[Senate Report 108-27]
[From the U.S. Government Publishing Office]



                                                        Calendar No. 42
108th Congress                                                  
                                 SENATE
 1st Session                                            Report 108-27
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             HYDROELECTRIC PROJECT IN THE STATE OF ILLINOIS

                                _______
                                

                 March 19, 2003.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 397]

    The Committee on Energy and Natural Resources, to which was 
referred the Act (H.R. 397) to reinstate and extend the 
deadline for commencement of construction of a hydroelectric 
project in the State of Illinois, 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. 397 is to reinstate the license for 
construction, operation, and maintenance and to extend the 
deadline for commencement of construction of a hydroelectric 
project in the State of Illinois.

                          BACKGROUND AND NEED

    Section 13 of the Federal Power Act requires that 
construction commence within 2 years after a project is 
licensed. The Federal Regulatory Commission (FERC is authorized 
under the Federal Power Act to extend this deadline once, for a 
maximum of two additional years, upon a finding that such 
extensions is ``not incompatible with the public interest.'' 
Consequently, a license is subject to termination if a licensee 
fails to begin construction within 4 years after the license is 
issued.
    H.R. 397 would reinstate an expired license for Project No. 
11214, a four-megawatt hydroelectric project on the U.S. Army 
Corps of Engineers' Carlyle Dam, located on the Kaskaskia 
River, as of the effective date of the surrender of the 
license. In 1997, Southwestern Electric Cooperative, Inc. 
(Southwestern) was issued the original license by FERC. 
However, Southwestern did not begin construction of the project 
and surrendered the license to FERC in 2000. According to House 
Report 108-6, the city of Carlyle, Illinois, is interested in 
developing the hydroelectric project and has reached agreement 
with Southwestern whereby once the license is reinstated, 
Southwestern has agreed to transfer the license, designs and 
development of the project to the city. FERC has stated that it 
is not aware of any other party that is interested in 
developing this project site.

                          LEGISLATIVE HISTORY

    H.R. 397 was introduced by Representative Shimkus on 
January 28, 2003, and reported by the House Energy and Commerce 
Committee on February 4, 2003. The measure passed the House by 
voice vote on February 11, 2003, and was referred to the Senate 
Committee on Energy and Natural Resources. The Subcommittee on 
Water and Power conducted a hearing on the measure on March 6, 
2003. At the business meeting on March 12, 2003, the Committee 
on Energy and Natural Resources ordered H.R. 397 favorably 
reported.

                        COMMITTEE RECOMMENDATION

    The Committee on Energy and Natural Resources, in open 
business session on March 12, 2003, by a voice vote of a quorum 
present, recommends that the Senate pass H.R. 397.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 authorizes FERC, for Project No. 11214, 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 and FERC's procedures under such 
section: (1) to reinstate the license for construction of the 
project as of the effective date of surrender of the license; 
and (2) to extend the deadline to commence construction of the 
project for up to three additional two-year periods beyond the 
date that is four years after the date of the issuance of the 
license.

                   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, March 14, 2003.
Hon. Pete V. Domenici,
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. 397, an act to 
reinstate and extend the deadline for commencement of 
construction of a hydroelectric project in the state of 
Illinois.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lisa Cash 
Driskill.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 397--An act to reinstate and extend the deadline for commencement 
        of construction of a hydroelectric project in the state of 
        Illinois

    CBO estimates that implementing H.R. 397 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 and would impose no costs on 
state, local, or tribal governments.
    H.R. 397 would authorize the Federal Energy Regulatory 
Commission (FERC) to reinstate the license and extend the 
deadline for construction of a hydroelectric project (number 
11214) in Carlyle, Illinois. Those provisions could 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 legislation's 
provisions would have no net budgetary impact.
    Because FERC's administrative costs are limited in annual 
appropriations, the act would not affect direct spending or 
revenues.
    On February 3, 2003, CBO transmitted a cost estimate for 
H.R. 397, as ordered reported on January 29, 2003 by the House 
Committee on Energy and Commerce. The two versions of the 
legislation are identical, as are our cost estimates.
    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 by 
carrying out H.R. 397. 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 H.R. 397.

                        EXECUTIVE COMMUNICATIONS

    The pertinent legislative report received by the Committee 
from FERC setting forth Executive agency recommendations 
relating to H.R. 397 is set forth below:

                      Federal Energy Regulatory Commission,
                                    Washington, DC, March 13, 2003.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: Thank you for your letter of March 10, 
2003 asking for my views on H.R. 397, a House-passed bill to 
reinstate the surrendered license and to extend the 
commencement of construction deadline applicable to a 
hydroelectric project licensed by the Federal Energy Regulatory 
Commission in the State of Illinois. My comments also apply to 
an identical Senate bill, S. 220.
    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.

The Project

    On June 26, 1997, the Commission issued a license to 
Southwestern Electric Cooperative, Inc. (Southwestern) to 
construct, operate, and maintain the 4-megawatt Carlyle 
Hydroelectric Project No. 11214, to be located at the U.S. Army 
Corps of Engineers' Carlyle Dam on the Kaskaskia River in 
Clinton County, Illinois. Construction of the project entails 
installing an intake structure, five intake conduits, a 
powerhouse with five 800-kilowatt generating units, a 
transmission line, and appurtenances. The deadline for the 
commencement of project construction was June 26, 1999.
    By filing of March 3, 1999, Southwestern advised the 
Commission that it would be applying to surrender the project 
license. On March 27, 2000, Southwestern filed an application 
to surrender the license, stating that the project was no 
longer economically feasible. No project construction has 
commenced. The Commission accepted the surrender, effective 
June 24, 2000.

H.R. 397 and S. 220

    Both bills would authorize the Commission, upon request of 
the licensee, after reasonable notice and in accordance with 
the requirements of Section 13 of the Federal Power Act, to 
reinstate the surrendered license for Project No. 11214 and to 
extend the deadline for commencement of project construction 
for three consecutive 2-year periods beyond the date that is 
four years after the issuance date of the license.
    As a general matter, enactment of bills authorizing or 
requiring commencement-of-construction extensions for 
individual projects delays the development of an important 
energy resource and therefore has not been recommended. In 
cases where project-specific extensions are authorized by the 
Congress, it has been the policy of prior Commission chairmen 
that such extensions not go beyond ten years from the date the 
project was licensed. It a licensee cannot meet a ten-year 
deadline, then as a general rule the license should be 
terminated, making the site once again available for such uses 
as current circumstances may warrant, based on up-to-date 
information on economic and environmental considerations. I 
have no reason to depart from this extension policy.
    H.R. 397 and S. 220 would provide for extensions of the 
deadline for commencement of construction that would not exceed 
ten years from the date the license was issued. Since this time 
period is within the ten-year deadline, I have no objection to 
the bills' enactment.
    I hope that this information is helpful to you. If I can be 
of further assistance to you in this or any other Commission 
matter, please let me know.
            Best regards,
                                              Pat Wood III,
                                                          Chairman.

                        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 H.R. 397, as ordered 
reported.

                                
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