Hydropower Licenses and Alternative Licensing Conditions in H.R. 6, 109th Congress

Hydropower Licenses and Alternative Licensing Conditions in H.R. 6, 109th Congress

Order Code RL32921
CRS Report for Congress
Received through the CRS Web
Hydropower Licenses and
Alternative Licensing Conditions
in H.R. 6, 109th Congress
May 12, 2005
Kyna Powers
Analyst in Energy and Environmental Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

Hydropower Licenses and Alternative Licensing
Conditions in H.R. 6, 109th Congress
Summary
In the next ten years, nearly 20% of the nation’s nonfederal hydropower projects
will require new federal licenses to continue operating. New licenses will establish
facilities’ operating parameters for the next 30 to 50 years. These operating
parameters will affect the total quantity and timing of electricity production. They
will also affect flood control, irrigation, municipal and industrial water supplies,
recreation, fish and wildlife habitat, and transportation.
Under the 1920 Federal Power Act (FPA), the Federal Energy Regulatory
Commission (FERC) has primary responsibility for balancing multiple water uses
and evaluating licensing and relicensing applications. The FPA also creates a role
in the licensing process for federal agencies that are responsible for managing
fisheries or federal reservations (e.g., national forests). Specifically, § 4(e) and §18
of the FPA give certain federal agencies the authority to attach conditions to FERC
licenses. For example, federal agencies may require applicants to build passageways
for fish (fishways), schedule periodic water releases for recreation, release minimum
flows for fish migration, or control water release rates to reduce erosion. Once an
authorized agency issues such conditions, FERC must include them in the project’s
license. While these conditions often generate environmental or recreational
benefits, they may also require construction expenditures and may increase
generation costs by reducing operational flexibility.
Reflecting recommendations by FERC and the hydropower industry, the House
included a provision to alter federal agencies’ license-conditioning authority in the
Energy Policy Act of 2005 (H.R. 6). This provision would allow stakeholders to pro-
pose alternative license conditions and would require federal agencies to consider and
accept the applicant’s proposed alternative if it found that the alternative (1) provides
for the adequate protection and utilization of the federal reservation, or would be no
less protective of the fish resource than the fishway initially prescribed, and (2) costs
less to implement, and/or would result in improved operation of the project for
electricity production. It also requires that the Secretary of the relevant conditioning
agency submit a written statement showing it gave equal consideration to the effects
of the original and alternative conditions on energy, flood control, navigation, air
quality, and water supply.
Response to the pending provision has been mixed. While the hydropower
industry supports the legislation, some environmental organizations oppose the bill,
and officials within some conditioning agencies have expressed concerns. Opponents
of the legislation contend that it could increase relicensing time, weaken
environmental protections, give applicants undue standing in the conditioning
process, and weaken FERC’s new Integrated Licensing Process. Proponents contend
that it would create accountability for the conditioning agencies, decrease the cost of
license conditions without diminishing agencies’ conditioning authority, and enhance
FERC’s licensing processes.
This report will be updated as events warrant.

Contents
Background and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Licensing Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Federal Power Act §4(e) and §18 License Conditions . . . . . . . . . . . . . . . . . . 2
License Conditions for Projects on Federal Reservations (FPA §4(e)) . 2
Fishway Provisions (FPA §18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
License Conditioning Agencies and the Relicensing Process . . . . . . . . . . . . 3
Pre-Application Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Post-Application Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cost of Mandatory Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Proposed Changes to the License-Conditioning Process . . . . . . . . . . . . . . . . 6
Hydroelectric Relicensing Legislation in the 109th Congress . . . . . . . . . . . . . . . . 7
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Length of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Environmental Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Effectiveness of the Integrated Licensing Process (ILP) . . . . . . . . . . . . 9
Participation in the Conditioning Process . . . . . . . . . . . . . . . . . . . . . . 10
Dispute Resolution Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
CRS Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Hydropower Licenses and
Alternative Licensing Conditions
in H.R. 6, 109th Congress
Background and Analysis
Hydropower is one of multiple benefits the nation’s waters provide. It accounts
for approximately 6% of all electricity consumed in the United States and 15% or
more of the electricity consumed in Idaho (86%), Oregon (68%), Washington (68%),
South Dakota (45%), Montana (26%), Alaska (21%), and New York (15%).1
Hydroelectric power is generated by releasing water through a set of turbines. It does
not pollute the air and may be turned on or off in a matter of minutes. By storing
water behind dams and controlling water releases, some hydropower facilities can
generate electricity during periods of high energy demand (so-called peaking power).
While hydropower facilities are important sources of clean peaking power, the
construction and management of dams are contentious because they affect other
water uses and resources. Dams alter rivers by blocking downstream flows and
creating reservoirs. These reservoirs may provide some recreational and habitat
benefits, but they reduce river recreation and may block the passage of migratory fish,
harming the commercial fishing industry that these fish support. 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, by Nicole T. Carter).
To make sure 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.2 This report summarizes federal licensing and license-
conditioning authority for nonfederal 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.
1 U.S. Dept. of Energy, Energy Information Administration, State Energy Data 2001
Consumption, Table S8, “Electric Power Sector Consumption Estimates, 2001,” available
at [http://www.eia.doe.gov/emeu/states/sep_sum/html/sum_btu_eu.html].
2 Managers of federal dams may implement operational changes similar to those contained
in hydropower licenses.

CRS-2
Licensing Authority
Rivers are national resources that may be used for interstate commerce and can
provide multiple benefits. As such, the federal government regulates the construction
and operation of facilities that block or pollute navigable waters. 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), to license all nonfederal 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 FERC-licensed
nonfederal dams). Many of the licenses for these projects were issued during the
1950s and 1960s, and are now expiring. In the next 10 years, 199 projects, or about
20% of all licensed nonfederal hydropower facilities, will need new licenses to
continue operating.3
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
certain agency-established operating conditions in its licenses. For example, §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, §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 § 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 such authority to state water
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. (For more information on §401, see CRS Report 97-488
ENR, Clean Water Act Section 401: Background and Issues, by Claudia Copeland.)
Federal Power Act §4(e) and §18 License Conditions
As noted above, §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 §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). Under this section, the
3 Federal Energy Regulatory Commission, Hydroelectric Projects Under Commission
License, updated Jan. 19, 2005, at [http://www.ferc.gov/industries/hydropower/gen-info/
projlic.PDF].

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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. For example, the Secretary could require the applicant to schedule periodic
water releases for recreation (white-water releases), to release minimum quantities
of water for fish migration (minimum flows), to control the rate of water release to
reduce habitat disruption (ramping requirements), and to limit 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 §4(e) conditions for
6% of the projects relicensed between 1995 and 2000.4
Fishway Provisions (FPA §18). Under §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) that allows fish to
pass around barriers created by the hydropower project.5 Fishways provide young
migratory fish with a passage around the dam on their way downstream. Without a
fishway, migratory fish may traverse the more dangerous passage over the dam via
spill, or through the project’s turbines. Adult fish may 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. To preserve and enhance fish
resources, the Fish and Wildlife Service (FWS) issued §18 conditions for 20% of the
projects relicensed between 1995 and 2000. The Department of Commerce, through
the National Marine Fisheries Service (NMFS), issued §18 conditions for 7.6% of the
projects licensed between 1995 and 2000. In some cases, the NMFS and the FWS
issued conditions for the same projects.6
License Conditioning Agencies
and the Relicensing Process
Federal resource agencies establish FPA §4(e) and §18 license conditions by
working with FERC’s licensing processes. FERC’s regulations allow three licensing
processes: (1) a structured process, known as the Traditional Licensing Process
(TLP), (2) a collaborative process, known as the Alternative Licensing Process
(ALP), and (3) a new licensing process, called the Integrated Licensing Process (ILP),
that is both structured and collaborative. The ILP is the default process. Each of
these processes has two phases: a pre-application phase led by the applicant, and a
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. (Hereafter referred to as 2001 DOI
Letter.)
5 U.S. 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
(Dec. 22, 2000). See also 16 U.S.C. §811.
6 2001 DOI Letter.

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post-application analysis phase led by FERC.7 As described below, conditioning
agencies participate in both licensing phases.
Pre-Application Phase. For FERC and other agencies to evaluate a project
and develop license conditions, they need information on how the project affects
various resources. FERC and conditioning agencies generally obtain this information
from the applicant, who conducts studies before submitting a license application.8
Specifically, FERC’s licensing process requires an applicant to consult with
stakeholders, including conditioning agencies, before the applicant proposes a study
plan.
The pre-application process can be delayed when the applicant disagrees with
the conditioning agencies about 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. Prior to the recent rule-
making, conditioning agencies and applicants could use FERC’s still-existing
Dispute Resolution Service (DRS). (The DRS mediates license disputes, and can call
on FERC staff to help clarify issues, but has no authority over the outcome.) Now,
based on the recent FERC rule, applicants and stakeholders may first try to resolve
disputes through voluntary discussions. If this voluntary process fails, however,
conditioning agencies can file for study dispute resolution. When this occurs, FERC
convenes a panel to review the dispute and make a recommendation to the director
of FERC’s Office of Energy Projects. This process may help to reduce litigation and
the initiation of studies late into the licensing process. (For more information on this
process, see CRS Report RL31903, Relicensing of Non-Federal Hydroelectric
Projects: Summary and Discussion of Procedural Reform Proposals, by Kyna
Powers.)
Post-Application Phase. Once the applicant completes the studies and
submits the license application, FERC evaluates the study results and develops the
license. FERC’s role is to develop a license that balances hydropower, recreation,
ecological, cultural, and other aspects influenced by the project. This license may
include conditions proposed by various resource agencies. Currently, 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 certain agency
conditions. However, some administrative activities are underway. In September
7 Federal Energy Regulatory Commission, Final Rule (Docket No. RM02-16-000, Order No.
2002), at [http://www.ferc.gov/whats-new/comm-meet/072303/H-1.pdf].
8 In some cases, FERC requests additional studies after the applicant has submitted the
license application.

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2004, the Department of the Interior released a proposed rule to establish an
administrative appeals process for license applicants, but no other stakeholders.9
Another issue is the delay in the license-conditioning process when the agency
has insufficient information to evaluate the project. Specifically, some officials
within conditioning agencies have voiced concern that applicants do not always
provide sufficient information in their license applications for agencies to develop
conditions. In some cases, agencies requested information as part of the study phase,
but the applicants decided not to include the studies in their study plan. 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.
Cost of Mandatory Conditions
Through the relicensing process, FERC often establishes license conditions
designed to preserve and enhance resources affected by hydropower projects. While
these conditions often generate environmental, recreational, or other benefits, they
may also generate costs for the applicant. In 2001, 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.10 However, these figures were criticized by the General
Accounting Office (now Government Accountability Office) because they are based
on a sample of projects that submitted their costs to FERC and not on a
representative sample.11
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. For example, license conditions may require applicants to purchase or
construct installations, including fishways, boat ramps, and fish screens. Variable
costs, such as changing facility operations, may also decrease total hydropower
production. For example, minimum flow requirements, white water releases, or
fishway releases may reduce the facility’s total generation when the water is not
released through turbines. According to FERC, conditions placed in the license for
9 “Procedures for Review of Mandatory Conditions and Prescriptions in FERC Hydropower
Licenses.” 69 Fed. Reg, 174 (Sept. 9, 2004).
10 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 (Washington, DC: May, 2001), available
at [http://www.ferc.gov/legal/ferc-regs/land-docs/ortc_final.pdf]. Hereafter referred to as
the Section 603 Report.
11 U.S. General Accounting Office, Licensing Hydropower Projects: Better Time and Cost
Data Needed to Reach Informed Decisions about Process Reforms, GAO-01-499
(Washington, DC: May 2, 2001).

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environmental protection reduce average annual hydropower generation by 1.59%.12
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.13 If hydropower is removed from the supply of peaking
power, additional generation by other higher cost producers may be required. At the
same time, FERC estimates that efficiency improvements (e.g., new turbines) made
during relicensing, increase hydropower generation capacity by an average of
4.06%.14
While license conditions generate costs for applicants, the absence of conditions
could cause (and may already have caused) harm to other stakeholders. For example,
operating dams without fishways or minimum water releases for fish could harm fish
stocks and people that enjoy or depend on fish (e.g., Native Americans, commercial
fishermen, anglers, and fish consumers). Similarly, operating dams without
constraints on reservoir fluctuations and water release rates may increase stream-bank
and reservoir-bank erosion. Such erosion generates costs for owners of shoreline or
river-front property (including taxpayers as owners of federal lands).
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 (§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 obtaining a new license.15 In addition to
administrative proposals, the Section 603 Report proposed legislative changes to the
relicensing process. One class of proposals focused 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
some officials within federal and state agencies oppose these suggestions and any
other proposed reduction in resource agencies’ current license-conditioning authority.
Opponents of FERC’s legislative proposal contend that administrative reforms, such
as FERC’s rule establishing the ILP and 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
12 Section 603 Report.
13 Not all dams have storage capacity. Some facilities, known as run-of-river projects, have
little storage, thus they depend on daily water inflows to generate hydropower.
14 Section 603 Report.
15 Ibid.

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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.) This legislation
was the basis of relicensing legislation proposed in the 108th Congress. Title III of
H.R. 4 (107th Congress) was incorporated into H.R. 6 as passed by the Senate during
the 108th Congress. Title III of H.R. 6 also passed the House (House H.R. 6), though
with substantive differences. The conference agreement16 contained similar language
to the House-passed bill, and is the basis of legislation proposed in the 109th
Congress.
Hydroelectric Relicensing Legislation
in the 109th Congress
Section 231 of H.R. 6, as passed by the House in the 109th Congress, focuses on
federal agencies’ license conditioning authority under §4(e) or §18 of the FPA. It
would provide license applicants, but not other interest groups, with the opportunity
for a trial-type hearing on facts related to agency-proposed license conditions. It
would allow all entities to propose alternative conditions. However, the conditioning
agency would be required to consider alternatives proposed by applicants, but no
other entities, and accept them if the alternative (1) “provides for the adequate
protection and utilization of the federal reservation,” or is “no less protective of the
fish resource than the fishway initially prescribed,” and (2) “costs less to implement,
and/or will improve operation of the project for electricity production.”
H.R. 6, as passed by the House, would also require the conditioning agency to
justify its decision to accept or reject the alternative after giving “equal
consideration” to 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). This section
of the proposed legislation differs from some earlier versions of the bill (e.g., the
Senate-passed version from the 108th Congress), which would have required the
agency to include such factors in its justification, but not to consider them equally.
H.R. 6 would also establish a system for reviewing the agency’s decision when
it rejects the applicant’s alternative. Specifically, it states that FERC could refer the
agency’s decision to its Dispute Resolution Service (DRS). Unlike its current
mediation role, 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 109th Congress is mixed. The
hydroelectric industry supports the legislation, but some environmental organizations
and some officials within relevant government agencies have expressed concerns.
While the National Hydropower Association is more supportive of H.R. 6 than
16 As noted above, the conference agreement did not pass by the end of the 108th Congress.

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previous bills, some environmental organizations view the Senate-passed version
from the 108th Congress as preferable. According to FERC, H.R. 6 (as passed by the
House in the 108th and 109th Congresses) would provide accountability by making
agencies justify their conditions relative to the proposed alternatives and the
conditions’ effects on multiple resources. The hydropower industry contends that
this legislation would decrease the cost of license conditions. On the other hand,
some 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 new ILP, and give license applicants more authority in the license
conditioning process than other stakeholders.17 These issues are discussed below.
Length of Process. If enacted, H.R. 6 would add additional steps to the
licensing process. Specifically, it 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, distribution, cost, and use; flood control; navigation; water supply;
and air quality (in addition to preserving other aspects of environmental quality).
H.R. 6 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. H.R. 6 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 108th Congress.
From the perspective expressed by industry and FERC, H.R. 6 as passed by the
House during the 108th and 109th Congresses would improve the license conditions,
thus justifying additional process time. Furthermore, supporters of the legislation
contend 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, contend that the administrative hearings called for
in H.R. 6 could add 2-3 years18 to a licensing process (including the pre-application
phase) intended to take 5-5.5 years. Furthermore, some opponents of the legislation
contend that the administrative appeals processes under development and the new
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 §4(e)
and §18 of the FPA, conditioning agencies are not required to analyze stakeholder
recommendations. Under H.R. 6, the agency “must consider” the alternative
conditions offered by the license applicant. After such consideration, the agency
would be required to accept the alternative if it found that the proposal meets
17 See, for example, Hydropower Reform Coalition, Oppose Hydropower Section in the
Energy Bill: More Red Tape and Less Environmental Protection, available at [http://www.
americanrivers.org/site/DocServer/05fulltextandcritique.doc?docID=282].
18 Ibid.

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specified environmental and cost criteria (e.g., the proposed alternative adequately
protects the resource).
Although federal conditioning agencies could reject an alternative condition that
did not meet the bill’s environmental and cost criteria, environmental organizations
are concerned that the bill would distract agencies from their focus on protecting fish
and federal reservations by requiring them to give equal consideration to the effects
on energy supply, distribution, cost, and use; flood control; navigation; water supply;
and air quality (in addition to perserving other aspects of environmental quality).
They further contend that the agencies do not have adequate resources to conduct
these additional studies. Supporters of the bill contend 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 their responsibility to make sure
that the alternative is “no less protective of fish resources,” or that it provides
“adequate protection and utilization of the reservation.” Environmental organizations
are concerned that the language contained in H.R. 6, which states that the alternative
“will be no less protective of the fish resource than the fishway initially prescribed,”
could open the door for applicants to propose non-fishway alternatives to fishway
conditions.19 For example, environmental organizations are concerned that the
legislation would allow the applicant to propose maintaining fish populations by
means such as stocking the river with hatchery fish. Environmental organizations
generally find this and other mechanisms to be less successful than fishways in
maintaining naturally-diverse migratory fish populations. However, industry
representatives contend that such concerns regarding the effectiveness of alternative
conditions are unwarranted. They contend that the provisions preserve 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 the Integrated Licensing Process (ILP). In 2004,
FERC created a new licensing process called the Integrated Licensing Process (ILP).
This process was intended to improve the licensing process by increasing FERC
participation in the early phases and creating a study dispute resolution mechanism.
Environmental organizations and some officials within conditioning agencies assert
that H.R. 6 could weaken the ILP by reducing incentives for applicants to engage
actively in early consultations with resource agencies. Specifically, opponents of the
legislation contend 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 contend
that this legislation would not reduce agencies’ conditioning authority, and thus
19 See the Hydropower Reform Coalition’s May 6, 2003 press release regarding the energy
bill, available at [http://www.americanrivers.org/site/DocServer/05ggsenatefloorhydroltr.
doc?docID=283].

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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, by Nicole T. Carter.)
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 H.R. 6 would increase the applicant’s input
relative to other stakeholders. H.R. 6 would entitle license applicants, but not other
stakeholders, to a trial-type hearing through which they could counter disputed
factual issues related to the agency’s proposed conditions. Furthermore, H.R. 6
would require that agencies consider the applicant’s alternative conditions but not the
conditions offered by “other interested parties.”20 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 in addition to other stakeholder-proposed alternatives.
Dispute Resolution Process. If the Secretary does not accept an
applicant’s alternative, H.R. 6 allows FERC to refer the dispute to its Dispute
Resolution Service (DRS). After consultation with the Secretary and the
Commission, the DRS would issue a non-binding advisory and the Secretary would
make a final determination. Supporters of this provision contend that the process
would help hold agencies’ accountable for their decisions. Others, however, point
out that the DRS is a facilitative entity that is not currently set-up to make
recommendations. They suggest that the administrative review processes agencies
are currently developing may be adequate, or that another process should be used
(e.g., a body similar to the Dispute Resolution Panels established pursuant to the
Final Rule). Still others contend that this process, which results in a non-binding
Dispute Resolution Service advisory, is unnecessary and lengthens the licensing
process.
Conclusion
As H.R. 6 moves from the House to the Senate, differences between H.R. 6
(109th Congress) and the Senate-passed version (108th Congress) leave multiple topics
for debate. In particular, the House-passed bill would establish trial-type hearings for
license applicants, but no other stakeholders; would require agencies to consider all
water resource uses equally; and would create a mechanism for reviewing
conditioning agencies’ decisions. While these provisions were incorporated into the
Conference agreement on H.R. 6 (108th Congress) and have support from the
hydropower community, opponents remain among other river users.
20 U.S. Congress, House, Energy and Commerce, Subcommittee on Energy and Air Quality,
testimony of Leon Szeptycki, General Council of Trout Unlimited, on Comprehensive
National Energy Policy, March 12, 2003.

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For Additional Reading
CRS Reports
CRS Report RL31536. Licensing of Non-Federal Hydroelectric Projects:
Background and Current Issues.
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).
Federal Energy Regulatory Commission, Office of Energy Projects, Hydroelectric
Licensing Under the Federal Power Act, Final Rule and Tribal Policy
Statement, (Revised Feb. 23, 2004)