49–006 

109TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 109–693 

ENDANGERED SPECIES COMPLIANCE AND 

TRANSPARENCY ACT OF 2006 

SEPTEMBER 28, 2006.—Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

Mr. POMBO, from the Committee on Resources, 

submitted the following 

R E P O R T 

[To accompany H.R. 4857] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Resources, to whom was referred the bill 

(H.R. 4857) to better inform consumers regarding costs associated 

with compliance for protecting endangered and threatened species 

under the Endangered Species Act of 1973, having considered the 

same, report favorably thereon without amendment and recommend that the bill do pass. 

PURPOSE OF THE BILL

The purpose of H.R. 4857 is to better inform consumers regarding costs associated with compliance for protecting endangered and 

threatened species under the Endangered Species Act of 1973. 

BACKGROUND AND NEED FOR LEGISLATION

In response to concerns that various species had become or were 

in danger of becoming extinct, Congress passed the Endangered 

Species Act (ESA) in 1973. Under the ESA, the Secretary of the Interior, through the U.S. Fish and Wildlife Service (FWS), has responsibility for plants, wildlife and inland fishes. The Secretary of 

Commerce, through the National Oceanic and Atmospheric Administration (NOAA), is responsible for implementing the ESA with respect to mostly marine and anadromous species. Each agency follows a regulatory process to list a species as ‘‘endangered’’ or 

‘‘threatened’’ based on the best available scientific and commercial 

data. More than 1800 species have been listed under the ESA, with 

1300 being domestic species. If federal actions, including approval 

or funding actions, may affect a listed species, Section 7 of the ESA 

requires federal agencies to consult with the FWS or NOAA to ‘‘insure that any action authorized, funded or carried out by such 


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agency * * * is not likely to jeopardize the continued existence’’ of 

a species. 

The ESA impacts the four Power Marketing Administrations 

(PMAs), their wholesale customers and, ultimately, the end-use retail customer through regulatory impacts on hydropower generation. The PMAs (Bonneville Power Administration, Western Area 

Power Administration, Southwestern Power Administration and 

the Southeastern Power Administration) market and deliver wholesale excess power generated at Bureau of Reclamation and U.S. 

Army Corps of Engineers (Corps) hydropower facilities. The Bureau 

is a major source of electricity for the western United States. The 

agency operates 58 hydroelectric powerplants averaging an annual 

total of 42 billion kilowatt-hours of electricity. The Corps is the Nation’s number one source of federal hydroelectricity, operating 75 

powerplants for an annual total of 100 billion kilowatt-hours. Federal power generated by both agencies provides up to 5% of the Nation’s electricity supply. In certain regions of the country, such as 

the Pacific Northwest, the Intermountain West and the Upper Midwest, federal power generation and transmission services play a 

very significant regional role in their respective electricity markets. 

Electricity marketed by the PMAs is sold on a wholesale basis to ‘‘preference’’ customers, which include non-profit municipals, rural 

electric cooperatives, public utility districts, irrigation districts and 

Native American tribes. These wholesale customers then ultimately 

serve over 55 million retail customers. Under numerous authorizing statutes, preference power is sold at ‘‘cost-of-service’’ based 

rates, which are designed to repay the federal capital investment 

in federal electricity generation and transmission facilities, annual 

operation and maintenance of such facilities and federal staffing. 

Cost-of-service based rates also include the costs of environmental 

mandates and replacement power services resulting from these 

mandates. 

One major environmental cost stems from the ESA. Over the 

years, the ESA’s Section 7 requirements have ultimately altered 

and decreased some federal power generation due to modification 

of water releases from dams. Since the PMAs are typically under 

contract with their customers to provide a set amount of power, the 

PMAs have to purchase replacement power on the open market to 

make up for lost federal hydropower generation and to meet contractual needs. This replacement power generally costs much more 

than federal power and is often fossil-fuel based power. Additionally, the PMAs experience direct costs for habitat restoration and 

protection, structural modifications to facilities, fish hatcheries, 

and other on-the-ground work. Much of these costs are built into 

the rate base and have been factors in recent rate hikes. 

In light of rising and uncertain ESA compliance costs, particularly in the Pacific Northwest, some PMA customers have called for 

greater transparency in the way such costs are reported. A May 

2005 poll conducted for the Northwest RiverPartners found that 

‘‘more than 70% either don’t know much they pay for salmon recovery or believe less than 5% of their monthly bills go to salmon recovery’’ in the Northwest. All four PMA Administrators testified before the Committee on Resources that their agencies do not itemize 

these costs on monthly wholesale customer bills. Wholesale customer utility representatives also testified before the Committee 


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that consumers are generally not aware of ESA compliance costs 

and that ESA cost information is not readily available. One utility 

which receives wholesale electricity from the Bonneville Power Administration testified that it lists environmental costs on monthly 

retail consumer bills. However, the utility faced considerable difficulty in acquiring the necessary data and was fortunate to have 

a retired Bonneville Power Administration official who could understand the information. The Committee understands that the vast 

majority of PMA customers do not have the financial or technical 

means to acquire and decipher ESA cost information and that legislation is necessary to provide more transparency on these costs. 

H.R. 4857 requires the PMAs to estimate and report the direct 

and indirect ESA costs to each wholesale firm power customer on 

a monthly billing basis. Under the bill, the PMAs provide the information to their wholesale customers, who can then decide how or 

whether to list this information to their retail consumers. Since all 

PMA operating costs are recovered through wholesale electricity 

rates, the bill does not seek to add costly operating mandates on 

the PMAs. As currently drafted, H.R. 4857 would not result in the 

hiring of new staff or the purchase of new computer software. 

The legislation focuses on ESA costs, which are some of the most 

volatile and uncertain costs faced by many electricity ratepayers 

today. The PMAs testified that the agencies could implement the 

ESA cost requirements under the bill at ‘‘negligible cost.’’ However, 

the addition of other monthly costs, such as measuring irrigation 

diversion costs on hydropower production and certain debt costs, 

would result in significant staff and technical costs that would ultimately be passed on to the consumer. For example, PMA staff have 

indicated that it would require very complex analyses and staff 

time to measure monthly irrigation diversion impacts when many 

of the diversions end up flowing back into the basin of origin, depending on the type of water year. It would also be very difficult 

for PMA staff to measure ‘‘benefits’’ associated with ESA compliance, rather than costs. In the Pacific Northwest, for example, 

there are many disputed studies on the benefits of endangered 

salmon restoration. These benefits are very subjective in nature as 

opposed to the hard numbers associated with costs such as replacement power, foregone generation and staffing. 

Ultimately, the point of the legislation is to list the ESA costs so 

a consumer will have better access to information. This transparency will allow the electricity consumer to make a more informed decision on ESA costs. 

COMMITTEE ACTION

H.R. 4857 was introduced on March 2, 2006, by Congresswoman 

Cathy McMorris (R–WA). The bill was referred to the Committee 

on Resources. On March 16, 2006, the Committee held a hearing 

on the bill. On July 19, 2006, the Committee met to consider the 

bill. No amendments were offered and the bill was ordered favorably reported to the House of Representatives by a 17–10 vote, as 

follows: 


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SECTION-BY-SECTION ANALYSIS

Section 1. Short title 

This section cites the bill as the ‘‘Endangered Species Compliance 

and Transparency Act of 2006.’’

Section 2. Endangered Species Act compliance estimation and reporting 

This section requires the Administrators of the Bonneville Power 

Administration, the Western Area Power Administration, the 

Southwestern Power Administration and the Southeastern Power 

Administration to estimate and report on firm power customers’

monthly power bills compliance costs associated with the Endangered Species Act of 1973 and related activities. Since the Committee understands that it could be cost-prohibitive for each PMA 

to assess ESA compliance costs on a real-time basis, this section allows each agency to simply estimate and report these costs. The 

Committee strongly encourages the PMAs to work closely with firm 

power customers in how costs are estimated and reported. 

The Committee understands that the Bonneville Power Administration has many ESA-related activities in the agency’s implementation of the Pacific Northwest Power Planning and Conservation 

Act. These ESA and Pacific Northwest Power Planning and Conservation Act costs are currently incorporated into the Bonneville 

Power Administration’s total ‘‘Fish and Wildlife’’ costs. As a result, 

the Committee understands the need for the agency to include 

these total ‘‘Fish and Wildlife’’ costs that will be reported under 

this legislation. 

This section defines ‘‘direct costs’’ to include federal agency obligations related to study-related costs, capital, operation, maintenance and replacement costs and staffing costs. The section also defines ‘‘indirect costs’’ to include foregone generation and replacement power costs, including the net costs of any transmission. In 

hearings before the Committee, the PMAs testified that foregone 

generation is a cost that is passed on to the wholesale customer, 

and ultimately, the retail electricity consumer. The Committee 

agrees with this assessment and expects the power marketing administrations to estimate and report foregone generation costs as 

a cost of compliance. 

This section requires the Bureau of Reclamation and any other 

affected federal agencies to assist the Administrators with cost 

identifications for purposes of this Act. 

Section 3. Endangered Species Act compliance report 

This section requires each Administrator, in coordination with 

the Bureau of Reclamation and other relevant federal agencies, to 

submit an annual report to the House Committee on Resources and 

to the Senate Committee on Environment and Public Works. This 

report, to be submitted no later than January 30 of each year, will 

estimate direct and indirect costs associated with ESA compliance 

on a project-by-project basis for the Western Area Power Administration and on a system-wide basis for the other PMAs. 


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COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of rule XIII 

of the Rules of the House of Representatives, the Committee on Resources’ oversight findings and recommendations are reflected in 

the body of this report. 

CONSTITUTIONAL AUTHORITY STATEMENT

Article I, section 8, section 3 of the Constitution of the United 

States grants Congress the authority to enact this bill. 

COMPLIANCE WITH HOUSE RULE XIII

1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the Rules of 

the House of Representatives requires an estimate and a comparison by the Committee of the costs which would be incurred in carrying out this bill. However, clause 3(d)(3)(B) of that rule provides 

that this requirement does not apply when the Committee has included in its report a timely submitted cost estimate of the bill prepared by the Director of the Congressional Budget Office under section 402 of the Congressional Budget Act of 1974. 

2. Congressional Budget Act. As required by clause 3(c)(2) of rule 

XIII of the Rules of the House of Representatives and section 

308(a) of the Congressional Budget Act of 1974, this bill does not 

contain any new budget authority, credit authority, or an increase 

or decrease in revenues or tax expenditures. According to the Congressional Budget Office, enactment of this bill would have a ‘‘negligible’’ net effect on direct spending and spending subject to appropriation. 

3. General Performance Goals and Objectives. This bill does not 

authorize funding and therefore clause 3(c)(4) of rule XIII of the 

Rules of the House of Representatives does not apply. 

4. Congressional Budget Office Cost Estimate. Under clause 

3(c)(3) of rule XIII of the Rules of the House of Representatives and 

section 403 of the Congressional Budget Act of 1974, the Committee has received the following cost estimate for this bill from the 

Director of the Congressional Budget Office: 

H.R. 4857—Endangered Species Compliance and Transparency Act 

of 2006 

H.R. 4857 would require the Department of Energy’s four federal 

power marketing administrations (PMAs) to report how much they 

spend to comply with the Endangered Species Act. Those agencies—the Bonneville Power Administration, and the Southeastern, 

Southwestern, and Western PMAs—market the electricity generated at federally owned dams. Under this bill, the agencies would 

be required to give their wholesale customers a monthly estimate 

of the customer’s share of the PMA’s direct and indirect costs to 

comply with the Endangered Species Act. The agencies also would 

have to submit annual reports to Congressional committees on this 

issue. 

CBO estimates that enacting H.R. 4857 would have a negligible 

net effect on direct spending and on spending subject to appropriation. Based on information from the PMAs, CBO estimates that the 

department would spend less than $500,000 a year to develop the 

information and systems needed for the new reports. Expenses inVerDate Aug 31 2005 22:20 Oct 04, 2006 Jkt 049006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR693.XXX HR693

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curred by the Bonneville Power Administration would increase direct spending, but such costs would be offset in the future by higher receipts from the sale of electricity. Likewise, any increase in the 

amount appropriated to the other PMAs to implement the bill 

would be offset by a corresponding increase in offsetting receipts 

from their sales of electricity. 

H.R. 4857 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is Kathleen Gramp. This 

estimate was approved by Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. 

COMPLIANCE WITH PUBLIC LAW 104–4

This bill contains no unfunded mandates. 

COMPLIANCE WITH HOUSE RESOLUTION 1000

This bill and report contain no provisions which require disclosure under this authority. 

PREEMPTION OF STATE, LOCAL OR TRIBAL LAW

This bill is not intended to preempt any State, local or tribal law. 

CHANGES IN EXISTING LAW

If enacted, this bill would make no changes to existing law. 

Æ 


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