The regulatory and permitting requirements for hydropower systems can be extensive, however, recent federal legislation aims to simplify the permitting process for small hydropower projects. The following section describes the regulatory and permitting process and requirements for implementing small hydropower projects.
Federal Energy Regulatory Commission
The Federal Energy Regulatory Commission (FERC), through section 23(b)(1) of the Federal Power Act (FPA), requires hydropower projects to be licensed or granted an exemption from licensing. FERC provides two possible exemptions, the Conduit Exemption and the 10-MW Exemption. FERC also allows certain Qualifying Conduit Hydropower Facilities up to 5-MW to not require a license or an exemption.
Qualifying Conduit Hydropower Facility
FERC may not require certain hydropower facilities on non-federally owned conduits with installed capacities up to 5-MW to be licensed or exempted. The applicant must file a Notice of Intent to Construct a Qualifying Conduit Hydropower Facility with FERC and show the conduit is not primarily for the generation of electricity and was not licensed or exempted on or before August 9, 2013. The project cannot be located at an impoundment. There are no consultation requirements and are categorically exempt from preparing a NEPA document.
FERC allows for a small hydroelectric facility up to 40 MW using a man-made conduit operated primarily for non-hydroelectric purposes to potentially be eligible for the conduit exemption. Under the conduit exemption, FERC requires the applicant to have all real property interests necessary to develop and operate the hydropower project, and the facility cannot occupy federal lands. The conduit on which the project is located must already exist and cannot be included as project work associated with the development of the hydropower facility. The conduit must be used for existing agricultural, municipal, or industrial consumption. The project also cannot be located at an impoundment (e.g., dam). Applications for exemptions of small hydroelectric conduits are categorically exempt from the requirement for an Environmental Assessment (EA) or Environmental Impact Statement (EIS); however, FERC can require an EA or EIS to be prepared if the project appears to have adverse environmental impacts.
The first step to obtaining a conduit exemption is to file preliminary information to FERC and stakeholders (defined below) so these entities can understand the proposed project, identify any environmental issues, identify any information needs, and provide comments and recommendations for the project. The information to be provided to FERC is called an “Initial Consultation Document” and includes the following:
- Proof of land ownership,
- Descriptions of the conduit,
- Water source and destination description,
- Head and flow characteristics,
- Turbine description and drawings,
- Turbine site boundary, and
- Turbine site environmental and cultural information.
The next step is to identify and consult with project stakeholders. Project stakeholders include relevant federal and state agencies, Indian tribes, non-governmental organizations, and interested parties. The consultation provides agencies and public an opportunity to voice any concerns or request any studies that may be relevant to the project. The consultation is a three-stage process. The first stage is to hold at least one joint meeting with stakeholders to explain the project and to discuss the projects potential environmental effects, and to find out if there are any needed studies. The second stage is to conduct any studies necessary and to prepare and receive comment on the draft exemption application. The third stage is to prepare and file the final exemption application with FERC and stakeholders. The three stages of the consultation process must be documented per 18 C.F.R. § 4.38. There is no filing fee required for application. There is no term limitation with conduit exemptions; therefore, the exemption is issued in perpetuity.[i]
In most cases, a FERC conduit exemption can be obtained within one year of initial development of application materials. FERC has issued conduit exemptions for some projects in as little as two months.
10 MW Exemption
FERC allows for a small hydroelectric project up to 10 MW to potentially be eligible for the 10 MW exemption. The applicant can propose to install or add capacity to a project at a non-federal, pre-July 22, 2005, dam or at a natural water feature. The project can be on federal lands but cannot be located at a federal dam. FERC requires the applicant to have all real property interests necessary to develop and operate the hydropower project. Unlike the conduit exemption, a NEPA document must be prepared. The consultation requirements are the same as for the conduit exemption as described above. There is no filing fee required for application. There is no term limitation with 10 MW exemptions; therefore, the exemption is issued in perpetuity.
Certification as a Qualifying Facility
FERC certifies small power production facilities as qualifying facilities under the Public Utility Regulatory Policies Act of 1978 (PURPA) to provide certain benefits to the facility under federal, state and local laws. The benefits include 1) the right to sell energy or capacity to a utility, 2) the right to purchase certain services from utilities, and 3) relief from certain regulatory burdens. A qualifying small power production facility is a generating facility of 80 MW or less whose primary energy source is a renewable resource and is certified pursuant to 18 C.F.R. § 292.207.
Bureau of Reclamation – Lease of Power Privilege
The development of non-federal hydroelectric powerplants on existing Reclamation facilities (e.g., dams or conduits) requires either a Lease of Power Privilege (LOPP) issued by the Reclamation or a License or License Exemption from FERC as previously described. Permitting authority is mutually exclusive; a Reclamation facility is either within the Reclamation’s or FERC’s permitting jurisdiction. Accordingly, development proceeds through either a LOPP or FERC License/Exemption, but not both. Hydropower developers are free to choose which agency to contact, and it is up to the Reclamation or FERC to determine the lead permitting authority[ii].
An LOPP is a contractual right given to a non-federal entity to use a Reclamation facility for electric power generation consistent with Reclamation project purposes. Reclamation’s main concern in awarding a LOPP is that the integrity of Reclamation facilities are not impaired. A new hydropower facility must not interfere with existing operations, jeopardize existing water rights, or create any safety issues.
Under an LOPP, the lessee is responsible for compliance with NEPA and the Endangered Species Act (ESA). Reclamation is responsible for lease development, as well as review and approval of designs, plans, and specifications and NEPA documentation.
Under an LOPP, title of the federal facility remains with Reclamation. Title of the hydropower facility is with the lessee unless contracted otherwise. Reclamation has the first right to take over the hydro plant in the event of a sale or default.
Once selected for development of an LOPP, the potential lessee must develop a cost recovery agreement with Reclamation for Reclamation costs related to the development of the lease including but not limited to NEPA, review of designs, administrative costs, construction, operation, maintenance, and security.
Initiation of an LOPP application starts with an application letter to Reclamation requesting an LOPP. In response, Reclamation posts a formal solicitation in the Federal Register asking for LOPP applications. After selection of the lessee, the LOPP process cannot be finalized until after completion of the NEPA process. Assuming the environmental process does not uncover any problematic issues resulting in a “Finding of No Significant Impact,” the process moves to final negotiation of the LOPP. Once signed, the typical LOPP length is 40 years. Additional information regarding the LOPP process is available on Reclamation’s Lease of Privilege website.viii
Army Corps of Engineers 
The Army Corps of Engineers regulates all construction activities occurring in “waters of the U.S.” by authority of the Clean Water Act, Section 404. Construction activities include the removal or placement of fill below the ordinary high water mark. This can include any natural waterway or wetland. There are three levels of Army Corps involvement in a hydropower project, 1) if the project is on a canal or conduit with no wetland impacts, the Army Corps may have no involvement, 2) if the construction activity is minor and/or the project qualifies for a FERC exemption, the project may qualify for a nationwide permit, or 3) if the amount of disturbance or quantity of dredge or fill is more than what qualifies for a nationwide permit, an individual permit is required.
Nationwide permits are designed for specific activities that will have little impact on the water or environmental quality. These permits are subject to fewer requirements than an individual permit and are meant to expedite the permitting process. There are several nationwide permits that could apply to hydropower construction activities.
- Nationwide permit #17 for Hydropower
For discharges or dredge or fill material associated with hydropower projects having (a) less than 5 MW of total generating capacity at existing reservoirs, where the project, including the fill, is either licensed or exempted by FERC. (Section 404)
- Nationwide permit #18 for minor discharges
For minor discharges of dredged or fill material into all waters of the United States, provided the activity meets all of the following criteria: (a) the quantity of discharged material and the volume of area excavated do no exceed 25 cubic yards below the plane of the ordinary high water mark; (b) the discharge will not cause the loss of more than 1/10-acre of waters of the United States; and (c) the discharge is not placed for the purpose of a stream diversion. (Sections 10 and 404)
- Nationwide Permit #19 for minor dredgingFor dredging of no more than 25 cubic yards below the plane of the ordinary high water mark or the mean high water mark from navigable waters of the United States (i.e., section 10 waters). This NWP does not authorize the dredging or degradation through siltation of coral reefs, sites that support submerged aquatic vegetation (including sites where submerged aquatic vegetation is documented to exist but may not be present in a given year), anadromous fish spawning areas, or wetlands, or the connection of canals or other artificial waterways to navigable waters of the United States (see 33 CFR 322.5(g)). (Sections 10 and 404)
An individual permit must be obtained, if a project does not fit into the requirements of one of the nationwide permits. These permits will take more time to obtain and have more requirements than a nationwide permit. Most small hydropower installations would likely qualify for a nationwide permit; however, to ensure adequate compliance with the Clean Water Act, the local U.S. Army Corps of Engineers office should be contacted and consulted regarding specific projects.
Wyoming Department of Environmental Quality Water Quality Division
The Wyoming Environmental Quality Act mandates permits are required for construction or modification of public water supplies. Plan review by the Wyoming Department of Environmental Quality – Water Quality Division (WDEQ-WQD) is required prior to bidding or constructing a project to obtain a permit to construct.
In addition, the WDEQ-WQD will complete a Section 401 certification to ensure activities authorized under a FERC exemption or Section 404 Army Corps of Engineers permit meet state water quality standards and do not degrade water quality. These certifications are required if a federal permit is issued for the facility. Wyoming Pollution Discharge Elimination System (WYPDES) permits are required for the discharge of stormwater pollutants associated with construction and also any construction dewatering.
Wyoming State Engineer’s Office
The Wyoming State Engineer’s Office (SEO) regulates and permits the beneficial use of water in the state. Development of a hydropower project will require the water right to list hydropower as a permitted use. Hydropower can be added to a water right as a permitted use by petitioning the State Board of Control (see prior discussion in “Site Assessment” for additional information).
Wyoming Game and Fish Department
The Wyoming Game and Fish Department would be considered a stakeholder during the FERC permitting process and would provide comment during the FERC licensing process. Usually, the U.S. Fish and Wildlife Service and the Wyoming Game and Fish Department work in conjunction with one another as stakeholders during the FERC licensing process.
State of Wyoming Department of Fire Prevention and Electrical Safety
The Electrical Safety Division of the Department of Fire Prevention and Electrical Safety is responsible for issuing electrical wiring permits and performing inspections of electrical installations. An electrical wiring permit is required anytime the electric utility needs to connect, disconnect, and restore electrical power. A wiring permit is required before work is started, and the person or contractor installing electrical wiring is responsible for obtaining the wiring permit. State versus local jurisdiction varies by county and municipality.[iii]
City/County Planning and Development Office
A city or county building permit may be required for the development of hydropower projects. Prior to the issuance of a building permit, a plan review is required to ensure all proposed construction is in accordance with Wyoming Public Works standard specifications and city/county standard specifications.
 This section was taken from The Colorado Energy Office The Small Hydropower Handbook, 2013
 This section was taken from The Colorado Energy Office The Small Hydropower Handbook, 2013
[i] Source: Hydroelectric Project Handbook for Filings Other Than License Exemptions, Federal Energy Regulatory Commission, April 2001.
[ii] For more information see www.usbr.gov/power/LOPP
[iii] For more information see http://wyofire.state.wy.us/%5C%5C/pdf/localandstatejurisdictions.pdf