the Agent shall give six month’s notice and, within 60 days of the date of resignation, shall make a payment to the Principal computed by these steps:

(a) Estimate the expense to be incurred by the Principal in replacing the Agent or performing the work itself for each month of a five year period after the resignation.

(b) Apply a discount rate of 8 percent per annum to the estimated future stream of the Principal’s expenses determined in step (a) to establish the estimated present worth of that future stream of expenses.

(c) Estimate the Agent’s fee for each month of the five year period after resignation. In estimating the Agent’s fee for such period, assume escalation of the price of power and energy sold from the Project at 6 percent per annum from the average sales price for the previous 24 months.

(d) Apply a discount rate of 8 percent per annum to the estimated future stream of monthly Agent’s fees determined in step (c) to establish the estimated present worth of that future stream of Agent’s fees.

(e) Subtract the amount found in step (d) from the amount found in step (b) to determine the Agent’s payment to the Principal under this provision of the agreement.

In the event that there is any dispute between the Principal and the Agent about the amounts owing to the Principal upon resignation of the agency, they shall be resolved as provided in Section Fourteen. SECTION FOURTEEN Procedures upon Revocation or Resignation of the Agent

Upon any revocation or resignation of the agency, the Agent shall make available to the Principal for copying all books of account, records, correspondence, memoranda, studies and other docu- ments that might be of use to the Principal in licensing, financing, constructing and operating and maintaining the Project and selling power and energy from the Project. The Agent shall cooperate with the Principal and the Principal’s new Agent, if any, in transferring responsibilities for the Project; the Principal shall compensate the Agent for any expenses incurred or services performed in the course of the transfer after revocation or resignation.

b Ð ix Appendix B

In the event that there is any dispute between the parties about payments owing under Sections Twelve and Thirteen upon revocation or resignation of the agency, the parties revoking or resigning the agency shall pay the other party the amounts that the party revoking or resigning the agency agrees are owing and shall pay into an escrow account, bearing interest, any additional amounts that the other party claims are owing. Thereafter, either party, by written request specifying the issues in dispute and summarizing the claims, may refer the dispute to arbitration as provided below. Payments shall be made from the escrow account to the parties according to the arbitration decision. In order to encourage the parties to make responsible claims as to what is or is not owning, the inter- est component on any amounts paid from the escrow account to a party shall be matched by a payment to that party from the other party of an amount equal to the interest component.

Any late payments under Sections Twelve and Thirteen shall bear interest at the prime rate paid from time to time by the commercial bank in Charleston, West Virginia, having the largest assets.

In any matter referred to arbitration under this Section Fourteen, the parties shall, if possible, agree upon a single arbitrator. If the parties fail to agree upon a single arbitrator within 30 days from the request in writing of one party to the other for arbitration, then each party shall, within 15 days after such failure, appoint one arbitrator and the arbitrators appointed by each party shall appoint a third arbitrator. If either party fails to appoint its arbitrator, then the other party shall request the American Arbitration Association to appoint a single arbitrator to arbitrate the matter. The arbitrator(s), after an opportunity for each of the parties to be heard, shall consider and decide the dispute and notify the parties in writing of the decision. Such decision shall be final and binding upon all parties and shall not be appealable in any jurisdiction. The expense of the arbitration shall be borne by the parties as determined by the arbitrator(s). Any proceedings in connection with such arbitration shall be conducted in Charleston, West Virginia.

SECTION FIFTEEN Responsibilities of the Parties

The Agent’s responsibility under this agreement is to use its best efforts in carrying out the obli- gations of the agency. The Agent and its employees and agents shall not be liable to the Principal for good faith errors of judgment or for any acts of commission or omission in connection therewith, but nothing in this agreement shall be construed to protect the Agent against any liability to the Principal arising from willful misconduct, bad faith, gross negligence or reckless disregard by the Agent of the obligations of its agency.

The Principal’s responsibility under this agreement is, pursuant to its commitment in Section One to proceed with the Project, to:

1. Exercise its right of direction and control of the Agent’s activities in a fashion that is timely and efficient,

2. Advance to the Agent the funds acquired through Project financing as they are needed to cover the expenses of the Project, and

3. Take such actions in administrative proceedings or such actions at law as may be required or desirable on behalf of the Project.

b Ð x Appendix B

If at any time either party believes the other to be in default under this agreement, that party shall give written notice to the other and shall afford the other a reasonable opportunity to remedy the default before taking any other action.

SECTION SIXTEEN Miscellaneous Provisions

This agreement shall inure to the benefit of, and shall bind, any successors or assigns of the Principal, including any transferees of a license for the Project, but shall not be assignable by the Agent without the Principal’s written consent.

Performance under this agreement shall be excused if and to the extent that a party is prevented from performing by action of a court or public authority, storm, flood, lightening, earthquake, explo- sion, strike, fire, breakdown, civil disturbance, war, acts of God, or shortage or any cause beyond the reasonable control of the party.

If any provision of this agreement shall be held invalid or unenforceable, the remainder of the agreement shall not be affected thereby and shall be valid and may be enforced to the full extent per- mitted by law.

The interpretation and performance of this agreement shall be in accordance with and controlled by the laws of the State of West Virginia.

This agreement may not be changed orally and may not be modified except by a writing signed by the parties.

Notices and written communications under this agreement should be addressed to:

Attention: Carroll T. Lay, Esquire Attention: President Attorney for Town of Summersville Noah Corporation 717 Main Street Post Office Box 640 Summersville, West Virginia 26651 Aiken, South Carolina 29801 or such other persons as the parties may designate in writing from time to time.

This agreement represents the complete understanding of the parties and any prior understand- ings regarding the subject of this agreement are merged herein and superseded hereby.

IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the day and year first above written.

ATTEST: G. Dale Bailes, Secretary BY: Thomas J. Trent, Mayor Town of Summersville

ATTEST: Elaine K. Edison, Secretary BY: Howard M. Hickey, President Noah Corporation

b Ð xi Appendix C UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Martin L. Allday, Chairman Charles A. Trabandt, Elizabeth Anne Moler, Jerry J. Langdon and Branko Terzic

Town of Summersville, West Virginia ) Project No. 10813-000

City of Manassas, Virginia ) Project No. 10634-000

Order Issuing License (Issued September 25, 1992)

The Town of Summersville, West Virginia (Summersville), filed a license application under Part I of the Federal Power Act (FPA)1 to construct, operate, and maintain the 80-megawatt (MW) Summersville Hydroelectric Project.2 The project would be located on the Gauley River, in Nicholas County, West Virginia, and would use surplus water or waterpower from the U.S. Army Corps of Engineers’ (Corps) Summersville Dam.3

Notice of the application was published, and motions to intervene were filed by: the City of Manassas, Virginia (Manassas); West Virginia Division of Natural Resources (WV DNR); American Whitewater Affiliation; Fayette County Chamber of Commerce, West Virginia Professional River Outfitters, and Class VI River Runners; and American Rivers, Incorporated. Except for Manassas, no party objects to issuance of the license. All comments filed by agencies and individuals have been fully considered. For the reasons stated below, we will issue the license.

BACKGROUND

The project, as licensed herein, consists of: (a) three penstocks, each 11 feet in diameter, con- nected to the existing outlet conduits of the Corps facility, and a fourth, 3-foot-diameter, penstock which branches off penstock No. 3 and leads to the small turbine; (b) a powerhouse containing three 24 MW turbines and one 8 MW turbine-generator, for a total installed capacity of 80 MW; (c) a new valve house with three large and one small Howell-Bunger valves; (d) a tailrace; (e) an 8-mile-long transmission line; and (f) appurtenant facilities. The project’s interconnection with the Corps facilities is described further below.

In 1981, Summersville was issued a preliminary permit in Project No. 3493 to study the develop- ment of hydroelectric energy at Summersville Dam.4 In 1983, during the term of the permit, Summersville filed a license application, and in 1984 a competitor (Southeastern Renewable

1 16 U.S.C. ¤¤ 791(a)-823(b) (1988) 3 Section 23(b)(1) of the FPA, 16 U.S.C. ¤ 817(1), requires a license for the construction and opera- 2 A competing application for a preliminary permit, tion of a hydroelectric project that will “utilize the filed by the City of Manassas, Virginia, was dis- surplus water or water power from any Government missed without prejudice by an unpublished order dam.” issued on Dec. 13, 1990. In this order the applica- tion is denied.

c Ð i Appendix C

Resources, Inc.) submitted another license application. In May 1984 both license applications were dismissed because the affected reach of the Gauley River was designated under the Wild and Scenic Rivers Act, 16 U.S.C. ¤¤ 1271-1287, for possible inclusion in the National Wild and Scenic Rivers System.5 On April 26, 1985, the President recommended that the affected reach of the Gauley RIver not be included in the National Wild and Scenic River System; pursuant to the terms of the Wild and Scenic Rivers Act, the licensing prohibition would expire on April 26, 1988.

Thereafter, Summersville submitted an application for a preliminary permit for the Summersville Dam site, which was granted in 1986,6 but due to concerns regarding its ability to finance the devel- opment Summersville surrendered the permit. The Commission Secretary’s Notice of Surrender, issued December 1, 1986, advised that new applications for the site could be filed on January 2, 1987. Summersville and Manassas submitted permit applications on that date, but in July 1988 the Commission dismissed both permit applications because of a policy adopted in March 1987 preclud- ing consideration of permit or license applications at study river sites until the three-year period for Congressional consideration had expired.7 The order stated that applications for the site would be accepted beginning Aug. 8, 1988.

On Aug. 8, 1988, Manassas filed a permit application that was docketed as Project No. 10634, and Summersville filed a license application that was docketed as Project No. 10635. The Commission staff notified Summersville of deficiencies in the license application, and Summersville submitted information to correct them.

On Oct. 26, 1988, before the competing permit and license applications were accepted or rejected, Congress enacted the West Virginia National Interest River Conservation Act of 1987, Public Law 100-534, 102 Stat. 2699. Title II of the act created the Gauley River National Recreation Area, which begins at the foot of the Summersville Dam and extends downstream approximately 25 miles. Within Title II, Section 202(d) adopted Section 7(c) of the Wild and Scenic Rivers Act, which prohibits the issuance of hydroelectric licenses. However, Section 205(c) of the act provides that:

during the four-year period after the enactment of this Act (i.e., until Oct. 26, 1992), nothing in this Act shall prohibit the licensing of a project adjacent to Summersville Dam as proposed by the City of Summersville, or by any competing project applicant with a permit or license application on file as of Aug. 8, 1988...

Section 205(c) also provides that if a project is licensed the boundary of the National Recreation Area is to be modified by relocating the upstream boundary of the Recreation Area to a point 550 feet downstream from the existing valve house. Section 205(c) directs the Secretary of the Interior to retain in the Recreation Area all lands which are not necessary to the operation of the project. The National Recreation Area is to be administered as a unit of the National Park System.

4 15 FERC ¦ 62,218 (1981). The order issuing the 6 36 FERC ¦ 62,179 (1986). preliminary permit also denied competing permit 7 applications, one of which was filed by a group that 44 FERC ¦ 62,095 (1988). A study river site is a included Manassas. river segment which has been designated for pos- sible inclusion in the Wild and Scenic Rivers 5 27 FERC ¦ 61,206 (1984), reh'g denied, 28 FERC System. ¦ 61,257 (1984), aff'd, Town of Summersville v. FERC, 780 F.2d 1034 (D.C. Cir. 1986). c Ð ii Appendix C

The Summersville Hydroelectric Project will be located between the Summersville Dam and the National Recreation Area, with the downstream edge of the project boundary being adjacent to the upstream boundary of the Recreation Area.

Before Summersville’s 1988 license application was accepted or rejected, Manassas’ permit application was accepted for filing, and the Commission issued notice of that application. Since the deadline for filing license applications in competition with Manassas' permit application was approaching and Summersville had not been informed whether it had corrected the deficiencies in its 1988 application, Summersville filed on July 31, 1989, a timely license application that was dock- eted as Project No. 10813.

The Commission staff notified Summersville of deficiencies in its 1989 license application, and subsequently rejected Summersville’s 1988 license application for failure to correct deficiencies. Summersville filed an appeal of the rejection. The Commission upheld the rejection of the 1988 appli- cation but accepted Summersville’s 1989 license application for filing.8 In an answer to Summersville’s appeal, Manassas argued9 that a license should not be issued to Summersville because it had abused its municipal preference.10 The Commission deferred consideration of Manassas’ allegations of municipal abuse until the review of Summersville’s license application.

On rehearing,11 the Commission addressed one aspect of Manassas’ allegation of municipal abuse by Summersville.12 The Commission found that Manassas had not shown that Summersville’s 1989 license application was the result of any abuse by Summersville of its municipal preference at the permit stage. The order noted that the 1983 license application filed by Summersville during the term of its 1981 permit was dismissed because of the designation of the Gauley River for potential inclusion in the Wild and Scenic River System. The order further noted that, upon the expiration of

8 53 FERC ¦ 61,259 (1990). This order determined license that were not preceded by preliminary per- that Summersville’s 1989 application qualified as mits, the Commission must give tie-breaker eligible under the terms of the Wet Virginia National preference to the application filed by a state or Interest River Conservation Act. Id. at p. 62,040 n. 7. municipality. In City of Fayetteville Public Works Commission, 16 FERC ¦ 61,209 (1981) 9 Manassas also argued that Summersville’s 1989 (Fayetteville), the Commission determined that license application should be rejected because it municipal preference does not apply to so-called duplicated the then-pending 1988 license applica- “hybrid” applications consisting of a municipality tion. The Commission found that Summersville had and a nonmunicipality. The Commission has found two license applications on file for the same project abuse of municipal preference in situations where as a result of a staff procedural error. We noted that the municipality used its municipal preference at the Manassas’ permit application should not have been permit stage to gain competitive advantage at the accepted before the staff decided whether to reject licensing stage on behalf of hidden, nonmunicipal Summersville’s 1988 application, and therefore entities whose interest in the project required them rescinded the not of Manassas’ permit application. to have been co-applicants. See, e.g., Gregory We also noted that Summersville had corrected the Wilcox, 24 FERC ¦ 61,317 (1983) and 26 FERC ¦ deficiencies in its 1989 license application in a 61,113 (1984). timely manner and that it was being accepted for fil- ing as of July 31, 1989. On Dec. 13, 1990, the staff 11 55 FERC ¦ 61,271 (1991).

dismissed Manassas’ permit application without 12 prejudice, and Manassas filed a request for rehear- The order also withdrew our rescission of the notice ing of that order. of Manassas’ permit application but upheld the order dismissing Manassas’ permit application, and 10 Under Section 7(a) of the FPA, 16 U.S.C. ¤ 800(a), affirmed the decision to accept and process when there are competing applications for prelimi- Summersville’s 1989 license application. nary permit, or competing applications for original

c Ð iii Appendix C the prohibition against licensing during Congressional consideration of the Wild and Scenic River issue, Manassas and Summersville were in fresh and equal positions to compete for development of the Summersville Dam site, and that Summersville’s 1989 license application was filed indepen- dently from the 1983 permit and not in reliance on it. The order deferred, until review of Summersville’s 1989 license application, consideration of Manassas’ allegations that Summersville does not have authority under state law to own and operate the project, and that Summersville does not intend to acquire and retain all of the property rights and interests in property necessary to oper- ate and maintain the project. Those issues are addressed below in this order.

DISCUSSION

A. Manassas’ Allegations Regarding Summersville’s Qualifications to Be a Licensee

1. Relationship Between Summersville and Noah Corporation

Manassas asserts that Noah Corporation is a joint venturer with Summersville in the project’s development and that the project will actually be owned and operated by Noah. Manassas argues that Summersville does not intend to retain all of the property rights necessary to construct and oper- ated the project but intends to transfer interests in the project to Noah that would require Noah to become a licensee. Manassas contends that Summersville will not be able to construct and operate the project as a sole licensee, inasmuch as all of the design, consultation, and study work related to the various applications has been performed by Noah and not by Summersville. Manassas also cites to a letter dated Nov. 26, 1980, from Howard M. Hickey, Jr., on behalf of Noah, to Farrell Johnson, Mayor of Summersville, recommending that Noah be withdrawn as an applicant from the pending permit application for Project No. 3493 so that the applicant would be a “pure” municipal rather than a hybrid. The letter goes on to state that any license issued for the project would then be transferred jointly to Summersville and Noah prior to the commencement of construction.

The addition of a non-municipal entity as a co-licensee to a license that was issued to a munic- ipal applicant could constitute an abuse of the municipal preference, even if the non-municipal entity is being added in order to provide financing for the project.13 Therefor, any financing plan or other agreement in which Noah would hold property rights which would require it to become a licensee could result in a finding that Summersville had abused its municipal preference.14

The November 1980 letter from Mr. Hickey to Mr. Johnson raises a question about the relation- ship between Summersville and Noah and Summersville’s intent to acquire and retain all of the property interests necessary to construct, operate and maintain the project. However, this letter was written before the Commission announced its policy regarding abuse of municipal preference in Fayetteville (see n. 11, supra). Summersville has since stated, in its application and in response to

13 See Paterson Municipal Utilities Authority, 27 FERC applicants such as to discourage potential applica- ¦ 61,323 (1984), and the City of Vidalia, Louisiana, tions by the latter. However, as discussed in our 28 FERC ¦ 61,328 (1984). prior order, as summarized above, any advantage that Summersville might have incurred from an 14 These principles apply despite the fact that abuse of municipal preference at the time it sought Summersville is the sole applicant for a license and and held a preliminary permit, had such abuse no competing license application has been filed, occurred, would in any event be irrelevant, because because (as we explained in Paterson and Vidalia) Summersville filed its license application in this pro- Summersville’s status as a municipality gave it an ceeding long after the permit expired. inherent advantage over potential non-municipal c Ð iv Appendix C staff inquiry, that it intends to acquire and retain all property interests necessary to be sole licensee for the project. It does, however, have a contractual agreement with Noah by which Noah is Summersville’s agent for most activities concerning the Summersville Dam Project.

In our decision in City of Fayetteville Public Works Commission, we stated that:15 “the preference afforded a municipality under Section 7(a) need not be jeopardized by con- tractual arrangements the municipality may make with non-municipal entities for assistance in financing, studying, constructing or operating a project. In order to retain its entitlement to municipal preference as the party who intends to be the licensee, the municipality must retain in such contractual relationships requisite control over the operation of the project and may not relinquish any property or other rights necessary for project purposes.” We have reviewed the agreement between Summersville and Noah, dated Dec. 13, 1992, and conclude that, as modified herein, it is acceptable. Under the agreement, Noah is to manage all aspects of the licensing, financing, design, construction, operation, and maintenance of the project,subject to the direction and control of Summersville,16 which will own all project property exclusively.17 Summersville has the right to direct and control Noah “in each and every action under- taken pursuant to the agency” established by the agreement, and Noah must consult with Summersville before taking actions “significantly” affecting the project, “unless exigent circumstances require otherwise.”18 Under these provisions, Summersville appears to retain the requisite control over project operations required by the FPA. Nevertheless, since Summersville’s control of Noah’s overall management of the project under the agreement is subject to “exigent circumstances”, and since Noah appears to have authority to take independent actions with respect to the project that do not “significantly” affect the project, and to make clear that Noah may in no way encumber Summersville’s performance of its duties as a licensee, the agreement must be modified to include a provision stating that: “Notwithstanding any provision contained herein, the Principal (Summersville) has the right to perform any and all acts required by an order of the Federal Energy Regulatory Commission or its successor without the prior approval of the Agent (Noah).”19 Inclusion if the foregoing provision will serve to ensure that the agreement comports with the pro- ject control and municipal preference requirements of the FPA. Under the agreement, Summersville will pay Noah a monthly fee equal to 49 percent of the pro- ceeds of the project,20 and in the event project expenses exceed gross income, Noah is to receive

15 Fayetteville, 16 FERC ¦ 61,209 at p. 61,456. The 19 Compare Linweave, Inc., 23 FERC ¦ 61,391 Commission has approved a variety of agreements (1983), where the Commission required modifica- where municipalities have contracted with non- tion of a lease agreement of project property to municipals for financing or project operation. See, include a similar provision to ensure that the e.g., City of New Martinsville, West Virginia, 32 licensee/lessee would possess all rights necessary FERC ¦ 61,268 (1985), and El Dorado Irrigation to accomplish all project purposes. District, 29 FERC ¦ 61,375 (1984). 20 See the agreement at pp. 12-14, Section Seven. 16 See the agreement at pp. 3-7, Section Three. Project proceeds are defined as gross income (con- sisting of power sales revenues to a utility plus an 17 Id. at p. 14, Section Nine. amount equal to the fully allocated cost of any pro- ject power used by Summersville) less monthly 18 Id. at p. 8, Section Four. expenses incurred by Noah

c Ð v Appendix C no fee.21 These provisions appear to provide an acceptable method of allocating project revenues between Summersville and Noah.22 That Noah will receive a portion of the project revenue does not by itself require it to become a licensee.23

Manassas has not presented any other evidence to support its contention that Summersville intends to transfer the license to Noah or add Noah as a co-licensee after the issuance of this license. Accordingly, we are satisfied that Summersville intends to maintain the control of project operations and ownership of property and property rights required by the license and the FPA.24

2. Summersville’s Municipal Authority

Manassas argues that a license should not be issued to Summersville because Summersville is not authorized by West Virginia law to construct, operate, and maintain the project. Summersville states in its application that it is authorized by West Virginia Code Sections 8-12-5(32) and (33) and 13-2C-1 to 13-2C-5 to engage in the business of operating a hydroelectric generating project.25

Manassas contends that the language of Section 8-12-5(32) does not permit Summersville to operate this project. Section 8-12-5(32) states in pertinent part that municipalities shall have the power:

“To erect, establish, construct, acquire, improve, maintain and operate... an electrical sys- tem... within or without the corporate limits of the municipality or partly within and partly without the corporate limits of the municipality, except that the municipality shall not erect any such system partly without the corporate limits of the municipality to serve persons already obtaining service from an existing system of the character proposed...”

Manassas argues that the prohibition in subsection 32 against establishing an electrical system outside the corporate limits of a municipality to serve persons already receiving service from an existing system prohibits Summersville from producing power for sale to a power company.

21 Id. at pp. 14-15, Section Eight. 24 However, if in the future Summersville seeks to transfer its license to a non-municipal entity, such 22 Compare El Dorado Irrigation District and El transfer may be barred as an abuse of municipal Dorado County Water Agency, 29 FERC ¦ 61,375 preference, unless the Commission determines, at p. 61,789 (1984), where the Commission after a competitive transfer proceeding or other approved a project financing arrangement involving proceeding, that Summersville and/or its private the sharing of project revenues between municipal transferee should be awarded the project license. licensees and a group of private investors. See Vidalia, supra n. 13.

23 See Fayetteville, supra, 16 FERC ¦ 61,459 n. 8, 25 Chapter 8, Article 12, Section 5 deals with general where the Commission found that it is the posses- municipal powers, and Chapter 13, Article 2C is the sion of proprietary interests in project property that Industrial Development and Commercial Develop- distinguishes a licensee from parties that are mere ment Bond Act. Section 8-12-5(33) provides that beneficiaries of a project. Compare Owyhee Summersville has the authority: Irrigation District, 55 FERC 61,252 p. 61,804 To acquire watersheds, water and riparian (1991), where the Commission found that a pro- rights, plant sites, rights-of-way and all other posed contract to share project revenues between property and appurtenances necessary, a licensee and a non-licensee, which would not appropriate, useful, convenient or incidental convey interests in project property or rights neces- to any such system... as aforesaid [including sary to accomplish project purposes, would not in Section 8-12-5(32)]... require the non-licensee to become a co-licensee. c Ð vi Appendix C

On March 10, 1990, after the date of Manassas’ motion opposing Summersville’s license appli- cation, the West Virginia Code was amended to provide that any municipality may:

“... acquire, construct, establish, extend, equip, repair, maintain and operate or lease to oth- ers for operation... an electric power system or construct, maintain and operate additions, betterments and improvements to an existing... electric power system, notwithstanding any provision or limitation to the contrary in any other law or charter: Provided, That such munic- ipality... shall not serve or supply... electric power facilities or services within the corporate limits of any other municipality or county commission without the consent of the governing body of such other municipality or county commission.”

Section 8-19-1(a).26 Summersville proposes to sell the project power to the Monongahela Power Company,27 but does not yet have a power supply contract. If the sale of project power to a private utility were to invoke the proviso in Section 8-19-1(a), Summersville would at that time have to obtain any requisite consent as provided for in that section. However, at this point Manassas has not demonstrated that the West Virginia Code prevents Summersville from constructing and operating the Summersville Dam Project.28

B. Whether to License the Project

We find that issuing a license for Summersville’s proposed project, with the mitigative measures recommended by the Commission’s staff, is in the public interest. This project will produce 198,000 MWh of electric energy annually using a clean, renewable resource. As discussed below and in the Environmental Assessment (EA)29 attached to this order, the project, as licensed, will not have sig- nificant adverse impacts on the recreational use of Lake Summersville or the Gauley RIver. We recognize that temporary adverse impacts on water quality and on recreational boating below the dam will occur during construction of the project, and that some of the project works, such as the powerhouse, valve house, and transmission line, will adversely affect the aesthetic appearance of the project area. Nonetheless, we conclude that the benefits of the project outweigh the unavoidable adverse impacts. Accordingly, we find that the Summersville Hydroelectric Project No. 10813 would be best adapted to comprehensive development of the waterway for beneficial public uses, as required by Section 10(a)(1) of the FPA.30

26 Section 8-18-1(c)(2) defines “electric power sys- 28 Summersville also states that it is authorized to tem” as: construct and operate the Summersville Dam “... a system or facility which produces elec- Project by the Industrial Development and tric power in its entirety or provides for the Commercial Development Bond Act (Bond Act), distribution of electric power for local con- which authorizes municipalities to acquire and sumption and use or for distribution and finance industrial and commercial projects. resale or any combination thereof, including, Manassas argues that the Summersville Dam but not limited to, power lines and wires, Project does not meet the definition of either a com- power poles, ... generators, ... machinery and mercial or industrial project as contained in the all other facilities necessary, appropriate, Bond Act. In light of the above discussion, we do useful or convenient or incidental in connec- not believe it is necessary to reach this issue. tion with or to an electric power supply 29 system.” Environmental Assessment for Summersville Hydroelectric Project, FERC No. 10813-000 Ð West 27 See EA at 1-2. Virginia (Jan. 10, 1992).

30 18 U.S.C. ¤ 803(a)(1).

c Ð vii Appendix C

C. Project Design and Construction

The hydroelectric project licensed herein will be constructed adjacent to the Corps’ Summersville Dam. The project reservoir is Lake Summersville, which the Corps manages for flood control, low- flow augmentation, and recreation. It has a surface area that varies seasonally between 514 and 4,920 acres.31 The dam, built in 1966, is a rockfill structure 393 feet high and 2,280 feet long. Water is drawn out of the reservoir through an intake structure that leads to a 29-foot-diameter outlet tun- nel,32 which splits into three 11-foot diameter steel tunnels controlled by three 9-foot-diameter Howell-Bunger valves,33 and one 3-foot-diameter steel tunnel controlled by one 30-inch Howell- Bunger valve. These valves are in a valvehouse located directly downstream of the reservoir.

The proposed project would be built immediately downstream of the Corps valvehouse. The existing tunnels would be extended and the three 11-foot diameter tunnels would each be bifurcated by wyes34 into two conduits: one leading to a new powerhouse located approximately 250 feet down- stream of the Corps valvehouse location,35 and the other leading to a new valvehouse located to the left of the powerhouse. The 3-foot-diameter tunnel would go directly into the new valvehouse. The four Howell-Bunger valves would be moved from the Corps valvehouse to the new valvehouse. The powerhouse would contain three 24-MW turbine generators, and one 8-MW turbine generator.

The Corps is concerned that the addition of hydraulic turbines to the existing outlet tunnels could subject that structure to hydraulic transients36 that are not experienced with the present control facil- ities. The Corps believes that the proposed plan’s introduction of new bends and wyes into the Corps discharge tunnels could threaten the physical integrity of the existing outlet works. The Corps asks that we require Summersville to conduct a study of hydraulic transients and, if necessary, incorpo- rate surge tanks37 or other facilities into the project to protect the structural integrity of the outlet works.

We agree that the proposed changes in the outlet works have the potential to cause hydraulic transients which could threaten the structural integrity of the existing outlet works. Accordingly, we are including Article 312 in the license, which requires Summersville to conduct a study of potential hydraulic transients in the dam’s discharge conduits and, if required by the Corps, incorporate surge tanks and other facilities into the proposed project to protect the existing outlet works.

31 The minimum pool is 514 acres, and the maximum 34 A wye is a “Y” shaped fixture that connects one pipe pool (during flood conditions) is 4,820 acres. The with two others. normal 928 acres, and the normal summer pool is 35 2,790 acres. In the fall, the Corps lowers the reser- One of these tunnels would have a smaller tunnel voir level in anticipation of heavy snows and rain in off of it just before they entered the powerhouse. the winter and spring months. Recreational boaters 36 Hydraulic transients are changes in pressure in the raft down the river during the draw-down period. water column in a tunnel or penstock. The pressure 32 The outlet tunnel is sometimes referred to as a dis- changes can be caused by changes in the volume charge conduit. of water flow, such as closing a valve. In order to run sufficient water through the turbines, the 33 A Howell-Bunger valve, named for its inventors, is Howell-Bunger valves may be closed. a regulating valve which allows for the release of 37 a controlled flow of water. This type of valve is A surge tank would provide a path for the blocked frequently used for turbine by-passes or to provide water in the tunnel to travel, thereby releasing any aeration of water. built-up pressure. c Ð viii Appendix C

The Corps is also concerned that the proposed changes in the discharge conduits may cause unacceptable flow patterns to develop in the conduits at the relocated Howell-Bunger valve site. In order to ensure that the proposed project does not create flow patterns which could adversely affect the dam or outlet works, we are including Article 313 in the license, which requires Summersville to construct and test a physical model of the penstock and conduit system to determine if unaccept- able flow patterns would be created in the conduit system, including the tailrace.

In order to construct the new facilities, the licensee will be installing cofferdams38 to divert the water from the construction site. The large Howell-Bunger valves will be removed from the Corps valvehouse and placed in the new valvehouse and powerhouses one at a time, with one cofferdam installed for each valve move.39

The Corps commented that the cofferdam needed for the first two stages of the project construc- tion are substantial structures which will be difficult to design and construct. The Corps requests that Summersville satisfy the Corps as to the design and feasibility of constructing the cofferdams before proceeding with other aspects of the project design. Summersville does not object to Corps review and approval of the cofferdam design to ensure that the integrity of the federal Summersville Dam is not jeopardized, but does not believe that the Corps’ concurrence on the feasibility of the cofferdams is necessary. Summersville believes that, because the cofferdams would not jeopardize the safety of the dam, the feasibility of the cofferdams is the concern of Summersville and its contractor.

We anticipate that any review of the cofferdam design by the Corps would include an evaluation of the likelihood of failure of the cofferdam and the potential threat that such a failure could pose to the structural integrity and operation of the federal project. Therefore, the Corps should have review and approval authority over the cofferdam design.40 In order to ensure that the cofferdams do not threaten the operation and structural integrity of the federal project, we are including Article 304 in the license, which will require that cofferdam design and construction be performed in consultation with, and subject to, the approval of the Corps’ Division Engineer. Article 304 also requires Summersville to submit a schedule for the submission of design documents and plans and specifi- cations for the project in order to allow timely review and approval by the Corps.

38 The cofferdams will be a single-sheet pile sup- across to the bank on the powerhouse side of the ported by buttresses, or a similar structure. tailrace. A settling basin with a haybale dike will be located immediately downstream of the right side of 39 The first-stage cofferdam will be located between the powerhouse. WHile this cofferdam is in place, the third (nearest the new valvehouse) and second the first conduit to the powerhouse, the power- turbines in the powerhouse and extend upstream house, and the tailrace will be built. between the third and second powerhouse conduits to the Corps valvehouse, and downstream a short 40 If the Corps were to conclude that there was a distance. A settling basin with a haybale dike will be potential for failure of the cofferdam, but that such a located to the right of the cofferdam. While this cof- failure would not threaten the structural integrity or ferdam is in place, the conduit leading to the new operation of the federal project, we would expect valvehouse, the new valvehouse, and its tailrace the Corps to communicate its views to will be built. The second-stage cofferdam will sur- Summersville and its contractors. In light of the round the second penstock from the Corps Corps’ engineering experience and expertise in this valvehouse to the powerhouse. A settling basin with area (as well as Summersville’s obvious interest in a haybale dike will be located downstream of the ensuring the integrity of its own facilities) we would cofferdam. While this cofferdam is in place, the sec- expect that in the event Summersville and its own ond conduit to the powerhouse will be built. The contractors would consult extensively with the third-stage cofferdam will extend from the end of Corps and to accord considerable deference to the the powerhouse nearing the valvehouse and cut Corps’ views.

c Ð ix Appendix C

The National Park Service is concerned that the cofferdams could affect the Gauley River National Recreation Area (which, as noted above, extends from just below the project to some 25 miles downstream) through sedimentation and leaching, and has requested its own review authority over the design of the cofferdams. We agree that erosion, sedimentation, and leaching from the cof- ferdams could affect the Recreation Area. Therefore, Article 311 of the license requires Summersville to submit design drawings and computations for the proposed cofferdams to the Park Service for review and recommendations for making the proposed cofferdams compatible with the operation of the Recreation Area.

The Corps notes that construction of the Summersville Project will cause temporary reductions in the overall discharge capacity of the outlet works during the times that the Howell-Bunger valves are relocated. The Corps states that there are certain periods of the year when any reduction in dis- charge capacity would be unacceptable. In order to ensure that reductions in discharge capacity do not adversely affect the operation of the Summersville Dam, we are including Article 314 in the license, which requires Summersville to schedule the relocation of the Howell-Bunger valves only during the time periods specified by the Corps.

D. Erosion and Sedimentation

The Park Service and the West Virginia DNR are concerned that sedimentation and erosion from project construction could adversely affect the Recreation Area. Ground-disturbing construction activities include the excavation in the river bank and bed during the construction of the powerhouse, the tailrace, and the discharge channel for the new valvehouse; the creation of the construction stag- ing area; the disposal of excess excavated soil; and obtaining access to transmission tower sites and the installation of the new towers. The EA notes that these construction activities could produce sig- nificant erosion and sedimentation problems.41

Summersville has prepared an Erosion and Sedimentation Control Plan, filed July 31, 1989, and revised May 30, 1990, which would reduce erosion and sedimentation from project construction to minor levels. Article 401 of this license requires Summersville to implement the erosion and sedimen- tation control plan it has filed. Summersville is required to file the final drawings, specifications, and schedule for implementing the plan at the same time it files the final project drawings and specifica- tions required by Article 302. Article 401 further requires Summersville to prepare the final drawings and specifications for the erosion and sedimentation control plan in consultation with the Park Service, West Virginia DNR, the Soil Conservation Service, and the Corps.

The Park Service is also concerned that the planned excavation spoil disposal area could affect the Recreation Area. Summersville proposed to dispose of spoil excavated in construction of the powerhouse, tailrace, and new valvehouse in the old Summersville Dam borrow area. The Recreation Area boundary map provided by the Park Service indicated that part of the spoil disposal area would be within the Recreation Area. The Park Service states that it reserves the right to refuse deposition of spoil material on land within the Recreation Area. If the Park Service refuses deposi- tion of spoil material, an alternative would be to sift the disposal site to another part of the Summersville Dam borrow area. It appears from maps that there is sufficient space in the borrow area outside the Recreation Area boundary to dispose of spoil from the project. Summersville states

41 EA at 8. c Ð x Appendix C that there are a number of former coal strip mining sites in the area where spoil could be deposited, and that moving spoil to an alternate site would not place a greater economic burden on the project.

The Park Service is also concerned about revegetation of those portions of the transmission line route which cross the Recreation Area. The Park Service notes that Summersville’s erosion and sed- imentation control plan calls for use of lespedeza and alfalfa for revegetation. Park Service policies do not allow the use of “exotic” species such as lespedeza and alfalfa where other alternatives exist. The Park Service states that native species would need to be used to revegetate those parts of the transmission line route which cross Park Service land. Article 401 requires Summersville to consult with the Park Service in the preparation of the erosion and sedimentation plan. The Park Service will be able to identify acceptable species for revegetation of the transmission line route during this consultation. In addition, Article 410 adopts the terms of the Memorandum of Understanding (MOU) between Summersville and the Park Service, which requires Summersville to locate the transmission line on a route acceptable to the Park Service. These requirements will ensure that the routing and revegetation of the transmission line route will be consistent with the purposes of the Recreation Area.

The Park Service is concerned that the transmission line could pose an electrocution hazard to perching raptors. The EA notes that bald eagles and peregrine falcons may be attracted to the pro- ject area and could be electrocuted when perching on the transmission line if it is not properly designed.42 Article 406 requires Summersville, after consulting with the Park Service, West Virginia DNR, the Corps, and the Fish and Wildlife Service, to file a transmission line design plan which con- siders measures necessary to protect raptors from electrocution.

E. Water Quality

Section 401(a)(1) of the Clean Water Act, 33 U.S.C. ¤ 1341(a)(1), requires that Summersville receive water quality certification or a waiver of certification before we can issue a license for the pro- ject. West Virginia DNR issued a water quality certification for the project on Sept. 18, 1991.

West Virginia DNR is concerned that project operation could result in reductions in water quality, specifically dissolved oxygen (DO), downstream of Summersville Dam. At the present time, water is released from Summersville Dam through the Howell-Bunger valves at the base of the dam. These valves dissipate energy from the discharged water and also have the effect of aerating the water to near-saturated or super-saturated DO concentrations. Project operations would divert most of the release flows through the project turbines and would reduce or frequently eliminate releases through the Howell-Bunger valves, with commensurate losses in aeration at the project dam.

West Virginia DNR has designated the Gauley River downstream of the Summersville Dam as a High Quality Stream and a Natural Resource Water.43 West Virginia’s anti-degradation policy provides that there should be no reduction in present water quality of National Resource Waters and High Quality Streams.44 The EA states that the area immediately downstream of the dam is classified as Trout Water by West Virginia DNR. The standard for DO concentrations immediately downstream of the dam is not less than 6.0 milligrams per liter (mg/l) at any time and not less than 7.0 mg/l during

42 EA at 20. Virginia Code Chapter 20, Article 5A and Legislative Rules, Title 46, Series I, Section 4.0. 42 “High Quality Stream” and “National Resource Waters” are categories established under West 44 EA at 11. Virginia’s water quality program pursuant to West

c Ð xi Appendix C spawning areas.The EA also states that, although DO concentrations have not been continuously monitored downstream of the dam, 61 samples were taken immediately downstream of the dam between 1975 and 1988. DO concentrations ranged from 5.9 mg/l to 13.0 mg/l and averaged 9.7 mg/l. The DO standard of 6.0 mg/l was not met on only one occasion, in June 1981.45

The water quality certification issued by West Virginia requires Summersville to maintain a DO concentration of 7.0 mg/l in the project tailrace and to operate the project in a manner that maintains DO concentrations in the river above Swiss, West Virginia, equivalent to those existing prior to pro- ject operations.46 West Virginia requires that Summersville prepare a plan for determining pre-project DO concentrations. The certification also requires Summersville to prepare an operating plan and to monitor water quality for the first two years of project operations. After the two-year study, Summersville is required to prepare a comprehensive evaluation of the operating plan which docu- ments project impacts and proposes revisions in the operating plan, if necessary.

The EA states that the fish species which occur in the Gauley River require a well-aerated envi- ronment for optimum growth and reproduction. The EA note that the U.S. Environmental Protection Agency’s (EPA) criteria for non-salmonid waters indicate that a DO concentration of 6.0 mg/l would have slight or no impact on early fish life stages and no impact on other life stages. The EPA criteria indicate that a DO concentration of 7.0 mg/l would have no impact on salmonid growth rates. The EA concludes that DO concentrations of at least 7.0 mg/l would have little or no effect on fish in the Gauley RIver. The EA states that it should be possible to operate the project in a manner which meets the 7.0 mg/l minimum DO concentration requirement during critical periods either with partial or total flow releases through the Howell-Bunger valves or other methods, such as the oxygen injec- tion system proposed by Summersville.47

Article 404 requires Summersville to maintain a DO concentration of at least 7.0 mg/l, as mea- sured in the Gauley River immediately downstream of the project’s tailrace. Article 404 also requires Summersville to install and operate permanent, continuously recording water temperature and DO monitoring devices, and reserves authority to the Commission to require modifications in project structures or operations to ensure that the 7.0 mg/l DO concentration level is met.

The water quality certification also requires Summersville to construct or provide a substantial number of recreation facilities which are completely unrelated to the maintenance or improvement of water quality. The section of the certification captioned “Recreation” requires Summersville to con- struct or improve access roads and paths, low water stepping stone bridges, fish attraction structures, a boat launching facility in Summersville Lake, and a residence and storage building, and to provide funds to West Virginia DNR for fish and wildlife management programs. We believe that these conditions are beyond the scope of Section 401, and that states should not use their water quality certification authority to impose conditions that are unrelated to water quality.48 However, since pursuant to Section 401(d) of the Clean Water Act all of the conditions in the water quality cer- tification must become conditions in the license, review of the appropriateness of the conditions is within the purview of state courts and not the Commission. The only alternatives available to the

45 EA at 12. 47 EA at 15-16.

46 The U.S. Department of the Interior supported this 48 See Central Maine Power Co., 52 FERC ¦ 61,033 requirement. (1990); Carex Hydro, 52 FERC ¦ 61,216 (1990). c Ð xii Appendix C

Commission are either to issue a license with the conditions included or to deny Summersville’s application, and we do not believe it is in the public interest to deny the application.

Several of the recreational facilities (an access road, angler access paths, and two stepping stone bridges) required by the water quality certification would be located outside of the project boundary and within the Recreation Area.49 The EA recommends that these riverside facilities not be built, because they would pose a threat to the Virginia spirea and its habitat.50 Intervenor American Whitewater Affiliation (Whitewater) objects to these facilities, because they would degrade the pris- tine scenery along the river bank. Whitewater also objects to the low water stepping stone bridges, because they could pose a serious hazard to boaters on the river. A low water stepping stone bridge is a series of rocks or concrete blocks placed in the river which allow pedestrians to cross the river at low flow levels without wading through the water. Whitewater believes that these bridges could cre- ate conditions which could cause boaters to be trapped under water and drowned.

The water quality certification requires Summersville to provide alternative access and/or recre- ational facilities at locations in the vicinity of the project site if the Park Service does not approve the proposed riverside facilities. For the reasons discussed above and in the EA, these facilities should not be built. Therefore, we strongly urge the Park Service to reject these proposed facilities.

With regard to the stepping stone bridges, we, too, are concerned that such bridges would pose a hazard to boaters who use the river during lower flows, and to anglers during flow periods that were slightly higher than the bridges are designed to accommodate. At such flows, the bridges could be submerged but visible to the anglers, tempting the anglers to use the bridges; under these circum- stances, someone attempting to use the bridge could be swept into the river. Commission staff communicated these safety concerns to West Virginia DNR, and by letter telefaxed to the Commission on Sept. 15, 1992 (formal letter to follow), West Virginia DNR agreed to delete the water quality certification’s requirement (at paragraph 3.C.IV) for stepping stone bridges. In its place, West Virginia DNR intends to insert the following new paragraph:

“The licensee shall design and install unspecified access improvements (to be determined by the Licensee and WV DNR) in the project vicinity at an expense comparable to designing, installing and maintaining two stepstone bridges on the Gauley River downstream of the pro- ject site, as per agreement reached between the Licensee and the WV DNR prior to issuance of State Certification.”

We are issuing the license for Project No. 10813 now, even though the substitution of new para- graph 3.C.IV of the project’s water quality certification will not be effective until West Virginia DNR formally amends the certification. However, by license Article 412 we are reserving our authority to amend the license to reflect adoption of procedures, to be developed through discussions with West Virginia DNR and, as appropriate, the Park Service, to ensure that any access improvements required under new paragraph 3.C.IV of the certification will, in the Commission’s judgment, not pose a safety hazard.

49 These facilities would be located in or along the requires Summersville to construct angler access river between the powerhouse and the point where paths on both sides of the river and two stepping the emergency spillway joins the river, approxi- stone bridges. mately two miles downstream. The certification 50 EA at 23-24.

c Ð xiii Appendix C

F. Recreation and Aesthetic Resources

The Park Service and intervenors West Virginia Professional River Outfitters (Outfitters) are con- cerned that modifications in the volume or scheduling of flows released into the Gauley River below the project could adversely affect the NRA and whitewater boating on the river. Whitewater rafting and boating on the Gauley River below the Summersville Dam are extensive. The EA notes that in 1990 over 30,000 people boated the river during the fall draw-down, and estimated that at current levels, recreational boating on the Gauley River adds 35 million dollars to the West Virginia econ- omy.51 Any significant change in the volume or scheduling of flows released from the Summersville Dam could have a major adverse impact on recreational boating on the Gauley.

The Corps is required to provide 20 days of whitewater boating releases (2,500 cfs minimum) starting the first weekend after Labor Day every year.52 The EA notes that the current agreement between the Corps, the commercial rafting outfitters and West Virginia DNR provides for 22 days of whitewater releases.53 These releases are scheduled Friday through Monday for five weeks and Saturday and Sunday for an additional week. Summersville agrees to generate power only from the flows that are provided by the Corps.

Article 402 requires Summersville to operate the project as directed by the Corps, using flows provided by the Corps and maintaining the current minimum flow regime. Article 402 further provides that the specified mode of operations may be modified only in the event of an emergency or for short periods upon mutual agreement among Summersville, the Corps, West Virginia DNR, the Park Service, and the U.S. Fish and Wildlife Service (FWS). Since Summersville must generate power only from the flows that are made available by the Corps and must maintain the present minimum flow regime, the operation of the project will not have any effect on the volume or timing of flows in the Gauley River below Summersville Dam.

Fayette County Chamber of Commerce, Outfitters, and Class VI River Runners (collectively, Fayette), the Park Service, and American Rivers are concerned that the construction and operation of the project will adversely affect whitewater boating on the Gauley River. Most whitewater boaters entering the Gauley River use one of the three put-ins located below Summersville Dam. The upper put-in, located just below the present outlet works, and the lower put-in, located about 500 feet down- stream, are used extensively by commercial rafting operations. Between the upper and lower put-ins there is an undeveloped path which leads to the river. This path is used primarily by private boaters, most of whom are kayakers. The commenters are concerned that the powerhouse and new valve house will make the upper put-in unusable.

The EA states that an inspection of the site of the new powerhouse and existing boating access points by the commenters, Summersville, FWS, and the Commission’s staff revealed that the middle and lower put-ins would not be adversely affected by the project, but that the upper put-in would be. Pursuant to agreements with the Park Service and West Virginia DNR, Summersville will construct

51 EA at 28. days of whitewater flows (the two-day weekend). Since the license requires Summersville to use only 52 Water Resources Development Act of 1986, Pub. L. those flows made available by the Corps and also No. 99-662, 100 Stat. 4082, 4225. requires the agreement of the Corps, Park Service,

53 and West Virginia DNR to modify flow releases, the Outfitters believe that the EA’s recommendation current 22-day whitewater draw-down season is does not adequately address the additional two adequately protected. c Ð xiv Appendix C a new upper put-in and upgrade the trail leading to the middle put-in. The Memorandum of Understanding, as incorporated in Article 410 of the license, requires Summersville to construct these access improvements before the start of project construction. Article 410 requires Summersville to consult with the Park Service, the Corps, Whitewater, and Outfitters in the design and location of the put-in and other recreational facilities required in the MOU with the Park Service.

Whitewater is concerned that the appearance of the powerhouse and transmission line will adversely affect the aesthetic quality and character of the upper put-in. The proposed powerhouse and valve house will be a substantial structure (approximately 240 feet x 60 feet x 50 feet) and will be visible from the put-in area and from an overlook on U.S. Route 219. The EA recommends that Summersville, in consultation with the Corps and the Park Service, select colors and textural finishes for the exterior of these structures which will blend in with the existing landscape.54 Article 409 adopts this recommendation and requires Summersville to file and implement a plan to minimize the visual impacts of structures. The visual impact of the new structures will be further reduced by their prox- imity to the dam, which is 2,280 feet long and 390 feet tall.

Whitewater is also concerned that the reduction or elimination of discharges through the Howell- Bunger valves will adversely affect the aesthetic quality of the upper put-in by eliminating the spray and mist effects that occur when flows are released from the Howell-Bunger valves.55 We agree that this will occur, but note that the license ensures continued access to the Gauley River and continu- ity in river flows such that boaters will continue to enjoy the river. In balancing the power and non-power benefits of the project and the recreational and aesthetic benefits and values of the mist and spray effects of the Howell-Bunger valves, we find that the benefits of developing the project out- weigh the adverse effect that will be caused by the loss of the spray and mists at the upper pit-in.56

The Park Service and Fayette are concerned that construction-related traffic could adversely affect recreational use of the Gauley River during the fall draw-down season.57 They believe that the single access road into and out of the project site does not have the capacity to handle construction- related traffic during the draw-down period. In its motion to intervene, Fayette requested that no construction take place on Friday through Monday during the draw-down, including the annual four- day Gauley River Festival. Fayette also asks that Summersville be required to store all construction equipment and materials in the construction staging area on the east bank of the river to avoid con- flict with boaters using the put-ins on the west bank.

The MOU between Summersville and the Park Service, which is incorporated in the license by Article 410, requires Summersville to suspend transportation of material and equipment to the con- struction site between 7:00 and 12:00 noon during the fall draw-down season when recreational flows are planned. Article 410 also requires Summersville to suspend all construction activities dur- ing the four-day Gauley River Festival, and to confine storage of construction material and equipment to the planned staging area during the fall draw-down period. Fayette agreed that suspending trans-

54 EA at 26. 56 In weighing the benefits and impacts, we have also considered that the spray and mists at the upper 55 The spray and mist occur due to the large decrease put-in are themselves not of natural origin, but are in pressure when the water passes from the outlet a product of the existing man-made dam. pipe and out through the valve. The effect is similar to that which occurs with a spray nozzle on a gar- 57 See n. 30, supra. den hose.

c Ð xv Appendix C portation of equipment and materials between 7:00 a.m. and 12:00 noon during the draw-down sea- son is satisfactory, because most of the boaters access the river during those hours. Article 410 also requires Summersville to maintain the access road during the period of project construction. These provisions in the license should ensure that project construction will not have significant adverse impacts on access to the river during the fall draw-down period.

Fayette and the Park Service are concerned that the cost estimates used by Summersville for the recreational facilities are lower than the actual costs of the facilities and ask that these estimates not be treated as caps. The figures used in the EA are only estimates. Their purpose is to permit a comparison of the costs of various alternatives and to determine what effect constructing and oper- ating these facilities will have on the financial feasibility of the project. The terms and conditions of the license require Summersville to construct or provide particular recreational facilities and do not create monetary limits on Summersville’s obligations to provide recreational facilities.

Whitewater contends that the EA fails to give equal consideration to the protection of recreational opportunities, as required by Section 4(e) of the FPA. Whitewater cites the omission of Whitewater from the list of entities to be consulted in the preparation of the landscaping plan and the design of the recreational facilities contained in the MOU between Summersville and the Park Service. It also notes that the stepstone bridges and angler access trails, which are required in the water quality cer- tification, were planned without consultation with Whitewater, and are in its view dangerous to recreationists.

Section 4(e) requires the Commission to give equal consideration to developmental and non- developmental purposes of a proposed project, but does not mandate a particular outcome or require equal treatment of these purposes. With regard to recreation, the EA examined the effects of the project on recreational opportunities in the surrounding area and recommended several mea- sures to enhance recreation. The license adopts these recommendations. We have also recommended that the stepstone bridges and angler access trails not be constructed. Whitewater’s disagreement with mandatory conditions contained in the water quality certification does not alter the fact that the Commission has given equal consideration to recreational values in reaching its deci- sion in this proceeding.

G. Endangered, Threatened, and Rare Species

The Park Service is concerned that the construction of some of the recreational facilities could adversely affect populations of Virginia spirea (Spirea virginiana), a federally listed threatened species. This shrub has been found in only 18 locations in five states. It grows in disturbed habitats along the scoured banks of high gradient streams.58 The EA states that a 1990 survey found Virginia spirea occurring on the left bank of the Gauley River from about one mile below the project to the confluence of the Gauley and Meadow Rivers.

The EA states that potential impact on Virginia spirea or its habitat can be avoided by careful siting of recreational facilities, and that the facilities proposed in the MOU between Summersville and the Park Service would not be located in areas where spirea are found.59 The Park Service is concerned

58 The project area is also within the range of running no suitable running buffalo clover habitat in areas buffalo clover (Trifolium stoloniferum), a federally listed which might be affected by project construction. endangered species. A field reconnaissance found 59 EA at 22-23. c Ð xvi Appendix C that the facilities that are required by the water quality certification could adversely affect existing Virginia spirea or suitable habitat that is available for the species’ expansion. The renovated access road for fish stocking, angler access trails, and low-water stepping-stone bridges required by the water quality certification could significantly increase the number of people using the river banks and increase the likelihood that Virginia spirea are trampled, cut down, or collected.60 As discussed above, we disagree with West Virginia DNR’s recommendation to provide these facilities along the stream banks; and as the EA states, avoiding impacts is preferable to developing mitigative mea- sures. We have therefore recommended that the river bank facilities requested by West Virginia DNR no be built.

However, as discussed above, all of these facilities are included as conditions of the water qual- ity certification and therefore must be included in the license. Since our responsibilities under the Endangered Species Act must be carried out if Summersville is required to construct these facili- ties,61 we are including Article 407 in the license, which requires Summersville to file and implement a plan to protect the Virginia spirea and its habitat.

The Park Service is also concerned that construction of the downstream river bank recreational facilities could adversely affect Barbara’s buttons (Marshallia grandiflora), a candidate for listing as a threatened or endangered plant species, which exist along the Gauley River below the Summersville Dam. The nearest population of Barbara’s buttons is located on the right bank of the river about 3,000 feet downstream from the dam. The facilities required by the MOU between Summersville and the Park Service would also not affect populations of Barbara’s buttons. However, the facilities required by the water quality certification could adversely affect Barbara’s buttons in the same man- ner as Virginia spirea. The habitat for Barbara’s buttons is very similar to that of Virginia spirea, so the effects of the proposed facilities on the two species would be essentially the same. The Park Service states that its policy is to treat candidate species as listed species. Because of the project’s relationship to the Recreation Area, we are including Barbara’s buttons in the protection plan required by Article 407.

H. Economic Feasibility

Fayette and Whitewater contend that the revenue figures used to calculate the economic feasi- bility of the project are too high and have resulted in an inflated estimate of the economic benefits of the project.62 They argue that a rate of 50 mills per kilowatt hour (mills/kWh) for project power is

60 The EA notes that one reason that the critical habitat dize the existence of Virginia spirea or adversely for Virginia spirea has not been determined is affect its habitat.

because publication of critical habitat descriptions 62 and maps would increase the vulnerability of the Whitewater contends that the economic analysis in species to increased collection and vandalism. (EA the EA does not comply with the standards contained at 23, n. 4.) in publication No. DPR-1, “Evaluating the Economics of Hydroelectric Projects at the Federal Energy 61 Section 7(a)(2) of the Endangered Species Act, 16 Regulatory Commission.” Whitewater claims that the U.S.C. ¤ 1536(a)(2), requires Federal agencies to Commission’s standards require that a project have ensure that their actions are not likely to jeopardize an internal rate of return that is 5.0 to 5.5 percent the continued existence of any endangered or threat- higher than the interest rate the licensee will have to ened species or result in the destruction or adverse pay for financing. The publication Whitewater cites, modification of these species’ habitats. Since Virginia which was issued by the Commission’s Office of spirea is a listed threatened species, the Commission Hydropower Licensing in Sept. 1989, is a description must ensure that licensing this project will not jeopar- (continued...)

c Ð xvii Appendix C higher than Allegheny Power Systems, Inc. is currently paying, and that the current avoided cost of 15 mills/kWh should be used in calculating the financial feasibility of the project.

The economic evaluation of the project that was performed in the EA was based on Summersville’s projection that it would be able to sell the project’s power output to Monongahela Power Company, a subsidiary of Allegheny Power Systems, Inc., for 59 mills/kWh. After the EA was published, Summersville filed, as support for this assumption, a copy of a 1987 15-year contract for the sale of power at 74 mills/kWh from another licensed hydroelectric project to another subsidiary of the Allegheny Power System. However, the power market has changed dramatically since 1987.

In May 1992 the Commission revised its long-term estimates of regional energy values based on the Department of Energy, Energy Information Administration’s (EIA) publication ANNUAL ENERGY OUTLOOK for 1992. Based on EIA’s fuel cost data for the region, we now estimate that the 1994, 50-year levelized alternative energy cost would be about 41 mills/kWh. We therefore calculate the internal rate of return for the project, with all of the mitigation measures except the dissolved oxygen injection system, we estimate the rate of return at 8.1 percent, whereas if those requirements are met by spilling water over the dam for three months, the annual generation would drop from about 198 gWh to about 165 gWh, and the rate of return would fall to about 6.9 percent.

As a general matter, in the last several years we have considered hydroelectric projects with internal rates of return between 6 and 8 percent to be unattractive to investors, but potentially feasi- ble, and projects with rates of return of less than about 6 percent to be not financeable.63 In light of the above, the project may not be economically beneficial. However, there are many factors that affect project economics, and a change in any one of those factors could improve the project’s eco- nomic benefits. The applicant may, for example, be able to obtain financing at a rate lower than the 11 percent rate we assumed in our calculations; to construct the project for less than we projected; or to sell the project power for more than we estimated.

Whether a licensed project is actually built is ultimately decided by the marketplace. If a licensee is unable to obtain financing, the project will not be developed. Article 316 requires Summersville to file a financing plan prior to commencing construction which shows that Summersville has acquired the funds, or commitments for funds, necessary to construct the project in accordance with this license. This will ensure that the environment is not unnecessarily disturbed by a partially con- structed project that is abandoned due to lack of funds.

Whitewater contends that the EA should have analyzed the action alternative of adopting energy conservation measures instead of constructing the new generating capacity represented by the pro- posed project. A discussion of energy conservation measures was not included in the EA, because

(continued...) a rate of return spread of 5.0 to 5.5 percent between of the general criteria used by the Commission staff those projects which the Commission staff recom- in reviewing the economic feasibility of a project, and mends be denied as economically infeasible and does not bind the Commission’s decisionmaking. In those projects which are attractive enough to poten- any event, Whitewater has misinterpreted the infor- tial investors that they will probably be built. mation in the publication. The publication states that 63 Commission staff uses a hurdle rate of 7.5 to 8.0 per- See, e.g., Allegheny Electric Cooperative, et al., 48 cent (rates generally available for municipal bonds FERC ¦ 61,363 (1989) at p. 62,341 n. 217; with minimal risk) to decide whether a project should Hydroelectric Development, Inc., 55 FERC ¦ 61,474 be licensed. The publication also states that there is (1991) at p. 62,558 n. 12. c Ð xviii Appendix C

Summersville has no distribution system and no end-use customers. As a result, Summersville itself has no opportunity to engage in programs to promote energy conservation and efficiency by end- use customers or to promote load management programs designed to reduce peak energy demands. The need for power analysis used the load and resource projections of the Allegheny Power System (the assumed receiving power system) reported by the East Central Area Reliability Coordination Agreement reliability council. Those projections include the effects of projected eco- nomical load management and energy conservation measures on internal power demand. Accordingly, Whitewater’s concerns about energy conservation measures were considered in deter- mining Allegheny’s need for power rather than as an alternative to hydropower development.

I. NEPA Considerations

Whitewater and the Park Service contend that the construction of the project constitutes a major federal action significantly affecting the quality of the human environment such that the Commission must prepare an Environmental Impact Statement (EIS) prior to making a decision on Summersville’s application. Our decision not to prepare and EIS but to issue the license based on the EA fulfills the requirements of the National Environmental Policy Act.64 The relevant issues are: (1) whether the areas of environmental concern have been accurately identified; (2) whether a “hard look” has been taken at the environmental issues; (3) whether a convincing case has been made for the finding of no significant impact; and, (4) if there is an impact of true significance, whether the impact has been significantly reduced as a result of changes or safeguards in the project.65 The EA provides a detailed analysis which has addressed all of the important environmental considerations, including the project’s impacts on geology and soils, water resources, fishery resources, terrestrial resources, threatened and endangered species, aesthetic resources, cultural resources, recreation, land and water use, and socioeconomic considerations. Where potential impacts from the project have been identified, the EA has recommended mitigative measures which have been included in the license. Through the analysis in the EA, the Commission has taken the requisite “hard look” at the environmental effects of this project, and our finding that issuing this license will not significantly affect the human environment is supported by substantial evidence.

Whitewater claims that the Commission must prepare an EIS because of the project’s impact on the aesthetic character of the put-in area immediately below the Summersville Dam. Our decision to issue a license for this project based on the information contained in the EA does not violate NEPA. The courts have held that decisions on aesthetic impacts generally do not require the preparation of an EIS.66 The EA considered the effects of the powerhouse and transmission lines on the aesthetic character of the area below the dam, stating that project construction will cause several adverse aes-

64 42 U.S.C. ¤ 4321 et seq. [a]esthetic objections alone will rarely compel the preparation of an environmental impact 65 See Humane Society of the United States v. Hodel, statement. Aesthetic values do not lend them- 840 F.2d 45, 62 (D.C. Cir. 1988); Sierra Club v. U.S. selves to measurement or elaborate analysis. Department of Transportation, 753 F.2d 120, 127 The necessary judgements are inherently sub- (D.C. Cir. 1985). jective and normally can be made as reliably on

66 the basis of an environmental assessment as Friends of the Ompompanoosuc and the State of on the basis of a much lengthier and costlier Vermont v. FERC, Nos. 92-4013 and 92-4015 (2d environmental impact statement. Cir. July 8, 1992); River Road Alliance v. Corps of Engineers, 764 F.2d 445 (7th Cir. 1985). In River 764 F.2d at 451 (citations omitted). Road, the court stated:

c Ð xix Appendix C thetic effects. The operation of equipment and machinery will produce noise and dust. Cleared veg- etation, cofferdams, construction buildings, and staging areas will temporarily degrade the appearance of the project area. The EA concluded that through proper landscaping and other con- trol measures these impacts can be mitigated. The erosion and sedimentation control plan required by Article 401 will include measures necessary to mitigate the short-term adverse aesthetic impacts that will occur during project construction.

J. Comprehensive Plans

Section 10(a)(2)(A) of the FPA67 requires the Commission to consider the extent to which a pro- ject is consistent with comprehensive plans prepared by appropriate federal and state agencies for improving, developing, or conserving a waterway or waterways affected by the project. The Commission treats as a comprehensive plan one that is prepared by a state or federal agency autho- rized to prepare such a plan; is a comprehensive study of one or more of the beneficial uses of a waterway or waterways; includes a description of the standards applied, the data relied upon, and the methodology used in preparing the plan; and is filed with the Secretary of the Commission.68 Federal and state agencies filed 13 comprehensive plans that address various resources in West Virginia. Of these, we identified and reviewed two plans that are relevant to this project.69 No conflicts were found.

K. Recommendations of Federal and State Fish and Wildlife Agencies

Section 10(j) of the FPA70 requires the Commission to include license conditions based on rec- ommendations filed pursuant to the Fish and Wildlife Coordination Act by federal and state fish and wildlife agencies for the protection, mitigation, and enhancement of fish and wildlife. As discussed above, the EA for the Summersville Project addresses the concerns of the federal and state fish and wildlife agencies, and the license includes conditions consistent with the recommendations of the agencies.

L. Conclusion

For the reasons discussed above and in the EA and the Safety and Design Assessment attached to this order, we conclude that the record before us supports issuance of a license to the Town of Summersville, West Virginia, to construct, maintain, and operate the Summersville Hydroelectric Project, as conditioned by the license articles adopted herein.

67 16 U.S.C. ¤ 803(a)(2)(A). the West Virginia statewide comprehensive outdoor recreation plan 1988-1992, published in 1989 by 68 18 C.F.R. ¤ 2.19 (1992). the West Virginia Governor’s Office of Economic and Community Development. 69 The two relevant plans are the Gauley River Basin plan, published in 1984 by West Virginia DNR; and 70 18 U.S.C. ¤ 803(j). c Ð xx Appendix D REFERENCES

Summersville Files Preliminary Permit Application, September 22, 1980

FERC Issued Preliminary Permit P-3493 to City of Summersville, 15 FERC 62,218, May 22,1981

Federal Court Upheld Permit Issuance Against Challenge by VA Cities, U.S. Court of Appeals, D.C. Circuit, No. 82-1655 and 82-1656, October 7, 1983

Summersville Files First License Application, P-3493, November 1, 1982

National Park Service Letter Advised FERC that License Cannot Be Issued During Wild River Study Period, January 11, 1984

FERC Dismisses Accepted License Application P-3493, 27 FERC 61,206 and 28 FERC 61,257, May 1984

Federal Court Upholds FERC Dismissal of License Application P-3493, Town of Summersville v. FERC, No. 84-1517, 780 F.2d 1034 (D.C. Circuit 1986)

Permit Application P-10634 Filed By Manassas, VA, August 8, 1988

Second License Application P-10635 Filed By Summersville, ...... August 8, 1988

West Virginia National Interest River Conservation Act of 1987, Public Law 100-534, 102 Stat. 2699 passed October 26, 1988

Third License Application P-10813 Filed By Summersville, July 31, 1989

FERC Order Accepting Application P-10813 and Dismissing Application P-10635, 53 FERC 61,259, 1990.

WV Department of Natural Resources Issued Water Quality Certification, September 18, 1991

FERC Order Issuing License P-10813, 60 FERC 61,291, September 25, 1992

License Amendment Application for Different Equipment and Transmission Line Filed by Summersville, September 25, 1995

Power Purchase Agreement with American Electric Power Approved by WV Public Service Commission, Case No. 96-0503-E-PC, May 21, 1996

FERC Order Amending License, 77 FERC 61,046, October 18, 1996

FERC Order Rejecting Challenge to Amendment Order by MMPPA and AWA, 78 FERC 61,051, January 21, 1997

Federal District Court Upheld Amendment, U.S. Court of Appeals, Fourth Circuit, Record Nos. 97- 1376, 97-1377 and 97-2058, May 1, 1998

FERC Order Approving Final Transmission Line Plan, 84 FERC 62,008, July 2, 1998

d Ð i