[House Report 104-315]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-315
_______________________________________________________________________


 
 CONSTRUCTION OF THREE HYDROELECTRIC PROJECTS IN THE STATE OF ARKANSAS

                                _______


November 7, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


  Mr. Bliley, from the Committee on Commerce, submitted the following

                              R E P O R T

                        [To accompany H.R. 657]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Commerce, to whom was referred the bill 
(H.R. 657) to extend the deadline under the Federal Power Act 
applicable to the construction of three hydroelectric projects 
in the State of Arkansas, having considered the same, report 
favorably thereon without amendment and recommend that the bill 
do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Rollcall Votes...................................................     3
Committee Oversight Findings.....................................     3
Committee on Government Reform and Oversight.....................     3
New Budget Authority and Tax Expenditures........................     3
Committee Cost Estimate..........................................     3
Congressional Budget Office Estimate.............................     4
Inflationary Impact Statement....................................     4
Advisory Committee Statement.....................................     4
Section-by-Section Analysis and Discussion.......................     4
Changes in Existing Law Made by the Bill, as Reported............     5

                          Purpose and Summary

    The purpose of H.R. 657 is to extend the deadline for the 
commencement of construction of three hydroelectric projects in 
Arkansas licensed by the Federal Energy Regulatory Commission 
(FERC) for up to six years.

                  Background and Need for Legislation

    Section 13 of the Federal Power Act (16 U.S.C. Sec. 806 
(1988)) establishes time limits for commencement of 
construction of a hydroelectric project once FERC has issued a 
license. The licensee must begin construction not more than two 
years from the date the license is issued, unless FERC extends 
the initial deadline. However, section 13 permits FERC to grant 
only one extension of that deadline for ``not longer than two 
additional years * * * when not incompatible with the public 
interests.'' Accordingly, FERC lacks authority to extend the 
deadline beyond a maximum of two years from the original 
deadline for commencement of construction. Therefore, a license 
is subject to termination if a licensee fails to begin 
construction within four years of the date the license is 
issued.
     H.R. 657 would extend the deadline for the commencement of 
construction for three projects (Project Nos. 4204, 4659, 4660) 
constituting the 21 megawatt White River Project for up to a 
maximum of three consecutive two-year periods. Since these 
projects were previously granted a six year extension by 
Congress in 1989, this extension would extend the deadline for 
up to sixteen years. The construction deadline for Projects No. 
4204 and 4659 is February 27, 1996, and the deadline for 
Project No. 4660 is November 7, 1995. According to the project 
sponsors, construction has not commenced for lack of a power 
purchase agreement. H.R. 657 does not ease the requirements of 
a hydroelectric license, but merely extends the period for 
commencement of project construction.
    The legislation provides for three consecutive two-year 
extensions, instead of a six-year extension, to assure that 
licensees must continue to meet the section 13 requirement that 
they prosecute construction ``in good faith and with due 
diligence'' before obtaining each two-year extension. If FERC 
determines that the licensee is not prosecuting construction in 
good faith and with due diligence, the Committee expects the 
agency will refuse to grant a request for an additional two-
year extension, terminate the license, and make the site 
available for other uses.
    Lack of a power sales contract is the main reason 
construction of licensed hydroelectric projects has not 
commenced. It is very difficult for a hydroelectric project 
sponsor to secure financing until it has been granted a 
license, and once it has been granted a license the 
construction deadline begins to run. Without a power sales 
contract, a project generally cannot be financed. There are 
other obstacles to commencement of construction, such as 
protracted proceedings on a licensee's application for a dredge 
and fill permit from the Army Corps of Engineers under section 
404 of the Clean Water Act. FERC has testified that in such 
cases it has issued orders staying the license until matters 
are resolved, suggesting that extension legislation is not 
needed in order to address delays beyond the control of the 
licensee. However, this does not apply to delays that are 
subject to the control of the licensee, such as lack of a power 
sales contract.
    One reason it is difficult for project sponsors to obtain 
power sales contracts is the changing nature of the electric 
industry in the United States. As the industry has become more 
exposed to competition, utilities are seeking to lower their 
costs and increase their flexibility. The term of power sales 
contracts that finance hydroelectric projects range up to 25 to 
30 years, and utilities are trying to avoid purchase agreements 
with long terms. In addition, the generating cost of these 
projects may not be as favorable as other alternatives.

                                Hearings

    The Subcommittee on Energy and Power held a hearing on H.R. 
657 and various other legislative proposals to extend the 
deadline for commencement of construction on October 18, 1995. 
Testimony was received from Ms. Susan Tomasky, General Counsel, 
Federal Energy Regulatory Commission.

                        Committee Consideration

    The Subcommittee on Energy and Power met in open markup 
session on October 18, 1995, and approved H.R. 657 for Full 
Committee consideration by a voice vote, without amendment, a 
quorum being present. The Full Committee met in open markup 
session on October 25, 1995 and ordered H.R. 657 reported to 
the House by a voice vote, without amendment, a quorum being 
present.

                             RollCall Votes

    Clause 2(l)(2)(B) of rule XI of the Rules of the House 
requires the Committee to list the recorded votes on the motion 
to report legislation and on amendments thereto. There were no 
recorded votes taken in connection with ordering H.R. 657 
reported. A motion by Mr. Bliley to order H.R. 657 reported to 
the House, without amendment, was agreed to by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of 
the House of Representatives, the Subcommittee on Energy and 
Power held legislative hearings and made findings that are 
reflected in this report.

              Committee on Government Reform and Oversight

    Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of 
the House of Representatives, no oversight findings have been 
submitted to the Committee by the Committee on Government 
Reform and Oversight.

               New Budget Authority and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the Committee states 
that H.R. 657 would result in no new or increased budget 
authority or tax expenditures or revenue.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 403 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of 
the House of Representatives, following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
403 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 27, 1995.
Hon. Thomas J. Bliley, Jr.,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 657, a bill to extend the deadline under the 
Federal Power Act applicable to the construction of three 
hydroelectric projects in the state of Arkansas, as ordered 
reported by the House Committee on Commerce on October 25, 
1995. CBO estimates that enacting the bill would have no net 
effect on the federal budget.
    The bill would extend the deadline for construction of 
three hydroelectric projects currently subject to licensing by 
the Federal Energy Regulatory Commission (FERC). This provision 
may have a minor impact on FERC's workload. Because FERC 
recovers 100 percent of its costs through user fees, any change 
in its administrative costs would be offset by an equal change 
in the fees that the commission charges. Hence, the bill's 
provisions would have no net budgetary impact.
    Because FERC's administrative costs are limited in annual 
appropriations, enactment of this bill would not affect direct 
spending or receipts. Therefore, pay-as-you-go procedures would 
not apply to the bill. In addition, CBO estimates that enacting 
the bill would have no significant impact on the budgets of 
state or local governments.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kim Cawley.
            Sincerely,
                                         June E. O'Neill, Director.

                     inflationary impact statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee finds that H.R. 657 
would have no inflationary impact.

                      advisory committee statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

             section-by-section analysis of the legislation

Section 1. Extension of deadlines

    This section authorizes FERC, upon the request of the 
licensee for Project Nos. 4204, 4659, and 4660, after 
reasonable notice, and in accordance with the good faith, due 
diligence, and public interest requirements of section 13 of 
the Federal Power Act and FERCs procedures under such section, 
to extend the time required for commencement of construction 
for such projects for up to a maximum of three consecutive two-
year periods. The section will take effect upon the expiration 
of the extension previously granted by FERC.

         changes in existing law made by the bill, as reported

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, the Committee finds that no 
changes in existing law are made by H.R. 657.

                                
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