[Senate Report 115-377]
[From the U.S. Government Publishing Office]
Calendar No. 663
115th Congress } { Report
SENATE
2d Session } { 115-377
======================================================================
BUREAU OF RECLAMATION PUMPED STORAGE HYDROPOWER DEVELOPMENT ACT
_______
November 26, 2018.--Ordered to be printed
_______
Ms. Murkowski, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany H.R. 1967]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Natural Resources, to which was
referred the bill (H.R. 1967) to amend the Reclamation Project
Act of 1939 to authorize pumped storage hydropower development
utilizing multiple Bureau of Reclamation reservoirs, having
considered the same, reports favorably thereon with an
amendment in the nature of a substitute, and recommends that
the bill, as amended, do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Bureau of Reclamation Pumped Storage
Hydropower Development Act''.
SEC. 2. AUTHORITY FOR PUMPED STORAGE HYDROPOWER DEVELOPMENT USING
MULTIPLE BUREAU OF RECLAMATION RESERVOIRS.
Section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C.
485h(c)) is amended--
(1) in paragraph (1), in the fourth sentence, by striking ``,
including small conduit hydropower development'' and inserting
``and reserve to the Secretary the exclusive authority to
develop small conduit hydropower using Bureau of Reclamation
facilities and pumped storage hydropower exclusively using
Bureau of Reclamation reservoirs''; and
(2) in paragraph (8), by striking ``has been filed with the
Federal Energy Regulatory Commission as of August 9, 2013'' and
inserting ``was filed with the Federal Energy Regulatory
Commission before August 9, 2013, and is still pending''.
SEC. 3. LIMITATIONS ON ISSUANCE OF CERTAIN LEASES OF POWER PRIVILEGE.
(a) Definitions.--In this section:
(1) Commission.--The term ``Commission'' means the Federal
Energy Regulatory Commission.
(2) Director.--The term ``Director'' means the Director of
the Office of Hearings and Appeals.
(3) Office of hearings and appeals.--The term ``Office of
Hearings and Appeals'' means the Office of Hearings and Appeals
of the Department of the Interior.
(4) Party.--The term ``party'', with respect to a study plan
agreement, means each of the following parties to the study
plan agreement:
(A) The proposed lessee.
(B) The Tribes.
(5) Project.--The term ``project'' means a proposed pumped
storage facility that--
(A) would use multiple Bureau of Reclamation
reservoirs; and
(B) as of June 1, 2017, was subject to a preliminary
permit issued by the Commission pursuant to section
4(f) of the Federal Power Act (16 U.S.C. 797(f)).
(6) Proposed lessee.--The term ``proposed lessee'' means the
proposed lessee of a project.
(7) Secretary.--The term ``Secretary'' means the Secretary of
the Interior.
(8) Study plan.--The term ``study plan'' means the plan
described in subsection (d)(1).
(9) Study plan agreement.--The term ``study plan agreement''
means an agreement entered into under subsection (b)(1) and
described in subsection (c).
(10) Tribes.--The term ``Tribes'' means--
(A) the Confederated Tribes of the Colville
Reservation; and
(B) the Spokane Tribe of Indians of the Spokane
Reservation.
(b) Requirement for Issuance of Leases of Power Privilege.--The
Secretary shall not issue a lease of power privilege pursuant to
section 9(c)(1) of the Reclamation Project Act of 1939 (43 U.S.C.
485h(c)(1)) (as amended by section 2) for a project unless--
(1) the proposed lessee and the Tribes have entered into a
study plan agreement; or
(2) the Secretary or the Director, as applicable, makes a
final determination for--
(A) a study plan agreement under subsection (c)(2);
or
(B) a study plan under subsection (d).
(c) Study Plan Agreement Requirements.--
(1) In general.--A study plan agreement shall--
(A) establish the deadlines for the proposed lessee
to formally respond in writing to comments and study
requests about the project previously submitted to the
Commission;
(B) allow for the parties to submit additional
comments and study requests if any aspect of the
project, as proposed, differs from an aspect of the
project, as described in a preapplication document
provided to the Commission;
(C) except as expressly agreed to by the parties or
as provided in paragraph (2) or subsection (d), require
that the proposed lessee conduct each study described
in--
(i) a study request about the project
previously submitted to the Commission; or
(ii) any additional study request submitted
in accordance with the study plan agreement;
(D) require that the proposed lessee study any
potential adverse economic effects of the project on
the Tribes, including effects on--
(i) annual payments to the Confederated
Tribes of the Colville Reservation under
section 5(b) of the Confederated Tribes of the
Colville Reservation Grand Coulee Dam
Settlement Act (Public Law 103-436; 108 Stat.
4579); and
(ii) annual payments to the Spokane Tribe of
Indians of the Spokane Reservation authorized
after the date of enactment of this Act, the
amount of which derives from the annual
payments described in clause (i);
(E) establish a protocol for communication and
consultation between the parties;
(F) provide mechanisms for resolving disputes between
the parties regarding implementation and enforcement of
the study plan agreement; and
(G) contain other provisions determined to be
appropriate by the parties.
(2) Disputes.--
(A) In general.--If the parties cannot agree to the
terms of a study plan agreement or implementation of
those terms, the parties shall submit to the Director,
for final determination on the terms or implementation
of the study plan agreement, notice of the dispute,
consistent with paragraph (1)(F), to the extent the
parties have agreed to a study plan agreement.
(B) Inclusion.--A dispute covered by subparagraph (A)
may include the view of a proposed lessee that an
additional study request submitted in accordance with
paragraph (1)(B) is not reasonably calculated to assist
the Secretary in evaluating the potential impacts of
the project.
(C) Timing.--The Director shall issue a determination
regarding a dispute under subparagraph (A) not later
than 120 days after the date on which the Director
receives notice of the dispute under that subparagraph.
(d) Study Plan.--
(1) In general.--The proposed lessee shall submit to the
Secretary for approval a study plan that details the proposed
methodology for performing each of the studies--
(A) identified in the study plan agreement of the
proposed lessee; or
(B) determined by the Director in a final
determination regarding a dispute under subsection
(c)(2).
(2) Initial determination.--Not later than 60 days after the
date on which the Secretary receives the study plan under
paragraph (1), the Secretary shall make an initial
determination that--
(A) approves the study plan;
(B) rejects the study plan on the grounds that the
study plan--
(i) lacks sufficient detail on a proposed
methodology for a study identified in the study
plan agreement; or
(ii) is inconsistent with the study plan
agreement; or
(C) imposes additional study plan requirements that
the Secretary determines are necessary to adequately
define the potential effects of the project on--
(i) the exercise of the paramount hunting,
fishing, and boating rights of the Tribes
reserved pursuant the Act of June 29, 1940 (54
Stat. 703, chapter 460; 16 U.S.C. 835d et
seq.);
(ii) the annual payments described in clauses
(i) and (ii) of subsection (c)(1)(D);
(iii) the Columbia Basin project (as defined
in section 1 of the Act of May 27, 1937 (50
Stat. 208, chapter 269; 57 Stat. 14, chapter
14; 16 U.S.C. 835));
(iv) historic properties and cultural or
spiritually significant resources; and
(v) the environment.
(3) Objections.--
(A) In general.--Not later than 30 days after the
date on which the Secretary makes an initial
determination under paragraph (2), the Tribes or the
proposed lessee may submit to the Director an objection
to the initial determination.
(B) Final determination.--Not later than 120 days
after the date on which the Director receives an
objection under subparagraph (A), the Director shall--
(i) hold a hearing on the record regarding
the objection; and
(ii) make a final determination that
establishes the study plan, including a
description of studies the proposed lessee is
required to perform.
(4) No objections.--If no objections are submitted by the
deadline described in paragraph (3)(A), the initial
determination of the Secretary under paragraph (2) shall be
final.
(e) Conditions of Lease.--
(1) Consistency with rights of tribes; protection,
mitigation, and enhancement of fish and wildlife.--
(A) In general.--Any lease of power privilege issued
by the Secretary for a project under subsection (b)
shall contain conditions--
(i) to ensure that the project is consistent
with, and will not interfere with, the exercise
of the paramount hunting, fishing, and boating
rights of the Tribes reserved pursuant to the
Act of June 29, 1940 (54 Stat. 703, chapter
460; 16 U.S.C. 835d et seq.); and
(ii) to adequately and equitably protect,
mitigate damages to, and enhance fish and
wildlife, including related spawning grounds
and habitat, affected by the development,
operation, and management of the project.
(B) Recommendations of the tribes.--The conditions
required under subparagraph (A) shall be based on joint
recommendations of the Tribes.
(C) Resolving inconsistencies.--
(i) In general.--If the Secretary determines
that any recommendation of the Tribes under
subparagraph (B) is not reasonably calculated
to ensure the project is consistent with
subparagraph (A) or is inconsistent with the
requirements of the Reclamation Project Act of
1939 (43 U.S.C. 485 et seq.), the Secretary
shall attempt to resolve any such inconsistency
with the Tribes, giving due weight to the
recommendations and expertise of the Tribes.
(ii) Publication of findings.--If, after an
attempt to resolve an inconsistency under
clause (i), the Secretary does not adopt in
whole or in part a recommendation of the Tribes
under subparagraph (B), the Secretary shall
issue each of the following findings, including
a statement of the basis for each of the
findings:
(I) A finding that adoption of the
recommendation is inconsistent with the
requirements of the Reclamation Project
Act of 1939 (43 U.S.C. 485 et seq.).
(II) A finding that the conditions
selected by the Secretary to be
contained in the lease of power
privilege under subparagraph (A) comply
with the requirements of clauses (i)
and (ii) of that subparagraph.
(2) Annual charges payable by licensee.--
(A) In general.--Subject to subparagraph (B), any
lease of power privilege issued by the Secretary for a
project under subsection (b) shall contain conditions
that require the lessee of the project to make direct
payments to the Tribes through reasonable annual
charges in an amount that recompenses the Tribes for
any adverse economic effect of the project identified
in a study performed pursuant to the study plan
agreement for the project.
(B) Agreement.--
(i) In general.--The amount of the annual
charges described in subparagraph (A) shall be
established through agreement between the
proposed lessee and the Tribes.
(ii) Condition.--The agreement under clause
(i), including any modification of the
agreement, shall be deemed to be a condition to
the lease of power privilege issued by the
Secretary for a project under subsection (b).
(C) Dispute resolution.--
(i) In general.--If the proposed lessee and
the Tribes cannot agree to the terms of an
agreement under subparagraph (B)(i), the
proposed lessee and the Tribes shall submit
notice of the dispute to the Director.
(ii) Resolution.--The Director shall resolve
the dispute described in clause (i) not later
than 180 days after the date on which the
Director receives notice of the dispute under
that clause.
(3) Additional conditions.--The Secretary may include in any
lease of power privilege issued by the Secretary for a project
under subsection (b) other conditions determined appropriate by
the Secretary, on the condition that the conditions shall be
consistent with the Reclamation Project Act of 1939 (43 U.S.C.
485 et seq.).
(4) Consultation.--In establishing conditions under this
subsection, the Secretary shall consult with the Tribes.
(f) Deadlines.--The Secretary or any officer of the Office of
Hearing and Appeals before whom a proceeding is pending under this
section may extend any deadline or enlarge any timeframe described in
this section--
(1) at the discretion of the Secretary or the officer; or
(2) on a showing of good cause by any party.
(g) Judicial Review.--Any final action of the Secretary or the
Director made pursuant to this section shall be subject to judicial
review in accordance with chapter 7 of title 5, United States Code.
(h) Effect on Other Projects.--Nothing in this section establishes
any precedent or is binding on any Bureau of Reclamation lease of power
privilege, other than for a project.
Purpose
The purpose of H.R. 1967 is to amend the Reclamation
Project Act of 1939 to authorize pumped storage hydropower
development utilizing multiple Bureau of Reclamation (BOR or
Reclamation) reservoirs.
Background and Need
Pumped storage hydropower projects generate electricity by
moving water between an upper and lower reservoir based on
electricity prices and demand, and other operational
considerations. Under current law, and pursuant to two
Memorandum of Understanding agreements between the BOR and the
Federal Energy Regulatory Commission (FERC) dated 1981 and
1992, Reclamation has jurisdiction over hydropower development
at its projects when hydropower is an authorized project
purpose. For those BOR facilities where hydropower is not an
authorized purpose, FERC has jurisdiction over hydropower
development. BOR asserts its permitting authority through a
Lease of Power Privilege (LOPP) program under the Reclamation
Project Act of 1939 (43 U.S.C. 485h(c)), while FERC is
authorized by the Federal Power Act to issue hydropower
licenses (16 U.S.C. 797).
Given this framework, a pumped storage project using two
Reclamation dams may require both a FERC license and a BOR LOPP
where one reservoir is authorized for hydropower development
but the other is not. Concerns have been raised that requiring
two separate Federal permitting processes for a single project
is inefficient and may serve as a disincentive for future
pumped storage development. H.R. 1967 clarifies that BOR has
exclusive authority to permit the development of non-Federal
pumped storage hydropower if the project uses two BOR-owned
facilities.
At the time of this legislation's consideration, the only
active non-Federal pumped storage hydropower project now facing
these dual processes is located in Washington State. The
proposed project seeks to use Banks Lake and Lake Roosevelt,
both of which are owned and operated by Reclamation. Developers
are currently seeking a FERC license for Banks Lake (the upper
reservoir), and will also be required to obtain a LOPP from BOR
for Lake Roosevelt (the lower reservoir).
This specific project is unique in that the project
developer initiated a FERC licensing process prior to the
introduction of H.R. 1967 and the Confederated Tribes of the
Colville Reservation and the Spokane Tribe of Indians of the
Spokane Reservation (Tribes), with reservations located on Lake
Roosevelt, have formally engaged on a number of issues through
that process. Additionally, these Tribes maintain that they
have dedicated significant resources to the process with the
expectation that FERC's dispute resolution process for study
requests, the Federal Power Act's mandatory conditioning
authority for the Department of the Interior, and State and
Federal fish and wildlife recommendations, would be available.
As such, a detailed process to address this single project that
was already seeking a FERC license has been included in H.R.
1967 as amended, but will not apply to any future pumped
storage projects employing two Reclamation facilities.
Legislative History
H.R. 1967 was introduced by Congressman Lamborn in the
House of Representatives on March 6, 2017. The bill was
favorably reported, as amended, by the Committee on Natural
Resources on March 27, 2017, and passed the House of
Representatives by voice vote on June 27, 2017.
The Water and Power Subcommittee held a hearing on H.R.
1967 on June 13, 2018.
The Senate Committee on Energy and Natural Resources met in
an open business session on October 2, 2018, and ordered H.R.
1967 favorably reported, as amended.
Committee Recommendation
The Senate Committee on Energy and Natural Resources, in
open business session on October 2, 2018, by a majority voice
vote of a quorum present, recommends that the Senate pass H.R.
1967, if amended as described herein.
Committee Amendment
During its consideration of H.R. 1967, the Committee
adopted an amendment in the nature of a substitute. The
substitute amendment made several technical changes to section
2 and added a section 3 that sets forth a detailed process for
the only active project that would be impacted by the Act. The
amendment is further described in the section-by-section
analysis.
Section-by-Section Analysis
Sec. 1. Short title
Section 1 provides a short title.
Sec. 2. Authority for pumped storage hydropower development using
multiple bureau of reclamation reservoirs
Section 2 amends the Reclamation Project Act of 1939 (43
U.S.C. 485h(c)) to provide the Secretary of the Interior
(Secretary) with the sole authority for development of pumped
storage hydropower exclusively using Reclamation reservoirs.
Sec. 3. Limitations of issuance of certain leases of power privilege
Subsection (a) defines key terms for section 3.
Subsection (b) prohibits the Secretary from issuing a LOPP
for the project unless the proposed lessee and the Tribes have
entered into a study plan agreement or the Secretary or the
Director of the Office of Hearings and Appeals (Director), as
applicable, make a final determination on a study plan
agreement or a study plan.
Subsection (c) specifies the requirements of a study plan
agreement, including allowing the parties to submit additional
comments and study requests, and requiring the proposed lessee
to study any potential adverse economic effects of the project
on the Tribes, including on annual payments to the Tribes as
part of the Grand Coulee Dam Settlement (Public Law 103-436).
This subsection also sets forth a protocol for communication
and consultation between the parties, and dispute resolution
procedures in the event the parties cannot resolve the study
plan agreement terms or implementation.
Subsection (d) requires the project developer to submit the
study plan to the Secretary for approval. The subsection also
requires the Secretary to make an initial determination to
approve, reject, or impose additional requirements on the study
plan within 60 days of submittal. This subsection further
allows the Tribes or the project lessee to submit to the
Director an objection to the Secretary's initial determination,
and requires the Director to hold a hearing on the record
regarding the objection and make a final determination within
120 days of receiving an objection.
Subsection (e)(1) requires the Secretary to include
conditions on the LOPP for the project, to be based on joint
recommendation of the Tribes, to ensure that the Tribes'
paramount hunting, fishing and boating rights are not
interfered with, that the project is consistent with those
rights, and that fish and wildlife are adequately and equitably
protected. This subsection also directs the Secretary to
attempt to resolve any inconsistency with the Tribes'
recommendations, and requires the Secretary to publish
findings, including a statement of the basis for each of the
findings.
Subsection (e)(2) directs the Secretary to condition the
LOPP to require the lessee to make direct payments to the
Tribes through reasonable annual charges for adverse economic
effects, and sets forth a process to determine the payment
amount and the settlement of disputes.
Subsection (e)(3) authorizes the Secretary to impose
additional conditions on the project consistent with the
Reclamation Project Act of 1939.
Subsection (f) allows the Secretary or any officer of the
Office of Hearing and Appeals to extend deadlines set by the
Act.
Subsection (g) states that final actions made pursuant to
this section remain subject to judicial review.
Subsection (h) states that nothing in section 3 is
precedential or binding on any future project.
Cost and Budgetary Considerations
The following estimate of the costs of this measure has
been provided by the Congressional Budget Office:
Under current law, nonfederal entities that propose to
develop hydropower at reservoirs administered by the Bureau of
Reclamation (BOR) must enter into a lease contract with BOR or
obtain a license from the Federal Energy Regulatory Commission
(FERC). The regulatory jurisdiction of each reservoir was
previously negotiated by the agencies to ensure than nonfederal
entities seeking to develop hydropower at a BOR reservoir would
be subject to only one permitting process.
At least one project proposed by a nonfederal entity to
develop pumped storage hydropower within BOR's Colombia Basin
Project (CBP) in the state of Washington would need to seek
permits from both agencies because it would be constructed on
two reservoirs; Banks Lake would require a BOR lease contract
and Lake Roosevelt reservoir would require a FERC license.
(Pumped storage hydropower is a type of storage for
hydroelectric energy used by electric power systems for load
balancing.) Enacting H.R. 1967 would simplify the regulatory
process by making BOR the sole regulatory authority for pumped
storage developers that are currently subject to regulation by
both BOR and FERC.
The bill also would require a nonfederal developer to
negotiate an agreement with the Confederated Tribes of Colville
Reservation and the Spokane Tribe of Indians of the Spokane
Reservation as a condition for a BOR lease contract on CBP
facilities. The agreement would establish the terms for
interactions between the developer and tribes. The plan would
involve preparing studies to analyze the potential adverse
effects of the project on annual payments due to the tribes
under their respective settlements; on hunting, fishing, and
boating rights of the Tribes; and on the environment. The bulk
of the costs for that work would be incurred by the developer
and any cost incurred by BOR would be paid to BOR by the
developer in advance.
Enacting H.R. 1967 would increase offsetting receipts
(which are recorded as reductions in direct spending) from
payments the project developer would make to BOR for additional
staff hours to negotiate lease agreements and to facilitate
development of the planned studies and agreement between the
developer and tribes. Using information from BOR, CBO estimates
that those offsetting receipts would total about $500,000 over
the 2019-2028 period; however, because BOR would spend those
amounts over the same period, the net effect on direct spending
would be negligible. Because enacting the bill would affect
direct spending, pay-as-you-go procedures apply. Enacting the
bill would not affect revenues.
In addition, FERC recovers 100 percent of its costs, which
are controlled by annual appropriations through user fees. Thus
any reduction in FERC's cost resulting from shifting its
licensing responsibilities to BOR would be offset by an equal
change in fees, resulting in no net change in discretionary
spending.
CBO estimates that enacting H.R. 1967 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2029.
H.R. 1967 contains no intergovernmental or private-sector
mandates as defined in Unfunded Mandates Reform Act.
On May 31, 2017, CBO transmitted a cost estimate for H.R.
1967, the Bureau of Reclamation Pumped Storage Hydropower
Development Act, as ordered reported by the House Committee on
Natural Resources on April 27, 2017. CBO's estimates of the
budgetary effects of implementing either piece of legislation
are similar; however, CBO estimates the Senate version would
affect direct spending.
The CBO staff contact for this estimate is Aurora Swanson.
The estimate was reviewed by H. Samuel Papenfuss, 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 H.R. 1967. The Act 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. 1967, as ordered reported.
Congressionally Directed Spending
H.R. 1967, as ordered reported, does not contain any
congressionally directed spending items, limited tax benefits,
or limited tariff benefits as defined in rule XLIV of the
Standing Rules of the Senate.
Executive Communications
The testimony provided by the Department of the Interior at
the June 13, 2018, hearing on H.R. 1967 follows:
Statement of Timothy R. Petty, Ph.D., Assistant Secretary for Water and
Science, U.S. Department of the Interior
Chairman Flake, Ranking Member Cortez Masto and members of
the Subcommittee, I am Dr. Tim Petty, Assistant Secretary for
Water and Science at the U.S. Department of the Interior
(Department). Thank you for the opportunity to provide the
views of the Department on H.R. 1967, the Bureau of Reclamation
Pumped Storage Hydropower Development Act. For the reasons I
will discuss below, the Department supports this bill.
H.R. 1967 aims to streamline the development and permitting
of non-federal pumped-storage hydroelectric projects on
Reclamation reservoirs. As noted in previous hearings, the
Department has an aggressive sustainable hydropower agenda,
which we continue to implement under existing authorities.
Pumped-storage can be a premiere, utility-scale energy
storage solution, able to provide both firm power and ancillary
services--to support the transmission of capacity and energy in
a safe, reliable manner. With that said, pumped-storage
deployment requires both significant, up-front capital
investment and specific topographical features. Therefore, we
see this bill as providing opportunities to streamline the
permitting process which may encourage the development of these
projects.
Reclamation is the second largest producer of hydroelectric
power in the United States, operating 53 hydroelectric power
facilities, comprising 14,730 megawatts of capacity. Each year,
Reclamation generates approximately 40 million megawatt-hours
of electricity (the equivalent demand of approximately 3.5
million U.S. homes) and producing over one billion dollars in
Federal revenue.
In 2010, the Department of the Interior, Department of
Energy, and Department of the Army (through the US Army Corps
of Engineers) entered a Memorandum of Understanding (MoU) for
Hydropower. The MoU advances reliable, low-cost, and
environmentally sustainable hydropower through a collaborative,
interagency framework, prioritizing like-goals and aligning
ongoing and future renewable energy development efforts.
Interior's MoU participation is administered through
Reclamation, given our mission and authorities in hydropower
generation.
In 2011 and 2012, Reclamation coordinated with MoU partners
to publish two resource assessment reports identifying
technical hydropower potential at non-powered Reclamation dams
and conduits. At this time, seven assessment sites, comprising
over 21 megawatts have been developed by non-federal entities--
with an additional nineteen assessment sites, comprising
approximately 74 megawatts in some stage of development.
Reclamation has also coordinated with MoU partners to
assess pumped-storage potential at existing Reclamation
reservoirs and associated projects. Specifically, the
assessment reports (one completed in 2013 and the other in
2014) evaluated the technical, environmental, and economic
merits of over 200 unique pumped-storage configurations at 60
Reclamation reservoirs that passed topography and storage
screening criteria. Reclamation is using these assessment
results to inform further study should sufficient customer
interest exists.
Reclamation would be happy to discuss with the Committee
these, and other MoU products. All MoU documents are available
on the Reclamation hydropower program webpage: https://
www.usbr.gov/power/.
In terms of non-federal development--both Reclamation and
the Federal Energy Regulatory Commission (FERC) are authorized
to permit the use of Reclamation dams and reservoirs to non-
federal entities for the purposes of hydropower development--
Reclamation via a Lease of Power Privilege (LOPP) contract or
FERC via a License.1 Per the Bureau of Reclamation Small
Conduit Hydropower Development and Rural Jobs Act of 2013
(Public Law 113-24), permitting authority on Reclamation
conduits is reserved, exclusively to Reclamation via a LOPP.
Reclamation is committed to facilitating the development of
non-federal hydropower on our existing assets--through either
Reclamation's or FERC's permitting processes. Acting on this
commitment, Reclamation has worked diligently with our customer
and stakeholder groups to define our LOPP permitting process,
detailed in Reclamation Manual Directive and Standard (D&S)
Lease of Power Privilege (LOPP) Processes, Responsibilities,
Timelines, and Charges (FAC 04-08). Reclamation has conducted
ongoing outreach to communicate and update LOPP permitting
process requirements and revised LOPP materials to ensure
consistent LOPP program administration. Current LOPP process
requirements implement Public Law 113-24 authorities related to
non-federal development on Reclamation conduits.
It is important to note that any non-federal hydroelectric
project developed on a Reclamation asset must not impair the
efficiency of any Reclamation generated power or water
deliveries, jeopardize public safety, or negatively affect any
other Reclamation project purpose. For these reasons, project
oversight is necessary--either through the LOPP contract or
FERC License conditioning requirements. In addition,
Reclamation would review any pumped storage application under
this authority to ensure the proposed LOPP does not conflict
with the statutory obligations of the Power Marketing
Administrations (PMAs). Consistent with Reclamation's existing
directives and standards, Reclamation would contact the
respective PMA when a non-federal developer approaches
Reclamation to develop a non-federal hydroelectric project, and
will work with the respective PMA on any necessary right of
first refusal or other agreement that preserves the PMA's
statutory responsibilities.
In total, 13 LOPP facilities currently operate on
Reclamation assets, comprising 46 megawatts. Nine of the 13
facilities were brought online since 2009, with three of the 13
online facilities initiated following the passage of Public Law
113-24. Likewise, 52 FERC facilities currently operate on
Reclamation assets, comprising 466 megawatts of capacity.
Approximately 50 non-federal projects--through either the LOPP
or FERC processes--are currently in some stage of active
development on Reclamation assets.
Based on feedback we have received from our customers and
operating partners, industry, and other stakeholders,
Reclamation, with this Committee's support, has been successful
in administering our leasing authorities.
Under current law, both Reclamation and FERC are authorized
to permit the use of Reclamation assets to non-federal entities
for the purposes of hydropower development. Reclamation and
FERC have entered two MoUs (one in 1981 and one in 1992) to
define jurisdictional boundaries and responsibilities. Per
those MoUs, each Reclamation asset is subject to one--and only
one--permitting process, meaning that non-federal entities
seeking to utilize a Reclamation asset for the purposes of
hydropower development would be required to obtain either a
Reclamation LOPP or FERC License--but not both.
The problem the bill addresses relates to non-federal
pumped storage projects utilizing multiple Reclamation
reservoirs which may, under the current regulatory framework,
require both a LOPP and FERC License in the circumstance that
one reservoir is within Reclamation's jurisdiction and the
other reservoir is within FERC's jurisdiction. Whereas both
agencies are acting within their respective authorities, the
result is a fragmented, cumbersome permitting process. The
legislation as drafted would minimize the regulatory burden in
these circumstances by requiring only a single LOPP approval.
The general premise of the MoU agreements is that, unless
otherwise specified in law, Reclamation assets reserved
exclusively for Federal power development under Federal
Reclamation law require a LOPP, and all other Reclamation
assets require a FERC License. An exception is for Reclamation
conduits, which were reserved for LOPP development by Public
Law 113-24.
Section 2 of the bill would specifically authorize
Reclamation to enter into LOPP contracts that permit the
development of non-federal pumped-storage hydropower utilizing
multiple Reclamation reservoirs. Reclamation interprets this
LOPP authorization to encompass all project works associated
with the non-federal pumped-storage project sited on multiple
Reclamation reservoirs. This language would streamline
permitting requirements and development of affected projects.
We interpret Section 2 as containing the same protections
for authorized, existing uses of Reclamation assets as exist in
any LOPP context. The LOPP authorization, for example, does not
affect existing contracts for the use of power and
miscellaneous revenues of a project for the benefit of users of
water from such project, and LOPP contracts cannot, in the
judgement of the Secretary, impair the efficiency of the
project for irrigation purposes. In practice, these protections
have meant that LOPP contracts generally do not modify the
existing project operations that project users have come to
rely on. To protect existing project users, Reclamation's
policy to implement LOPP contracts requires extensive
consultation among existing project users and the non-federal
LOPP applicant.
Reclamation is aware of one, active non-federal pumped-
storage project that would benefit from the proposed
legislation--sited on Banks Lake and Lake Roosevelt reservoirs,
which are part of Reclamation's Columbia Basin Project in
Washington State. Given the current regulatory framework, non-
federal project works sited on Banks Lake would proceed through
a FERC License--and those works sited on Lake Roosevelt would
proceed through a Reclamation LOPP. This legislation would
streamline the permitting from two distinct processes to one.
The bill's language would not affect non-federal pumped-
storage projects utilizing one Reclamation reservoir and a
second non-Reclamation reservoir (private or otherwise) outside
Reclamation jurisdiction. Such projects would be required to
obtain appropriate authorization to develop the Reclamation
reservoir (either LOPP or FERC License, dependent upon the
authorized reservoir purpose(s)), in addition to appropriate
authorization from the non-Reclamation regulator (likely FERC)
to develop the non-Reclamation reservoir. Reclamation would be
happy to work with the Committee--and FERC--to discuss
opportunities to streamline permitting and project development
in this instance.
In conclusion, as stated at previous hearings on
hydropower-related issues before this subcommittee, Reclamation
will continue to review and assess potential new hydropower
projects that provide a high economic return for the nation,
are both clean and energy efficient, and can be accomplished in
accordance with protections for fish and wildlife, the
environment, and recreation. As the nation's second largest
hydropower producer, Reclamation strongly believes in the past,
present and bright future of this important electricity
resource.
The Department is pleased to support this legislation.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
H.R. 1967, 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):
RECLAMATION PROJECTS ACT OF 1939
Act of August 4, 1939 (53 Stat. 1187; 43 U.S.C. 495 et seq.), as
amended
AN ACT
To provide a feasible and comprehensive plan for the
variable payment of construction charges on United States
reclamation projects, to protect the investment of the United
States in such projects, and for other purposes.
* * * * * * *
Sec. 9. (a) * * *
* * * * * * *
(c)(1) The Secretary is authorized to enter into contracts
to furnish water for municipal water supply or miscellaneous
purposes: Provided, That any such contract either (A) shall
require repayment to the United States, over a period of not to
exceed forty years from the year in which water is first
delivered for the use of the contracting party, with interest
not exceeding the rate of 3\1/2\ per centum per annum if the
Secretary determines an interest charge to be proper, of an
appropriate share as determined by the Secretary of that part
of the construction costs allocated by him to municipal water
supply or other miscellaneous purposes; or (B) shall be for
such periods, not to exceed forty years, and at such rates as
in the Secretary's judgment will produce revenues at least
sufficient to cover an appropriate share of the annual
operation and maintenance cost and an appropriate share of such
fixed charges as the Secretary deems proper, and shall require
the payment of said rates each year in advance of delivery of
water for said year. Any sale of electric power or lease of
power privileges, made by the Secretary in connection with the
operation of any project or division of a project, shall be for
such periods, not to exceed forty years, and at such rates as
in his judgment will produce power revenues at least sufficient
to cover an appropriate share of the annual operation and
maintenance cost, interest on an appropriate share of the
construction investment at not less than 3 per centum per
annum, and such other fixed charges as the Secretary deems
proper: Provided further, That in said sales or leases
preference shall be given to municipalities and other public
corporations or agencies; and also to cooperatives and other
nonprofit organizations financed in whole or in part by loans
made pursuant to the Rural Electrification Act of 1936. Nothing
in this subsection shall be applicable to provisions in
existing contracts, made pursuant to law, for the use of power
and miscellaneous revenues of a project for the benefit of
users of water from such project. The provisions of this
subsection respecting the sales of electric power and leases of
power privileges shall be an authorization in addition to and
alternative to any authority in existing laws related to
particular projects [, including small conduit hydropower
development] and reserve to the Secretary the exclusive
authority to develop small conduit hydropower using Bureau of
Reclamation facilities and pumped storage hydropower
exclusively using Bureau of Reclamation reservoirs. No contract
relating to municipal water supply or miscellaneous purposes or
to electric power or power privileges shall be made unless, in
the judgment of the Secretary, it will not impair the
efficiency of the project for irrigation purposes.
(2)(A) When carrying out this subsection, the Secretary
shall first offer the lease of power privilege to an irrigation
district or water users association operating the applicable
transferred conduit, or to the irrigation district or water
users association receiving water from the applicable reserved
conduit. The Secretary shall determine a reasonable time frame
for the irrigation district or water users association to
accept or reject a lease of power privilege offer for a small
conduit hydropower project.
(B) If the irrigation district or water users association
elects not accept a lease of power privilege offer under
subparagraph (A), the Secretary shall offer the lease of power
privilege to other parties in accordance with this subsection.
(3) The Bureau of Reclamation shall apply its categorical
exclusion process under the National Environmental Policy Act
of 1969 (42 U.S.C. 4321 et seq.) to small conduit hydropower
development under this subsection, excluding siting of
associated transmission facilities on Federal lands.
(4) The Power Resources Office of the Bureau of Reclamation
shall be the lead office of small conduit hydropower policy and
procedure-setting activities conducted under this subsection.
(5) Nothing in this subsection shall obligate the Western
Area Power Administration, the Bonneville Power Administration,
or the Southwestern Power Administration to purchase or market
any of the power produced by the facilities covered under this
subsection and none of the costs associated with production or
delivery of such power shall be assigned to project purposes
for inclusion in project rates.
(6) Nothing in this subsection shall alter or impede the
delivery and management of water by Bureau of Reclamation
facilities, as water used for conduit hydropower generation
shall be deemed incidental to use of water for the original
project purposes. Lease of power privilege shall be made only
when, in the judgment of the Secretary, the exercise of the
lease will not be incompatible with the purposes of the project
or division involved, nor shall it create any unmitigated
financial or physical impacts to the project or division
involved. The Secretary shall notify and consult with the
irrigation district or water users association operating the
transferred conduit before offering the lease of power
privilege and shall prescribe terms and conditions that will
adequately protect the planning, design, construction,
operation, maintenance, and other interests of the United
States and the project or division involved.
(7) Nothing in this subsection shall alter or affect any
existing agreements for the development of conduit hydropower
projects or disposition of revenues.
(8) Nothing in this subsection shall alter or affect any
existing preliminary permit, license, or exemption issued by
the Federal Energy Regulatory Commission under Part I of the
Federal Power Act (16 U.S.C. 792 et seq.) or any project for
which an application [has been filed with the Federal Energy
Regulatory Commission as of August 9, 2013] was filed with the
Federal Energy Regulatory Commission before August 9, 2013, and
is still pending.
(9) In this subsection:
(A) Conduit.--The term ``conduit'' means any Bureau of
Reclamation 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) Irrigation district.--The term ``irrigation district''
means any irrigation, water conservation or conservancy,
multicounty water conservation or conservancy district, or any
separate public entity composed of two or more such districts
and jointly exercising powers of its member districts.
(C) Reserved conduit.--The term ``reserved conduit'' means
any conduit that is included in project works the care,
operation, and maintenance of which has been reserved by the
Secretary, through the Commissioner of the Bureau of
Reclamation.
(D) Transferred conduit.--The term ``transferred conduit''
means any conduit that is included in project works the care,
operation, and maintenance of which has been transferred to a
legally organized water users association or irrigation
district.
(E) Small conduit hydropower.--The term ``small conduit
hydropower'' means a facility capable of producing 5 megawatts
or less of electric capacity.
* * * * * * *
[all]