[Federal Register Volume 60, Number 98 (Monday, May 22, 1995)]
[Notices]
[Pages 27154-27201]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12337]




[[Page 27153]]

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Part II





Department of Agriculture





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Forest Service



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Hydropower Applications

  Federal Register / Vol. 60, No. 98 / Monday, May 22, 1995 / 
Notices   
[[Page 27154]] 

DEPARTMENT OF AGRICULTURE

Forest Service
RIN 0596-AA47


Hydropower Applications

AGENCY: Forest Service, USDA.

ACTION: Notice of proposed policy and procedures; request for public 
comment.

-----------------------------------------------------------------------

SUMMARY: The Forest Service proposes to revise current policy and 
procedures, implemented in February 1987, concerning administration of 
hydropower authorizations and the processing of proposals for 
hydropower projects affecting National Forest System lands. This notice 
contains the proposed revision, clarifies the current policy, and 
modifies procedures. These revisions are necessary to make agency 
policy and procedures consistent with regulatory changes by the Federal 
Energy Regulatory Commission (FERC) and to address issues raised in 
appeals related to authorizing hydropower projects. This proposed 
revision also includes revised fee structures that developers would pay 
for hydropower projects on National Forest System lands exempted from 
FERC licensing. The fees were revised to ensure that the United States 
receives fair market value for the use of National Forest System lands 
for hydropower development. Public comment is invited.

DATES: Comments must be received in writing on or before July 21, 1995.

ADDRESSES: Send written comments to Director of Lands (2770), 4th 
Floor, South Wing, Auditors Building, Forest Service, USDA, P.O. Box 
96090, Washington, DC 20090-6090.
    The public may inspect comments received on this proposed policy in 
the Office of the Director of Lands, 4th Floor, South Wing, Auditors 
Building, 201 14th Street, SW., Washington, DC, between the hours of 
8:30 a.m. and 4:30 p.m. Those wishing to inspect comments are 
encouraged to call ahead (202-205-1367) to facilitate entry into the 
building.

FOR FURTHER INFORMATION CONTACT:
Questions about this proposal or requests for the entire Forest Service 
Handbook 2709.15, Hydropower Handbook, should be addressed to J. 
Kenneth Myers, Assistant Director, Realty Management Group, Lands Staff 
202-205-1248.

SUPPLEMENTARY INFORMATION:

Background and Need for Policy

    Presently, there are more than 240 non-Federal hydropower projects 
on National Forest System lands that are either licensed or exempted 
from licensing by the Federal Energy Regulatory Commission (FERC). 
Hydropower developers must receive authorization from both FERC and the 
Forest Service to construct and operate projects on National Forest 
System lands. The Forest Service is authorized under the Federal Power 
Act (16 U.S.C. 791 et seq.) to set mandatory terms and conditions in a 
FERC license necessary to protect National Forest System resources. The 
Forest Service also has authority under the Federal Land Policy and 
Management Act (FLPMA) (43 U.S.C. 1701) to issue special use 
authorizations for the occupancy and use of National Forest System 
lands for hydropower purposes. Both the Forest Service and FERC must 
review applications for proposed hydropower projects for adequacy and 
prepare environmental analyses under the National Environmental Policy 
Act (42 U.S.C. 4371 et seq.).
    Hyrdopower development proposals affecting National Forest System 
lands nearly quadrupled in 1981 as a result of legislation promoting 
the construction of energy projects utilizing renewable resources, 
namely, the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 
260) and the Energy Security Act of 1980 (Pub. L. 96-294; 42 U.S.C. 
8855). In 1984, the Supreme Court in Escondido Mutual Water Co. v. 
LoJolla Band of Mission Indians, 466 U.S. 765 (1984) (hereafter 
``Escondido ruling''), clarified the role of the Secretary of 
Agriculture in the licensing of hydropower projects on National Forest 
System lands. The Escondido ruling makes it clear that when National 
Forest System lands are to be occupied by a hydropower project, the 
Secretary may impose conditions on a FERC license necessary for the 
adequate protection and utilization of the National Forest. This 
affirmation of the Secretary's authority was incorporated into a 
February 1987 revision of Forest Service Manual Chapter 2770, which 
sets our broad direction to Forest Service managers on how to respond 
to applications for FERC licenses. Simultaneously, the agency issued a 
new Handbook (FSH 2709.15) in February 1987 to provide field direction 
on hydropower licenses and permits.
    In August 1989, the forest Service initiated a process to identify 
the topics or aspects of the agency's hydropower project direction that 
need revision.
    Numerous modifications to existing policy and procedures were 
identified during the process. As a result, the agency is proposing a 
revision of all hydropower direction in the Manual and Handbook. A 
discussion of the important modifications follows. Because of the 
length of the Handbook, only the proposed Manual direction and the 
following parts of the Handbook are set forth at the end of this 
Federal Register notice: (1) The Forest Service conditions for a FERC 
license, (2) special use authorization provisions for licensed 
projects, (3) direction on charging fees to hydropower developers, and 
(4) direction on rehabilitating dams in wilderness areas. Those 
interested in reviewing a copy of the entire Handbook may obtain a copy 
by calling the FOR FURTHER INFORMATION CONTACT listed in the beginning 
of this notice.

Modifications to Existing Policy and Procedures

1. Recognition of Hydropower as an Appropriate Use of National Forest 
System Lands

    Current Forest Service policy recognizes hydropower as an 
appropriate use of National Forest Service land but the policy is not 
clearly stated.
    In the proposed Manual revision, this agency policy is rewritten 
and clarified. These changes appear in the draft Forest Service Manual 
(FSM) in sections FMS 2770.2 and 2770.3. In summary, (1) energy is a 
recognized use of National Forest System lands; (2) hydropower is a 
valuable energy resource and a legitimate use of National Forest System 
lands; (3) sites with hydropower development potential are unique and 
rare; (4) the Forest Service will favorably consider hydropower 
development that does not conflict with other important uses or 
allocations of National Forest System resources; and (5) potential 
hydropower use should be carefully considered in the forest planning 
process.
2. Resource Balance

    The Forest Service must balance energy development with protection 
and use of National Forest System resources. Furthermore, the agency 
strives to mitigate adverse environmental impacts whenever possible. 
The Forest Service often sets instream flow requirements and requires 
other measures necessary for the adequate protection and utilization of 
National Forest System resources. Consistent with the Escondido ruling, 
FERC is precluded from requiring a less stringent instream flow than 
the Forest Service's required flow even if their information indicates 
less stringent flows are justified and in the public interest.
    Consistent with its responsibility to administer National Forest 
System lands [[Page 27155]] in the public interest, the Forest Service 
reviews and considers recommendations of other agencies, as well as the 
licensee, in developing its position. The agency, however, will not 
simply include recommendations of other agencies as part of its 
mandatory conditions. Independent analysis of all recommendations by 
the Forest Service is necessary to put in perspective the project's 
impact against the Forest Service's general responsibility to protect 
all National Forest System resources. The Manual direction is being 
revised to reflect the Forest Service's obligation to balance resource 
needs in arriving at decisions related to hydropower development. The 
proposed revisions appear in the proposed Manual in FSM 2770.3 and 
2773.2.

3. Relicensing Policy

    The Manual lacks specific Forest Service policy relicensing 
hydropower projects and the role of the agency.
    Under the proposed revision, the Forest Service would use the 
authority under section 4(e) of the Federal Power Act to condition the 
license of a project being relicensed. The responsibility has been 
affirmed by FERC. The proposed policy would recognize that such 
projects have been part of the environment for 50 years or more and 
that the Forest Service should not attempt, by virtue of its 
conditioning authority, to recreate the pre-license environment. 
However, the agency would mitigate unacceptable impacts to resources. 
The proposed changes appear in the Manual in FSM 2776.

4. Unlicensed Projects

    The Forest Service does not have a policy regarding unlicensed 
hydropower projects. Before 1976, the Federal Power Commission (now 
FERC) allowed the Forest Service to authorize by a special use 
authorization minor hydropower projects. This authority was withdrawn 
in 1976; however, several unlicensed projects still exit on National 
Forest System lands. The agency proposes policy and guidance regarding 
the special use authorizations for unlicensed projects which would 
encourage their owners to obtain appropriate authorization for FERC. 
This proposed change appears in the Manual in FSM 2772.24. The agency 
shall not authorize amendments to these projects unless they first 
comply with FERC's regulations.

5. Cooperative Forest Service/FERC Environmental Assessments

    Until recently, the Forest Service and FERC prepared separate 
environmental assessments but prepared environmental impact statements 
as cooperating agencies. The Forest Service has recently adopted an 
environmental analysis process that is generally conducted 
cooperatively with FERC. The new process is explained in the proposed 
Manual in FSM 2773.

6. Recreation Plans and Development

    The Forest Service proposes to clarify direction regarding 
recreation development and other recreation mitigation and enhancement 
needs associated with hydropower project development.
    A new Manual section (FSM 2774) has been developed, in accordance 
with section 4(e) of the Federal Power Act, addressing recreation 
development at hydropower projects. This proposed section clarifies the 
licensee's full responsibility for the recreation needs resulting from 
project development and operation. And, even though the Forest Service 
could operate recreation facilities at a hydropower project according 
to a written agreement with the licensee, the licensee would remain 
financially responsible for the operation, as well as for the 
construction, maintenance, and replacement of the recreation 
facilities. Several items related to recreation plan development, 
operation, liability, and user fees may be the subject of voluntary and 
consensual agreement between the Forest Service and the licensee. These 
items may include, but are not limited to, licensee responsibility for 
construction, operation, maintenance, and replacement of recreation 
facilities on National Forest System lands, collection of fees to 
offset Forest Service operating costs, and the need for recreation 
planning for lands beyond the area directly influenced by the project.
7. Wild and Scenic Rivers

    The Forest Service proposes to update the direction relating to 
hydropower development affecting designated and potential Wild and 
Scenic Rivers. The authority for this direction is section 7 of the 
Wild and Scenic Rivers Act (16 U.S.C. 1271-1287). The Forest Service 
proposes to prepare eligibility determinations for rivers not in the 
Wild and Scenic Rivers System that are affected by a hydropower 
proposal. Such determinations shall be prepared in a timely manner, 
usually accompanying the initial 4(e) report. Rivers found eligible for 
inclusion through this process would then be studied by the Forest 
Service for suitability. This Wild and Scenic River suitability study 
would be completed within 18 months or in conjunction with the 
environmental document for the hydropower project. While not legally 
bound to do so, it has been FERC's practice to refrain from acting upon 
the license application until completion of the suitability study if 
the Forest Service makes timely determinations. Under the proposed 
policy, for rivers found suitable under this process, the Forest 
Service shall forward recommendations for Wild and Scenic River 
designation to the Secretary of Agriculture for review and submission 
to Congress. Once a suitability determination is made and for a period 
not to exceed three years after Congress has received the formal 
recommendation for Wild and Scenic River designation from the 
Secretary, the Forest Service shall use its authority under section 
4(e) of the Federal Power Act to protect a suitable river from impacts 
that would ``invade or unreasonably diminish the values'' which make it 
eligible and suitable for inclusion in the Wild and Scenic Rivers 
System. If Congress fails to take action to protect the proposed river 
within three years, the Forest Service shall manage the river as a 
multiple-use resource and resume consideration of the original 
hydropower proposal. The proposed changes appear in the Manual in FSM 
2775.1
    For Congressionally designated rivers and designated study rivers, 
the Manual has been updated to clarify the procedures for section 7 
determinations pursuant to the Wild and Scenic Rivers Act. The updated 
direction is in the Manual in FSM 2775.1

8. Term of the Special Use Authorization.

    Current Forest Service direction for a special use authorization of 
a hydropower project exempted from the FERC licensing requirements does 
not address the amortization or financing period of the project.
    The Forest Service proposes to revise its direction for special use 
authorizations for exempt projects to require the issuing officer to 
consider the amortization and financing periods of a project in 
determining the term of the special use authorization. The proposed 
change appears in the Manual in FSM 2772.4.

9. Fees

    A proposed Forest Service policy on hydropower fees for licensed 
projects was published in the Federal Register in 1984 (49 FR, p. 
23902, June 8, 1984). Due to the length of time since that notice, the 
agency is again seeking comments on a revised fee structure 
[[Page 27156]] proposed in section 65.3 of the Handbook.
a. Fees for Projects Exempt from Licensing
    In 1987, the Forest Service implemented policy that set fair market 
value for use of National Forest System lands by hydropower projects 
exempted from licensing by FERC at three percent of the gross power 
sales from the project. This was based upon a market survey of land 
rental fees charged for hydropower use on private land. Upon 
administrative appeal, that policy was rescinded pending public notice 
and opportunity to comment. This notice seeks that involvement. In the 
interim, the Forest Service has been charging fair market value for the 
use of National Forest System lands, as determined by appraisal. Fees 
for the few projects that receive an exemption from licensing from FERC 
are contained in section 65.3 of the Handbook.
b. Fees for Licensed Projects
    To date, Forest Service policy has been that it has the authority 
to collect fees for hydropower projects licensed by FERC. The Forest 
Service, however, presently waives the collection of fees for these 
projects since FERC already collects fees for the use of National 
Forest System land; although the fees collected by FERC for run-of-the-
river projects (projects that operate whereby instantaneous inflow to 
the project equals instantaneous outflow) are often far below the 
market value of the use of those lands for power purposes.
    The Forest Service proposes that, for licensed projects, fees shall 
not be charged because to do so may be inconsistent with the Federal 
Power Act (16 U.S.C. 803(e)) (FSH 2709.15, sec. 65.2).This position is 
consistent with the Federal Land Policy and Management Act (43 U.S.C. 
1702(a)(9)) which does not require the collection of fees where another 
statute, in this case the Federal Power Act, also provides for fee 
collection.

10. New Mandatory 4(e) License Conditions

    The Forest Service is proposing to update and revise those 
conditions required to be incorporated in all licenses issued by FERC 
for projects occupying National Forest System lands. These conditions 
would be applied to all proposed projects that would occupy National 
Forest System lands. Once these conditions have gone through the public 
notice process and are included in the final Handbook, they will not be 
subject to appeal under Department of Agriculture administrative appeal 
regulations at 36 CFR 215 and 251. The proposed revisions of mandatory 
license conditions appear in the draft Handbook in section 55.6, 
exhibit 01.

11. New Special Use Authorization Provisions

    The Forest Service proposes to revise the special use authorization 
conditions for hydropower projects (FSH 2709.15, sec. 77, ex. 01). 
These revisions are based on issues raised in appeals related to the 
open-ended nature of special use authorization conditions. Those 
provisions identified as mandatory will no longer be subject to appeal 
if they are incorporated into the final notice of policy.

12. Other License and Special Use Authorization Conditions

    Other proposed conditions which may be used or adapted for use for 
a proposed project have also been developed in standardized form (Form 
FS 2700-4g) and are proposed in the Handbook. These conditions may be 
applied to projects as site-specific needs dictate. Their application 
is appealable, since the authorized Forest Officer has the discretion 
to require them. These conditions can be found in the Handbook in 
section 55.6, exhibit 01, and in section 77, exhibit 01.

13. Open-ended Nature of the Special-use Authorization

    Under existing procedures, the licensee of a FERC-licensed 
hydropower project on National Forest System lands obtains a special 
use authorization from the Forest Service after FERC issues a license. 
(The FERC license contains an explicit clause to this effect as a 
condition of the license.) This procedure places the licensee in the 
awkward position of accepting a license without knowing what conditions 
the special use authorization may impose on the project's operation.
    The Forest Service proposes to revise the Handbook procedures to 
limit the use of open-ended Forest Service conditions in the license 
(issued by FERC) and in the special use authorization issued by the 
Forest Service (Form FS-2700-4g); instead, the Forest Service would 
provide prospective licensees with a special use authorization prior 
to, and contingent upon, issuance of a license. This reversal of the 
special use authorization process will ensure that licensees will know 
ahead of time the requirements and costs associated with the special 
use authorization throughout the term of the license. In order to guard 
against modification in the design or operation of the project 
subsequent to issuance of the special use authorization, the special 
use authorization would contain a provision which states that it is to 
become effective only if the project is licensed substantially as it 
was proposed during the time the Forest Service was developing the 
conditions for the special use authorization. These changes would 
require modification of the Forest Service special use authorization 
(FSH 2709.15, sec. 77, ex. 01, Form FS-2700-4g) and of the FERC license 
conditions currently required by the Forest Service (FSH 2709.15, sec. 
55.6, ex. 01, condition 101).

14. Revocation of the Special Use Authorization

    Current policy provides for revocation of a hydropower project 
special use authorization based on breach of the terms or conditions 
therein or for reasons to further the public interest.
    Since FERC already has procedures in place which permit revocation 
of the license upon a public interest determination, the Forest Service 
believes that revocation of a special use permit on the basis of the 
public interest is redundant and adds unnecessary uncertainty to 
operations under the license. Therefore the Forest Service proposes to 
eliminate public interest as a basis for revocation of the special use 
authorization. The proposed change appears in the Handbook in section 
77, exhibit 01, condition V.B.
15. Modification of the Special Use Authorization

    At any time during the license term, which varies from 30 to 50 
years, FERC may reopen and amend the license if it is in the public 
interest. Furthermore, FERC must review the project as a new proposal 
when the licensee applies for a license renewal when the license term 
ends. Currently, FERC licenses contain a mandatory condition under 
section 4(e) of the Federal Power Act that allows the Forest Service to 
unilaterally change the terms of special use authorizations for 
hydropower projects after 30 years, subject to loosely defined 
guidelines.
    Forest Service special use regulations (36 CFR 251) provide for 
revision of special use authorization conditions at specified intervals 
to reflect changing times and conditions if the term of the special use 
authorization exceeds 30 years.
    Based on its review, the agency proposes to provide for revision of 
conditions in hydropower project special use authorization only if the 
project is amended or when the license terminates and the relicensing 
process is [[Page 27157]] initiated. In those cases where the Forest 
Service determines that special use authorization revision is necessary 
and appropriate prior to license termination or project amendment, the 
agency proposes to petition FERC to reopen the license. If FERC grants 
a Forest Service petition, FERC will be able to balance the need to 
amend the license against the hardship such amendment would cause the 
licensee. The Forest Service believes this system is more equitable 
than the current unilateral right of the agency to periodically change 
a special use authorization if its term is greater than 30 years. Under 
this proposal, the Forest Service would no longer require a section 
4(e) condition for reopening the FERC license at intervals. This 
proposed change appears in the draft Handbook in section 77, exhibit 
01, condition I.D.

16. Continuation of the Special Use Authorization During Annual 
Licenses

    The current Forest Service special use authorization does not 
provide for any interim authorization between termination of the 
original license and issuance of a new license through the relicensing 
process. During this period, a hydropower project operates on an annual 
license, which generally is granted and renewed by FERC as a matter of 
course until relicensing is completed.
    The Forest Service proposes to modify the terms and conditions of 
the special use authorization for hydropower projects to provide that 
it remains in force for a particular project during relicensing as long 
as (1) FERC issues annual licenses and (2) there is not a critical need 
to immediately modify the authorization to provide for protection and 
management of National Forest System resources before the issuance of a 
new license and special use authorization. The proposed change appears 
in the draft Handbook in section 77, exhibit 01, condition II.A.

17. Improvement Relocation

    The current special use authorization for hydropower projects 
requires the licensee to move hydropower and appurtenant facilities, if 
necessary, to accommodate future government access needs. This 
provision subjects the license to uncertainty regarding project costs. 
Accordingly, the Forest Service proposes to modify this provision 
slightly. Rather than speaking solely to relocation of facilities, the 
proposed direction would recognize that modification of hydropower 
facilities also may be appropriate under certain circumstances. The 
special use authorization also would make explicit that this provision 
would apply only in furtherance of Federal Government purposes. In 
other words, the licensee would not incur additional costs to 
accommodate other forest users absent a Federal need. Instead, other 
forest users would have to pay for facility relocation or modification 
expenses resulting from their actions or needs. The proposed change 
appears in the Handbook in section 77, exhibit 01, condition III.I.

18. Nonexclusive Use of National Forest System Lands

    The Forest Service may permit other uses of National Forest System 
lands within FERC-licensed project boundaries which do not materially 
interfere with the hydropower project. To this end, the special use 
authorization expressly prohibits exclusive use of National Forest 
System lands for project purposes and authorizes other nonconflicting 
uses on lands within a FERC-licensed project boundary. On the other 
hand, FERC typically authorizes licensees to exclude other uses from 
lands within the project boundary and holds the licensee responsible 
for accidents occurring therein. Due to this inconsistency between the 
Forest Service and FERC requirements concerning exclusive use of 
project lands, licensees contend that they may be held liable in tort 
claims for injuries occurring on project lands by users over which they 
had no knowledge or control.
    The agency agrees that the licensee should not be held liable for 
injuries or damage caused by the actions of another Forest Service 
permittee if the licensee had no knowledge of or control over the other 
permittee. The Forest Service does not believe it is in the interest of 
sound management of National Forest System lands to change its policy 
of authorizing nonconflicting uses within the licensed boundary; 
however, the agency does believe it is appropriate to revise the 
standard terms and conditions of the special use authorization for 
licensed or relicensed projects to permit the exclusion of the public 
from certain areas within the project boundaries for safety reasons. 
This proposed revision appears in the draft Handbook in section 77, 
exhibit 01, as condition I.G.

19. Plan Approvals, Amendments, and Approval Authority

    Current license and special use authorization provisions reserve to 
the Forest Service authority to approve project construction, design 
and mitigation plans. Based on this authority there is the potential 
for delays and additional costs resulting from (1) required Forest 
Service approval of plans, (2) Forest Service authority to modify 
plans, (3) Forest Service authority to require amendments to the 
project, (4) Forest Service authority to suspend construction 
operations for noncompliance with the terms of the special use 
authorization, and (5) Forest Service final approval authority. There 
is some question regarding the extent to which the Forest Service can 
exercise control over a FERC license through this reserved authority.
    In order to provide the licensee greater certainty regarding 
project operation, the Forest Service proposes to modify its standard 
4(e) license condition that currently allows the Forest Service to 
impose changes in the operation and location of project facilities once 
a project has been licensed and issued a special use authorization. The 
intent of this proposal is to limit the discretion of the Forest 
Service by requiring Forest Service consistency in the agency's review 
and approval of project plans. For example, if the Forest Service had 
initially approved the concept of a powerhouse on the south side of a 
stream, it should not require the licensee to move the powerhouse to 
the north side during review of the final plan absent compelling 
information (justifying the change) not available during the initial 
review.
    The proposed license conditions also provide for expedited higher 
level resolution of disputes regarding Forest Service approval of plans 
and Forest Service imposed suspensions. While the Forest Service will 
consult with FERC and the licensee on such disputes to the extent 
possible, it ultimately is and will remain the Forest Service's 
responsibility to make the final determination when licensee actions 
affect surface resources on National Forest System lands. Note that 
FERC has responsibility for dam safety and overall public safety, and 
therefore the Forest Service should not interfere with FERC's 
responsibilities in these areas. These changes appear in the Handbook 
in section 55.6, exhibit 01, conditions 102, 105, and 106.

20. Annual Review of Project

    A standard license condition used by the Forest Service requires 
the licensee to meet annually with the Forest Service and review the 
project with a subsequent report to FERC. In order to reduce the amount 
of paperwork and reviews and to increase flexibility, the Forest 
Service proposes to modify the condition to require a meeting only 
every 5 years or for a period mutually agreeable to the Forest Service 
and the [[Page 27158]] licensee. The proposed change is in the draft 
Handbook in section 55.6, exhibit 01, condition 104.

21. Project Rehabilitation in Wilderness

    The existing Manual and Handbook do not address hydropower project 
maintenance and rehabilitation in units of the National Wilderness 
Preservation System. These projects were in place before the 
establishment of the wilderness area. Direction would be incorporated 
in the Hydropower Handbook with this proposed revision. Maintenance and 
rehabilitation of hydropower projects in wilderness is necessary for 
safety and other reasons but it would be achieved subject to the 
provisions and intent of the Wilderness Act (16 U.S.C. 1131-1136). 
Decisions on access to the project would consider, among other things, 
the type of rehabilitation, the most reasonable and efficient method to 
conduct such work, the manner in which the original project was 
constructed, and ways in which to minimize the impact on wilderness 
values. Due to the restrictions imposed by the Wilderness Act, project 
rehabilitation must often be done by primitive means and will be more 
costly than similar project maintenance and rehabilitation outside 
designated wilderness. Nevertheless, necessary project rehabilitation 
would be allowed. The proposed revision is in the handbook, section 
64.7.

Environmental Impact

    This proposed policy would establish direction to Forest Service 
employees on the review, authorization, and administration of 
hydropower proposals on National Forest System lands. The environmental 
impacts of proposed projects will be addressed in environmental 
documents specific to each proposed project. Section 31.1b of Forest 
Service Handbook 1909.15 (57 FR 43180, Sept. 18, 1992) excludes from 
documentation in an environmental assessment or impact statement 
``rules, regulations, or policies to establish Service-wide 
administrative procedures, program processes, or instructions.'' The 
agency's preliminary assessment is that this policy falls within this 
category of actions and that no extraordinary circumstances exist which 
would require preparation of an environmental assessment or 
environmental impact statement. A final determination will be made upon 
adoption of the final policy.
Controlling Paperwork Burdens on the Public

    This policy does not contain any recordkeeping or reporting 
requirements or other information collection requirements as defined in 
5 CFR 1320 and, therefore, imposes no paperwork burden on the public. 
Accordingly, the review provisions of the Paperwork Reduction Act of 
1980 (44 U.S.C. 3507) do not apply. The Forest Service uses information 
provided to FERC as a basis for reviewing hydropower project impacts on 
National Forest System lands. Any further additional information is 
covered by the Forest Service's special use regulations (36 CFR part 
251).

Regulatory Impact

    This proposed policy has been reviewed under USDA procedures and 
Executive Order 12866 on Regulatory Planning and Review. It has been 
determined that this is not a significant rule. The policy will not 
have an annual effect of $100 million or more on the economy nor 
adversely affect productivity, competition, jobs, the environment, 
public health or safety, nor State or local governments. This rule will 
not interfere with an action taken or planned by another agency nor 
raise new legal or policy issues. Finally, this action will not alter 
the budgetary impact of entitlements, grants, use fees, or loan 
programs or the rights and obligations of recipients of such programs. 
Accordingly, this proposed policy is not subject to OMB review under 
Executive Order 12866.
    Moreover, this proposed policy has been considered in light of the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.), and it has been 
determined that this action will not have a significant economic impact 
on a substantial number of small entities as defined by that Act. In 
short, little or no effect on the National economy will result from 
this policy, since this action consists primarily of technical and 
administrative changes to existing policy and procedures. In fact, it 
may reduce costs to the Government and users of the National Forest 
System.

Takings Executive Order

    This proposed policy has been analyzed in accordance with the 
principles and criteria contained in Executive Order 12630, and it has 
been determined that this proposed policy does not pose the risk of 
taking of Constitutionally protected private property.
    First, special use authorizations are not private property 
compensable under the Fifth Amendment if taken by the Government. The 
special use authorization is a benefit or privilege bestowed on a 
private individual to use National Forest System lands. In the event 
that special use authorizations are found to have certain contractual 
rights associated with them, those rights are consensual in nature and 
require the prior informed consent of the parties to form the 
agreement. Such consensual agreements generally do not result in 
takings claims against the Government. Finally, the proposed policy 
does not purport to modify the existing special use authorizations. 
Instead, only special use authorizations that will be issued after the 
date this guidance is adopted will be subject to the revisions and 
clarification described herein.

Comments Invited

    The proposed policy and procedures for hydropower uses of National 
Forest System lands would replace existing policy and procedures 
contained in the Forest Service Manual (FSM 2770) and Forest Service 
Handbook (FSH 2709.15). The text of the Manual and sections of the 
Handbook containing the Forest Service standard license 4(e) conditions 
and the Forest Service special use authorization conditions for 
licensed projects are set out at the end of this notice. Single copies 
of the entire Handbook are available free of charge upon request to the 
further information contact listed at the beginning of this notice. The 
Forest Service invites written comments and will analyze and consider 
those comments in the development of the final notice of policy which 
will be published in the Federal Register.

    Dated: May 15, 1995.
David G. Unger,
Associate Chief.
Proposed Manual Revision

    Note: The Forest Service organizes its directive system by 
alpha-numeric codes and subject headings. Only those sections of the 
Forest Service Manual and Handbook that are the subject of this 
notice are set out here. The audience of this direction is Forest 
Service employees charged with reviewing, processing, and approving 
hydropower proposals on National Forest System lands.

Title 2700--Land Uses Management

Chapter 2770--Federal Power Act Projects

Contents

2770.1  Authority
2770.2  Objectives
2770.3  Policy
2770.4  Responsibility
2770.41  Chief
2770.42  Director of Lands, Washington Office
2770.43  Regional Forester
2770.6  Federal Energy Regulatory Commission (FERC) Responsibility 
and Authority
2771.  Forest Service involvement with FERC on Hydropower 
Projects [[Page 27159]] 
2771.1  Response to Applications
2771.11  Response to License Applications
2771.12  Response to Preliminary Permit Applications
2771.13  Response to Exemption Applications
2771.2  Requirements
2771.21  Section 4(e) Reports
2771.22  Section 4(e) Conditions
2771.23  Projects Exempted from Licensing
2771.24  National Forest Purposes
2771.25  Recommendation that Project is Not in Public Interest
2771.3  Coordination
2771.31  Other Actions within Project Boundaries
2771.32  Project Surrender, Termination, or Abandonment
2771.33  Federal Takeover of Project Facilities
2771.4  Federal Power Act and Powersite Withdrawals
2771.41  Exchange within Federal Power Act and Powersite Withdrawals
2771.42  Retraction of Licensed Project Boundaries and Withdrawals
2772  Special-Use Authorizations
2772.1  Applications
2772.2  Authorization of Projects
2772.21  Authorization of Licensed Projects
2772.22  Denial of Special-use Authorization to Licensed Project
2772.23  Authorization of Projects under Preliminary Permit
2772.24  Authorization of Projects Exempt from Licensing
2772.25  Requirement To Have Special-use Authorization
2772.3  Conditions
2772.4  Term
2772.5  Revocation or Suspension of Special-use Authorization
2772.6  Special-use Authorization Fees
2773  Environmental Analysis
2773.1  Environmental Analysis and Documentation
2773.11  Licensed Projects
2773.12  Projects Exempted from Licensing
2773.2  Mitigation
2774  Recreation Uses at Hydropower Projects
2774.1  Licensee Responsibility
2774.2  Facility Operation, Maintenance, and Replacement
2774.3  Campgrounds
2774.4  Signs
2774.5  Project Recreation Plan
2774.6  Recreation Planning during Relicensing
2775  Special Management Areas
2775.1  Projects Proposed in Wild and Scenic River Areas
2775.11  Projects Proposed on All Other Waterways
2775.12  Projects Proposed on Wild and Scenic Rivers on Lands in 
Conservation Units in Alaska
2775.2  Projects Proposed in Designated Wilderness Areas
2775.3  Projects Proposed in Roadless Study Areas
2775.4  Projects Proposed in Research Natural Areas
2775.41  Projects Proposed in Candidate Research Natural Areas
2775.5  Projects Proposed in Other Special Areas
2775.51  Projects Proposed in Study Special Areas
2775.6  Projects Proposed in State-Designated Special Areas
2775.7  Projects Proposed in National Monuments
2776  Relicensing
2776.1  Section 4(e) Conditions in New License
2776.2  Removal of Project
Title 2700--Land Uses Management

Chaper 2770--Federal Power Act Projects

    This chapter covers the review of proposals for hydropower 
projects; the use of authority granted by section 4(e) of the Federal 
Power Act (16 U.S.C. 797(e)) to set conditions in licenses for 
hydropower projects issued by the Federal Energy Regulatory Commission 
(FERC) for the protection and utilization of National Forest System 
lands; the granting of special-use authorizations for hydroelectric 
projects; and the granting of special-use authorizations for primary 
transmission lines subject to licensing by FERC that are partly or 
wholly on National Forest System land. The chapter also covers the 
relationship of the Forest Service and FERC during project planning, 
construction, and operation.

2770.1--Authority

    See FSM 2701.1 for statutory authorities that govern the general 
issuance and administration of special use authorizations on National 
Forest System lands. The following statutes and regulations 
specifically govern the issuance and administration of hydropower 
projects on National Forest System lands:
    1. The Federal Power Act of August 26, 1935 (49 stat. 847; 16 
U.S.C. 797). This act grants the Forest Service the authority to 
require conditions in a Federal Energy Regulatory Commission (FERC) 
license for a hydropower project on National Forest System lands.
    2. The Wild and Scenic Rivers Act of October 2, 1968 (82 Stat. 906; 
16 U.S.C. 1271-1287). This act, specifically in sections 7(a), 7(b) and 
5(d), sets forth Forest Service responsibilities for determining 
acceptability for projects that impact designated and study wild and 
scenic rivers. Section 7 gives the Secretary of Agriculture the 
authority to determine whether a proposed project would be on or 
directly affect a wild and scenic river or would degrade or 
unreasonably diminish the values for which the river was designated. 
Under section 5(d), the Forest Service is authorized to study rivers 
for suitability for designation as wild and scenic.
    3. Title V. Section 501, Federal Land Policy and Management Act of 
October 21, 1976, as amended (90 Stat. 2743; 43 U.S.C. 1761-1771). 
Title V of the Federal Land Policy and Management Act (FLPMA) 
authorizes the Secretary of Agriculture to issue, renew, or grant 
permits or easements to occupy, use, or traverse National Forest System 
lands for the generation, transmission, and distribution of electric 
power. Under section 501, as amended by the Energy Policy Act of 
October 24, 1992 (106 Stat. 2776; 42 U.S.C. 13201), permits or 
easements are not required for the continued operation of projects 
licensed by FERC or exempted as of October 24, 1992, unless additional 
project area or the project had received a permit or easement under 
section 501 of FLPMA at some time in the past.
    4. Title 36, Code of Federal Regulations, Part 297, Subpart A. This 
regulation provides direction concerning projects affecting wild and 
scenic rivers administered in whole or in part by the Secretary of 
Agriculture.
2770.2--Objectives

    1. To facilitate hydropower production where it is compatible with 
the purposes for which a National Forest was created or acquired.
    2. To ensure that planning, construction, and operation of 
hydropower projects are performed in a manner that provides adequate 
protection and utilization of National Forest System lands and 
resources.
    3. To ensure that Forest Service planning and the evaluation of the 
hydropower proposals recognize the rarity of sites which are suitable 
for potential hydropower development because of a unique combination of 
resources and circumstances.

2770.3--Policy

    1. Hydropower development is an appropriate use of National Forest 
System land, unless one or more of the following circumstances exist:
    a. Hydropower development is inconsistent with and would interfere 
with the purposes for which the affected area was created or acquired 
as determined by the following: The Organic Administration Act, the 
Multiple Use-Sustained Yield Act, subsequent acts making special 
designations within the National Forest System, and legislation or 
Presidential proclamation specifically establishing a National Forest.
    b. Hydropower development is inconsistent with the management 
direction in the Forest land and resource management plan, and 
significant adverse effects on the [[Page 27160]] management and 
utilization of National Forest System resources cannot be mitigated 
sufficiently to achieve plan consistency with the Forest plan.
    c. The project is not in the public interest (FSM 2771.25)
    2. Weight energy resource development with the protection and 
utilization of other National Forest resources when determining what 
mitigation is necessary to provide the best balance of protection and 
utilization of those resources.
    3. Cooperate and coordinate activities in the development of the 
Nation's energy resources for hydropower with the Federal Energy 
Regulatory Commission (FERF); Federal, State, and local resource 
agencies; tribal governments; coordinating bodies, such as the 
Northwest Power Planning Council; and potential developers.

2770.4--Responsibility

2770.41--Chief

    1. For projects proposed in designated wilderness areas or other 
special areas which require Presidential approval:
    a. The Chief reserves authority to approve reports and sign 
correspondence that make recommendations to the Secretary for approval 
of projects when the Forest Service considers them to be in the public 
interest, and
    b. The Chief may deny approval for projects when the Forest Service 
considers them not to be in the public interest (FSM 1923 and FSM 
2323).
    2. The Chief also reserves the authority to approve a Forest 
Service recommendation to FERC that the Federal Government take over a 
project whose license period is ending (FSM 2771.33).

2770.42--Director of Lands, Washington Office

    Except for the authority reserved to the Chief (FSM 2770.41), the 
Director of Lands, Washington Office has authority and responsibility 
to:
    1. Approve reports and sign correspondence to the Federal Energy 
Regulatory Commission (FERC) relating to activities under the Federal 
Power Act, as amended.
    2. Represent the Department of Agriculture in contacts with FERC at 
the National level in matters relating to hydropower projects (FSM 
1043).
    3. Coordinate the review of matters pertaining to hydropower 
projects with other agencies of the Department.
    4. Control the assignment of Forest Service personnel as witnesses 
in FERC hearings, secure Office of the General Counsel review, and 
approve testimony prior to its being filed with FERC.
    5. Review prior to signature, any Regional Forester decision for 
hydropower project proposals involving section 7 of the Wild and Scenic 
Rivers Act. (See review and routing procedures in FSH 2709.15, sec. 
24.41)
    6. Review prior to signature, any Regional Forester decision 
involving section 4(e) of the Federal Power Act, except when the 
Director specifically waived such a review because the Regional 
Forester has staff sufficiently experienced in hydropower procedures. 
(See review and routing procedures in FSH 2709.15, sec. 52.2)
    7. Approve recommendations to FERC for the Federal Government to 
take over hydropower project facilities (FSM 2771.33).

2770.43--Regional Forester

    The Regional Forester has authority and responsibility to:
    1. Subject to the delegations of authority to the Washington Office 
Director of Lands in FSM 2770.42, paragraphs 5 and 6, approve reports 
and signed correspondence to FERC on behalf of the Secretary of 
Agriculture relating to licensing activities under the Federal Power 
Act, as amended, including reports under section 4(e) of the Federal 
Power Act, except as noted in the following paragraph 8. This authority 
may not be redelegated.
    2. Establish Region-wide quidelines for analysis and administration 
of hydropower projects on National Forest System lands.
    3. Coordinate with FERC staff as necessary.
    4. Maintain an information base for use in managing Federal Power 
Act project activities.
    5. Respond to FERC on behalf of the Secretary of Agriculture on 
applications for licenses. Coordinate review of applications for FERC 
licenses, field investigations, and preparation of 4(e) reports.
    6. Respond to FERC on behalf of the Secretary of Agriculture on 
applications for preliminary permits and exemptions.
    7. Establish procedures for contacting licensees or special-use 
holders at least 5 years prior to the expiration of their license or 
special-use authorization to ascertain their intentions concerning 
continuation of the project.
    8. For projects proposed in wilderness areas or other areas which 
require Presidential approval:
    a. Prepare, for the Chief's review, the environmental impact 
statement (EIS) necessary for the Secretary to make recommendations to 
the President concerning such projects.
    b. Approve reports recommending to the Chief approval of projects 
when the Forest Service considers them to be in the public interest.
    c. Approve reports and sign correspondence for denial of approval 
when the Forest Service considers projects not to be in the public 
interest.
    The authority to sign the recommendation to the Chief or to deny 
approval for a project may not be redelegated.
    9. Subject to the delegation of authority to the Washington Office 
Director of Lands (FSM 2770.42, para. 5 and 6) approve reports and sign 
correspondence to FERC on behalf of the Secretary of Agriculture 
relating to decisions made under section 7 of the Wild and Scenic 
Rivers Act for hydropower projects.
    10. As appropriate, authorize Forest Supervisors to correspond 
directly with FERC on all administrative and construction matters 
during construction and operation of a project.
    11. Issue special-use authorizations for hydropower projects that 
have been licensed or exempted from licensing by FERC. The authority to 
issue special-use authorizations for these projects may be redelegated 
to the Forest Supervisor, but the authority may not be redelegated by 
the Forest Supervisor to lower level officials.

2770.6--Federal Energy Regulatory Commission (FERC) Responsibility and 
Authority

    Forest Service officers must coordinate actions regarding 
hydropower matters with the Federal Energy Regulatory Commission 
(FERC). Review the information regarding FERC in FSH 2709.15, chapter 
10.
2771.--Forest Service Involvement With FERC on Hydropower Projects

    For a summary of the typical steps involved in the hydropower 
approval and administration process, see FSH 2709.15, sec. 28.

2771.1--Response to Applications

2771.11--Response to License Applications

    Use the 4(e) report (FSM 2771.2) to state the official position of 
the Secretary regarding the licensing of specific projects affecting 
National Forest System land and resources (FSH 2709.15, ch. 50). Where 
appropriate, include comments on the effects of the project on the 
programs of the Department of Agriculture. Also, see FSM 2774.5 for 
coordination with license applicants on recreation project 
plans. [[Page 27161]] 

2771.12--Response to Preliminary Permit Applications

    The Regional Forester must provide comments to FERC on potential 
problems, concerns, and conditions for applications for preliminary 
permits on projects affecting National Forest System lands and 
resources. Do not prepare a 4(e) report for a preliminary permit; 
submit these comments through correspondence.

2771.13--Response to Exemption Applications

    The Regional Forester shall identify potential problems and provide 
comments and recommendations to FERC on applications for exemptions. 
Incorporate standard and special conditions required on exemptions in 
the special-use authorization. Do not prepare 4(e) report for an 
exemption; submit these comments through correspondence.

2771.2--Requirements

2771.21--Section 4(e) Reports

    Respond to a Federal Energy Regulatory Commission (FERC) notice 
that an application for license is ready for environmental analysis 
with a report pursuant to section 4(e) of the Federal Power Act 
(hereafter called a 4(e) report) for any project that would occupy 
National Forest System land. An original and 8 copies of the 4(e) 
report must be provided to FERC within 60 days of the FERC notice. 
FERC's regulations allow FERC to consider 4(e) conditions filed after 
the 60-day deadline as recommendations rather than mandatory 
conditions. The exception is when FERC grants the Forest Service an 
extension of time because of extenuating circumstances or because the 
Forest Service and FERC are conducting a cooperative environmental 
analysis under the National Environmental Policy Act (NEPA). In these 
cases the Forest Service must provide preliminary 4(e) reports within 
the 60-day timeframe and final 4(e) conditions within 45 days after the 
cooperative NEPA analysis is completed (FSH 2709.15, sec. 13.32).
    Regional Foresters shall transmit draft 4(e) reports (preliminary 
and final) to the Washington Office Director of Lands for procedural 
review prior to the Regional Forester's decision and transmittal to 
FERC in conformance with the review and routing procedures in FSH 
2709.15, section 52.2. However, if the Washington Office Director of 
Lands notifies the Regional Forester that such reviews are not 
necessary because of sufficient Regional staff experience in hydropower 
matters, the Regional Forester may send 4(e) reports to FERC without 
Washington Office review. The Regional Forester shall send copies of 
the signed 4(e) reports to the Washington Office Director of Lands.
    The 4(e) report should provide FERC with:
    1. A statement of the conclusion as to the project's consistency or 
interference with the purposes for which the National Forest was 
created or acquired, and as appropriate, advice on whether the project 
is in the public interest (FSM 2771.24 and 2771.25 and FSH 2709.15, 
sec. 27).
    2. Appropriate comments regarding the project application for 
license.
    3. Conditions (FSM 2771.22) to be included in the FERC license 
necessary for the adequate protection and utilization of the National 
Forest System lands and resources (FSH 2709.15, ch. 50).
    4. The appropriate environmental documentation and documentation of 
decision in support of the conditions that the Forest Service will 
require in the license 4(e) conditions) and in the special-use 
authorization (FSH 2709.15, ch. 30).
    5. A copy of the special-use authorization that will be issued if 
the project is licensed (FSH 2709.15, sec. 77). See FSH 2709.15, 
chapter 50, for instructions on responding to FERC under various 
situations.

2771.22--Section 4(e) Conditions

    For a project which would occupy National Forest System lands, the 
Forest Service may impose conditions through the 4(e) report the FERC 
must make part of any license it issues for the project. Such 
conditions must be reasonable and necessary for the adequate protection 
and utilization of National Forest System lands and resources.
    Do not impose the recommendations of other agencies as 4(e) 
conditions without an independent analysis by the Forest Service so 
that they become Forest Service conditions. Generally, limit 4(e) 
license conditions to those measures that have substantial effects on 
the economics or siting of the project. Other conditions of a more 
routine nature relating to project impacts on National Forest Systems 
lands may be imposed through the special-use authorization (FSM 
2772.3). (See FSH 2709.15, sec. 21.4, for limits on the scope of 4(e) 
conditions for amendments to a license see also FSH 2709.15, sec. 
52.23, 55.1, and 55.6). Chapter 70 of the Handbook contains direction 
on the forms to complete for various special-use permits for hydropower 
projects. (See FSH 2709.15, sec. 77, ex. 01 through 04).

2771.23--Projects Exempted From Licensing

    An exemption from licensing (FSH 2709.15, sec. 12) by FERC does not 
grant or imply a grant to any land-use rights to the exemptee. Advise 
FERC of substantial concerns regarding potential effects of exempt 
project proposals on National Forest resources. Make an independent 
determination of whether to authorize such projects (FSM 2772.2).

2771.24--National Forest Purposes

    FERC may not license projects which it finds would be inconsistent 
and that would interfere with the purposes for which the National 
Forest was created or acquired (section 4(e) of the Federal Power Act). 
Those purposes are defined in the Organic Administration Act of 1897 
(16 U.S.C. 473 et. seq.) and expanded by the Multiple-Use Sustained-
Yield Act of 1960 (16 U.S.C. 528 et. seq.) and subsequent acts (FSM 
2701.1). In addition, some National Forest enabling legislation or 
proclamations state specific purposes. Since Congress has the authority 
to change or expand the National Forests, those purposes do not have to 
have been stated at the time the National Forest was originally 
reserved or acquired to be ``purposes for which they were created or 
acquired.'' Specific legislation (the Wilderness Act for example; 16 
U.S.C. 1131-1136) and specific designations (Research Natural Areas for 
example) also determine the purposes for which portions of the National 
Forests are created or acquired.
    Through the Forest and Rangeland Renewable Resources Planning Act 
of 1974 (16 U.S.C. 1601 et seq; as amended by the National Forest 
Management Act of 1976), Congress requires land and resources 
management planning to determine management direction for the National 
Forests. Such plans must be consistent with the purposes for which 
those lands were created or acquired. Therefore, also use the Forest 
land and resource management plan in determining the consistency of a 
project with the purposes for which the National Forest was created or 
acquired. Fully disclose to FERC in the 4(e) report, a recommendation 
concerning the nature and extent of any significant inconsistency or 
interference the project would cause for those purposes. FERC makes the 
decision whether to authorize the project through licensing. In so 
doing, FERC makes the actual determination regarding whether the 
project is inconsistent with or would interfere with the purposes for 
which the National Forest was created or acquired. [[Page 27162]] 

2771.25--Recommendation That Project is Not Public Interest

    The Forest Service is not responsible for determining or 
recommending whether a hydropower project (with an application for 
license) is in the public interest. Consider making such a 
recommendation to FERC if the available information supports such a 
conclusion. Make sure the 4(e) report fully explains the nature and 
extent of reasons for the Forest Service recommendation. Use the Forest 
land and resource management plan as a basis for evaluating the needs 
of the public.
    FERC makes the actual determination of whether the project is in 
the public interest under section 10(a) of the Federal Power Act.

2771.3--Coordination

2771.31--Other Actions Within Project Boundaries

    Do not initiate non-project related resource management activities 
or authorize use by others on lands covered by a hydropower project use 
authorization or license unless it is determined that such activities 
or uses will not adversely affect project operations and will not 
conflict with the terms and conditions of the project special-use 
authorization or license. Also, prior to granting special-use 
authorizations to third parties, the authorized officer must review 
with the Federal Energy Regulatory Commission (FERC) and the affected 
licensee proposed non-project uses within the boundaries of licensed 
projects.

2771.32--Project Surrender, Termination, or Abandonment

    FERC is responsible for procedures for termination, surrender, and 
abandonment of licensed projects (18 CFR Part 6). See FSM 2772.5 for 
termination requirements for Forest Service special-use authorizations 
(36 CFR 251.60).
2771.33--Federal Takeover of Project Facilities With Expired License

    Federal takeover of a project whose license period is ending is a 
rarely used process which requires Congressional action. If warranted, 
the Forest Service may file a recommendation with FERC that the United 
States exercise its right to take over a hydropower project no earlier 
than five years before the license expires and no later than the end of 
the comment period for a notice of an application for a new license, a 
nonpower license, or an exemption. The Forest Service rarely would 
propose to the Federal Energy Regulatory Commission (FERC) that the 
United States take over a project. The Chief must approve a Forest 
Service recommendation for the Federal Government to take over project 
facilities. If a project is taken over, the Federal Government must 
compensate the licensee for the net investment. See Title 18, Code of 
Federal Regulations, Part 16, Subpart C, sections 16.14 through 16.17, 
for procedures for recommending to FERC for Federal takeover of a 
project. See FSM 2716.4 for direction regarding Forest Service takeover 
of unlicensed projects by default, surrender, abandonment, and so 
forth.

2771.4--Federal Power Act and Powersite Withdrawals

    (For further direction see FSH 2709.15, sec. 21.8.)

2771.41--Exchange Within Federal Power Act and Powersite Withdrawals

    Lands withdrawn for power purposes within licensed project 
boundaries are available for disposal through exchange or other means 
only after:
    1. FERC vacates or amends the withdrawal, and thus opens (restores) 
the lands for exchange and other related actions, or
    2. FERC makes a determination that the lands may be conveyed 
subject to a reservation in the patent or deed under section 24 of the 
Federal Power Act.

2771.42--Retraction of Licensed Project Boundaries and Withdrawals

    When a project boundary contains National Forest System lands that 
are in excess of what is needed for the project, the authorized officer 
should formally request that the licensee and FERC retract the 
boundary; then, request FERC to vacate (terminate) the withdrawal of 
these excess lands.
    When withdrawn lands are associated with an inactive project (that 
is, one not currently authorized or being considered by FERC for some 
type of action), request FERC to vacate the withdrawal.

2772--Special-Use Authorizations

    FSH 2709.11, Special Uses Handbook, provides direction on the 
authorization and administration of special uses on National Forest 
System land. Chapters 60 and 70 of FSH 2709.15, Hydropower Handbook, 
provide detailed instructions for special-use authorizations related to 
hydropower projects on the following forms: Form FS-2700-4e, Special-
Use Permit Exempted or Unlicensed Hydropower Project; Form FS-2700-4g, 
Special-Use Permit, Licensed Hydropower Project; and Form FS-2700-4f, 
Special-Use Permit, Hydropower Investigation.

2772.1--Applications

    Applicants for Federal Energy Regulatory Commission (FERC) 
licenses, preliminary permits, and exemptions from licensing must also 
apply to the Forest Service for authorization when projects involve 
National Forest System land (36 CFR 251 Part B; FSM 2772.25). 
Authorizing officers should encourage applicants to file applications 
for special use authorizations with the Forest Service concurrently 
with filing a FERC license or exemption application.

2772.2--Authorization of Projects

    Project special-use authorizations shall become effective only 
after the project is licensed or exempted from licensing by FERC.

2772.21--Authorization of Licensed Projects

    Issue special-use authorizations for all hydropower projects 
licensed by FERC in accordance with FSM 2772.25. If the Forest Service 
determines that a project (whose proponent is seeking a license) should 
not be constructed on National Forest System land, then the Forest 
Service must advise FERC, before the licensing decision is made, that 
the project is inconsistent or would interfere with National Forest 
purposes or that it would not be in the public interest. Promptly 
notify the Washington Office Director of Lands is issuance of a 
special-use authorization to a project licensed by FERC might violate a 
law or cause unacceptable damage to National Forest System resources 
before preparing a section 4(e) report.

2772.22--Denial of Special-Use Authorization to Licensed Project

    Licensed projects may not be denied a special-use authorization 
(FSM 2772.21)
2772.23--Authorization of Projects Under Preliminary Permits

    The Forest Service may issue investigative special use permits to 
authorize studies to be carried out by prospective applicants that have 
received a FERC preliminary permit. An investigative special-use permit 
(FS-2700-4f) may be issued to allow investigation of potential 
projects. This type of permit must contain conditions necessary for 
resource protection commensurate with the scope of investigation (FSH 
2709.15, sec. 62.11 and 74). [[Page 27163]] 

2772.24--Authorization of Projects Exempt From Licensing

    For a project exempted from licensing by FERC, the Forest Service 
may issue a special-use authorization (Form FS-2700-4e) if it 
determines the project is an appropriate use of National Forest System 
lands and is in the public interest. (See FSH 2709.15, sec. 53.2, for 
additional information on exemptions.)

2772.25--Requirement To Have Special-use Authorization

    Pursuant to the Federal Land Policy and Management Act (FLPMA) of 
October 21, 1976, the holder of a FERC license or a hydropower project 
proponent who is exempt from licensing also must obtain a Forest 
Service special-use authorization. This requirement to have a special-
use authorization applies to original licenses (first license for 
project) and new licenses issued as a result of relicensing. However, 
pursuant to the Energy Policy Act of 1992 (42 U.S.C. 13201), a special 
use authorization is not required for the continued operation of 
licensed or exempted projects that had not received a authorization 
under section 501 of FLPMA at any time prior to the passage of the Act 
unless FERC determines that additional National Forest System lands 
would be affected. Before passage of FLPMA, FERC licensees were not 
required to have a Forest Service special-use authorization. See FSH 
2709.15, section 63.1, for direction regarding the reasonable and 
orderly phase-in of FLPMA requirements in regard to licensed and 
relicensed projects.
    A special-use authorization is also required for the use of 
National Forest System lands affected by a material license amendment, 
even if the current license was issued prior to passage of FLPMA. See 
FSH 2709.15, section 63.1 for direction regarding the reasonable and 
orderly phase-in of FLPMA requirements in regard to amendments of 
license.

2772.3--Conditions

    Special-use authorizations for licensed projects (Form FS-2700-4g) 
shall authorize the occupancy and use of National Forest System lands. 
In addition to the mandatory standard provisions (FSH 2709.15 sec. 72), 
the special-use authorization shall include those conditions and 
requirements which are necessary for comprehensive and compatible use 
of land, water, and hydropower resources consistent with the purposes 
for which the National Forests are managed (FSM 2772.5, and FSH 
2709.15, sec. 62.13 and 72). These conditions, however, should not 
duplicate what is already required in the FERC license.
    1. In the Forest Service special-use authorization for a FERC-
licensed project (Form FS-2700-4g), do not include conditions and 
requirements that:
    a. Substantially affect power production capability (through limits 
on water use or through high costs), or
    b. Substantially affect facility siting. Such requirements are to 
be imposed through conditions in the section 4(e) report (FSM 2771.21).
    2. The limitations on conditions in special use authorizations in 
the preceding paragraph 1 do not apply to:
    a. A Federally owned dam under the jurisdiction of the Forest 
Service, or
    b. A project exempted from licensing by FERC.
    Special-use authorizations for projects exempted from licensing 
(Forms FS-2700-4e) by FERC must also include conditions to protect the 
public interest normally covered by the FERC license (FSH 2709.15, sec. 
12, 62.12, and 73).
    An investigation special-use permit (Form (FS-2700-4f) may be 
issued to allow investigation of potential projects. This type of 
permit must contain conditions necessary for resource protection 
commensurate with the scope of investigation (FSH 2709.15, sec. 62.11 
and 74).

2772.4--Term

    For FERC-licensed projects, issue a special-use authorization (Form 
FS-2700-4g) for the same term as the license. For projects exempted 
from licensing by FERC, the authorized Forest Service officer shall 
determine the term of the permit (Form FS-2700-4e), up to 30 years. 
Temporary facilities and investigations may be authorized for up to 3 
years (Form FS-2700-4f) (FSH 2709.15, sec. 62.1).

2772.5--Revocation or Suspension of Special-Use Authorization

    A special-use authorization for a FERC-licensed project (Form FS-
2700-4g) has a term matching that of the license and normally is not 
revoked unless and until the license terminates. However, a special-use 
authorization for a licensed project may be revoked or suspended for 
breach of its conditions, if negotiations to remedy the breach in 
consultation with FERC such as those outlined in FSH 2709.15, section 
64, fail to obtain the compliance of the holder (see also FSM 2771.32). 
Special-use authorizations for FERC-exempted projects may be revoked in 
accordance with 36 CFR 251.60.

2772.6--Special Use Authorization Fees

    See FSH 2709.15, section 65 for policy on charging fees for:
    1. Investigation permits,
    2. Licensed project authorizations, and
    3. Exempted project authorizations.

2773--Environmental Analysis

2773.1--Environmental Analysis and Documentation

    (FSM 1950, FSH 1909.15, FSH 2709.15, ch. 30.) If an environmental 
impact statement (EIS) is to be prepared, FERC usually will be the lead 
Federal agency. Line officers should request FERC to designate the 
Forest Service as a cooperating agency when National Forest System 
lands are affected. When an environmental assessment (EA) is to be 
prepared, the Forest Service and FERC will usually perform a 
cooperative environmental analysis and prepare a cooperative EA.

2773.11--Licensed Projects

    The Federal Energy Regulatory Commission (FERC) is responsible for 
National Environmental Policy Act (NEPA) compliance for projects 
licensed by FERC. The Forest Service is responsible for NEPA compliance 
on decisions regarding the determination of the conditions imposed 
through the 4(e) report (FSM 2771.21); and special-use permit 
conditions necessary for the protection and utilization of National 
Forest System lands; and compatibility decisions under Section 7 of the 
Wild and Scenic Rivers Act.

2773.12--Projects Exempted From Licensing

    When National Forest System lands are involved, the Forest Service 
is responsible for NEPA compliance for projects exempt from licensing 
by FERC.

2773.2--Mitigation

    Determine the effects of the project as proposed and the effects of 
identified alternatives. Devise alternatives which provide for 
mitigation of adverse resource impacts. Analyze alternatives and their 
associated resource protection measures, and balance resource 
protection needs and resource utilization needs.
    1. Identify measures necessary for the adequate protection and 
utilization of the National Forest and
    a. Include the measures in the 4(e) report which will then be 
incorporated into the license; as appropriate, require implementation 
plans as a 4(e) condition or as a condition of the special-use 
authorization to provide site-specific details for applying those 
measures on the ground; and/or [[Page 27164]] 
    b. Include them as appropriate in the special-use authorization.
    2. The effects of a project should be known before authorization is 
granted through the license or special-use authorization. Therefore, 
determine resource protection measures in the environmental analysis 
before authorization. The license or special-use authorization may 
require plans to implement the mitigation measures, but in general, the 
plans would not be used to determine the impacts (FSH 2709.15, sec. 
55.23).
    3. Required mitigation measures must be reasonable and necessary 
for the adequate protection and utilization of the National Forest and 
should be designed to prevent unnecessary impacts to forest resources. 
As noted in FSM 2271.22, do not require, through 4(e) conditions, 
measures that do not meet that standard.
    4. Tradeoffs in uses of the National Forest can be evaluated and 
certain enhancement measures may be required through 4(e) conditions 
for the adequate protection and utilization of the National Forest. For 
example, in allowing an important hydropower development, a resource or 
use (such as dispersed recreation) may be severely impacted or 
eliminated from the affected area--an unmitigated impact. Through 
evaluation of the project, another related resource or use (such as 
developed recreation) may be enhanced by actions or developments (such 
as campgrounds) the licensee could provide. Such enhancements may be 
required through section 4(e) conditions as offsetting the impacts of 
the development. Carefully negotiate such enhancements with the 
potential licensee to obtain agreement if possible. In cases where it 
may be difficult to substantiate project impacts with the need for 
enhancement, be aware that such measures may be challenged by the 
potential licensee for their imposition as 4(e) conditions. Seek the 
advice of the Washington Office Lands Staff before requiring offsetting 
enhancement without the potential licensee's consent.
    5. Developing offsite resources as mitigation for resources lost by 
development in the project area is acceptable as called for by a 
balanced evaluation of the effects of the project. However, it is not 
necessary that resource losses be mitigated by such offsite 
replacement. Determine whether offsite replacement is appropriate based 
on the evaluation of effects of the project and the balancing of the 
hydropower needs with resource needs; consider whether potentially lost 
resources are unique or in short supply; and determine the feasibility 
of replacing the resources. See FSM 2276.1, for offsite mitigation 
direction regarding projects in relicensing.

2774--Recreation Uses at Hydropower Projects

    (See also FSM 2314 for additional direction.)
2774.1--Licensee Responsibility

    Licensees and exemptees are responsible for providing recreation 
and interpretive facilities to mitigate (FSM 2773.2) the recreation 
pressures induced by the construction and operation of the hydropower 
facilities. That induced recreation need is often the result of 
reservoir construction or stream flow alterations that create a water 
attraction or new access to existing roads (such as by snow removal). 
These attractions may invite the recreating public to existing 
locations in increased numbers, to new places, and to places or at 
times not previously used.
    Require developers of hydropower facilities that induce or displace 
recreational use of the National Forest to provide facilities and 
otherwise mitigate those increases and losses in recreation use in an 
appropriate manner, consistent with the Forest land and resource 
management plan. Specify necessary facilities and mitigation measures 
as conditions in the 4(e) report submitted to FERC (FSH 2709.15, ch. 
50). Forest Service requirements for recreation facilities and 
mitigation measures must be reasonable and necessary for the adequate 
protection and utilization of the National Forest and its resources 
(Federal Power Act, sec. 4(e); 16 U.S.C. 797(e)).
    Hold the licensee or exemptee responsible for construction, 
operation, maintenance, and replacement of recreation facilities that 
accommodate project-induced use or mitigate impacts from projects 
constructed through licenses or exemption issued by the Federal Energy 
Regulatory Commission (FERC). Do not relieve the licensee of the 
obligation to provide those facilities and to cover the costs for 
facility operation, maintenance, and replacement.
    See FSH 2709.15, section 24.2, for additional direction on Forest 
Service and licensee responsibilities; in particular, see section 24.22 
regarding displaced recreation uses.

2774.2--Facility Operation, Maintenance, and Replacement

    Control licensee's construction, operation, maintenance, and 
replacement of recreation facilities on National Forest System lands 
through the project special-use authorization (FSM 2772, FSH 2709.15, 
ch. 60).
    Negotiation is the preferred method of determining which party 
should assume operation and maintenance of licensee-constructed project 
recreation facilities (FSM 2774.2). If negotiations fail, the Forest 
Service may require the licensee to turn over operation and maintenance 
of these facilities on National Forest System lands to the Forest 
Service as long as the standards of FSH 2709.15, section 24.31 are met.
    When it is desirable for the Forest Service to operate the 
recreation facilities (FSH 2709.15, sec. 24.3), negotiate a memorandum 
of understanding (FSH 2709.15, sec. 42.2) with the licensee for such 
operation at the licensee's expense. Ownership of facilities is not 
necessary for the Forest Service to operate facilities through a 
memorandum of understanding or license conditions. Use a collection 
agreement to allow the licensee to make payments for Forest Service 
operation, maintenance, and replacement of facilities.
    Licensees may be allowed to operate Forest Service-owned facilities 
through the authority of the Granger-Thye Act (16 U.S.C. 580(d); see 
FSM 2711.7). The licensee may improve National Forest facilities and 
the facilities operated by the licensee under authorization of the 
Forest Service project special-use authorization by adding appropriate 
conditions from the standard Granger-Thye permit (FSM 2713.12a).
    Negotiate shared financial responsibility with the licensee when 
facilities are constructed which accommodate both project induced 
recreation and non-project induced recreation.
    See FSH 2709.15, section 24.3, for additional direction on 
determining who is responsible for operating, maintaining, and 
replacing recreation facilities.
    Generally, do not accept ownership of recreation facilities 
constructed by the licensee. Such acceptance may make the Forest 
Service responsible for operation and maintenance of the facility, as 
well as replacement. If the licensee desires to transfer ownership to 
the Forest Service, ensure that the transfer agreement specifies the 
licensee's continuing responsibility, including replacement of 
facilities as appropriate. In addition, make sure that project-induced 
facilities remain within the project boundary so that they remain 
within the jurisdiction of the FERC license.

2774.3--Campgrounds

    Campgrounds constructed on National Forest System lands, regardless 
[[Page 27165]] of who builds, operates, or maintains them, are to be 
identified and managed as National Forest campgrounds. They are subject 
to Forest Service standards and to National programs, such as the 
``Golden Age and Golden Access Passports.''
    Monitor literature produced by the licensee to ensure that 
campgrounds are identified as National Forest campgrounds and as 
licensed and/or operated by the licensee as required by a condition of 
the special use authorization or FERC license.

2774.4--Signs

    Recreation facility signs must be from the Forest Service family of 
signs for campgrounds (FSM 7160 and FSH 7109.11). Give visible and 
equal credit in such signs to the licensee for its role in the 
campground development, construction, and operation, as appropriate. 
The licensee is responsible for the cost of such signs.
    Interpretive signs for the project are the responsibility of the 
licensee, except to the extent they interpret the Forest Service 
mission or activities.
    Coordinate with FERC and the licensee with regard to placement and 
design of signs required by FERC for the project.
2774.5--Project Recreation Plan

    As part of the application for a FERC license, a project applicant 
normally prepares a project recreation plan to address future 
recreation needs associated with the project. The Forest Service should 
work with a license applicant to ensure that the applicant's plan 
adequately anticipates and plans for future recreation needs. In the 
plan, develop and include criteria or measurable events that will 
trigger future additional facility needs.
    Do not use open-ended special-use authorization or 4(e) conditions 
for the FERC license to require unspecified future recreation 
developments; however, provide flexibility for modifying the project 
recreation plan if unanticipated needs for different recreation 
developments arise in the future. Keep in mind that costs for any 
future modifications must be within the total cost of the future 
recreation expansion required in the license.

2774.6--Recreation Planning During Relicensing

    Recreation guidelines for relicensing existing FERC-licensed 
projects are the same as for original licenses. Needs induced by the 
project are the responsibility of the licensee, regardless of when 
those needs were originally induced or who is currently meeting those 
needs.
    The Forest Service has constructed many recreation facilities in 
the past to accommodate recreation induced by FERC-licensed projects 
when the licensee would not construct the facilities. During 
relicensing, use appropriate 4(e) conditions (FSH 2709.15, ch. 50) to 
require the licensee to assume appropriate financial responsibility for 
those facilities constructed by the Forest Service, unless the Forest 
Service has reasons to retain this responsibility (see also related 
direction in FSM 2774.2 and FSH 2709.15, sec. 24.15).

2775--Special Management Areas

2775.1--Projects Proposed in Wild and Scenic Rivers Areas

    Rivers and study rivers designated for protection under sections 3 
or 5(a) of the Wild and Scenic Rivers Act (16 U.S.C. 1271 et seq.) may 
not be used for hydropower projects on or directly affecting such 
rivers. Hydropower projects not on or directly affecting a designated 
wild and scenic river, but having some indirect affects on the river, 
may be permitted only where they do not invade or unreasonably diminish 
the existing wild and scenic river values (this provision also affects 
rivers designated for study under section 5(a) of the Wild and Scenic 
River Act).
    By law, the Secretary of Agriculture must make the determination of 
whether a project is ``on or directly affecting'' the designated river 
or would ``invade or unreasonably diminish the values for which the 
river was designated,'' in accordance with section 7 of the Wild and 
Scenic Rivers Act. This is called a section 7 determination. This 
authority has been delegated to the Regional Forester, who must make 
this determination prior to issuance of an exemption or license by FERC 
on rivers administered by the Department of Agriculture. See FSM 
2354.04 and 2770.4 for the delegation of authority for making this 
determination. For further direction on wild and scenic rivers, see FSH 
2709.15, sec. 25; 36 CFR Part 297; and FSH 1909.12, ch. 8.
2775.11--Projects Proposed on All Other Waterways

    The proposed use of rivers on National Forest System lands for 
hydropower projects must be consistent with the requirements of section 
5(d) of the wild and Scenic Rivers Act which Authorizes the Forest 
Service to study the Suitability of rivers for wild and scenic 
protection through the forest planning process. Therefore, the Regional 
Forester must ensure that eligibility determinations have been 
completed for all National Forest rivers proposed for use by hydropower 
projects by the time of the interim 4(e) report (FSH 2709.15, sec. 25; 
FSM 2354). If the river is not eligible for inclusion in the Wild and 
Scenic Rivers System, note that fact in the interim 4(e) report to 
FERC. If the river is eligible for inclusion in the Wild and Scenic 
Rivers system, ask FERC to delay the licensing decision until the 
suitability determination for inclusion in the Wild and Scenic Rivers 
System has been completed as outlined in FSH 2709.15, section 25.3. 
This requirement to complete eligibility requirements and, if the river 
is eligible, to complete suitability determinations applies to rivers 
identified on the Nation-wide Rivers Inventory and to rivers identified 
for consideration through Forest land and resource management plans 
(FSM 1924).

2775.12--Wild and Scenic Rivers on Lands in Conservation Units in 
Alaska

    Dams and hydropower plants on a designated wild and scenic river in 
Alaska would not be an appropriate use and could not be licensed by 
FERC if they are ''on or directly affecting'' the river (Wild and 
Scenic Rivers Act, sec. 7, and sec. 1107 of the Alaska National 
Interest Lands Conservation Act (ANILCA; 94 Stat. 2464; 16 U.S.C. 
3167)). A transportation or utility system, including linear facilities 
associated with a hydropower project, may use lands within the 
boundaries of a designated river in Alaska National Forests when the 
following conditions are met (16 U.S.C. 3167(b)):
    1. Facilities do not interfere with or impede the streamflow of and 
transportation on the river.
    2. The transportation or utility system (linear facilities, such as 
pipelines, ditches, tunnels and powerlines; 16 U.S.C. 3162(4)) is 
located and constructed in an environmentally sound manner.

2775.2--Projects Proposed in Designated Wilderness Areas.

    (FSM 2320), and FSH 2709.15, sec. 26.) A new hydropower project may 
occupy land in a wilderness only if the President approves (16 U.S.C. 
1133(d)(4)). The Secretary of Agriculture is responsible for a 
recommendation to the President to approve a hydroelectric use in a 
designated wilderness. The Chief is responsible for the recommendation 
to the Secretary to approve such a hydroelectric use. The Regional 
Forester is responsible for evaluating such a proposal. The 
[[Page 27166]] Secretary, Chief, or Regional Forester (FSM 2770.4) may 
determine that a proposal is not in the public interest and dismiss the 
project proposal.
    Even though the Forest Service is responsible for initiating a 
recommendation for a project in wilderness, the Federal Energy 
Regulatory Commission (FERC) is responsible for the environmental 
impact statement (EIS) needed to evaluate proposed licensing of the 
project (FSM 2773). Such an EIS generally is prepared with the 
cooperation of the Forest Service through the Regional Forester.
    If the Chief determines that a proposed project in wilderness is in 
the public interest, the Chief transmits the EIS, along with the 
recommendation, to the Department of Agriculture for the Secretary's 
recommendation to the President for a decision. If the President 
approves the project and the associated use of the wilderness, the 
Regional Forester must submit a 4(e) report to FERC consistent with 
that decision.
    A special-use authorization (Form FS-2700-4f) for study of a 
potential hydropower development and other non-ground-disturbing 
activities in a wilderness may be issued without Presidential approval 
(FSM 2772.3, and FSH 2709.15, sec. 62.11 and 74).
    Existing facilities in wilderness areas that have been properly 
authorized by a FERC license continue to be authorized by that license. 
See FSH 2709.15, section 64.7, for further guidance on administering 
existing projects in the wilderness.

2775.3--Project Proposed in Roadless Study Areas

    Roadless study areas include legislatively unreleased Roadless Area 
Review and Evaluation II (RARE II) areas, further planning areas, and 
Congressionally mandated wilderness study areas (FSM 1923 and FSM 
2320).
    When roadless study lands are included in an application for 
license for a proposed hydropower project, advise FERC through an 
interim 4(e) report (or other appropriate correspondence) of the study 
and pending land allocation decision. Recommend that FERC:
    1. Reject the application for license and advise the applicant to 
reapply if the lands in question are allocated to non-wilderness uses 
that would not conflict with hydropower development, or
    2. Delay the licensing decision until the land allocation decision 
is made, preferably through the Forest land and resource management 
plan. If the land use decision must be made before the forest land and 
resource management plan can be implemented, conduct a suitable 
analysis in compliance with the National Environmental Policy Act (FSM 
1920; FSH 1909.12 and 1909.15).
    Generally, grant investigation special-use authorizations (Form FS-
2700-4f) in these areas only for study and other non-ground-disturbing 
activities.

2775.4--Projects Proposed in Research Natural Areas

    Most surface hydropower facilities would be incompatible with the 
purposes of a research natural area (FSM 4063). However, the research 
natural area management plan may allow for hydropower or similar uses; 
in this case, evaluate a proposed project and respond to FERC in a 4(e) 
report. Coordinate advice to FERC and the issuance of any special-use 
authorizing actions within the research natural area with the Research 
Station Director.
    1. If a proposed hydropower project is incompatible with the 
purposes of the research natural area, then:
    a. In response to a notice of application to FERC for license, or 
in the 4(e) report, inform FERC that such surface uses would be 
incompatible with the purposes of the research natural area.
    b. Do not issue a special-use authorization for a project exempted 
from licensing by FERC when the project includes surface lands within a 
research natural area boundary.
    2. When the Station Director believes that the hydropower values 
that would be forgone are of greater public benefit than keeping the 
research natural area fully protected, the Station Director may 
request, with Regional Forester concurrence, that the Chief reconsider 
or modify the designation order establishing the research natural area 
(see direction on authority of Station Directors in FSM 4062).
    3. In general, do not issue an investigation special-use 
authorization (Form FS-2700-4f) to a project proposing to use lands of 
a research natural area; however, a non-ground disturbing investigation 
special-use authorization may be issued in situations such as:
    a. The research natural area's management plan allows actions which 
include or are similar to those proposed by the hydropower project;
    b. There would be no direct or indirect modification to the 
ecological processes of the research natural area; for example, a 
tunnel under the research natural area might not adversely affect the 
area; or
    c. The Station Director anticipates that a proposed hydropower 
development may have significant public benefits.

2775.41--Projects Proposed in Candidate Research Natural Areas

    When candidate research natural area lands are included in an 
application for license for a proposed hydropower project, advise FERC 
of the study and pending land allocation decision. Recommend that FERC:
    1. Reject the application for license and advise the applicant to 
reapply if these lands are allocated to non-research natural area uses 
that would not conflict with hydropower development, or
    2. Delay the licensing decision until the land allocation decision 
is made, preferably through the Forest land and resource management 
plan. If the land use decision must be made before the land and 
resource management plan can be implemented, conduct a suitable 
analysis in compliance with the National Environmental Policy Act (FSM 
1920; FSH 1909.12 and 1090.15).
    Issue investigation special-use authorizations (Form FS-2700-4f) 
for candidate research natural areas where no ground disturbance will 
take place. Coordinate the issuance of any special-use authorizing 
actions within the candidate research natural area with the Research 
Station Director.

2775.5--Projects Proposed in Other Special Areas

    1. Other special areas may be established by the Forest land and 
resource management plan or unit plan for which the Forest Service may 
determine that a proposed hydropower development would not be 
compatible. Special interest areas established by the Forest Service 
may include:
    a. Scenic, geological, botanical, zoological, and paleontological 
areas (FSM 2360.2).
    b. Cultural resources areas (FSM 2361).
    c. National scenic or historic trails (FSM 2353.4).
    d. Other special land allocations established through the forest 
land and resource management plan or other procedure where hydropower 
development would be incompatible.
    2. Other special land allocations may have been established by 
legislation, such as national recreation areas, where hydropower 
development may be incompatible.
    3. When hydropower use would be incompatible with the management 
and purposes for establishing the special area, take the following 
actions:
    a. In response to a notice of application to FERC for license, 
inform FERC in the 4(e) report that such use [[Page 27167]] would be 
incompatible with National Forest purposes of the special management 
area (FSH 2709.15, sec. 26.4).
    b. In response to an application for special-use authorization for 
a project exempted from licensing by FERC, do not issue a special-use 
authorization for such a project that includes lands within the special 
management area.
    4. When project impacts can be adequately mitigated to protect the 
management and purposes for establishing the special management area, 
impose appropriate conditions on the license and special-use 
authorization through the 4(e) report or through the special-use 
authorization alone for a project exempted from licensing.

2775.51--Projects Proposed in Study Special Areas

    When study special management area lands are included in an 
application for license for a proposed hydropower project, advise FERC 
of the study and pending land allocation decision. Recommend that FERC:
    1. Reject the application for license and advise the application to 
reapply if the lands in question are allocated to non-special area uses 
that would not conflict with hydropower development, or
    2. Delay the licensing decision until the land allocation decision 
is made, preferably through the Forest land and resource management 
plan. If the land use decision must be made before the Forest land and 
resource plan can be implemented, conduct a suitable analysis in 
compliance with the National Environmental Policy Act (FSM 1920; FSH 
1909.15).
    Issue investigation special-use authorizations (Forms FS-2700-4f) 
for study special areas, and as appropriate, carefully regulate 
potential ground disturbance.

2775.6--Projects Proposed in State-Designated Special Areas

    The States may designate special areas, such as State wild and 
scenic rivers, wild trout streams, and State game refuges, which may 
include National Forest System land. State laws may prohibit State 
permits for hydropower projects on these special areas, but these laws 
are not binding on Federally authorized projects. However, in the 
spirit of cooperation, give such State laws and areas very careful 
analysis when considering hydropower projects. Under section 4(e) of 
the Federal Power Act, the Forest Service is not authorized to:
    1. Impose conditions on the license to ensure protection of the 
State's designated special areas; or
    2. Impose conditions on the license to protect other State 
interests not directly a result of the need for ``adequate protection 
and utilization of the National Forest.''
    However, the Forest Service and the State may request that FERC 
provide protections which promote the interest of the state-designated 
area.

2775.7--Projects Proposed in National Monuments

    FERC is prohibited from licensing a project that would occupy lands 
of a national monument administered by the Forest Service or other 
Federal agency (41 Stat. 1353; 16 U.S.C. 797(a)); such action would 
require an act of Congress.

2776--Relicensing

    In general, follow the same procedures for projects whose owners 
are applying for a new license under relicensing procedures as used for 
those for projects whose applicants are applying for an original 
license. The procedural differences apply mainly to the project owners, 
not the Forest Service (sec. 15 of the Federal Power Act, 16 U.S.C. 
808; 18 CFR Part 16, subpart B, sec. 16.8 through 16.13).

2776.1--Section 4(e) Conditions in Relicensing

    The Forest Service may specify 4(e) conditions in a new license 
issued by FERC under relicensing procedures. Such conditions must be 
reasonable and necessary for the adequate protection and utilization of 
the National Forest as it exists at the time of relicensing.
    Existing projects provide public benefits and have been in place 
long enough to be the ``normal'' situation where they exist. Therefore 
avoid disruption of these projects and carefully evaluate the need for 
change. However, it is essential to require reasonable measures to 
protect the environment. For example, it may be reasonable to provide 
fish passage over a dam, but not to restore a stream fishery that was 
converted to a lake fishery. Do not seek in relicensing offsite 
replacement of resources lost during the original licensing decision.
    Generally, limit the resource protection measures to those which 
the project could afford to provide and still operate; avoid as much as 
possible actions that would cause projects to operate in a marginal 
economic condition.

2776.2--Removal of Project

    If special circumstances indicate a project that is under 
consideration for relicensing should be removed, recommend in a 4(e) 
report to FERC that no new license be issued and that the area be 
restored. Do not use the conditioning authority under section 4(e) of 
the Federal Power Act to force removal of a project. See FSM 2771.33, 
for direction regarding Federal takeover of a project.
Proposed Handbook Revision

    Following are the sections of the Hydropower Handbook (FSH 2709.15) 
cited in this Federal Register notice. For a copy of the entire 
Handbook, call the For Further Information Contact listed at the 
beginning of the notice. This Handbook provides detailed direction to 
Forest Service personnel for evaluating hydropower project proposals 
and for coordinating with the Federal Energy Regulatory Commission 
(FERC). See FSM 2770 for policy and overall direction on Forest Service 
hydropower matters.

64.7--Administration of Projects in Wilderness Areas

    Facilities in wilderness areas that have been properly authorized 
by a FERC license will continue to be authorized by that license. When 
FERC relicenses a project, the Forest Service issues a companion 
special-use authorization (Form FS-2700-4g), usually under the Federal 
Land Policy and Management Act (FLPMA) (FSM 2770.1). Since FLPMA 
authority cannot be used for facilities in a wilderness, use the 
Organic Act (16 U.S.C. 551) for the Forest Service authorization of 
that portion of the project in the wilderness.
    These hydropower projects are considered as valid existing rights 
and administered as such under section 4(c) of the Wilderness Act of 
September 3, 1964 (16 U.S.C. 1133(c); FSM 2775.2).
    Existing special use authorizations may be modified for maintenance 
and reconstruction work on projects in wilderness areas. Any 
modifications to such facilities must be made in conformance with the 
requirements of the license and any special-use authorization, and 
section 4(c) of the Wilderness Act, except that modifications to 
increase storage capacity or similar improvements must receive 
Presidential approval (sec. 4(d)(4) of the Wilderness Act).
    Hydropower dams in wilderness areas must meet the requirements of 
Federal and State law, including the Wilderness Act, the Dam Safety Act 
(33 U.S.C. 467a-367n), the Federal Power Act, the [[Page 27168]] law 
and regulation that provides for the special use authorization, and the 
terms of the authorization. The Wilderness Act provides for the 
maintenance of existing dams and related facilities in wilderness areas 
if they are valid existing rights.
    Maintenance can include work that will improve the safety of the 
dam, such as enlarging the spillway or increasing the freeboard on the 
dam. In some instances the installation of a water measuring device may 
be added when required by State law and when there is no suitable 
location available outside of the wilderness area.
    FSM 2320 provides direction for evaluating proposed improvements 
and reconstruction of facilities, including access alternatives to the 
dam or water conveyance system. Consideration of proposals for work on 
dams and related access should be made on a case-by-case basis using 
the NEPA process (FSM 1950), balancing wilderness values with licensee 
rights and public safety. Historic methods of access and economics also 
should be considered in the analysis.
    Hydropower projects licensed by FERC do not qualify for an easement 
under the Act of October 27, 1986 (Pub. L. 99-5545, the ``Ditch Bill''; 
FSM 2770.1) which amended parts of the Federal Land Policy and 
Management Act of 1976 (43 U.S.C. 1761(c)).
65--Special-Use Authorization Fees

    Fees may be charged for investigation special use permits (Form FS-
2700-4f), as well as for project special use authorizations.

65.1--Investigation Permit Fee

    Unless the market conditions indicate that a higher fee is 
appropriate, charge $200.00 for the term of a hydropower investigation 
permit (Form FS-2700-4f).

65.2--Licensed Project Authorization Fee

    Waive the fee for this type of authorization since FERC already 
charges fees for the use of National Forest System land.
    The holder shall pay a fee, as described in section 65.31, for 
areas outside the license boundary that are under temporary permit.

65.3--Exempted Project Authorization Fee

65.31--Fee for Construction Period (Minimum Operation Fee)

    Charge the annual minimum fee of 10 percent of the land value of 
the area under permit for periods when power is not being sold. At the 
option of the Regional Forester, determine such land value by appraisal 
or other sound business practices. The holder shall pay the minimum fee 
in advance at the beginning of each year. Calculate the fee for 
temporary permits issued for temporary areas outside the main permit 
area at 10 percent, annually, of the land value of the area under those 
permits.

65.32--Operation Fee

    Unless local market conditions indicate otherwise, the holder shall 
pay a fee of 3 percent of the gross power sales from the start of 
project operation until the end of the fifth year. From the start of 
the sixth year to the end of the tenth year, the holder shall pay a fee 
of 5 percent of the gross power sales. The fee from the start of the 
eleventh year until the end of the term of the authorization may 
increase up to 10 percent. Determine the final rate through a 
reevaluation of the market, during the tenth year.
    The holder pays the minimum operation fee (sec. 65.31) in advance 
each year and that amount is credited toward the operation fee. The 
holder does not start paying the quarterly operation fees each year 
until the year's accumulated operation exceeds the minimum operation 
fee. The holder pays the operation fee quarterly, within 45 days of the 
end of each quarter, unless the average annual fee is less than $2,000 
(in which case the holder pays at the end of the year).

65.33--Fee Adjustment of Mixed Ownership

    Adjust the operation fee when the Federal Government land under 
permit is less than 90 percent of the total linear distance actually 
occupied by the project excluding access roads and transmission lines. 
Make the adjustment by measuring slope-distance length of the project 
from the outlet of the lowest powerhouse tailrace to the upstream edge 
of the impoundment created by the diversion. The percentage of that 
length that is on Government land is the percentage of the total fee 
that is due the Government. For example, if the government owns 800 
feet of a 1,000-foot-long project, the initial operation fee would be 
80 percent of 3 percent of the gross power sales or 2.4 percent of the 
gross power sales.
    If there is more than one diversion, include the additional lengths 
of those other diversions from the point of intersection with those 
already measured in the total length.

65.34--Transmission Line Fee

    The holder shall pay a separate fee for the area under permit for 
the transmission line portion of the project if such a line is the only 
facility under permit or if the transmission line exceeds 2,500 feet on 
National Forest System land to the point of interconnection with an 
existing transmission line. A separate special use authorization for a 
transmission line greater than 2,500 feet is not necessary, but may be 
used at the discretion of the authorizing officer; that is, the 
authorizing officer has the discretion to charge an additional fee for 
the transmission line within the hydropower permit, instead of issuing 
a separate transmission line permit for lines over 2,500 feet. 
Determine fees by the procedures for transmission line fees (see also 
sec. 62.24).

65.35--Conduit Exemption Fee

    While conduit exemptions cannot be issued for projects that occupy 
Federal lands, FERC grants exemptions to such projects as long as the 
powerhouse is not on Federal lands and there is no new construction on 
Federal lands; for example when the powerhouse would be on non-Federal 
lands and the existing water pipeline or ditch on Federal lands does 
not need modification.
    Regardless of FERC's action, treat the project in its entirety when 
calculating fees. Consistent with section 65.33, measure the linear 
distance of the water system from the powerhouse to the upper end of 
the diversion or to the next powerhouse, if any. The percentage of that 
length that is on National Forest System land is the percentage of the 
total fee that would be charged.

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[FR Doc. 95-12337 Filed 5-19-95; 8:45 am]
BILLING CODE 3410-11-C