**Testimony of\
J. Mark Robinson\
Director, Office of Energy Projects\
Federal Energy Regulatory Commission\
Before the\
Subcommittee on Water and Power\
Committee on Energy and Natural Resources\
United States Senate\
**

**September 21, 2006**

Madam Chairman and Members of the Subcommittee:

My name is J. Mark Robinson and I am the director of the Office of
Energy Projects at the Federal Energy Regulatory Commission. Our office
is responsible for the licensing, administration, and safety of
non-federal hydropower projects; the certification of interstate natural
gas pipelines and storage facilities; and the authorization, safety, and
security of liquefied natural gas (LNG) terminals. I appreciate the
opportunity to appear before you to comment on two bills: (1) S. 2070, a
bill to provide certain requirements for hydroelectric projects on the
Mohawk River in the State of New York; and (2) S. 3851, a bill that
would allow extension of preliminary permit periods by the Federal
Energy Regulatory Commission for the Thomas Bay projects in Alaska,
defined as FERC Project Nos. 12495, 12619 and 12621.

I appear today as a Commission staff witness speaking with the approval
of the Chairman of the Commission. The views I express are my own and
not necessarily those of the Commission or of any individual
Commissioner.

Under Part I of the Federal Power Act (FPA), the Commission issues
licenses to non-federal interests authorizing the construction,
operation and maintenance of water power projects on navigable waters of
the United States, on federal lands and on streams, over which the
Congress has jurisdiction. Licenses are also required to utilize surplus
water or waterpower from government dams.

Licenses are issued under the FPA for terms up to 50 years and contain
conditions that reflect consideration of all environmental and
developmental aspects of the project, including such factors as the
effect of project construction and operation on fish and wildlife
resources, irrigation, flood control, water supply, recreation, and the
safety of the public. Section 15 of the FPA, authorizes the Commission,
at the expiration of an existing license and where the United States
does not exercise its right to take over the licensed project, to issue
a new license to the existing licensee or to a new licensee. Where there
is no federal takeover and where the Commission does not issue a new
license before the existing license expires, the Commission must issue
from year to year an annual license to the current licensee under the
terms and conditions of the current license until the project is taken
over or a new license is issued. Section 15(c)(1) provides that
"\[e\]ach application for a new license pursuant to this section shall
be filed with the Commission at least 24 months before the expiration of
the term of the existing license."

**[S. 2070]{.underline}**

S. 2070 would require the Commission to accept other valid license
applications, if submitted not later than July 31, 2006, to develop the
project works or water resources of a hydroelectric project located on
the Mohawk River in the State of New York that has been operating under
annual licenses for 10 or more years. S. 2070 would require that the
Commission expeditiously process any pending valid license applications
and issue a license only if the Commission determines that the project
will best develop the affected water resources. S. 2070 further requires
that any such new license issued shall include the same license
conditions relating to the use of affected waters provided in articles
32 and 33 of the license for Potomac Light & Power Company's Millville
Project, FERC No. 2343. The Commission included Article 32 in the
Millville license to reserve its authority to issue a license for a
project that was recommended in a comprehensive plan by the Department
of the Army, Corps of Engineers to be constructed downstream of the
Millville Project and would more completely utilize the water resources
of the Shenandoah River. Article 33 requires the Millville Project
licensee to surrender its license if its project becomes inoperative by
reason of inundation by a more complete hydroelectric project.

S. 2070 would affect one project licensing proceeding currently pending
before the Commission. On December 23, 1991, Niagara Mohawk Power
Corporation filed an application to relicense the 38.8-megawatt School
Street Project, FERC No. 2539. The project is located at river mile 2.5
on the Mohawk River in Albany and Saratoga counties, New York.

Since the application was filed, the license was transferred to Erie
Boulevard, LP (Erie). The School Street Project was among a group of 10
projects filed in 1991 by Erie's predecessor for which the New York
Department of Environmental Conservation (New York DEC) denied Clean
Water Act water quality certification, the grant or waiver of which is a
prerequisite to the Commission issuing a hydropower license. Following
these denials, the state, along with Erie's predecessor and other
interested parties, entered into settlement negotiations for each
project. Settlement negotiations have been concluded for each of the 10
projects. The New York DEC has issued water quality certifications and
the Commission has issued licenses for nine of the projects. The School
Street Settlement Agreement, dated March 7, 2005, was signed by Erie and
seven other parties including the New York DEC, although New York DEC
has not yet issued water quality certification for the project. The
School Street Project, the last of the 10 projects, has been operating
under annual licenses since 1993.

In response to the draft water quality certification notice issued by
New York DEC on March 7, 2005, Green Island Power Authority (GIPA) and
the Town and Village of Green Island sought party status in the
certification proceeding and challenged various aspects of the project.
The water quality certification process before the New York DEC is
currently undergoing adjudication proceedings. Because the New York DEC
has not yet issued water quality certification for the project, the
Commission has been unable to act on the School Street license
application.

On July 19, 2004, GIPA filed an application for a preliminary permit to
study the potential development of the 100-megawatt Cohoes Falls Project
and asked the Commission to waive its regulations to the extent
necessary to consider GIPA's application. As described in its
application, the project would be located at the site of the existing
School Street Project. GIPA proposes to construct, slightly downstream
of the School Street Project's dam, a new dam, remove part of the
existing School Street dam, and decommission various other facilities of
the School Street Project.

On January 21, 2005, the Commission dismissed GIPA's application for
preliminary permit for the proposed Cohoes Falls Project, stating that
the statutory deadline established by FPA section 15(c)(1) for filing
relicense applications for the Cohoes Falls Project (including competing
applications) fell in 1991, 2 years before the School Street license
would have expired, and that any development application GIPA might file
would be more than 13 years late. Because such applications are not
permitted by section 15(c)(1), the Commission found that there was no
reason to process a preliminary permit to study a project for which an
application cannot lawfully be filed.

On February 22, 2005, GIPA filed a timely request for rehearing which
was denied by the Commission on March 24, 2005. Subsequently, GIPA filed
an appeal of the Commission's orders with the U.S. Circuit Court of the
District of Columbia. The appeal was voluntarily dismissed in December
2005.

On May 15, 2006, GIPA filed its offer of settlement in the proceeding to
relicense Erie's School Street Project. GIPA's offer proposed two
alternatives: (1) terminate Erie's license and dismiss its relicense
application; or (2) issue a relicense to Erie that would terminate upon
the licensing and construction by GIPA of its Cohoes Falls Project. GIPA
attached to its offer of settlement an application for licensing the
Cohoes Falls Project. By notice issued May 24, 2006, the Commission
rejected GIPA's offer of settlement on the previously stated grounds
that its competitive proposal was not filed within the time frame
established by section 15(c)(1) of the FPA. On June 5, 2006, GIPA and
Adirondack Hydro Development filed a motion to present evidence or, in
the alternative, offer of proof and if necessary, motion to reopen the
record in the proceeding to relicense the School Street Project. The
motion sought to put into the record GIPA's previously rejected
pleading. As before, the Commission rejected the motion by notice issued
June 28, 2006. Rehearings of both Commission notices are currently
pending.

The FPA provides a complete and well-reasoned method for the orderly
development of the nation's non-federal hydropower resources. It also
provides hydropower licensees certainty regarding the period when
competitive license applications may be filed. This bill would negate
that certainty in the case of the School Street Project.

In addition, this bill would provide a special advantage to an entity
which did not meet the requirements of the FPA to the disadvantage of an
entity which met the statutory deadline. Approval of this bill could
encourage applicants in other cases and locations to petition Congress
for similar relief in order to promote their interests at the expense of
the FPA's well-established procedures and of other existing licensees
and could introduce further uncertainty into the licensing process.

As a result of these concerns, I do not support S. 2070.

**[S. 3851]{.underline}**

This legislation provides that notwithstanding section 5 of the FPA or
any other provision of law (including regulations), on receipt of a
request from the preliminary permit holder of a Thomas Bay project and
after providing reasonable notice, the Commission may extend the period
for the Thomas Bay project for not more than two consecutive three-year
periods following the expiration of the initial preliminary permit for
the Thomas Bay project, in accordance with applicable procedures of the
Commission. S. 3851 defines the term "Thomas Bay project" as including:
(1) the hydroelectric project of the Commission at Cascade Creek,
Alaska, preliminary permit number 12495; (2) the hydroelectric project
of the Commission at Ruth Lake, Alaska, preliminary permit number 12619;
and (3) the hydroelectric project of the Commission at Scenery Lake,
Alaska, preliminary permit number 12621.

Section 5 of the FPA allows for the filing of applications for
preliminary permit by a potential hydroelectric project developer before
the filing of a license application. The Commission issues preliminary
permits for three years for the following purpose. The purpose of a
preliminary permit is to maintain priority of application for a license
during the term of the permit while the permittee conducts
investigations and secures data necessary to determine the feasibility
of the proposed project, and if the project is found to be feasible,
prepares an acceptable license application.

Cascade Creek LLC filed applications for preliminary permits for the
proposed 80-megawatt (MW) Cascade Creek Project, FERC No. 12495, on May
4, 2004; 20-MW Ruth Lake Project FERC No. 12619, on October 12, 2005;
and 80-MW Scenery Creek Project, FERC No. 12621, on October 11, 2005.

The Cascade Creek permit was issued on October 8, 2004, and will expire
September 30, 2007. The Ruth Lake and Scenery Creek permits were issued
on February 23, 2006, and will expire January 31, 2009. Standard Article
4 of all issued preliminary permits requires a permittee to file
six-month progress reports. If the permittee fails to comply with these
conditions, the permit is subject to cancellation.

As required by Article 4 of the issued permits, Cascade Creek LLC, the
permittee, filed six-month progress reports for Project No. 12495 on May
25, 2005, September 29, 2005, and March 31, 2006, generally describing
for that report period, the nature and timing of what it has done under
the pre-filing requirements, and other applicable Commission regulations
and what studies it was planning on conducting the following six months.
The first report shows that the permittee obtained information from
previous studies, from the British Columbia Transmission Corporation,
and from British Columbia, Canada; on transmission line routing,
characteristics, and permitting requirements. The second report
indicates the permittee provided drawings and consulted with U.S. and
Canadian government agencies and private companies. The third report
shows the permittee persuaded the State of Alaska and British Columbia
Transmission Corporation to conduct feasibility studies for an
interconnection, which found the interconnection to be feasible.

Likewise, Cascade Creek, LLC filed timely progress reports for Project
No. 12619 and Project No. 12621 on July 31, 2006. The initial progress
reports for these two projects indicate the permittee has developed
stream flow data and did reconnaissance inspections of the sites.

In general, if a permittee has not completed the studies and
consultation at the expiration of a permit necessary to file an
application for license, it may file an application for a new
preliminary permit. The Commission may grant another permit if it
concludes that the applicant has diligently and in good faith pursued
the requirements of its prior permit. Because there is already a
mechanism whereby a permittee can apply for a new three-year permit to
pursue development of a proposed hydroelectric project, I do not support
the proposed legislation.

I appreciate the opportunity to present my views to the Subcommittee.
Thank you.