[Senate Report 104-77]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 100
104th Congress                                                   Report
                                 SENATE

 1st Session                                                     104-77
_______________________________________________________________________


 
                  FEDERAL POWER ACT AMENDMENTS OF 1995

                                _______


   April 27 (legislative day, April 24), 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. 737]
    The Committee on Energy and Natural Resources having 
considered the same, reports favorably thereon an original bill 
(S. 737) to extend the deadlines applicable to certain 
hydroelectric projects, and for other purposes, and recommends 
that the bill do pass.
    The text of the bill is as follows:
SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Power Act Amendments 
of 1995''.

SEC. 2. EXTENSION OF COMMENCEMENT OF CONSTRUCTION DEADLINE FOR CERTAIN 
                    HYDROELECTRIC PROJECTS LOCATED IN THE STATE OF WEST 
                    VIRGINIA.
  (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 
projects numbered 6901 and 6902, the Commission shall, upon the 
request of the licensee for those projects, in accordance with 
the good faith, due diligence, and public interest requirements 
of that section, the Commission's procedures under that 
section, and the procedures specified in that section, extend 
the time period during which the licensee is required to 
commence construction of those projects so as to terminate on 
October 3, 1999.
  (b) Applicability.--Subsection (a) shall take effect for the 
projects upon the expiration of the extension, issued by the 
Commission under section 13 of the Federal Power Act (16 U.S.C. 
806), of the period required for commencement of construction 
of the projects.
  (c) Reinstatement of Expired License.--If a license for a 
project described in subsection (a) has expired prior to the 
date of enactment of this Act, the Commission shall reinstate 
the license effective as of the date of its expiration and 
extend the time required for commencement of construction of 
the project until October 3, 1999.

SEC. 3. EXTENSION OF COMMENCEMENT OF CONSTRUCTION DEADLINE FOR A 
                    HYDROELECTRIC PROJECT LOCATED IN THE STATE OF 
                    KENTUCKY.

  (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 may, 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).
SEC. 4. EXTENSION OF COMMENCEMENT OF CONSTRUCTION DEADLINE FOR A 
                    HYDROELECTRIC PROJECT LOCATED IN THE STATE OF 
                    WASHINGTON.

    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 until May 
31, 2001, the time required for the licensee to commence the 
construction of such project. 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, to extend until May 31, 
2001, the time required for the licensee to commence the 
construction of such project.

SEC. 5. EXTENSION OF COMMENCEMENT OF CONSTRUCTION DEADLINE FOR A 
                    HYDROELECTRIC PROJECT LOCATED IN THE STATE OF 
                    OREGON.

    Notwithstanding the expiration of the permit and 
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 7829, 
the Commission shall, at the request of the licensee for the 
project, reinstate the permit effective May 23, 1993, and 
extend the time period during which the licensee is required to 
commence the construction of the project to the date that is 4 
years after the date of enactment of this Act.

SEC. 6. EXTENSION OF COMMENCEMENT OF CONSTRUCTION DEADLINE FOR CERTAIN 
                    HYDROELECTRIC PROJECTS LOCATED IN THE STATE OF 
                    ARKANSAS.

    Notwithstanding the time limitations of section 13 of the 
Federal Power Act (16 U.S.C. 806), the Federal Energy 
Regulatory Commission, upon the request of the licensee for 
FERC projects numbered 4204, 4660, and 4659 (and after 
reasonable notice), 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 commencement of construction of 
the projects for a maximum of three consecutive two-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 such 
project.

SEC. 7. LIMITED EXEMPTION TO HYDROELECTRIC LICENSING PROVISIONS FOR 
                    TRANSMISSION FACILITIES ASSOCIATED WITH THE EL VADO 
                    HYDROELECTRIC PROJECT.

    (a) Exemption.--Part I of the Federal Power Act, and the 
jurisdiction of the Federal Energy Regulatory Commission under 
such part I, shall not apply to the transmission line 
facilities associated with the El Vado Hydroelectric Project 
(FERC Project No. 5226-002) which are described in subsection 
(b).
    (b) Facilities Covered by Exemption.--The facilities to 
which the exemption under subsection (a) applies are those 
transmission facilities located near the Rio Chama, a tributary 
of the Rio Grande, in Rio Arriba County, New Mexico, referred 
to as the El Vado transmission line, a three phase 12-mile long 
69 kV power line installed within a 50-foot wide right-of-way 
in Rio Arriba County, New Mexico, originating at the El Vado 
Project's switchyard and connecting to the Spills 69 kV 
Switching Station operated by the Northern Arriba Electric 
Cooperative, Inc.
SEC. 8. ALASKA STATE JURISDICTION OVER SMALL HYDROELECTRIC PROJECTS.

    The Federal Power Act, as amended, (16 U.S.C. 1791a et 
seq.) is further amended by adding the following at the end of 
section 23:
    ``(c) In the case of any project works in the State of 
Alaska--
          ``(1) that are not part of a project licensed under 
        this Act prior to the date of enactment of this 
        subsection;
          ``(2) for which a license application has not been 
        accepted for filing by the Commission prior to the date 
        of enactment of this subsection (unless such 
        application is withdrawn at the election of the 
        applicant);
          ``(3) having a power production capacity of 5,000 
        kilowatts or less;
          ``(4) located entirely within the boundaries of the 
        State of Alaska; and
          ``(5) not located in whole or in part on any Indian 
        reservation, unit of the National Park System, 
        component of the Wild and Scenic Rivers System or 
        segment of a river designated for study for potential 
        addition to such system,
``the State of Alaska shall have the exclusive authority to 
authorize such project works under State law, in lieu of 
licensing by the Commission under the otherwise applicable 
provisions of this part, effective upon the date on which the 
Governor of the State of Alaska notifies the Secretary of 
Energy that the State has in place a process for regulating 
such projects which gives appropriate consideration to the 
improvement or development of the State's waterways for the use 
or benefit of intrastate, interstate, or foreign commerce, for 
the improvement and use of waterpower development, for the 
adequate protection, mitigation of damage to, and enhancement 
of fish and wildlife (including related spawning grounds), and 
for other beneficial public uses, including irrigation, flood 
control, water supply, recreational and other purposes, and 
Indian rights, if applicable.
    ``(d) In the case of a project that would be subject to 
authorization by the State under subsection (c) but for the 
fact that the project has been licensed by the Commission prior 
to the enactment of subsection (c), the licensee of such 
project may in its discretion elect to make the project subject 
to the authorizing authority of the State.
    ``(e) With respect to projects located in whole or in part 
on Federal lands, State authorizations for project works 
pursuant to subsection (c) of this section shall be subject to 
the approval of the Secretary having jurisdiction with respect 
to such lands and subject to such terms and conditions as the 
Secretary may prescribe.
    ``(f) Nothing in subsection (c) shall preempt the 
application of Federal environment, natural, or cultural 
resources protection laws according to their terms.''.

SEC. 9. FERC VOLUNTARY LICENSING OF HYDROELECTRIC PROJECTS ON FRESH 
                    WATERS IN THE STATE OF HAWAII.

  Section 4(e) of the Federal Power Act is amended by striking 
``several States, or upon'' and inserting ``several States 
(except fresh waters in the State of Hawaii, unless a license 
would be required by section 23 of the Act), or upon''.
                         Purpose of the Measure

    The purposes of S. 737 are: (1) to extend the deadlines 
contained in the Federal Power Act for the commencement of 
construction of FERC-licensed hydroelectric projects located in 
the States of West Virginia, Kentucky, Washington, Oregon and 
Arkansas; (2) to provide a limited exemption to the 
hydroelectric licensing provisions of the Federal Power Act for 
transmission facilities associated with the El Vado 
hydroelectric project located in New Mexico; (3) to provide the 
State of Alaska with jurisdiction over small hydroelectric 
projects of 5 megawatts or less; and (4) to amend the Federal 
Power Act to remove the jurisdiction of the FERC to issue a 
voluntarily-requested license for hydroelectric projects 
located on fresh waters in the State of Hawaii.

                          Background and Need

                          sections 2 through 6

    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.
    Sections 2 through 6 provide an extension of the time to 
begin construction for identified hydroelectric projects in the 
States of West Virginia, Kentucky, Washington, Oregon and 
Arkansas.

                               section 7

    This section would amend the hydroelectric licensing 
provisions of Part I of the Federal Power Act to permit a 
limited exemption for a 12-mile transmission line in Rio Arriba 
County, New Mexico.
    In 1985, the FERC granted the County of Los Alamos, New 
Mexico (Los Alamos) a major license under the FPA. The license 
authorized the construction, operation and maintenance of the 
El Vado Hydroelectric Power Project (El Vado Project) on the 
Rio Chama in Rio Arriba County, New Mexico. The principal 
project features include a 175-foot-high, 1,325-foot-long 
gravel fill dam; a 3,310-acre reservoir; outlet works; a 
powerhouse with one 8-mega-watt generating unit; and a 12-mile-
long transmission line.
    The transmission line is a three phase 12-mile-long, 69-
kilovolt (KV) power line supported on single wooden pole 
structures located in a 50-foot-wide right-of-way. The line 
begins at the El Vado Project's switchyard and connects to a 
69-KV switching station that is owned and operated by the 
Northern Rio Arriba Electric Cooperative, Inc. (NORA). NORA is 
a Rural Electric Administration (REA) financed rural electric 
cooperative whose distribution system serves the rural area in 
which the El Vado Project is located.
    During the construction phase of the project, it was 
determined that the project would be better served if NORA 
would own and operate the transmission line. In 1984, NORA 
entered into a two-part agreement with Los Alamos. Los Alamos 
would contribute the capital for construction of the 
transmission line and appurtenant facilities. NORA would 
utilize its system as expanded by the transmission line to 
assist in the delivery of the project's power output to Los 
Alamos and provide station services to the project during 
periods of nongeneration.
    Through subsequent audits of the project, the FERC's Office 
of Hydropower Licensing (OHL) discovered NORA's ownership of 
the transmission line. In May of 1993, OHL ordered Los Alamos 
to modify the transmission line ownership structure to be 
consistent with its license. At the time the transmission line 
agreement was executed until the OHL order, Los Alamos did not 
know that allowing NORA to own and operate the transmission 
line was inconsistent with the provisions of its FERC license.
    Section 7 would exempt from the licensing provisions of the 
FPA only the 12-mile, 69-KV transmission line of the El Vado 
Project. NORA would continue to own and operate the 
transmission line; however, it would be made consistent with 
the project's license. The Committee notes that the United 
States would not forfeit its FPA jurisdiction over the entire 
El Vado Project. The exemption applies only to FERC regulatory 
oversight of the project's transmission line.
    The United States would retain a certain amount of control 
over the transmission line. The line would remain subject to a 
contract (Contract No. 7-LM-53-01197, dated October 9, 1987) 
with the Bureau of Reclamation for construction, operation and 
maintenance of the power line. Also, as the property of NORA, 
the transmission line would be pledged against NORA's REA loan.
                               SECTION 8

    This section gives the State of Alaska the exclusive 
authority to authorize hydroelectric projects 5 megawatts or 
smaller. It goes into effect when the Governor of the State of 
Alaska notifies the Secretary of Energy that the State has in 
place a comprehensive process for regulating hydroelectric 
projects. The required process is modeled on the one contained 
in the Federal Power Act for the FERC.
    The authority granted by this section would apply to 
projects 5 megawatts or smaller located in the State of Alaska: 
(1) which are not part of a project licensed under this act 
prior to the date of enactment; (2) for which a application has 
not been accepted for filing by the Commission prior to the 
date of enactment of this subsection (unless such application 
is withdrawn at the election of the applicant); (3) which are 
located entirely within the boundaries of the State of Alaska; 
and (4) which are not located in whole or in part on any Indian 
reservation, unit of the National Park System, component of the 
Wild and Scenic Rivers System or segment of a river designated 
for study for potential addition to such system.
    In the case of a project that would be subject to 
authorization by the State but for the fact that the project 
has been licensed by the Commission prior to the enactment of 
subsection, the licensee of such project may in its discretion 
elect to make the project subject to the authorizing authority 
of the State.
    For hydroelectric projects located on Federal lands, a 
State authorization for the hydroelectric project is subject to 
the approval of the Secretary of the Federal agency having 
jurisdiction with respect to such lands, and is subject to such 
terms and conditions as that Secretary may prescribe.
    The provisions specifically provide that nothing preempts 
the application of Federal environmental, natural, or cultural 
resources protection laws according to their terms.

                               SECTION 9

    This section removes the authority of the Federal Energy 
Regulatory Commission to issue a voluntarily-requested license 
for hydroelectric projects located on fresh waters of the State 
of Hawaii.
    Section 4(e) of the Federal Power Act contains the Federal 
Energy Regulatory Commission's basic authority to issue a 
license for hydroelectric projects. Section 23(b) of the 
Federal Power Act requires the licensing of a hydroelectric 
project built after 1935 on navigable waters or affecting 
interstate commerce.
    Section 4(e) has been interpreted by the courts as 
permitting the voluntary licensing of a hydroelectric project 
where licensing is not required by section 23(b). (Cooley v. 
Federal Energy Regulatory Commission, 843 F.2d 1464 (D.C. Cir. 
1988)
    Section 9 would amend the Federal Power Act to remove the 
jurisdiction of the Federal Energy Regulatory Commission to 
issue a voluntarily requested license for hydroelectric 
projects on fresh waters in the State of Hawaii. The policy 
justification for exempting Hawaii from the voluntary licensing 
provisions of the Federal Power Act is based on the uniqueness 
of Hawaii's situation.
    The Hawaiian islands are over 2,000 miles from the nearest 
land mass. They are the most geographically isolated group of 
islands in the world.
    Unlike the long interstate rivers of the continental United 
States, Hawaii's streams are isolated on individual islands and 
run quickly off steep volcanic slopes. Hawaii has a total of 
376 streams that flow year-round in at least part of their 
course. These streams are located on five islands--Hawaii 
(132), Maui (90), Kauai (61), Oahu (57), and Molokai (36). Only 
twenty-eight are longer than ten miles and only seven have an 
average flow greater than 80 cubic feet per second. Hawaii's 
streams are generally not navigable except for a few which have 
brief wide stretches near their mouths as they open to the sea. 
There are no interstate rivers, few if any streams crossing 
Federal lands, and no Federal dams.
    Over one-half of Hawaii's streams have been diverted for a 
variety of uses. Irrigating taro fields was the chief historic 
use of Hawaii's surface water. During the past century, 
irrigation of sugarcane and a booming tourist industry have 
become major water users.
    The populations and distribution of native Hawaiian aquatic 
species are in decline due to stream modification and the 
introduction of non-native competitors and predators. Although 
Hawaiian streams contain a small number of native fish, insect, 
crustacean, and mollusk species, most are only found in Hawaii. 
The middle and lower sections of Hawaii's streams contain eight 
diadromous fauna (animals that migrate between fresh and salt 
water) and two euryhaline fishes (animals that exist in waters 
with varying levels of salt). All require access to the ocean. 
There are no native freshwater species.
    The islands of Hawaii contain one-third of all listed 
threatened and endangered species. Eighteen species of 
threatened and endangered birds live in the riparian zone of 
119 of Hawaii's 376 streams. Four of the species are 
waterbirds, and the rest are forest birds whose habitat 
includes streams. Although none of the currently listed 
threatened and endangered plants are associated with Hawaiian 
streams, about 180 taxa of rare planst are associated with 86 
of those streams.
    Eighteen Hawaiian streams are listed on the nationwide 
inventory of potential wild, scenic, and recreational rivers. 
Seventeen are listed because of outstanding scenic value. Four 
are listed because of outstanding recreational value. Ten 
perennial, four intermittent and four minor streams pass 
through or along parts of the National Park System.
    Hawaii's streams are subject to protection under Article 
XXII of the State Constitution, the State Water Code, and a 
comprehensive statewide stream assessment which serves as a 
basic for protecting stream resolurces. They are still subject 
to the Rivers and Harbors Act of 1899.
    Only about 1.5 percent of the State's electric energy 
currently comes from hydroelectric power. The island of Kauai 
receives 16 percent its electricity from hydroelectric power. 
On the islands of Hawaii, Kauai, and Maui, there is a total of 
eighteen operating plants--sixteen run by sugar companies and 
two managed by a local utility. The combined capacity of the 
existing plants is only 18.5 megawatts (MW). The new 10 MW 
Wailuku River Project, which went into operation in 1993, is 
the only hydropower project built in Hawaii in the past fifty 
years. None are FERC-licensed projects.
    The FERC estimates that there are about 50 MW of unused 
generating capacity in Hawaii, at twenty-eight potential sites. 
All of these potential sites would have a capacity of 5 MW or 
less, with the exception of a potential 11.7 MW site in the 
Wailua River Basin on Kauai. Nine operating plants are 
proposed, with a total potential generating capacity of 21 MW.
    There are about 28 state permits and 30 to 35 county 
permits and approvals that are applicable to land and water use 
proposals. The Department of Land and Natural Resources has the 
primary responsibility for overseeing many of the regulatory 
programs involving hydropower development. Proposed 
hydroelectric projects are subject to a thorough review both 
when they seek to amend instream flow standards to obtain a 
State water lease and when they seek to obtain a Conservation 
District Use Permit.
    Section 2408 of the Energy Policy Act of 1992 (Public Law 
102-486) directed the Federal Energy Regulation Commission 
(FERC), in consultation with the State of Hawaii, to study 
hydroelectric licensing in Hawaii. The purpose of the study is 
to determine whether such licensing should be transferred to 
the state. Section 2408 required the FERC to analyze the 
following:
          (1) the State regulatory programs applicable to 
        hydroelectric power production and the extent to which 
        such programs are suitable as a substitute for 
        regulation of such projects under the Federal Power 
        Act, taking into consideration all aspects of such 
        regulation, including energy, environmental, and safety 
        considerations;
          (2) any unique geographical hydrological, or other 
        characteristics of water ways in Hawaii or any other 
        aspects of hydroelectric power development and natural 
        resource protection in Hawaii that would justify or not 
        justify the permanent transfer of FERC jurisdiction 
        over hydroelectric power projects to that State;
          (3) the adequacy of mechanisms and procedures for 
        consideration of fish and wildlife and other 
        environmental values applicable in connection with 
        hydroelectric power development in Hawaii under the 
        state programs referred to in paragraph (1);
          (4) any national policy considerations that would 
        justify or not justify the removal of FERC jurisdiction 
        over hydroelectric power projects in Hawaii;
          (5) the precedent-setting effect, if any, of 
        provisions of law adopted by the Congress removing FERC 
        jurisdiction over hydroelectric power projects in 
        Hawaii.
    On April 13, 1994, the FERC submitted its report to the 
House Committee on Energy and Commerce and to the Senate 
Committee on Energy and Natural Resources as required by 
section 2408. In addition to consulting with the State of 
Hawaii, the FERC solicited the views of other Federal agencies 
involved with the regulation of hydropower projects. The report 
did not reach any overall conclusion as to whether the Federal 
Power Act should be amended to exempt projects on the fresh 
waters of Hawaii from FERC's jurisdiction. The FERC stated that 
the Commission will express no opinion on this issue because it 
properly falls within the purview of the Congress to decide.
    Section 9 amends section 4(e) of the Federal Power Act to 
exempt projects on the fresh waters of the State of Hawaii from 
the voluntary licensing authority of the FERC.
    Section 9 does not amend section 23(b) of the Federal Power 
Act which requires the licensing of hydroelectric projects 
built after 1935 on navigable waters or affecting interstate 
commerce or are located on federal lands or use water from a 
government dam.
                          Legislative History

    S. 737 was reported by the Committee on Energy and Natural 
Resources as an original bill.

            Committee Recommendation and Tabulation of Votes

    The Senate Committee on Energy and Natural Resources, in 
open business session on March 15, 1995, by a majority vote of 
a quorum present, recommends that the Senate pass the bill as 
described herein.
    The rollcall vote on reporting the measure was 18 yeas, 0 
nays, as follows:
        YEAS                          NAYS
Mr. Murkowski
Mr. Hatfield \1\
Mr. Domenici
Mr. Nickles \1\
Mr. Craig
Mr. Thomas
Mr. Kyl \1\
Mr. Grams
Mr. Jeffords \1\
Mr. Burns
Mr. Campbell
Mr. Johnston
Mr. Bumpers
Mr. Ford
Mr. Bradley
Mr. Bingaman \1\
Mr. Akaka
Mr. Wellstone

    \1\ Indicates vote by proxy.

                   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, March 23, 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 the Federal Power Act Amendments of 1995, as ordered 
reported by the Senate Committee on Energy and Natural 
Resources on March 15, 1995. CBO estimates that enacting the 
bill would have no net effect of the federal budget.
    The bill would provide exemptions or extensions of 
deadlines for certain hydroelectric projects currently subject 
to licensing by the Federal Energy Regulatory Commission 
(FERC). The provisions 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 the Federal Power Act Amendments 
of 1995 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 and 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.

                      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:

                      Federal Energy Regulatory Commission,
                                    Washington, DC, March 14, 1995.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: Thank you for your letters of February 
27 and March 2, 1995, and Committee staff's inquiries of March 
13 and 14, requesting my comments on a number of bills to allow 
for the extension of the construction deadlines applicable to 
nine hydroelectric projects licensed by the Federal Energy 
Regulatory Commission. Because it is my understanding that the 
Committee is scheduled to mark all these bills on March 15, I 
have combined my comments on these bills in one letter.
    This letter also responds to your March 2, 1995 request for 
comments on S. 225, a bill to remove the Commission's 
jurisdiction to license projects on fresh waters in the State 
of Hawaii; and to Committee staff's March 13 request for 
comments on S. 522, a bill to exempt from Part I the Federal 
Power Act the primary transmission line for a project in New 
Mexico. The bills fall into four general categories. Each bill 
is discussed below.

1. Extension of statutory deadline to commence 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.
    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 
definitively whether a project is economically viable and to 
sign a power purchase agreement. If a licensee cannot meet such 
a deadline, I believe the site should be made available to 
potential competitors.
    I do not have specific objections to the proposed 
legislation, except with respect to the ten year maximum time 
period to begin construction. Suggestions on how to conform the 
legislation to that principle are noted.
            S. 283
    S. 283 would authorize the Commission to extend until April 
15, 2001, the deadline for commencement of construction of 
Project Nos. 4474 and 7041. The two projects in question were 
both licensed on September 27, 1989. In light of my view that 
ten years is the maximum period that a licensee should be given 
to commence project construction, I recommend that S. 283 be 
amended to authorize the Commission to extend the construction 
deadline until September 26, 1999.
    As noted, on September 27, 1989, the Commission issued a 
license to the Borough of Cheswick, Pennsylvania, and the 
Allegheny Valley North Council of Governments to construct and 
operate the 12-megawatt Allegheny Lock and Dam No. 3 Project 
No. 4474 at an existing Corps of Engineers dam on the Allegheny 
River, in Allegheny County, Pennsylvania. The Commission issued 
a license to Potter Township, Pennsylvania, to construct and 
operate the 20-megawatt Emsworth Hydro Project No. 7041 at an 
existing Corps of Engineers dam on the Ohio River, in Allegheny 
County. In 1994, the Commission approved the transfer of the 
project license to the Potter Township Hydroelectric Authority.
    The original deadline for commencement of construction of 
each project was September 26, 1991. The Commission stayed, 
pending judicial review, most of the requirements of each 
license (including the construction deadlines) from September 
27, 1990, to April 16, 1992, which resulted in a new 
construction deadline of April 15, 1993, for each project. This 
deadline was subsequently extended to April 13, 1995, for each 
project, because the licensees needed additional time to 
consult with the Corps regarding site access and project design 
and construction, and to obtain power sales contracts.
    For Project No. 4474, construction entails removing a 135-
foot-long section of the existing dam to accommodate a headrace 
channel, and adding crest gates, a powerhouse, a 142-foot-long 
side-channel spillway, a one-mile-long transmission line, and 
related project facilities. For Project No. 7041, construction 
entails building a 1,800-foot-long dike for the forebay, a 250-
foot-long open-channel intake, and a powerhouse.
            S. 359
    S. 359 would require the Commission to extend until October 
3, 1999, the deadline for commencement of construction of 
Project Nos. 6901 and 6902.
    The two projects in question were both licensed to the City 
of New Martinsville, West Virginia, on September 27, 1989. The 
Commission issued licenses to construct and operate the 37-
megawatt New Cumberland Project No. 6901 at an existing Corps 
of Engineers dam on the Ohio River, in Hancock County, West 
Virginia; and the 35-megawatt Willow Island Lock and Dam 
Project No. 6902 at an existing Corps of Engineers dam on the 
Ohio River, in Pleasant County, West Virginia, and Washington 
County, Ohio.
    The original deadline for commencement of construction of 
each project was September 26, 1991. The Commission rescinded 
the license for Project No. 6901 for lack of issuance or waiver 
of state water quality certification for the project, and 
subsequently reissued the license once state water quality 
certification was issued. This resulted in a new deadline of 
October 3, 1993, to commence construction of the project. This 
deadline was subsequently extended to October 3, 1995, because 
the licensee needed additional time to secure project 
financing.
    The Commission stayed, pending judicial review, most of the 
requirements of Project No. 6902 (including the construction 
deadline) from March 28, 1991, to April 16, 1992, which 
resulted in a new construction deadline of October 15, 1992. 
This deadline was subsequently extended to October 15, 1994, to 
allow the licensee the additional time requested to secure 
project financing.
    For Project No. 6901, construction entails building a 600-
foot-long intake channel, a powerhouse, and a 649-foot-long 
tailrace, and adding a primary transmission line and related 
facilities. For Project No. 6902, construction entails building 
a 980-foot-long approach channel, a powerhouse, and an 865-
foot-long exist channel, and adding a 1.5-mile-long 
transmission line and related facilities.
            S. 421
    S. 421 would authorize the Commission to extend by up to 
six years the construction deadline for commencement of 
construction of Project No. 10228.
    The Commission issued a license on June 21, 1991, to WV 
Hydro, Inc. to construct and operate the 80-megawatt Cannelton 
Hydroelectric Project, to be located at an existing Corps of 
Engineers dam on the Ohio River, in Hancock County, Kentucky. 
In 1994, the Commission approved the transfer of the project 
license to the Cannelton Hydroelectric Project, L.P. The 
original deadline for the commencement of project construction 
was June 20, 1993. This deadline was subsequently extended to 
June 20, 1995, because the licensee had not obtained project 
financing.
    Project construction entails building a 500-foot-long 
intake channel, a 700-foot-long tailrace channel, and a new 
powerhouse, and adding a 700-foot-long transmission line, a 
recreation area, and related facilities.
            S. 461
    S. 461 would authorize the Commission to extend until May 
31, 2001, the deadline for commencement of construction of 
Project No. 3701.
    The Commission issued a license on June 27, 1991, to the 
Yakima Tieton Irrigation District to construct and operate the 
13.6-megawatt Tieton Dam Project No. 3701 at an existing Bureau 
of Reclamation dam on the Tieton River, in Yakima County, 
Washington. The original deadline for commencement of project 
construction was May 31, 1993. This deadline was subsequently 
extended to May 31, 1995, because the licensee had not obtained 
a power sales contract.
    Project construction entails removing the existing outlet-
works valvehouse and adding a new powerhouse, a 21-mile-long 
overhead transmission line, and related project facilities.
            S. 468
    S. 468 would authorize the Commission to extend for up to 
six years the deadline for commencement of construction of 
Project No. 9423.
    The Commission issued a license on April 12, 1991, to 
Summit Energy Storage, Inc. to construct and operate the 1,500-
megawatt Summit Pumped Storage Hydroelectric Project No. 9423, 
to be located on South Run in Summit and Medina Counties, Ohio. 
The original deadline for commencement of project construction 
was April 11, 1993. This deadline was subsequently extended to 
April 11, 1995, because the licensee had not obtained a power 
sales contract.
    Project construction entails building an upper reservoir, a 
permanent diversion channel, an underground powerhouse, an 
underground transformer gallery, six penstocks, a lower 
reservoir in an existing underground limestone mine, concrete-
lined tunnels and shafts to convey flows between the upper 
reservoir and the lower reservoir, a 3-mile-long transmission 
line, and related project facilities.
            S. 538
    S. 538 would require the Commission, at the request of the 
licensee, to reinstate the terminated license for Project No. 
7829 effective May 23, 1993, and give the licensee four years 
from the date of enactment of S. 538 to commence project 
construction.
    The Commission issued a license on May 25, 1989, to the 
Talent, Rogue River Valley, and Medford Irrigation Districts to 
construct and operate the 1,896-kilowatt Emigrant Dam Hydro 
Project No. 7829 at an existing Bureau of Reclamation dam on 
Emigrant Creek in Jackson County, Oregon. The original deadline 
for commencement of project construction was May 24, 1991. This 
deadline was subsequently extended to May 24, 1993, because the 
licensee had not obtained a power sales contract. On September 
21, 1993, the Commission terminated the license for the 
licensee's failure to commence construction by the statutory 
deadline.
    Project construction entails adding a bifurcation pipe at 
the existing outlet pipe of the Emigrant Dam; one penstock, 175 
feet long, leading to one powerhouse; a second penstock, 195 
feet long, leading to a second powerhouse; a tailrace, a 1,000-
foot-long transmission line, and related project facilities.

2. Extension of deadline to complete construction

    Section 13 of the FPA 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.
    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.
            S. 543
    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. 
The licensee would be required to file with the Commission 
annual reports of the progress of completion of the Corps' and 
the licensee's construction activities at the dam.
    The Commission issued a license on November 16, 1989, to 
the Eugene Water and Electric Board to construct and operate 
the 14.65-megawatt Blue River Dam Power Plant Project No. 3109 
at an existing Corps of Engineers dam on the Blue River, a 
tributary of the McKenzie River, in Lane County, Oregon. The 
original deadlines for commencement and completion of project 
construction were October 31, 1991, and October 31, 1993, 
respectively. These deadlines were subsequently extended to 
October 31, 1993, and October 31, 1995. The licensee commenced 
project construction on October 28, 1993, in the form of 
offsite turbine/generator fabrication. Construction work at the 
site cannot proceed until the Corps completes installation of a 
water temperature control structure at the dam, an undertaking 
I understand is currently targeted for completion in 2005.
    Project construction entails adding a modified intake 
structure and outlet tunnel to the Corps dam and installing a 
600-foot-long penstock, a powerhouse, a tailrace, a 1.5-mile-
long transmission line, a 1-mile-long access road, and related 
project facilities.

3. Hydropower Projects in Hawaii

    S. 225 would amend Section 4(e) of the Federal Power Act by 
inserting the following parenthetical limitation: ``(except 
fresh waters in the State of Hawaii, unless a license would be 
required by section 23 of the Act)''. These words would modify 
the reference to ``several States,'' so as to partially limit 
the authority of the Commission to issue licenses under Section 
4(e) with respect to proposed hydropower projects in Hawaii.
    Section 4(e) of the FPA contains the Commission's authority 
to issue licenses for hydropower projects. Section 23(b)(1) 
sets forth the circumstances under which a project cannot be 
constructed, operated, or maintained without a license. In 
certain circumstances, the Commission has authority to issue a 
license for a hydropower project in response to a voluntary 
application under Section 4(e), even if licensing is not 
required under Section 23(b)(1). See Cooley v. Federal Energy 
Regulatory Commission, 843 F.2d 1464, 1469 (D.C. Cir. 1988).
    Under S. 225, the Commission would continue to have 
jurisdiction to issue licenses to construct, operate, and 
maintain hydropower projects in Hawaii whenever Section 
23(b)(1) would require a license for such activities. However, 
the Commission would be precluded from issuing a license for a 
project in Hawaii if Section 23(b)(1) did not require a license 
for such activities.
    Pursuant to Section 2408 of the Energy Policy Act of 1992, 
the Commission on April 13, 1994, submitted to the Senate and 
House Committees a study of regulation of hydropower projects 
in Hawaii. The study noted that the Commission has never 
licensed a hydropower project in Hawaii, and is thus not 
currently regulating any project in Hawaii. Therefore, 
enactment of S. 225 would not significantly disrupt the 
Commission's current operations. However, as noted in the 
study, there are two pending requests for rehearing of 
Commission decisions concerning proposals to develop a 
hydroelectric project to be located on the Hanalei River in 
Kauai County, Hawaii. In Island Power Co. (Docket No. EL87-5-
001), an intervenor is seeking rehearing of a determination by 
the Director of the Commission's Office of Hydropower Licensing 
that the proposed project need not be licensed under Section 
23(a)(1) of the FPA because of its effect on diadromous fish 
and anadromous shrimp. 42 FERC para. 62,129 (1988). In Hanalei 
Hydropower, Inc. (Project No. 11161), the State of Hawaii is 
seeking rehearing of the Director's issuance of a preliminary 
permit for the project pursuant to licensing authority under 
Section 4(e) of the FPA because of its location on a Commerce 
Clause water. 57 FERC para. 62,142 (1991).
4. El Vado Project transmission line

    S. 522 would exempt from regulation under Part I of the 
Federal Power Act a 12-mile transmission line which is a 
project work of the licensed El Vado Hydroelectric Project No. 
5226.
    In 1985, the Commission issued a license to the County of 
Los Alamos, New Mexico, for the 8-megawatt El Vado 
Hydroelectric Project, on the Rio Chama, a tributary of the Rio 
Grande, in Rio Arriba County, New Mexico. The licensed project 
includes a 12-mile-long 69-kilovolt primary transmission line, 
which is necessary to the operation of the project. The 
transmission line is, however, owned and operated by a separate 
entity, Arriba Electric Cooperative. The license gave Los 
Alamos five years to acquire the necessary title or contractual 
operational control over the transmission line. Alternatively, 
the Cooperative could have join Los Alamos as co-licensee, or 
could have obtained a separate license for the transmission 
line. The Cooperative did not wish to pursue either course. Ten 
years after the license was issued, the licensee had still 
failed to comply with the requirement that it obtain necessary 
property rights over the line, despite repeated letters and 
compliance orders from the Commission staff.
    The transmission line has been constructed and is in 
operation, and the Commission is not aware of any problems 
associated with it. The Commission is also not aware of any 
aspect of this particular primary transmission line that would 
distinguish it from other hydroelectric project primary 
transmission lines. Finally, this licensee's years-long lack of 
compliance with a fundamental license requirement is a 
troubling factor.
    Thank you for offering me an opportunity to comment on 
bills affecting the Commission's hydropower program. If I can 
be of further assistance to you in this or any other Commission 
matter, please let me know.
    With best wishes,
            Sincerely,
                                         Elizabeth A. Moler, Chair.
                                ------                                

                      Federal Energy Regulatory Commission,
                                    Washington, DC, March 27, 1995.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: Thank you for your letter of March 17, 
1995, requesting comments on the Committee Amendment on Alaska 
hydropower projects of 5 megawatts or less, approved by the 
Senate Committee on Energy and Natural Resources at its March 
15, 1995, business meeting.

                        the committee amendment

    The Committee Amendment provides (with certain exceptions 
discussed below) that, at such time as the Governor of the 
State of Alaska notifies the Secretary of Energy that the State 
has in place a process for regulating hydropower project works 
having a power production capacity of 5,000 kilowatts (5 
megawatts or MW) or less, according to specified public 
interest standards, Alaska shall have exclusive authority to 
authorize all such project works that are not under Commission 
license or within a license application that has been accepted 
for filing as of the date of the provision's enactment. If such 
project works are under a Commission license as of the date of 
enactment, then the licensee may elect to transfer the project 
to state regulation.
    The Committee Amendment provides that project works are not 
removed or removable from Commission jurisdiction if they are 
located in whole or in part on any Indian reservation, unit of 
the National Park System, component of the Wild and Scenic 
Rivers System, or segment of a river designated for study for 
potential addition to such system. State authorizations for 
project works located in whole or in part on Federal lands 
shall be subject to the approval of, and terms and conditions 
imposed by, the Secretary having jurisdiction with respect to 
such Federal lands. Finally, the transfer to the State of the 
above-described authority does not preempt the application of 
Federal environmental, natural, or cultural resources 
protection laws according to their terms.

              ferc-regulated hydropower projects in alaska

    The Commission authorizes the construction, operation, and 
maintenance of hydropower projects under three different 
instruments: licenses issued pursuant to Part I of the Federal 
Power Act; exemptions from licensing, issued pursuant to 
Section 30 of the FPA for hydropower projects of up to 40 MW 
located on certain types of conduits and on non-federal land 
(conduit exemptions); and exemptions from licensing, issued 
pursuant to Section 405 of the Public Utility Regulatory 
Policies Act of 1978 for certain projects with 5 MW capacity or 
less located at non-federal pre-1977 dams (5 MW exemptions). In 
addition, under Section 4(f) of the FPA the Commission issues 
preliminary permits under which permittees may study the 
feasibility of a project proposal while holding the right of 
priority to apply for a license or exemption.
    There are currently 20 licensed projects in Alaska. Of 
these, 15 projects occupy National Forest lands administered by 
the U.S. Forest Service, and five projects occupy federal lands 
administered by the U.S. Bureau of Land Management (BLM). Of 
the total of 20 licensed projects, 11 projects are 5 MW or 
less, and 9 projects are larger than 5 MW.
    There are 3 exempted projects in Alaska, all under 5 MW. 
One project occupies National Forest lands, and two occupy non-
federal lands.
    Accordingly to the Commission's computer data base, it 
appears that none of the licensed or exempted projects occupies 
an Indian reservation. One project occupies a National Moose 
Range; one project is at least partly within the Skagway-White 
Pass National Historic Landmark; one project occupies a segment 
of the Deer Mountain-John Mountain Trail, which is part of the 
National Recreation Trail System; and one project occupies the 
Kodiak National Wildlife Refuge. Effective with the passage of 
the Energy Policy Act of 1992, there are new criteria governing 
the Commission's power to authorize projects that would occupy 
a unit of the National Park System.
    The data base does not indicate that there are any existing 
projects located on rivers that are now included, or being 
studied for inclusion, in the national Wild and Scenic Rivers 
System. We note that under Section 7(a) of the Wild and Scenic 
Rivers Act the Commission is barred from licensing (or 
exempting from licensing) the construction of hydropower 
project works on or directly affecting any river included, or 
being studied for inclusion, in the System.
    There is currently pending before the Commission one Alaska 
license application, which has been accepted for filing. The 
application is for a 4 MW project to be located on National 
Forest lands. Also pending is an accepted Alaska exemption 
application for a 7 00 kW project on non-federal land.
    Finally, there are a number of potential Alaska projects at 
the pre-development application stage. Eight project proposals 
are currently being studied under issued preliminary permits. 
Of these, two would be projects over 5 MW, both to occupy 
National Forest lands. Six would be projects 5 MW or less, of 
which three would occupy National Forest lands, one would 
occupy BLM lands, and two would occupy non-federal lands. There 
are also pending two Alaska permit applications, one to study a 
2.5 MW project on National Forest lands, and one to study a 8 
MW project on non-federal lands.

                  comments on the committee amendment

    As a general matter, I do not support legislation removing 
non-federal hydropower projects from the Commission's 
jurisdiction based on the size of the project. A project with a 
small capacity can have a very significant impact both at the 
project site and far beyond its immediate environs. That impact 
must be evaluated. Pursuant to the mandates of the Federal 
Power Act, the Commission performs that evaluation and in doing 
so gives equal consideration to development interests and 
environmental resources in determining whether, and with what 
requirements, to authorize hydropower development.
    The underlying premise of the legislation is that Alaska 
presents the Congress with a special case that favors local 
control over projects that otherwise be subject to the 
Commission's jurisdiction. Inasmuch as Alaska is not 
interconnected with the interstate, electric grip in the Lower 
48 states, I am willing to consider Alaska's special 
circumstance and will not object to the legislation provided 
that a proper state program is in place to ensure that the 
impact of any 5 MW project is evaluated. However, I would 
oppose a generic 5 MW exemption for projects located in the 
Lower 48 states. Such piecemealing will have a deleterious 
effect on the Commission's ability to study and mitigate the 
cumulative environmental effects of all non-federal hydropower 
projects in a river basin or watershed.
    There are a number of technical issues associated with the 
Committee Amendment. I will address these next.
    The Amendment requires the Governor of the State of Alaska 
to notify the Secretary of Energy that the State has a 
regulatory program in place. Under the Department of Energy 
Organization Act, the Secretary is not charged with 
responsibility for administering the hydropower development 
program. Rather that responsibility resides with this 
Commission. I would respectfully suggest that the notification 
be addressed to the Chair of the Commission rather than the 
Secretary. We would, in turn, notify the Secretary of the 
Interior, the Secretary of Commerce, and the Secretary of 
Agriculture as required according to the jurisdiction of 
Federal lands affected.
    The Amendment provides for the transfer to the State of 
Alaska of the Commission's jurisdiction over specified 
hydropower ``project works.'' Section 3(12) of the Federal 
Power Act defines ``project works'' as ``the physical 
structures of a project.'' Section 3(11) of the FPA defines 
``project'' as a:

        complete unit of improvement or development, consisting 
        of a power house, all water conduits, all dams and 
        appurtenant works and structures (including navigation 
        structures) which are a part of said unit, and all 
        storage, diverting, or forebay reservoirs directly 
        connected therewith, the primary transmission line or 
        lines transmitting power therefrom to the point of 
        junction with the distribution system, all 
        miscellaneous structures used and useful in connection 
        with said unit or any part thereof, and all water 
        rights, rights-of-way, ditches, dams, reservoirs, 
        lands, or interest in lands the use and occupancy of 
        which are necessary or appropriate in the maintenance 
        and operation of such unit.

Since ``project works'' do not include water rights, rights-of-
way, or lands and interests in lands, then with respect to 
project works removed from Commission jurisdiction the project 
developer would have to obtain such rights and interests from 
the appropriate state or federal entity. With respect to non-
federal lands needed for a project, the developer would not 
have access to the federal right of eminent domain provided to 
licensees by Section 21 of the FPA.
    With respect to future hydropower proposals in Alaska, the 
Amendment provides to standard for defining ``project works 
having a power production capability of 5,000 kilowatts or 
less.'' Absent statutory criteria to the contrary, there is the 
potential for abuse in ``packaging'' proposed project works in 
a manner that artificially segregates into 5 MW grouping the 
power production components of what is in fact a single unit of 
development, in order to evade Commission jurisdiction. Or a 
developer may deliberately underutilize the water power 
potential of a stream in order to evade Commission 
jurisdiction. Creating these incentives would not in my view 
foster public interest objectives.
    The Amendment does not address the Commission's exemption 
authority. As I described above, the Commission has two sources 
of statutory authority to issue exemptions from licensing for 
qualifying projects. An exemption is not tantamount to federal 
deregulation; rather, it is a form of lesser regulation 
designed for projects which by their nature will not ordinarily 
entail a significant impact on the environment. Exempted 
projects are subject to mandatory fish and wildlife conditions 
imposed by state and federal fish and wildlife agencies. 
Inasmuch as the Amendment does not mention exemptions, projects 
exempted as of the date of the Amendment's enactment would not 
be subject to transfer to State regulation.
    Any future development proposal of 5 MW or less, whether or 
not it would have qualified for an exemption, would however 
appear to come under State, not Commission, jurisdiction. This 
would appear to be the intent, even though the Amendment states 
that, as to qualifying project works, ``the State of Alaska 
shall have the exclusive authority to authorize such project 
works under State law, in lieu of licensing by the Commission 
under otherwise applicable provisions of this part [Part I of 
the FPA].'' Assuming I am correctly understanding the intent, 
the Amendment should provide for the State's exclusive 
authority, ``in lieu of licensing and exemption from licensing 
by the Commission under otherwise applicable provisions of this 
part and of Section 405 of the Public Utility Regulatory 
Policies Act of 1976.''
    As noted, the State's ``exclusive'' authority under 
qualifying project works is in lieu of the Commission's 
authority. However, the Amendment provides that no transfer of 
authority to the State ``shall preempt the application of 
Federal environment, natural, or cultural resources protection 
laws according to their terms.'' In addition, with the removal 
of the Commission's authority, other Federal agencies may have 
jurisdiction over certain projects. For example, removal of the 
Commission's jurisdiction leaves intact the jurisdiction of the 
U.S. Army Corps of Engineers under the Rivers and Harbors Act 
of 1899, which requires a Corps permit for new construction in 
navigable waters. Presumably, any Corps action under the 1899 
Act would be a Federal action subject to applicable Federal 
procedural and resource protection laws, such as the National 
Environmental Protection Act, the Clean Water Act, Historic 
Preservation Act, the Endangered Species Act, and so forth.
    There is a final technical point. The Amendment provides 
for the transfer to the State of Alaska of qualifying projects 
for which no license application has been accepted by the 
Commission as of the date of enactment of the Amendment. It 
also provides that project developers can choose to transfer to 
State regulation projects that were under Commission license as 
of the enactment date. However, the Amendment makes no 
provision for projects not under license but for which a 
license application was submitted to the Commission but not yet 
accepted for filing as of the enactment date.
    Thank you for the opportunity to comment on this 
legislative proposal, which is of considerable significance to 
the Commission's hydropower program.
    With best wishes,
            Sincerely,
                                         Elizabeth A. Moler, Chair.
                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill S. 225, as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

                           FEDERAL POWER ACT

                 The Act of June 10, 1920, Chapter 285

    Sec. 4. * * *
    (e) To issue licenses to citizens of the United States, or 
to any association of such citizens, or to any corporation, 
organized under the laws of the United States, or any State 
thereof, or to any State or municipality for the purpose of 
constructing, operating, and maintaining dams, water conduits, 
reservoirs, power houses, transmission lines, or other project 
works necessary or convenient for the development and 
improvement of navigation and for the development, 
transmission, and utilization of power across, along, from or 
in any of the streams or other bodies of water over which 
congress has jurisdiction under its authority to regulate 
commerce with foreign nations and along the [several States, or 
upon] several States (except fresh waters in the State of 
Hawaii, unless a license would be required by section 23 of the 
Act), or upon any part of the public lands and reservations of 
the United States (including the Territories), or for the 
purpose of utilizing the surplus water or water power from any 
Government dam, except as herein provided: Provided, That 
licenses shall be issued within any reservation only after a 
finding by the Commission that the license will not interfere 
or be inconsistent with the purpose for which such reservation 
was created or acquired, and shall be subject to and contain 
such conditions as the Secretary of the department under whose 
supervision such reservation falls shall deem necessary for the 
adequate protection and utilization of such reservation. 
Provided further, That no license affecting the navigable 
capacity of any navigable waters of the United States shall be 
issued until the plans of the dam or other structures affecting 
navigation have been approved by the Chief of Engineers and the 
Secretary of the Army. Whenever the contemplated improvement 
is, in the judgment of the Commission, desirable and justified 
in the public interest for the purpose of improving or 
developing a waterway or waterways for the use or benefit of 
interstate or foreign commerce, a finding to that effect shall 
be made by the Commission and shall become a part of the 
records of the Commission: Provided further, That in case the 
Commission shall find that any Government dam may be 
advantageously used by the United States for public purposes in 
addition to navigation, no license therefor shall be issued 
until two years after it shall have reported to Congress the 
facts and conditions relating thereto, except that this 
provision shall not apply to any Government dam constructed 
prior to June 10, 1920. And provided further, That upon the 
filing of any application for a license which has not been 
preceded by a preliminary permit under subsection (f) of this 
section, notice shall be given and published as required by the 
proviso of said subsection. In deciding whether to issue any 
license under this Part for any project, the Commission, in 
addition to the power and development purposes for which 
licenses are issued, shall give equal consideration to the 
purposes of energy conservation, the protection, mitigation of 
damage to, and enhancement of, fish and wildlife (including 
related spawning grounds and habitat), the protection of 
recreational opportunities, and the preservation of other 
aspects of environmental quality.
          * * * * * * *