[Senate Report 107-192]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 469
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-192

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



 
                HYDROELECTRIC PROJECT IN NORTH CAROLINA

                                _______
                                

                 June 28, 2002.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 1010]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1010) to extend the deadline for 
commencement of construction of a hydroelectric project in the 
State of North Carolina, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                         PURPOSE OF THE MEASURE

    The purpose of S. 1010 is to authorize the Federal Energy 
Regulatory Commission, at the request of the licensee, to 
extend for three consecutive two year periods the deadline for 
the licensee to commence construction of hydroelectric project 
No. 11437 in the State of North Carolina.

                          BACKGROUND AND NEED

    Section 13 of the Federal Power Act requires a 
hydroelectric licensee to commence the construction of its 
project within 2 years of the date of the issuance of the 
license. That deadline can be extended by the Federal Energy 
Regulatory Commission one time for a maximum of 2 additional 
years. If construction has not commenced by the end of the time 
period the license is terminated by the Commission unless 
legislation authorizing an additional extension is enacted. 
This legislation authorizes the Commission to extend the 
construction deadline for Project No. 11437.
    The Federal Energy Regulatory Commission issued an original 
license to Hydro Matrix Partnership, Ltd., on June 26, 1997, to 
construct and operate the 8-megawatt Jordan Dam Project No. 
11437, to be located at an existing U.S. Army Corps of 
Engineers dam on the Haw River in Chatham County, North 
Carolina. The original deadline for commencement of the project 
was June 25, 1999. This deadline was extended until June 25, 
2001, because the licensee needed additional time to obtain the 
necessary project financing. Construction did not commence by 
that date and no action has been taken yet to terminate the 
license.
    Project No. 11437 includes construction of a support 
structure, a conduit, two power modules with a total of eighty 
100-kilowatt turbine-generator units, two overhead cranes, two 
inflatable bladders in each of the existing intake towers, a 
5.1 mile-long primary transmission line, and related project 
facilities.

                          LEGISLATIVE HISTORY

    S. 1010 was introduced by Senator Helms on June 11, 2001. 
The views of the Federal Energy Regulatory Commission were 
sought on December 3, 2001 and provided by the Chairman of the 
Commission on December 10, 2001.

                       COMMITTEE RECOMMENDATIONS

    The Committee on Energy and Natural Resources, in open 
business session on June 5, 2002, by a voice vote of a quorum 
present, recommends that the Senate pass S. 1010, as described 
herein.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 authorizes the Federal Energy Regulatory 
Commission, at the request of the licensee, to extend the 
deadline for commencing construction of hydroelectric project 
No. 11437. The time period may be extended for three 
consecutive two-year periods. The extension is to take effect 
on the date of expiration of the extension originally issued by 
the Commission under section 13 of the Federal Power Act.

                   COST AND BUDGETARY CONSIDERATIONS

    The following estimate of the cost of this measure has been 
provided by the Congressional Budget Office.

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 14, 2002.
Hon. Jeff Bingaman,
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. 1010, a bill to 
extend the deadline for commencement of construction of a 
hydroelectric project in the state of North Carolina.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lisa Cash 
Driskill.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 1010--A bill to extend the deadline for commencement of construction 
        of a hydroelectric project in the state of North Carolina

    CBO estimates that implementing S. 1010 would have no net 
effect on the federal budget. The bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act and would impose no costs on 
state, local, or tribal governments.
    S. 1010 would authorize the Federal Energy Regulatory 
Commission (FERC) to extend, by six years, the deadline for 
beginning construction of a hydroelectric project currently 
subject to licensing by that agency. The proposed extension is 
for project number 11437 in Chatham County, North Carolina. 
This provision may have a minor impact on FERC's workload. 
Because FERC recovers 100 percent of its costs through user 
fees, any change in its administrative costs would be offset by 
an equal change in the fees that the commission charges. Hence, 
the bill's provisions would have no net budgetary impact.
    Because FERC's administrative costs are set in annual 
appropriations, enactment of this legislation would not affect 
direct spending or receipts. Therefore, pay-as-you-go 
procedures would not apply to S. 1010.
    The CBO staff contact for this estimate is Lisa Cash 
Driskill. This estimate was approved by Peter H. Fontaine, 
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 S. 1010. 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 program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 1010.

                        EXECUTIVE COMMUNICATIONS

    On December 3, 2001, the Committee on Energy and Natural 
Resources requested legislative reports from the Federal Energy 
Regulatory Commission and the Office of Management and Budget 
setting forth Executive agency recommendations on S. 1010. The 
report was received on December 10, 2001. The pertinent 
communications received by the Committee from the Chairman of 
the Federal Energy Regulatory Commission setting forth his 
reviews relating to this measure are set forth below:

                      Federal Energy Regulatory Commission,
                                 Washington, DC, December 10, 2001.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: Thank you for your two letters of 
December 3, 2001, requesting comments on S. 639 and S. 1010, 
bills to extend the construction deadlines applicable to four 
hydroelectric projects licensed by the Federal Energy 
Regulatory Commission. Enclosed is a description of the 
projects addressed by the bills.
    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, the Commission is required to terminate the 
license. Section 13 also authorizes the Commission to extend 
the deadline for completion of construction when not 
incompatible with the public interest.
    As a general matter, enactment of bills authorizing or 
requiring commencement-of-construction extensions for 
individual projects delays utilization in the public interest 
of an important energy resource and therefore is not 
recommended. In cases where project-specific extensions are 
authorized by the Congress, however, they should be of 
relatively short duration and respond only to the practical but 
unforeseeable needs of the licensee. Absent of showing of 
extraordinary circumstances, granting a licensee more than ten 
unstayed years from the issuance date of the license to 
commence construction does not meet these criteria. (Where the 
Commission has stayed the construction deadlines, or the entire 
license, for example pending judicial appeal of the license, 
the period of the stay is not counted in applying this 10-year 
policy.) I believe ten years is a more than reasonable period 
for a licensee to determine whether a project is economically 
viable and to sign a power purchase agreement. If a licensee 
cannot meet such a deadline, then as a general matter that 
license should be terminated pursuant to the requirement of 
Section 13, so that the site is once again available for 
whatever uses current circumstances may warrant, based on up-
to-date information on economic and environmental 
considerations.
    As is described in more detail in the attachment to this 
letter, in June 2001 the Commission held that construction had 
timely commenced on two of the projects addressed by S. 639--
Project Nos. 6901 and 6901--thereby removing the need for 
extension legislation for these two projects.
    The third project addressed by S. 639--Project No. 7307--
was terminated for failure to commence construction. If the 
legislation is enacted as currently drafted, it will reinstate 
the license as of the date of its expiration, mandate as 
initial two-year extension of the construction deadline, and 
allow two additional two-year extensions, which would move the 
deadline to 14\1/2\ years after the license was issued. As a 
consequence, and consistent with the Commission's policy on 
this matter, I do not support S. 639 with respect to Project 
No. 7307.
    S. 1010 would extend the construction commencement deadline 
for Project No. 11437 to 10 years after the license was issued. 
Since this time period is consistent with the Commission's 
policy, I have no objection to S. 1010.
    Thank you for the opportunity to comment on these bills. If 
I can be of further assistance in this or any other Commission 
matter, please let me know.
            Best regards,
                                              Pat Wood III,
                                                          Chairman.
    Enclosure.

Attachment to Chairman Wood's Response to December 3, 2001 Letters From 
                      the Honorable Jeff Bingaman

    S. 1010 would authorize the Commission, at the request of 
the licensee and in accordance with the requirements of Section 
13 of the FPA and the Commission's procedures under that 
section, to extend the period by which the licensee is required 
to commence construction of Project No. 11437 by three 
consecutive 2-year periods, i.e., until June 25, 2007. The new 
deadline would be ten years the date the license was issued.
    Project No. 11437. On June 26, 1997, the Commission issued 
an original license to Hydro Matrix Partnership, Ltd., to 
construct and operate the 8-megawatt Jordan Dam Project No. 
11437, to be located at an existing U.S. Army Corps of 
Engineers dam on the Haw River in Chatham County, North 
Carolina. Construction of the project entails a support 
structure, a conduit, two power modules with a total of eighty 
100-kilowatt turbine-generator units, two overhead cranes, two 
inflatable bladders in each of the existing intake towers, a 
5.1-mile-long primary transmission line, and relating project 
facilities.
    The original deadline for the commencement of project 
construction was June 15, 1999. This deadline was subsequently 
extended to June 25, 2001, because the licensee needed 
additional time to obtain project financing. Construction did 
not commence by that date. No action has as yet been taken to 
terminate the license.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill S. 1010, as 
ordered reported.

                                  
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