[Senate Report 113-229]
[From the U.S. Government Publishing Office]
Calendar No. 516
113th Congress Report
SENATE
2d Session 113-229
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BUREAU OF RECLAMATION HYDROPOWER DEVELOPMENT EQUITY AND JOBS ACT
_______
July 31, 2014.--Ordered to be printed
_______
Ms. Landrieu, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 2010]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 2010) to amend the Water Conservation and
Utilization Act to authorize the development of non-Federal
hydropower and issuance of leases of power privileges at
projects constructed pursuant to the authority of the Water
Conservation and Utilization Act, 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 all after the enacting clause and insert the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Bureau of Reclamation Hydropower
Development Equity and Jobs Act''.
SEC. 2. AMENDMENT.
Section 9 of the Act of August 11, 1939 (commonly known as the
``Water Conservation and Utilization Act'') (16 U.S.C. 590z-7) is
amended--
(1) by striking ``In connection with'' and inserting ``(a) In
General.--In connection with''; and
(2) by adding at the end the following:
``(b) Certain Leases Authorized.--
``(1) In general.--Notwithstanding subsection (a), the
Secretary--
``(A) may enter into leases of power privileges for
electric power generation in connection with any
project constructed pursuant to this Act; and
``(B) shall have authority over any project
constructed pursuant to this Act in addition to and
alternative to any existing authority relating to a
particular project.
``(2) Process.--In entering into a lease of power privileges
under paragraph (1), the Secretary shall use the processes,
terms, and conditions applicable to the lease under section
9(c) of the Reclamation Project Act of 1939 (43 U.S.C.
485h(c)).
``(3) Findings not required.--No findings under section 3
shall be required for a lease under paragraph (1).
``(4) Rights retained by lessee.--Except as otherwise
provided under paragraph (5), all right, title, and interest in
and to installed power facilities constructed by non-Federal
entities pursuant to a lease under paragraph (1), and any
direct revenues derived from that lease, shall remain with the
lessee.
``(5) Lease charges.--Notwithstanding section 8, lease
charges shall be credited to the project from which the power
is derived.
``(6) Effect.--Nothing in this section alters or affects any
agreement in effect on the date of enactment of the Bureau of
Reclamation Hydropower Development Equity and Jobs Act for the
development of hydropower projects or disposition of
revenues.''.
Purpose
The purpose of S. 2010 is to amend the Water Conservation
and Utilization Act to authorize the development of non-Federal
hydropower and issuance of leases of power privileges at
projects constructed pursuant to the authority of the Water
Conservation and Utilization Act.
Background and Need
Both section 5 of the Town Sites and Power Development Act
of 1906 (43 U.S.C. 522) and section 9(c) of the Reclamation
Project Act of 1939 (43 U.S.C. 485h(c)) authorize the Bureau of
Reclamation to lease Reclamation facilities to non-federal
entities to produce electric power, through what is known as a
``lease of power privilege.'' In 2013, the Bureau of
Reclamation Small Conduit Hydropower Development and Rural Jobs
Act (Public Law 113-24) amended section 9(c) of the Reclamation
Project Act of 1939 to give the Bureau still broader authority
to enter into leases of power privileges at Reclamation
projects, including small conduit facilities, and to facilitate
development of hydropower at these facilities.
In addition to Reclamation projects built and operated
under Reclamation law, the Bureau also administers 11
reclamation projects that were built during the Great
Depression pursuant to the Water Conservation and Utilization
Act (16 U.S.C. 590z-7) (WCUA) with the assistance of the Works
Project Administration. The 11 projects built under the WCUA
are:
1. Buffalo Rapids Project--southeastern Montana
2. Intake Project--Montana
3. Mancos Project--southwest corner of Colorado
4. Mann Creek Project--west-central Idaho
5. Milk River Project--north-central Montana
6. Angostura Unit of PSMB--southwestern South Dakota
7. Mirage Flats Project--northwestern Nebraska
8. Rathdrum Prairie Project--panhandle of Idaho
9. Newton Project--Newton, Utah
10. Missoula Valley Project--west-central Montana
11. Scofield Project--Price, Utah
Because these 11 projects were not authorized under
Reclamation law, the authority to enter into leases of power
privileges granted by section 5 of the Town Sites and Power
Development Act of 1906 and section 9(c) of the Reclamation
Project Act of 1939 do not extend to them. Additional
legislation is needed to authorize the Bureau of Reclamation to
enter into leases of power privileges at the WCUA projects.
Legislative History
S. 2010 was introduced by Senator Barrasso on February 10,
2014. A hearing was held on the bill by the Subcommittee on
Water and Power on February 27, 2014. At its business meeting
on June 18, 2014, the Senate Energy and Natural Resources
Committee ordered S. 2010 favorably reported with an amendment
in the nature of a substitute.
Identical legislation, H.R. 1963, was introduced by Rep.
Daines (R-MT) on May 14, 2013. The House of Representatives
passed the measure on a voice vote on December 3, 2013. A
hearing was held on the bill by the Subcommittee on Water and
Power on February 27, 2014. At its business meeting on June 18,
2014, the Senate Energy and Natural Resources Committee ordered
H.R. 1963 favorably reported with an amendment in the nature of
a substitute.
Committee Recommendation
The Senate Committee on Energy and Natural Resources, in
open business session on June 18, 2014, by a voice vote of a
quorum present, recommends that the Senate pass S. 2010, if
amended as described herein.
Committee Amendment
During its consideration of S. 2010, the Committee adopted
an amendment in the nature of a substitute. The amendment is
technical in nature and makes changes to clarify the processes
used in the lease of power privileges and to make it consistent
with the Reclamation Small Conduit Hydropower and Rural Jobs
Act (Public Law 113-24). The amendment is explained in detail
in the section-by-section analysis below.
Section-by-Section Analysis
Section 1 provides the short title.
Section 2 amends section 9 of the WCUA by adding a new
subsection (b) to authorize the Secretary of the Interior to
enter into leases of power privileges for electric power
generation in connection with any project constructed under the
WUCA, and to give the Secretary authority over any project
pursuant to that Act. Paragraph (2) of the new subsection (b)
requires the Secretary to use the same processes, terms, and
conditions applicable under section 9(c) of the Reclamation
Project Act of 1930 (43 U.S.C. 485h(c)). Paragraph (3) provides
that no findings are required for a lease of power privileges.
Paragraph (4) provides that the lessee retains all right,
title, and interest in power facilities constructed by non-
Federal entities and all direct revenues derived from the
lease. Paragraph (5) provides that lease charges shall be
credited the project from which the power is derived. Paragraph
(6) provides that nothing in the WCUA alters any agreement in
effect on the date of enactment of S. 2010 for the development
of hydropower projects or disposition of revenues.
Cost and Budgetary Considerations
The following estimate of costs of this measure has been
provided by the Congressional Budget Office:
S. 2010--Bureau of Reclamation Conduit Hydropower Development Equity
and Jobs Act
S. 2010 would authorize the Bureau of Reclamation to enter
into leases with nonfederal entities to develop hydropower at
11 water project facilities owned by the government. Based on
information from the bureau, CBO estimates that enacting the
bill would affect direct spending; therefore, pay-as-you-go
procedures apply. However, we estimate such effects would not
be significant. Enacting the legislation would not affect
revenues or discretionary spending.
In 2011, the bureau completed an assessment of the II
facilities and found that seven of the locations have potential
for hydropower development. Under current law, the bureau is
authorized to develop hydropower production at those seven
facilities if it is federally financed and owned; however, it
has no plans to do so. Under the bill, the bureau would also be
authorized to work with nonfederal entities to develop
hydropower through lease agreements at any of the 11 facilities
specified in the legislation. Under such agreements, which we
expect the bureau would take advantage of, nonfederal entities
would finance the necessary hydropower improvements and own the
electricity derived from those improvements in exchange for a
lease payment to the federal government.
Any such lease payments would either be applied to
outstanding construction balances at the underlying facility
where they are collected or would be available to be spent
without further appropriation on rehabilitation work at the
facility. As a result, CBO estimates the net effects from such
lease payments would not be significant.
S. 2010 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act. Public
entities, such as irrigation districts and water use
associations, would benefit from federal hydropower leasing
contracts. Any costs to those entities would be incurred
voluntarily as a condition of receiving federal assistance. On
September 11, 2013, CBO transmitted a cost estimate for S.
1963, the Bureau of Reclamation Conduit Hydropower Development
Equity and Jobs Act, as ordered reported by the House Committee
on Natural Resources on July 31, 2014. 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. 2010.
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. 2010, as ordered reported.
Congressionally Directed Spending
This bill, as 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
February 27, 2014 Subcommittee on Water and Power hearing on S.
2010 follows:
Statement of Robert Quint, Senior Advisor, Bureau of Reclamation,
Department of the Interior
Chairman Schatz, members of the Subcommittee, I am Bob
Quint, Senior Advisor at the Bureau of Reclamation
(Reclamation). I am pleased to provide the views of the
Department of the Interior (Department) on S. 2010, the Bureau
of Reclamation Conduit Hydropower Development Equity and Jobs
Act. The Department, with some technical amendments summarized
in this statement, supports S. 2010, which amends the Water
Conservation and Utilization Act (16 U.S.C. Sec. Sec. 590y et
seq.) to authorize the development of non-federal hydropower
and issuance of leases of power privilege at projects
constructed pursuant to the authority of the Water Conservation
and Utilization Act (WCUA). In general, the Department supports
the increase in the generation of clean, renewable
hydroelectric power in existing canals and conduits. 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 Department's efforts to encourage the development of
sustainable hydropower, provide an overview of the history of
WCUA, and detail the areas in the bill where we believe
improvements could be made.
department's hydropower efforts
Before I share the Department's views on S. 2010, I want to
highlight some of the activities underway at the Department to
develop additional renewable hydropower capacity. In March
2011, the Department of the Interior and Department of Energy
announced nearly $17 million in funding over three years for
research and development projects to advance hydropower
technology. The funding included ten projects for 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 Administration's goal of meeting 80 percent of our
electricity needs from clean energy sources by 2035.
In March 2010 the Department entered into a Hydropower
Memorandum of Understanding (MOU)\1\ with the Department of
Energy, and the Army Corps of Engineers to study and promote
opportunities to develop additional hydropower. 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. While this first phase, completed in 2011, focused
primarily on Reclamation dams, the second phase focused on
constructed Reclamation waterways such as canals and conduits.
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. The two studies revealed that an
additional 1.5 million megawatt-hours of renewable energy could
be generated through hydropower at existing Reclamation sites.
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\1\http://www.usbr.gov/power/SignedHydropowerMOU.pdf, 2010
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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. This directive and standard was revised
earlier this month to incorporate new process requirements
established by Public Law 113-24, Bureau of Reclamation Small
Conduit Hydropower Development and Rural Jobs Act. New process
requirements updated in the document include: LOPPs being
offered first to irrigation districts or water user
associations operating or receiving water from Reclamation
transferred or reserved works and establishing timeframes for
irrigation districts or water user associations to accept or
reject the LOPP offer. The temporary revised procedures are out
for public comment until March 28, 2014.
overview of history of wcua
The WCUA was enacted on August 11, 1939 (amended October
14, 1940) to provide assistance to people hard hit by drought
in the Dust Bowl and other similar arid and semiarid areas of
the United States through the construction and development of
irrigation projects. WCUA leveraged the considerable labor
available by the Work Project Administration and other federal
agencies during the New Deal, which absent congressional
authorization, were precluded from using appropriations for
many of the requisite needs of irrigation projects. For
example, the Work Project Administration and other federal
agencies did not have the authority to purchase water rights,
rights-of-way, heavy machinery, and the services required to
design and construct engineering features, prepare legal
documents, and administer projects. WCUA resolved this issue by
authorizing the Bureau of Reclamation to use appropriations to
purchase rights-of-way, equipment and supplies, and for the
payment of competent supervisory, technical, legal and
administrative assistance, while the Work Project
Administration and other federal agencies funded the costs of
mechanics and laborers. Under WCUA, the Bureau of Reclamation
retained the responsibility for the construction and
administration of these projects. The Bureau of Reclamation has
been authorized to construct 11 projects and three separate
units under the WCUA.\2\
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\2\WCUA Projects: Mancos Project, Colorado; Buford-Trenton Project
(North Dakota); Buffalo Rapids Project, Montana; Scofield Project,
Utah; Intake Project, Montana; Mirage Flats Project, Nebraska; Missoula
Valley Project, Montana; Mann Creek Project, Idaho (not eventually
constructed under WCUA); Newton Project, Utah; Rapid Valley Project,
South Dakota; Balmorhea Project, Texas. The Eden Project, Wyoming, was
originally considered under the WCUA but was constructed under separate
authority. In addition, three units were authorized pursuant to WCUA
authority. Each unit is part of a Reclamation project that was not
altogether authorized by the WCUA. The three units include: Dodson
Pumping Unit, Milk River Project, Montana; Post Falls Unit, Rathdrum
Prairie Project, Idaho; and the Woodside Unit, Bitterroot Valley
Project, Montana (no construction has been undertaken).
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Reclamation is authorized to issue LOPP contracts on
projects that were authorized under Reclamation law pursuant to
Section 5 of the Town Sites 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). However, WCUA projects
were not authorized pursuant to Reclamation law and the
provisions of WCUA are only subject to Reclamation law where
explicitly identified in the WCUA. The LOPP authority granted
in Section 5 of the Town Sites 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) does not apply to
WCUA projects since it is not identified in the WCUA, and
therefore WCUA projects are not authorized to develop non-
federal hydropower absent congressional action. The Mancos
Project in southwestern Colorado is such a case where Congress
authorized the nonfederal development of hydropower on a WCUA
project through project specific legislation (P.L. 103-434).
s. 2010
Reclamation testified on H.R. 1963, a companion measure to
the legislation before the subcommittee today, last May before
the House Water and Power Subcommittee. The legislation was
amended by the House of Representatives, and that bill is
identical to the legislation before the Subcommittee today, S.
2010. The Department would be pleased to work with the
Subcommittee to further refine the legislation.
Section 2(c) of S. 2010 would specifically authorize
Reclamation to develop or enter into LOPP contracts for the
development of new hydropower on projects and facilities
authorized by WCUA, consistent with the Reclamation Project Act
of 1939. In accordance with federal Reclamation law, typically
LOPP charges paid by Lessees are deposited in the Reclamation
Fund as a credit to the affected project. However, WCUA
projects were not funded by the Reclamation Fund, but rather
the General Fund of the Treasury. To this point, the WCUA
states that all receipts from WCUA project operations--
including power--are to be covered into the Treasury, rather
than the Reclamation Fund, to the credit of miscellaneous
receipts. Therefore, if the intention of S. 2010 is for WCUA
LOPP charges to credit the affected WCUA project, additional
clarification is necessary in Section 2(g) of S. 2010 detailing
where the charges will be covered and how they will be applied
to the affected project. The Department looks forward to the
opportunity to work with the sponsors to address this issue.
Sections 2(h), 2(i), 2(j), 2(k), and 2(m) are duplicative
of Section 9(c) of the Reclamation Project Act of 1939, as
amended by PL 113-24, Bureau of Reclamation Small Conduit
Hydropower Development and Rural Jobs Act. If the 1939 Act is
amended again, there will be two distinct LOPP processes, one
for traditional Reclamation projects and one for WCUA projects,
as prescribed in S. 2010. For that reason, the Department
recommends deleting these duplicative areas of the bill.
Reclamation would be happy to work with the Subcommittee to
address these concerns.
Finally, Reclamation is concerned that the bill as written
may be interpreted in such a way that the LOPP authorization
granted is restricted to small conduit hydropower development
and would not apply to all WCUA conduit development or dam
development. For context, all WCUA conduit sites that show
hydropower potential are under 5 MW and would qualify as
``small conduit hydropower;'' however, the majority of WCUA
hydropower potential exists at WCUA dams. Therefore, if the
intent of the bill is to ``unlock'' the WCUA for non-federal
development through LOPP, the authorization needs to extend to
all WCUA conduits and dams. As the bill is written, it is
unclear if the authorization extends to all WCUA conduits and
dams. Reclamation would be happy to work with the Subcommittee
to address this concern.
In conclusion, as stated at previous hydropower hearings
before this subcommittee, 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.
Thank you for the opportunity to discuss S. 2010. 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 S. 2010, as ordered reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is in italic, and existing law in which no
change is proposed is shown in roman):
WATER CONSERVATION AND UTILIZATION ACT
Public Law 76-848
AN ACT Authorizing construction of water conservation and utilization
projects in the Great Plains and arid and semiarid areas of the United
States
* * * * * * *
Sec. 9 [In connection with] (a) In Generall.--In connection
with any project undertaken pursuant to this Act, provisions,
including contracts of sale, may be made for furnishing
municipal or miscellaneous water supplies, or for developing
and furnishing power in addition to the power requirements of
irrigation: Provided, That expenditures from appropriations
made directly pursuant to the authority contained in section 12
(1) to meet costs allocated to municipal or miscellaneous water
supplies or surplus power shall not exceed $500,000 for any one
project: Provided further, That no contract relating to a water
supply for municipal or miscellaneous purposes or to electric
power shall be made unless, in the judgment of the Secretary,
it will not impair the efficiency of the project for irrigation
purposes. On any project where such provisions are made, the
Secretary shall allocate to municipal or miscellaneous water
purposes or to surplus power the part of the estimated
construction costs of the project which he deems properly so
allocable; and such allocations shall not be included in the
reimbursable construction costs covered by the repayment
contract or contracts required under section 4. All right,
title, and interest in the facilities provided for such
municipal or miscellaneous water supplies or surplus power and
the revenues derived therefrom shall be and remain in the
United States. Contracts for such municipal or miscellaneous
water supplies or for such surplus power shall be at such rates
as, in the Secretary's judgment, will produce revenues at least
sufficient to cover the appropriate share of the annual
operation and maintenance cost of the project and such fixed
charges, including interest, as the Secretary deems proper.
Contracts for the sale of surplus power shall be for periods
not to exceed forty years and contracts for water supply for
municipal or miscellaneous purposes shall be for such periods
as the Secretary may determine and may include such renewal
options as the Secretary deems desirable: And provided further,
That in sales or leases of such power, 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 and any
amendments thereof.
(b) Certain Leases Authorized.--
(1) In General.--Notwithstanding subsection (a), the
Secretary--
(A) may enter into leases of power privileges
for electric power generation in connection
with any project constructed pursuant to this
Act; and
(B) shall have authority over any project
constructed pursuant to this Act in addition to
and alternative to any existing authority
relating to a particular project.
(2) Process.--In entering into a lease of power
privileges under paragraph (1), the Secretary shall use
the processes, terms, and conditions applicable to the
lease under section 9(c) of the Reclamation Project Act
of 1939 (43 U.S.C. 485h(c)).
(3) Findings not required.--No findings under section
3 shall be required for a lease under paragraph (1).
(4) Rights retained by lessee.--Except as otherwise
provided under paragraph (5), all right, title, and
interest in and to installed power facilities
constructed by non-Federal entities pursuant to a lease
under paragraph (1), and any direct revenues derived
from that lease, shall remain with the lessee.
(5) Lease charges.--Notwithstanding section 8, lease
charges shall be credited to the project from which the
power is derived.
(6) Effect.--Nothing in this section alters or
affects any agreement in effect on the date of
enactment of the Bureau of Reclamation Hydropower
Development Equity and Jobs Act for the development of
hydropower projects or disposition of revenues.
* * * * * * *