[House Report 104-507]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-507
_______________________________________________________________________


                           EXTENSION OF THE
 
    FEDERAL POWER ACT DEADLINE FOR PROJECT NUMBER 10228 IN KENTUCKY

                                _______


 March 28, 1996.--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. 2501]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Commerce, to whom was referred the bill 
(H.R. 2501) to extend the deadline under the Federal Power Act 
applicable to the construction of a hydroelectric project in 
Kentucky, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Rollcall Votes...................................................     3
Committee Oversight Findings.....................................     4
Committee on Government Reform and Oversight.....................     4
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
    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. EXTENSION OF DEADLINE.

    (a) In General.--Notwithstanding the time period specified in 
section 13 of the Federal Power Act (16 U.S.C. 806) that would 
otherwise apply to the Federal Energy Regulatory Commission project 
numbered 10228, the Commission shall, at the request of the licensee 
for the project and after reasonable notice, in accordance with the 
good faith, due diligence, and public interest requirements of that 
section and the Commission's procedures under that section, extend the 
time period during which the licensee is required to commence the 
construction of the project, under the extension described in 
subsection (b), for not more than 3 consecutive 2-year periods.
    (b) Effective Date.--This section shall take effect on the date of 
the expiration of the extension of the period required for commencement 
of construction of the project described in subsection (a) that the 
Commission issued, prior to the date of enactment of this Act, under 
section 13 of the Federal Power Act (16 U.S.C. 806).

                          purpose and summary

    The purpose of H.R. 2501 is to extend the deadline for the 
commencement of construction of a hydroelectric project in the 
State of Kentucky 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.
    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 
competitive, utilities are seeking to lower their costs and 
increase their flexibility. The terms 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.
    H.R. 2501 would extend the deadline for the commencement of 
construction for an 80 megawatt hydroelectric project (Project 
No. 10228) 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. 10228 expired on 
June 20, 1995, but FERC has not yet terminated the license. 
According to the project sponsor, construction has not 
commenced for lack of a power purchase agreement. To date, the 
licensee has invested about $300,000 in project development. 
H.R. 2501 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 the 
licensee must continue to meet the section 13 requirement that 
it prosecute construction ``in good faith and with due 
diligence'' before obtaining each two-year extension. If FERC 
determines 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.

                                hearings

    The Subcommittee on Energy and Power held a hearing on the 
general subject of legislative extensions of hydroelectric 
construction deadlines, as well as specific bills to extend the 
deadline for individual projects on October 18, 1995. Testimony 
was received from Ms. Susan Tomasky, General Counsel, Federal 
Energy Regulatory Commission. There were no legislative 
hearings held on H.R. 2501, which was introduced after the 
hearing, but written comments were provided by Ms. Tomasky in a 
letter to the Subcommittee dated December 11, 1995.

                        committee consideration

    The Subcommittee on Energy and Power met in open markup 
session on March 5, 1996, and approved H.R. 2501, as amended, 
for Full Committee consideration by a voice vote, a quorum 
being present. The Full Committee met in open markup session on 
March 13, 1996, and ordered H.R. 2501 reported to the House, as 
amended, 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. 2501 
reported. A motion by Mr. Bliley to order H.R. 2501 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 did not hold a legislative hearing on H.R. 2501. The 
Subcommittee held a legislative hearing on similar bills on 
October 18, 1995, received written comments on H.R. 2501 from 
the Federal Energy Regulatory Commission in a letter to the 
Subcommittee dated December 11, 1995, 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. 2501 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, the 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, March 18, 1996.
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. 2501, a bill to extend the deadline under the 
Federal Power Act applicable to the construction of a 
hydroelectric project in Kentucky, and for other purposes, as 
ordered reported by the House Committee on Commerce on March 
13, 1996. CBO estimates that enacting the bill would have no 
net effect on the federal budget. The bill does not contain any 
intergovernmental or private sector mandates, and would have no 
direct budgetary impact on state, local, or tribal governments.
    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 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.
    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. 2501 
would have no inflationary impact.

                      Advisory Committee statement

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

             Section-by-Section Analysis of the Legislation

Section 1. Extension of deadline

    This section directs FERC, upon the request of the licensee 
for Project No. 10228, 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 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 
section will take effect upon the date of 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. 2501.

                                
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