[Senate Report 104-105]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 138
104th Congress                                                   Report
                                 SENATE

 1st Session                                                    104-105
_______________________________________________________________________


 
 EXTENDING THE DEADLINE UNDER THE FEDERAL POWER ACT APPLICABLE TO THE 
           CONSTRUCTION OF A HYDROELECTRIC PROJECT IN OREGON

                                _______


    July 11 (legislative day, July 10), 1995.--Ordered to be printed

_______________________________________________________________________


  Mr. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 543]
    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 543) to extend the deadline under the 
Federal Power Act applicable to the construction of a 
hydroelectric project in Oregon, and for other purposes, having 
considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                         purpose of the measure

    The purpose of S. 543 is to extend the deadline contained 
in the Federal Power Act for the commencement of construction 
of a FERC-licensed hydroelectric project located in the State 
of Oregon.

                          background and need

    Section 13 of the Federal Power Act requires a licensee to 
commence the construction of a hydroelectric project within two 
years of the date of the issuance of the license. That deadline 
can be extended by the FERC one time for as much as two 
additional years. If construction has not commenced at the end 
of the time period, the license is terminated by the FERC. 
Thus, in the absence of this legislation, the FERC would 
terminate the license at the end of the time period authorized 
under the Federal Power Act for commencement of construction.
    S. 543 would extend the time required to begin construction 
of hydroelectric project numbered 3109 to the later of October 
31, 2002, or the date that is one year after the date on which 
the Army Corps of Engineers completes construction of water 
temperature control structures at the Blue River Dam.

                          legislative history

    S. 543 was introduced by Senator Hatfield on March 13, 
1995. A hearing was held on May 18, 1995.

            committee recommendation and tabulation of votes

    The Senate Committee on Energy and Natural Resources, in 
open business session on June 14, 1995, by a unanimous voice 
vote with a quorum present, recommends that the Senate pass the 
bill as described herein.

                   cost and budgetary considerations

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:
                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 19, 1995.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed S. 543, a bill to extend the deadline under the 
Federal Power Act applicable to the construction of a 
hydroelectric project in Oregon, and for other purposes, as 
ordered reported by the Senate Committee on Energy and Natural 
Resources on June 14, 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 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, 
who can be reached at 226-2860.
            Sincerely,
                                                    June E. O'Neill

                      regulatory impact evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out this measure.
    The bill is not a regulatory measure in the sense of 
imposing government-established standards or significant 
economic responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the provisions of the bill. Therefore, there would be no impact 
on personal privacy.
    Little, if any additional paperwork would result from the 
enactment of this measure.

                        executive communications

    The pertinent communications received by the Committee from 
the Federal Energy Regulatory Commission setting forth 
Executive agency relating to this measure are set forth below:
   Statement by Elizabeth A. Moler, Chair, Federal Energy Regulatory 
                               Commission

    Mr. Chairman and members of the committee thank you for the 
opportunity to be here today to comment on nine bills affecting 
14 hydroelectric projects licensed by the Federal Energy 
Regulatory Commission.
    Seven of the bills would extend the statutory deadline for 
the start of construction of twelve licensed projects. The 
eighth bill would extend the non-statutory deadline for 
completion of project construction for one licensed project. 
The ninth bill would partially waive annual charges assessed 
for one licensed project's occupancy of federal land. I will 
address each subject matter in turn. Detailed information about 
each bill is included in an appendix to my testimony.


 s. 283, s. 468, s. 547, s. 549 s. 595, s. 611, and s. 801: extending 
               deadlines to commence project construction


    Section 13 of the Federal Power Act requires that 
construction of a licensed project be commenced within two 
years of issuance of the license. Section 13 authorizes the 
Commission to extend this deadline once, for a maximum 
additional two years. If project construction has not commenced 
by this deadline, Section 13 requires the Commission to 
terminate the license.
    All 12 of the projects in question have received the 
maximum four years for commencement of construction. S. 611 
would authorize the Commission to extend one project's 
construction deadline by an additional three years, for a total 
of seven years. S. 468, S. 547 and S. 595 would authorize or 
require the Commission to extend the deadline for four projects 
by an additional six years, for a total of ten years.
    S. 283 would authorize the Commission to extend the 
deadline for two projects by an additional seven and one-half 
years, for a total of a little over eleven and one-half years. 
S. 549 would authorize an extension of up to six years for 
three projects which have already been given ten years--four 
years under Section 13 and six years under special legislation 
passed in 1989--for a total for 16 years. S. 801 would 
authorize extensions of up to ten years for two projects, for a 
total of 14 years.
    As a general principle, I do not support the enactment of 
bills authorizing or requiring construction extensions for 
individual projects. However, if such extensions are to be 
authorized, as a matter of policy I would object to granting a 
licensee more than ten years from the issuance date of the 
license to commence construction. In my view, ten years is a 
more than reasonable period for a licensee to determine 
definitely whether a project is economically viable and to sign 
a power purchase agreement. If a licensee cannot meet such a 
deadline, I believe the license should be terminated pursuant 
to Section 13, so that the site is once again available for 
whatever uses current circumstances may warrant.
    I recognize that sometimes project licenses, such as those 
which are the subject of S. 283, are stayed by the Commission 
pending judicial review. However, I believe that a ten-year 
period in which to commence construction is sufficient to 
accommodate judicial review, and indeed should be sufficient 
for all but the most extraordinary circumstances. On the other 
hand, one of the projects which is the subject of S. 801 was 
stayed within days of its issuance while the Commission 
completed related proceedings, and was in essence reissued six 
years later. In those circumstances, I would count the ten 
years from the issuance date.
    I therefore recommend that S. 283, S. 549, and S. 801 be 
amended to authorize the Commission to extend the construction 
deadline until no more than ten years from issuance of the 
project licenses involved.
    I would not support legislation to amend Section 13 of the 
Federal Power Act to extend the four-year statutory deadline. 
Holding a license without commencing construction constitutes 
``site banking,'' which in the long-held view of the 
Commission, as affirmed on judicial review, is contrary to the 
intent of the Act. Nearly all failures to commence timely 
project construction have been due to the lack of a power 
purchase contract. If the project power cannot find a market 
within four years, then the site should be made available for 
other uses.
    If there are regulatory delays beyond the licensee's 
control, such as a protracted proceeding on the licensee's 
application for a required dredge and fill permit from the 
Corps of Engineers under Section 404 of the Clean Water Act, 
then the Commission can issue, and has issued, an order staying 
the license until such matters are resolved.
    Except with respect to the ten-year maximum time period to 
begin construction, I do not have specific objections to the 
proposed legislation.


         s. 543: extension of deadline to complete construction


    Section 13 of the Federal Power Act requires a licensee to 
complete project construction within the deadline established 
by the Commission. Section 13 provides that ``the period for 
the completion of construction carried on in good faith and 
with reasonable diligence may be extended by the Commission 
when not incompatible with the public interests.'' If the 
licensee does not complete project construction by the 
deadline, Section 13 requires the Commission to take steps to 
terminate the license.
    S. 543 would require the Commission, at the request of the 
licensee, to extend the time for completion of construction of 
Project No. 3109 to the later of October 31, 2002, or one year 
after the date the Corps of Engineers completes construction of 
a water temperature control structure at the Blue River Dam.
    As a general principle, it is not in the public interest to 
significantly extend the deadline by which a licensee must 
complete construction of its project and commence hydroelectric 
operations. However, the Commission is aware that licensed 
projects to be located at federal dams are subject to the 
exigencies of operations at the federal facility, and has 
sought to accommodate this reality as appropriate. 
Consequently, I have no objection to S. 543.
          * * * * * * *
                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of the rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by S. 543, as ordered 
reported.