Chuck Sensiba on Troutman Pepper’s Expertise in Hydro Law
May 11, 2021
The law firm Troutman Pepper has the largest hydropower practice in the country in terms of professionals who devote all or a substantial part of their law practice to hydropower matters. Dating to its earliest beginnings over 100 years ago, the firm has been deeply involved in energy and natural resources issues on behalf of its clients, and the recent merger between Troutman Sanders and Pepper Hamilton enhances the firm’s ability to offer services nationwide. In this interview, Troutman Pepper Partner Chuck Sensiba tells Hydro Leader about his experience in the field of hydro law and the top regulatory and policy issues for hydro law today.
Hydro Leader: Please tell us about your background and how you came to be in your current position.
Chuck Sensiba: I’ve always had an interest in water and natural resources issues. I grew up on my family’s homestead in southern New Mexico, and I remember, even as a small child, listening to conversations around the family dinner table about the water disputes between Texas and New Mexico and understanding the finite resource that water is. When I went to college, I decided to study environmental and natural resources issues because of this upbringing.
I attended law school in Colorado and had the chance as a law clerk to do some work on behalf of the City of Boulder, which at the time was planning to develop a small hydropower facility to capture energy from its water supply as it is captured from the Arapaho Glacier and transported down the mountain into the city’s water supply system. I was captivated by the interdisciplinary proceedings, which brought together all the different interests that touched on water resources: federal and state resource agencies, the city, and environmental advocates. Based on that experience, I decided to try to pursue hydropower as the focus of my legal career. I reached out to law firms that specialized in this unique area of the law, and I considered government service in the Federal Energy Regulatory Commission (FERC) as well. I was fortunate to find a firm in Washington, DC, where I was able to get exceptional training and build my law practice. Over the 20‑plus years since I began my legal career, I’ve been fortunate to focus my practice almost exclusively on hydropower, and about 3 years ago, I moved my growing practice to Troutman.
Hydro Leader: Please tell us about Troutman Pepper and what makes it distinctive.
Chuck Sensiba: Energy law is an essential part of the DNA of Troutman Pepper. Recently, the law firm went through a major merger: Troutman Sanders merged with Pepper Hamilton. That brought together two firms, each with a national presence but with different legacy regional footprints. Troutman Sanders was headquartered in Atlanta and had a strong tradition and presence in the South and thesoutheastern United States. By contrast, Pepper Hamilton was headquartered in Philadelphia and was strong in the Northeast and upper Midwest. Both firms had a strong presence on the West Coast as well.
Interestingly, both legacy law firms had a strong tradition in hydropower. Troutman Sanders was founded over a century ago, and from its earliest beginnings, it served utility companies on energy and natural resources issues. The firm has long been associated with hydropower law. In fact, it was the firm’s strong presence and reputation in the hydropower sector that attracted me to move my practice there.
Pepper Hamilton also has a storied history in hydropower. When FERC’s predecessor agency, the Federal Power Commission (FPC), was first reorganized as an independent agency, founding partner George Pepper successfully represented the first independent FPC chairman before the U.S. Supreme Court when the Senate attempted to withdraw its consent to the appointment. George Pepper also represented Gifford Pinchot, who served as Theodore Roosevelt’s United States Forest Service chief and was an early architect and supporter of the Federal Water Power Act of 1920, in a dispute that helped to define the U.S. conservation movement in the early 20th century.
Today, Troutman Pepper is one of the largest law firms in the United States and serves its clients through 23 offices across the nation.
Hydro Leader: Please tell us about Troutman Pepper’s hydro practice.
Chuck Sensiba: In terms of the number of professionals who devote their law practices to hydropower clients, I believe that Troutman has the largest hydro practice in the country. We have four senior-level attorneys—Angela Levin, Andrea Wortzel, Hallie Meushaw, and me—who spend all or a considerable amount of our time in the hydropower space. Our clients also have the benefit of a number of associate attorneys who represent the next generation of legal leaders in this field: Elizabeth McCormick, who joined us from FERC’s Office of General Counsel a few years ago; Melissa Horne, Houston Shaner, and Morgan Gerard. We have a deep bench that allows us to quickly and efficiently meet our clients’ needs.
Along with this depth, we have incredible breadth in our hydropower practice. Hydropower touches on many areas of the law, and our clients appreciate how the firm can serve as a one-stop shop for all regulatory issues facing hydropower projects, including those related to FERC electric and transmission regulation and federal programs such as the National Environmental Protection Act (NEPA), the Endangered Species Act (ESA), the Clean Water Act (CWA), and the National Historic Preservation Act (NHPA).
Of course, hydropower issues are strongly tied to public policy as well, and our clients appreciate our ability to help them resolve challenges through engagement on Capitol Hill and with departmental leadership. For example, Dave Ross, who served as assistant administrator for the Office of Water at the U.S. Environmental Protection Agency (EPA), recently joined the firm.
When regulatory and policy advocacy are unable to meet our clients’ objectives, they can turn to us for litigation support, with confidence that our litigators have direct experience in hydropower issues. Misha Tseytlin, for example, currently leads the hydropower industry’s effort, on behalf of the National Hydropower Association, in defending the EPA’s recent rulemaking under section 401 of the CWA.
Finally, the firm has a strong transactional practice involving utilities and energy projects. Hayden Baker, for instance, recently managed environmental and project due diligence and negotiated key aspects of a major transaction involving multiple hydroelectric facilities on the East Coast.
So, in a couple of words, our hydropower practice at Troutman is multidisciplinary. It is comprehensive. And most importantly, we have found that our clients greatly appreciate the economic value of having institutional knowledge of their individual needs and objectives applied across many different sectors—and with the skill sets to apply these objectives in a multidisciplinary way to achieve their business objectives. We are honored that our clients have trusted us to provide counsel and representation on a wide variety of projects—from some of the largest, most high-profile, and most complex FERC relicensing projects in history to small run-of-river and conduit facilities.
Hydro Leader: Are you are seeing any big regulatory trends or rule changes in the hydropower world at the moment?
Chuck Sensiba: In its closing years, the Trump administration was prolific in issuing new rules aimed at reducing governmental red tape and streamlining federal approvals of infrastructure projects, including hydropower. For instance, the Council on Environmental Quality (CEQ) issued new regulations on environmental NEPA review. In my practice, hydropower projects face NEPA review all the time—it is required for FERC hydropower licensing and relicensing and for major license amendments. The Trump-era NEPA rules, which remain in force though they are being challenged judicially, are starting to have an effect as regulators and the regulated industry seek to understand and implement them.
One area in which this occurs is the determination of the effects of a project that need to be studied for environmental impact. Under the prior rules, project effects were categorized as direct effects, indirect effects, and more nebulous cumulative effects. The Trump-era rules have done away with those categories and instead look more holistically at the reasonably foreseeable effects of a proposed project. We’ll see if these regulations survive judicial review or if the Biden administration decides to propose further changes. Until then, one of the new challenges related to this change in NEPA terminology will be to discern the true scope of the changes it has on individual proceedings as they move forward.
Beyond CEQ’s new NEPA rules, the Trump administration updated EPA regulations governing state water quality certification under section 401 of the CWA. Water quality certification is an important tool that states and, in some instances, Native American tribes use to ensure that hydropower projects and other federally licensed activities meet certain requirements of the federal CWA and state water quality standards. If the states or tribes issue a water quality certification, their conditions become mandatory conditions of the FERC license. This ability to condition the federal license is a powerful regulatory tool.
The Trump-era regulations under section 401, which had not been updated for decades, attempt to discipline the water quality certification process in several important ways. The first relates to timing. In some states, water quality certification takes years or even decades to complete. Although the statute itself provides a maximum time of 1 year for states to decide on an application for water quality certification, states found ways around this requirement by requesting or directing applicants to withdraw their application before the 1‑year deadline expired and then to resubmit the same applications to trigger the 1‑year clock again. A series of cases at the U.S. Court of Appeals recently invalidated this practice, and the new Trump EPA regulations codify these court rulings.
In addition to that, the new EPA regulations establish substantive requirements for what the states should be looking at when they issue their certifications. In the past, states have used their certification conditioning authority to broadly regulate entire projects—including aspects related to power generation, public recreation, fish and wildlife resources, and water quality standards—under the broad umbrella of water quality. And, in fairness, the U.S. Supreme Court endorsed a broad interpretation of section 401 in its 1994 Public Utility No. 1 of Jefferson County ruling. However, the EPA’s rule points out that, in that case, the Supreme Court did not have the benefit of the EPA’s own interpretation of section 401. The rule then articulates a narrower interpretation of water quality certification, concluding that it applies only to a project’s discharge, not to the entire licensed activity, and only to more traditional, standard water quality requirements.
While the EPA’s CWA section 401 rule is currently in effect, it is being challenged in federal court. The litigation proceedings are being held in abeyance while the Biden administration decides how it plans to address them. Also, there are various cases that are still pending that will provide further guidance on the 1‑year requirement under section 401 itself. CWA section 401 is an important issue that continues to evolve.
Hydro Leader: What have you seen from the Biden administration so far in terms of regulations and policies that relate to hydropower, and what do you expect to see in the next few years?
Chuck Sensiba: With the Biden administration, a principal focus is climate. It is encouraging that the proposed Clean Future Act recognizes that hydropower needs to be part of a climate solution. That makes sense for a number of reasons. First and foundationally, hydropower is our country’s most reliable and well-established renewable resource. It’s been around much longer than other renewables. We understand it—both its immense benefits and its potential environmental effects—and it offers products and has characteristics that are unlike those of other renewable resources. Hydropower is a flexible resource. Grid operators can schedule when the generating facility will be online and when it won’t be. It has the ability, through pumped storage projects, and even conventional hydropower with flexible operations, to store energy. Everyone recognizes that a modern, clean energy grid needs energy storage, and while there’s been tremendous effort and advancement in the research and development of utility-scale battery technologies, the hydropower industry has been raising its hand on this issue for a long time, trying to help policymakers understand it has long been a solution for energy storage and that there are immense opportunities for growth. Another emerging policy of the Biden administration is placing significant emphasis on environmental justice. In the hydro space, this will likely translate to opportunities for Native American tribes to have greater involvement and influence in the FERC licensing process.
Hydro Leader: Do you expect to see an increase in green credits or an extension of credits to hydropower that it previously was not given access to?
Chuck Sensiba: That is absolutely needed. Right now, there is great variation in how states’ renewable energy requirements treat hydropower. Some states view all hydropower as renewable, which it is. Other states exclude larger hydropower projects. Still others exclude older facilities and selectively deem only incremental hydropower (i.e., development at an existing project that increases capacity or production) as eligible—seemingly based the idea that renewable energy credits should be available only to help spur the economic growth that comes from construction and new project development and not to meet overarching climate goals.
We need policies that are consistent across the board and do not pick winners and losers in the renewable energy space. Hydropower already faces significant regulatory disadvantages compared to other renewables due to licensing and permitting requirements. That disadvantage is amplified when policymakers don’t extend the same economic incentives to hydropower they do to other renewable project development.
Hydro Leader: Have there been recent changes in the treatment of small hydro?
Chuck Sensiba: The most recent policy advances came in 2013, when Congress, in the Hydropower Regulatory Efficiency Act (HREA), did two things to streamline small hydropower authorization. First, many conduit hydropower projects with a capacity of 5 megawatts (MW) or less, which the statute terms qualified conduit hydropower facilities, were completely removed from the jurisdiction of the Federal Power Act (FPA) and were no longer required to have a FERC license or authorization. The 2013 HREA required FERC to determine whether or not a project was a qualified conduit hydropower facility, but that process was designed to be quick. Then, in the America’s Water Infrastructure Act (AWIA) of 2018, Congress expanded this program to include conduit projects of up to 40 MW. This has great potential to prompt water managers across the United States to take another look at hydropower. It’s possible that without the inherent risks of a burdensome federal regulatory overlay, hydropower development—perhaps in place of pressure-release valves—could be a viable means to increase revenue.
Next, the HREA required FERC to complete a pilot program for determining the feasibility of completing the licensing process for hydropower at existing nonpowered dams within a quick, 2‑year time frame.
More recently, the AWIA extended benefits to small hydropower by extending the time periods for preliminary permits and giving project developers more time to begin construction after FERC issues a license.
We still need to do more to help small hydropower. For example, there are many small vintage projects, particularly in New England, that are coming off 30‑, 40‑, or 50‑year FERC licenses and need to be relicensed. These small projects’ economies are sometimes marginal, and the prospect of going through a long and burdensome relicensing proceeding is daunting. Not only might these projects face new environmental requirements, but the relicensing process itself could challenge the continued economic viability of a small project. One idea to address this situation is to allow small hydropower projects facing relicensing to instead swap out that license for a different type of federal authorization, called a FERC exemption. Exemptions come with their own challenges, but one of their advantages is that they are perpetual, which some project owners may find attractive. This working proposal is to find ways for a licensee in some situations to quickly trade in their license for an exemption without having to incur the expense of FERC relicensing.
Hydro Leader: Why should young lawyers or current law students consider hydro law, and what kinds of courses, studies, or experiences should they seek out to pursue a career in that field?
Chuck Sensiba: What is great about a career in hydropower law is that it is diverse. The issues that we see in this highly specialized area are unique to each project. It requires multidisciplinary experience in a number of different programs. The FPA is the base of our practice, but like other federally licensed activities, it pulls in NEPA, ESA, NHPA, and dozens of other federal programs.
On top of that diversity, there are regional differences in resource issues. In the Pacific Northwest, there are issues related to salmon, steelhead, and ESA-listed species as well as important Native American treaties that in many cases predate statehood. In the Southeast, there are issues related to American eel and Atlantic sturgeon. This regional diversity makes the practice vibrant and exciting.
In terms of coursework, I don’t think any law school offers a class in hydropower law. I would encourage law students interested in hydro law to take courses that focus on environmental law and natural resources law. Some law schools offer classes in energy law, and it’s important for students to begin to understand the business underpinnings of energy projects. Coursework in administrative law is essential as well.
Hydro Leader: What should everybody know about Troutman Pepper?
Chuck Sensiba: Our hydropower practice is made up of a diverse group of energy and environmental lawyers, transactional attorneys, and litigators. We are skilled in this focused practice area of the law in a highly regulated industry. We are passionate about what we do, and we are committed to serving the industry that we represent. I have the honor of serving on the board of directors for the National Hydropower Association, and several of the lawyers in the firm are actively involved in various of the association’s committees. My partner Angela Levin serves as general counsel to the Northwest Hydroelectric Association. We’re involved in other regional hydropower associations as well, and we try to keep our industry informed by contributing to Hydro Leader, keeping our clients and colleagues informed in our own Hydropower Report, and spending time with colleagues at industry conferences and meetings. While some of these activities have looked a bit different during the COVID‑19 pandemic, we very much look forward to renewing these relationships as we return to more normal operations.