[Senate Report 106-26]
[From the U.S. Government Publishing Office]




                                                        Calendar No. 63

106th Congress                                                   Report
  1st Session                    SENATE                          106-26

=======================================================================



 
   FERC LICENSING OF HYDROELECTRIC PROJECTS ON FRESH WATERS IN HAWAII

                                _______
                                

                 March 18, 1999.--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. 334]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 334) to amend the Federal Power Act to 
remove the jurisdiction of the Federal Energy Regulatory 
Commission to license projects on fresh waters in the State of 
Hawaii, having considered the same, reports favorably thereon 
without amendment and recommends that the bill do pass.

                         Purpose of the Measure

    S. 334 precludes the voluntary licensing of hydroelectric 
projects on fresh waters in the State of Hawaii.

                          Background and Need

    Part I of the Federal Power Act was enacted in 1920 to 
establish a ``complete scheme of national regulation which 
would promote the comprehensive development of the water 
resources of the Nation.'' First Iowa Hydro-Electric Coop, v. 
FPC, 328 U.S. 152, 180 (1946). Section 4(e) of the Federal 
Power Act authorizes the Federal Energy Regulatory Commission 
(FERC) to issue licenses for hydroelectric projects that (1) 
are located on waters over which Congress has jurisdiction 
under the Commerce Clause, (2) are located on public land or a 
Federal reservation, or (3) use surplus water or power from a 
Federal dam. Section 23(b)(1) of the Act requires anyone 
building or operating a hydroelectric project to obtain a FERC 
license if the project (1) is located on navigable water, (2) 
is located on public land or a Federal reservation, (3) uses 
surplus water or power from a Federal dam, or (4) is located on 
a body of water over which Congress has jurisdiction under the 
Commerce Clause, was built after 1935, and affects interstate 
or foreign commerce.
    Although Congress' power to regulate interstate and foreign 
commerce includes the power to regulate navigation, Gibbons v. 
Ogden, 22 U.S. (9 Wheat.) 1, 189 (1824), Federal Commerce 
Clause jurisdiction is broader than the concept of 
navigability. United States v. Appalachian Power Co., 311 U.S. 
377, 426-427 (1940). Thus, the circumstances in which the FERC 
may issue licenses under section 4(e) of the Federal Power Act 
are broader than the circumstances in which developers of 
hydroelectric projects must obtain a FERC license. As a result, 
the FERC has the power to issue a license for a hydroelectric 
project in response to a voluntary application under section 
4(e) of the Federal Power Act, even though the applicant is not 
required to obtain a license under section 23(b)(1) of the Act. 
Cooley v. FERC, 843 F.2d 1464, 1469 (D.C. Cir. 1988).
    The State of Hawaii has made a case for a limited exemption 
from FERC licensing based on Hawaii's unique circumstances. 
Hawaii's streams are isolated on individual islands and run 
quickly down steep volcanic slopes. There are no interstate 
rivers in Hawaii, few if any streams crossing Federal land, and 
no Federal dams. Hawaii's streams are generally not navigable. 
Hawaii has a unique body of water law that has evolved from 
Native Hawaiian custom and a comprehensive regulatory program 
that protects water resources.
    In short, none of the bases for FERC's licensing 
jurisdiction under section 23(b) of the Federal Power Act 
appear to exist in Hawaii. Indeed, FERC has never licensed a 
hydroelectric project in Hawaii and has no application to 
license one pending.
    Nonetheless, as explained above, section 4(e) of the 
Federal Power Act gives FERC the discretion to license 
hydroelectric projects in response to voluntary applications 
even though the project is not required to be licensed under 
section 23(b)(1) of the Act. The Attorney General of Hawaii has 
testified that FERC's voluntary licensing authority ``can lead 
to: (1) claim jumping by business competitors; and (2) attempts 
to use FERC's claimed preemptive authority to override state 
stream regulation'' to the detriment of Hawaii's waters. S. 
Hrg. 103-924, p. 14 (1994).
    In 1991, the Committee on Energy and National Resources 
favorably reported legislation to eliminate the FERC's 
voluntary licensing authority over hydroelectric projects on 
fresh waters in Hawaii as part of its energy policy bill (S. 
1220) in the 102nd Congress. S. Rept. 102-72, p. 245. The 
Senate passed an energy bill (S. 2166) with the Hawaiian 
exemption in it in 1992, but the provision was substantially 
rewritten in conference. As ultimately enacted, the provision 
did not eliminate the FERC's voluntary licensing authority over 
projects in Hawaii, though it did direct the FERC to study 
hydroelectric licensing in Hawaii and report to Congress on 
whether projects in Hawaii should be exempt from FERC 
licensing.
    The FERC submitted its report in 1994. 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 the FERC's jurisdiction, though it did note that 
the FERC had never licensed a hydroelectric project in Hawaii.

                          Legislative History

    As noted under ``Background and Need,'' the Committee on 
Energy and Natural Resources favorably reported, and the Senate 
passed, legislation to eliminate the FERC's voluntary licensing 
authority over hydroelectric projects on fresh waters in Hawaii 
during the 102nd Congress, though the provision was 
substantially amended in conference to preserve the FERC's 
current licensing authority and require the FERC to conduct a 
study on whether Congress should exempt Hawaiian projects in 
the future.
    Following receipt of the FERC study, the Committee again 
reported legislation to exempt projects on Hawaii's fresh 
waters from the FERC's voluntary licensing authority in 1994 
(S. 2384, S. Rept. 103-336), 1995 (S. 225, S. Rept. 104-70), 
and 1996 (S. 737, S. Rept. 104-77). The Senate passed two of 
these three measures (S. 2384 in the 103rd Congress and S. 737 
in the 104th Congress), though neither became law.
    The Committee again passed legislation to exempt these 
projects in 1998. S. 846 and section 2 of S. 439 in the 105th 
Congress.) S. 846 was reported by the Committee on October 15, 
1997 (Report 105-112), and passed the Senate on June 25, 1998. 
S. 439 was reported by the Committee on October 15, 1997 
(Report 105-111), and passed the Senate on June 25, 1998. No 
action was taken by the House on either bill. S. 334 is 
identical to S. 846 and section 2 of S. 439.

                       Committee Recommendations

    The Senate Committee on Energy and Natural Resources, in 
open business session on March 4, 1999 by a voice vote with a 
quorum present, recommends that the Senate pass S. 334 without 
amendment.

                      Section-by-Section Analysis

    S. 334 contains only one section. Section 1 eliminates the 
FERC's authority to issue voluntarily requested licenses for 
hydroelectric projects located on fresh waters in the State of 
Hawaii.

                   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 9, 1999.
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 S. 334, a bill to amend 
the Federal Power Act to remove the jurisdiction of the Federal 
Energy Regulatory Commission to license projects on fresh 
waters in the State of Hawaii.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts for this 
estimate are Kim Cawley (for federal costs), and Lisa Cash 
Driskill (for the state and local impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 334--A bill to amend the Federal Power Act to remove the 
        jurisdiction of the Federal Energy Regulatory Commission to 
        license projects on fresh waters in the state of Hawaii

    CBO estimates that enacting this bill would have no net 
effect on the federal budget. S. 334 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act and would have no impact on the 
budgets of state, local, or tribal governments. The bill would 
limit FERC's authority to license certain hydroelectric 
projects in Hawaii, leaving the state with that authority. 
Because Hawaii already licenses and regulates these projects, 
the bill would not require Hawaii to take any action.
    S. 334 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, enacting S. 334 would not affect direct 
spending or receipts. Therefore, pay-as-you-go procedures would 
not apply to the bill.
    The CBO staff contacts for this estimate are Kim Cawley 
(for federal costs), and Lisa Cash Driskill (for the state and 
local impact). This estimate was approved by Robert A. 
Sunshine, Deputy 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

    No executive communications were received by the Committee 
on S. 334. Executive communications were received by the 
Committee on identical legislation in the 105th Congress, S. 
846 and section 2 of S. 439, which appear in Senate Reports 
105-112 and 105-111 respectively.

                        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. 334, 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. 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 had jurisdiction under its authority to regulate 
commerce with foreign nations and among 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.

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