[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]




 
    MANDATORY CONDITIONING REQUIREMENTS ON HYDROPOWER: HOW FEDERAL 
RESOURCE AGENCIES ARE DRIVING UP ELECTRICITY COSTS AND DECREASING THE 
                         ORIGINAL GREEN ENERGY

=======================================================================

                           OVERSIGHT HEARING

                               before the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                        Wednesday, June 27, 2012

                               __________

                           Serial No. 112-117

                               __________

       Printed for the use of the Committee on Natural Resources



         Available via the World Wide Web: http://www.fdsys.gov
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          Committee address: http://naturalresources.house.gov



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                     COMMITTEE ON NATURAL RESOURCES

                       DOC HASTINGS, WA, Chairman
            EDWARD J. MARKEY, MA, Ranking Democratic Member

Don Young, AK                        Dale E. Kildee, MI
John J. Duncan, Jr., TN              Peter A. DeFazio, OR
Louie Gohmert, TX                    Eni F.H. Faleomavaega, AS
Rob Bishop, UT                       Frank Pallone, Jr., NJ
Doug Lamborn, CO                     Grace F. Napolitano, CA
Robert J. Wittman, VA                Rush D. Holt, NJ
Paul C. Broun, GA                    Raul M. Grijalva, AZ
John Fleming, LA                     Madeleine Z. Bordallo, GU
Mike Coffman, CO                     Jim Costa, CA
Tom McClintock, CA                   Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Jeff Denham, CA                          CNMI
Dan Benishek, MI                     Martin Heinrich, NM
David Rivera, FL                     Ben Ray Lujan, NM
Jeff Duncan, SC                      Betty Sutton, OH
Scott R. Tipton, CO                  Niki Tsongas, MA
Paul A. Gosar, AZ                    Pedro R. Pierluisi, PR
Raul R. Labrador, ID                 John Garamendi, CA
Kristi L. Noem, SD                   Colleen W. Hanabusa, HI
Steve Southerland II, FL             Paul Tonko, NY
Bill Flores, TX                      Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
PJon Runyan, NJ
Bill Johnson, OH
Mark Amodei, NV

                       Todd Young, Chief of Staff
                      Lisa Pittman, Chief Counsel
               Jeffrey Duncan, Democratic Staff Director
                David Watkins, Democratic Chief Counsel


                                 ------                                

                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Wednesday, June 27, 2012.........................     1

Statement of Members:
    Hastings, Hon. Doc, a Representative in Congress from the 
      State of Washington........................................     1
        Prepared statement of....................................     3
    Napolitano, Hon. Grace F., a Representative in Congress from 
      the State of California....................................     3
        Prepared statement of....................................     5

Statement of Witnesses:
    Grubich, John R., General Manager, Public Utility District 
      No. 1 of Okanogan County, Okanogan, Washington.............    23
        Prepared statement of....................................    24
    Maisch, Einar, Director of Strategic Affairs, Placer County 
      Water Agency, Auburn, California...........................    12
        Prepared statement of....................................    13
    Reardon, Jeff, Maine Brook Trout Campaign Director, Trout 
      Unlimited, Manchester, Maine...............................    18
        Prepared statement of....................................    19
    Robinson, J. Mark, Principal, JMR Energy Infra, LLC, Reston, 
      Virginia...................................................     6
        Prepared statement of....................................     8

                                     



     OVERSIGHT HEARING ON ``MANDATORY CONDITIONING REQUIREMENTS ON 
 HYDROPOWER: HOW FEDERAL RESOURCE AGENCIES ARE DRIVING UP ELECTRICITY 
           COSTS AND DECREASING THE ORIGINAL GREEN ENERGY.''

                              ----------                              


                        Wednesday, June 27, 2012

                     U.S. House of Representatives

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Committee met, pursuant to notice, at 10:02 a.m., in 
Room 1324, Longworth House Office Building, Hon. Doc Hastings 
[Chairman of the Committee] presiding.
    Present: Representatives Hastings, McClintock, Thompson, 
Duncan of South Carolina, Tipton, Noem; Napolitano, Holt, 
Costa, Sablan, and Garamendi.
    The Chairman. The Committee on Natural Resources will now 
come to order, and the Chair notes the presence of a quorum, 
which under Committee Rule 3(e) is two Members.
    The Committee on Natural Resources meets today to hear 
testimony on ``Mandatory Conditioning Requirements on 
Hydropower: How Federal Resource Agencies are Driving Up 
Electricity Costs and Decreasing the Original Green Energy.'' 
We will now begin with a five-minute statement of the Chairman 
and the Ranking Member. And I ask unanimous consent that if any 
other Members wish to have opening statements appear in the 
record, that they be submitted to the Committee prior to the 
close of business today.
    So, I will recognize myself for five minutes.

    STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    The Chairman. Today's hearing is another step by this 
Committee to restore the promise of hydropower, a renewable, 
emissions-free, and low-cost source of energy.
    In the early part of the last century, visionary leaders 
and engineers constructed multi-purpose dams and reservoirs, 
like the Grand Coulee and Hoover Dams, to harness the energy of 
moving water and, in high-water periods, capture water for low-
water periods. That, to me, is still a sound concept today.
    In the Central Washington congressional district I have the 
honor to represent, we have both Federal and non-Federal 
hydroelectric dams. Together they produce more hydropower than 
any other congressional district in the Nation. Despite their 
success, hydropower is under assault from those bent on 
litigation and over-regulation. This Committee has focused 
intensely on Federal dams and canals, but today's hearing takes 
a new turn. Instead, we will examine Federal regulation on non-
Federal dams, which account for over half of the Nation's 
hydropower production.
    The resource agencies under the jurisdiction of this 
Committee, whether it's the National Marine Fisheries Service, 
the U.S. Fish and Wildlife Service, the Forest Service, the 
National Park Service, or the Bureau of Land Management, all 
play a large role in the cost, size, and scale of non-Federal 
hydropower, and even play a role in whether some dams should 
exist through the mandatory conditioning authorities. It 
appears they do so in a vacuum that ignores economic, societal 
or environmental reality.
    Current law enacted by the Energy Policy Act of 2005 allows 
hydropower developers to propose alternative to Federal 
regulations. But, like all laws, it has its shortcomings 
because of the interpretation and implementation of complex, 
conflicting Federal laws and regulations.
    The re-licensing of hydropower dams is an opportunity to 
responsibly renew a clean, non-carbon-emitting, renewable 
energy source. But there have been abuses. The re-licensing 
process should not be a hostage-taking opportunity for Federal 
agencies to demand a ransom to be paid to fund their wish 
lists, or for Federal agencies to push a covert dam removal 
agenda by imposing conditions so onerous that hydropower 
licenses are surrendered instead of renewed.
    Regrettably, what I just said is not hyperbole. It is 
happening. It is a reality. And I think it is unacceptable.
    Some utilities and organizations are fearful to even 
discuss real and reasonable reforms out of a concern that that 
resource agency will punish them. For example, some agencies 
try to take another bite out of an apple during the rare 
occasion they don't get what they want. In my State, the 
Okanogan PUD in north central Washington is experiencing that 
right now with an agency that threatens to impose costly 
requirements not even related to dam licensing. The end result 
could be a financially infeasible project that will not 
generate power or provide jobs at a dam that has been there for 
almost a century.
    We will hear today that, despite its longstanding success, 
hydropower remains a stagnant form of energy compared to other 
electricity resources. I believe that's because of lawsuits by 
taxpayer-funded litigants and because of Federal agencies that 
stifle innovation and energy growth.
    We have heard of the vast potential for more hydropower 
development but to accomplish this we need to modernize and 
update our laws. This Committee has already acted on two bills, 
and had numerous oversight hearings, but more can and will be 
done. Some of that may be controversial, but I believe that 
that debate needs to start sooner, rather than later.
    So, we are fortunate today to have the best and brightest 
here today who represent non-Federal power development, and 
thus, job creation. And I am very pleased that I have somebody 
from my State of Washington and somebody that will be in my 
district in the next Congress, and I will make that proper 
introduction.
    And with that, I yield back my time, and I recognize the 
gentlelady from California.
    [The prepared statement of Mr. Hastings follows:]

          Statement of The Honorable Doc Hastings, Chairman, 
                     Committee on Natural Resources

    Today's hearing is another step by this Committee to restore the 
promise of hydropower--a renewable, emissions-free and low-cost source 
of energy.
    In the early part of the last century, visionary leaders and 
engineers constructed multi-purpose dams and reservoirs, like the Grand 
Coulee and Hoover Dams, to harness the energy of moving water and in 
high water periods capture water for low water periods. That is still a 
sound concept today.
    In the Central Washington congressional district I have the honor 
to represent, we have both federal and non-federal hydroelectric dams. 
Together they produce more hydropower than any other congressional 
district in the nation.
    Despite their success, hydropower is under assault from those bent 
on litigation and over-regulation. This Committee has focused intensely 
on federal dams and canals, but today's hearing takes a new turn. 
Instead, we will examine federal regulation of non-federal dams, which 
account for half of the nation's hydropower production.
    The resource agencies under the jurisdiction of this Committee--
whether it's the National Marine Fisheries Service, the U.S. Fish and 
Wildlife Service, the Forest Service, the National Park Service or the 
Bureau of Land Management--play a large role in the cost, size and 
scale of non-federal hydropower and even play a role in whether some 
dams should exist through their mandatory conditioning authorities. It 
appears they do so in a vacuum that ignores economic, societal or 
environmental reality.
    Current law enacted by the Energy Policy Act of 2005 allows 
hydropower developers to propose alternatives to federal regulations. 
But, like all laws, it has its shortcomings because of the 
interpretation and implementation of complex, conflicting federal laws 
and regulations.
    The relicensing of a hydropower dam is an opportunity to 
responsibly renew a clean, non-carbon-emitting, renewable energy 
source. But there have been abuses. The relicensing process should not 
be a hostage-taking opportunity for federal agencies to demand a ransom 
to be paid to fund their wish lists, or for federal agencies to push a 
covert dam removal agenda by imposing conditions so onerous that 
hydropower licenses are surrendered instead of renewed. Regrettably, 
this is not hyperbole. It is happening. It is reality. And it is 
unacceptable.
    Some utilities and organizations are fearful to even discuss real 
and reasonable reforms out of concern that the resource agencies will 
punish them. For example, some agencies try to take another bite out of 
the apple during the rare occasion they don't get what they want. 
Okanogan PUD in northeastern Washington is experiencing that right now 
with an agency that threatens to impose costly requirements not even 
related to dam relicensing. The end result could be a financially 
infeasible project that will not generate power and provide jobs at a 
dam that has been there for almost a century.
    We will hear today that despite its longstanding success, 
hydropower remains a stagnant form of energy compared to other 
electricity sources. I believe that's because of lawsuits by taxpayer-
funded litigants and because of federal agencies that stifle innovation 
and energy growth.
    We have heard of the vast potential for more hydropower 
development. But to accomplish that, we need to modernize and update 
our laws. This Committee has already acted on two bills and had 
numerous oversight hearings, but more can and will be done. Some may be 
controversial, but this debate needs to start.
    We are fortunate to have some of the best and brightest here today 
who represent non-federal power development and job creation. I 
particularly want to welcome John Grubich of the Public Utility 
District Number 1 in Okanogan County. I look forward to his and 
everyone's testimony.
                                 ______
                                 

  STATEMENT OF THE HON. GRACE NAPOLITANO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Napolitano. Thank you, Mr. Chairman. And sorry Mr. 
Markey wasn't here, so I am sitting in for him, and his 
introductory is what I am going to be reading.
    President Teddy Roosevelt once said that our rivers are a 
public good, and that any permit to obstruct them for reasons 
and on conditions that seem good at the moment should be 
subject to revision when changed conditions demand. In the 
early 20th century, Congress allowed hundreds of permits to 
build dams on public rivers. By 1986, the licenses were set to 
expire, and Congress decided that these licenses should reflect 
the public's interest through mandatory conditioning 
requirements, the subject of two days' of hearings.
    For years, Congress found FERC had been far too deferential 
and unquestioning when it came to hydropower interests. FERC 
was not properly taking into account the full range of impacts 
of these dams on the environment, on the Tribes, and on 
recreational opportunities.
    Under the leadership of Energy and Commerce Chairman 
Dingell and Subcommittee on Energy and Power Chair Markey, 
Congress passed in 1986--and President Reagan signed into law--
the Electric Consumer Protection Act, required FERC to give 
equal consideration to recreation, to fisheries, to energy 
conservation and energy generation when issuing licenses. 
Legislation limited FERC's ability to reject the advice of 
expert agencies and Tribes concerning fish, wildlife, and 
tribal needs. It allowed for the operation and development of 
hydropower to be consistent with the public's interest, not 
just hydropower's interest.
    The law passed in 1920 was amended by Congress in 2005, 
when it passed the Energy Policy Act. The bill included 
provisions that, in their final form, allowed for consideration 
of alternative conditions during re-licensing, as well as to 
consider any disputed facts relating to fish waste. Many 
Democrats, including Mr. Markey, had strongly opposed earlier 
versions. An equitable compromise was worked out in the end, 
and final provisions gave the industry some additional 
procedural options, and did not compromise the fundamental 
integrity of the environment.
    The hydro industry was even satisfied with this final 
result. The National Hydropower Association said at the time 
that the 2005 hydropower licensing provision will result--and I 
am quoting--``in increased energy production and energy 
savings, all while preserving important environmental values.''
    So, what has happened since? Well, according to the data 
obtained from FERC, licenses filed after 2005 took a third of 
the 6-year process, compared to licenses filed prior to that. 
Now, it takes two years for FERC to act on completed 
application that promotes hydropower without compromising other 
public values. Two years for a license that lasts fifty years, 
half a century.
    And why are we here today? Apparently, the 2005 reforms 
passed under a Republican Congress and signed by President 
George W. Bush did not go far enough. By its title, today's 
hearing suggests the hearing's outcome: allowing the resource 
agencies to have mandatory conditioning powers is a bad idea. I 
disagree. Next chapter in the history of hydropower will 
involve the industry working smarter, not harder. And we are 
already seeing this in transition. It will involve hydropower 
licensees using new technologies to get more power out of their 
existing dams.
    We will hear from a witness today who will describe dam 
efficiencies that open 1,000 miles of river while increasing--I 
repeat--increasing power generation. The bill introduced 
today--actually, yesterday, along with Ranking Member Markey--
called Hydro2.0 will help all of Bureau of Reclamation hydro 
facilities achieve a win-win outcome. The American people 
deserve nothing less.
    And I look forward to hearing the testimony from the 
witnesses who have joined us this morning, and I yield back the 
balance of my time.
    [The prepared statement of Mrs. Napolitano follows:]

   Statement of The Honorable Grace F. Napolitano, a Representative 
                in Congress from the State of California

    Thank you Mr. Chairman.
    In ancient Greece the basic unit of society was the ``oikos''. This 
word, which is the root of modern words like ``economy'' and 
``ecosystem,'' meant ``household'', ``family'', or ``house''.
    Here in the House, we are charged with taking care of our 
household--the lands and waters of the United States--and in doing so, 
we take care of our family--the American people. Our family depends on 
a flourishing economy and healthy ecosystems. These concepts are rooted 
together.
    Take for example the fact that our rivers, when healthy, generate 
economic benefits through fishing, recreation, and hydropower.
    Teddy Roosevelt knew as much, insisting that rivers are a public 
good, and that ``any permit to obstruct them for reasons and on 
conditions that seem good at the moment should be subject to revision 
when changed conditions demand.''
    Well, in 1986, changed conditions did make demands.
    At the time, dam re-licensing represented very poor housekeeping. 
For years, FERC had been far too deferential and unquestioning when it 
came to hydropower interests. The agency was not properly taking into 
account the full range of impacts of these dams on the environment, on 
the Tribes, and on recreational opportunities.
    So under the leadership of Energy and Commerce Chairman Dingell and 
Subcommittee on Energy and Power Chair Markey, Congress passed and 
President Regan signed into law the Electric Consumer Protection Act, 
which required FERC to give equal consideration to recreation, 
fisheries, energy conservation, and energy generation when issuing 
licenses. The legislation limited FERC's ability to reject the advice 
of expert agencies and tribes concerning fish, wildlife and tribal 
needs.
    It allowed for the operation and development of hydropower to be 
consistent with public interests, not just hydropower's interests.
    Congress next amended the hydropower licensing provisions of the 
Federal Power Act in 2005 when it passed the Energy Policy Act. This 
bill included provisions that, in their final form, allowed for 
consideration of alternative conditions during relicensing as well as a 
hearing to consider any disputed facts relating to fishways. Many 
Democrats, including Mr. Markey, had strongly opposed earlier versions. 
But an equitable compromise was worked out in the end.
    The final provisions gave the industry some additional procedural 
options, but they did not compromise the fundamental integrity of the 
balancing system put in place in 1986.
    The hydro industry was even satisfied with this final result. The 
National Hydropower Association said at the time that that the 2005 
hydropower licensing provision ``will result in increased energy 
production and energy savings, all while preserving important 
environmental values.''
    So, what has happened since? According to data that obtained from 
FERC, licenses filed after 2005 took a third of the time to process 
compared to licenses filed prior to that. It now takes about two years. 
Two years for FERC to act on a completed application that promotes 
hydropower without compromising other public values. Two years for a 
license that lasts half a century.
    So, why are we here today? Apparently the 2005 reforms, passed 
under a Republican Congress and signed by President George W. Bush, 
don't go far enough. The biased title of today's hearing suggests that 
they have already decided that allowing the resource agencies to have 
mandatory conditioning powers is a bad idea. I think they are wrong.
    The next chapter in the history of hydropower will involve the 
industry working smarter, not harder, and we are already seeing this 
transition. It will involve hydropower licensees using new technologies 
to get more power out of their existing dams. We will hear from a 
witness today who will describe dam efficiencies that opened 1,000 
miles of river while increasing power generation. A bill I introduced 
yesterday along with the Ranking Member Markey, ``Hydro 2.0'' will help 
all Bureau of Reclamation hydro facilities achieve win-win outcomes. 
The American people deserve nothing less.
    I look forward to hearing the testimony from the witnesses who have 
joined us this morning.
                                 ______
                                 
    The Chairman. I thank the gentlelady for her statement. And 
we now have a panel of witnesses here, and I want to thank all 
of you for being here.
    We have Mr. J. Mark Robinson, who is a Principal of JMR 
Energy Infra, LLC, in Reston, Virginia; Mr. Einar Maisch, the 
Director of Strategic Affairs for the Placer County Water 
Agency in Auburn, California--thank you for being here; Mr. 
Jeff Reardon, the Maine Brook Trout Campaign Director for Trout 
Unlimited, in Manchester, Maine; and, from my State of 
Washington, Mr. John Grubich, General Manager of the Okanogan 
PUD district in Okanogan, Washington.
    If you haven't been here and testified in front of Congress 
before, let me tell you how it works. Your full statement will 
appear in the record, but you will have five minutes to make 
your oral statements. And I would ask you to keep your remarks 
to five minutes, if you can. The way the timing lights work, 
when the green light comes on, it means you are doing very 
well, and when the yellow light comes on, it means there is one 
minute to go. When the red light comes on, it means that your 
five minutes have expired. I would hope that you would try to 
wrap up your remarks in that time period.
    So, with that, Mr. Robinson, we will start with you. And 
you are recognized for five minutes.

           STATEMENT OF J. MARK ROBINSON, PRINCIPAL, 
            JMR ENERGY INFRA, LLC, RESTON, VIRGINIA

    Mr. Robinson. Thank you, Mr. Chairman, Members. I 
appreciate the opportunity to talk to you today about 
hydropower licensing and mandatory conditioning authority. But 
first I would like to identify my bias. I always do this 
whenever I testify or when I talk to groups. My bias is seeing 
energy from the ground up. Most people I dealt with at FERC, 
and a lot of people in the district, that matter, have their 
bias looking at energy from the markets back. You get very 
different answers on what the problems are, depending upon 
where your biases are. And I just wanted everybody to know mine 
consists of seeing what is necessary to get something built, 
how do you go about doing that.
    Example of how that bias affects, if you ask people why 
aren't we building electric transmission in this country, the 
market people at FERC will say, ``Well, we got to get cost 
allocation right, we have to get the incentives in place to 
make the markets--send the signals to get the transmission 
built.'' If you asked me when I was at FERC--and people did, 
believe it or not--I would say you don't have a regulatory 
process which allows for someone to be in charge of siting 
electricity transmission and navigating through all the 
problems that come up with any type of energy infrastructure 
siting. So that is my bias, and everything I say from here on 
out will reflect that.
    Hydropower. It is in trouble. It has been in trouble for a 
long time. And nothing seems to be changing that. If you go 
back and look at the statistics for different forms of 
generation and their contributions to our generation mix in 
this country--which is at about 1,000 megawatts, more or less--
hydropower in 2000 was 79 gigawatts of power. And I think I 
said 1,000 megawatts; I meant 1,000 gigawatts. In 2000, 
hydropower was 79 gigawatts. In 2010 hydropower was 79 
gigawatts, in terms of its net contribution to our electric 
generation.
    Hydropower has been stagnant for the last decade, and 
probably much longer than that. I have been involved with 
hydropower for over 35 years, 31 of which at FERC. And once we 
left the mid-1980s, it has pretty much stayed the same since 
then.
    If you look at other forms of generation during that same 
time period, natural gas in an example where hydropower gained 
nothing over that decade. Natural gas added 187 gigawatts of 
power. In fact, in just two years of that decade, natural gas 
added more generation than all of the current hydropower which 
exists today. And if you think it was because there was cheap 
gas back then, gas in those--in that two-year period hit $6.87. 
And during that 10-year decade it went over $10. So even though 
we are in a cheap gas phase now, during that period of building 
of natural gas, we were not.
    Look at the nuclear power industry. Georgia Power right now 
is building the--I can't say that word--the Vogtle plants down 
in Georgia. They estimate that their cost of that facility is 
going to be $6,363 per installed kW. Now, hydro varies in terms 
of its capital outlay, and there is a fuel charge, of course, 
associated with nuclear, as well. But hydro, on average, is 
about $3,000 per installed kW.
    And if you think that hydro just is not available, the 
reason we are developing nuclear plants that cost twice as much 
and gas fire generation that has a fuel charge associated with 
it, DOE, just a couple of months ago, came out with a report 
that said there was 12 gigawatts of available hydropower in the 
U.S. that didn't require any new dam construction.
    So, hydropower suffers from an unlevel playing field. What 
can we do about it? The unlevel playing field is that we have 
distributed decision-making when it comes to hydropower, and 
you have concentrated decision-making when it comes to natural 
gas and nuclear. By distributed decision-making, what I mean 
there is that you have a number of agencies who can come in 
with mandatory conditions and decide whether or not something 
is in the public interest by how much they--burden they want to 
impose upon a particular project. The Klamath River Project is 
a perfect example where talked-about fish passage facilities 
were in the $200 million range. It is no wonder people started 
talking about how do we get rid of this project when they were 
faced with a $200 million bill, potentially, under section 18.
    The way that we can fix that dispersed decision-making is 
with something called the Six Principles of Energy 
Infrastructure Development. I won't bore you with all six of 
those principles. But one of them in particular, I think, is 
significant, and that is to have an agency, a group, who is 
given that authority to make that public interest call. Other 
people can have mandatory conditioning authority. They can 
provide that input into that agency. But somebody has to be 
able to say this is in the public interest or not to build this 
project. And it is not just a matter of I have a narrow focus, 
I have one aspect of the project that I want to make sure 
happens, and we are going to get that project, that aspect into 
this license, regardless of what the overall public interest 
determination is.
    So, if I could make one recommendation to you, it is the 
same recommendation that FERC made to you in 2001 in a report 
that was filed pursuant to section 603 of the Energy Act of 
2000, and that is that you need to curb the dispersed decision-
making process, invest one agency with that overall public 
interest determination that looks across all aspects of the 
projects and decides, ``Is this hydropower project in the 
public interest?''
    Thank you very much. I appreciate the opportunity.
    [The prepared statement of Mr. Robinson follows:]

    Statement of J. Mark Robinson, Principal, JMR Energy Infra, LLC

    Mr. Chairman and Members of the Committee:
    My name is J. Mark Robinson and I am the Principal with JMR Energy 
Infra, LLC. In this role I advise clients on the development of major 
energy infrastructure including liquefied natural gas (LNG) export 
facilities, natural gas pipelines, electric transmission lines, and, 
more germane to this hearing, hydropower projects regulated by the 
Federal Energy Regulatory Commission (FERC). Prior to my current 
activities I was with FERC for 31 years starting as an aquatic 
ecologist in the hydropower program and finishing as the Director of 
the Office of Energy Projects (OEP) from 2001 to 2009. During that 
later period OEP was responsible for the licensing, administration, and 
safety of approximately 1,600 non-federal hydropower projects.
    I would like to thank you for the opportunity to speak today on 
mandatory conditioning requirements and their impact on hydropower 
development. The comprehensive nature of FERC's licensing program 
addresses all siting and operational issues with the full participation 
of federal and state agencies while attempting to ensure the timely and 
cost effective development of hydropower projects found to be in the 
public interest. Timeliness and cost effectiveness, however, are 
virtues that with some regularity go by the wayside as a result of a 
widely dispersed decision making process exemplified by the mandatory 
conditioning authority given to multiple agencies.
    The remainder of my testimony will describe the efforts that have 
been made to efficiently integrate mandatory conditions into the 
licensing process, the issues that still detract from the ability to 
move on hydropower projects that are in the public interest, and a 
rational approach to the licensing of hydropower that would improve all 
agencies' ability to reach a decision jointly on needed projects while 
including mandatory conditions.
I. Licensing Hydropower Projects and Mandatory Conditions
    Mandatory conditions take several forms in the licensing of 
hydropower projects but in essence they all share one attribute--the 
condition is provided by a separate federal or state agency and the 
FERC must include the condition in any license issued giving that 
condition the protective umbrella of the Federal Power Act (FPA) in 
terms of enforcement. There are three mandatory conditions that are 
common to the licensing process as described here.
    FPA Section 4(e)--In cases where the proposed licensed project 
would be located on a federal reservation, the federal agency 
responsible for managing that land, typically the Department of 
Agriculture and the Department of the Interior, can file conditions to 
protect the reservation. These conditions are required to be included 
in any license issued. For example, the Secretary of the Interior 
prescribes mandatory conditions for projects on Indian reservations, 
and the Secretary of Agriculture does so for projects in national 
forests.
    FPA Section 18--The FPA of 1935 contained Section 18 that gave 
authority to the Secretary of Commerce to ``prescribe'' fishways. In 
1970, Section 18 was amended to also give such authority to the 
Secretary of the Interior. The authority to prescribe fishways applies 
to new licenses as well as original licenses. Fishways can costs tens 
of millions of dollars and thus have a significant impact on the 
viability of not only new proposed projects but also existing projects 
up for relicensing. The fishways prescribed by the Secretaries of 
Commerce and of the Interior must be included in any license issued.
    Clean Water Act (CWA) Section 401--Under Section 401 of the CWA, a 
license applicant must obtain certification from the state or 
interstate pollution control agency verifying compliance with the CWA. 
Conditions included with the issuance of the 401 Certificate are 
considered conditions of any license issued by FERC. Although the CWA 
Section 401 conditions are frequently the most significant impediment 
to timely licensing of hydropower projects the focus of this testimony 
will be on FPA Section 4(e) and 18 mandatory conditions.
    Although not a mandatory condition in the sense described above 
there are another set of conditions required by the FPA that should be 
noted here--Section 10(j) conditions. Section 10(j) of the FPA, 
requires fish and wildlife conditions included in licenses be based on 
conditions proposed by federal and state fish and wildlife agencies. If 
the FERC fails, in any respect, to adopt an agency's recommendation, it 
must explain not merely why it disagrees with the agency, but why the 
agency's recommendation is inconsistent with the FPA or other 
applicable law. This test of inconsistency with the law raises Section 
10(j) conditions to near mandatory levels.
    It should also be noted that in 2005 the Congress recognized a 
growing concern with the use of mandatory conditions and provided some 
relief. The Energy Policy Act of 2005 (EPAct) required the Departments 
of the Interior, Commerce, and Agriculture to provide for: 1) expedited 
trial-type hearings on contested mandatory conditions; and 2) 
alternatives to agency proposed mandatory conditions. Parties to a FERC 
license proceeding may request a trial-type hearing on mandatory 
conditions before an administrative law judge (ALJ). These hearings are 
limited to ``sorting out the facts of a case'' and are not used to 
decide whether a condition or prescription is appropriate for economic 
or policy reasons. The conditioning agency, however, must take into 
account the ALJ's opinion prior to issuing final conditions for 
inclusion in a FERC license. More significantly, the conditioning 
agency must accept proposed alternative mandatory conditions if they 
find: (1) that an alternative condition would adequately protect and 
use the reservation (federal lands) or that an alternative fishway 
would be as protective as a fishway initially prescribed, and (2) that 
an alternative condition would cost significantly less or would 
increase energy production. In making a decision, the conditioning 
agency must give equal consideration to the effects of the condition 
adopted and alternatives not accepted on certain energy and 
environmental criteria.
    Under the FERC's Integrated Licensing Process, mandatory conditions 
are first provided to the parties after as much as three years of 
studies performed in cooperation with the conditioning agencies. Once 
the application for licensing is filed and found acceptable for 
processing the conditioning agencies file their ``preliminary 
conditions'' that are then available for review by the applicant and 
other parties. If a trial type hearing is requested pursuant to the 
Energy Policy Act of 2005 then that procedure is followed while the 
FERC prepares a draft National Environmental Policy Act (NEPA) 
document, either an environmental assessment or and environmental 
impact statement. Regardless of whether a trial type hearing is 
requested the conditioning agencies may file modified conditions after 
the draft NEPA document so they may be included in the final NEPA 
analysis.
    As the FERC found in its 2009 review of the use of the trial type 
hearing most of these proceeding end with a negotiated settlement (13 
of the first 16 requests for trial type hearing were settled and 
withdrawn). This process of providing preliminary and modified 
conditions provides an opportunity for the conditioning agencies to 
lead with what some may consider unreasonable conditions as a tool for 
providing leverage in any settlement discussions that are ongoing. 
Knowing that the applicant must affirmatively pursue a trial type 
hearing and that the agencies have an opportunity to provide modified 
conditions later in the FERC process places the conditioning agencies 
in a superior position during any negotiations. The playing field is 
significantly tilted in favor of the conditioning agencies.
II. Challenges to the Hydropower Development
    The FERC's role in licensing hydropower has been diminished over 
the last few decades. Prior to the FPA of 1935 the only significant 
role played by other agencies was outlined in Section 4(e). Originally 
the FERC reviewed Section 4(e)'s conditions as advisory. However, in 
1984, the Supreme Court's Escondido decision found that 4(e) conditions 
were mandatory. This left the FERC with a choice of either finding that 
the 4(e) conditions were in the public interest and include them 
unaltered in any license issued or find that the conditions were 
inconsistent with the broad public interest standard of FPA Section 
10(a)(1) and decline to issue the license. Unlike the FERC and its 
requirements under Section 10(a)(1), agencies with 4(e) authority have 
no statutory obligation to adhere to the balanced development standard. 
The more narrow focus and interests of conditioning agencies with 4(e) 
authority results in conflicts with the license applicant caught in the 
middle.
    The 1935 passage of the FPA included Section 18 authority for the 
Secretary of Commerce to ``prescribe'' fishways.
    In American Rivers v. FERC (9th Cir. 1999) the Court ruled that 
FERC lacked authority to determine whether Section 18 conditions were 
in fact fishways. As a result of these judicial rulings the FERC's only 
discretion with respect to mandatory conditions it might otherwise 
conclude are not in the public interest is simply to deny the license 
application. The conflict between a broad public interest determination 
by FERC and the more narrow purpose of mandatory conditions continues.
    In May 8, 2001, the FERC filed a report with Congress pursuant to 
Section 603 of the Energy Act of 2000. This report entitled, ``Report 
on Hydroelectric Licensing Policies, Procedures, and Regulations--
Comprehensive Review and Recommendations'', was prepared after 
consultation with conditioning agencies to determine how to reduce the 
cost and time of obtaining a license under the FPA and to propose 
needed legislative changes. A review of this report and recommendations 
indicate that not much has changed in the last 11 years.
    The finding of the 2001 report included that the time from the 
filing of a license application to an order issuing license was 
slightly more than three and a half years with many proceedings taking 
substantially longer. A review of all 16 hydropower licenses issued in 
2011 (the last full year available for comparison) by FERC shows that 
the average time from filing the application to licensing was 3.6 years 
with the longest being 8 years. The 2001 report also concluded that ``. 
. .the underlying source of most delays was a statutory scheme that 
disperses decision-making among federal and state agencies acting 
independently of the FERC's proceedings.'' This dispersed decision-
making remains the primary cause of not only delay but also additional 
costs associated with the preparation of the application and the cost 
of mandatory conditions.
    The 2001 report captures the findings of the 100 pages of analyses 
with the following paragraph referring to dispersed decision making:
        ``The same statutory scheme also ensures that the Commission 
        has scant control over the costs of preparing a license 
        application or of the costs of environmental mitigation and 
        enhancement. These expenditures are frequently mandated in 
        state water quality certification or mandatory federal agency 
        conditions required pursuant to FPA Sections 4(e) and 18, and 
        override the Commission's balancing of all relevant factors 
        affecting the public interest.''
    A related issue in timely licensing can be described as extended 
agency authority. This is where agencies will take the authority they 
have been granted covering an aspect of the project (e.g., prescribing 
fishways pursuant to Section 18 of the FPA) and utilize that singular 
authority to duplicate the action of the siting agency to make an 
overall public interest determination. This unnecessary and 
counterproductive duplication of the public interest determination can 
results in regulatory uncertainty when an applicant does not know which 
forum will ultimately decide if a project should be constructed. This 
is not to say that the agencies with conditioning authority need to 
agree with the FERC's decision, but rather that those agencies should 
focus on their aspect of the project and condition accordingly while 
leaving the overall siting determination to the agency given that 
authority.
    This dispersed decisional authority as represented by mandatory 
conditions does take its toll on hydropower development. A comparison 
among various electric power generation sources demonstrates the 
stagnation felt by the hydropower development community.
    Between 2000 and 2010, according to the U.S. Energy Information 
Administration (EIA) Annual Generator Report, the net summer capacity 
for hydropower remained constant at 79 gigawatts (GW). No net increase 
in hydropower capacity for a decade. During this same period EIA 
reports that natural gas capacity increased by 187 GWs. In just two 
years between 2000 and 2002 more natural gas generation was added to 
the Nation's supply than all existing hydropower capacity today. It 
should be noted that according to EIA natural gas prices reached a high 
of $6.82 during this two year period and reached a high of $10.79 
during the decade. Natural gas was not cheap but the market ignored 
hydropower and moved to natural gas.
    Another comparison follows from the nuclear power industry. Utility 
executives are reasonably concerned with diversifying their generation 
sources. Georgia Power as an example is developing the Vogtle Nuclear 
Plant at an estimated cost of $6,363 per installed kilowatt. Hydropower 
projects vary in terms of their construction costs but EIA puts the 
average cost of construction at approximately $3,000 with no fuel 
costs. Utilities will pay twice the capital cost for generation and 
incur a fuel cost as well while available hydropower goes undeveloped.
    The Department of Energy, in a report issued this year entitled, 
``An Assessment of Energy Potential at Non-Powered Dams in the United 
States,'' estimated that without building a single new dam there were 
12 GWs of available hydropower ready for development. No new dams 
required, half the cost of constructing nuclear power, no cost fuel 
compared to the variable cost of natural gas and yet hydropower remains 
stagnant for at least the last decade. Certainly the issue of dispersed 
decision making, as represented by multiple agencies with mandatory 
conditioning authority and first identified by FERC in 2001, should be 
considered as a primary reason for the complete lack of progress in the 
development of this Nation's most significant, in terms of existing 
capacity, renewable resource.
III. A Rational Licensing Process with Mandatory Conditions
    A rational process for the authorization of any energy 
infrastructure including hydropower development includes six basic 
principles:
        1.  Exclusive Jurisdiction--one lead agency that has been 
        designated by congress as the only agency that has siting 
        authority
        2.  Pre-filing--A system for quickly identifying issues and 
        determining if there are any fatal flaws early in the process
        3.  One Federal Record--All agencies must work together to 
        create one administrative record and all agencies are bound to 
        that one record for judicial review
        4.  Disciplined Schedule--All agencies have to act within the 
        time frame set by the lead agency with repercussions on 
        authorities if an agency delays their decision
        5.  Expeditious Judicial Review--Failure of an agency to follow 
        the schedule set by the lead agency or to provide conditions 
        narrowly focused to their authorities results in immediate 
        referral to the federal court system
        6.  Eminent domain
    Designating one agency as having exclusive siting authority would 
not usurp the decisional authority of the mandatory conditioning 
agencies. Rather it recognizes that one agency has been vested with the 
authority to determine whether the proposal is in the public interest 
while others have been vested with authorities that go only to some 
aspect of the project. This would specifically address the issue of 
extended agency authority where mandatory conditions are used to 
achieve larger agency goals like basin-wide restoration. The Alaska Gas 
Pipeline Act of 2004 specifically addressed this issue by 
distinguishing between the lead agency and other agencies that are 
handling aspects of the project.
    The development of one federal record for all agencies that are 
acting under federal law is at its core just a matter of good 
government. Currently, at times agencies go to the effort of developing 
records covering the same issues under different time frames. Requiring 
all agencies to work together under the schedule of the lead agency 
would reduce waste, improve decision making, and reduce the potential 
for conflicting conclusions. Finally, to provide discipline to the 
process the agencies need to know that, should they not meet the 
schedule or extend their authorities beyond designated aspect of the 
project, their actions would be reviewed by the federal court.
    With these six principles in place, energy infrastructure has the 
potential for development. As an example the natural gas pipeline 
industry has a legislative/regulatory environment that encompasses all 
six principles. During the period from 2000 to 2010 more than 15,000 
miles of new interstate pipeline were constructed. This included one 
1,700 mile, 42 inch diameter pipeline across eight states that took 
only three and one half years to go from the application being filed at 
FERC to completing construction and natural gas flowing from the 
Rockies to the Pennsylvania border.
    By comparison the hydropower industry only benefits from two of the 
six principles--pre-filing and eminent domain. As a consequence 
licensing can continue for excessive periods of time with associated 
costs. As an example the relicensing of the existing Orville hydropower 
project in California has been ongoing for nearly 10 years with many of 
those years directly related to the resolution of mandatory conditions. 
In practice there are no statutory curbs in the existing licensing 
process to the delays associated with resolving mandatory conditions 
and as a consequence no certainty in the regulatory process. Given 
these types of licensing uncertainties there is little incentive for 
the potential proponent for a new hydropower project to invest. The 
ability of a developer to see that the first dollar invested in 
pursuing a new hydropower project has a reasonable chance to result in 
a return is critical to infrastructure development. Hydropower suffers 
from lacking this legislative/regulatory environment that incorporates 
the six principles of energy infrastructure development.
IV. Conclusion
    The FERC's licensing process is designed to ensure that all issues 
are carefully considered based on extensive input from all affected 
parties. Mandatory conditions can be integrated into this process 
without disruption or unnecessary costs. By developing a statutory/
regulatory process based on the six principles of energy infrastructure 
development that restrains the abuse of the mandatory conditioning 
authority, developmental interests will once again turn to our Nation's 
original green energy.
                                 ______
                                 
    The Chairman. Thank you very much, Mr. Robinson, for your 
testimony.
    We have next Mr. Einar Maisch, Director of Strategic 
Affairs for the Placer County Water Agency in Auburn, 
California. Welcome, and you are recognized for five minutes.

   STATEMENT OF EINAR MAISCH, DIRECTOR OF STRATEGIC AFFAIRS, 
         PLACER COUNTY WATER AGENCY, AUBURN, CALIFORNIA

    Mr. Maisch. Thank you, Mr. Chairman, Ranking Member 
Napolitano. I appreciate the opportunity to be here today to 
talk to you. Placer County Water Agency owns and operates a 
hydroelectric project in the Sierra Nevada, just west of Lake 
Tahoe. It is a 224-megawatt, produces about a million megawatt 
hours a year. And we are--our license is up in 2013, so we have 
been very involved in the re-licensing of that project. We have 
also been very involved in the re-licensing of two neighboring 
projects, because of an interbasin transfer that provides water 
supply in Placer County that PG&E and Nevada Irrigation 
District own.
    The role of hydro, I think, was summarized well in your 
opening statement. It is clean energy. It doesn't seem to make 
a lot of sense that we would be reducing clean energy in an era 
when we are trying to reduce greenhouse gas emissions, and 
taking other sources of generation offline.
    I think, more importantly, besides the fact that it is 
clean energy, it is also critical to the regulation of the 
grid. It provides ancillary services that allow non-
dispatchable, renewable energy sources to be integrated into 
the grid. I think up in your area, Bonneville Power has 
recently demonstrated the capabilities and the strains that 
excessive amounts of wind energy put on the system. So hydro is 
not only a clean energy source, it allows other clean energy 
sources to come into the system. And reducing hydro, I think, 
is not helpful to our overall goals in this country.
    Re-licensing is long and expensive. You know, the history 
in our neighborhood is that folks are losing 8 to 10 percent of 
their generation. The ILP was intended to help that situation, 
impose deadlines. They thought deadlines would reduce costs and 
streamline the process. Unfortunately, all it does is end up 
with not enough information. And when you have not enough 
information, the mandatory conditioning authorities end up 
imposing more onerous conditions. They become overprotective, 
they do adaptive management, require ongoing studies. And what 
you end up with is license reopeners, and no real assurances 
and no quantifiable costs. It is a very difficult business 
model.
    PCWA, in its experience, started well early. We started 
five years before our license conditions. We had a very 
collaborative process. We put a lot of money into it overall. 
We spent $37 million on our re-licensing. We are going to lose 
5 percent of generation, we are going to spend another $20 
million on capital costs. Our O&M costs are going up by $2.4 
million, and we are making cash payments to resource agencies 
of $1 million a year. These are things that we have agreed to 
in our new license.
    The neighboring re-licensings in Nevada County, PG&E and 
NID, they are looking at much higher losses, roughly double the 
losses that we have. And because they have not exactly gone at 
it the way that we did, they just complied with the timelines 
required and the ILP, the process was much more contentious. We 
watched that. Resource agencies are much more aggressive.
    What we need is we need ability to go back to balancing 
resources. You know, the Federal Power Act requires FERC to 
balance resources, but it doesn't require the resource agencies 
to do any balancing when they submit their mandatory 
conditions. And the Act of 2005 that amended the--and gave us 
the ability to file comments, that really hasn't worked out. 
Comments are routinely ignored. If you want to file alternative 
conditions, you do so completely on the resource agency's 
grounds. They make you submit all kinds of information about 
what effects it has, balancing resources, and yet they are not 
required to provide any of that information. They are not 
required to justify their conditions, state what the purpose of 
the conditions are, or any information regarding the balancing 
of the proposed conditions.
    We think that the answer to this is either to make the 
resource agencies, as a condition of submitting mandatory 
conditions, do the balancing, do a NEPA process, go through an 
open and transparent process, or give up their mandatory 
conditioning and give it to FERC and let FERC do the balancing 
under their authorities under the Federal Power Act. Thank you.
    [The prepared statement of Mr. Maisch follows:]

       Statement of Einar Maisch, Director of Strategic Affairs, 
                       Placer County Water Agency

INTRODUCTION:
    Chairman Hastings and Ranking Member Markey; My name is Einar 
Maisch; I am the Director of Strategic Affairs for the Placer County 
Water Agency (PCWA) located in Auburn, California. Thank you for the 
opportunity to address the Natural Resources Committee today on the 
important topic of Mandatory Conditioning Requirements on Hydropower.
    PCWA is a public agency established by an Act of the California 
Legislature in 1957 to provide water and energy services within Placer 
County. PCWA is governed by a five-member elected Board of Directors.
    PCWA is the owner and licensee of the Middle Fork American River 
Project (MFP), Federal Energy Regulatory Commission (FERC) Project No. 
2079. The MFP is located in northern California, west of Lake Tahoe, on 
the west slope of the Sierra Nevada Mountains. The MFP serves as a 
multi-purpose water supply and hydroelectric project. The Project was 
licensed in 1963 and began operations in 1967. It has a generating 
capacity of approximately 224 megawatts (MW) and produces an average of 
1,000,000 megawatt-hours (MWh) per year of clean, carbon-free energy. 
The MFP is also used to divert and store water to meet municipal, 
industrial, and agricultural demands in western Placer County.
    PCWA's 50-year FERC license expires on February 28, 2013. In my 
capacity as Director of Strategic Affairs, in cooperation with the 
County of Placer, I have overseen the relicensing of the MFP. In 
addition, I have directed PCWA's active participation as a stakeholder 
in the relicensing of two FERC hydroelectric projects in the Yuba River 
Watershed, the next watershed north of the American River. These 
projects include Nevada Irrigation District's (NID) Yuba-Bear 
Hydroelectric Project, FERC Project No. 2266 and Pacific Gas and 
Electric's (PG&E) Drum-Spaulding Project, FERC Project No. 2310. In 
these proceedings, PCWA's primary interest is to protect both current 
and future consumptive water deliveries for the residents of Placer 
County, from the Yuba-Bear/Drum-Spaulding projects.
    PCWA has intimate knowledge of the FERC's Integrated Licensing 
Process (ILP) and the mandatory conditioning authority that certain 
resource agencies have under the Federal Power Act (FPA).

ROLE OF HYDRO IN THE NATION'S ENERGY PORTFOLIO:
    Hydropower represents a source of clean, renewable energy, 
providing approximately 10% of the country's electric generating 
capacity. The energy produced from hydro-generation is not only 
emission-free, which facilitates the country's overall objective of 
reducing greenhouse gases, but is also one of the least-costly forms of 
energy available to consumers. Furthermore, due to its ability to be 
dispatched quickly, hydropower provides valuable ancillary services to 
support the overall quality and reliability of the electric grid.
    Only recently, from the experiences in the Bonneville Power 
Administration's territory and others, have many come to understand 
that hydropower's grid regulation capability is critical to 
incorporating more non-dispatchable renewable energy sources (i.e., 
wind and solar) into the nation's energy portfolio.

RELICENSING PROCESS OVERVIEW:
    The relicensing process is a long and expensive process with 
decision-making authority spread across a range of federal and state 
agencies pursuing different statutory missions. The relicensing of 
hydroelectric projects is resulting in an average loss of approximately 
8-10% of the nation's hydropower. In addition, implementation of new 
license conditions has dramatically increased capital and operating 
costs. In some cases, the loss of generation revenue combined with 
increased costs has resulted in hydroelectric projects being deemed 
uneconomical, resulting in decommission.

The Integrated Licensing Process
    As of July 23, 2005, the ILP is the default FERC process for the 
licensing of hydroelectric projects. The ILP offered several advantages 
over the previous licensing processes, most importantly defined 
deadlines for participation through the process associated with:
          Study plan determination;
          Requests for additional information; and
          Filing of terms and conditions by resource agencies.
    Unfortunately, however, if the licensee strictly adheres to the ILP 
schedule, there may be insufficient time to complete the required 
studies and have sufficient information available to resolve conflicts 
with relicensing participants on potential new license conditions, 
prior to submittal of the License Application. While the ILP timeline 
may appear to confine the study activities and costs, it often results 
in FERC prolonging the licensing proceeding until studies are completed 
or encourages the resource agencies to mandate very conservative 
license conditions based on either a lack of information or 
insufficient time for the parties to jointly understand the 
implications of the study results. The resource agencies often also 
request license reopeners or impose conditions that require extensive 
studies after the license is issued and adaptive management that allows 
the agencies to modify their mandatory conditions over the term of the 
license, once study results become available.
    Under these scenarios the licensee is left with uncertain costs and 
conditions for years into the new license, which makes efficient 
budgeting and planning exceedingly difficult.

PCWA's Relicensing Experience
    For the relicensing of the MFP, PCWA made the strategic decision to 
invest in the development of the study plans and implementation of 
scientific studies early in the process. In fact, PCWA began 
relicensing activities five years prior to filing of the Notice of 
Intent (NOI) and Pre-Application Document (PAD). PCWA was the first 
license applicant to submit stakeholder-approved study plans in its 
PAD. PCWA also obtained FERC approval to expedite the study plan 
process. Early implementation of the study plans allowed PCWA to 
complete the studies in sufficient time for the results to be used by 
relicensing participants to collaborate on new license conditions. PCWA 
submitted a Final License Application (FLA) which included detailed 
management and monitoring plans. The resource agencies filed 
preliminary terms and conditions on August 2011 which were generally 
consistent with the FLA and subsequent negotiations between the 
parties. FERC's draft National Environmental Policy Act (NEPA) document 
should be distributed for public review in mid-July 2012.
    PCWA has worked collaboratively with resource agencies, non-
governmental organizations (NGO), and other stakeholders for seven 
years on this project. Overall, we feel that the stakeholders in our 
relicensing have appreciated PCWA's approach, and they have been 
reasonable in setting conditions. We believe that this success was 
directly related to PCWA's early engagement in the process and active 
collaboration with relicensing participants.
    PCWA has spent about $37 million on the relicensing of the MFP to 
date. Under the preliminary terms and conditions filed by the mandatory 
conditioning agencies, PCWA expects to lose about 5% of annual energy 
generation as a result of increased instream flows requirements. We 
expect to spend approximately $20 million on capital improvements; our 
annual operation and maintenance (O&M) costs will increase 
approximately $2.4 million per year and direct cash payments to 
resource agencies will amount to another $1 million per year. Believe 
me, under the current regulatory framework, this is what success looks 
like.

The PG&E and NID Relicensing Experience
    In the northern adjacent watershed, the story is different. PG&E is 
relicensing its Drum-Spaulding Project (FERC Project No. 2310) 
collaboratively with NID's Yuba-Bear Hydroelectric Project, (FERC 
Project No. 2266). The Drum-Spaulding/Yuba-Bear projects are highly 
integrated, operating as a single system with over 50 individual 
diversions. It is one of the most complex hydropower systems in 
California, if not the nation. Many of its facilities date back to the 
California Gold Rush era and are used to support both power generation 
and delivery of consumptive water. However, complexity does not 
translate into high revenues from power generation.
    PG&E and NID made the strategic decision to be less aggressive in 
the development of study plans and implementation of environmental 
studies compared to PCWA; however, they did comply with every ILP 
regulatory deadline. This approach was likely due to the overall 
complexity of the system, an order of magnitude more complex than 
PCWA's MFP, and the inability of the project revenues to support the 
scope of studies expected by resource agencies.
    With less timely information available in the Yuba-Bear/Drum-
Spaulding relicensing, resource agencies have been more aggressive, and 
their current proposal will result in a loss of approximately 10% of 
average annual generation, in addition to significant capital 
improvements, and increased operating costs. As a consequence, PG&E 
recently asked FERC to divide the Drum-Spaulding Project into more than 
one licensed project, because electric generation revenues may not be 
sufficient to support continued hydropower operations of the entire 
system.
    The residents of Placer County are dependent upon operations of the 
Drum-Spaulding Project and its water conveyance facilities to deliver 
consumptive water. These conveyance facilities have provided water to 
the people of Placer County since the late-1800's. The new license 
conditions and the uncertainty about the fate of the project, now 
licensed to PG&E, are obviously of great concern to PCWA and its water 
customers.

RESOURCE BALANCING:
    The FPA gives FERC legal authority to issue licenses for non-
federal hydroelectric projects. During the relicensing process, FERC 
must give ``equal consideration'' to developmental and non-
developmental values including:
          Utilization of the site's hydroelectric potential;
          Potential benefits to interstate or foreign commerce;
          Adequate protection, mitigation, and enhancement of 
        fish and wildlife (including their spawning grounds and 
        habitat); and
          Other beneficial public uses, including energy 
        conservation, irrigation, flood control, water supply, 
        recreational opportunities, and other aspects of environmental 
        quality.
    It is important to note that under FERC jurisdiction the baseline 
for the relicensing of a hydroelectric project is the existing 
environmental conditions associated with the current project facilities 
and on-going O&M.

Mandatory Conditioning
    Under Section 4(e) of the FPA, resource agencies may establish 
mandatory conditions for lands within their federal reservation. Under 
Section 18, certain resource agencies can prescribe mandatory fishways 
prescriptions. However, the mandatory conditioning agencies are not 
required to give equal consideration to developmental and non-
developmental values. The only requirement for mandatory conditions 
under Section 4(e) is that they do not interfere with the purpose for 
which the federal reservation was created or acquired, and that they 
are deemed necessary for the ``adequate protection and utilization'' of 
such reservation.
    These resource agencies can impose mandatory conditions that result 
in substantial loss of hydropower generation, require costly 
infrastructure modifications, and increase O&M costs without 
considering the overall effects of the conditions on project economics, 
energy supply, water supply, and any other public benefits. The 
resource agencies are simply following their statutory mission. 
Although we can all cite examples where resources agencies have been 
overzealous in prescribing mandatory conditions, the problem lies in 
the guidance provided under current law. The resource agencies do not 
have to establish mandatory conditions with an eye toward balancing 
environmental and societal values.
    Since the FPA does not allow FERC to modify or reject mandatory 
conditions filed by resource agencies, there is no mechanism to 
establish final license conditions that are balanced and provide for 
equal consideration of other developmental and non-developmental 
values. This directly conflicts with FERC's authority under the FPA.
    In addition, the resource agencies do not consider filing of 
mandatory conditions to be a federal action requiring analysis under 
NEPA. We strongly disagree with this interpretation. Because these 
conditions are mandatory and must be accepted by FERC, the act of 
submitting the conditions should be considered a federal action, and 
therefore the resource agencies should be required to complete an 
independent review under NEPA that includes a detailed analysis of 
direct, indirect or cumulative effects of the federal action. The NEPA 
analysis conducted by FERC for issuance of the new license is completed 
after resource agencies have issued their mandatory conditions, and it 
therefore cannot satisfy NEPA for issuance of the mandatory conditions.

Challenging Mandatory Conditions
    Under current regulations, the licensee and other parties have 
three options to respond to preliminary mandatory conditions including 
submitting: 1) comments; 2) alternative conditions; and/or, 3) requests 
for a trial-type hearing.
    Experience shows that comments filed on mandatory conditions are 
routinely ignored and at best become a footnote in the administrative 
record.
    Filing of alternative conditions is a more extensive process that 
requires the licensee to meet specific criteria. The alternative 
conditions must be submitted within 30 days following filing of the 
preliminary terms and conditions, including mandatory conditions, with 
FERC.
    The filing of alternative conditions must include:
          A description of the alternative;
          An explanation of how the alternative will provide 
        the adequate protection and utilization of the reservation;
          An explanation of how the alternative, as compared to 
        the preliminary conditions, will
                  Cost significantly less to implement or
                  Result in improved operation of the project 
                works for electricity production;
          An explanation how the alternative will affect (1) 
        energy supply, distribution, cost, and use; 2) flood control; 
        (3) navigation; (4) water supply; (5) air quality; (6) other 
        aspects of environmental quality; and
          Specific citations to any scientific studies, 
        literature, etc relied on to support proposal.
    The party proposing an alternative condition must provide extensive 
evidence comparing its alternative to the resource agency's preliminary 
mandatory conditions across a range of different factors, both 
environmental and economic. In contrast, the mandatory conditioning 
agency itself, in developing and filing its preliminary mandatory 
conditions, is not required to consider or present evidence on any of 
those factors, or on the effects of the conditions it has mandated. 
Furthermore, alternative conditions are evaluated by the mandatory 
conditioning agency within the confines of ``adequate protection and 
utilization of the reservation.'' This approach does not provide for 
equal consideration of other environmental and societal values. In 
other words, there is no balancing.
    So what happens once resource agencies receive alternative 
conditions? Under the current regulations, the resource agencies are 
not obligated to respond in a timely manner or consult on the 
alternative conditions. The resource agencies are only obligated to 
provide an explanation of the rationale for rejecting the alternative 
conditions concurrent with the filing of their modified terms and 
conditions. At this point in the process, the licensee has no ability 
under the alternative condition process regulations to challenge the 
mandatory conditions.
    The request for trial-type hearing on a mandatory condition is an 
even more arduous and expensive process. This request must also be made 
within 30 days following the filing of preliminary terms and conditions 
by the resource agencies. The request for hearing must be solely based 
on a ``disputed issue of material fact.'' What constitutes an issue of 
material fact is ill-defined. The hearing process is focused on whether 
the mandatory conditions are supported by the record, in the context of 
the resource agencies' narrow objective--protection and utilization of 
the federal reservation. The hearing process does not evaluate the 
mandatory conditions in a broader perspective of balancing other 
environmental and societal values.
    To further compound the problem, the resource agencies can issue 
modified mandatory conditions later, which can be substantially 
different from the preliminary conditions, with no clear process for 
requesting a trial-type hearing on the modified mandatory conditions.

RECOMMENDED PROCESS IMPROVEMENTS:
    We urge Congress to revise the licensing regulations to incorporate 
greater balance in the development of license conditions for 
hydroelectric projects. Specifically, we present two options to revise 
the mandatory conditioning process.
    Option 1 includes:
          Require resource agencies to broaden the scope of 
        their analysis when developing mandatory conditions, beyond 
        just the narrow mission of their respective agency and adhere 
        to the broader requirement of balancing between developmental 
        and non-developmental values that is currently required of 
        FERC.
          Establish that agencies filing mandatory conditions 
        with FERC are engaging in a ``federal action'' and require 
        independent environmental review under NEPA; including a 
        comprehensive analysis of the direct, indirect, and cumulative 
        impacts of their action under the same public review process 
        required for every other federal action.
          Require resource agencies to clearly define the 
        objective of each mandatory condition with an accompanying 
        rationale and disclosure of impacts in an open and transparent 
        manner, thereby, adhering to the same standard of disclosure 
        and explanation required of the licensee and other parties 
        submitting Alternative Conditions.
          Require agencies to promptly consult and respond to 
        Alternative Conditions prior to FERC's Draft NEPA document, 
        rather than allowing the agencies to ignore the requests for 
        months and only address them during the filing of modified 
        terms and conditions, after the Draft NEPA document has been 
        issued.
          Modify the hearing process regarding the basis for 
        challenging mandatory conditions such that concerns over 
        balancing between developmental and non-developmental values 
        can be addressed, rather than restricting the hearing process 
        to only ``issues of material fact.'' Further, there should be a 
        clear process for requesting a trial-type hearing on modified 
        terms and conditions.
    Option 2 includes:
          A more direct and cost-effective approach for 
        revising the relicensing process--simply eliminate mandatory 
        conditioning authority and have resource agencies use their 
        authority to file recommendations under Section 10(a) and 10(j) 
        of the FPA. This would allow FERC to fully evaluate and balance 
        these recommendations in a broader context.
    I would like to thank Chairman Hastings and Ranking Member Markey 
for allowing me to share my thoughts on this important topic with the 
Natural Resources Committee. Revising the mandatory conditioning 
process is paramount for the Nation's hydroelectric generation 
resources.
                                 ______
                                 
    The Chairman. Thank you very much, Mr. Maisch, for your 
testimony.
    Next we have Mr. Jeff Reardon, from the Maine Brook Trout 
Campaign Director for Trout Unlimited in Manchester, Maine. 
And, Mr. Reardon, you are recognized for five minutes.

STATEMENT OF JEFF REARDON, MAINE BROOK TROUT CAMPAIGN DIRECTOR, 
               TROUT UNLIMITED, MANCHESTER, MAINE

    Mr. Reardon. Chairman Hastings, Ranking Member Napolitano, 
thank you for the opportunity to testify today. I work for 
Trout Unlimited, a national non-profit conservation 
organization with more than 140,000 volunteers organized into 
400 chapters from Maine to Alaska. Our mission is to conserve, 
protect, and restore North America's cold water fisheries and 
their watersheds. And our chapters annually invest over 600,000 
hours of volunteer time to achieving this mission.
    We believe strongly in working collaboratively to achieve 
meaningful conservation results that provide benefits to a 
variety of stakeholders, including hydropower generators and 
electric rate payers. I have worked for TU for 13 years. And 
increasingly, our work in Maine has succeeded in finding 
cooperative solutions to vexing challenges.
    Trout Unlimited has consistently applied a collaborative 
approach to hydropower re-licensing. I have personally been 
involved in re-licensing more than 20 hydroelectric dams 
representing TU. Based on my experience, I believe the re-
licensing process has gotten better over time at catalyzing 
solutions that balance the needs of the hydropower industry, 
fish and wildlife, and the citizens who use our nation's 
rivers. Mandatory conditioning authorities are critically 
important tools for achieving this balance. In our experience, 
the resource agencies have been sparing and judicious in how 
they apply these authorities.
    For a time following passage of the Electric Consumers 
Protection Act, the new authorities, combined with a huge wave 
of project re-licensings in the early 1990s, strained FERC's 
effectiveness and the effectiveness of the resource agencies. 
Recognizing this, TU and other resource users worked very hard 
with FERC, the resource agencies, and the industry to seek 
improvements. One such improvement was the establishment of the 
cooperative licensing process in which stakeholders and the 
licensee worked cooperatively from study design through permit 
approval and, in many cases, through implementation to find 
common ground and durable solutions.
    These cooperative processes have led to resounding 
successes, not just in Maine, but also in places like the Clark 
Fork Basin of Montana, with Avista Power, and the Deschutes 
River Basin of Oregon with Portland General Electric.
    I would like to take a few minutes to highlight some 
successful projects I have worked on in Maine. The Kennebec 
River Basin, where I live and where I have done the bulk of my 
work, offers proof that power generation and fisheries can be 
better balanced. Between 1993 and 2006, FERC re-licensed 16 of 
the 25 dams in the basin. FERC approved surrender and removal 
of three of those dams, as well as approving operational 
changes at most of the remaining ones. The net result: in-basin 
hydro-generating capacity was reduced by less than three 
percent, and commercial and recreational fisheries have boomed. 
And I mean boomed.
    The Sebasticook River, where sea-run fish were absent from 
1837 through the 1990s, now supports the largest run of river 
herring on the East Coast. And two Maine communities have 
regained historic commercial fishing rights they lost nearly 
200 years ago.
    This spring the fish lift at the Benton Falls Dam has 
passed over 1.7 million river herring, and we are midway 
through the run at this point. The Kennebec River supports a 
popular and growing recreational fishery for American shad--
that is new--and striped bass, which now have access to 20 more 
miles of river, part of Maine's $257 million recreational 
fishing economy.
    A more recent project on the Penobscot River may trump 
that. The Penobscot River Restoration Project is an 
unprecedented collaboration among the Penobscot Indian Nation, 
seven conservation groups, hydro companies, PPL, and Black Bear 
Hydro, and State and Federal agencies. The core of the project 
is a plan for the non-profit Penobscot River Restoration Trust 
to purchase and decommission three dams, removing two of them. 
Combined with improved fish passage on the remaining dams owned 
by Black Bear, the project will improve access to over 1,000 
miles of river habitat for 11 species of sea-run fish, 2 of 
them listed as endangered. Enhancements to the remaining 
hydropower dams will fully offset any power losses from the 3 
decommissioned dams, and may actually result in a small net 
increase. Creativity by the dam operators, figuring out how to 
get more power out of fewer dams, was crucial to resolving 
decades of conflict over fish passage and other issues that go 
back to when I was in high school.
    Since I started working on hydropower projects, re-
licensing has become far more cooperative, with benefits for 
fish, anglers, hydropower production, and local communities. 
Our experience has demonstrated that where companies, agencies, 
and stakeholders work collaboratively, the re-licensing process 
results in positive outcomes for all involved.
    Trout Unlimited urges the Committee to foster more of these 
successes by encouraging Federal resource agencies to seek 
collaborative approaches, and by helping to provide the 
resources to these agencies to do that difficult job well.
    Thank you again for the opportunity to testify.
    [The prepared statement of Mr. Reardon follows:]

    Statement of Jeff Reardon, Maine Brook Trout Project Director, 
                            Trout Unlimited

    Mr. Chairman:
    Thank you for the opportunity to testify before the House Natural 
Resources Committee on the mandatory conditioning authorities afforded 
the federal resource agencies under the Federal Power Act (FPA). My 
name is Jeff Reardon. I am the Maine Brook Trout Project Director for 
Trout Unlimited (TU), a national non-profit conservation organization 
with more than 140,000 volunteers organized into 400 chapters from 
Maine to Alaska. Our mission is to conserve, protect and restore North 
America's coldwater fisheries and their watersheds. TU chapters invest 
thousands of volunteer hours on their local streams and rivers to 
restore habitat for trout and salmon fisheries, and they invest 
considerable time in conducting youth conservation camps and taking 
kids fishing.
    TU works with partners to fulfill our mission. TU staff and 
volunteers work with state agencies to clean up pollution from 
abandoned mines, with farmers and ranchers to improve riparian habitat 
and restore stream channels, and with western irrigators to improve 
water management and restore stream flows. TU also works with sportsmen 
and -women who care about protecting great fishing and hunting places 
on public lands.
    TU believes strongly in the principle of working collaboratively to 
achieve meaningful conservation results that provide benefits to a 
variety of stakeholders, including hydropower utilities and electric 
ratepayers. I have been fortunate to work with TU for 13 years, and 
increasingly our work in Maine has succeeded in finding cooperative 
solutions to vexing challenges.
    TU has consistently applied this collaborative conservation process 
to hydropower relicensing over the past 20 years. I have personally 
been involved in the relicensing of more than 20 hydroelectric dams. As 
a member of the Penobscot Trust, TU currently is an owner and operator 
of three dams in Maine as part of a project that will soon remove or 
decommission the dams, while our partner Black Bear Hydro, LLC will 
replace the lost power through hydropower enhancements at other dams.
    Based on our experience, I believe that the relicensing process is 
getting better and better over time for catalyzing solutions that 
balance the needs of the hydropower industry, the fish and wildlife 
resources of our rivers, and most importantly, the citizens of our 
nation. Mandatory conditioning authorities are critically import tools 
for achieving this balance which, among other things, is essential for 
sustaining quality hunting and angling opportunities and the $76 
billion in economic activity attributable annually to hunting and 
angling. Maine's sport fishing industry alone is valued at more than 
$257 million per year. In our experience, the resources agencies have 
been judicious in how they apply these valuable authorities.
    Because there has been so much ``water over the dam'', let me take 
a few moments to describe how we got to where we are today.
The FPA, mandatory conditions and balancing river uses
    Hydropower is an important source of energy for the nation. Among 
its strengths are that it does not cause air pollution or produce 
radioactive waste, such as other power sources do, and that fuel costs 
for the power producer are zero. But in many places hydropower 
development has devastated fisheries and other aquatic resources. Hydro 
dams block upstream and downstream fish migration; they alter upstream 
and downstream habitat; and they injure or kill fish that pass through 
turbines or over spillways. Construction and operation of private and 
public hydropower dams have been especially harmful to migratory fish 
such as salmon, river herring, shad, striped bass, and eels over the 
past 150 years.
    For example, in a 2004 report on Atlantic Salmon in Maine, the 
National Research Council identified dams as ``the single most 
important class of impediments to salmon recovery that can be 
influenced by human actions,'' and identified fish passage improvements 
as an ``urgently needed action''.
    To attempt to provide some balance of river uses while encouraging 
and regulating hydropower, the Federal Power Act was established in 
1920. The Act mandated the Federal Energy Regulatory Commission (FERC) 
to grant licenses for hydropower projects. Because of the poor record 
of success in mitigating losses to fisheries from hydro dam operation 
and construction, Congress passed the Electric Consumers Protection Act 
in 1986. Signed by President Reagan, the law amended the Federal Power 
Act. It required that FERC ``give equal consideration to non-power 
generating values such as the environment, recreation, fish, and 
wildlife, as are given to power and development objectives when making 
hydroelectric project licensing decisions.'' The U.S. Fish and Wildlife 
Service (FWS), NOAA Fisheries and the Forest Service, with whom we 
commonly work, are three of the agencies which have the authority to 
impose conditions to require dams to allow fish passage and to mitigate 
fish population and fish habitat losses where needed. In exchange for 
abiding by these conditions, and the others placed on the projects by 
FERC, hydro dam operators get long term licenses to use the river to 
generate power, from 35 to 50 years. These long license terms, combined 
with no fuel costs, provide dam owners the opportunity to recover 
capital expenditures required as a condition of the license.
    The new authorities, combined with a huge wave of project 
relicensings in the 1990's, strained the ability of FERC and resource 
agencies to make the law work effectively. There were some very 
positive outcomes, such as the Avista project on the Clark Fork which I 
will highlight in a moment. But some hydropower industry 
representatives, states, and conservationists had legitimate complaints 
about the way FERC and the resource agencies implemented the 1986 
changes. TU and other river conservationists worked very hard with FERC 
and the resource agencies to seek improvements over the past 20 years.
    One such improvement was the establishment of a cooperative 
licensing process, in which stakeholders and the licensee work together 
from the very inception of relicensing to the conclusion--from the 
early studies to permit approval--to find common ground and durable 
solutions. Nonetheless, some of the industry went to Congress seeking 
dramatic, weakening changes to the mandatory conditioning authorities. 
In 2005, Congress rejected substantial weakening of the mandatory 
conditions but did make changes to the law.
    Provisions in the Energy Policy Act of 2005, signed into law by 
President Bush, generally place a higher burden of proof on the 
resource agencies to justify their conditions, and provided a ``trial 
type'' hearing mechanism to allow industry and other stakeholders to 
challenge the proposed conditions.
    States also have mandatory conditioning authority through the Clean 
Water Act, through which they can protect their water quality standards 
by adding conditions to hydropower licenses. In states such as Maine, 
this authority has also proven to be very useful in mitigating damage 
to fish habitat and in catalyzing meaningful environmental improvements 
with little or no loss of generating capacity.
    Clearly, fisheries and river recreation and local economies have 
benefited from the FPA. But have we lost generating capacity? In most 
places, no. According to FERC, changes required by the relicensing 
process, including mandatory conditions, result in an average per-
project generating loss of only 1.6%. The Kennebec River basin in 
Maine, where I've done the bulk of my work, offers proof that power 
generation and fisheries can be better balanced. From 1993-2006 FERC 
relicensed 16 of 25 dams in the basin. FERC approved surrender and 
removal of 3 dams, as well as approving operational changes at most of 
the remaining dams. The net result? In-basin hydro generating capacity 
was reduced by about 3%.
    And the environmental results have been dramatic. The Sebasticook 
River, a tributary to the Kennebec, which saw construction of two 
fishways and removal of the Fort Halifax Dam, now supports the largest 
run of river herring on the east coast, with more than 1.7 million 
river herring passed via the new fish lift at the Benton Falls this 
spring. Two Maine communities have already regained the historic 
alewife fishing rights they lost when Edwards Dam was constructed in 
1837, and other communities are eager to join them. In addition to fish 
passed upriver at Benton Falls, these commercial fisheries harvested 
more than 500,000 herring for use as bait by Maine's lobster industry. 
The lower Kennebec River supports a popular and growing recreational 
fishery for American shad, and striped bass, once restricted to below 
the head of tide, now range more than 20 miles upstream to provide a 
new recreational fishery in the Kennebec and its tributaries. A unique 
salmon restoration program on the Sandy River, site of another dam 
removal, has generated the best egg-to-smolt yield of juvenile Atlantic 
salmon in the U.S.
    For freshwater resident fish, improved minimum flows and habitat 
restoration projects funded by project licensees have resulted in 
improved production and growth of native brook trout, and better 
protection for native lake trout that spawn in some headwater 
reservoirs.
    And for recreational anglers and other river users, there is vastly 
improved public access, and more predictable flow scheduling has 
enhanced recreational fishing opportunities by improving angler safety, 
while also providing more certainty for Maine's whitewater boating 
community.
    All of these changes were achieved through settlement agreements 
with the dam owners that were designed to satisfy legal requirements, 
but also to maximize fisheries and recreation benefits while 
maintaining hydropower generation.
    To repeat, despite the fact that these changes included 
decommissioning three dams, basin-wide loss of power was less than 3%--
significantly less than year-to-year variation based on precipitation.

Cooperative licensing processes are on the rise
    Over the past 10 years, relicensing has become a far more 
cooperative process, with great benefits to fish, fishing, hydropower 
production, and local economies. And at reasonable costs. TU is 
strongly supportive of the cooperative process. It requires a greater 
up-front investment in time and effort from all involved, especially 
the licensee, but the rewards can be great. The company, agencies, and 
river stakeholders can establish working relationships, implement 
mutually beneficial study and work plans, develop and consider options 
together, and together make mutually beneficial decisions.
    Very simply, in our view the cooperative process is natural 
resources decision-making at its best. These are local solutions which 
benefit the companies, fish, recreation and local economies. We salute 
companies such as PPL in Maine, Portland General Electric in Oregon, 
and Avista in Montana and the Northwest for their willingness to show 
the way forward, and reap the rewards from it in terms of licenses 
granted by FERC in a timely manner, and holding costs down.
Local solutions, local successes
    There are a growing number of significant project successes which 
demonstrate the benefits of the cooperative relicensing process.

Clark Fork Project in Western Montana (Avista Power)
    In the Clark Fork basin, Avista worked with nearly 40 
organizations, including TU staff and volunteers, over several years to 
create the Clark Fork Settlement Agreement. The agreement applies to 
the Clark Fork Project License, which includes the Noxon Rapids and 
Cabinet Gorge hydroelectric developments. The settlement agreement 
contained 26 protection, mitigation, and enhancement measures which 
Avista began implementing ahead of schedule. Likewise, FERC issued the 
new license one year before the existing licenses expired. The working 
relationships formed through the cooperative licensing process have 
endured through project implementation in the form of the Clark Fork 
Management Committee, which meets regularly to approve and monitor 
implementation efforts.
    The Clark Fork Project has made great progress in protecting and 
restoring habitat in the basin, including:
          Transporting bull trout over Cabinet Gorge Dam for 
        the first time in 50 years, in an attempt to reestablish 
        historic migration routes.
          Restoring over a mile of Twin Creek (an important 
        bull trout spawning stream) to its historic channel through a 
        multi-party effort lead by TU and partially funded by Avista.
          Purchase of 871-acres of wetland and riparian habitat 
        along Bull River, the largest tributary to Cabinet Gorge 
        Reservoir. These purchases will allow preservation of existing 
        wetland and riparian habitat.
          Obtaining more than $300,000 in grants to leverage 
        existing funds.
          Receipt of the National Hydropower Association's 
        Outstanding Stewardship of America's Waters Awards award in 
        2000, 2001, 2002, 2003, 2004, 2005, and 2006.
          Significant improvements to recreational facilities 
        such as Pilgrim Creek Park.

Pelton Round Butte Project, Deschutes River, Central Oregon
    The Portland General Electric Company and Confederated Tribes of 
the Warm Springs Indian Reservation, after initially competing against 
each other to relicense the 350 megawatt Pelton Round Butte 
Hydroelectric Project on the Deschutes River in central Oregon, 
convened a massive, multi-year, effort that brought together groups 
representing industry, tribal, conservation (including TU), 
agricultural, municipal, and county interests. Reintroducing ESA-listed 
salmon and steelhead in the Crooked, Metolius, and middle Deschutes 
rivers upstream of the project was the centerpiece of the new license 
and mitigation package. In 2009, PGE and the Confederated Tribes of the 
Warm Springs completed a fish intake and bypass project at the Pelton 
Round Butte Hydroelectric Project dam, which will enable Chinook 
salmon, sockeye salmon, and steelhead to complete their natural life 
cycle in the Deschutes River basin for the first time in 40 years.
    Additional terms and conditions provided for recreation and 
enhanced sustainability in the rural communities located near the 
project. Further, the reintroduction effort has lead to additional 
resources being dedicated to the Deschutes River basin, and addressing 
watershed health issues for the benefit of small Oregon towns 
attempting to diversify their economies. Local entities like the Three 
Sisters Irrigation District have been able to secure mitigation dollars 
associated with the relicensing effort to modernize their water 
diversion, delivery, and use systems in a way that streamlines 
operations while at the same time providing additional streamflows and 
restored access to over 20 miles of historic steelhead habitat on 
Whychus Creek.
Penobscot River Project, PPL, Central Maine
    Perhaps the most creative hydroelectric project that TU has worked 
on, the Penobscot River Restoration Project is an unprecedented 
collaboration among the Penobscot Indian Nation, seven conservation 
groups, hydropower companies PPL Corporation and Black Bear Hydro, LLC, 
and state and federal agencies. On the Penobscot, a Multiparty 
Agreement resolved decades of arguments over fish passage, hydropower, 
and issues important to the Penobscot Indian Nation. The core of the 
project is a plan for the Penobscot River Restoration Trust, the non-
profit organization charged with implementing the agreement, to 
purchase and remove the two lowermost dams on the Penobscot River, and 
purchase and decommission a third dam at the mouth of the Penobscot's 
largest tributary, where a fish bypass will be constructed. Combined 
with improved fish passage on the remaining dams, the project will 
improve access to over 1,000 miles of river habitat for 11 species of 
sea-run fish. Enhancements to the remaining hydropower dams will offset 
any power losses from the three decommissioned dams.
Conclusion
    These examples show that where companies, agencies, and 
stakeholders work collaboratively, the relicensing process can result 
in outcomes that meet the needs of the hydropower industry, the fish 
and wildlife resources of our rivers and the industries they support, 
and the public. TU urges the committee to foster more of these 
successes by:
        1.  Encouraging the federal resource agencies to seek 
        cooperative approaches to solving hydropower relicensing 
        challenges, and
        2.  Helping to provide the resources that the agencies need to 
        get the job done well.
    Thank you for the opportunity to testify.
                                 ______
                                 
    The Chairman. Thank you, Mr. Reardon, for your testimony.
    And last, and certainly not least, from my home State of 
Washington we have Mr. John Grubich, who is the General Manager 
of the Okanogan PUD district in Okanogan, Washington. Mr. 
Grubich, you are recognized for five minutes.

  STATEMENT OF JOHN GRUBICH, GENERAL MANAGER, PUBLIC UTILITY 
      DISTRICT #1 OF OKANOGAN COUNTY, OKANOGAN, WASHINGTON

    Mr. Grubich. Thank you, Mr. Chairman and Committee members. 
I appreciate the opportunity to visit with you today.
    One of my business school professors was famous for saying, 
``Theory is great, but where does the rubber meet the road?'' I 
hope I can illustrate that point to you today.
    Okanogan PUD is a small, publicly owned utility, consumer-
owned utility, in the State of Washington governed by three 
locally elected officials. It has assets of just about $1 
million, annual revenues of about $40 million, just under 100 
employees, and it is not a deep pocket.
    We have a hydro structure in Okanogan County, Enloe Dam, 
that was put into service in 1906. It operated until 1958. And 
it is a run-of-the-river project. It provides 9 megawatts of 
capacity and 4.5 average megawatts of generation. Okanogan 
began this process in 2005, when it filed its preliminary 
license permit application. It filed the final license 
application in August of 2008. So we are closing in on four 
years of regulatory oversight and trying to figure out if we 
have a project or not.
    Enloe Dam is going to generate, as I said, 4.5 average 
megawatts of energy. But it is going to be renewable, green 
energy, which everyone in the region is looking for. As Mr. 
Robinson indicated, hydropower provides additional benefits 
that other alternative sources don't. It provides a reliable, 
predictable source of energy when we need it.
    The benefits of this project are going to be that it will 
increase construction jobs in the area for about 300 
construction jobs, should meet the Washington State renewable 
energy portfolio standard. It will provide energy to the north 
part of Okanogan County, sufficient to service 3,000 
residential homes, and it will add reliability to our 
distribution system.
    Our concern is that the time it takes, and the individual 
agencies' ability to add additional requirements to this 
project makes it--could possibly make it economically 
unfeasible.
    One of the agencies, the Bureau of Land Management, has 
attempted to make mandatory conditions--not through the FERC 
process, FERC has already evaluated those and said that the 
vast majority of those requirements were not essential to the 
project and not related to the project. However, because we 
need a right-of-way from the Bureau of Land Management, they 
are saying those conditions will be part of the right of way. 
That will increase the project cost by approximately $6 
million. So we go from a $31 million project cost to now a $37 
million project cost, 20 percent increase.
    Again, the timing of it. Once FERC issues a license, BLM 
has now said it will take them an additional 18 months to issue 
the right of way. That is problematic for us. These two 
pictures show that, of anything, this is a no brainer. This is 
an existing dam that is a run of the river, that all it takes 
is re-establishing the generation capacity to provide 
hydroelectric power to citizens of Okanogan County. Thank you.
    [The prepared statement of Mr. Grubich follows:]

            Statement of John R. Grubich, General Manager, 
            Public Utility District No. 1 of Okanogan County

Introduction
    Good morning, Mr. Chairman and Members of the Committee. I 
appreciate the opportunity to speak with you today about the mandatory 
conditioning authority of federal natural resource agencies and their 
effect on the Enloe Hydroelectric Project (Enloe Project). My name is 
John Grubich, and I am the General Manager of the Public Utility 
District No. 1 of Okanogan County (District), in Washington. Thank you 
very much for the opportunity to come before you to provide a 
background on the Enloe Project, describe its potential for generating 
green renewable power, the local benefits of construction of the Enloe 
Project, and our issues with the federal resource agencies holding 
mandatory unilateral conditioning authority over the Enloe Project. I 
will address these topics in the order just given.

Background on Enloe Hydroelectric Project
    The proposed Enloe Project is a 9 MW hydroelectric facility on the 
Similkameen River, near the Canadian border in North Central 
Washington. In 2005, the District renewed its efforts to obtain a 
Federal Energy Regulatory Commission (FERC) license to restore the 
Enloe Project. The history of hydropower development at the Enloe site 
spans the last century. Originally developed in 1906, the Enloe Project 
ceased operation in 1958 and most of the equipment was removed. The 
District's proposed design for redeveloping the Enloe Project would 
provide important environmental benefits and, with the restoration of 
crest gates, more than double the previous project's generating 
capacity to 9 MW.
    Utilizing the FERC's Traditional Licensing Process, the District 
filed the license application with FERC in August, 2008. Throughout the 
licensing process, the District has consulted with many federal and 
state entities including: Native tribes in Washington and Canada; the 
Department of Interior's Bureau of Land Management (BLM, the underlying 
landowner); National Oceanic and Atmospheric Administration Fisheries 
(NOAA Fisheries) and the Fish and Wildlife Service (under Section 7 of 
the Endangered Species Act); U.S. Army Corps of Engineers (under 
Section 404 of the Clean Water Act); Washington State Department of 
Ecology (Ecology) (under Section 401 of the Clean Water Act and state 
law); Washington Department of Fish and Wildlife; Washington Department 
of Natural Resources; Washington State Historic Preservation Office 
(under Section 106 of the National Historic Preservation Act); and 
Okanogan County.
    FERC issued a Final Environmental Assessment (EA) under the 
National Environmental Policy Act (NEPA) on August 31, 2011. The Final 
Programmatic Agreement under the National Historic Preservation Act was 
issued on January 30, 2012. The District and Ecology continued efforts 
to complete a Clean Water Act Section 401 water quality certification. 
On February 24, 2012, Ecology published a draft 401 certificate with a 
30 day comment period. Ecology is reviewing and responding to comments 
in anticipation of issuing Final 401 Water Quality Certification. The 
District expects a FERC license after finalization of the Section 401 
Water Quality Certification and the issuance of a Biological Opinion by 
NOAA Fisheries. After issuance of the FERC license, the District will 
need to finalize the right-of-way (ROW) authorization with the BLM, 
which is required under the Federal Land Policy and Management Act 
(FLPMA).

Enloe as a Source of Green, Renewable Power
    Located at an existing dam and reservoir and operating on a run-of-
river basis with virtually no measurable effects on the hydrologic 
regime of the Similkameen River, the Enloe Project will be a model of 
green, carbon-free hydropower design and operation. The Protection, 
Mitigation, and Enhancement Measures (PM&E's) identified in the Enloe 
License Application together with the mitigation measures identified in 
FERC's EA under NEPA will meet or exceed the scientific principles and 
technical requirements generally specified for ``green hydro'' 
certification. Leading environmental organizations have identified six 
key goals which provide a reasonable determination of whether a 
hydropower facility has low impacts on the environment. These concern 
fish populations, river flow, water quality, flooding of wildlife 
habitats, cultural resources and recreation. They have also established 
objective criteria to address these six goals. Internationally, 
European and Canadian criteria for green hydro include such 
considerations as: minimum flow regulations; hydro operations (e.g., 
peaking); reservoir management; bedload management; power plant design; 
hydrological character; connectivity of river systems; sediment budget 
and geomorphology; and landscape and biotypes. By all such measures and 
criteria, the Enloe Project would strongly qualify as an appropriate, 
green hydro project.
    The Enloe Project is located above Similkameen Falls, a barrier to 
anadromous fish passage, and above critical habitat designated by the 
NOAA Fisheries. It incorporates a significant package of beneficial 
measures to enhance and protect downstream fish. The District has 
agreed to provide fisheries and aesthetic flows required by Ecology to 
protect aesthetic and instream values, as will be embodied in the 401 
Water Quality Certification in final preparation by Washington State.
    When licensed, the District will spend approximately $2.4 million 
of the total estimated project cost of $30.9 million on construction 
and implementation of the PM&E's over 40 years, a significant portion 
of which will employ local community professional services, vendors and 
contractors. These ``ecological investments'' to protect, mitigate and 
enhance the physical and human environment of the Enloe Project are 
equivalent to those widely required for ``green hydro certification.'' 
They include:
          Enhancement of fish habit far exceeding the minimal 
        fisheries impacts of the Project. A cold water spawning and 
        rearing refuge will be built out of an existing side channel, 
        15,000 cubic yards of spawning gravels will be added to the 
        gravel-poor Similkameen River, and large woody debris will be 
        transported beyond the existing dam, among other things.
          A comprehensive vegetation and wetland management 
        program, providing restoration, mitigation, and monitoring.
          Protection of water temperature, dissolved oxygen, 
        total dissolved gas, and other water temperature parameters.
          Recreation amenities that greatly exceed the 
        measurable effects of the project, including substantial access 
        improvements and interpretation.
          Protection of local wildlife through project design 
        and construction as well as construction of enhancements to 
        benefit bald eagles.

The Development of the Enloe Project is Consistent with National Policy
    The Enloe Project has been developed consistent with the recent 
interest in adding hydropower development to existing dams. Currently, 
only 3 percent of the nation's 80,000 dams generate electricity.\1\ A 
study by the Department of Energy, National Oak Ridge Laboratory 
estimated that approximately 12.6 GW of new, renewable power can be 
generated at existing dam sites.\2\ This study also found that a 
majority of these sites can be developed on federal land, not 
disturbing tribal sites, critical habitat, or national parks and 
wilderness areas.
---------------------------------------------------------------------------
    \1\ National Hydropower Association, http://hydro.org/tech-and-
policy/developing-hydro/powering-existing-dams/.
    \2\ National Hydropower Association, http://hydro.org/wp-content/
uploads/2011/04/ORNL-Hydro-Factsheet-final.pdf
---------------------------------------------------------------------------
    A Memorandum of Understanding (MOU) was signed on March 24, 2010 
between the Department of the Interior (DOI), the Department of Energy 
(DOE) and the Department of Army, implemented through the U.S. Army 
Corps of Engineers (USACE). The purpose of the MOU is to develop 
reliable, affordable, and environmentally sustainable hydropower by 
building a long-term working relationship, prioritizing similar goals, 
and aligning ongoing and future renewable energy development efforts 
between DOE, DOI, and USACE. In its 2-year progress report, DOE, DOI 
and USACE stated that one of the goals of the MOU was to investigate 
the facilitation of the permitting process for federal and non-federal 
hydropower generation.

Benefits of the Enloe Project to Washington State
    The District believes that hydropower is a clean renewable resource 
with significant untapped job-creating and environmental benefits, and 
potential for expansion that should be strongly encouraged by Congress. 
Specifically, the 2010 American Recovery and Reinvestment Act stimulus 
package included a $6 million allotment to train low-income, Veteran, 
and disabled workers in Washington State to perform energy-efficient 
construction jobs.\3\ The Enloe Project is an example of a construction 
project that could use these skilled ``green'' workers and create other 
economic benefits in the area. In April-May 2012, the unemployment rate 
in Washington State was 8.3%,\4\ and specifically it was 10.2% in 
Okanogan County.\5\ The Enloe Project is projected to employ at least 
20-25 percent of the personnel needed for the construction of the 
project from the local impacted area. In addition, the remainder of the 
construction personnel would temporarily relocate to the construction 
area, benefiting local businesses, retail and housing providers during 
the length of construction and compliance.
---------------------------------------------------------------------------
    \3\ http://seattletimes.nwsource.com/html/localnews/
2010846442_recoveryjobs21m.html.
    \4\ http://www.bls.gov/lau/.
    \5\ https://fortress.wa.gov/esd/employmentdata/eeis-tools/labor-
area-summaries.
---------------------------------------------------------------------------
    The Enloe Project is expected to generate an average of 45.0 GWh 
annually, and the total value of the power produced by the Enloe 
Project is estimated to be $2.6 million annually. This generation and 
revenue represent a source of clean, renewable and sustainable 
hydropower that will be used by and benefit the residents of Okanogan 
County. Overall, the District's power portfolio is based on 88 percent 
hydropower (from other sources), with the remainder being wind, nuclear 
and a small amount of other energy sources. To meet increased demand 
for power, if unable to develop the project due to the cost of 
requirements placed on it by federal agencies, the District would be 
forced to forego the local economic and environmental benefits of this 
green generation and obtain the replacement power from natural gas or 
coal fired generation.

Issues with BLM's Authority to Issue Mandatory Conditions in its ROW
    Developing the Enloe Project with the PM&E's proposed in the 
license application (which are based on extensive consultation with 
most federal and state resource agencies, as well as the additional 
measures recommended by FERC in the Final EA), would represent an 
environmentally beneficial and economically viable project. However, 
the prospect of further mandatory enhancement measures poses a 
potential jeopardy that could destroy the economic viability of the 
project. Notwithstanding the positive project attributes of the Enloe 
Project and outcomes of the FERC NEPA process, the BLM has proposed 
further onerous environmental recommendations in the FERC licensing 
process which are unnecessary and unjustified. These recommendations 
would accomplish BLM programs and objectives that are not directly 
related to project impacts. Enloe is a very small project, with a total 
budget of approximately $30.9 million (of which about $2.4 million is 
committed to environmental mitigation). BLM's program would increase 
total project cost by 20 percent.
    BLM's recommendations would not only raise the cost of the PM&E's 
from $2.4 million to an estimated $8.7 million, but also would expose 
the District to future open-ended cost increases because BLM's 
requirements would reserve to BLM the discretion to increase 
requirements and costs still further in the future. BLM's modified 
recommendations all go well beyond the level of mitigation considered 
sufficient by FERC in its EA; they are therefore unnecessary to 
mitigate project impacts, and lack any objective justification. It is 
also important to understand that the District's proposed PM&E program, 
as enhanced by FERC's mitigation requirements, already offers 
significant beneficial enhancements of the human and physical 
environments, beyond the mere mitigation of Project effects.
    The BLM's many additional recommendations would restore 
recommendations previously considered and rejected by FERC in its EA. 
FERC received these recommendations from BLM at least twice, explicitly 
considered each of them in its EA, and rejected them. Although BLM has 
declined to formally impose these requirements as mandatory conditions 
under Section 4(e) of the Federal Power Act (FPA), BLM has stated that 
it plans to achieve the same result by unilaterally imposing these 
recommendations as requirements of its ROW, regardless of FERC's 
considered opinion. This approach to the license and ROW conditions 
disregards and subverts the purpose of the FERC licensing process.
    These BLM unjustified and unnecessary recommendations include 
requirements that the District:
          Spend an amount equivalent to nearly 80 percent of 
        the entire existing mitigation program to move spoils primarily 
        composed of native rock off site.
          Be responsible for a program of recreation 
        improvements that has no relationship to project impacts or 
        needs, and would triple the District's recreation mitigation 
        cost.
          Rebuild an expensive footbridge that FERC concluded 
        was not necessary due to the lack of public facilities and 
        recreation opportunities (existing or proposed) on the west 
        side of the river.
          Conduct studies leading toward aesthetic flows that 
        BLM would set itself, ignoring flow agreements that have been 
        negotiated through the Washington State 401 Water Quality 
        Certification process, and exposing the project to an open-
        ended financial risk.
          Comply with more extensive vegetation management 
        requirements than BLM has imposed on any other project of which 
        we are aware, potentially increasing mitigation costs for these 
        resources by more than 150 percent.
          Increase fisheries mitigation to 150 percent of the 
        planned program to address impacts unrelated to the project, 
        ignoring the extensive and well-supported fisheries mitigation 
        program negotiated with agencies and Tribes that already fully 
        mitigates impacts.
    Any process that allows a federal resource or land management 
agency to unilaterally impose its ``wish list'' of PM&E's on a project 
without regard to actual project impacts and the economic feasibility 
of such conditions on the project represents an invitation to 
arbitrary, project-crippling requirements. What is required is a 
process that requires or at least encourages federal resource or land 
management agencies to participate in developing a consensus of 
interested federal and state agencies with respect to what constitutes 
a reasonable level of project-related PM&E's. Parceling out unilateral 
authority to impose PM&E requirements on a project--as is currently the 
case with mandatory conditioning authority under FPA Section 4(e) and 
independent conditioning authority exercised by federal land management 
agencies under FLPMA--is potentially disastrous, saddling such projects 
with needless costs or, in too many cases, thwarting needed development 
altogether.

Conclusion
    The District is hopeful that BLM may yet reconsider its intent to 
overreach with these excessive license and ROW conditions and thereby 
preserve the economic viability of our proposed beneficial green 
hydropower project. We applaud the Committee for looking into the 
impact of federal resource agencies' mandatory conditioning authority 
on the economics of projects such as the Enloe Project. In closing, I 
would like to thank the Committee for this opportunity to speak today 
and address the very important and potentially project-crippling 
requirements posed upon the District in its pursuit of licensing a 
clean renewable power project. The District looks forward to working 
cooperatively with the Committee as it moves forward with its 
assessment of federal natural resource agency conditioning authority. I 
will be happy to answer any questions.
                                 ______
                                 
    The Chairman. Thank you, Mr. Grubich, for your testimony. 
We will now begin the question period for Members, and I will 
recognize myself for five minutes.
    Mr. Grubich, let me follow up with what you said. And this 
is the time line that I understand. On August 8, 2011, it was 
after FERC had issued its draft environmental assessment, after 
that for the Enloe Dam. That is when the Secretary of the 
Interior, through BLM, filed their 36 pages of recommendations 
for the right of way. Now, this is just the right of way, it 
has nothing to do with the physical aspect of the dam. Is that 
correct?
    Mr. Grubich. That is correct.
    The Chairman. OK. Now, why--I guess I am--where I am 
puzzled is why would an Interior Department need to conduct 
additional NEPA review when the FERC process went through a 
NEPA review.
    Mr. Grubich. That is an excellent question, and that is one 
we have posed to the agency.
    The Chairman. And they have said what?
    Mr. Grubich. They have not articulated the reason why at 
this point.
    And to be fair, Mr. Chairman, we are in dialogue with the 
agency, trying to resolve this. My concern is that the 
timeliness of the resolution is of the utmost importance before 
our board makes the decision to go forward with the project or 
not.
    If you look, BLM has 45 acres of land around this land, 45 
acres of land. And yet they want to impose an additional $6 
million of project costs that have nothing to do with this 
project, based on FERC's analysis.
    The Chairman. Let me ask. Going through this process with 
FERC, you obviously had to have a lot of stakeholders involved 
with that. Give me an idea of what the stakeholders and--what 
consensus that they came through in the FERC process.
    Mr. Grubich. And we had all the stakeholders, including 
BLM, in the process, although BLM is the only one who didn't 
support the outcome of the process. We had the Colville Indian 
Tribe, we had the Lower and Upper Similkameen Band from Canada 
supporting the project. We had the Washington State Department 
of Ecology, the Washington Fisheries, all of the Federal 
agencies involved in the FERC process. And when FERC came out 
with their final EA, BLM at that point chose to take exception 
to FERC's evaluation of their recommendations.
    The Chairman. Well, that kind of leads in to another 
observation. Mr. Reardon just testified prior to your testimony 
that the status quo works when you have a collaboratory 
process. And you just--I don't want to put words in your mouth, 
so confirm that I said this correctly--you said that all the 
stakeholders, with the exception of BLM, was pretty much in 
agreement with the project.
    And so, I had made an observation in my opening statement 
that it appears some agencies step in for a second bite. Is 
that an accurate assessment of what you are doing? In other 
words, the project itself, the Enloe project itself, going 
through FERC, there is broad consensus with the exception of 
one agency. Now this agency, because it doesn't agree with it, 
is imposing different requirements totally unrelated to energy 
production. Is that a fair assessment of what is going on?
    Mr. Grubich. Yes, that is a fair assessment. And second 
bite of the apple is a very appropriate illustration.
    It is frustrating, from a small utility's perspective, to 
go through this process and believe that you have the 
boundaries of the project done, and then have one agency hold 
the hammer over your head as to can you go forward with the 
project. And I can tell you, from a financing standpoint, that 
is my biggest concern. Not only are our local officials going 
to have to make a decision potentially without full knowledge, 
but when we go to finance a project, the construction risk 
component adds either cost to the project or interest to the 
project or to the bonds. That is another huge concern that I 
have when it comes time to package this and go forward with the 
project.
    The Chairman. Now, just briefly, put that in perspective. 
What did you say your revenues are, roughly, a year?
    Mr. Grubich. A little over $40 million.
    The Chairman. A little over $40 million. And this project 
could cost in upwards of over 30, three-quarters of your total 
revenues for 1 year.
    Mr. Grubich. Well, it is estimated at $31 million right 
now, which is about equal to our retail sales. And then any 
additions are going to be at least as much as our total annual 
sales.
    The Chairman. Well, Mr. Grubich, thank you very much. I was 
made aware of this some time ago, and I have to say I shook my 
head when I heard what you said, because this is totally 
unrelated to power production. It is simply ancillary, and it--
I very much appreciate your testimony.
    My time has obviously expired. I recognize the gentlelady 
from California.
    Mrs. Napolitano. Thank you, Mr. Chairman. And, Mr. Reardon, 
with a simple yes or no, do any of the Federal agencies have 
the authority to tell FERC they cannot construct a license 
project?
    Mr. Reardon. No. Sorry. No.
    Mrs. Napolitano. Thank you. In Mr. Robinson's testimony it 
states mandatory conditions have taken a toll on hydropower 
development, sending a market signal that it is bad business to 
pursue new hydropower projects. Yet in testimony from FERC 
Commissioner Phil Moeller, he estimates that pending hydropower 
license applications propose almost 2,500 additional megawatts 
of new capacity, and applications for another 5,580 megawatts 
expected to be filed in the next 5 years. Sound like an 
industry that is deterred by environmental conditions?
    Mr. Reardon. No, and I just add that what we see is a 
number of existing projects looking at incremental increases in 
generation on both of the big basins I have worked in, the 
Penobscot and the Kennebec.
    Mrs. Napolitano. Developers are not doing it for the 
benefit of environment. They are going to make money out of it. 
Would they pursue projects or proposals if they did not make 
economic sense?
    Mr. Reardon. I assume not.
    Mrs. Napolitano. I would hope not. In Mr. Maisch's 
testimony, he states the resource agencies can impose mandatory 
conditions that result in substantial loss of hydropower 
generation, require costly infrastructure modifications, and 
increase O&M costs. There are other costs associated with 
hydropower that are borne by other users of the river, whether 
it is the fishermen, downstream water users, everybody who 
benefits from the healthy ecosystems. These costs come in the 
form of fewer fish, less and lower water quality, and fewer 
recreational opportunities. Doesn't a true balancing of 
interests require that, one, getting the benefit from altering 
a natural river environment should have to pay the cost of 
degrading it?
    Mr. Reardon. Yes. And I think the example on the Kennebec 
is a great one. You know, those fish runs were destroyed by a 
dam that was built when there was no fish passage authority, 
and not restored until after ECPA and fish passage authority 
went to the Federal agencies.
    Mrs. Napolitano. So there is a cost borne by others that is 
not always----
    Mr. Reardon. There certainly is.
    Mrs. Napolitano. Thank you. Mr. Maisch, your testimony 
indicates that your agency expects to lose about five percent 
of the annual energy generation as a result of increased in-
stream flow requirements, and will spend approximately 20 
million on capital improvements, with an increase in O&M costs 
of 2.4 million per year, an impressive amount. But did your 
agency recoup its initial investment in the project over the 
prior license term?
    Mr. Maisch. Well, our agency was in a partnership project 
with Pacific Gas and Electric Company, so they got all of the 
energy and paid all of the operation and maintenance costs and 
the bond indebtedness. So we have received the full benefit of 
all of the water supply. And so, yes, there have been benefits 
over the 50-year license, no doubt at all.
    Mrs. Napolitano. Well, then, in the same token, what is 
your estimate with the net revenue from the project's power 
generation and the water delivery over the next 30 to 50 years, 
when the license period--time where these new investments in 
the project will give your agency the exclusive right to use 
this public waterway to generate hydroelectricity?
    Mr. Maisch. Yes. We expect the project to produce in the 
neighborhood of $45 million a year in energy benefits.
    Mrs. Napolitano. Forty-five. Thank you very much.
    And, Mr. Reardon, just a question for Maine. How many 
Mainers went dark with the removal of the Fort Halifax Dam and 
the Edwards Dam?
    Mr. Reardon. None.
    Mrs. Napolitano. Any consumers will lose access to power 
with the decommission of the Great Works Dam and the Veazie 
Dam?
    Mr. Reardon. No. And, in fact, one of the elements of that 
project is that the energy enhancements started being 
implemented before the dam removals, which haven't occurred 
yet.
    Mrs. Napolitano. I see. Mr. Robinson, you say hydropower is 
in trouble. And just--my common sense tells me that those that 
do hydropower would normally have their ducks set up when they 
go for licensing, or at least they should. And it is an unlevel 
playing field. I have visited a couple of the PMAs, and first 
time I think anybody has really gone and talked to them. And I 
am wondering. Why have they not been vocal, if there have been 
issues?
    And I can certainly see that what they charge for the 
electricity does not take care of the infrastructure issue.
    Mr. Robinson. Yes. I think one of the reasons our--FERC's 
licensees and applicants are not vocal in this, and they have 
some difficulty in expressing their concerns, is that they know 
that they are going to have to work with these agencies, and 
they know that the playing field is not level, and they will be 
the recipient of those mandatory conditions. And so they do 
their best. And I feel for them. They do their best to try to 
work within the system that Congress has laid out for them and 
that FERC regulates to get an equitable decision.
    Unfortunately, with regularity, they do not get that 
equitable decision out of the resource agencies, and they get 
mandatory decisions that are not consistent with where even the 
Commission has found the public interest.
    Mrs. Napolitano. Thank you, Mr. Chairman, for your 
indulgence.
    The Chairman. The time of the gentlelady has expired. The 
Chair recognizes the gentlelady from South Dakota, Mrs. Noem.
    Mrs. Noem. Thank you, Mr. Chairman. My question would be 
for Mr. Robinson. We have heard testimony today and some of the 
conversation that we have already had that FERC may have its 
own set of guidelines that it follows, while the resource 
agencies have another set of requirements or rules all 
together.
    So, FERC has to look at hydropower re-licensing in a multi-
dimensional manner, where some of these resource agencies may 
look at them one dimensionally, through environmental 
protection rules without taking into consideration costs or 
benefits. And so, I was curious if in your evaluation of this, 
does Federal law create this conflict, and create these two 
different sets of rules that are looked at by the agencies and 
FERC?
    Mr. Robinson. Well, in my history at FERC--and I started in 
1978 and was there through 2009--originally it was not a 
problem, because FERC interpreted the 4(e) conditions and the 
section 18 conditions as basically advisory. But through a 
number of court decisions that occurred starting in about 1983, 
I think, with Escondido, those conditions were made mandatory 
without FERC having any ability to modify or consider those 
conditions.
    What that did for the process--and we had hydropower 
development through the 1980s. We had as many as 500 
applications per year for new projects--not the kind of 
projects that we were hearing about here a minute ago--new 
projects on rivers prior to 1983. But what happened then was it 
became apparent that the Commission could not move forward 
without an agency deciding whether or not elk habitat was 
critically important for their purposes, and imposing those 
conditions on a hydropower project that had no relationship to 
elk habitat.
    That started sort of the unfolding of the hydropower 
program, and it has just continued through the years, to the 
point now where we essentially, for decades have had no net 
development of hydropower in this country, while other forms of 
generation have continued to grow. Nothing has happened since 
2001, when the Commission staff recommended to Congress that we 
had a problem. Those problems are just as significant today as 
they were over a decade ago, and we still do not continue to 
develop the hydropower potential of this country.
    Mrs. Noem. So what would your recommendation be?
    Mr. Robinson. Pure and simple. Those conditions--the 
distributed decision-making process, or dispersed decision-
making process, has to have the discipline of an agency that is 
vested with the authority and the responsibility and reviewable 
by the courts to exercise the laws--the Endangered Species Act 
and others--and make decisions across the spectrum of issues on 
what is in the public interest.
    That does not happen now. It happens in the natural gas 
industry. The six principles I mentioned earlier are all 
evident in the natural gas industry. That is why we put 1,500 
miles of natural gas pipeline in the ground every year. The 
equivalent of that on hydro just doesn't exist. They only have 
two of the six principles covered, and nothing can get done.
    Mrs. Noem. Mr. Maisch, would you like to weigh in on this 
topic, and your experience that you have had through the 
process?
    Mr. Maisch. Yes. Thank you very much. The--I agree with Mr. 
Robinson whole-heartedly. The resource agencies don't have the 
responsibility to balance across diverse interests. And it 
makes total sense. I mean the resource agencies have their 
narrow view of resources that they are charged with protecting. 
And that is their only view of the world. And the fact that 
reducing hydro means we can't have as much wind or solar 
generation added to the--you know, just is not in their 
purview. And they are not capable, I don't think, of balancing 
across those lines. And you need someone like FERC, who has a 
central decision-making authority that can take into account a 
diverse environmental as well as economic interests, and make a 
final decision. And we don't have that.
    Mrs. Noem. So what do you believe would be the best method 
of reconciliation between the resource agencies and FERC to 
come to that decision? Do you believe that FERC needs to have 
that ability to move forward?
    Mr. Maisch. I think that that would be the simplest and 
best solution, yes.
    Mrs. Noem. OK, thank you. Mr. Chairman, I yield back.
    The Chairman. Would the gentlelady yield to me? Would the 
gentlelady yield to me----
    Mrs. Noem. Certainly.
    The Chairman [continuing]. For the balance of time?
    Mrs. Noem. Certainly.
    The Chairman. I just want to ask a question here. Mr.--and 
to Mr. Robinson is this question.
    Mr. Reardon said that--in his testimony, that there is only 
a small loss of hydropower. And yet Mr. Maisch testified that 
one facility in California loses 10 percent. My question to you 
is are there examples where this conditioning could cause a dam 
to be removed?
    Mr. Robinson. Yes. I mentioned one earlier, with the 
Klamath project in California. There the section 18 
prescription is estimated to cost somewhere on the order of 
$200 million. And that, of course, moved that applicant into a 
position of saying, ``What can we do to get out from under that 
burden?'' And that is dam removal. I can't remember exactly, 
but I think it is over 100 megawatts that is represented by 
that 1 project.
    The Chairman. Right. I think Mr. McClintock knows all the 
figures on that.
    Mr. Robinson. Yes.
    The Chairman. I would just say--I would just make this 
observation--and I thank the gentlelady for yielding--that 
equates 100 percent loss of power.
    Mr. Robinson. It does.
    The Chairman. Yes.
    Mr. Robinson. And you can find examples on either side. But 
the overall statistics on hydropower is that it has been 
stagnant for more than a decade----
    The Chairman. Right.
    Mr. Robinson [continuing]. While other generation sources 
continue to grow.
    The Chairman. My time has expired. The Chair recognizes the 
gentleman from California, Mr. Garamendi.
    Mr. Garamendi. Thank you, Mr. Chairman. And thank you for 
the hearing. Very, very important issues to be discussed here. 
And it is going to take us some time to get through all of 
this, probably multiple hearings.
    Just a couple of things. Most of the witnesses have made 
recommendations about how to move things forward. Among those 
are streamlining the processes and, I understand, giving one 
agency authority. I think this was, Mr. Robinson, one of your 
recommendations. Could you expand on that for, like, maybe 30 
or 40 seconds, and try to tell us what--how you would--who that 
would be?
    Mr. Robinson. I will try real hard. I have been through 
four iterations of trying to modify the regulations at FERC to 
make things quicker, more efficient, the whole bit. What I have 
concluded--and I was responsible for the last iteration, the 
ILP, that was----
    Mr. Garamendi. I understand.
    Mr. Robinson [continuing]. My responsibility. I take full 
blame for it. What happens is the more we try to make it--
recognizing the disperse decision-making process and make it 
more efficient, the more opportunities we have given people 
over time to leverage that process to get what they want with a 
singularity of focus. As long as that exists, then the first 
dollar for infrastructure development is not going to be spent.
    Developers are going to go in and look at that process and 
say, ``I can put my money somewhere else and have a better 
chance of return on it,'' and that is why you have a stagnant 
hydropower program. You need to have an agency who can guide 
the process, and has the ultimate control responsibility 
authority for making the decision. Is it in the public 
interest? And then they have to defend that decision, as well. 
Right now, there is just too many cooks in the kitchen.
    Mr. Garamendi. So who should that agency be?
    Mr. Robinson. Well, I have a bias there, because I worked 
for FERC for 31 years, and I think we were very capable of 
doing that. We have--they have, I'm sorry--they have the 
expertise, the knowledge, the resources. They know hydro and 
they know the resources. What the----
    Mr. Garamendi. OK, so you--so, for example, NMFS would 
provide information to FERC, and then FERC would use that 
information and make a decision.
    Mr. Robinson. They can provide the mandatory conditions to 
FERC, but FERC has to have the ability to look at those 
conditions and say that ``They are mandatory as long as they 
are consistent with our determination of the public interest.'' 
It wouldn't be a matter of FERC just not looking at the 
conditions.
    Mr. Garamendi. OK. So what it basically does is it takes 
the resource agency's authority, transfer it over to FERC. FERC 
then has the dual responsibilities--that is, the environmental 
as well as the development responsibilities--and would have to 
find the common ground.
    Mr. Robinson. They have that right now.
    Mr. Garamendi. I understand. But the resource agencies do 
not. They have----
    Mr. Robinson. The resource agencies do not. They have the 
responsibility--there are provisions in EPAC 2005 which tried 
to impose the overall look onto the agencies. Basically it is 
the fox in the chicken coop.
    Mr. Garamendi. OK. That is very helpful, thank you. Also, I 
think your testimony picked up the issue of eminent domain. And 
that would be the Federal Government using its eminent domain 
power to provide acquisition of private property for a private 
developer to develop a hydro project.
    Mr. Robinson. That is correct. And, in fact, of the six 
principles, that is the last principle for successfully 
building energy infrastructure. That is one of the two of the 
six principles that hydro already has, and has had since 1920. 
They have the eminent domain authority under the Federal--I 
can't remember the name of it now, but it was enacted in 1920.
    Mr. Garamendi. As I think we know, eminent domain----
    Mr. Robinson. Yes.
    Mr. Garamendi [continuing]. Using eminent domain for the 
purposes of a private party has been rather controversial in 
recent years.
    Mr. Robinson. And that is why the Commission historically 
has done everything they can to try to not impose that. But 
it--the natural gas industry has that as well, the eminent 
domain authority.
    Mr. Garamendi. Well, obviously, that will become a 
controversial issue.
    Mr. Robinson. It has been.
    Mr. Garamendi. Fifty-one seconds. Many reasons why new 
projects have not gone forward, the licensing is one of them. 
There are also opportunity--geographic opportunity issues. Run-
of-the-river projects are being proposed. Is there any 
specific--major dams is a big issue, I understand that. But 
run-of-the-river is another area. In that realm, what kind of 
problems may exist?
    And I think I will ask the rest of the crew here to answer, 
and--well, I will just let the question hang. Thank you very 
much, Mr. Chairman.
    The Chairman. Well, you can always ask that question in 
writing and get a response. We would all like to hear that. And 
if the gentleman wants to follow up, he certainly can.
    Mr. Garamendi. Or if somebody else could ask the question 
and get a response.
    The Chairman. The Chair recognizes the gentleman from South 
Carolina, Mr. Duncan.
    Mr. Duncan of South Carolina. Well, thank you, Mr. 
Chairman. You know, it baffles me that when we can grant 
licenses for 30 or 50 years, but--we have a long track record 
with the countries that are running these hydroelectric 
projects, but then we require something that is so complex, 
expensive, and lengthy in the re-licensing process.
    You have a track record. You know what has been going on 
for the last 30 or 50 years. And so this is an important issue. 
The re-licensing process, in my opinion, takes far too long, 
especially when you have a wide agreement among environmental 
and industrial stakeholders and state resource agencies.
    And I will give you an example. That is the Catawba-Wateree 
Project in North Carolina managed by Duke Power. They had the 
North Carolina Department of Natural Resources and a wide 
variety of other agencies on board with them and in agreement, 
and it still took way too long, and it cost the rate payers way 
too much money. I have talked about this a number of occasions 
in here. This project is a project where the applicants sought 
to re-license a facility well before its license expired. It 
took significant steps prior to filing its re-licensing 
application to gain the support from over 69 stakeholders.
    When it filed with FERC, the process was continually 
delayed because the National Marine Fisheries Service, they 
would not engage in the process. In fact, FERC asked them to 
initiate a formal consultation back in 2009, and was rebuffed. 
FERC then issued a final Environmental Impact Statement for the 
project and asked for Marine Fisheries to issue a biological 
opinion for the project by the end of February 2010. However, 
the Marine Fisheries continued to drag the process out and just 
recently, within the last two months, issued the draft 
biological opinion.
    Now, this was about a sturgeon that hadn't been seen in 
this part of that river system in over 70 years. Seventy years. 
And so, while there seemed to be some good points, there are 
also some bad points like the excessive sturgeon monitoring 
requirements and adaptive management provisions for the whole 
term of the new license. Adaptive management is especially 
troublesome, since it would allow the Marine Fisheries to 
change the applicants' hydro operations as frequently as every 
year, asking for increased flow releases from the Wateree hydro 
station, and upsetting the water use balance achieved by the 
stakeholders.
    Now, I am going to take that and I am going to think about 
the Savannah River basin and Lake Hartwell and what not FERC is 
doing, but the Corps of Engineers is doing with downstream 
flows for sturgeon when current flows, which are, I think, 
excessive, put more water in the river than was in the river 
before the lakes were ever built, all because of a sturgeon 
downstream.
    So, what is additionally troubling, and something Marine 
Fisheries did not take into account is that upsetting the 
stakeholder agreement can void the basis for the South Carolina 
vs. North Carolina Supreme Court case settlement agreement 
regarding water appropriations or apportionment rights, inter-
basin transfers, and everything that is going on there.
    So, in response to some of the suggestions by Marine 
Fisheries in the draft biological opinion, the applicant has 
offered an alternative monitoring program that is much more 
reasonable and does not include adaptive management. Hopefully 
this is something that Marine Fisheries will appreciate, 
pursue, and act on expeditiously. It is just another cog in the 
wheel that creates a system and a process that is too expensive 
for the rate payers and the companies, and it is too lengthy.
    So, Mr. Robinson, I ask you this. In your testimony you 
talked about the excessive delays by these coordinating 
agencies. What would you think if the coordinating agencies 
like Marine Fisheries were given a drop-dead date, a definitive 
time frame on which to act, and if they didn't, then they are 
out of the picture, they have had their opportunity? What would 
you think about that?
    Mr. Robinson. I would say that you just named the third 
principle of the six principles of effective infrastructure 
development, a disciplined schedule. If you don't have the 
ability, if that agency with authority does not have the 
ability to discipline the schedule that is set in consultation 
with all the agencies, then that increases the leverage for 
those resource agencies to extend it, to get more in 
negotiations out of their terms and conditions, and hold the 
process up.
    It also basically eliminates the ability of anybody to come 
in and say, ``I want to develop a new project,'' that they 
can't stand that indefinite risk. That regulatory uncertainty 
stops the investment. So it is something that needs to be 
applied to the hydropower licensing process. It is currently 
not there.
    Mr. Duncan of South Carolina. Yes. I appreciate it. That 
was my follow-up question about the uncertainty, and you 
touched on that.
    I would just end with this, Mr. Chairman. As we have 
allowed a number of different groups and agencies to hijack the 
whole process with regard to the rivers and lakes and the hydro 
projects, which are seen as green energy--their base load 24/7 
power supplies that could supplement all this other green 
energy that we are pursuing with wind and solar--it is the 
right thing to re-license these in a timely fashion. And it is 
the right thing to keep costs down for the rate payer and the 
companies. And with that, I will yield back.
    The Chairman. I appreciate the gentleman, and his time has 
expired, and the Chair recognizes the gentleman from 
California, Mr. Costa.
    Mr. Costa. Thank you very much, Mr. Chairman. I want to 
continue to proceed along the line of questioning that we have 
been engaged in today.
    But I do want to point out that it is important to note 
here we are not only talking about when we look at re-licensing 
operations, units that are held privately by utility companies, 
but also public utility companies as well, that are held by the 
public in trust to provide energy for that public purpose.
    Mr. Robinson, with your past experience on FERC, typically 
how long would you say a re-licensing--a facility that has been 
built, that has been operating for 30, 50 years, whatever, 
takes to be re-licensed?
    Mr. Robinson. Beyond way too long.
    Mr. Costa. ``Way too long'' is defined by what? Four to six 
years? That seems to be----
    Mr. Robinson. When we put our regs in place in 2005 for the 
ILP, the integrated licensing process, which was supposed to 
provide discipline, we recognized there that it would be five 
to five-and-a-half years to re-license existing projects----
    Mr. Costa. OK. Did the rest of you concur with that? Is it 
five years, plus or minus, about average?
    Mr. Maisch. In our project we started three years before 
that. So actually, eight years.
    Mr. Costa. So you are eight years at Placer.
    Mr. Maisch. Right.
    Mr. Costa. And anybody else take issue with that time line?
    Mr. Grubich. We are seven years----
    Mr. Costa. You are seven years.
    Mr. Grubich [continuing]. Today, and we are still----
    Mr. Costa. OK.
    Mr. Grubich [continuing]. Not in the final license.
    Mr. Costa. And, Mr. Reardon, you have a different 
perspective?
    Mr. Reardon. I have applied for one set of licenses from 
FERC, and I think we were two-and-a-half years from application 
to receipt.
    Mr. Costa. You better give an inside track to these others. 
Obviously, you----
    Mr. Reardon. The other thing I might say, though, is that 
it depends a lot on the project. Complicated----
    Mr. Costa. No. Obviously, it does, and that is an average. 
But that is my experience, four to six years.
    My--it appears under section 18 of the Federal Power Act 
that the National Marine Fisheries Service, otherwise known as 
NMFS, seems to have absolute, unfettered discretion when it 
comes to re-licensing to impose conditions, and that FERC has 
no discretion to modify these conditions. Would--Mr. Robinson, 
Mr. Maisch, you care to comment quickly?
    Mr. Robinson. Yes, quickly, you are correct. But beyond 
that, depending upon where you are in the National Marine 
Fisheries Service around the country, they will use that 
authority and they will leverage that to try to take on larger 
agency interests like basin restoration on the back of a single 
project.
    Mr. Costa. And shouldn't FERC be able to balance the 
competing interests on energy supply and water supply, flood 
control? I mean to the degree that you draw the process out, to 
the degree that you take--I mean these projects are built for 
power purposes, but they are--also sometimes provide a flood 
control component as well as water supply. And to the degree 
that they leverage, as you put it, and now the water is reduced 
for the other purposes, but they don't have to pay for those, 
it is the rate payers that are paying for that, is that not the 
case?
    Mr. Maisch. That is exactly the case. You are exactly 
right. FERC--excuse me, the National Marine Fisheries Service, 
as well as the----
    Mr. Costa. If the benefits are so important to the 
increased--for the fisheries, it seems to me that it shouldn't 
come out of the rate payers that are paying for the increased 
benefits.
    Mr. Maisch. Well, there is no place else for it to come.
    Mr. Costa. Mr. Grubich, you have a comment there?
    Mr. Grubich. Yes. When we make our rates, we use a 
philosophy called cost-causer/cost-payer, in that the cost 
associated with serving a group of customers should be paid by 
that group of customers.
    It seems to me, in this process, the individual agencies 
don't adhere to that same philosophy. If the project drives the 
cost, the project should pay for the cost. But if the agencies 
want ancillary benefits out of that project, it shouldn't come 
out of the cost of the project, and it shouldn't----
    Mr. Costa. No, I concur. And we even have some projects 
that I am familiar with in which, on flow requirements that 
they have leveraged, or attempted to leverage, that they are--
by their own admission, has been a case where anadromous fish 
have not--never, may never, ever existed in the waterways. 
But----
    Mr. Grubich. Case in point is Enloe Dam.
    Mr. Costa. In where?
    Mr. Grubich. Enloe Dam, the project that we are licensing.
    Mr. Costa. Well, same thing in the Tuolumne River.
    Mr. Grubich. Right.
    Mr. Costa. And--but they don't care, because they have the 
leverage. And under section 18 under the Federal Power Act, 
they use it.
    So, it seems to me that balance has to be achieved here. We 
even have a more difficult circumstance--and my time has 
expired--where hydropower in California, under the Renewable 
Energy Act, is not included or counted as renewable, which is 
beyond my comprehension.
    But, nonetheless, Mr. Chairman, I think this is an area 
that we need to continue to try to refine, and see if there is 
something that we can do to make some sense out of this. 
Because these are projects that were built for the purpose of 
providing public power for the people in this country. And the 
re-licensing is critical to continue that effort. And being 
held up at the pass, so to speak, because there is an 
opportunity for re-licensing, when the whole financial 
structure for these projects was based upon a certain amount of 
power being able to be generated based upon water supply and 
flood control, and now you change the equation with no cost--
with rate payers having to pay all the cost, is unfair and 
inappropriate, I think.
    The Chairman. The time of the gentleman has expired. The 
Chair recognizes the gentleman from Pennsylvania, Mr. Thompson.
    Mr. Thompson. Thank you, Chairman, and thanks for having 
this hearing, as well. I associate myself with my good friend 
from California and his comments. I had the opportunity just a 
matter of weeks ago to visit a hydropower generation plant that 
was built and attached to a flood control dam that was built, 
and was very, very impressed, actually. We are talking about 
clean, affordable energy, kind of a win-win for everyone.
    Obviously, the dam has, without a doubt, has saved 
countless lives and property over the decades that it has been 
there. And the power plant is generating electricity that is--
it is operated, owned and operated, by a rural electric 
cooperative. It is just one part of their portfolio for 
producing energy. But, you know, I think because of smart 
decisions like that, I believe that their energy costs are 
among the lowest rates in the State of Pennsylvania.
    And, frankly, I am a sportsman. And I was very impressed 
with, frankly, how--this plant and how they operate, the 
partnership that they have, the fishing. And some of the 
fishing facilities, actually, that this company, this 
organization has provided, just very, very positive.
    Mr. Robinson, the Federal Energy--FERC--Regulatory 
Commission once suggested that a one-stop shop would be set up 
to--should be set up to re-license non-Federal hydropower 
projects. You know, I happen to believe that the bureaucracy 
created with the current silo process is tremendous and, 
frankly, serves to drive up costs. And that is cost that is 
borne on the backs of those who purchase the electricity, in 
the end. And, you know, I think all of our goal--at least my 
goal, obviously, and I know many of the folks I work with are 
dedicated to affordable and reliable energy, and hydro does 
that.
    You also--you referenced that FERC be given exclusive 
authority to site projects, and that there should be one 
Federal record on each project. Would this undermine the 
environmental protections? And is there a precedent?
    Mr. Robinson. No, I don't believe it would undermine the 
environmental protections. Where an agency has exclusive 
authority--and that does exist in other generation sources--
that agency is still responsible for all the laws that are 
there to protect the environment. And they have to coordinate 
and cooperate with the resource agencies on what they believe 
is important under the Endangered Species Act and others.
    So, even though you say ``exclusive''--or I say ``exclusive 
authority,'' it doesn't mean that somebody has dictatorial 
authority. It just means there is a recognition that one agency 
is called on to make the public interest determination after 
gathering all the information from everybody else and deciding 
is this in the public interest or not, and how should it be 
constructured.
    Mr. Thompson. So, in other words, in your opinion, this 
would truly increase efficiency, not skip any steps, but 
improve efficiency in determining the cost benefits of the 
proposed project.
    Mr. Robinson. Absolutely.
    Mr. Thompson. Right. In April of 2012, the Department of 
Energy issued a report showing that the U.S. has 12 gigawatts 
of untapped hydropower potential in existing dams that are not 
currently producing power. In addition, there are other 
locations that may have potential for dam or run-of-river 
development.
    What single regulatory change--and I will open this up to 
the panel--do you think would have the largest impact when it 
comes to developing this potential? And we will start with Mr. 
Robinson.
    Mr. Robinson. Just quickly, having that agency that has the 
authority to make the decision.
    Mr. Thompson. That lead----
    Mr. Robinson. Right.
    Mr. Thompson [continuing]. Lead agency with--OK, thank you.
    Mr. Maisch. I would concur. The problem that you have now 
is that you can't get on the record what it is the resource 
agencies are trying to accomplish with their mandatory 
conditions. You have to try to second-guess it, and you don't 
get a final answer. Or at least it is very difficult to get a 
final answer. And streamlining that would be the secret to 
achieving the means--the ends you are talking about.
    Mr. Thompson. Now, I have to assume, with all these--what I 
would call the silo approach that we have now, you almost have 
to feel like a ping pong ball getting bounced back and forth 
between agencies that probably don't communicate real well 
together.
    Mr. Maisch. Well, no. Actually, the resource agencies have 
done a good job of coming together and presenting a united 
front. That doesn't seem to be the problem. The problem is that 
you have no leverage in the situation. You can try to cajole, 
you can try to persuade, you can provide science. But in the 
end, the resource agencies get to make the final decision, 
regardless of what you present.
    Mr. Thompson. Thank you. It looks like my time has expired. 
But if there is an opportunity to get some input from you two 
gentlemen, either in writing or after the hearing, I look 
forward to doing that.
    So thank you, Chairman.
    The Chairman. Well, if either one want to answer very 
briefly----
    Mr. Thompson. Thank you.
    The Chairman [continuing]. We have gone over on others. So, 
real quickly, I think that question is--should be answered by 
all.
    Mr. Reardon. I don't have anything to add, except that in 
Maine I think those opportunities are mostly very small dams, 
and I don't think the obstacles are regulatory.
    Mr. Grubich. There is nothing I would add to Mr. 
Robinson's. I believe a centralized system makes most sense.
    Mr. Thompson. Great. Thank you, gentlemen. Thank you, 
Chairman.
    The Chairman. I thank the gentleman from Pennsylvania. And 
the Chair recognizes the gentleman from California, Mr. 
McClintock.
    Mr. McClintock. Thank you, Mr. Chairman. About 15 years ago 
I asked the California Energy Commission for its estimate of 
the cost of various sources of power for electricity 
generation. They came back with a report that indicated that 
hydropower was the very cheapest form of electricity that we 
had. They were estimating at the time about a half-a-cent a 
kilowatt hour. At a half-a-cent a kilowatt hour, an average 
household's electricity bill would come to about $30 a year. 
That was operations and maintenance and amortized capital. But 
now we are told that hydroelectricity is just too expensive.
    Mr. Robinson, to what extent is Government to blame for 
that increase in the cost of hydroelectricity?
    Mr. Robinson. Well, I think, if I remember correctly, back 
when we did a study in the early 2000s we looked at something 
like 30 percent of all the costs associated with a re-license 
that went to the benefit of the environment were incurred as 
just the application costs.
    Mr. McClintock. Just the application cost. But that 
doesn't----
    Mr. Robinson. Just the application cost----
    Mr. McClintock [continuing]. Include all of the capital 
costs to meet other regulatory requirements.
    Mr. Robinson. Right.
    Mr. McClintock. The Chairman mentioned the Klamath Dam 
situation, which is just an incredible scandal.
    Mr. Robinson. Right.
    Mr. McClintock. Four perfectly good hydroelectric dams on 
the Klamath River, capable of generating 155 megawatts of the 
cleanest and cheapest electricity on the planet, and there is a 
concerted effort to tear them down. Why? Because, we are told, 
they are contributing to a catastrophic decline of salmon on 
the Klamath River.
    When I was up there--that is up on the north end of my 
district--I said, ``Well, why doesn't somebody build a fish 
hatchery?''
    And there was an awkward silence around the table, and 
finally somebody volunteered, ``Well, we do have a fish 
hatchery at the Iron Gate Dam. It produces 5 million salmon 
smolts a year; 17,000 of them return every year as fully grown 
adults to spawn. They won't let us include them in the 
population counts.''
    How are we going to be able to meet our future electricity 
needs with that kind of lunacy dominating our public policy? I 
suppose that is more of a rhetorical question than a technical 
one. So let me go to the technical side of it.
    They then tell us, ``Oh, don't worry, we will replace this 
with wind and solar.'' Well, on the same energy commission 
study wind and solar were named as the two most expensive 
possible ways of producing electricity.
    And, on top of that, as you know, they are intermittent, 
meaning that they have to constantly--because of a cloud 
passing over a solar ray or a sudden drop off in the wind at a 
solar farm brings the electricity generation to zero, and 
because we have to constantly match the electricity going on 
the grid with the electricity being drawn off or the grid 
collapses, we have to be ready to, at a moment's notice, 
replace that lost wind and solar power with reliable 
electricity. We either do that through hydroelectricity through 
dams, we just open a valve, or we have to pay to keep turbines 
constantly spinning with gas or coal-fired plants to meet that 
sudden loss.
    Is that a rational policy, to tear down hydroelectric dams 
and replace them with wind and solar?
    Mr. Robinson. In my opinion, no. Hydropower not only 
provides that black start capability of coming online 
immediately when you do have intermittent energy sources--that 
problem, but you also have--if you take a hydro project out, to 
replace a 500-megawatt hydropower project with wind, you need 
about 30,000 to 35,000 acres of land with wind turbine, 1.5 
megawatt wind turbines on it. Wind does not come 
environmentally without cost. So you have an existing project, 
some costs have incurred. Some benefits have occurred to the 
environment, as well, with those projects recreation-wise, 
fishery-wise. But you are eliminating that, and you are 
incurring new costs with new lands being dedicated to wind. 
That just doesn't make sense to me.
    Mr. McClintock. Mr. Maisch, in our neck of the woods is the 
site for the Auburn Dam. The most expensive part of that 
construction was done in the 1970s, the actual cutting of the 
footing for that facility. It is estimated to produce 800 
megawatts of the cleanest and cheapest electricity on the 
planet, but it was abandoned in the 1970s.
    If that dam had been constructed, what would that have 
meant for your rate payers?
    Mr. Maisch. The--it would have allowed us to get our water 
out of the system in a much more economical manner. As it is, 
we are having to pump it up. The energy would have gone into 
the grid. It probably would have reduced overall cost to 
operate the electric grid in California.
    Mr. McClintock. Well, especially if it was coming off that 
dam at a half-a-cent a kilowatt hour, as it was before the 
Government came here to help us.
    Mr. Robinson, do you have an estimate of the undeveloped 
hydropower potential of this country?
    Mr. Robinson. It does exist. The most recent estimate was 
by DOE for existing dams, and it was 12 gigawatts of available 
power.
    Mr. McClintock. No, I am talking about potential dam sites. 
Do we have any study on that?
    Mr. Robinson. Potential dam sites, it has been done. I 
don't remember the exact number any longer, I am sorry.
    The Chairman. The time of the gentleman has expired. I want 
to thank all the Members, and I want to thank all the panel 
here for their testimony.
    What--this may be the first in a series of future hearings, 
because what we have--what has at least come to light that 
hasn't come to light here before is that there is certainly a 
lot of uncertainty in the re-licensing. I think that is pretty 
obvious. But there are many statutes that come into play that 
causes the process to slow down. I mean coming from the 
Northwest, I am painfully aware. And that is why we have had 
hearings on the Endangered Species Act, for example. Mr. 
McClintock alluded to that in his remarks.
    But I want to thank the panel for being here. As usual, 
there generally are questions that may come up and we will 
write to you if those questions come up. And if you have 
additional views you would like to present, the record will be 
open for 10 days.
    So, once again, I want to thank all of you for your 
testimony here. And if there is no further business to come 
before the Committee, the Committee stands adjourned.
    [Whereupon, at 11:22 a.m., the Committee was adjourned.]

                                 
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