[House Report 104-318]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-318
_______________________________________________________________________


 
      AUTHORIZING EXTENSION OF TIME LIMITATION FOR A FERC-ISSUED 
                         HYDROELECTRIC LICENSE

                                _______


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. 1014]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Commerce, to whom was referred the bill 
(H.R. 1014) to authorize extension of time limitation for a 
FERC-issued hydroelectric license, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
The amendment....................................................     1
Purpose and summary..............................................     2
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........................     4
Committee cost estimate..........................................     4
Congressional Budget Office estimate.............................     4
Inflationary impact statement....................................     5
Advisory committee statement.....................................     5
Section-by-section analysis and discussion.......................     5
Changes in existing law made by the bill, as reported............     5

                               Amendment

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

That notwithstanding the time limitation of section 13 of the Federal 
Power Act, the Federal Energy Regulatory Commission, upon the request 
of the licensee for FERC Project No. 3701, is authorized, in accordance 
with the good faith, due diligence, and public interest requirements of 
section 13 and the Commission's procedures under such section, to 
extend the time required for the licensee to commence the construction 
of such project for up to a maximum of 3 consecutive 2-year periods. 
This section shall take effect for the project upon the expiration of 
the extension (issued by the Commission under section 13) of the period 
required for commencement of construction of such project. If the 
license for FERC Project 3701 should expire prior to the date of 
enactment of this Act, the Commission is authorized and directed to 
reinstate effective June 1, 1995, the license previously issued for 
such project.

                          Purpose and Summary

    The purpose of H.R. 1014 is to extend the deadline for the 
commencement of construction of a hydroelectric project in 
Washington 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. 1014 would extend the deadline for the commencement of 
construction for a 13.6 megawatt hydroelectric project (Project 
No. 3701) in Washington for up to a maximum of three 
consecutive two-year periods. This would extend the deadline to 
up to ten years after the date the license was issued. The 
deadline for commencement of construction for Project No. 3701 
ran out on May 31, 1995. According to the project sponsor, 
construction has not commenced for lack of a power purchase 
agreement. H.R. 1014 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. 
1014 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. 1014, as 
amended, for Full Committee consideration by a voice vote, a 
quorum being present. The Full Committee met in open markup 
session on October 25, 1995 and ordered H.R. 1014, as amended, 
reported to the House by a voice vote, 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. 1014, as 
amended, reported. A motion by Mr. Bliley to order H.R. 1014 
reported to the House, as amended, 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. 1014 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. 1014, a bill to authorize extension of time 
limitation for a FERC-issued hydroelectric license, 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 a 
hydroelectric project 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 provision 
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. 1014 
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

    H.R. 1014 authorizes FERC, upon the request of the licensee 
for Project No. 3701 and in accordance with the good faith, due 
diligence, and public interest requirements of section 13 of 
the Federal Power Act and FERC's procedures under such section, 
to extend the time required for commencement of construction 
for such project for up to a maximum of three consecutive two-
year periods. The bill will take effect upon the expiration of 
the extension previously granted by FERC. H.R. 1014 authorizes 
and directs FERC to reinstate the license for Project No. 3701 
in the event the license expires before the date of enactment 
of this bill.

         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. 1014.

                                
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