[Senate Report 115-297]
[From the U.S. Government Publishing Office]
Calendar No. 511
115th Congress } { Report
SENATE
2d Session } { 115-297
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QUALIFYING CONDUIT HYDROPOWER FACILITY
_______
July 11, 2018.--Ordered to be printed
_______
Ms. Murkowski, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany H.R. 2786]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Natural Resources, to which was
referred the bill (H.R. 2786) to amend the Federal Power Act
with respect to the criteria and process to qualify as a
qualifying conduit hydropower facility, having considered the
same, reports favorably thereon with an amendment, and
recommends that the bill, as amended, do pass.
Amendment
The amendment is as follows:
On page 2, strike lines 7 through 12 and insert the
following:
(2) in paragraph (3)(C)(ii), by striking ``5'' and
inserting ``40''.
Purpose
The purpose of H.R. 2786 is to amend the Federal Power Act
(FPA) with respect to the criteria and process to qualify as a
qualifying conduit hydropower facility.
Background and Need
The Hydropower Regulatory Efficiency Act of 2013 (Public
Law 113-23) amended the FPA to allow FERC to issue
``exemptions'' (which are licenses granted in perpetuity) for
hydroelectric projects of five megawatts or less utilizing
manmade conduits that are operated primarily for purposes other
than electricity generation. Under current law, the Federal
Energy Regulatory Commission (FERC) must make an initial
determination on project eligibility within 15 days of a filing
and publish a public notice of intent. Following the notice, a
period of 45 days is provided for public comment on FERC's
initial determination as to whether a facility meets the
qualifying criteria. If no entity contests whether the facility
meets the qualifying criteria within 45 days, the facility is
deemed to meet the criteria and its license is approved.
Since its 2013 enactment, the process outlined above has
resulted in 83 qualifying projects that have received the one-
time license known as an ``exemption,'' with an average total
processing timeline of just over two months (45-day public
notice period). According to FERC, it has rarely received
comments on a project's qualifications, and supports Congress
shortening the 45-day notice period and lifting the five
megawatt cap in order to benefit a broader range of projects.
Legislative History
H.R. 2786 was introduced in the House of Representatives by
Representative Hudson and Degette, on June 6, 2017, and
referred to the Committee on Energy and Commerce. The Energy
and Commerce Committee favorably reported the bill, as amended,
by voice vote on July 12, 2017. H.R. 2786 passed the House of
Representatives by a vote of 420-2 on July 18, 2017, and the
bill was received by the Senate and referred to the Committee
on Energy and Natural Resources on July 19, 2017.
The Subcommittee on Water and Power held a legislative
hearing on H.R. 2786 on February 28, 2018.
The Committee on Energy and Natural Resources met in an
open business session on May 17, 2018 and ordered H.R. 2786
favorably reported as amended.
Committee Recommendation
The Senate Committee on Energy and Natural Resources, in
open business session on May 17, 2018, by a majority voice vote
of a quorum present, recommends that the Senate pass H.R. 2786,
if amended as described herein.
Committee Amendment
During its consideration of H.R. 2786, the Committee
adopted an amendment to increase the installed capacity for a
qualifying conduit facility from five to 40 megawatts, instead
of eliminating the cap altogether.
Section-by-Section Analysis
Section 1. Qualifying conduit hydropower facilities
Section 1 amends Section 30(a)(2)(C) of the FPA to reduce
the time period to contest whether the conduit facility meets
the qualifying criteria from 45 to 30 days. This section
further amends section 30(a)(3)(C)(ii) of the FPA to raise the
maximum installed capacity from five to 40 megawatts.
Cost and Budgetary Considerations
The following estimate of the costs of this measure has
been provided by the Congressional Budget Office:
Under the Federal Power Act, the Federal Energy Regulatory
Commission (FERC) licenses and regulates most nonfederal
hydroelectric facilities. Under current law, hydroelectric
projects with a capacity of less than 5 megawatts that generate
power using water flowing through agricultural, municipal, or
industrial conduits are exempt from FERC's licensing
requirements. H.R. 2786 would expand that exemption to include
facilities with capacities of up to 40 megawatts and would
modify procedures for determining whether proposed facilities
qualify for that exemption.
CBO estimates that implementing H.R. 2786 would have no
significant net effect on the federal budget. Expanding the
size of projects that would be exempt from FERC's licencing
requirements could reduce the agency's workload and costs to
review and approve applications for licenses. However, because
FERC recovers 100 percent of its costs through user fees, any
change in that agency's costs (which are controlled through
annual appropriation acts) would be offset by an equal change
in fees that the commission charges, resulting in no net change
in federal spending.
Enacting H.R. 2786 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
CBO estimates that enacting H.R. 2786 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2029.
H.R. 2786 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act.
On July 18, 2017, CBO transmitted a cost estimate for H.R.
2786 as reported by the House Committee on Energy and Commerce
on July 12, 2017. Although the two versions of the legislation
differ with regard to the capacity of projects that would be
exempt from licensing requirements, neither would have a
significant net effect on the federal budget. Thus, the
estimated costs are the same for both pieces of legislation.
The CBO staff contact for this estimate is Megan Carroll.
The estimate was reviewed by H. Samuel Papenfuss, Deputy
Assistant Director for Budget Analysis.
Regulatory Impact Evaluation
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out H.R. 2786. The bill is not a regulatory measure in
the sense of imposing Government-established standards or
significant economic responsibilities on private individuals
and businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of H.R. 2786, as ordered reported.
Congressionally Directed Spending
H.R. 2786, as ordered reported, does not contain any
congressionally directed spending items, limited tax benefits,
or limited tariff benefits as defined in rule XLIV of the
Standing Rules of the Senate.
Executive Communications
The testimony provided by the Federal Energy Regulatory
Commission at the February 28, 2018, hearing on H.R. 2786
follows:
Federal Energy Regulatory Commission
Re S. 1142, H.R. 2457 and H.R. 2786.
Hon. Lisa Murkowski,
Chairman, Committee on Energy and Natural Resources, Washington, DC.
Dear Chairman Murkowski: This letter is in response to a
request by the Senate Committee on Energy and Natural Resources
for my views on S. 1142 and H.R. 2457, two bills to authorize
the extension of the time to begin construction of the original
licenses for the Red River Lock and Dam No 3. (FERC Project No.
12756), Red River Lock and Dam No. 4 (FERC Project No. 12757),
and Red River Lock and Dam No. 5 (FERC Project No. 12758), and
H.R. 2786, a bill to amend the Federal Power Act (FPA) with
respect to criteria and process for a proposed project to
qualify as qualifying conduit hydropower facility.
h.r. 2786
Section 30(a) of the FPA exempts certain conduit hydropower
facilities from the licensing requirements of the FPA. The
provision requires an entity proposing to construct a
qualifying conduit hydropower facility to file with the
Commission a notice of intent to construct the facility,
including sufficient information to demonstrate the facility
meets the qualifying criteria. Once the notice of intent is
filed with the Commission, section 30(a)(2)(B) requires the
Commission to make an initial determination as to whether the
facility meets the qualifying criteria within 15 days of
receiving the notice of intent. The qualifying criteria, as
defined in Hydropower Regulatory Efficiency Act (HREA) of 2013,
include:
i. the facility is constructed, operated, or
maintained for generation of electric power and uses
for such generation only the hydroelectric potential of
a non-federally owned conduit;
ii. the facility has an installed capacity that does
not exceed 5 megawatts (MW);
iii. on or before the date of the enactment of HREA
of 2013 (August 9, 2013), the facility is not licensed
under, or exempted from the license requirements.
If the Commission makes an initial determination that the
facility meets the qualifying criteria, section 30(a)(2)(B)
requires the Commission to publish a public notice of the
notice of intent to construct a qualifying conduit facility,
giving the public the opportunity to comment on whether the
facility meets the qualifying criteria. The FPA further states
that if, not later than 45 days after the date of the
publication of public notice, no entity contests whether the
facility meets the qualifying criteria, the facility shall be
deemed to meet the criteria. Although an uncontested facility
is automatically deemed to qualify at the end of the notice
period, as a matter of general practice the Commission issues a
letter confirming that the facility qualifies. If an entity
contests whether the facility meets the qualifying criteria,
section 30(a)(2)(C) requires the Commission to promptly issue a
determination as to whether the facility meets the criteria.
H.R. 2786 would modify the qualifying conduit hydropower
facility process in two ways. First, the proposed bill would
shorten the comment period for the public, including state and
federal resource agencies, from 45 to 30 days. For your
information, FERC staff, on average, completes review of
qualifying conduit facility applications shortly after the 45-
day notice period closes. In fiscal year 2017, Staff processed
22 notices of intent to construct qualifying conduits in an
average of 58 days, and has processed four such notices, in an
average of 56 days, thus far in fiscal year 2018. The shortened
public notice period established by H.R. 2786 could slightly
reduce the processing time.
The second modification to section 30 of the FPA would
eliminate the existing 5-MW limit on qualifying facilities,
thus allowing projects of unlimited capacity to meet the
criteria for a qualifying conduit facility. This change could
potentially establish a larger subset of hydropower projects
that would not be required to be licensed or exempted by the
Commission. Section 30, giving the Commission the authority to
exempt certain small hydroelectric facilities from the
requirements of Part I of the FPA, was added to the FPA in
1978, and since that time, the Commission has issued only a
handful of conduit exemptions over 5 MW. Accordingly, I am
uncertain how many projects will be affected by this revision.
Should Congress choose to remove the 5-MW ceiling on
qualifying conduit hydropower facilities, such that these
projects could be of any size, it might also consider removing
the ceiling for conduit exemptions. Currently the maximum size
of projects for which the Commission may issue conduit
exemptions under its existing authority is 40 MW. It is not
clear why there should be no limit on the size of qualifying
conduit hydropower facilities and yet a 40-MW limit on conduit
exemptions.
If I can be of further assistance to you on this or any
other Commission matter, please let me know.
Sincerely,
Kevin J. McIntyre,
Chairman.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
H.R. 2786 as ordered reported, are shown as follows (existing
law proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
THE FEDERAL POWER ACT
* * * * * * *
Sec. 29. That all Acts or parts of Acts inconsistent with
this Act are hereby repealed: Provided, That nothing herein
contained be held or construed to modify or repeal any of the
provisions of the Act of Congress approved December 19, 1913,
granting certain rights-of-way to the city and county of San
Francisco, in the State of California: Provided further, That
section 18 of an Act making appropriations for the
construction, repair, and preservation of certain public works
on rivers and harbors, and for other purposes, approved August
8, 1917, is hereby repealed.
Sec. 30. (a)(1) A qualifying conduit hydropower facility
shall not be required to be licensed under this part.
(2)(A) Any person, State, or municipality proposing to
construct a qualifying conduit hydropower facility shall file
with the Commission a notice of intent to construct such
facility. The notice shall include sufficient information to
demonstrate that the facility meets the qualifying criteria.
(B) Not later than 15 days after receipt of a notice of
intent filed under subparagraph (A), the Commission shall--
(i) make an initial determination as to whether the
facility meets the qualifying criteria; and
(ii) if the Commission makes an initial
determination, pursuant to clause (i), that the
facility meets the qualifying criteria, publish public
notice of the notice of intent filed under subparagraph
(A).
(C) If, not later than [45] 30 days after the date of
publication of the public notice described in subparagraph
(B)(ii)--
(i) an entity contests whether the facility meets the
qualifying criteria, the Commission shall promptly
issue a written determination as to whether the
facility meets such criteria; or
(ii) no entity contests whether the facility meets
the qualifying criteria, the facility shall be deemed
to meet such criteria.
(3) For purposes of this section:
(A) The term ``conduit'' means any tunnel, canal,
pipeline, aqueduct, flume, ditch, or similar manmade
water conveyance that is operated for the distribution
of water for agricultural, municipal, or industrial
consumption and not primarily for the generation of
electricity.
(B) The term ``qualifying conduit hydropower
facility'' means a facility (not including any dam or
other impoundment) that is determined or deemed under
paragraph (2)(C) to meet the qualifying criteria.
(C) The term ``qualifying criteria'' means, with
respect to a facility--
(i) the facility is constructed, operated, or
maintained for the generation of electric power
and uses for such generation only the
hydroelectric potential of a non-federally
owned conduit;
(ii) the facility has an installed capacity
that does not exceed [5] 40 megawatts; and
(iii) on or before the date of enactment of
the Hydropower Regulatory Efficiency Act of
2013, the facility is not licensed under, or
exempted from the license requirements
contained in, this part.
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