[Senate Report 108-299]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 618
108th Congress                                                   Report
                                 SENATE
 2d Session                                                     108-299

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



 
                  TAPOCO PROJECT LICENSING ACT OF 2004

                                _______
                                

                  July 7, 2004.--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 S. 2319]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 2319) to authorize and facilitate 
hydroelectric power licensing of the Tapoco Project, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill, as amended, do pass.
    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Tapoco Project Licensing Act of 
2004''.

SEC. 2. DEFINITIONS.

  In this Act:
          (1) APGI.--The term ``APGI'' means Alcoa Power Generating 
        Inc. (including its successors and assigns).
          (2) Commission.--The term ``Commission'' means the Federal 
        Energy Regulatory Commission.
          (3) Map.--The term ``map'' means the map entitled ``Tapoco 
        Hydroelectric Project, P-2169, Settlement Agreement, Appendix 
        B, Proposed Land Swap Areas, National Park Service and APGI'', 
        numbered TP514, Issue No. 9, and dated June 8, 2004.
          (4) Park.--The term ``Park'' means Great Smoky Mountains 
        National Park.
          (5) Project.--The term ``Project'' means the Tapoco 
        Hydroelectric Project, FERC Project No. 2169, including the 
        Chilhowee Dam and Reservoir in the State of Tennessee.
          (6) Secretary.--The term ``Secretary'' means the Secretary of 
        the Interior.

SEC. 3. LAND EXCHANGE.

  (a) Authorization.--
          (1) In general.--Upon the conveyance by APGI of title 
        acceptable to the Secretary of the land identified in paragraph 
        (2), the Secretary shall simultaneously convey to APGI title to 
        the land identified in paragraph (3).
          (2) Description of land to be conveyed by apgi.--The land to 
        be conveyed by APGI to the Secretary is the approximately 186 
        acres of land, subject to any encumbrances existing before 
        February 21, 2003--
                  (A) within the authorized boundary of the Park, 
                located northeast of United States Highway 129 and 
                adjacent to the APGI power line; and
                  (B) as generally depicted on the map as ``Proposed 
                Property Transfer from APGI to National Park Service''.
          (3) Description of land to be conveyed by the secretary.--The 
        land to be conveyed by the Secretary to APGI are the 
        approximately 110 acres of land within the Park that are--
                  (A) adjacent to or flooded by the Chilhowee 
                Reservoir;
                  (B) within the boundary of the Project as of February 
                21, 2003; and
                  (C) as generally depicted on the map as ``Proposed 
                Property Transfer from National Park Service to APGI''.
  (b) Minor Adjustments to Conveyed Land.--The Secretary and APGI may 
mutually agree to make minor boundary or acreage adjustments to the 
land identified in paragraphs (2) and (3) of subsection (a).
  (c) Opportunity to Mitigate.--If the Secretary determines that all or 
part of the land to be conveyed to the Park under subsection (a) is 
unsuitable for inclusion in the Park, APGI shall have the opportunity 
to make the land suitable for inclusion in the Park.
  (d) Conservation Easement.--The Secretary shall reserve a 
conservation easement over any land transferred to APGI under 
subsection (a)(3) that, subject to any terms and conditions imposed by 
the Commission in any license that the Commission may issue for the 
Project, shall--
          (1) specifically prohibit any development of the land by 
        APGI, other than any development that is necessary for the 
        continued operation and maintenance of the Chilhowee Reservoir;
          (2) authorize public access to the easement area, subject to 
        National Park Service regulations; and
          (3) authorize the National Park Service to enforce Park 
        regulations on the land and in and on the waters of Chilhowee 
        Reservoir lying on the land, to the extent not inconsistent 
        with any license condition considered necessary by the 
        Commission.
  (e) Applicability of Certain Laws.--Section 5(b) of Public Law 90-401 
(16 U.S.C. 460l-22(b)), shall not apply to the land exchange authorized 
under this section.
  (f) Reversion.--
          (1) In general.--The deed from the Secretary to APGI shall 
        contain a provision that requires the land described in 
        subsection (a)(3) to revert to the United States if--
                  (A) the Chilhowee Reservoir ceases to exist; or
                  (B) the Commission issues a final order 
                decommissioning the Project from which no further 
                appeal may be taken.
          (2) Applicable law.--A reversion under this subsection shall 
        not eliminate APGI's responsibility to comply with all 
        applicable provisions of the Federal Power Act (16 U.S.C. 791a 
        et seq.), including regulations.
  (g) Boundary Adjustment.--
          (1) In general.--On completion of the land exchange 
        authorized under this section, the Secretary shall--
                  (A) adjust the boundary of the Park to include the 
                land described in subsection (a)(2); and
                  (B) administer any acquired land as part of the Park 
                in accordance with applicable law (including 
                regulations).
          (2) National park service land.--Notwithstanding the exchange 
        of land under this section, the land described in subsection 
        (a)(3) shall remain in the boundary of the Park.
          (3) Public notice.--The Secretary shall publish in the 
        Federal Register notice of any boundary revised under paragraph 
        (1).

SEC. 4. PROJECT LICENSING.

  Notwithstanding the continued inclusion of the land described in 
section 3(a)(3) in the boundary of the Park (including any modification 
made pursuant to section 3(b)) on completion of the land exchange, the 
Commission shall have jurisdiction to license the Project.

SEC. 5. LAND ACQUISITION.

  (a) In General.--The Secretary or the Secretary of Agriculture may 
acquire, by purchase, donation, or exchange, any land or interest in 
land that--
          (1) may be transferred by APGI to any nongovernmental 
        organization; and
          (2) is identified as ``Permanent Easement'' or ``Term 
        Easement'' on the map entitled ``Tapoco Hydroelectric Project, 
        P-2169, Settlement Agreement, Appendix B, Proposed Land 
        Conveyances in Tennessee'', numbered TP616, Issue No. 15, and 
        dated March 11, 2004.
  (b) Land Acquired by the Secretary of the Interior.--The Secretary 
shall--
          (1) adjust the boundary of the Park to include any land or 
        interest in land acquired by the Secretary under subsection 
        (a);
          (2) administer any acquired land or interest in land as part 
        of the Park in accordance with applicable law (including 
        regulations); and
          (3) publish notice of the adjustment in the Federal Register.
  (c) Land Acquired by the Secretary of Agriculture.--
          (1) Boundary adjustment.--The Secretary of Agriculture 
        shall--
                  (A) adjust the boundary of the Cherokee National 
                Forest to include any land acquired under subsection 
                (a);
                  (B) administer any acquired land or interest in land 
                as part of the Cherokee National Forest in accordance 
                with applicable law (including regulations); and
                  (C) publish notice of the adjustment in the Federal 
                Register.
          (2) Management.--The Secretary of Agriculture shall evaluate 
        the feasibility of managing any land acquired by the Secretary 
        of Agriculture under subsection (a) in a manner that retains 
        the primitive, back-country character of the land.

SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

  There are authorized to be appropriated such sums as are necessary to 
carry out this Act.

                         PURPOSE OF THE MEASURE

    The purpose of S. 2319 is to authorize and facilitate 
hydroelectric power licensing of the Tapoco Project through the 
exchange of certain lands with Great Smoky Mountains National 
Park on the Little Tennessee River.

                          BACKGROUND AND NEED

    The Chilhowee Reservoir was constructed in 1957. The 
reservoir flooded approximately 100 acres of Great Smoky 
Mountains National Park in three embayments, including Abrams, 
Chiligate and Shop creeks. The dams are owned by Tapoco, a 
subsidiary of the Aluminum Company of America (ALCOA) and 
provide power for their aluminum plant in Blount County, 
Tennessee. Because the dams are privately owned, they must be 
licensed by the Federal Energy Regulatory Commission (FERC). 
Dams owned by federal agencies such as the Tennessee Valley 
Authority or the Army Corps of Engineers are exempt from the 
FERC licensing requirement.
    Although Congress expressly forbid FERC and its 
predecessor, the Federal Power Commission, from licensing any 
water project ``within the limits * * * of any national park * 
* * without specific authority of Congress,'' the Federal Power 
Commission licensed the Tapoco hydroelectric facility in 1955. 
That license will expire on February 28, 2005, and given the 
statutory prohibition, FERC cannot relicense the project 
without a specific statutory authorization. In order to 
continue to operate the Tapoco facility, ALCOA must acquire 
legal ownership of the flooded embayments currently owned by 
the National Park Service.
    S. 2319 will authorize the Secretary of the Interior to 
exchange the flooded park land for approximately 186 acres of 
land currently owned by ALCOA and located within the boundary 
of Great Smoky Mountains National Park. Once the land exchange 
has been completed, the bill would grant FERC the jurisdiction 
to relicense the Tapoco facility.
    Agreement on the proposed land exchange is the result of 
more than seven years of negotiations between ALCOA, the Nature 
Conservancy, the National Park Service, the United States Fish 
and Wildlife Service, the Eastern Band of Cherokee Indians, the 
Bureau of Indian Affairs, and numerous state agencies, 
environmental organizations and private landowners. The land to 
be acquired by the National Park Service includes a 
biologically diverse habitat that is occupied by 21 endangered 
species, including the Junaluska salamander. Under the 
negotiated Settlement Agreement, ALCOA will also grant a 
permanent easement to the Forest Service on 6,000 acres that 
are adjacent to Great Smoky Mountains National Park and the 
Cherokee National Forest and a 40-year recreation easement on 
more than 4,000 acres to the Tennessee Nature Conservancy.

                          LEGISLATIVE HISTORY

    S. 2319 was introduced on April 19, 2004 by Senator 
Alexander. The Senate Subcommittee on National Parks held a 
hearing on S. 2319 on April 27, 2004. On June 16, 2004, the 
Committee on Energy and Natural Resources ordered S. 2319, as 
amended, favorably reported.

                        COMMITTEE RECOMMENDATION

    The Committee on Energy and Natural Resources, in an open 
business session on June 16, 2004, by a voice vote of a quorum 
present, recommends that the Senate pass S. 2319, if amended as 
described herein.

                          COMMITTEE AMENDMENT

    During its consideration of S. 2319, the Committee adopted 
an amendment in the nature of a substitute. The amendment makes 
several technical and clarifying changes. The amendment also 
eliminated language from the original section 3(g) which 
exempted the land exchange from the requirements of National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), and 
the National Historic Preservation Act (16 U.S.C. 470 et seq.). 
The amendment is described in detail in the section-by-section 
analysis below.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 titles the bill ``Tapoco Licensing Act of 2004.''
    Section 2 defines key terms used in the Act.
    Section 3(a) directs the Secretary of the Interior 
(Secretary) to acquire from the Alcoa Power Generating Inc. 
(APGI) approximately 186 acres of land located within the 
boundary of Great Smoky Mountain National Park in exchange for 
approximately 110 acres of land that are flooded by the 
Chillowee Reservoir. This section also references maps and the 
locations of the land to be exchanged. The current hydropower 
license for the Tapoco project expires on February 28, 2005. In 
order for the Federal Energy Regulatory Commission (FERC) to 
act on APGI's relicensing application before this expiration 
date, it is imperative that the Department of the Interior 
complete the land transfer authorized by this legislation no 
later than December 2004. Based on the testimony provided by 
the Department of the Interior at the Subcommittee hearing, the 
Committee understands that the Department is aware of this 
deadline and expects to have the land transfer completed by 
December 2004.
    If the Department fails to complete the land transfer 
within this time frame, the Department should provide the 
Committee with a written explanation as to the nature of the 
delay, as well as a proposed schedule for completion.
    Subsection (b) authorizes the Secretary to make minor 
acreage adjustments to the land described in Section 3(a) if 
mutually agreeable with APGI.
    Subsection (c) allows APGI the opportunity to mitigate 
resource issues should the Secretary determine that the land 
described in section 3 be unsuitable for inclusion in the park.
    Subsection (d) requires that the Secretary reserve a 
conservation easement over the land that is transferred to 
APGI.
    Paragraph (1) prohibits development other than that which 
is required for the operation and maintenance of the reservoir 
or required by FERC.
    Paragraph (2) allows public access to the lands under the 
conservation easement and makes them subject to both park 
service regulations and the terms and conditions required by 
FERC.
    Paragraph (3) authorizes the National Park Service to 
enforce park regulations on the transferred lands that are 
consistent with the terms and conditions required by FERC.
    Subsection (e) exempts the land exchanged under this 
section from section 5(b) of Public Law 90-401 (16 U.S.C. 460l-
22(b)).
    Subsection (f) requires that the land described in 
subsection (a) revert to the United States if the Chilowee dam 
is breached or the project is decommissioned. This provision 
does not eliminate APGI's responsibilities under the Federal 
Power Act (16 U.S.C. 791a et seq.).
    Subsection (g) describes administrative procedures for 
adjusting the park boundary and is self explanatory.
    Section 4 grants the Commission the jurisdiction to license 
the project upon completion of the land exchange and states 
that FERC shall have jurisdiction to license the Tapoco 
Project, notwithstanding that the land conveyed to APGI under 
section 3(a)(3) remains within the boundary of Great Smoky 
Mountains National Park. The Committee notes that this section 
provides permanent authority for FERC to license the project so 
long as the terms of this Act are satisfied. This jurisdiction 
is granted even though the land described in section 3(a)(3) 
and any adjustments made pursuant to section 3(b) will remain 
within the boundary of the park. The Committee intends that 
FERC jurisdiction to relicense the Tapoco Project attaches once 
the land exchange described in section 3(a) is completed, and 
is not contingent on the completion of additional minor 
exchanges that may be undertaken pursuant to Section 3(b).
    Section 5(a) authorizes the Secretary of the Interior to 
acquire land that may be transferred to a non governmental 
organization by APGI pursuant to the Tapoco Hydroelectric 
Project, P-2169, Settlement Agreement, March 11, 2004.
    Subsection (b) describes administrative procedures for 
adjusting the park boundary and required that the Secretary 
administer the acquired land in accordance with applicable law 
and regulation.
    Subsection (c)(1) describes administrative procedures for 
adjusting the Cherokee National Forest boundary and requires 
that the Secretary of Agriculture administer the acquired land 
in accordance with applicable law and regulation.
    Paragraph (2) requires the Secretary of Agriculture to 
evaluate the feasibility of managing the Cherokee National 
Forest lands acquired under this Act in a way that retains its 
backcountry character.
    Section 6 authorizes the appropriation of such funds as are 
necessary to carry out this 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 23, 2004.
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 S. 2319, the Tapoco 
Project Licensing Act of 2004.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Megan 
Carroll.
            Sincerely,
                                         Elizabeth Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

S. 2319--Tapoco Project Licensing Act of 2004

    CBO estimates that implementing S. 2319 would cost $6 
million over the 2005-2009 period, assuming appropriation of 
the necessary amounts. Enacting the bill would not affect 
direct spending or revenues. S. 2319 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act and would impose no significant 
costs on state, local, or tribal governments.
    S. 2319 would authorize the Secretary of the Interior to 
exchange 100 acres of land within the Great Smoky Mountains 
National Park in Tennessee for 186 acres of other land within 
the authorized boundary of that park owned by Alcoa Power 
Generating Inc. (APGI). APGI would use the land it receives for 
the Tapoco Hydroelectric Project. According to the National 
Park Service (NPS), the federal land to be conveyed currently 
generates no receipts and is not expected to do so over the 
next 10 years. Hence, we estimate that the proposed exchange 
would not affect offsetting receipts (a credit against direct 
spending). We estimate that the agency would spend about 
$30,000 in 2005 to complete the transaction, assuming the 
availability of appropriated funds.
    S. 2319 also would authorize the Secretaries of Agriculture 
and the Interior to acquire certain other land that is 
currently owned by APGI. Based on information from APGI and 
local tax assessors regarding the value of that land, CBO 
estimates that the federal government would spend $6 million 
over the 2006-2009 period to acquire that land, assuming 
appropriation of the necessary funds. We also estimate that any 
resulting increase in federal spending for land management 
would total less than $500,000 a year.
    The CBO staff contact for this estimate is Megan Carroll. 
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. 2319.
    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. 2319.

                        EXECUTIVE COMMUNICATIONS

    On April 21, 2004, the Committee on Energy and Natural 
Resources requested legislative reports from the Department of 
the Interior, the Federal Energy Regulatory Commission and the 
Office of Management and Budget setting forth Executive agency 
recommendations on S. 2319. These reports had not been received 
when this report was filed. The testimony provided by the 
Department of the Interior and the Federal Energy Regulatory 
Commission at the Subcommittee hearing on S. 2319 follows:

    Statement of Paul Hoffman, Deputy Assistant Secretary, Fish and 
          Wildlife and Parks, U.S. Department of the Interior

    Mr. Chairman, thank you for the opportunity to present the 
Department of the Interior's views regarding S. 2319. This bill 
would authorize and facilitate hydroelectric power re-licensing 
of the Tapoco Project, near Great Smoky Mountains National 
Park.
    The Department supports S. 2319 with the amendments 
discussed later in this testimony. We believe that the exchange 
authorized in S. 2319, together with the comprehensive 
Settlement Agreement discussed later in this testimony, is an 
excellent example of Secretary Norton's 4 C's, Conservation 
through Cooperation, Consultation and Communication and 
demonstrates how environmental groups, local and state 
governments, industry, tribes, and the Federal government can 
work cooperatively on the conservation of important 
environmental resources.
    S. 2319 would resolve a jurisdictional issue by allowing 
the Federal Energy Regulatory Commission (FERC) to issue a new 
license to Alcoa Power Generating Inc. (APGI) to operate its 
existing Tapoco Project (FERC project #2169), a system of four 
hydropower dams on the Little Tennessee and Cheoah rivers 
straddling the North Carolina-Tennessee border. The bill also 
authorizes the Secretary to exchange lands within Great Smoky 
Mountains National Park (park) with APGI. Once the exchange is 
completed, the bill allows FERC to re-license the project. The 
Secretary and the Secretary of Agriculture are also authorized 
to acquire title to additional lands that may be transferred to 
a nongovernmental organization, as part of the Settlement 
Agreement related to this project, and add them to the 
boundaries of the park or the Cherokee National Forest.
    In 1999, when APGI began work on a re-licensing application 
with FERC to continue the operation of the Tapoco Project, it 
was discovered that a portion of the project, known as 
Chilhowee Reservoir, inundates approximately two miles of 
government-owned lands along Abrams Creek and shorter segments 
along three other streams, all within the 1926 authorized 
boundary of the park. This situation has existed since the 
1950's when Chilhowee Dam was completed and originally licensed 
by the former Federal Power Commission. FERC does not have the 
legal authority to issue licenses for hydropower projects that 
flood lands within authorized national park boundaries.
    The Federal Power Act and the enabling legislation for the 
park specifically prohibit hydropower projects within the park. 
The historical record, from the 1950's and earlier, of how the 
licensing was allowed to occur is unclear. Records indicate 
that the NPS and the Federal Power Commission were aware of the 
jurisdictional defect, but no evidence has been found that 
proves that the issue was legally resolved. It appears that the 
Federal Power Commission granted the license and the decision 
was not challenged.
    S. 2319 would resolve this situation by requiring a 
transfer of approximately 100 acres of submerged lands along 
Abrams Creek, and three smaller tributaries within the park, to 
APGI and granting jurisdiction to FERC to re-license the Tapoco 
Project and the operations at Chilhowee Dam and Reservoir. In 
exchange, the park would receive fee title to 186 acres of 
forested uplands within its authorized boundary that are 
currently under APGI ownership and retain management and 
enforcement rights over the 100 acres transferred to APGI. The 
bill also contains a reversionary clause that stipulates if the 
dam is ever breached or removed, the submerged lands would 
revert to the NPS.
    The exchange would extend park-owned land to the east 
shoulder of U.S. Highway 129 for approximately three miles. 
Currently, park-owned land stops at a powerline easement well 
to the northeast of the highway. This gap between the highway 
and the powerline creates an isolated pocket of land within the 
park boundary that poses ongoing management and law enforcement 
problems. Because of the reserved management easement, NPS 
rangers would continue to patrol the four flooded creek 
embayments within the park and enforce park rules, even though 
the underlying fee interest in the land will now belong to 
APGI.
    Critical to our support of this bill are additional 
conservation provisions in a comprehensive Settlement Agreement 
that has recently been developed among APGI, the Department of 
the Interior, the U.S. Forest Service, Tennessee and North 
Carolina natural resource agencies, the Eastern Band of 
Cherokee Indians, local governments, and several 
nongovernmental organizations. The Settlement Agreement has 
widespread support from the involved parties and will be filed 
with FERC to address the issues in the re-licensing of the 
Tapoco Project, including whether or not Chilhowee should 
continue to operate as a reservoir.
    In addition to the land exchange proposed in S. 2319, under 
the Settlement Agreement APGI will donate to The Nature 
Conservancy (TNC) a permanent conservation easement on an 
additional 400 acres of land it owns in Tennessee, within the 
park's authorized boundary, but lying southwest of Highway 129 
and the previously mentioned 186-acre parcel. These lands will 
continue to be maintained as a wildlife management area under 
an existing agreement with the State of Tennessee until such 
time as they might be acquired by the NPS. APGI will also grant 
an option to TNC to buy the fee interest of this tract for a 
price reflecting impact on value of the donated easement, and 
TNC will be restricted from selling the tract to any entity 
other than the NPS.
    In addition to the land exchange provisions in S. 2319, the 
Settlement Agreement also stipulates that APGI will donate 
conservation easements to TNC for several other parcels of 
land. The first permanent conservation easement is on 
approximately 5,500 acres of land that will be the centerpiece 
of a ``conservation corridor'' linking the park with the 
Cherokee National Forest, immediately south of the project's 
reservoirs on the Little Tennessee River. TNC will hold the 
easement and the property will be available for purchase in fee 
for future addition to the Cherokee National Forest or the 
park, as appropriate.
    The second conservation easement is on approximately 4,000 
more acres of APGI lands in Tennessee and would last for the 
term of the new FERC license. If APGI decides to sell these 
lands or to sell the project to a different company, it has 
agreed to make these lands available for purchase by TNC. 
Though in essence a right of first refusal, TNC would only be 
authorized to sell these lands to the Tennessee Wildlife 
Resources Agency, the U.S. Forest Service or the park.
    Finally, APGI has agreed to establish a mitigation fund for 
the project area in Tennessee that will make $100,000 per year 
available to the NPS, the U.S. Fish and Wildlife Service, the 
U.S. Forest Service, TNC, the State of Tennessee, and other 
stakeholders for actions to mitigate the ecological impacts of 
the hydroelectric project, such as reducing invasive, non-
native, terrestrial and aquatic species, improving wildlife 
habitats, and conducting relevant ecological research. A 
similar, but smaller mitigation fund ($25,000 per year) will be 
established for projects on the North Carolina portion of the 
project. APGI will also restore biologically important minimum 
stream flows to sections of the Little Tennessee River and the 
Cheoah River that have been bypassed for the last 50 years for 
power generation.
    We should note that an appraisal has not been done on the 
lands to be exchanged. The value of these lands would normally 
be determined through an objective appraisal conducted in 
accordance with the Uniform Appraisal Standards for Federal 
Land Acquisitions (UASFLA). However, we are mindful that 
legislated land transfers often promote other considerations 
that may not lend themselves readily to the standard appraisal 
process or to equal value exchanges in all cases. In this 
instance, NPS conveys approximately 100 acres of land to APGI 
and receives in return a reservation of a conservation easement 
on the 100 acres of land, a reversion interest on the 100 acres 
of land, and 186 additional acres of land or suitable 
equivalent. Conservation provisions also are provided for in 
the related Settlement Agreement. For these reasons, this 
exchange results in environmental, management, energy-related 
and economic benefits for the parties and the public. The 
balancing of important public policy considerations against the 
financial implications of proposed transfers are ultimately a 
question that rests with Congress.
    We also have several amendments to suggest. Section 4(c) 
provides for the reversion of fee simple title to the United 
States. We would like to work with the Committee, APGI, and 
other interested parties to address several issues in this 
subsection. First, the provision requires reversion for fee 
simple title for the Chilhowee Dam, and we believe the 
intention of the provision is to require the reversion of the 
lands identified in Section 4(a)(2), not the dam itself. 
Second, we would like to discuss with the parties further 
refinement of the circumstances under which reversion of fee 
title should occur.
    Section 4(g) of the bill states, among other things, that 
the exchange is deemed to meet the requirements of the National 
Environmental Policy Act of 1969 and the National Historic 
Preservation Act. The Department does not believe this broad 
exemption is necessary. Much of the environmental compliance 
work necessary to implement the exchange has already been 
conducted. We therefore recommend striking these provisions 
from the bill.
    In addition, we suggest one technical amendment that will 
make the land acquisition authority in Section 6(a)(2) of the 
bill consistent with that in Section 4(f). The amendment is 
attached to this testimony.
    S. 2319, which will authorize the re-licensing of the 
Tapoco Project, and the accompanying Settlement Agreement 
together provide a solution that makes sense, helps protect 
ecosystem sustainability within the Southern Appalachians, and 
is widely supported by the involved agencies and groups. We 
look forward to working with the committee to help this bill 
move forward.
    Mr. Chairman, this concludes my statement. I would be 
pleased to answer any questions you or other members of the 
subcommittee may have.
                                ------                                


  Statement of J. Mark Robinson, Director, Office of Energy Projects, 
                  Federal Energy Regulatory Commission

    Mr. Chairman and members of the committee, my name is J. 
Mark Robinson and I am the Director of the Office of Energy 
Projects at the Federal Energy Regulatory Commission 
(Commission). I appreciate the opportunity to appear before you 
to discuss S. 2319, the Tapco Project Licensing Act of 2004, 
which relates to a hydroelectric project regulated by the 
Commission. As a member of the Commission's staff, the views I 
express in this testimony are my own, and not those of the 
Commission.


                               BACKGROUND


    Pursuant to Part I of the Federal Power Act (FPA), the 
Commission is responsible for licensing and relicensing non-
Federal hydropower projects, managing those projects during 
their license terms, and overseeing the safety of hydropower 
dams. Section 4(e) of the FPA authorizes the Commission to 
issue licenses for projects which, among other things, are 
located ``upon'' reservations of the United States.
    The Federal Water Power Act of 1920 (FWPA), which in 1935 
became Part I of the FPA, originally included national parks in 
the definition of ``reservations.'' In 1921, Congress amended 
the FWPA to remove national parks and monuments from the 
Commission's jurisdiction, and to retain in Congress the 
jurisdiction to authorize the construction of dams in parks. In 
1935, when the FWPA was amended and became Part I of the FPA, 
Congress revised the definition of the term ``reservation'' to 
state that ``reservations shall not include national monuments 
or national parks.''
    Establishment of the Great Smoky Mountain National Park was 
first provided for by a Congressional Act approved on May 22, 
1926, with a provision specifying that the provisions of the 
FWPA did not apply to the park.
    The 359.8-megawatt (MW) Tapoco Hydroelectric Project is 
located on the Little Tennessee and Cheoah Rivers in Graham and 
Swain Counties, North Carolina, and Blount and Monroe Counties, 
Tennessee. The project consists of the 49.2-MW Santeetlah 
Development, located on the Cheoah River, and the 118-MW Cheoah 
Development, the 140.4-MW Calderwood Development, and the 52.2-
MW Chilhowee Development, all located on the Little Tennessee 
River. The project occupies 387 acres within the Nantahala 
National Forest, which is administered by the U.S. Forest 
Service. Notwithstanding the prohibitions discussed above on 
the Commission licensing projects within national parks, the 
reservoir of the Chilhowee project is located in part on one 
hundred acres of land within the Great Smoky Mountain National 
Park, which is administered by the National Park Service.
    The Commission issued the original license for the Tapoco 
Project on March 17, 1955, for a period of 50 years, effective 
March 1, 1955, and expiring on February 28, 2005. The 1955 
license authorized the construction and operation of the 
Chilhowee Development, and the continued operation of the 
Calderwood, Cheoah, and Santeetlah Developments. The license 
order did not state that a portion of the project would occupy 
national park land. Moreover, the license application, filed on 
October 25, 1954, states that ``[n]o lands or reservations of 
the United States will be affected by the * * * [p]roject.'' A 
search of the Commission's filed has produced no information 
that sheds further light on the matter.
    As I have mentioned, the only portion of the Tapoco Project 
that is located on national park land is a part of the 
Chilhowee Reservoir. When the reservoir, which has a surface 
area of about 1,734 acres at normal full pond elevation of 
874.0 feet msl, is at full elevation, it inundates 
approximately 100 acres of national park land.
    Water in the reservoir is stored and released in order to 
provide head for generation at the project. In addition, the 
reservoir supports the second highest recreational use of the 
four developments, due to its proximity to Knoxville, and the 
availability of several boating access points and campgrounds. 
Also, Chilhowee's upper end supports a cold- to cool-water 
fishery, while the lower portion of the reservoir supports a 
cool-water fishery. The Tennessee Wildlife Resources Agency 
actively manages the upper portion of the reservoir as a 
stocked put-and-take trout fishery and stock catchable sized 
trout.


                      THE RELICENSING PROCEEDINGS


    On February 21, 2003, Tapoco Division of Alcoa Power 
Generating Inc. (Alcoa) filed an application for a new license 
for the project. On July 23, 2003, the Commission issued a 
public notice of the application. In response to the notice, 
several agreements in principle were filed with the Commission, 
setting forth the framework of a comprehensive settlement 
agreement among Alcoa, the U.S. Department of the Interior, the 
U.S. Department of Agriculture, the Eastern Band of Cherokee 
Indians, resource agencies of the States of North Carolina and 
Tennessee, local governments, and national, regional, and local 
non-governmental organizations, with respect to relicensing the 
Tapoco Project. The parties have indicated to Commission staff 
that they expect to file a settlement agreement with the 
Commission on or before May 14, 2004.
    As part of the agreement in principle, Alcoa agrees to 
convey to the Park Service, in fee simple, approximately 200 
acres of land located outside of the Tapoco Project boundary, 
and within the authorized boundary of the Great Smoky Mountain 
National Park. In return, the Park Service would transfer to 
Alcoa the approximate 100 acres of the Great Smoky Mountain 
National Park inundated by Chilhowee Reservoir. If these 
transfers were accomplished, no portion of the Tapoco Project 
would be located within a national park. However, it is my 
understanding that the Secretary of the Interior must obtain 
Congressional authorization in order to complete the transfers.
    On March 15, 2004, Commission staff issued an environmental 
assessment (EA) for the relicensing of the Tapoco Hydroelectric 
Project.
    The EA states that there is essentially no shoreline 
development on any of the Little Tennessee River mainstem 
reservoirs other than project-related facilities (project works 
and recreation facilities), and some small, public, non-project 
recreation areas. All of the shoreline surrounding the 
Chilhowee, Calderwood and Cheoah reservoirs is owned by Alcoa, 
the Tennessee Valley Authority, the Forest Service, the 
National Park Service, and the Tennessee Department of 
Transportation. Moreover, with the exception of a few parcels, 
most of the property adjoining the project boundary is also 
owned by these entities. The EA concluded that topography and 
existing property ownership virtually ensure that these 
reservoir shorelines will continue to be protected from future 
development. Further, nothing proposed by Alcoa is expected to 
change development patterns around the reservoir, or the 
current uses of the reservoir. Finally, as is often the case 
for projects in the southeastern U.S., the EA recommends that 
Alcoa be required to develop and implement a shoreline 
management plan, in order to protect important aquatic and 
terrestrial habitats and cultural sites, and to enhance 
recreation resources by establishing specifications and 
criteria to ensure that all private and multi-use recreation 
facilities are properly constructed and maintained.
    On the other hand, the EA indicates that, were the 
reservoir lowered to an elevation where it would no longer 
inundate the Great Smoky Mountain National Park, virtually the 
entire 1,724 acre Chilhowee Reservoir would be eliminated, 
resulting in the loss of the fishery, boating, and other 
recreation opportunities, as well as the annual loss of 52.2 MW 
capacity, or enough to power about 52,000 homes.
    The EA recommended that the Commission issue a new license 
for the Tapoco Project consistent with the agreements in 
principle. Comments on the EA are due by May 14, 2004.


                        THE PROPOSED LEGISLATION


    S. 2319 would authorize the Secretary of the Interior, 
consistent with the agreements in principle, to transfer to 
Alcoa the 100 acres of national park land that are occupied by 
the Chilhowee Reservoir, in exchange for some 186 acres of land 
located elsewhere in Great Smoky Mountain National Park, or for 
equivalent land. S. 2319 further states that, on completion of 
the land exchange, the Commission will have jurisdiction to 
license the Tapoco Project.
    The land exchange provided for by S. 2319 will allow the 
Commission to consider Alcoa's proposal to relicense the 
project in its current form, as contemplated by the agreements 
in principle, without the need to address the issue of a 
portion of the project being located in a national park. If the 
legislation were to provide that the transfer be concluded by 
December 2004, it would help ensure the Commission's ability to 
act on Alcoa's proposal by the date the license expires on 
February 28, 2005.
    Thank you. I will be pleased to answer any questions you 
may have.

                        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. 2319 as ordered 
reported.

                                  
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