Order Code IB10122
CRS Issue Brief for Congress
Received through the CRS Web
Hydropower Licenses and Relicensing
Conditions: Current Issues
and Legislative Activity
Updated January 9, 2004
Kyna Powers
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Licensing Authority
Federal Power Act §4(e) and §18 License Conditions
License Conditions for Projects on Federal Reservations (FPA §4(e))
Fishway Provisions (FPA §18)
License Conditioning Agencies and the Relicensing Process
Pre-Application Phase
Post-Application Phase
Cost of Mandatory Conditions
Proposed Changes to the License-Conditioning Process
Hydroelectric Relicensing Legislation in the 108th Congress
Discussion
Length of Process
Environmental Issues
Effectiveness of Integrated Licensing Process (ILP)
Participation in the Conditioning Process
Conclusion
LEGISLATION
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
Hearings
FOR ADDITIONAL READING
CRS Reports
Other Documents


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Hydropower Licenses and Relicensing Conditions:
Current Issues and Legislative Activity
SUMMARY
In the next ten years, more than 40% of
been passed by both chambers of the 108th
the nation’s non-federal hydropower projects
Congress (H.R. 6) to alter federal agencies’
will require new federal licenses to continue
license-conditioning authority.
The House
operating. New licenses will establish facili-
passed H.R. 6 on April 11, 2003. The Senate
ties’ allowed generation capacity, operating
passed another version of H.R. 6 on July 31,
parameters, and environmental protection
2003. A conference agreement was reached on
requirements for the next 30 to 50 years.
November 17, 2003, and passed by the House
These operating parameters will affect the
the next day. The conference agreement on
total quantity and timing of electricity produc-
H.R. 6 would allow stakeholders to propose
tion, flood control, irrigation, municipal water
alternative license conditions and would
supplies, recreation, fish and wildlife habitat,
require federal agencies to consider alterna-
and transportation.
tives proposed by license applicants.
The
legislation would also require an agency to
Under the 1920 Federal Power Act
accept the applicant’s proposed alternative if
(FPA), the Federal Energy Regulatory Com-
it found that the alternative: 1) provides for
mission (FERC) has primary responsibility for
the adequate protection and utilization of the
balancing multiple water uses and evaluating
federal reservation, or will be no less protec-
licensing and relicensing applications. How-
tive of the fish resource than the fishway
ever, the FPA also creates a role in the licens-
initially prescribed, and 2) costs less to imple-
ing process for federal agencies that are re-
ment, and/or will result in improved operation
sponsible for managing fisheries or federal
of the project for electricity production.
reservations (e.g. national forests, etc.). Spe-
cifically, sections 4(e) and 18 of the FPA give
Response to the proposed legislation has
certain federal agencies the authority to attach
been mixed. While FERC and the hydro-
conditions to FERC licenses. For example,
power industry generally support the legisla-
federal agencies may require applicants to:
tion, some environmental organizations op-
build passageways through which fish can
pose the bills, and officials within some con-
travel around the dam, schedule periodic water
ditioning agencies have expressed concerns.
releases for recreation, release minimum flows
Opponents of the legislation argue that re-
of water for fish migration, control water
source agencies are taking adequate steps to
release rates to reduce erosion, or limit reser-
improve the conditioning process, and that the
voir fluctuations to protect the reservoir’s
legislation could increase relicensing time,
shoreline habitat. Once an agency issues such
weaken environmental protections, give appli-
conditions, FERC must include them in its
cants undue standing in the conditioning
license. While these conditions often generate
process, and weaken FERC’s proposed licens-
environmental or recreational benefits, they
ing process. On the other hand, proponents of
may also require construction expenditures
the legislation argue that it would create
and may increase generation costs by reducing
accountability on the part of conditioning
operational flexibility.
agencies, decrease the cost of license condi-
tions without diminishing agencies’ condition-
Reflecting recommendations by FERC
ing authority, and enhance FERC’s proposed
and the hydropower industry, legislation has
licensing process.
Congressional Research Service
˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
Conferees on the House and Senate comprehensive energy bills (H.R. 6) met on
November 17, 2003, and approved a conference report that contained provisions on
hydroelectric facilities. The Senate conferees voted 10-3 to approve an offer to the House
conferees. The House conferees approved a counteroffer by voice vote, and the House
conferees' counteroffer was accepted by eight of the Senate conferees. The House approved
the conference report November 18, 2003.
BACKGROUND AND ANALYSIS
Hydropower is one of the multiple benefits the nation’s waters provide. It accounts for
nearly 7% of all electricity produced in the United States and 15% or more of the electricity
produced in Idaho (27%), Maine (15%), Montana (34%), Oregon (43%), South Dakota
(30%), Vermont (37%), and Washington (44%).1 Hydroelectric power is generated by
releasing water through a set of turbines; thus, it does not produce air pollutants and can be
turned on or off in a matter of minutes. By storing water behind dams and controlling water
releases, hydropower facilities can generate electricity during periods of high energy demand
(so called peaking power).
While these facilities are important sources of clean peaking power, the construction
and management of dams are contentious because dams affect other beneficial water uses
and resources. The construction of dams alters the river by blocking downstream flows and
creating reservoirs. While reservoirs can provide recreational opportunities and habitat for
certain fish species, they increase the effort migratory fish must exert to travel up or down
river and increase the exposure of young fish to predators. Once a hydropower facility is
built, its management also affects water uses. For example, the decision of when, how, and
how much water to release from a hydroelectric facility affects flood control, irrigation,
municipal water supplies, recreation, fish and wildlife habitats, and transportation (See CRS
Report RL31536, Licensing of Non-Federal Hydroelectric Projects: Background and
Current Issues
).
In order to make sure that navigable waters are managed for the public interest,
Congress oversees the construction and operation of hydroelectric facilities. Congress
directly authorizes federal hydropower projects and requires that private hydropower projects
obtain federal licenses.
This issue brief summarizes federal licensing and license-
conditioning authority for non-federal projects, discusses key arguments for and against
changing the process through which federal resource agencies issue license conditions, and
reviews current legislative proposals to revise federal licensing authority. (Managers of
federal dams may implement changes similar to those contained in hydropower licenses.)
1 Department of Energy Report DOE/EIA-0214, State Energy Data Report 1999, Table 3, “Energy
Consumption Estimates by Source,” at [http://www.eia.doe.gov/emeu/sedr/contents.html].
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Licensing Authority
Through the 1920 Federal Power Act (FPA) (16 U.S.C. 792), Congress created the
Federal Power Commission (FPC), later renamed the Federal Energy Regulatory
Commission (FERC), which licenses all non-federal hydropower facilities. Using this
authority, FERC granted 30 to 50 year licenses to projects located in 45 states (excluding
Delaware, Hawaii, Mississippi, North Dakota, and South Dakota which have no non-federal
dams). Many of the licenses for these projects were issued during the 1950s and 1960s, and
are now expiring. In the next 10 years, 218 projects, or about 40% of all non-federal
hydropower facilities, will need new licenses to continue operating.2
In order to help ensure that FERC licenses protect migratory fish and federally reserved
lands (e.g., lands, such as Indian reservations and national forests, that are set apart by the
federal government for a special purpose), Congress created a role in the licensing process
for certain federal agencies. The FPA requires that FERC include in its license certain
agency-established operating conditions. For example, section 18 of the FPA (16 U.S.C.
811) stipulates that the Secretary of the Interior or the Secretary of Commerce may develop
license conditions that direct the applicant to construct and maintain a passageway, called
a fishway, through which fish can travel around barriers created by the dam. Furthermore,
section 4(e), authorizes certain department secretaries to develop license conditions for
facilities located in the federal reservations they manage (16 U.S.C. 797(e)). Under section
4(e), a secretary may stipulate provisions that are necessary to maintain the reservation for
its federally designated purposes. Conditioning authority is not limited to FERC and Federal
agencies. The 1970 Federal Water Pollution Control Act, commonly known as the Clean
Water Act (CWA) (33 U.S.C. 1341) extends conditioning authority to state pollution-control
agencies. Under the CWA, a FERC-issued license must include any conditions that the state
deems necessary to maintain state-designated uses or water quality standards.
Federal Power Act §4(e) and §18 License Conditions
As noted above, sections 4(e) and 18 of the FPA grant federal agencies the authority to
issue license conditions designed to preserve or enhance federally reserved lands, and to help
fish travel around barriers created by hydropower facilities. The type of conditions issued
pursuant to FPA sections 4(e) and 18 are described below.
License Conditions for Projects on Federal Reservations (FPA §4(e)).
Section 4(e) of the FPA applies to hydropower facilities located on federally reserved lands
(e.g., Indian reservations and national forests, etc.). Under this section, the Secretary of the
department with jurisdiction over the reserved land has the authority to issue any license
conditions necessary to maintain the reservation.
Depending on the purpose of the
reservation, the agency’s conditions may address a range of goals including the preservation
or enhancement of recreation, federal lands, and aquatic habitat. Specifically, the Secretary
could require the applicant to: schedule periodic water releases for recreation (white-water
releases), release minimum quantities of water for fish migration (minimum flows), control
the rate of water release to reduce habitat disruption (ramping requirements), and limit
2 Federal Energy Regulatory Commission, Hydroelectric Projects Under Commission License,
updated March 11, 2003, at [http://www.ferc.gov/industries/hydropower/gen-info/projlic.pdf].
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reservoir fluctuations to reduce erosion and maintain habitat (reservoir fluctuation limits).
The Department of the Interior reports that the Bureau of Indian Affairs, Bureau of
Reclamation, National Park Service, and Bureau of Land Management issued section 4(e)
conditions for 6% of the projects relicensed between 1995 and 2000.
Fishway Provisions (FPA §18). Under section 18 of the FPA, the Secretary of the
Interior and the Secretary of Commerce may require applicants to construct and operate a
physical structure, facility, or levee, called a fishway,3 that allows fish to swim around
barriers created by the hydropower project. Fishways provide young migratory fish with
somewhat safer passage around the dam on their way downstream. Without a fishway,
migratory fish have no alternative to the more dangerous passage over the dam via spill or
through the project’s turbines. Adult fish also use fishways, such as fish ladders, to get past
the dam on their way upstream to spawn. Without fishways, a hydropower project may block
upstream migration. In order to preserve and enhance fish resources, the Fish and Wildlife
Service (USFWS) issued section 18 conditions for 20% of the projects relicensed between
1995 and 2000. The Department of Commerce, through the National Marine Fisheries
Service (NMFS) issued section 18 conditions for 7.6% of the projects licensed between 1995
and 2000. In some cases, the NMFS and the USFWS issued conditions for the same
projects.4
License Conditioning Agencies and the Relicensing Process
Federal resource agencies establish FPA section 4(e) and 18 license conditions by
working through and alongside FERC’s licensing processes. FERC’s regulations allow three
licensing processes: a structured process known as the Traditional Licensing Process (TLP),
a collaborative process known as the Alternative Licensing Process (ALP), and a new
licensing process, called the Integrated Licensing Process (ILP), that is both structured and
collaborative. Each of these processes has two phases: a pre-application phase led by the
applicant and a post-application analysis phase led by FERC.5
As described below,
conditioning agencies participate in both licensing phases.
Pre-Application Phase. In order for agencies to evaluate a project and develop
license conditions, they need information on how the project affects the resources they
manage. The conditioning agency generally obtains this information from the applicant who
conducts studies before a license application is submitted. Specifically, FERC’s licensing
process requires an applicant to consult with stakeholders, including conditioning agencies,
before the applicant decides which studies to undertake.
3 Environmental Protection Agency, Notice of Proposed Interagency Policy on the Prescription of
Fishways under Section 18 of the Federal Power Act
, 65 Fed.Reg. 80898 (December 22, 2000). See
also 16 U.S.C. §811.
4 Letter by William D. Bettenberg (Interior) to David P. Boergers (FERC), Hydroelectric Licensing
Policies, Procedures, and Regulations: Comprehensive Review
, entered into FERC Docket No.
PL01-1-000 on April 16, 2001.
5
The
Notice
of
Proposed
Rulemaking
is
available
under
RM02-16-000
at
[http://www.ferc.gov/industries/hydropower/indus-act/hydro-rulemaking-nopr.pdf] on August 27,
2003. (Hereafter referred to as FERC’s NOPR.)
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The pre-application process can be delayed when the applicant disagrees with the
conditioning agencies regarding the need for, or content of, particular studies. Agencies,
unlike FERC, do not have the authority to require applicants to conduct studies. However,
agencies’ authority to issue license conditions does provide applicants with an incentive to
resolve study disagreements. Applicants and conditioning agencies may utilize voluntary
mechanisms for resolving these study disputes. Under the ALP, for example, conditioning
agencies and applicants may use FERC’s Dispute Resolution Service (DRS). The DRS is
a FERC service that mediates license disputes. The DRS does not provide recommendations,
but it may bring in FERC experts to help clarify issues. When agencies and the applicant do
not resolve their disagreements using the DRS, the agency’s study request may be deferred
until FERC evaluates the application.
Under the ILP, applicants and stakeholders would first try to resolve disputes through
voluntary discussions. If this voluntary process fails, then the conditioning agencies, under
the ILP, would have the opportunity to initiate a “formal study dispute resolution process.”
Under the ILP, FERC will become involved during the pre-application phase and will have
the final say regarding the applicant’s study development plan. (For more information on
this process see CRS Report RL31903. Relicensing of Non-Federal Hydroelectric Projects:
Summary and Discussion of Procedural Reform Proposals
)
Post-Application Phase. Once the applicant completes its studies and submits its
license application, conditioning agencies evaluate the study results and develop their
conditions. At present, agencies develop license conditions that may or may not incorporate
suggestions from other stakeholders. After the agency submits its conditions, FERC must
include them in its license unless FERC finds that the conditions are unrelated to the
agencies’ FPA jurisdiction. If the conditions are outside the agencies’ jurisdiction, FERC
may refuse to include them in its license. A key issue prompting legislative proposals is that
under the current processes, applicants and other stakeholders have little opportunity to
contest agencies’ conditions.
However, the Department of the Interior is currently
developing administrative appeals processes for license conditions.6
Another issue is that delay in the license-conditioning process may occur when the
agency has insufficient information to evaluate the project. Specifically, some officials
within conditioning agencies have voiced concern that some applicants do not provide
sufficient information in their license applications for agencies to develop conditions.
Insufficient information is often the result of unresolved study disputes. If a study is not
conducted during the pre-application phase, a conditioning agency may ask FERC to require
that the applicant conduct the study. The agency may also conduct the study itself, or may
issue license conditions in the absence of full information. However, conducting studies
often requires significant financial resources and the imposition of conditions without the
underlying studies may lead to litigation. Therefore, a major goal of the proposed ILP is to
resolve study disputes early in the pre-application phase.
6 Statement of Lynn Scarlett, Assistant Secretary of Policy, Management and Budget, U.S.
Department of the Interior, to the Federal Energy Regulatory Commission, November 7, 2002. See
also FERC’s NOPR.
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Cost of Mandatory Conditions
Through the relicensing process, FERC and federal agencies establish license conditions
designed to preserve and enhance the resources affected by hydropower projects. While
these conditions often generate environmental, recreational, or other benefits, they may also
require that the applicant incur costs. FERC calculated the median cost of a license’s
protection, mitigation, and enhancement measures, including state agency conditions, as
$246 per kilowatt (kW) of capacity under the TLP and as $58 per kW under the ALP.
However, these figures have been criticized by the General Accounting Office because they
are based on a sample of projects that submitted their costs to FERC and not on a
representative sample.7
License conditions may result in two types of costs: fixed capital costs such as
construction of installations, and variable costs that arise from changes in management
techniques. For example, license conditions may require applicants to purchase or construct
installations including fishways, boat ramps, and fish screens. Changing facility operations
may also decrease total hydropower production. For example, minimum flow requirements,
white water releases, or fishway releases reduce the facility’s total generation when the water
is not released through turbines. According to FERC, conditions placed in the license for
environmental protection reduce average annual hydropower generation by 1.59%. While
these conditions may decrease total electricity generation, they may also reduce the facility
operator’s leeway to store water behind the dam for release during periods of peak demand.
If hydropower is removed from the supply of peaking power, additional generation by other
higher cost producers would be required. At the same time, FERC estimates that efficiency
improvements made during relicensing increase capacity by an average of 4.06%.
While hydropower license conditions often generate costs, other stakeholders would
face costs if such conditions were not applied. For example, fishway requirements and
minimum flow requirements reduce the dam’s harm to migratory fish populations. Without
such requirements, Native Americans, the commercial fishing industry, and individuals who
fish for recreation would continue to pay the costs of decreased fish populations. Likewise,
constraints on reservoir height fluctuations and water release rates reduce stream-bank and
reservoir-bank erosion. Without such conditions, taxpayers, as owners of national forests,
and other owners of shoreline or river-front property may continue to pay the costs of such
erosion. Depending on the project’s characteristics, license conditions may benefit a wide
array of stakeholders that use the water for irrigation, transportation, fishing, boating.
Proposed Changes to the License-Conditioning Process
A number of issues emerged as the first wave of hydropower projects were relicensed
throughout the 1990s. These issues have prompted Congress to hold hearings and take other
actions to examine the licensing process. The 106th Congress directed FERC to conduct a
comprehensive review of the policies, procedures, and regulations guiding the licensing
process and report to Congress (section 603 of the Energy Act of 2000, P.L.106-469). FERC
responded in May 2001, with recommendations on how to reduce the length and expense of
7 General Accounting Office Report, GAO-01-499, Licensing Hydropower Projects: Better Time and
Cost Data Needed to Reach Informed Decisions about Process Reforms,
May 2, 2001.
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obtaining a new license.8 In addition to administrative proposals, which are the subject of
CRS Report RL31903, the Section 603 Report proposed legislative changes to the relicensing
process. One class of proposals focuses on agencies’ mandatory conditioning authority. For
example, FERC suggested that Congress grant it the authority to reject or modify resource
agencies’ conditions and that Congress require agencies to better support their license
conditions. While the hydropower industry tends to support these FERC recommendations,
environmental organizations, and officials within federal and state agencies oppose these
suggestions and any other proposed reduction in current license-conditioning authority.
Opponents of FERC’s legislative proposal argue that administrative reforms, such as FERC’s
proposed rule establishing the ILP and the development of agencies’ administrative review
processes, are adequate to improve the relicensing process.
Legislative proposals incorporating some of these suggestions have been introduced in
Congress in recent years, but none has been enacted. For example, hydroelectric titles passed
both chambers during the 107th Congress. (H.R. 4, the Securing America’s Future Energy
Act, passed the House August 2, 2001 and the Energy Policy Act, also H.R. 4, passed the
Senate April 25, 2002.) Title III of each of these bills would have allowed license applicants
to propose alternatives to agencies’ mandatory conditions under the Federal Power Act.
While a compromise was not achieved at the end of the 107th Congress, this legislation is the
basis of all relicensing legislation proposed in the 108th Congress.
Hydroelectric Relicensing Legislation
in the 108th Congress
Title III of H.R. 4 (107th Congress) was incorporated into the Senate-passed energy bill,
H.R. 6, in the nature of a substitute. Title III of H.R. 6 also passed the House, though with
substantive differences.9 The conference agreement on H.R. 6 contains similar language to
the House-passed bill. Each of these bills10 focuses on federal agencies’ license conditioning
authority under section 4(e) or 18 of the FPA. The House-passed bill would provide license
applicants with the opportunity for a trial-type hearing on facts related to agency-proposed
license conditions. Furthermore, each bill would change the license-conditioning process by
allowing stakeholders, including applicants, to propose alternative conditions. When the
license applicant proposes an alternative, the conditioning agency would be required to
consider it, and to adopt the alternative if it meets certain environmental and cost criteria.
Specifically, the agency would have to accept an applicant’s proposed alternative if it found
that the alternative: 1) “provides for the adequate protection and utilization of the
reservation” (§33 (a)(2)(A) of the Federal Power Act as amended by the conference
8 Federal Energy Regulatory Commission, Report to Congress on Hydroelectric Licensing Policies,
Procedures, and Regulations — Comprehensive Review and Recommendations Pursuant to Section
603 of the Energy Act of 2000,
Section 603 Report (Washington, DC: May 2001). Available at
[http://www.ferc.gov/legal/ferc-regs/land-docs/ortc_final.pdf] on August 27, 2003.
9 “A bill to enhance energy conservation and research and development, to provide for security and
diversity in the energy supply for the American people, and for other purposes.”
10
Two additional bills, H.R. 1013 and S. 14 (§511) were introduced in the 108th Congress and
contain hydropower licensing titles that are identical to those in the House-passed bill.
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agreement on H.R. 6), and/or “will be no less protective of the fish resources than the
fishway initially prescribed” (§33 (b)(2)(A) of the Federal Power Act as amended by the
conference agreement on H.R. 6); and 2) costs less to implement, and/or will result in
improved operation of the project for electricity production (§33 (a)(2)(B) and §33
(b)(2)(B)of the Federal Power Act as amended by the conference agreement on H.R. 6). The
Senate-passed bill contains similar language, but it adds that improvements in project
operations for electricity production are compared with the operations under the agency’s
proposed condition.
The House-passed bill and the conference agreement would also require that the
conditioning agency justify its decision to accept or reject the alternative after giving equal
consideration to the effect of its condition and the alternative condition on a broad range of
factors. These factors include energy supply, distribution, cost, and use; flood control;
navigation; water supply; and air quality (in addition to the preservation of other aspects of
environmental quality) (§33 (a)(3)of the Federal Power Act as amended by the conference
agreement on H.R. 6). This section of the proposed legislation differs from the Senate-
passed bill, which would require the agency to include such factors in its justification, but
not to consider them equally.
The House-passed bill and the conference agreement differ from the Senate-passed bill
by establishing a system for reviewing the agency’s condition when it rejects the applicant’s
alternative. Specifically, the House-passed bill and conference agreement state that FERC
could refer the agency’s decision to its Dispute Resolution Service (DRS). Unlike the DRS’
mediation role under the alternative licensing process (ALP), the proposed legislation would
require the DRS to review the facts and issue a non-binding advisory. The Secretary of the
conditioning agency would then reconsider his or her decision and may or may not accept
the advisory.
Discussion
Response to the relicensing legislation in the 108th Congress is mixed. FERC and the
hydroelectric industry support the hydropower relicensing legislation, but some
environmental organizations and some officials within relevant government agencies have
expressed concerns. While the National Hydropower Association is more supportive of the
House-passed bill than the Senate-passed bill, some environmental organizations view the
Senate-passed bill as a modest improvement over the House-passed bill. According to
FERC, the House-passed bill would provide accountability by making agencies justify their
conditions in light of the proposed alternatives and the conditions’ effects on multiple
resources. The hydropower industry argues that this legislation would decrease the cost of
license conditions. On the other hand, environmental organizations and officials within
conditioning agencies have expressed concerns that the legislation would further increase the
length of the relicensing process, diminish environmental protection, reduce the effectiveness
of FERC’s proposed ILP, and give license applicants more authority in the license
conditioning process than other stakeholders. These issues are discussed below.
Length of Process. If enacted, all versions of H.R. 6 would add additional steps to
the licensing process. Specifically, the bills would require that federal agencies determine
whether or not a proposed alternative meets the environmental and cost criteria described
above, and determine how the alternative and agencies’ conditions affect energy supply,
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distribution, cost, and use; flood control; navigation; water supply; and air quality (in
addition to the preservation of other aspects of environmental quality). The House-passed
bill and the conference agreement would also allow license applicants to initiate a trial-type
hearing on issues of material fact. Both of these provisions could add an undetermined
amount of time to the licensing process. The legislation passed in the House and included
in the conference agreement, would also establish a 90-day process for the DRS and FERC
to review the agency’s conditions. This provision was not included in the Senate-passed
H.R. 6.
From the perspective expressed by industry and FERC, the House-passed bill would
most improve the license conditions, thus justifying additional process time. Furthermore,
supporters of the legislation argue that additional procedure on the front end could decrease
delays at the end of the process. However, some environmental organizations, such as the
Hydropower Reform Coalition, argue that the administrative hearings called for in the
House-passed bill could take up to ten years. Furthermore, some opponents of the legislation
argue that new administrative appeals processes and FERC’s July 2003 rule establishing the
ILP will sufficiently improve the relicensing process.
Environmental Issues. Under the FPA, Congress granted FERC the authority to
issue hydropower licenses, but gave federal land and water management agencies the
responsibility for protecting federal reservations and maintaining fish resources. When
issuing license conditions to fulfill their responsibilities under sections 4(e) and 18 of the
FPA,
conditioning
agencies
are
not
currently required
to
solicit
stakeholder
recommendations. Under the House and Senate-passed bills, the agency “must consider” the
alternative conditions offered by the license applicant. After such consideration, the agency
would not be required to accept the alternative if it found that the proposal does not meet
specified environmental and cost criteria (e.g., the proposed alternative does not adequately
protect the resource).
Although federal conditioning agencies could reject an alternative condition that did not
meet either bills’ environmental and cost criteria, environmental organizations are concerned
that the House-passed bill and conference agreement would distract agencies from their focus
on protecting fish and federal reservations. These opponents argue that the bill would require
conditioning agencies to expand their focus to give equal consideration to the conditions’
effects on energy supply, distribution, cost, and use; flood control; navigation; water supply;
and air quality (in addition to the preservation of other aspects of environmental quality).
They further argue that the agencies do not have adequate resources to conduct these
additional studies. However, supporters of the bills argue that requiring agencies to balance
the multiple effects of their conditions would help ensure that license conditions are
established in the public interest.
While the equal consideration clause may expand the agencies’ focus, the effect of this
language on the conditions designed to protect fish and federally reserved lands would
depend on how the agencies interpret the phrase “no less protective of fish resources,” and
the phrase “adequate protection and utilization of the reservation.”
Environmental
organizations are concerned that the language contained in the conference agreement, “no
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less protective of the fish resource than the fishway11 initially prescribed,” could open the
door for applicants to propose non-fishway alternatives to fishway conditions.12
For
example, environmental organizations are concerned that the legislation would allow the
applicant to propose maintaining fish populations by stocking the river with hatchery fish or
through other mechanisms that do not move native fish. Environmental organizations
generally find these other mechanisms to be less successful than fishways in maintaining
migratory fish populations. However, industry representatives argue that such concerns
regarding the effectiveness of alternative conditions are unwarranted.
Specifically,
proponents of the legislation point out that it preserves agencies’ authority to reject
alternatives which are “less protective of the fish resources than the agencies’ alternative.”
Therefore, the applicant’s ability to substitute other mechanisms for fishways, would depend
on the agency’s determination of the protectiveness of the alternative.
Effectiveness of Integrated Licensing Process (ILP).
Environmental
organizations and some officials within conditioning agencies also assert that proposed
legislation, namely the House-passed bill, could weaken the new Integrated Licensing
Process by reducing the incentives for applicants to engage actively in early consultations
with resource agencies.
Specifically, opponents of the legislation argue that license
applicants would be less willing to consult and negotiate with resource agencies if the
agencies do not have the authority to issue final license conditions. Conversely, FERC and
the hydropower industry argue that this legislation would not reduce agencies’ conditioning
authority, and thus would not alter an applicant’s incentive to negotiate with agencies. (For
more information on the ILP, see CRS Report RL31536, Licensing of Non-Federal
Hydroelectric Projects: Background and Current Issues.
)
Participation in the Conditioning Process.
Under current law, the
recommendations of industry and non-industry stakeholders are given similar weight in
agencies’ conditioning process. A key concern of environmentalists and other nonutility
stakeholder groups is that the bills would increase the applicant’s input relative to other
stakeholders. Specifically, the House-passed bill and the conference agreement entitle
license applicants, but not other stakeholders, to “a determination on the record, after
opportunity for an agency trial-type hearing of any disputed issues of material fact.”
Furthermore, either bill would require that agencies consider the applicant’s alternative
conditions but not the conditions offered by “other interested parties.”13 Some non-industry
stakeholders would prefer to see this section expanded to require that agencies consider
alternatives offered by any stakeholder. However, some officials within conditioning
agencies are concerned that they may have insufficient resources to consider all industry-
proposed alternatives let alone other stakeholder-proposed alternatives.
The bills state that the agency shall accept the applicant’s alternative if it meets the bills’
environmental and cost requirements.
Therefore, opponents are concerned that the
11 See footnote 3.
12 See the Hydropower Reform Coalition’s critique of the energy bill at [http://www.amrivers.org/
docs/TitleIIICritique.pdf], available on July 18, 2003.
13 U.S. Congress, House, Energy and Commerce Committee, Subcommittee on Energy and
Commerce, testimony of Leon Szeptycki, General Council of Trout Unlimited, on the Role of the
Federal Government in Licensing Hydropower Dams, hearing, March 12, 2003.
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legislation would require the conditioning agency to accept a proposed alternative condition
with little regard for its effect on other water resource uses (e.g., recreation, flood control,
irrigation, etc.). However, FERC and the hydropower industry point out that FERC already
has the responsibility to balance multiple water uses, and that the bill could decrease the cost
of meeting agencies’ section 4(e) and 18 objectives.14
Conclusion
Enactment of H.R. 6 would affect the conditioning process in a number of ways. All
versions of H.R. 6 would allow stakeholders to offer alternative license conditions. The
House-passed bill and the conference agreement would also create a mechanism for
reviewing the decision of conditioning agencies and would entitle license applicants to a
trial-type hearing on facts related to the agency’s conditions. These changes could lengthen
the conditioning process. H.R. 6 could also increase the influence of applicants relative to
other stakeholders. The effect of H.R. 6 on fish resources and on federal reservations is
unclear and would depend on how conditioning agencies interpret the terms “adequate
protection and utilization of the reservation” and “no less protective of the fish resources.”
The effect of the House-passed bill and the conference agreement on other resources could
depend on how the agencies balance their obligation to accept the applicant’s alternative (i.e.,
if it meets the two criteria) relative to their responsibility to justify the conditions they select
based on equal consideration of multiple effects. It appears that these issues could lead to
further review.
LEGISLATION
H.R. 6 (Tauzin)
Language in Title III is identical to H.R. 1013. Introduced April 7, 2003; referred to the
House Energy and Commerce Committee. Introduced April 7, 2003; referred to multiple
committees. Passed House April 11, 2003; passed Senate July 31, 2003. Conference
agreement
reached on November 17, 2003. Conference report passed by House on
November 18, 2003.
H.R. 1013 (Radanovich)
Establishes new requirements for federal agencies that set conditions or fishway
prescriptions for hydroelectric licenses under sections 4(e) and 18 of the Federal Power Act.
Allows license applicants to initiate a trial-type hearing on factual issues related to the
agency’s conditions. Requires federal agencies to consider alternative conditions proposed
by the license applicant and accept the proposed alternative if it: 1) provides for the adequate
protection and utilization of the reservation, or will be “no less protective of the fish
resources than the fishway initially prescribed” and 2) will either cost less, and/or will
improve the project’s operational efficiency. Requires the agency to justify its decision to
14 U.S. Congress, House, Energy and Commerce Committee, Subcommittee on Energy and
Commerce, testimony of J. Mark Robinson, Director, Office of Energy Products, Federal Energy
Regulatory Commission, hearing, March 12, 2003.
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accept or to reject the alternative after giving equal consideration to both conditions’ effects
on a broad range of factors. Establishes a system for reviewing an agency’s decision when
it rejects the applicant’s alternative. Introduced February 27, 2003; referred to House
Committee on Energy and Commerce, Subcommittee on Energy and Air Quality.
S. 14 (Domenici)
Section 511 is identical to H.R. 1013 and Title III of the House-passed bill, H.R. 6.
Introduced April 30, 2003; returned to the Senate’s Legislative Calendar on July 31, 2003.
In lieu of S. 14, the Senate passed H.R. 6, as amended, with language from H.R. 4 of the
107th Congress in the nature of a substitute. Title III of this Senate-passed bill establishes
new requirements for federal agencies that set conditions or fishway prescriptions for
hydroelectric licenses under sections 4(e) and 18 of the Federal Power Act. It requires
federal agencies to consider alternative conditions proposed by the license applicant and
accept the proposed alternative if it (1) provides for the adequate protection and utilization
of the reservation, or will be “no less protective of the fish resources than the fishway
initially prescribed” and (2) will either cost less, and/or will improve the project’s operational
efficiency as compared to the condition initially deemed necessary by the Secretary. Title
III requires the agency to explain the basis for its decision to accept or to reject the alternative
and to describe both conditions’ effects on a broad range of factors.
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
Hearings
U.S. Congress. House. Committee on Energy and Commerce. Subcommittee on Energy
and Air Quality.
Hearing, March 12, 2003 on comprehensive energy policy at:
[http://energycommerce.House.gov/108/Hearings/03122003hearing819/hearing.htm]
U.S. Congress. House. Committee on Energy and Commerce. Subcommittee on Energy and
Air Quality. Hydroelectric Relicensing and Nuclear Energy. Hearing, June 27, 2001.
107th Congress, 1st session. 185p. (107-55)
U.S. Congress. Senate. Committee on Energy and Natural Resources. National Energy
Issues. Hearing, July 19, 2001. 107th Congress, 1st session. 202 p.(107-144)
FOR ADDITIONAL READING
CRS Reports
CRS Report RL31536. Licensing of Non-Federal Hydroelectric Projects: Background and
Current Issues.
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CRS Report RL31903. Relicensing of Non-Federal Hydroelectric Projects: Summary and
Discussion of Procedural Reform Proposals.
Other Documents
Federal Energy Regulatory Commission. Hydroelectric License Regulations under the
Federal Power Act: Notice Requesting Comments and Establishing Public Forums and
Procedures and Schedule
, FERC Docket No. RM02-16-000 (Washington, DC:
September 12, 2002)
Federal Energy Regulatory Commission. Notice Requesting Comments and Establishing
Public Forums and Procedures and Schedule pursuant to (18 CFR Parts 4 and 16),
Docket No. RM02-16-000 (Washington, DC: February 20, 2003).
[http://www.ferc.gov/industries/hydropower/indus-act/hydro-rulemaking-nopr.pdf]
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