[Federal Register Volume 76, Number 184 (Thursday, September 22, 2011)]
[Notices]
[Pages 58837-58839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-24335]


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DEPARTMENT OF THE INTERIOR

Bureau of Reclamation


Notice of Intent to Accept Proposals, Select Lessee, and Contract 
for Hydroelectric Power Development at Caballo Dam, Rio Grande Project, 
New Mexico

AGENCY: Bureau of Reclamation, Interior.

ACTION: Notice.

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SUMMARY: Current Federal policy encourages non-Federal development of 
environmentally sustainable hydropower potential on Federal water 
resource projects. The Bureau of Reclamation (Reclamation), in 
consultation with the Department of Energy, Western Area Power 
Administration (Western), will consider proposals for non-Federal 
development of hydroelectric power at Caballo Dam, a feature of the Rio 
Grande Project. Reclamation is considering such hydroelectric power 
development under a lease of power privilege. No Federal funds will be 
available for such hydroelectric power development. Western would have 
the first opportunity to purchase and/or market the power that would be 
generated by such development under a lease of power privilege. The Rio 
Grande Project is a Federal Reclamation project. This notice presents 
background information, proposal content guidelines, and information 
concerning selection of a non-Federal entity to develop hydroelectric 
power at Caballo Dam.

DATES: A written proposal and seven copies must be submitted on or 
before 5 p.m. (MST) on January 20, 2012. A proposal will be considered 
timely only if it is received in the office of the Area Manager by or 
before 5 p.m. on the designated date. Interested entities are cautioned 
that delayed delivery to this office due to failures or 
misunderstandings of the entity and/or of mail, overnight, or courier 
services will not excuse lateness and, accordingly, are advised to 
provide sufficient time for delivery. Late proposals will not be 
considered.

ADDRESSES: Send written proposal and seven copies to Mr. Mike Hamman, 
Area Manager, Albuquerque Area Office, Bureau of Reclamation, 555 
Broadway Avenue, NE., Suite 100, Albuquerque, New Mexico 87102, 
telephone (505) 462-3540.
    A copy of the proposal should also be sent at or about the time it 
is due at Reclamation to: CRSP Manager, Western Area Power 
Administration, 150 Social Hall Avenue, Suite 300, Salt Lake City, Utah 
84111-1534. Western is available to meet with Reclamation and 
interested entities to discuss Western's potential marketing of 
hydropower.

FOR FURTHER INFORMATION CONTACT: Technical data may be obtained by 
contacting Ms. Kathleen Dickinson, Albuquerque Area Office, Bureau of 
Reclamation, 555 Broadway Avenue, NE., Suite 100, Albuquerque, New 
Mexico 87102, e-mail: [email protected]. Reclamation will be 
available to meet with interested entities only upon written request to 
Ms. Kathleen Dickinson at the above cited address. Reclamation will 
provide an opportunity for a site visit. In addition, Reclamation 
reserves the right to schedule a single meeting and/or visit to address 
the questions of all entities that have submitted questions or 
requested site visits.
    Information related to Western's purchasing and/or marketing of the 
power may be obtained by contacting Ms. LaVerne Kyriss, CRSP Manager, 
Western Area Power Administration, 150 Social Hall Avenue, Suite 300, 
Salt Lake City, Utah 84111-1534, telephone (801) 524-6372.

SUPPLEMENTARY INFORMATION: Construction of the Rio Grande Project was 
authorized by the Secretary of the Interior (Secretary) on December 2, 
1905, under provisions of the Reclamation Act of 1902 (Act of June 17, 
1902, 32 Stat. 388). The Reclamation Act was extended to the entire 
state of Texas on June 12, 1906 (34 Stat. 259), following a partial 
extension for Engle (Elephant Butte) Dam in 1905 (33 Stat. 814). 
Caballo Dam was included as a flood control unit in the Rio Grande 
Canalization Project (Act of June 4, 1936, 49 Stat. 1463). Construction 
of Caballo Dam took place from 1936 to 1938. Flood control operations 
of the dam are governed by the agreement of October 9, 1935, between 
the Departments of State and Interior. Caballo Reservoir has a surface 
area of about 11,500 acres and is located approximately 17 miles south 
of Truth or Consequences, New Mexico. Caballo

[[Page 58838]]

Reservoir also provides replacement for storage lost at Elephant Butte 
Reservoir due to silt deposition and enables more efficient power 
generation at Elephant Butte Dam. Additional information about the Rio 
Grande Project can be found at: http://www.usbr.gov/projects/Project.jsp?proj_Name=Rio+Grande+Project. Additional information about 
Caballo Reservoir operations can be found at: http://www.usbr.gov/uc/crsp/GetSiteInfo.
    Reclamation, in consultation with Western, is considering 
hydroelectric power development at Caballo Dam under a lease of power 
privilege. A lease of power privilege is an alternative to Federal 
hydroelectric power development. A lease of power privilege is a 
contractual right given to a non-Federal entity to use a Reclamation 
facility for electric power generation consistent with Reclamation 
project purposes. Leases of power privilege have terms not to exceed 40 
years. The general authority for lease of power privilege under 
Reclamation law includes, among others, the Town Sites and Power 
Development Act of 1906 (43 U.S.C. Sec. 522) and the Reclamation 
Project Act of 1939 (43 U.S.C. 485h(c)) (1939 Act). Reclamation will be 
the lead Federal agency for ensuring compliance with the National 
Environmental Policy Act (NEPA) and all other relevant Federal 
environmental compliance laws such as the Endangered Species Act, 
National Historic Preservation Act, and Clean Water Act for any lease 
of power privilege considered in response to this notice. Leases of 
power privilege may be issued only when Reclamation, upon completion of 
the NEPA process, determines that the proposed hydropower development 
is environmentally acceptable. Any lease of power privilege at Caballo 
Dam must accommodate existing contractual and environmental commitments 
related to operation and maintenance of existing Rio Grande Project 
facilities, including water delivery contracts, flood control 
operations, and compliance with the Rio Grande Compact (Act of May 31, 
1939, 53 Stat 785) and the convention between the United States and 
Mexico concluded on May 21, 1906. Caballo Reservoir storage levels must 
comply with the Court Order CIV-90-95 HB/WWD, dated October 17, 1996. 
The lessee (i.e., successful proposing entity) would be required to 
coordinate operation and maintenance of any proposed hydropower 
development with existing Federal features. The lessee will be required 
to meet all Bulk Electric System (BES) electrical reliability standards 
that apply to the proposed hydro-generation facilities.
    Western would have the first opportunity to purchase and/or market 
the power that would be generated under any lease of power privilege. 
Western would have 60 days from the date of notification of selection 
of a lessee in which to decide whether to purchase and/or market the 
power.
    All costs incurred by the United States related to development and 
operation and maintenance under a lease of power privilege, including 
environmental compliance, engineering reviews, and development of the 
lease of power privilege, would be at the expense of the lessee. In 
addition, the lessee would be required to make annual payments to the 
United States for the use of a Federal Government facility. Depending 
on the economic viability of the proposed hydropower development, this 
amount will be not less than 3 mills per kilowatt-hour of generation. 
If conditions provide opportunity for substantial benefits to accrue to 
the lessee, then the United States will benefit proportionally. Also, 
under the lease of power privilege, provisions will be included for 
inflation of the annual payment with time. Such annual payments to the 
United States would be deposited as a credit to the Reclamation Fund.

Proposal Content Guidelines

    Interested parties should submit proposals explaining in as precise 
detail as is practicable how the hydropower potential would be 
developed. Factors which a proposal should consider and address 
include, but are not limited to, the following:
    (a) Provide all information relevant to the qualifications of the 
proposing entity to plan and implement such a project, including, but 
not limited to, information about preference status, type of 
organization, length of time in business, experience in funding, design 
and construction of similar projects, industry rating(s) that indicate 
financial soundness and/or technical and managerial capability, 
experience of key management personnel, history of any reorganizations 
or mergers with other companies, and any other information that 
demonstrates the interested entity's organizational, technical, and 
financial ability to perform all aspects of the work. Include a 
discussion of past experience in operating and maintaining similar 
facilities and provide references as appropriate. The term ``preference 
entity,'' as applied to a lease of power privilege, means an entity 
qualifying for preference under Section 9(c) of the 1939 Act as a 
municipality, public corporation or agency, or cooperative or other 
nonprofit organization financed in whole or in part by loans made 
pursuant to the Rural Electrification Act of 1936, as amended.
    (b) Provide geographical locations and describe principal 
structures and other important features of the proposed development 
including roads and transmission lines. Estimate and describe installed 
capacity and the capacity of the power facilities under dry, average, 
and wet hydrological conditions. Also describe seasonal or annual 
generation patterns. Include estimates of the amount of electrical 
energy that would be produced from the facility for each month of 
average, dry, and wet water years. If capacity and energy can be 
delivered to another location, either by the proposing entity or by 
potential wheeling agents, specify where capacity and energy can be 
delivered. Include concepts for power sales and contractual 
arrangements, involved parties, and the proposed approach to wheeling 
and BES electrical reliability compliance if required.
    (c) Indicate title arrangements and the ability for acquiring title 
to or the right to occupy and use lands necessary for the proposed 
development(s), including such additional lands as may be required 
during construction.
    (d) Identify water rights applicable to the operation of the 
proposed development(s), the holder of such rights, and how these 
rights would be used, acquired, or perfected. No new net depletions 
will be permitted since the Rio Grande is already fully appropriated.
    (e) Discuss any studies necessary to adequately define impacts on 
the Rio Grande Project and the environment of the development. Describe 
any significant environmental issues associated with the development 
and the proposing entity's approach for gathering relevant data and 
resolving such issues to protect and enhance the quality of the 
environment. Explain any proposed use of the hydropower development for 
conservation and utilization of the available water resources in the 
public interest.
    (f) Describe anticipated contractual arrangements with Reclamation, 
which has operation and maintenance responsibility, for any Rio Grande 
Project feature(s) that are proposed for utilization in the hydropower 
development under consideration. Define how the hydropower development 
would operate in harmony with the multiple purposes of the Rio Grande 
Project, existing applicable water delivery contracts, flood control 
operations, compliance with court-

[[Page 58839]]

ordered reservoir storage levels, the Rio Grande Compact (Act of May 
31, 1939, 53 Stat 785), the convention between the United States and 
Mexico concluded on May 21, 1906, and the treaty between the United 
States and Mexico dated February 1, 1933.
    (g) Describe plans for continuing downstream flows during 
construction that are required to meet irrigation demands, flood 
control operations, and Rio Grande Compact and international treaty 
requirements.
    (h) Describe plans for assuming liability for damage to the 
operational and structural integrity of the Rio Grande Project caused 
by construction, operation, and/or maintenance of the hydropower 
development.
    (i) Identify the organizational structure planned for the long-term 
operation and maintenance of any proposed hydropower development.
    (j) Provide a management plan to accomplish such activities as 
planning, environmental and electrical reliability compliance, lease of 
power privilege development, design, construction, facility testing, 
and start of hydropower production. Prepare schedules of these 
activities as is applicable. Describe what studies are necessary to 
accomplish the hydroelectric power development and how the studies 
would be implemented.
    (k) Estimate development cost. This cost should include all 
investment costs such as the cost of studies to determine feasibility, 
environmental and electrical reliability compliance, design, 
construction, and financing as well as the amortized annual cost of the 
investment; also, the annual operation, maintenance, and replacement 
expense for the hydropower development; annual payments to the United 
States; expenses that may be associated with the Rio Grande Project; 
and the anticipated return on investment. If there are additional 
transmission or wheeling expenses associated with the development of 
the hydropower development, these should be included. Identify proposed 
methods of financing the hydropower development. An economic analysis 
should be presented that compares the present worth of all benefits and 
costs of the hydropower development.

Selection of Lessee

    Reclamation, in consultation with Western, will evaluate proposals 
received in response to this published notice. Reclamation may request 
additional information from individual proposing entities and/or all 
proposing entities after proposals are submitted, but prior to making a 
selection of a lessee.
    Reclamation will give more favorable consideration to proposals 
that (1) are well adapted to developing, conserving, improving, and 
utilizing the water and natural resources in an environmentally and 
economically sound manner; (2) clearly demonstrate that the offeror is 
qualified to develop the hydropower facility and provide for long-term 
operation and maintenance; and (3) best share the economic benefits of 
the hydropower development among parties (including the United States) 
to the lease of power privilege. A proposal will be deemed unacceptable 
if it is inconsistent with Rio Grande Project purposes, as determined 
by Reclamation. Reclamation will give preference to those entities that 
qualify as preference entities, as defined under Proposal Content 
Guidelines, item (a), provided that their proposal is at least as well 
adapted to developing, conserving, and utilizing the water and natural 
resources as other submitted proposals and that the preference entity 
is well qualified. Through written notice, all preference entities 
submitting proposals would be allowed 90 days to improve their 
proposals, if necessary, to be made at least equal to a proposal(s) 
that may have been submitted by a non-preference entity.

Power Purchasing and/or Marketing Considerations

    Western would have the first opportunity to purchase and/or market 
the power that would be generated by the project under a lease of power 
privilege. Western will consult with Reclamation on such power 
purchasing and/or marketing considerations.
    Western may market the power available from the project as part of, 
and under the existing marketing plan of, its Salt Lake City Area 
Integrated Projects. Western may also market the power on a stand-alone 
basis; first to preference entities qualified under criteria 
established by Western and second to non-preference entities by 
developing an individual marketing plan for this power. This marketing 
plan would be developed through a separate subsequent public process 
beginning with a notice in the Federal Register of Western's intent to 
market the power. The marketing plan would include all aspects of 
marketing the power, including assignment of power to qualified 
preference and/or non-preference entities, pricing, transmission, and 
delivery of power. Western would recover the costs it would incur in 
purchasing and/or marketing the power through the rates charged for the 
power. Firm power rates would be established through a public process, 
initiated by a notice in the Federal Register, separate from the 
marketing plan.
    In the event Western elects to not purchase and/or market the power 
generated by the hydropower development, or such a decision cannot be 
made within 60 days of notification of selection of a lessee, the 
lessee would be responsible for marketing the power generated by the 
project with priority given to preference entities as heretofore 
defined in Proposal Content Guidelines, item (a). In addition, if 
Western elects to not purchase and or market the power generated by the 
hydropower development, the Lessee will be responsible to coordinate 
the appropriate transmission service that may be required.

Notice and Time Period To Enter Into Lease of Power Privilege

    Reclamation will notify, in writing, all entities submitting 
proposals of Reclamation's decision regarding selection of the 
potential lessee. The selected potential lessee will have two years 
from the date of such notification to accomplish NEPA compliance and 
enter into a lease of power privilege for the proposed development of 
hydropower at Caballo Dam. Any excessive delay resulting from 
compliance with the provisions of Federal environmental laws or 
administrative review by a Federal agency, pertaining to the project, 
may extend the two-year time period for a period equal to that of the 
delay. In the event of litigation related to the proposed project, the 
two-year time period will be extended for a period equal to that of the 
delay, provided such litigation was initiated by parties other than the 
selected potential lessee or its employees, officers, agents, assigns, 
shareholders, customers, or persons or groups served by or in privity 
with the potential lessee. The lessee will then have up to two years 
from the date of execution of the lease to complete the designs and 
specifications and an additional year to begin construction.

    Dated: August 8, 2011.
Larry Walkoviak,
 Regional Director, Upper Colorado Region.
[FR Doc. 2011-24335 Filed 9-21-11; 8:45 am]
BILLING CODE 4310-MN-P