FERC Moves to Streamline Hydropower Environmental Reviews

Order H-1 (Docket No, RM26-7-000)
In its first order, FERC proposed to streamline its review under the National Environmental Policy Act (NEPA) for actions involving hydropower with either minimal or no environmental impacts in order to promote greater regulatory certainty and efficiency. Interested parties have until March 26, 2026, to comment on the Notice of Proposed Rulemaking (NOPR) published by FERC in the Federal Register.

In the order and NOPR, FERC proposed an amendment to 18 CFR Part 380, which are its regulations implementing NEPA. The amendment would expand a Categorical Exclusion (CE)—a category of actions determined by the agency to not ordinarily have a significant effect on the human environment outside of extraordinary circumstances—from the NEPA requirement to prepare environmental review documents for proposed projects. The proposed CE expansion would add revocations and terminations of licenses and exemptions for water power where the action will result in minimal ground disturbances and impacts on reservoir conditions/downstream flows.

Ordinarily, NEPA orders federal agencies to evaluate environmental effects from their proposed actions and engage the public in the decision-making process. If a significant effect on the human environment is reasonably foreseeable because of a major federal action, the agency responsible is required to prepare an Environmental Impact Statement (EIS). For proposed actions with less certain effects, the agency must issue an Environmental Assessment (EA), which is more concise. A CE, which allows an agency to satisfy the requirements of NEPA without necessitating the preparation of an EIS or EA, may be extended to actions that a federal agency has determined to not ordinarily have a significant effect on the quality of the human environment. ( 42 U.S.C. 4336(a)(2); 42 U.S.C. 4336e(1).)

To evaluate whether actions may fall under a CE from NEPA review, FERC and its staff will independently review the environmental information provided by the project sponsor, applicant, FERC research and inspections, other federal agencies and commenting stakeholders. Agencies are permitted to authorize new CEs based on reliable data determining that a category of actions does not regularly result in significant effects on the human environment.

FERC has jurisdiction over hydropower projects in the United States and issues licenses for such projects. Licenses may end through revocation, termination by implied surrender, termination due to failure to commence construction or voluntary surrender. Currently, FERC’s regulations address NEPA review requirements only through voluntary surrender but not for FERC-initiated termination for failure to commence construction, implied surrender termination when the licensee has indicated intent to abandon a project without filing a surrender application, or for when FERC revokes a license under Federal Power Act § 31 due to the licensee’s knowing violation of a compliance order.

FERC has concluded that termination due to a failure to commence construction does not result in environmental effects. Implied surrender revocation or termination leaves existing project facilities in place without additional actions that may affect the surrounding environment. FERC’s experience has shown minimal environment effects from implied surrender terminations or revocations of licenses and exemptions for water power where there has been minimal or no ground disturbing activity and changes in reservoir conditions/downstream flows.

FERC believes that this streamlining effort will enable FERC staff to expedite processing of cases and allow for attention to other actions with higher potential to impact the environment. Public comment on this notice of proposed rulemaking is due on March 26, 2026.

Order H-2 (Docket No. CX26-1-000)
In its second order, FERC adopted five existing CEs from the Tennessee Valley Authority (TVA)—a federal agency dedicated to transmission and generation of electricity for customers in the Tennessee Falley—under NEPA Section 109 for use in actions concerning hydropower projects. Specifically, FERC adopted TVA CEs 16, 17, 36, 37 and 38:

• TVA 16. Covers construction of infrastructure for new transmission lines and construction of interconnection facilities and electric power substations.
• TVA 17. Covers routine repair, maintenance, modification and minor upgrades of already existing transmission infrastructure.
• TVA 36. Covers routine repair, operation and maintenance for existing infrastructure systems, buildings, public use areas, facility grounds, recreation sites and operating equipment in the immediate vicinity of generation facilities. Covered actions are limited to those required to maintain assets suitable for use for their current location and purpose.
• TVA 37. Covers upgrades and changes to existing infrastructure, buildings and other physical assets.
• TVA 38. Covers the siting, construction and use of new buildings and infrastructure, like utility lines servicing the relevant buildings.

FERC’s adoption of the above CEs will become effective on March 22, 2026.

Implications
FERC’s February 19, 2026, orders are the latest in a series of efforts by FERC to streamline hydropower licensing and administration. In a press release, FERC Chairman Laura V. Swett stated that, “By cutting unnecessary red tape, we are accelerating the decision-making processes and allowing applicants to get the answers they need quickly and efficiently, all while ensuring we meet our statutory obligations under NEPA.”