[Senate Report 113-35]
[From the U.S. Government Publishing Office]
Calendar No. 68
113th Congress Report
SENATE
1st Session 113-35
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BUREAU OF RECLAMATION SMALL CONDUIT HYDROPOWER DEVELOPMENT AND RURAL
JOBS
_______
June 3, 2013.--Ordered to be printed
_______
Mr. Wyden, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 306]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 306) to authorize all Bureau of
Reclamation conduit facilities for hydropower development under
Federal Reclamation law, and for other purposes, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill, as amended, do pass.
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Bureau of Reclamation Small Conduit
Hydropower Development and Rural Jobs Act''.
SEC. 2. AUTHORIZATION.
Section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C.
485h(c)) is amended--
(1) by striking ``The Secretary is authorized to enter into
contracts to furnish water'' and inserting the following:
``(1) The Secretary is authorized to enter into contracts to
furnish water'';
(2) by striking ``(1) shall'' and inserting ``(A) shall'';
(3) by striking ``(2) shall'' and inserting ``(B) shall'';
(4) by striking ``respecting the terms of sales of electric
power and leases of power privileges shall be in addition and
alternative to any authority in existing laws relating to
particular projects'' and inserting ``respecting the sales of
electric power and leases of power privileges shall be an
authorization in addition to and alternative to any authority
in existing laws related to particular projects, including
small conduit hydropower development''; and
(5) by adding at the end the following:
``(2)(A) When carrying out this subsection, the Secretary
shall first offer the lease of power privilege to an irrigation
district or water users association operating the applicable
transferred conduit, or to the irrigation district or water
users association receiving water from the applicable reserved
conduit. The Secretary shall determine a reasonable time frame
for the irrigation district or water users association to
accept or reject a lease of power privilege offer for a small
conduit hydropower project.
``(B) If the irrigation district or water users association
elects not accept a lease of power privilege offer under
subparagraph (A), the Secretary shall offer the lease of power
privilege to other parties in accordance with this subsection.
``(3) The Bureau of Reclamation shall apply its categorical
exclusion process under the National Environmental Policy Act
of 1969 (42 U.S.C. 4321 et seq.) to small conduit hydropower
development under this subsection, excluding siting of
associated transmission facilities on Federal lands.
``(4) The Power Resources Office of the Bureau of Reclamation
shall be the lead office of small conduit hydropower policy and
procedure-setting activities conducted under this subsection.
``(5) Nothing in this subsection shall obligate the Western
Area Power Administration, the Bonneville Power Administration,
or the Southwestern Power Administration to purchase or market
any of the power produced by the facilities covered under this
subsection and none of the costs associated with production or
delivery of such power shall be assigned to project purposes
for inclusion in project rates.
``(6) Nothing in this subsection shall alter or impede the
delivery and management of water by Bureau of Reclamation
facilities, as water used for conduit hydropower generation
shall be deemed incidental to use of water for the original
project purposes. Lease of power privilege shall be made only
when, in the judgment of the Secretary, the exercise of the
lease will not be incompatible with the purposes of the project
or division involved, nor shall it create any unmitigated
financial or physical impacts to the project or division
involved. The Secretary shall notify and consult with the
irrigation district or water users association operating the
transferred conduit before offering the lease of power
privilege and shall prescribe terms and conditions that will
adequately protect the planning, design, construction,
operation, maintenance, and other interests of the United
States and the project or division involved.
``(7) Nothing in this subsection shall alter or affect any
existing agreements for the development of conduit hydropower
projects or disposition of revenues.
``(8) Nothing in this subsection shall alter or affect any
existing preliminary permit, license, or exemption issued by
the Federal Energy Regulatory Commission under Part I of the
Federal Power Act (16 U.S.C. 792 et seq.) or any project for
which an application has been filed with the Federal Energy
Regulatory Commission as of the date of the enactment of the
Bureau of Reclamation Small Conduit Hydropower Development and
Rural Jobs Act.
``(9) In this subsection:
``(A) Conduit.--The term `conduit' means any Bureau
of Reclamation tunnel, canal, pipeline, aqueduct,
flume, ditch, or similar manmade water conveyance that
is operated for the distribution of water for
agricultural, municipal, or industrial consumption and
not primarily for the generation of electricity.
``(B) Irrigation district.--The term `irrigation
district' means any irrigation, water conservation or
conservancy, multicounty water conservation or
conservancy district, or any separate public entity
composed of two or more such districts and jointly
exercising powers of its member districts.
``(C) Reserved conduit.--The term `reserved conduit'
means any conduit that is included in project works the
care, operation, and maintenance of which has been
reserved by the Secretary, through the Commissioner of
the Bureau of Reclamation.
``(D) Transferred conduit.--The term `transferred
conduit' means any conduit that is included in project
works the care, operation, and maintenance of which has
been transferred to a legally organized water users
association or irrigation district.
``(E) Small conduit hydropower.--The term `small
conduit hydropower' means a facility capable of
producing 5 megawatts or less of electric capacity.''.
Purpose
The purpose of S. 306 is to authorize all Bureau of
Reclamation conduit facilities for hydropower development under
Federal Reclamation law.
Background and Need
The Bureau of Reclamation is the largest wholesale water
supplier, operating 337 reservoirs with a total storage
capacity of 245 million acre-feet of water. These reservoirs
provide irrigation water to 10 million farmland acres through
hundreds of miles of canals. Reclamation is also the second
largest producer of hydroelectric power in the western United
States. Fifty-three Bureau of Reclamation power plants annually
provide more than 40 billion kilowatt hours generating nearly a
billion dollars in power revenues and produce enough
electricity to serve 3.5 million homes.
There is potential to develop additional hydropower on
existing small conduits at Reclamation's water canals and
pipelines. Small conduit hydropower projects are defined as
projects producing 5-megawatts or less. According to a study
completed by the Bureau of Reclamation, 373 existing canals and
conduits have the combined potential of generating over 365,000
MW-hours of additional hydropower annually.
In order to develop small conduit hydropower, developers
must use the Lease of Power Privilege (LOPP) process where
hydropower is an authorized use. In developing small conduit
hydropower, the Secretary of the Interior must first offer the
LOPP to the irrigation district or municipality that currently
operates the project. S. 306 facilitates small hydropower
development at existing conduits by expediting and improving
the LOPP process.
Legislative History
Senator Barrasso introduced S. 306 on February 13, 2013.
The bill is co-sponsored by Senators Crapo, Enzi, Risch, and
Flake. The Senate Committee on Energy and Natural Resources
held a hearing on S. 306 on April 23, 2013. On May 8, 2013, the
Committee ordered S. 306 favorably reported, by voice vote,
with amendment in the nature of a substitute to conform S. 306
to the text of H.R. 678.
Representative Tipton introduced similar legislation, H.R.
678, on February 13, 2013. The House Committee on Natural
Resources held a hearing on the bill on March 25, 2013, and
reported the bill favorably out of committee. The bill passed
the House by a roll call vote of 416-7 with amendments. At its
business meeting on May 8, 2013, the Senate Energy and Natural
Resources Committee ordered H.R. 678 favorably reported.
In the 112th Congress, similar legislation, H.R. 2842, was
introduced by Representative Tipton on September 6, 2011. H.R.
2842 passed the House on March 7, 2012, by a roll call vote of
265 to 154. The Senate Committee on Energy and Natural
Resources Subcommittee on Water and Power held a hearing on
H.R. 2842 on September 19, 2012 (S. Hrg. 112-301).
Committee Recommendation
The Senate Committee on Energy and Natural Resources, in an
open business session on May 8, 2013, by voice vote of a quorum
present, recommends that the Senate pass S. 306, if amended as
described herein.
Committee Amendments
During its consideration of S. 306, the Committee adopted
an amendment in the nature of a substitute. The amendment
modifies S. 306 to conform it to the text of H.R. 678. The
provisions of the substitute are described in more detail in
the section-by-section analysis.
Section-by-Section Analysis
Section 1 provides the short title
Section 2 amends section 9(c) of the Reclamation Project
Act of 1939 (43 U.S.C. 485h(c)) to authorize sales of electric
power and leases of power privileges as a function at all
Bureau of Reclamation conduits. Section 2 of H.R. 678 clarifies
that the Bureau of Reclamation, not the Federal Energy
Regulatory Commission, is responsible for authorizing conduit
hydropower development on Reclamation-owned facilities through
its Lease of Power Privilege program.
This section further amends section 9(c) of the Reclamation
Project Act of 1939 by adding a number of new provisions as it
relates to small conduit hydropower development. Section
9(c)(2) of the Reclamation Project Act of 1939, as added by
section 2, requires that power privilege leases be offered
first to an irrigation district or water users association
operating or receiving water from the applicable transferred or
reserved conduit. The Secretary is directed to determine a
reasonable time frame for the irrigation district or water
users association to accept or reject a lease of power
privilege so that the Secretary can offer the lease of power
privilege to other parties if the irrigation district or water
users association elects no to develop small conduit hydropower
at the applicable conduit.
Section 9(c)(3) of the Reclamation Project Act of 1939, as
added by section 2, requires the Bureau of Reclamation to
``apply its categorical exclusion process under the National
Environmental Policy Act of 1969 . . . to small conduit
hydropower develop under this subsection, excluding siting of
associated transmission facilities on Federal lands.'' A
``categorical exclusion'' is defined by the Council on
Environmental Quality (CEQ) as a category of actions that
normally do not have a significant effect on the environment
and thus do not normally require preparation of either an
environmental assessment or an environmental impact statement
under the National Environmental Policy Act. 40 C.F.R. 1508.4.
The CEQ's regulations authorize federal agencies to adopt
categorical exclusions for such actions, subject to
``extraordinary circumstances in which a normally excluded
action may have a significant environmental effect,'' in which
case an environmental assessment or environmental impact
statement may be required.
Under its current authority, the Bureau of Reclamation has
adopted a categorical exclusion for lease of power privilege
projects ``if the scope of the project is consistent with the
terms'' of the categorical exclusion, ``and there are no
extraordinary circumstances.'' Reclamation Manual, Directives
and Standards, FAC 04-08 at 10 (Sept. 28, 2012). Extraordinary
circumstances are identified in the Department of the
Interior's NEPA rules at 43 C.F.R. 46.215. The Bureau's manual
provides that ``where any extraordinary circumstances exist, a
higher level of NEPA evaluation will be required.''
Paragraph (3) does not create a new statutory categorical
exclusion. It simply provides that the Bureau shall apply its
existing categorical exclusion process, which includes review
for possible extraordinary circumstances, to small conduit
hydropower development under subsection 9(c). The Bureau's
witness testified at the Committee's hearing that, if H.R. 678
is enacted, the Bureau ``would interpret this language as
endorsing its current directive and standard to potentially
apply categorical exclusions, provided that no extraordinary
circumstances exist, pursuant to 40 C.F.R. Sec. 1508.4.'' He
went on to state that the Bureau believes section (3) would
``preserve its discretion to determine whether a closer review
under NEPA is appropriate.''
Section 9(c)(4) of the Reclamation Project Act of 1939, as
added by section 2, designates the Power Resources Office in
Reclamation's Denver headquarters as the lead office for small
conduit hydropower policy and procedure setting activities.
Section 9(c)(5) of the Reclamation Project Act of 1939, as
added by section 2, clarifies that the Western Area Power
Administration, the Bonneville Power Administration and the
Southwestern Power Administration are not obligated to purchase
or market the conduit hydropower generated at Reclamation
facilities and that none of the costs associated with the
generation shall be assigned to these agencies' power rates.
Section 9(c)(6) includes provisions that declare nothing in
the bill will alter or impede the delivery and management of
water for original project purposes, and deems water used for
conduit hydropower generation to be incidental to use of water
for the original project purposes.
Section 9(c)(7) includes provisions that declare nothing in
the bill will alter or affect any existing agreements for
conduit hydropower development projects or disposition of
revenues.
Section 9(c)(8) specifies that nothing in this bill shall
alter or affect any existing permit, license, or exemption
issued by FERC under Part I of the Federal Power Act or any
project with a pending application at FERC as of the date of
enactment of this Act.
Section 9(c)(9) defines key terms used in section 9(c), as
amended.
Cost and Budgetary Considerations
The following estimate of costs of this measure has been
provided by the Congressional Budget Office.
S. 306--Bureau of Reclamation Small Conduit Hydropower Development and
Rural Jobs Act
CBO estimates that enacting S. 306 would increase federal
offsetting receipts by about $1 million over the 2014-2023
period because it would authorize the Bureau of Reclamation to
permit private entities to develop hydropower at certain
facilities owned by the bureau. Pay-as-you-go procedures apply
because enacting the legislation would increase offsetting
receipts (a credit against direct spending). Enacting the bill
would not affect revenues.
S. 306 would clarify that the jurisdiction over small
hydropower development by private entities on all bureau
irrigation canals and conduits lies solely with the bureau.
Under current law, the bureau or the Federal Energy Regulatory
Commission (FERC) has jurisdiction over hydropower development
at such facilities. CBO expects that this change would result
in a small increase in receipts from hydropower development
because the federal government collects no funds from project
developers if a project is authorized by FERC.
Typically, the bureau's agreements with private developers
of hydropower facilities on small conduits generate annual
receipts to the federal government ranging from about $10,000--
at most facilities--up to $100,000 for a few larger sites.
Selecting the lessee, negotiating the leasing contract, and
constructing new facilities usually takes two to four years
depending on the size of the project. Under the legislation,
CBO expects that the federal government would receive some
additional receipts beginning two years after enactment and
that those additional collections would grow to about $200,000
a year by 2023.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending or revenues. S. 306 would increase offsetting
receipts beginning in 2015. The budgetary changes that are
subject to those pay-as-you-go procedures are shown in the
following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 306 AS ORDERED REPORTED BY THE SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES ON MAY 8, 2013
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By fiscal year, in millions of dollars--
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2013-2018 2013-2023
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NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact............ 0 0 0 0 0 0 0 0 0 0 0 0 -1
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S. 306 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
On March 25, 2013, CBO transmitted a cost estimate for H.R.
678, the Bureau of Reclamation Small Conduit Hydropower
Development and Rural Jobs Act, as ordered reported by the
House Committee on Natural Resources on March 20, 2013. The two
pieces of legislation are similar, and the CBO cost estimates
are the same.
The CBO staff contact for this estimate is Aurora Swanson.
The estimate was approved by Theresa Gullo, 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 S. 306.
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 S. 306 as ordered reported.
Congressionally Directed Spending
S. 306, 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 Bureau of Reclamation at the
April 23, 2013, Full Committee hearing on S. 306 follows.
Statement of Lowell Pimley, Deputy Commissioner of Operations, Bureau
of Reclamation, Department of the Interior
Chairman Wyden, members of the Committee, I am Lowell
Pimley, Deputy Commissioner of Operations at the Bureau of
Reclamation (Reclamation). I am pleased to provide the views of
the Department of the Interior (Department) on S. 306 and H.R.
678, the Bureau of Reclamation Small Conduit Hydropower
Development and Rural Jobs Act. The Department supports the
goals of S. 306 and H.R. 678, which aim to increase the
generation of clean, renewable hydroelectric power in existing
canals and conduits, and believes these bills will provide
greater certainty and administrative streamlining of these
types of projects. As noted in previous hearings, the
Department has an aggressive sustainable hydropower agenda,
which we continue to implement under existing authorities. My
testimony today will summarize the areas where the
Administration supports the objectives of S. 306 and H.R. 678,
as well as detail the areas in the bills where we believe
improvements could be made, recognizing that the House of
Representatives amended H.R. 678 to address many of the
Department's concerns.
Reclamation is the second largest producer of hydropower in
the country. A 2010 Hydropower Memorandum of Understanding
(2010 MOU)\1\ signed by the Secretaries of Energy and the
Interior, and the Assistant Secretary of the Army (Civil Works)
provides a strategy to facilitate the development of
sustainable hydropower on federal facilities. Before I share
the Department's views on S. 306 and H.R. 678, I want to
highlight some of the activities underway at the Department to
develop additional renewable hydropower capacity. In March
2011, Secretary Salazar and the U.S. Department of Energy
Secretary Steven Chu announced nearly $17 million in funding
over three years for research and development projects to
advance hydropower technology. The funding included ten
projects that will receive a total of $7.3 million to research,
develop, and test low-head, small hydropower technologies that
can be deployed at existing non-powered dams or constructed
waterways. The funding will further the Obama Administration's
goal of meeting 80 percent of our electricity needs from clean
energy sources by 2035.
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\1\http://www.usbr.gov/power/SignedHydropowerMOU.pdf, 2010
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In March 2011, the Department released the results of an
internal study, the Hydropower Resource Assessment at Existing
Reclamation Facilities, that estimated the Department could
generate up to one million megawatt hours of electricity
annually and create jobs by addressing hydropower capacity at
70 of its existing facilities. In March 2012, Reclamation
completed the second phase of its investigation of hydropower
development, Site Inventory and Hydropower Energy Assessment of
Reclamation Owned Conduits, as referenced in the 2010 MOU.
While the first phase, completed in 2011, focused primarily on
Reclamation dams, the second phase focused on constructed
Reclamation waterways such as canals and conduits, and
estimated the Department could generate over 365,000 megawatt
hours of electricity annually by addressing hydropower capacity
on 373 of its existing canals. In total, the two studies
revealed that an additional 1.5 million megawatt-hours of
renewable energy could be generated through hydropower at
existing Reclamation sites.
Reclamation worked diligently with our stakeholders and the
hydropower industry to improve our Lease of Power Privilege
(LOPP) processes, and this collaboration culminated in the
release of an updated and improved LOPP directive and standard
in September 2012. These new procedures better define roles,
timelines and responsibilities that will allow us to better
support and encourage sustainable hydropower development at
Reclamation facilities.
In summary, both S. 306 and H.R. 678 would do two things:
1) provide a blanket authorization for the installation of
small hydropower units on all Reclamation-owned canals and
conduits and 2) require that Reclamation offer preference to
water user organizations for the development of canal/conduit
hydropower under a LOPP. Additionally, S. 306 would exempt
small canal/conduit hydropower projects below 5 MW from the
requirements of the National Environmental Policy Act (NEPA),
while H.R. 678 directs Reclamation to apply its categorical
exclusion process under NEPA to small conduit hydropower
development. Finally, S. 306 designates Reclamation's Power
Resources Office (PRO) as the lead point of contact for
requests to develop canal/conduit hydropower under a LOPP. Per
the Department's recommendation, H.R. 678 was amended to direct
Reclamation's PRO as the lead office for policy and procedure
setting activities.
Section 2 of S. 306 and H.R. 678 would clarify that
Reclamation is responsible for authorizing conduit hydropower
development on Reclamation-owned facilities through LOPP
contracts. As background, Reclamation is authorized by existing
law to issue LOPP contracts that utilize Reclamation-owned
facilities for private hydropower development under Section 5
of the Townsites and Power Development Act of 1906, 43 U.S.C.
Sec. 522, and Section 9(c) of the Reclamation Project Act of
1939, 43 U.S.C. Sec. 485h(c). Statutes that are specific to
individual Reclamation projects may also apply. Similar to the
LOPP process, the Federal Energy Regulatory Commission (FERC)
may also issue licenses for hydropower development under the
authority of the Federal Power Act, 16 U.S.C. Sec. 791 et seq.
To resolve potential confusion over whether a Reclamation LOPP
contract or a FERC license should govern hydropower development
at Reclamation facilities, Reclamation and FERC entered into
agreements in 1981 and 1992 to address hydropower development.
In particular, a 1992 memorandum of understanding between
Reclamation and FERC (1992 MOU)\2\ established a process to
resolve questions of jurisdiction over hydropower development
at Reclamation facilities. Reclamation and FERC continue to
work together to improve that process and make the process more
efficient.
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\2\The 1992 MOU is available in the Federal Register at: 58 Fed.
Reg. 3269 (Jan. 8, 1993).
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Section 2 of S. 306 and H.R. 678 would specifically
authorize Reclamation to develop or enter into LOPP contracts
for the development of new hydropower on conduits or canals on
Reclamation-owned projects. This language would streamline the
issuance of LOPP contracts by simplifying the Reclamation-FERC
jurisdictional consultation that was established in the 1992
MOU. This language also could provide Reclamation with an
opportunity to discuss programmatically resolving jurisdiction
over hydropower development on Reclamation conduits with FERC,
thus creating the potential to eliminate case-by-case
jurisdictional consultations for development on Reclamation
conduits.
Section 2 of S. 306 and H.R. 678 would also require that
Reclamation offer preference in the award of LOPPs to
``irrigation districts or water users associations'' with which
Reclamation has an existing contract for operations and
maintenance (O&M) of that project or project feature. While
Reclamation already provided preference to existing irrigation
districts and water user associations pursuant to Section 9(c)
of the Reclamation Projects Act of 1939 we agree that these
irrigation districts and water users currently operating and
maintaining Reclamation transferred works should get additional
favorability. In September 2012 we incorporated this concept
into our revised LOPP directive and standard. Reclamation would
be happy to work with the sponsors of the bills and the
Committees to resolve any concerns regarding preference.
Section 2 of S. 306 would provide that NEPA ``shall not
apply to small conduit hydropower development, excluding siting
of associated transmission on Federal lands[.]'' The Department
opposes a waiver of NEPA. Furthermore, this language is in
contrast to the existing provision in Section 30 of the Federal
Power Act (16 U.S.C. 823a) that allows FERC to approve an
application to develop hydropower within conduits located on
non-federal lands under certain conditions. Accordingly, as
provided in FERC's regulations at 18 CFR Sec. 380.4(a)(14),
FERC is not required to prepare an environmental assessment or
environmental impact statement for certain conduit hydropower
projects that meet the statutory and regulatory criteria and do
not have the potential for significant environmental impacts.
The Department understands the intent of S. 306 to be that
conduits and canals are existing, manmade structures where
environmental impacts associated with construction have already
occurred and/or been mitigated. However, the Department's view
is that low-impact hydropower, particularly in conduits and
canals, can be efficiently developed by utilizing existing
environmental review provisions that will not unduly delay
project development and ensure environmental health and safety.
Environmental analysis for many LOPP contracts has, for
example, been addressed through environmental assessments
rather than environmental impact statements. Reclamation's
newly published LOPP procedures also allow for an existing
categorical exclusion under NEPA to be applied to low-impact
hydropower projects where low impact is defined by their impact
to project operations as opposed to the size of the project.
Reclamation believes that low-impact hydropower developed in
conduits or canals may be appropriately analyzed under the same
categorical exclusion procedures that are documented in the
Departmental Manual at 516 DM 14.5(C)(3) and (D)(4).
H.R. 678, as amended by the House of Representatives,
directs Reclamation to ``apply its categorical exclusion
process under the National Environmental Policy Act of 1969 (42
U.S.C. 4321 et seq.) to small conduit hydropower development
under this subsection, excluding siting of associated
transmission facilities on Federal lands.'' The Department
recognizes the intent of H.R. 678 to encourage the use of the
categorical exclusion procedures that are allowed for in its
LOPP directives and standards and documented in the
Departmental Manual. If enacted, Reclamation would interpret
this language as endorsing its current directive and standard
to potentially apply categorical exclusions, provided that no
extraordinary circumstances exist, pursuant to 40 C.F.R.
Sec. 1508.4. Under Section 2 of H.R. 678, Reclamation does not
guarantee that categorical exclusions will apply on every small
hydropower project. Reclamation believes it should preserve its
discretion to determine whether a closer review under NEPA is
appropriate.
The Department believes that environmental protections
should continue to apply in the context of new construction
undertaken on federal lands, and will continue to apply NEPA
through the use of categorical exclusions or environmental
assessments. We understand the value and importance of
expedient environmental review and believe development of
hydropower within Reclamation's existing conduits and canals
can be efficiently analyzed utilizing these existing review
processes.
I would also like to address concerns raised by language in
Section 2 of S. 306 specifying that ``the Power Resources
Office of the Bureau of Reclamation shall be the lead office of
small conduit hydropower activities conducted under this
subsection.'' The Department understands the bill sponsor's
desire to simplify points of contact for entities seeking to
develop hydropower. However, in practice, project-specific
expertise concerning Reclamation facilities resides first at
the field level where ownership responsibility for the specific
infrastructure resides. It is preferable for developers to
approach the appropriate Reclamation regional or area office
with proposals to develop conduit hydropower, and contact the
PRO as needed. There is a robust channel of communication
between the PRO, other Denver Offices, and Reclamation regional
and field offices that allows for successful implementation of
a LOPP agreement. Reclamation organizes its workforce as
appropriate to maximize the efficiency and expertise of
personnel.
For these reasons, the Department is pleased to support the
House amended language in H.R. 678 specifying that ``the Power
Resources Office of the Bureau of Reclamation shall be the lead
office of small conduit hydropower policy and procedure-setting
activities conducted under this subsection.''.
S. 306 and H.R. 678 would amend 9(c) of the Reclamation
Project Act of 1939, which in addition to providing LOPP
authority, authorizes the Secretary to enter into contracts for
municipal water supply and miscellaneous purposes. Several of
the definitions in S. 306 as drafted would affect the other
authorities in the 1939 Act. In particular, the proposed
definition of ``transferred work'' is too narrow to refer to
all works affected by subsection 9(c) of the 1939 Act, since
that subsection authorizes contracts involving works other than
conduits. Either the definition would need to be broadened to
include all affected works, or the term defined narrowed from
``transferred work'' to ``transferred conduit.'' Also, the
existing 1939 Act has a definitions section. Any definitions
that are of general application should be included in the
existing definitions section, rather than in subsection 9(c).
Definitions that apply solely to conduit hydropower need to do
so explicitly, to avoid misapplication or confusion. The
Department would be happy to work with the Committee on S. 306
to make these technical changes to the language of the proposed
definitions and their placement within the existing 1939 Act.
The Department appreciates and supports the language in H.R.
678 that narrows the terms defined as recommended above.
As referenced above, Reclamation has procedures in place
through the LOPP process for the sites where Reclamation has
the authority to develop hydropower. In September 2012 we
released an updated LOPP Directive and Standard that improved
our processes, especially for conduits and canals, and
incorporated the concept of additional favorability for
irrigation districts and water user associations with O&M
responsibility on Reclamation projects.
Finally, H.R. 678 provides that ``nothing in this
subsection shall alter or affect any existing preliminary
permit, license, or exemption issued by the Federal Energy
Regulatory Commission under Part I of the Federal Power Act (16
U.S.C. 792, et seq.) or any project for which an application
has been filed with the Federal Energy Regulatory Commission as
of the date of the enactment of the Bureau of Reclamation Small
Conduit Hydropower Development and Rural Jobs Act.'' This
language allows for existing and pending FERC licenses to
remain within FERC's jurisdiction, rather than be redirected
into Reclamation's LOPP process.
In conclusion, as stated at previous hydropower hearings
before this committee, Reclamation will continue to review and
assess potential new hydropower projects that provide a high
economic return for the nation, are energy efficient, and can
be accomplished in accordance with protections for fish and
wildlife, the environment, or recreation. As the nation's
second largest hydropower producer, Reclamation strongly
believes in the past, present and bright future of this
important electricity resource. With these recommended
revisions, S. 306 and H.R. 678 will go a long way towards
meeting the Administration's goals of developing clean,
reliable, cost-effective, and sustainable hydropower in the
United States.
Thank you for the opportunity to discuss S. 306 and H.R.
678. This concludes my written statement, and I am pleased to
answer questions at the appropriate time.
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
the bill H.R. 678, 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):
RECLAMATION PROJECT ACT OF 1939
Act of August 4, 1939 (53 Stat. 1187; 43 U.S.C. 485 et seq.)
AN ACT To provide a feasible and comprehensive plan for the variable
payment of construction charges on United States reclamation projects,
to protect the investment of the United States in such projects, and
for other purposes.
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Sec. 9. (a)
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(c) [The Secretary is authorized to enter into contracts to
furnish water]
(1) The Secretary is authorized to enter into
contracts to furnish water for municipal water supply
or miscellaneous purposes: Provided, That any such
contract either--
[(1) shall] (A) shall require repayment to
the United States, over a period of not to
exceed forty years from the year in which water
is first delivered for the use of the
contracting party, with interest not exceeding
the rate of 3\1/2\ per centum per annum if the
Secretary determines an interest charge to be
proper, of an appropriate share as determined
by the Secretary of that part of the
construction costs allocated by him to
municipal water supply or other miscellaneous
purposes; or
[(2) shall] (B) shall be for such periods,
not to exceed forty years, and at such rates as
in the Secretary's judgment will produce
revenues at least sufficient to cover an
appropriate share of the annual operation and
maintenance cost and an appropriate share of
such fixed charges as the Secretary deems
proper, and shall require the payment of said
rates each year in advance of delivery of water
for said year. Any sale of electric power or
lease of power privileges, made by the
Secretary in connection with the operation of
any project or division of a project, shall be
for such periods, not to exceed forty years,
and at such rates as in his judgment will
produce power revenues at least sufficient to
cover an appropriate share of the annual
operation and maintenance cost, interest on an
appropriate share of the construction
investment at not less than 3 per centum per
annum, and such other fixed charges as the
Secretary deems proper: Provided further, That
in said sales or leases preference shall be
given to municipalities and other public
corporations or agencies; and also to
cooperatives and other nonprofit organizations
financed in whole or in part by loans made
pursuant to the Rural Electrification Act of
1936 [7 U.S.C. 901 et seq.]. Nothing in this
subsection shall be applicable to provisions in
existing contracts, made pursuant to law, for
the use of power and miscellaneous revenues of
a project for the benefit of users of water
from such project. The provisions of this
subsection [respecting the terms of sales of
electric power and leases of power privileges
shall be in addition and alternative to any
authority in existing laws relating to
particular projects.] respecting the sales of
electric power and leases of power privileges
shall be an authorization in addition to and
alternative to any authority in existing laws
related to particular projects, including small
conduit hydropower development. No contract
relating to municipal water supply or
miscellaneous purposes or to electric power or
power privileges shall be made unless, in the
judgment of the Secretary, it will not impair
the efficiency of the project for irrigation
purposes.
(2)(A) When carrying out this subsection, the
Secretary shall first offer the lease of power
privilege to an irrigation district or water users
association operating the applicable transferred
conduit, or to the irrigation district or water users
association receiving water from the applicable
reserved conduit. The Secretary shall determine a
reasonable time frame for the irrigation district or
water users association to accept or reject a lease of
power privilege offer for a small conduit hydropower
project.
(B) If the irrigation district or water users
association elects not to accept a lease of power
privilege offer under subparagraph (A), the Secretary
shall offer the lease of power privilege to other
parties in accordance with this subsection.
(3) The Bureau of Reclamation shall apply its
categorical exclusion process under the National
Environmental Policy Act of 1969 (42 U.S.C. 4321 et
seq.) to small conduit hydropower development under
this subsection, excluding siting of associated
transmission facilities on Federal Lands.
(4) The Power Resources Office of the Bureau of
Reclamation shall be the lead office of small conduit
hydropower policy and procedure-setting activities
conducted under this subsection.
(5) Nothing in this subsection shall obligate the
Western Area Power Administration, the Bonneville Power
Administration, or the Southwestern Power
Administration to purchase or market any of the power
produced by the facilities covered under this
subsection and none of the costs associated with
production or delivery of such power shall be assigned
to project purposes for inclusion in project rates.
(6) Nothing in this subsection shall alter or impede
the delivery and management of water by Bureau of
Reclamation facilities, as water used for conduit
hydropower generation shall be deemed incidental to use
of water for the original project purposes. Lease of
power privilege shall be made only when, in the
judgment of the Secretary, the exercise of the lease
will not be incompatible with the purposes of the
project or division involved, nor shall it create any
unmitigated financial or physical impacts to the
project or division involve. The Secretary shall notify
and consult with the irrigation district or water users
association operating the transferred conduit before
offering the lease of power privilege and shall
prescribe terms and conditions that will adequately
protect the planning, design, construction, operation,
maintenance, and other interests of the United States
and the project or division involved.
(7) Nothing in this subsection shall alter or affect
any existing agreements for the development of conduit
hydropower projects or disposition of revenues.
(8) Nothing in this subsection shall alter or affect
any existing preliminary permit, license, or exemption
issued by the Federal Energy Regulatory Commission
under Part I of the Federal Power Act (16 U.S.C. 792 et
seq.) or any project for which an application has been
filed with the Federal Energy Regulatory Commission as
of the date of the enactment of the Bureau of
Reclamation Small Conduit Hydropower Development and
Rural Jobs Act.
(9) In this subsection:
(A) Conduit.--The term ``conduit'' means any
Bureau of Reclamation tunnel, canal, pipeline,
aqueduct, flume, ditch, or similar manmade
water conveyance that is operated for the
distribution of water for agricultural,
municipal, or industrial consumption and not
primarily for the generation of electricity.
(B) Irrigation district.--The term
``irrigation district'' means any irrigation,
water conservation or conservancy, multicounty
water conservation or conservancy district, or
any separate public entity composed of two or
more such districts and jointly exercising
powers of its member districts.
(C) Reserved conduit.--The term ``reserved
conduit'' means any conduit that is included in
project works the care, operation, and
maintenance of which has been reserved by the
Secretary, through the Commissioner of the
Bureau of Reclamation.
(D) Transferred conduit.--The term
``transferred conduit'' means any conduit that
is included in project works the care,
operation, and maintenance of which has been
transferred to a legally organized water users
association or irrigation district.
(E) Small conduit hydropower.--The term
``small conduit hydropower'' means a facility
capable of producing 5 megawatts or less of
electric capacity.
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