To improve the Federal licensing process for hydroelectric projects.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Hydroelectric Licensing and 
Incentives Act of 2001''.

SEC. 2. IMPROVEMENTS TO HYDROPOWER RELICENSING PROCESS.

    (a) In General.--Part I of the Federal Power Act (16 U.S.C. 791a 
and following) is amended by adding at the end the following:

``SEC. 32. PROCESS FOR CONSIDERATION BY FEDERAL AGENCIES OF CONDITIONS 
              TO LICENSES.

    ``(a) Definitions.--In this section:
            ``(1) Condition.--The term `condition' means--
                    ``(A) a condition to a license for a project on a 
                Federal reservation determined by a consulting agency 
                for the purpose of the first proviso of section 4(e); 
                or
                    ``(B) a prescription relating to the construction, 
                maintenance, or operation of a fishway determined by a 
                consulting agency for the purpose of the first sentence 
                of section 18.
            ``(2) Consulting agency.--The term `consulting agency' 
        means--
                    ``(A) in relation to a condition described in 
                paragraph (1)(A), the Federal agency with 
                responsibility for supervising the reservation; and
                    ``(B) in relation to a condition described in 
                paragraph (1)(B), the Secretary of the Interior or the 
                Secretary of Commerce, as appropriate.
    ``(b) Factors To Be Considered.--In determining a condition, a 
consulting agency shall--
            ``(1) consider the economic effects (including power cost 
        impacts) of the condition;
            ``(2) consider the effect on other beneficial public uses 
        (including irrigation, flood control, water supply, and 
        recreation) of the condition;
            ``(3) consider compatibility with other conditions to be 
        included in the license, including mandatory conditions of 
        other agencies, when available;
            ``(4) consider compatibility with conditions existing at 
        the project site, including, where applicable, joint operation 
        of a facility by two or more sovereign nations, operation of a 
        facility on a waterway that is an international boundary, and 
        conditions mandated by international treaty;
            ``(5) prescribe a condition only when necessary to address 
        direct project-related effects; and
            ``(6) in selecting among conditions that are equally 
        effective for purposes of the first proviso of section 4(e) and 
        the first sentence of section 18, prescribe the least costly 
        alternative.
    ``(c) Documentation.--
            ``(1) In general.--A consulting agency shall assemble a 
        record detailing, among other pertinent matters, all proposals 
        made, comments received from public notice of draft conditions, 
        facts considered, and analyses made sufficient to demonstrate 
        compliance with subsection (b).
            ``(2) Submission to the commission.--A consulting agency 
        shall include the documentation under paragraph (1) in it, 
        submission of a condition to the Commission.
    ``(d) Public Comment.--Before submitting to the Commission a 
condition, and at least 90 days before a license applicant is required 
to file a license application with the Commission, a consulting agency 
shall provide notice of draft conditions and an opportunity for a 
hearing on the record. The consulting agency shall take into 
consideration all comments received and include in the documentation 
submitted to the Commission evidence thereof.
    ``(e) Submission of Final Condition.--
            ``(1) In general.--After an applicant files with the 
        Commission an application for a license, the Commission shall 
        set a date by which a consulting agency shall submit to the 
        Commission a final condition.
            ``(2) Limitation.--Except as provided in paragraph (4), the 
        date for submission of a final condition shall be not later 
        than one year after the date  on which the Commission gives the 
consulting agency notice that a license application is ready for 
environmental review.
            ``(3) Default.--If a consulting agency does not submit a 
        final condition to a license by the date set under paragraph 
        (1)--
                    ``(A) the consulting agency shall not thereafter 
                have authority to recommend or establish a condition to 
                the license; and
                    ``(B) the Commission may, but shall not be required 
                to, recommend or establish an appropriate condition to 
                the license that--
                            ``(i) furthers the interest sought to be 
                        protected by the provision of law that 
                        authorizes the consulting agency to propose or 
                        establish a condition to the license; and
                            ``(ii) conforms to the requirements of this 
                        Act.
            ``(4) Extension.--The Commission may extend for good cause 
        a deadline set under paragraph (2).''.
    (b) Conforming and Technical Amendments.--(1) Section 3(17)(E)(ii) 
of the Federal Power Act (16 U.S.C. 796(17)(E)(ii)) is amended by 
striking the period at the end thereof and inserting a semicolon.
    (2) The first proviso of the first sentence of section 4(e) of such 
Act (16 U.S.C. 797(e)) is amended by inserting after ``conditions'' the 
following: ``, determined in accordance with section 32,'' and by 
striking the period at the end of the proviso and inserting a colon.
    (3) Section 14(b) of such Act (16 U.S.C. 807(b)) is amended by 
striking ``its'' and inserting ``it'' in the second sentence.
    (4) Section 18 of such Act (16 U.S.C. 811) is amended in the first 
sentence by striking ``prescribed by the Secretary of Commerce'' and 
inserting ``prescribed, in accordance with section 32, by the Secretary 
of the Interior or the Secretary of Commerce, as appropriate''.
    (5) Section 21 of such Act (16 U.S.C. 814) is amended by inserting 
a colon after ``$3,000''.
    (6) Section 30(c)(1) of such Act (16 U.S.C. 823a(c)(1)) is amended 
by inserting a comma after ``Service'' each place it appears.

SEC. 3. HYDROELECTRIC PRODUCTION INCENTIVES.

    (a) Incentive Payments.--For electric energy generated and sold by 
a qualified hydroelectric facility during the incentive period, the 
Secretary of Energy (referred to in this section as the ``Secretary'') 
shall make, subject to the availability of appropriations, incentive 
payments to the owner or operator of such facility. The amount of such 
payment made to any such owner or operator shall be as determined under 
subsection (e) of this section. Payments under this section may only be 
made upon receipt by the Secretary of an incentive payment application 
which establishes that the applicant is eligible to receive such 
payment and which satisfies such other requirements as the Secretary 
deems necessary. Such application shall be in such form, and shall be 
submitted at such time, as the Secretary shall establish.
    (b) Definitions.--For purposes of this section:
            (1) Qualified hydroelectric facility.--The term ``qualified 
        hydroelectric facility'' means a turbine or other generating 
        device owned or solely operated by a non-Federal entity which 
        generates hydroelectric energy for sale and which is added to 
        an existing dam or conduit.
            (2) Existing dam or conduit.--The term ``existing dam or 
        conduit'' means any dam or conduit the construction of which 
        was completed before the date of the enactment of this section 
        and which does not require any construction or enlargement of 
        impoundment or diversion structures (other than repair or 
        reconstruction) in connection with the installation of a 
        turbine or other generating device.
            (3) Conduit.--The term ``conduit'' has the same meaning as 
        when used in section 30(a)(2) of the Federal Power Act.
The terms defined in this subsection shall apply without regard to the 
hydroelectric kilowatt capacity of the facility concerned, without 
regard to whether the facility uses a dam owned by a governmental or 
nongovernmental entity, and without regard to whether the facility 
begins operation on or after the date of the enactment of this section.
    (c) Eligibility Window.--Payments may be made under this section 
only for electric energy generated from a qualified hydroelectric 
facility which begins operation during the period of 10 fiscal years 
beginning with the first full fiscal year occurring after the date of 
enactment of this Act.
    (d) Incentive Period.--A qualified hydroelectric facility may 
receive payments under this section for a period of 10 fiscal years 
(referred to in this section as the ``incentive period''). Such period 
shall begin with the fiscal year in which electric energy generated 
from the facility is first eligible for such payments.
    (e) Amount of Payment.--
            (1) In general.--Payments made by the Secretary under this 
        section to the owner or operator of a qualified hydroelectric 
        facility shall be based on  the number of kilowatt hours of 
hydroelectric energy generated by the facility during the incentive 
period. For any such facility, the amount of such payment shall be 1.5 
cents per kilowatt hour (adjusted as provided in paragraph (2)), 
subject to the availability of appropriations under subsection (g), 
except that no facility may receive more than $1,000,000 in one 
calendar year.
            (2) Adjustments.--The amount of the payment made to any 
        person under this section as provided in paragraph (1) shall be 
        adjusted for inflation for each fiscal year beginning after 
        calendar year 2001 in the same manner as provided in the 
        provisions of section 29(d)(2)(B) of the Internal Revenue Code 
        of 1986, except that in applying such provisions the calendar 
        year 2001 shall be substituted for calendar year 1979.
    (f) Sunset.--No payment may be made under this section to any 
qualified hydroelectric facility after the expiration of the period of 
20 fiscal years beginning with the first full fiscal year occurring 
after the date of enactment of this Act, and no payment may be made 
under this section to any such facility after a payment has been made 
with respect to such facility for a period of 10 fiscal years.
    (g) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary to carry out the purposes of this section 
$50,000,000 for each of the fiscal years 2002 through 2011.

SEC. 4. HYDROELECTRIC EFFICIENCY IMPROVEMENT.

    (a) Incentive Payments.--The Secretary of Energy shall make 
incentive payments to the owners or operators of hydroelectric 
facilities at existing dams to be used to make capital improvements in 
the facilities that are directly related to improving the efficiency of 
such facilities by at least 3 percent.
    (b) Limitations.--Incentive payments under this section shall not 
exceed 10 percent of the costs of the capital improvement concerned and 
not more than one payment may be made with respect to improvements at a 
single facility. No payment in excess of $1,000,000 may be made with 
respect to improvements at a single facility.
    (c) Authorization.--There is authorized to be appropriated to carry 
out this section not more than $50,000,000 in each fiscal year after 
the fiscal year 2001.

SEC. 5. SMALL HYDROELECTRIC POWER PROJECTS.

    Section 408(a)(6) of the Public Utility Regulatory Policies Act of 
1978 is amended by striking ``April 20, 1977'' and inserting ``May 16, 
2001''.

SEC. 6. INCREASED HYDROELECTRIC GENERATION AT EXISTING FEDERAL 
              FACILITIES.

    (a) In General.--The Secretary of Energy, in consultation with the 
Secretary of the Interior and Secretary of the Army, shall conduct 
studies of the cost-effective opportunities to increase hydropower 
generation at existing federally-owned or operated water regulation, 
storage, and conveyance facilities. Such studies shall be completed 
within two years after the date of enactment of this Act and 
transmitted to the Committee on Commerce of the House of 
Representatives and the Committee on Energy and Natural Resources of 
the Senate. An individual study shall be prepared for each of the 
Nation's principal river basins. Each such study shall identify and 
describe with specificity the following matters:
            (1) Opportunities to improve the efficiency of hydropower 
        generation at such facilities through, but not limited to, 
        mechanical, structural, or operational changes.
            (2) Opportunities to improve the efficiency of the use of 
        water supplied or regulated by Federal projects where such 
        improvement could, in the absence of legal or administrative 
        constraints, make additional water supplies available for 
        hydropower generation or reduce project energy use.
            (3) Opportunities to create additional hydropower 
        generating capacity at existing facilities through, but not 
        limited to, the construction of additional generating 
        facilities, the uprating of generators and turbines, and the 
        construction of pumped storage facilities.
            (4) Preliminary assessment of the costs and the economic 
        and environmental consequences of such measures.
    (b) Previous Studies.--If studies of the type required by 
subsection (a) have been prepared by any agency of the United States 
and published within the five years prior to the date of enactment of 
this Act, the Secretary of Energy may choose not to perform new studies 
and incorporate the information in such studies into the studies 
required by subsection (a).
    (c) Authorization.--There is authorized to be appropriated such 
sums as may be necessary to carry out the purposes of this section.

Summary: Hydroelectric Licensing and Incentives Act of 2001 - Amends the Federal Power Act to prescribe procedural guidelines for the consideration of hydroelectric power licensing by Federal agencies and the Secretaries of the Interior and of Commerce. Instructs the Secretary of Energy to make incentive payments: (1) for a period of ten fiscal years to the owner or operator of electric energy generated and sold by a qualified hydroelectric facility. And (2) to the owner or operator of hydroelectric facilities at existing dams for capital improvements directly related to specified facility efficiency improvements. Amends the Public Utility Regulatory Policies Act of 1978 to redefine an existing dam for purposes of small hydroelectric power projects as one whose construction was completed on or before May 16, 2001 . Instructs the Secretary of Energy to study and report to certain congressional committees on cost-effective opportunities to increase hydropower generation at existing federally-owned or operated water regulation, storage, and conveyance facilities.