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###### Department of the Interior

###### Bureau of Reclamation

# AGENCY:

Bureau of Reclamation, Interior.

# ACTION:

Notice of intent.

# SUMMARY:

Promoting responsible development of renewable energy and moving the Nation toward a clean energy future is a top priority of the Department of the Interior. The Department signed a Memorandum of Understanding in March 2010 intended to focus on opportunities for development of environmentally sustainable hydropower at existing Bureau of Reclamation (Reclamation) facilities. The Department, acting through the Reclamation will consider proposals for non-Federal development of hydroelectric power at Pueblo Dam River Outlet of the Fry-Ark Project, Colorado. Reclamation is considering such hydroelectric power development under a lease of power privilege. No Federal funds will be available for such hydroelectric power development. The Department will prioritize projects that appropriately balance increased energy generation with consideration of environmental impacts. The Western Area Power Administration (Western) would have the first opportunity to purchase and/or market the power that would be generated by such development under a lease of power privilege. The Fry-Ark Project is a Reclamation project. This Notice presents background information, proposal content guidelines, information concerning selection of one or more non-Federal entities to develop hydroelectric power at Pueblo Dam River Outlet, and power purchasing and/or marketing considerations. Interested entities are invited to submit a proposal on this project.

# DATES:

A written proposal and seven copies must be submitted on or before 12 p.m. (MDT), on August 19, 2011. A proposal will be considered timely only if it is received in the office of the Lease of Power Privilege Coordinator by or before 12 p.m. (MDT) on the designated date. Interested entities are cautioned that delayed delivery to this office due to failures or misunderstandings of the entity and/or of mail, overnight, or courier services will not excuse lateness and, accordingly, are advised to provide sufficient time for delivery. Late proposals will not be considered.

# ADDRESSES:

Written proposals and seven copies should be sent to Mr. George Gliko, Lease of Power Privilege Coordinator (GP-2200), Bureau of Reclamation, Great Plains Regional Office (GP-2200), P.O. Box 36900, Billings, MT 59107-6900.

                        Information related to Western's purchasing and/or marketing the power may be obtained at Western Area Power Administration, Rocky Mountain Region, Attn: Dave Neumayer, Power Marketing Manager, 5555 East                               ( print page 22144)                            Crossroads Blvd., Loveland, CO 80538, Telephone: (970) 461-7322.                    

Information related to the operation and maintenance of Pueblo Dam and Reservoir may be obtained from Mr. Karl Thiel at the Bureau of Reclamation, Eastern Colorado Area Office, 11056 W County Road 18E, Loveland, CO 80537-9711, Telephone: (970) 962-4331.

# FOR FURTHER INFORMATION CONTACT:

Mr. George Gliko at (406) 247-7651.  

Reclamation will be available to meet with interested entities only upon written request to the Lease of Power Privilege Coordinator at the above address. Reclamation reserves the right to schedule a single meeting and/or visit to address at once the questions of all entities that have submitted questions or requested site visits.

# SUPPLEMENTARY INFORMATION:

                    The Fry-Ark Project, located in south-central Colorado, was authorized for construction, including hydroelectric power, by Public Law 87-590; 76 stat. 389. Specifically, the act authorizes the Secretary of the Interior to construct, operate and maintain the Fryingpan-Arkansas Project, Colorado, in substantial accordance with House Document 187. House Document 187 states in several sections (Page 29, Section 45; Page 31, Section 49) that a project power system will be included as project features (including Pueblo Powerplant to be located at Pueblo Dam and Reservoir) and is authorized to be constructed, operated, and maintained. Reclamation operates and maintains Pueblo Dam and Reservoir. Reclamation has recently released its Hydropower Resource Assessment (March 2011), which estimated that Pueblo Dam is economically feasible to develop (benefit-cost ratio 2.34, including green incentives), and that there is a potential capacity of 13 MW. The Assessment may be viewed in its entirety at                     *http://www.usbr.gov/​power/​.*

Reclamation is considering hydroelectric power development at Pueblo Dam River Outlet through a lease of power privilege. A lease of power privilege is a congressionally authorized alternative to Federal hydroelectric power development. A lease of power privilege grants to a non-Federal entity the right to utilize the Fry-Ark project for non-Federal electric power generation and sale, consistent with project purposes. Leases of power privilege have terms not to exceed 40 years. The general authority for lease of power privilege under Reclamation law includes, among others, the Town Sites and Power Development Act of 1906 (43 U.S.C. 522) (1906 Act) and the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)) (1939 Act). Reclamation will be the lead Federal agency for ensuring compliance with the National Environmental Policy Act (NEPA) of any lease of power privilege considered in response to this Notice. Leases of power privilege may be issued only when Reclamation, upon completion of the NEPA process, determines that the affected hydroelectric power sites are environmentally acceptable. Any lease of power privilege at Pueblo Dam River Outlet must accommodate existing contractual commitments related to operation and maintenance of such existing facilities, and must meet the requirements of applicable law, including, but not limited to, the 1906 Act and the 1939 Act.

Western would have the first opportunity to purchase and/or market the power that would be generated under any lease of power privilege. Under this process, Western would either purchase and market the power as Loveland Area Power power or market the power independently by first offering it to preference entities and secondly to non-preference entities.

All costs incurred by the United States related to development and operation and maintenance under a lease of power privilege, including but not limited to NEPA compliance, development of the lease of power privilege, design reviews, construction oversight, and any other associated documents, would be the expense of the lessee.

*Proposal Content Guidelines:*                     Interested parties should submit one or more proposals explaining in as precise detail as is practicable how the hydropower potential at each site would be developed. Factors which proposals should consider and address include, but are not limited to, the following:                

                    1. Provide all information relevant to the qualifications of the proposing entity to plan and implement such a project, including, but not limited to, information about preference status, type of organization, length of time in business, experience in funding, design and construction of similar projects, industry rating(s) that indicate financial soundness and/or technical and managerial capability, experience of key management personnel, history of any reorganizations or mergers with other companies, safety record, and any other information that demonstrates the interested entity's organizational, technical and financial ability to perform all aspects of the work. Include a discussion of past experience in operating and maintaining similar facilities and provide references as appropriate. The term                     *preference entity,*                     as applied to a lease of power privilege, means an entity qualifying for preference under Section 9(c) of the 1939 Act, as a municipality, public corporation or agency, or cooperative or other nonprofit organization financed in whole or in part by loans made pursuant to the Rural Electrification Act of 1936, as amended.                

2. Provide geographical locations and describe principal structures and other important features of the proposed development including roads and transmission lines. Estimate and describe installed capacity and the capacity of the power facilities under dry, average, and wet hydrological conditions. Also describe seasonal or annual generation patterns. Include estimates of the amount of electrical energy that would be produced from each facility for each month of average, dry and wet water years. If capacity and energy can be delivered to another location, either by the proposing entity or by potential wheeling agents, specify where capacity and energy can be delivered. Include concepts for power sales and contractual arrangements, involved parties and the proposed approach to wheeling if required.

3. Indicate title arrangements and the ability to acquire title to or the right to occupy and use lands necessary for the proposed development, including such additional lands as may be required during construction.

4. Identify water rights applicable to the operation of the proposed development, the holder of such rights, and how these rights would be acquired or perfected.

5. Discuss any studies necessary to adequately define impacts on the Fry-Ark Project and the environment required by the development. Describe any significant environmental issues associated with the development and the proposing entity's approach for gathering relevant data and resolving such issues to protect and enhance the quality of the environment. Explain any proposed use of the hydropower development for conservation and utilization of the available water resources in the public interest.

                    6. Describe anticipated contractual arrangements with the entity or entities having operation and maintenance responsibility for the Fry-Ark Project feature(s) that are proposed for utilization in the hydropower development under consideration. Define how the hydropower development would operate in harmony with the Fry-Ark Project, not impact Fry-Ark Project operations, existing applicable contracts related to operation and maintenance of Fry-Ark Project                           ( print page 22145)                        feature(s) that are proposed for utilization in the hydropower development under consideration, and any other applicable water-related contracts.                

7. Identify the organizational structure planned for the long-term operation and maintenance of any proposed hydropower development.

8. Provide a management plan to accomplish such activities as planning, NEPA compliance, lease of power privilege development, design, construction, facility testing, and start of hydropower production. Prepare schedules of these activities as applicable. Describe what studies are necessary to accomplish the hydroelectric power development and how the studies would be implemented.

9. Estimate development cost. This cost should include all investment costs such as the cost of studies to determine feasibility, NEPA compliance, design, construction, associated bonding and financing as well as the amortized annual cost of the investment; also, the annual operation, maintenance, and replacement expense for the hydropower development; lease payments to the United States; and expenses that may be associated with the Fry-Ark Project. If there are additional transmission or wheeling expenses associated with the development of the hydropower development, these should be included. Identify proposed methods of financing and hydropower development. An economic analysis should be presented that compares the present worth of all benefits and costs of the hydropower development.

*Selection of Lessee:*                     Reclamation will evaluate proposals received in response to this published notice.                

Reclamation will give more favorable consideration to proposals that (1) Are well-adapted to developing, conserving, and utilizing the water and natural resources, (2) clearly demonstrate that the offeror is qualified to develop the hydropower facility and provide for long-term operation and maintenance, and (3) develop the hydropower potential economically. Credit will be given to those proposals that demonstrate development of power in an environmentally-friendly manner. While all developments will be required to perform NEPA analysis, proposals should include information as to how the proposer will minimize environmental impact during construction, maintenance and operation. Proposers should also include design characteristics and methods that will be used to minimize environmental impacts and improve the environmental attributes of the facility. Any work the developer is proposing to do to enhance the ecosystem should also be explained in the proposal. A proposal will be deemed unacceptable if it is inconsistent with Fry-Ark Project purposes, as determined by Reclamation. Reclamation will give preference to those entities that qualify as preference entities (as defined under Proposal Content Guidelines, item 1.) provided that their proposal is at least as well-adapted to developing, conserving, and utilizing the water and natural resources as other submitted proposals and that the preference entity is well qualified. Preference entities would be allowed 90 days to improve their proposals, if necessary, to be made at least equal to a proposal that may have been submitted by a non-preference entity.

*Power Purchasing and/or Marketing Considerations:*                     Western would have the first opportunity to purchase and/or market the power that would be generated by the project under a lease of power privilege. Western will consult with Reclamation on such power purchasing and/or marketing considerations.                

In the event Western elects to not purchase and/or market the power generated by the hydropower development or such a decision cannot be made prior to execution of the lease of power privilege, the lessee would be responsible for marketing the power generated by the project with priority given to preference entities as heretofore defined in Proposal Content Guidelines, item 1.

*Notice and Time Period to Enter Into Lease of Power Privilege:*                     Reclamation will notify, in writing, all entities submitting proposals of Reclamation's decision regarding selection of the potential lessee. The selected potential lessee will have 2 years from the date of such notification to enter into a lease of power privilege for the site or sites identified in the proposal. This period may only be extended by the United States in writing. Such leases of power privilege will state whether and how Western will be involved in purchasing and/or marketing the power.                

Dated: April 14, 2011.

Michael J. Ryan,

Regional Director.

[FR Doc. 2011-9533 Filed 4-19-11; 8:45 am]

BILLING CODE 4310-MN-P