In the next 15 years, over 400 existing nonfederal dams will require new licenses by the Federal Energy Regulatory Commission (FERC) in order to continue operations. In many cases, state or federal agencies have a unique opportunity to condition the hydropower licenses to protect environmental values. In 1996, the Court of Appeals for the District of Columbia Circuit issued an opinion striking down a mandatory license condition imposed by the U.S. Department of the Interior in a FERC relicensing. The case, Bangor Hydro-Electric Company v.Federal Energy Regulatory Commission, is instructive for agencies regarding the procedures to be followed in imposing mandatory FERC licensing conditions in the future. After Bangor Hydro, agencies should: (1) support their decisions by substantial evidence in the FERC record, (2) request applicant studies to support agency decisions and allow public comment on the decisions as a means to test the facts and analysis, and (3) consider intervening in a case to defend the condition on appeal. Bangor Hydro also raises, but does not decide, the issue of whether the agency imposing the mandatory condition should engage in balancing the economics of the hydropower project with the public resources affected by the project.