[Senate Report 105-136]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 255
105th Congress                                                   Report
                                 SENATE

 1st Session                                                    105-136
_______________________________________________________________________


 
     EXTENSION OF HYDROELECTRIC PROJECT IN THE STATE OF WASHINGTON

                                _______
                                

                November 4, 1997.--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 H.R. 1184]

    The Committee on Energy and Natural Resources, to which was 
referred the Act (H.R. 1184) to extend the deadline under the 
Federal Power Act for the construction of the Bear Creek 
Hydroelectric Project in the State of Washington, and for other 
purposes, having considered the same, reports favorably thereon 
without amendment and recommends that the Act do pass.

                         Purpose of the Measure

    The purpose of H.R. 1184 is to extend the deadline 
contained in the Federal Power Act for the commencement of 
construction of the Bear Creek Hydroelectric Project, a FERC-
licensed hydroelectric project (project number 10371) located 
in the State of Washington, and to reenact the third sentence 
of section 6 of the Federal Power Act which was inadvertently 
repealed by the General Accounting Office Act of 1996.

                          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 Federal Energy Regulatory Commission 
(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. It is very difficult for a 
hydroelectric project sponsor to secure financing until it has 
a power sales contract, and generally a licensee cannot secure 
a contract until it has been granted a license. H.R. 1184 would 
extend the time allowed to begin construction of hydroelectric 
project numbered 10371 for three consecutive two-year periods. 
This assures the project additional time to secure a contract 
and financing.
    This legislation reenacts the third sentence of section 6 
of the Federal Power Act which was inadvertently repealed by 
the General Accounting Office Act of 1996.

                      Section-by-Section Analysis

                               section 1

    Section 1 authorizes the FERC to extend the time period 
during which the licensee is required to commence construction 
of the project for not more than three consecutive two-year 
terms.

                               section 2

    This section reenacts the third sentence of section 6 of 
the Federal Power Act, which was inadvertently repealed by the 
General Accounting Office Act of 1996.

                          Legislative History

    H.R. 1184 was passed by the House on June 10, 1997. A 
hearing was held by the Subcommittee on Water and Power on 
October 7, 1997.

            Committee Recommendation and Tabulation of Votes

    The Senate Committee on Energy and Natural Resources, in 
open business session on October 22, 1997, by a voice vote with 
a quorum present, recommends that the Senate pass the bill 
without amendment.

                   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, October 24, 1997.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1184, an act to 
extend the deadline under the Federal Power Act for the 
construction of the Bear Creek hydroelectric project in the 
State of Washington, and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact for this 
estimate is Kim Cawley.
            Sincerely,
                                              James L. Blum
                                             (For June E. O'Neill).
    Enclosure.

               Congressional Budget Office Cost Estimate

H.R. 1184.--An act to extend the deadline under the Federal Power Act 
        for the construction of the Bear Creek hydroelectric project in 
        the State of Washington, and for other purposes

    CBO estimates that enacting H.R. 1184 would have no net 
effect on the federal budget. The legislation contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act of 1995 and would not affect the 
budgets of state, local, or tribal governments.
    H.R. 1184 would extend for up to six years the deadline for 
construction of a hydroelectric project currently subject to 
licensing by the Federal Energy Regulatory Commission (FERC). 
The proposed extension is for FERC project number 10371. 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 
provision would have no net budgetary impact.
    Because FERC's administrative costs are limited in annual 
appropriations, enactment of this legislation would not affect 
direct spending or receipts. Therefore, pay-as-you-go 
procedures would not apply.
    The CBO staff contact for this estimate is Kim Cawley. This 
estimate was approved by Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                      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 of Kristina Nygaard, Assistant General Counsel, Hydroelectric 
            Licensing, Federal Energy Regulatory Commission

    Mr. Chairman and Members of the Subcommittee: My name is 
Kristina Nygaard, and I am Assistant General Counsel for 
Hydroelectric Licensing at the Federal Energy Regulatory 
Commission. I am appearing before you as a Commission staff 
witness and do not speak for individual members of the 
Commission.
    Thank you for the opportunity to be here today to comment 
on a bill affecting the Federal Energy Regulatory Commission's 
regulation of non-federal hydropower projects pursuant to Part 
I of the Federal Power Act and related statutes.
    H.R. 1184 would extend the statutory deadline for the start 
of construction of the licensed project.
    H.R. 1184 would also restore to Section 6 of the Federal 
Power Act the provision requiring the mutual agreement of a 
licensee and the Commission for the alteration or surrender of 
a hydropower license.


    h.r. 848 and h.r. 1184: extending deadlines to commence project 
                              construction


    The two projects in question are the 800-kilowatt AuSable 
Project (FERC No. 10836), to be located in Clinton and Essex 
Counties, New York, and the 4-megawatt Bear Creek Project (FERC 
No. 10371), to be located in Skagit County, Washington. Both 
projects have received the maximum four years for commencement 
of construction. H.R. 848 and section 1 of H.R. 1184 would 
respectively require and authorize the Commission, upon the 
request of the licensee and in accordance with the good faith, 
due diligence, and public interest requirements of Section 13 
of the Federal Power Act, to extend the deadline for up to six 
additional years, for a total of ten years from the date of 
licensing.
    As a general principle, we do not support the enactment of 
bills requiring construction deadline extensions for individual 
projects. However, if such extensions are authorized by the 
Congress, as a matter of policy we would object to granting a 
licensee more than ten years from the issuance date of the 
license to commence construction. In our view, ten years is a 
more than reasonable period for a licensee to secure financing 
and complete final design of a licensed project. Since the two 
bills in question would not extend the deadline beyond the ten-
year mark, we have no specific objections to them. I understand 
that section 4 of S. 439, the omnibus hydro bill approved by 
the Senate Energy and Natural Resources Committee on September 
24, would give the Commission generic authority to extend 
construction commencement deadlines for up to ten years. In 
addition to extending commencement of construction deadlines, 
H.R. 848 and 1184 provide for the reinstatement of the licenses 
in question if they have expired, as one of them has. Attached 
to my testimony are detailed comments about the bills and the 
projects they concern.


    restoration of a provision of section 6 of the federal power act


    Section 2 of H.R. 1184 would amend Section 6 of the Federal 
Power Act by restoring a sentence, inadvertently deleted in 
1996, that require the mutual agreement of a licensee and the 
Commission for the alteration or surrender of a hydropower 
license. I understand that section 5 of the version of S. 439 
approved by the Senate Energy and Natural Resources Committee 
on September 24 makes a similar technical correction. We 
strongly support the restoration of this fundamental element of 
a license issued pursuant to Part I of the Federal Power Act.

               Appendix to Testimony of Kristina Nygaard


                        h.r. 1184 (mr. metcalf)


Section 1
    Section 1 of H.R. 1184 would, if need be, reinstate the 
license for Project No. 10371 and would authorize the 
Commission, upon the request of the licensee and in accordance 
with the good faith, due diligence, and public interest 
requirements of Section 13 of the Federal Power Act, to extend 
for up to six years (10 years after licensing) the deadline for 
commencement of project construction.
            Project No. 10371
    On December 10, 1993, the Commission issued a license to 
CPS Products, Inc., to construct, operate, and maintain the 4-
megawatt Bear Creek Project No. 10371, to be located at an 
existing dam in Skagit County, Washington. The deadline for 
commencement of project construction, originally December 9, 
1995, was extended to December 9, 1997.
Section 2
    Last Congress, provisions of both the General Accounting 
Office Act of 1996, Pub. L. No. 104-316 (H.R. 3864), and the 
National Defense Authorization Act of FY 1996, Pub. L. No. 104-
106 (S. 1124), deleted the last sentence in Section 6 of the 
Federal Power Act, 16 U.S.C. Sec. 799. (The last sentence 
required the Commission to file all issued hydropower licenses 
with the General Accounting Office.) However, due to the 
wording of these provisions, the combined result was that the 
last two sentences of Section 6 were deleted. Section 2 of H.R. 
1184 would restore the second-to-last sentence, which states: 
``Licensees may be revoked only for the reasons and in the 
manner prescribed under the provisions of this Act, and may be 
altered or surrendered only upon mutual agreement between the 
licensee and the Commission after thirty days' public notice.''

                        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 Act H.R. 1184, 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

                                 Part I

          * * * * * * *
    Sec. 6. Licenses under this Part shall be issued for a 
period not exceeding fifty years. Each such license shall be 
conditioned upon acceptance by the licensee of all the terms 
and conditions of this Act and such further conditions, if any, 
as the Commission shall prescribe in conformity with this Act, 
which said terms and conditions and the acceptance thereof 
shall be expressed in said license. Licenses may be revoked 
only for the reasons and in the manner prescribed under the 
provisions of this Act, and may be altered or surrendered only 
upon mutual agreement between the licensee and the Commission 
after thirty days' public notice.