[House Report 112-563]
[From the U.S. Government Publishing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-563

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



 
              HYDROPOWER REGULATORY EFFICIENCY ACT OF 2012

                                _______
                                

 June 29, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5892]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 5892) to improve hydropower, and for other 
purposes, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                            C O N T E N T S

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for Legislation..............................     2
Hearings.........................................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     5
Committee Oversight Findings.....................................     5
Statement of General Performance, Goals and Objectives...........     5
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Earmark..........................................................     5
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................     6
Advisory Committee Statement.....................................     6
Applicability to Legislative Branch..............................     6
Section-by-Section Analysis of Legislation.......................     7
Changes in Existing Law Made by the Bill, as Reported............     8

                          Purpose and Summary

    H.R. 5892, the ``Hydropower Regulatory Efficiency Act of 
2012,'' was introduced by Rep. Cathy McMorris Rodgers (together 
with Reps. DeGette, Dingell, Latta, Markey, Matheson, L. Smith, 
and Terry) on June 5, 2012. The legislation facilitates the 
development of new hydropower resources in the United States by 
streamlining the federal licensing requirements for small 
hydropower projects and qualifying conduit hydropower 
facilities. The legislation also requires the Federal Energy 
Regulatory Commission to study ways to improve federal 
hydropower licensing for non-powered dams and closed-loop 
pumped storage facilities.

                  Background and Need for Legislation

    Hydropower is the nation's largest renewable energy 
generation resource, providing nearly 8 percent of the 
electricity generated in the United States. Including pumped 
storage facilities, there are approximately 100,000 megawatts 
(MW) of current installed hydropower capacity in the United 
States. The hydropower sector employs approximately 200,000-
300,000 workers across the United States and nearly 2,500 U.S. 
companies participate in the development, licensing, 
construction, and operation of hydropower projects.\1\
---------------------------------------------------------------------------
    \1\National Hydropower Association, ``Job Creation Opportunities in 
Hydropower,'' Final Report (September 20, 2009), available at: http://
hydro.org/wp-content/uploads/2010/12/NHA_JobsStudy_FinalReport.pdf; 
NHA, ``U.S. Hydropower Supply Chain Snapshot,'' available at: http://
hydro.org/why-hydro/available/hydropower-supply-chain-snapshot/.
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    Ninety-three percent of U.S. hydroelectric facilities are 
operated by the private sector, public utilities, and state or 
local governments.\2\ According to the Federal Energy 
Regulatory Commission (FERC), which regulates non-federal 
projects, these entities operate 1,645 hydropower facilities in 
every region of the U.S.\3\ Many of these facilities are much 
smaller than the large federal dams typically associated with 
hydropower. FERC records show that approximately 71% of non-
federal hydropower facilities have a capacity of less than 5 
MW, demonstrating the importance of small hydropower projects 
to the nation's energy portfolio.\4\
---------------------------------------------------------------------------
    \2\Idaho National Laboratory, ``A Study of United States 
Hydroelectric Plant Ownership'' (June 2006), available at: http://
hydropower.inl.gov/hydrofacts/pdfs/a_study_of_united_ 
states_hydroelectric_plant_ownership.pdf.
    \3\See FERC, ``Issued Licenses,'' available at: http://ferc.gov/
industries/hydropower/gen-info/licensing/licenses.xls; and ``Issued 
Exemptions,'' available at: http://ferc.gov/industries/hydropower/gen-
info/licensing/exemptions.xls.
    \4\See Testimony of Jeff C. Wright, Director, Office of Energy 
Projects, FERC, before the Subcommittee on Energy and Commerce (May 9, 
2012).
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Hydropower's Potential

    Despite abundant resources, the production of electricity 
from water resources is not fully utilized. With the right 
federal policies in place, it may be possible to double 
hydropower capacity and create thousands of new domestic jobs. 
For instance, a study completed on behalf of the National 
Hydropower Association (NHA) concluded that by utilizing 
currently untapped resources, the United States could add 
approximately 60,000 MW of new hydropower capacity by 2025, 
potentially creating as many as 700,000 jobs in the process.\5\
---------------------------------------------------------------------------
    \5\National Hydropower Association, ``Job Creation Opportunities in 
Hydropower,'' Final Report (September 20, 2009), available at: http://
hydro.org/wp-content/uploads/2010/12/NHA_JobsStudy_FinalReport.pdf; 
Final Report Update with state breakdowns (April 26, 2010), available 
at http://hydro.org/wp-content/uploads/2011/02/NHA-Annual-Conf-
Frantzis-pres-Final-7.pdf.
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    A significant amount of new hydroelectric generation could 
come from maximizing existing infrastructure, particularly non-
powered dams. For example, only about 3 percent of the nation's 
approximately 80,000 dams currently generate hydropower.\6\ The 
U.S. Department of
---------------------------------------------------------------------------
    \6\U.S. Army Corps of Engineers, National Inventory of Dams, chart: 
``Dams by Primary Purpose,'' available at: http://geo.usace.army.mil/
pgis/f?p=397:5:48574067111801::NO.Energy and Oak Ridge National 
Laboratory recently released a report identifying 12,000 MW of new 
hydropower that could be developed at existing non-powered dams.\7\
    \7\U.S. Department of Energy, ``An Assessment of Energy Potential 
at Non-Powered Dams in the United States'' (April 2012), available at: 
http://www1.eere.energy.gov/water/pdfs/npd_report.pdf.
---------------------------------------------------------------------------
    There also is significant growth potential in the small 
hydropower and conduit power sectors of the industry, as 
numerous project developers and local governments across the 
country consider retrofitting local dam infrastructure or 
investing in irrigation power projects and other conduit 
applications. For instance, the U.S. Bureau of Reclamation 
released a study identifying 373 existing canals and conduits 
that have the combined potential of generating over 365,000 MW-
hours of additional hydropower annually.\8\
---------------------------------------------------------------------------
    \8\U.S. Bureau of Reclamation, ``Site Inventory and Hydropower 
Energy Assessment of Reclamation Owned Conduits,'' Final Report (March 
2012), available at: http://www.usbr.gov/power/CanalReport/index.html.
---------------------------------------------------------------------------

Additional Hydropower Benefits

    Hydropower is a clean, renewable, and zero-emission 
electricity source; its utilization currently avoids 225 
million metric tons of carbon dioxide in the U.S. each year--
equal to the output of approximately 42 million passenger cars, 
according to NHA. Hydropower facilities also can provide grid 
reliability and stability services, such as the ability to 
quickly meet changing demand in electric load, firming for 
intermittent variable resources, such as wind and solar, and 
black start capability in times of an outage.

Regulation of Hydropower Development

    Hydropower developments face a comprehensive regulatory 
approval process that involves many participants, including 
FERC, federal and state resource agencies, local governments, 
tribes, non-governmental organizations and the public. The 
regulatory process to license and construct a hydropower 
facility can be considerably longer than the process for other 
renewable energy resources. For example, FERC's Integrated 
Licensing Process established specifically for hydropower 
projects is structured to be completed in 5 years, while the 
development timeline for wind and solar projects can be as 
short as 18-24 months.
    Developers of small hydropower projects told the Committee 
that, due to the lack of economies of scale with smaller 
projects, the costs associated with the licensing process serve 
as a financial disincentive to pursue these facilities. In 
recent years, FERC has taken steps to improve the licensing 
process of small hydropower projects. However, FERC exemption 
applications can be lengthy and time consuming to prepare. For 
very small projects, the cost of FERC compliance can 
potentially exceed the cost of hydro equipment.
    According to the Colorado Small Hydro Association, a 
typical exemption application for a small hydropower system may 
be on the order of 100 pages, including all the necessary 
explanatory text, diagrams, maps, letters and appendices. 
Compiling all the necessary information can take months, 
requiring expensive consulting assistance from engineers, 
attorneys, professionally-licensed surveyors and environmental 
consultants. Hiring consultants to complete FERC small hydro 
exemptions for small projects may typically cost somewhere 
between $10,000 and $30,000--a price tag that often outweighs 
the total hydro equipment installation cost for a typical small 
(1-2 kilowatt) residential micro-hydro system.
    FERC currently reports 578 proposed projects with pending 
license and license exemption applications, as well as issued 
and pending preliminary permits.\9\ This represents over 76,000 
MW in new hydropower capacity pending at FERC.\10\ By improving 
the hydropower licensing process, H.R. 5892 could facilitate 
the development of many of these and future hydropower 
projects.
---------------------------------------------------------------------------
    \9\These pending projects include all hydropower technologies: 
conventional, conduit, pumped storage, and new marine hydrokinetic. 
Arrived at by combining project figures from FERC generated 
spreadsheets. See ``Pending Licenses, Relicenses and Exemptions'' 
(total projects: 62 equaling 3,658.753 MW), available at: http://
ferc.gov/industries/hydropower/gen-info/licensing/pending-lre.xls; 
``All Issued Preliminary Permits'' (total projects: 433 equaling 
60,679.366 MW), available at: http://ferc.gov/industries/hydropower/
gen-info/licensing/issued-pre-permits.xls; and ``All Pending 
Preliminary Permits'' (total projects 83 equaling 12,211.573 MW), 
available at: http://ferc.gov/industries/hydropower/gen-info/licensing/
pending-pre-permits.xls.
    \10\Id.
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Supporters of the Legislation

    Supporters of the legislation include NHA, American Rivers, 
the Colorado Small Hydropower Association, and Voith 
Hydropower.

                                Hearings

    On May 9, 2012, the Subcommittee on Energy and Power held a 
legislative hearing on a discussion draft of the ``Hydropower 
Regulatory Efficiency Act of 2012'' and received testimony 
from:
           Mr. Jeffrey C. Wright, Director, Office of 
        Energy Projects, Federal Energy Regulatory Commission;
           Mr. Andrew Munro, Director, Customer Service 
        Division, Grant County Public Utility Commission, on 
        behalf of the National Hydropower Association;
           Mr. Matthew Rice, Colorado Director, 
        American Rivers; and,
           Mr. Kurt Johnson, President, Colorado Small 
        Hydro Association.

                        Committee Consideration

    A discussion draft of the ``Hydropower Regulatory 
Efficiency Act of 2012'' was released on May 2, 2012 by 
Representatives Cathy McMorris Rodgers and Diana DeGette.
    On May 9, 2012, the Subcommittee on Energy and Power held a 
legislative hearing on the discussion draft.
    On June 5, 2012, H.R. 5892, the ``Hydropower Regulatory 
Efficiency Act of 2012,'' was introduced by Representative 
Cathy McMorris Rodgers (together with Representatives DeGette, 
Dingell, Latta, Markey, Matheson, L. Smith, and Terry).
    On June 7, 2012, the Subcommittee on Energy and Power met 
in open markup session to consider H.R. 5892. No amendments 
were offered during the markup and the subcommittee ordered 
H.R. 5892 favorably reported, by voice vote, to the full 
committee.
    On June 19 and 20, 2012, the Committee on Energy and 
Commerce met in open markup session. No amendments were offered 
during the markup and the Committee ordered H.R. 5892 favorably 
reported, by voice vote, to the House of Representatives.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, H.R. 5892 was reported by voice 
vote with a majority quorum present. There was no request for a 
recorded vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

         Statement of General Performance Goals and Objectives

    H.R. 5892 facilitates the development of new hydropower 
resources in the United States by streamlining the federal 
licensing requirements for small hydropower projects and 
qualifying conduit hydropower facilities. The legislation also 
requires the Federal Energy Regulatory Commission to study ways 
to improve federal hydropower licensing for non-powered dams 
and closed-loop pumped storage facilities.

    New Budget Authority, Entitlement Authority and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
5892, the ``Hydropower Regulatory Efficiency Act of 2012,'' 
would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

                                Earmarks

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 5892, the ``Hydropower Regulatory Efficiency 
Act of 2012,'' contains no earmarks, limited tax benefits, or 
limited tariff benefits.

                        Committee Cost Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974.

                                                     June 27, 2012.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5892, the 
Hydropower Regulatory Efficiency Act of 2012.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Megan 
Carroll.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 5892--Hydropower Regulatory Efficiency Act of 2012

    Under the Federal Power Act, the Federal Energy Regulatory 
Commission (FERC) issues licenses and regulates hydroelectric 
facilities, regardless of size. H.R. 5892 would amend current 
law to allow FERC to extend certain permits related to 
hydroelectric facilities and exempt small hydroelectric 
facilities with generating capacity of 10 megawatts or less 
from FERC's licensing requirements. In addition, the bill would 
direct the Secretary of Energy to study the feasibility of 
generating hydroelectric power using water flowing through 
conduits or at facilities that store water. Finally, the bill 
would authorize FERC to carry out pilot projects to demonstrate 
the potential of generating hydroelectric power at nonpowered 
dams and water storage facilities.
    Based on information from FERC and the Department of Energy 
(DOE), CBO estimates that implementing H.R. 5892 would have no 
significant impact on the federal budget. CBO anticipates that 
the proposed changes to FERC's permitting and licensing 
requirements would reduce the commission's workload. We also 
estimate that FERC would spend about $1 million on pilot 
projects authorized under the bill, assuming appropriation of 
necessary amounts. However, because FERC recovers 100 percent 
of its costs through user fees, any change in the agency's 
costs (which are controlled through annual appropriation acts) 
would be offset by an equal change in fees that the commission 
charges, resulting in no net change in federal spending. 
Finally, CBO estimates that any increased costs to DOE to 
prepare the study required under H.R. 5892 would be negligible. 
Enacting H.R. 5892 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    H.R. 5892 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.
    The CBO staff contact for this estimate is Megan Carroll. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

               Section-by-Section Analysis of Legislation


Section 1--Short title; table of contents

    Section 1 provides the short title of ``Hydropower 
Regulatory Efficiency Act of 2012'' and provides a table of 
contents.

Section 2--Findings

    Section 2 sets forth findings on the potential power 
generation and economic benefits resulting from increased 
hydropower development in the United States.

Section 3--Promoting small hydroelectric power projects

    Section 3 increases the licensing exemption threshold for 
small hydropower projects from 5 megawatts (MW) to 10 MW.

Section 4--Promoting conduit hydropower projects

    Section 4(a) provides that a ``qualifying conduit 
hydropower facility'' is not required to obtain a FERC license. 
The term is defined as a hydropower project that (1) uses a 
non-federally owned conduit, (2) has an installed capacity of 5 
megawatts or less, and (3) does not currently have a license or 
exemption. An entity proposing to construct a qualifying 
conduit hydropower facility is required to file a notice of 
intent with FERC that includes sufficient information to 
demonstrate that the facility meets the qualifying criteria. If 
FERC makes an initial determination that the proposed project 
meets the criteria, it shall publish public notice of the 
notice of intent to construct the project. If no entity 
contests that the project meets the criteria within 45 days, 
the project is deemed to meet the criteria. If an entity 
contests whether the project meets the criteria, FERC is 
required to promptly issue a written determination as to 
whether the facility meets the criteria. Section 4(a) also 
expands eligibility for the existing conduit exemption to 
facilities with an installed capacity of up to 40 megawatts.
    Section 4(b) makes conforming amendments to section 405 of 
the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 
2705).

Section 5--FERC authority to extend preliminary permit periods

    Section 5 allows FERC to extend the term of a preliminary 
permit for up to 2 years, for a total of 5 years if FERC finds 
that the permittee has carried out activities under the permit 
in good faith and with reasonable diligence.

Section 6--Promoting hydropower development at non-powered dams and 
        closed-loop pumped storage projects

    Section 6 directs FERC to study the feasibility of 
establishing a 2-year licensing process for hydropower 
development at non-powered dams and closed-loop pumped storage 
projects. The results of the program shall be reported to 
Congress.

Section 7--DOE study of pumped storage and potential hydropower from 
        conduits

    Section 7 directs the Secretary of Energy to complete a 
study of: (1) the technical flexibility and potential of 
certain new and existing pumped storage facilities to support 
intermittent renewable generation and provide grid reliability 
benefits; and (2) the range of opportunities for hydropower 
from conduits in the United States.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as 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):

PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978

           *       *       *       *       *       *       *



TITLE IV--SMALL HYDROELECTRIC POWER PROJECTS

           *       *       *       *       *       *       *


SEC. 405. SIMPLIFIED AND EXPEDITIOUS LICENSING PROCEDURES.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Exemptions From Licensing Requirements in Certain 
Cases.--The Commission may in its discretion (by rule or order) 
grant an exemption in whole or in part from the requirements 
(including the licensing requirements) of part I of the Federal 
Power Act to small hydroelectric power projects having a 
proposed installed capacity of [5,000] 10,000 kilowatts or 
less, on a case-by-case basis or on the basis of classes or 
categories of projects, subject to the same limitations (to 
ensure protection for fish and wildlife as well as other 
environmental concerns) as those which are set forth in 
subsections (c) and (d) of section 30 of the Federal Power Act 
with respect to determinations made and exemptions granted 
under [subsection (a) of such section 30] subsection (b) of 
such section 30; and subsections (c) and (d) of such section 30 
shall apply with respect to actions taken and exemptions 
granted under this subsection. Except as specifically provided 
in this subsection, the granting of an exemption to a project 
under this subsection shall in no case have the effect of 
waiving or limiting the application (to such project) of the 
second sentence of subsection (b) of this section.

           *       *       *       *       *       *       *

                              ----------                              


FEDERAL POWER ACT

           *       *       *       *       *       *       *



PART I

           *       *       *       *       *       *       *


  Sec. 5. (a) Each preliminary permit issued under this Part 
shall be for the sole purpose of maintaining priority of 
application for a license under the terms of this Act for such 
period or periods, not exceeding a total of three years, as in 
the discretion of the Commission may be necessary for making 
examinations and surveys, for preparing maps, plans, 
specifications, and estimates, and for making financial 
arrangements.
  (b) The Commission may extend the period of a preliminary 
permit once for not more than 2 additional years beyond the 3 
years permitted by subsection (a) if the Commission finds that 
the permittee has carried out activities under such permit in 
good faith and with reasonable diligence.
  (c) Each such permit shall set forth the conditions under 
which priority shall be maintained.
  (d) Such permits shall not be transferable, and may be 
canceled by order of the Commission upon failure of permittees 
to comply with the conditions thereof or for other good cause 
shown after notice and opportunity for hearing.

           *       *       *       *       *       *       *

  Sec. 30. [(a) Except as provided in subsection (b) or (c), 
the Commission may grant an exemption in whole or in part from 
the requirements of this part, including any license 
requirements contained in this part, to any facility (not 
including any dam or other impoundment) constructed, operated, 
or maintained for the generation of electric power which the 
Commission determines, by rule or order--
          [(1) is located on non-Federal lands, and
          [(2) utilizes for such generation only the 
        hydroelectric potential of a manmade conduit, which is 
        operated for the distribution of water for 
        agricultural, municipal, or industrial consumption and 
        not primarily for the generation of electricity.
  [(b) The Commission may not grant any exemption under 
subsection (a) to any facility the installed capacity of which 
exceeds 15 megawatts (40 megawatts in the case of a facility 
constructed, operated, and maintained by an agency or 
instrumentality of a State or local government solely for water 
supply for municipal purposes).] (a)(1) A qualifying conduit 
hydropower facility shall not be required to be licensed under 
this part.
  (2)(A) Any person, State, or municipality proposing to 
construct a qualifying conduit hydropower facility shall file 
with the Commission a notice of intent to construct such 
facility. The notice shall include sufficient information to 
demonstrate that the facility meets the qualifying criteria.
  (B) Not later than 15 days after receipt of a notice of 
intent filed under subparagraph (A), the Commission shall--
          (i) make an initial determination as to whether the 
        facility meets the qualifying criteria; and
          (ii) if the Commission makes an initial 
        determination, pursuant to clause (i), that the 
        facility meets the qualifying criteria, publish public 
        notice of the notice of intent filed under subparagraph 
        (A).
  (C) If, not later than 45 days after the date of publication 
of the public notice described in subparagraph (B)(ii)--
          (i) an entity contests whether the facility meets the 
        qualifying criteria, the Commission shall promptly 
        issue a written determination as to whether the 
        facility meets such criteria; or
          (ii) no entity contests whether the facility meets 
        the qualifying criteria, the facility shall be deemed 
        to meet such criteria.
  (3) For purposes of this section:
          (A) The term ``conduit'' means any tunnel, canal, 
        pipeline, aqueduct, flume, ditch, or similar manmade 
        water conveyance that is operated for the distribution 
        of water for agricultural, municipal, or industrial 
        consumption and not primarily for the generation of 
        electricity.
          (B) The term ``qualifying conduit hydropower 
        facility'' means a facility (not including any dam or 
        other impoundment) that is determined or deemed under 
        paragraph (2)(C) to meet the qualifying criteria.
          (C) The term ``qualifying criteria'' means, with 
        respect to a facility--
                  (i) the facility is constructed, operated, or 
                maintained for the generation of electric power 
                and uses for such generation only the 
                hydroelectric potential of a non-federally 
                owned conduit;
                  (ii) the facility has an installed capacity 
                that does not exceed 5 megawatts; and
                  (iii) on or before the date of enactment of 
                the Hydropower Regulatory Efficiency Act of 
                2012, the facility is not licensed under, or 
                exempted from the license requirements 
                contained in, this part.
  (b) Subject to subsection (c), the Commission may grant an 
exemption in whole or in part from the requirements of this 
part, including any license requirements contained in this 
part, to any facility (not including any dam or other 
impoundment) constructed, operated, or maintained for the 
generation of electric power which the Commission determines, 
by rule or order--
          (1) utilizes for such generation only the 
        hydroelectric potential of a conduit; and
          (2) has an installed capacity that does not exceed 40 
        megawatts.
  (c) In making the determination under [subsection (a)] 
subsection (b) the Commission shall consult with the United 
States Fish and Wildlife Service and the State agency 
exercising administration over the fish and wildlife resources 
of the State in which the facility is or will be located, in 
the manner provided by the Fish and Wildlife Coordination Act 
(16 U.S.C. 661, et seq.), and shall include in any such 
exemption--
          (1) * * *

           *       *       *       *       *       *       *

  (d) Any violation of a term or condition of any exemption 
granted under [subsection (a)] subsection (b) shall be treated 
as a violation of a rule or order of the Commission under this 
Act.

           *       *       *       *       *       *       *


                                  
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