[Senate Report 106-28]
[From the U.S. Government Publishing Office]
Calendar No. 65
106th Congress Report
1st Session SENATE 106-28
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ALASKA SMALL HYDROELECTRIC PROJECTS
_______
March 19, 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. 422]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 422) to provide for Alaska state
jurisdiction over small hydroelectric projects, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill, as amended, do pass.
The amendment is as follows:
On page 4, line 21, insert the word ``not'' between the
words ``are'' and ``located''.
Purpose of the Measure
S. 422 authorizes the State of Alaska to assume
responsibility for licensing small hydroelectric projects of 5
megawatts or smaller. The State of Alaska may assume
jurisdiction over these projects only after it certifies that
it has in place a licensing program that protects the public
interest and the environment to the same extent as does the
FERC licensing process.
Background and Need
current law
Part I of the Federal Power Act was enacted in 1920 to
establish a ``complete scheme of national regulation which
would promote 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 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.
In 1991, the Bush administration proposed a National Energy
Strategy designed to reduce our nation's dependence on foreign
oil and increase domestic energy security. Among other things,
the President's strategy called for legislation ``exempting
from FERC regulation non-Federal hydropower projects with a
capacity of 5 MW or less.'' The Bush administration asserted
that a nationwide 5 MW exemption was ``appropriate because the
issues raised by small hydropower projects are local and ought
not to require a FERC decision; and small projects have little
or no impact on navigation and interstate commerce, the
motivation for FERC jurisdiction over many projects.'' National
Energy Strategy, p. 123 (1991).
The Committee on Energy and Natural Resources included a
nationwide 5 megawatt exemption in the energy policy bill (S.
1220) it reported in 1991. S. Rept. 102-72, pp. 51-52, 243-244.
The Senate adopted an amendment to strike the exemption,
however, and the Energy Policy Act of 1992 became law without
the 5 megawatt exemption.
In the 103rd, 104th, and 105th Congresses, the Committee
included 5 megawatt exemptions for projects in Alaska in
hydroelectric bills (S. 2384 in the 103rd Congress; S. 737 in
the 104th Congress; S. 439 in the 105th Congress). These
provisions would have given the State of Alaska the option of
assuming licensing authority over hydroelectric projects in
Alaska that have a capacity of 5 megawatts or less. Although
the Senate passed both bills, neither was enacted into law.
S. 422, like the three earlier provisions, is premised on
the belief that Alaska presents special circumstances that
favor local control over projects that would otherwise be
subject to FERC licensing. Unlike the lower 48 states, Alaska
is not connected to the interstate electric grid. Small hydro
is especially important in remote sections of Alaska, where the
availability of energy sources is limited and the resulting
cost of producing electricity is high. Over 150 villages in
Alaska are not interconnected into any larger electrical grid,
and each is supplied with power almost exclusively from its own
diesel generators--the most expensive type of electric power
producer. As a result, the cost of power in these communities
is the highest in the United States. Residential rates are
between 40 and 45 cents per kilowatt-hour, four to five times
the average residential rate in the United States. In the
absence of hydroelectric power, the only practical source of
electric power is small-scale diesel generation, which is not
only very expensive but also can have undesirable environmental
impacts. FERC testified at the hearing on S. 439 in 1997 that,
while the Commission would object to a generic 5 MW exemption
for projects located in the lower 48 States, it would not
object to an Alaska exemption, based on Alaska's unique
circumstances, provided an Alaska program would adequately
evaluate project impacts.
Legislative History
S. 422 was introduced on February 11, 1999. No hearing has
been held. S. 422 is identical to section 1 of S. 439 in the
105th Congress. 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.
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. 422 with an
amendment.
Committee Amendment
The Committee inserted the word ``not,'' which had been
mistakenly omitted when the bill was originally printed.
Section-by-Section Analysis
Section I directs the FERC to discontinue exercising its
licensing and regulatory authority over qualifying project
works in the State of Alaska upon certifying that the State has
in place a regulatory program for such projects that provide
the same level of protection to the public interest and the
environment as Federal regulation, gives certain non-power
interests equal consideration with power development interests,
and requires licensees to observe the same conditions for
navigation and fish and wildlife protection that are now
required by Federal law.
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. 422, a bill to
provide for Alaska state jurisdiction over small hydroelectric
projects.
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. 422--A bill to provide for Alaska state jurisdiction over small
hydroelectric projects
The bill would direct the Federal Energy Regulatory
Commission (FERC) to end its licensing and regulatory authority
over certain hydroelectic projects in Alaska when the state has
a comparable regulatory program in place for such projects.
CBO estimates that enacting this bill would have no net
effect on the federal budget. S. 422 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 state's
costs associated with establishing and carrying out a
regulatory program for the hydroelectric projects affected by
this bill would be voluntary.
The bill's 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 would have no net budgetary impact.
Because FERC's administrative costs are limited in annual
appropriations, enacting S. 422 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. 422. Executive communications were received by the
Committee on identical legislation in the 105th Congress, S.
439, which appear in Senate Report 105-111.
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. 422, 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
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SEC. 32. ALASKA STATE JURISDICTION OVER SMALL HYDROELECTRIC PROJECTS.
(a) Discontinuance of Regulation by the Commission.--
Notwithstanding sections 4(e) and 23(b), the Commission shall
discontinue exercising licensing and regulatory authority under
this Part over qualifying project works in the State of Alaska,
effective on the date on which the Commission certifies that
the State of Alaska has in place a regulatory program for
water-power development that--
(1) protects the public interest, the purposes listed
in paragraph (2), and the environment to the same
extent provided by licensing and regulation by the
Commission under this Part and other applicable Federal
laws, including the Endangered Species Act (16 U.S.C.
1531 et seq.) and the Fish and Wildlife Coordination
Act (16 U.S.C. 661 et seq.);
(2) gives equal consideration to the purposes of--
(A) energy conservation,
(B) the protection, mitigation of damage to,
and enhancement of, fish and wildlife
(including related spawning grounds and
habitat),
(C) the protection of recreational
opportunities,
(D) the preservation of other aspects of
environmental quality,
(E) the interests of Alaska Natives, and
(F) other beneficial public uses, including
irrigation, flood control, water supply, and
navigation; and
(3) requires, as a condition of a license for any
project works--
(A) the construction, maintenance, and
operation by a licensee at its own expense of
such lights and signals as may be directed by
the Secretary of the Department in which the
Coast Guard is operating, and such fishways as
may be prescribed by the Secretary of the
Interior or the Secretary of Commerce, as
appropriate,
(B) the operation of any navigation
facilities which may be constructed as part of
any project to be controlled at all times by
such reasonable rules and regulations as may be
made by the Secretary of the Army, and
(C) conditions for the protection,
mitigation, and enhancement of fish and
wildlife based on recommendations received
pursuant to the Fish and Wildlife Coordination
Act (16 U.S.C. 661 et seq.) from the National
Marine Fisheries Service, the United States
Fish and Wildlife Service, and State fish and
wildlife agencies.
(b) Definition of ``Qualifying Project Works''.--For
purposes of this section, the term ``qualifying project works''
means project works--
(1) that are not part of a project licensed under
this Part or exempted from licensing under this Part or
section 405 of thePublic Utility Regulatory Policies
Act of 1978 prior to the date of enactment of this section;
(2) for which a preliminary permit, a license
application, or an application for an exemption from
licensing has not been accepted for filing by the
Commission prior to the date of enactment of subsection
(c) (unless such application is withdrawn at the
election of the applicant);
(3) that are part of a project that has a power
production capacity of 5,000 kilowatts or less;
(4) that are located entirely within the boundaries
of the State of Alaska; and
(5) that are not located in whole or in part on any
Indian reservation, conservation system unit (as
defined in section 102(4) of the Alaska national
Interest Lands Conservation Act (16 U.S.C. 3102(4))),
or segment of a river designated for study for addition
to the Wild and Scenic Rivers System.
(c) Election of State Licensing.--In the case of
nonqualifying project works that would be a qualifying project
works but for the fact that the project has been licensed (or
exempted from licensing) by the Commission prior to the
enactment of this section, the licensee of such project may in
its discretion elect to make the project subject to licensing
and regulation by the State of Alaska under this section.
(d) Project Works on Federal Lands.--With respect to
projects located in whole or in part on a reservation, a
conservation system unit, or the public lands, a State license
or exemption from licensing shall be subject to--
(1) the approval of the Secretary having jurisdiction
over such lands, and
(2) such conditions as the Secretary may prescribe.
(e) Consultation With Affected Agencies.--The Commission
shall consult with the Secretary of the Interior, the Secretary
of Agriculture, and the Secretary of Commerce before certifying
the State of Alaska's regulatory program.
(f) Application of Federal Laws.--Nothing in this section
shall preempt the application of Federal environmental, natural
resources, or cultural resources protection laws according to
their terms.
(g) Oversight by the Commission.--The State of Alaska shall
notify the Commission not later than 30 days after making any
significant modification to its regulatory program. The
Commission shall periodically review the State's program to
ensure compliance with the provisions of this section.
(h) Resumption of Commission Authority.--Notwithstanding
subsection (a), the Commission shall reassert its licensing and
regulatory authority under this Part if the Commission finds
that the State of Alaska has not complied with one or more of
the requirements of this section.
(i) Determination by the Commission.--
(1) Upon application by the Governor of the State of
Alaska, the commission shall within 30 days commence a
review of the State of Alaska's regulatory program for
water-power development to determine whether it
complies with the requirements of subsection (a).
(2) The Commission's review required by paragraph (1)
shall be completed within one year of initiation and
the Commission shall within 30 days thereafter issue a
final order determining whether or not the State of
Alaska's regulatory program for water-power development
complies with the requirements of subsection (a).
(3) If the Commission fails to issue a final order in
accordance with paragraph (2), the State of Alaska's
regulatory program for water-power development shall be
deemed to be in compliance with subsection (a).
* * * * * * *