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[Senate Report 112-19]
[From the U.S. Government Publishing Office]

                                                        Calendar No. 55
112th Congress                                                   Report
                                 SENATE
 1st Session                                                     112-19

======================================================================

 
                       HYDROPOWER IMPROVEMENT ACT

                                _______
                                

                  May 18, 2011.--Ordered to be printed

                                _______
                                

   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 629]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 629) to improve hydropower, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill, as amended, do 
pass.
    The amendment is as follows:
    On page 10, line 21, strike ``(b)(3)'' and insert 
``(b)(4)''.

                                Purpose

    The purpose of S. 629 is to improve and increase hydropower 
production in the United States.

                          Background and Need

    Hydropower represents approximately two-thirds of the 
renewable electricity generation in the United States and is 
currently providing almost seven percent of the country's total 
energy generation. About forty-five percent of all hydropower 
in the United States is generated at federally-owned 
facilities. With only three percent of the nation's 
approximately eighty thousand federal and non-federal dams 
currently generating hydropower there is great potential to 
increase hydropower production. Additional hydropower can be 
sited, constructed, and operated in a responsible manner to 
reduce or avoid environmental damages. S. 629 seeks to 
encourage development of additional hydropower through 
efficiency improvements or capacity additions at existing 
facilities, including conduits, adding hydropower to non-
powered dams, small hydropower development, and pumped storage 
projects.
    Further research will aid in the development of more 
efficient and environmentally sound hydropower technologies. 
Improving the licensing process will also help ensure that 
additional hydropower can be developed while maintaining 
environmental protections and the opportunity for public input 
into the licensing process. Through the workshops and pilot 
projects called for in S. 629, it is anticipated that the 
Federal Energy Regulatory Commission (FERC), the Bureau of 
Reclamation and the resources agencies will develop processes 
that will improve existing procedures.

                          Legislative History

    Senator Murkowski introduced S. 629 on March 17, 2011. The 
bill is co-sponsored by Senators Begich, Bingaman, Cantwell, 
Crapo, Murray, Risch, Whitehouse, and Wyden. The Committee on 
Energy and Natural Resources held a hearing on S. 629 on March 
31, 2011 (S. Hrg. 112- ) and considered the bill and adopted an 
amendment at its business meeting on April 12, 2011. The 
Committee ordered S. 629 favorably reported, as amended, at its 
business meeting on April 12, 2011.

                        Committee Recommendation

    The Senate Committee on Energy and Natural Resources, in 
open business session on April 12, 2011, by voice vote of a 
quorum present, recommends that the Senate pass S. 629, if 
amended as described herein. Senators Lee and Paul were 
recorded as opposing the measure.

                          Committee Amendment

    During its consideration of S. 629, the Committee adopted 
an amendment. The amendment made a technical clarification to 
the bill.

                      Section-by-Section Analysis

    Section 1 provides the short title of the bill and table of 
contents.
    Section 2 contains findings relating to the potential for 
development of additional hydropower in the United States.
    Section 3 defines terms used in the Act.
    Section 4 states the Sense of the Senate that the United 
States should increase the capacity and generation of clean, 
renewable hydropower to improve environmental quality and 
support job creation and economic investment.
    Section 5 directs the Secretary of Energy to establish a 
competitive grant program to support the following efforts: 
efficiency improvements or capacity additions at existing 
hydropower facilities; adding power generation to non-powered 
dams; addressing aging infrastructure concerns; conduit 
projects, environmental studies; and environmental mitigation 
measures.
    Section 6 directs the Secretary of Energy to develop and 
implement a plan for research, development and demonstration of 
increased hydropower production. The Secretary is also directed 
to provide technical assistance for applicable environmental 
analyses.
    Section 7 directs FERC to conduct workshops and pilot 
projects to investigate whether hydropower development at 
existing non-powered dams and closed-loop pumped storage 
projects can be licensed within two years, and to report back 
to Congress on the results.
    Section 8 codifies FERC's regulatory definition of 
``conduit'' and allows conduit projects located on federal land 
to be eligible for FERC's existing licensing exemption process. 
FERC is also directed to enter into a memorandum of 
understanding with other agencies to establish a more efficient 
approval process for conduit hydropower projects and to conduct 
workshops and develop pilot projects to identify ways to 
improve the approval process for conduit and small hydropower 
projects while maintaining adequate environmental, health and 
safety protections. The workshops will also investigate whether 
the rated capacity for small hydroelectric power projects 
should be increased from five megawatts.
    Section 9 authorizes FERC to extend the term of a 
hydropower preliminary permit for two years.
    Section 10 directs the Commissioner of Reclamation to study 
the barriers to non-federal development at Reclamation projects 
and to enter into a Memorandum of Understanding with FERC to 
improve coordination and timeliness of non-federal development 
at Reclamation projects.
    Section 11 directs the Secretary of Energy to study the 
potential quantity of hydropower that may be obtained from 
conduits.
    Section 12 directs the Secretary of Energy, in consultation 
with the United States Geological Survey, to study and identify 
suitable pumped storage sites in the country.
    Section 13 directs the President to report to the Senate 
Energy and Natural Resources Committee and the House Energy and 
Commerce Committee on the actions taken by the agencies to 
implement the March 24, 2010 Memorandum of Understanding on 
Hydropower.
    Section 14 provides that the Act shall not limit the 
authority of the Bureau of Reclamation to develop new 
hydropower at existing federal projects consistent with Federal 
law, power and nonpower operating requirements, and laws 
governing Federal Power Marketing Administrations. The Act does 
not limit the authority under existing law of a Federal Power 
Marketing Administrator in the event that operations at Federal 
projects with hydropower are modified.
    Section 15 states that the Statutory Pay-As-You-Go Act of 
2010 applies.

                   Cost and Budgetary Considerations

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

S. 629--Hydropower Improvement Act of 2011

    Summary: S. 629 would authorize appropriations for a 
variety of activities aimed at promoting the supply and energy 
efficiency of hydroelectric power. Assuming appropriation of 
amounts authorized by the bill and estimated to be necessary, 
CBO estimates that implementing S. 629 would cost $378 million 
over the 2012-2016 period. S. 629 would not affect direct 
spending or receipts; therefore, pay-as-you-go procedures do 
not apply.
    S. 629 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 629 is shown in the following table. The 
costs of this legislation fall within budget functions 270 
(energy) and 300 (natural resources and environment).

----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, in millions of dollars--
                                                              --------------------------------------------------
                                                                2012    2013    2014    2015    2016   2012-2016
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level................................     113     100     100     100     100       513
Estimated Outlays............................................      23      60      95     100     100       378
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that S. 
629 will be enacted by the end of fiscal year 2011 and that 
appropriations will be provided near the start of each fiscal 
year. Estimates of outlays are based on historical spending 
patterns for similar activities carried out by the affected 
agencies.
    S. 629 would specifically authorize the appropriation of 
$510 million over the 2012-2016 period for a variety of 
activities aimed at promoting hydroelectric power. That amount 
includes:
           $50 million annually over the 2012-2016 
        period for the Department of Energy (DOE) to provide 
        grants to support projects to add new hydroelectric-
        generating capacity, projects to increase the energy 
        efficiency of existing facilities that generate 
        hydroelectric power, and analyses and implementation of 
        measures to mitigate the environmental impact of such 
        projects;
           $50 million annually over the 2012-2016 
        period for DOE to establish a program to research, 
        develop, and demonstrate innovative means of increasing 
        the use, generation, energy efficiency, and 
        environmental quality of hydropower; and
           A total of $10 million for the Federal 
        Energy Regulatory Commission to establish pilot 
        projects to demonstrate the feasibility of small 
        hydroelectric-power facilities and projects to generate 
        hydroelectric power using water flowing through 
        agricultural, municipal, or industrial conduits.
    In addition, CBO also estimates that funding various 
studies, reports, and regulatory activities under the bill 
would require appropriations totaling $3 million in 2012. In 
total, assuming appropriation of the authorized and estimated 
amounts, CBO estimates that implementing S. 629 would cost $23 
million in 2012 and $378 million over the 2012-2016 period, 
with additional spending occurring in later years.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: S. 629 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal Costs: Megan Carroll; Impact 
on State, Local, and Tribal Governments: Ryan Miller; Impact on 
the Private Sector: Amy Petz.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget Analysis.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of Rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 629.
    The bill is not a regulatory measure in the sense of 
imposing Government-established standards or significant 
economic responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 629, as ordered reported.

                   Congressionally Directed Spending

    S. 629, as ordered reported, does not contain any 
congressionally directed spending items, limited tax benefits, 
or limited tariff benefits as defined in rule XLIV of the 
Standing Rules of the Senate.

                        Executive Communications

    The testimony provided by the Federal Energy Regulatory 
Commission, the Bureau of Reclamation and Department of Energy, 
at the March 31, 2011, Full Committee hearing on S. 629 
follows:

 Statement of Michael L. Connor, Commissioner, Bureau of Reclamation, 
                       Department of the Interior

    Chairman Bingaman, Ranking Member Murkowski, and members of 
the Committee, I am Mike Connor, Commissioner of the Bureau of 
Reclamation (Reclamation). I am pleased to be here alongside 
the Department of Energy (DOE) and the Federal Energy 
Regulatory Commission (FERC) to discuss activities underway at 
the Department of the Interior (Department) as they relate to 
S. 629, the Hydropower Improvement Act of 2011.
    Hydropower is a clean and efficient way to produce energy 
and is a renewable resource. Each kilowatt-hour of 
hydroelectricity is produced at an efficiency of more than 
twice that of any other energy source. Where hydropower does 
have environmental impacts, particularly on fish species and 
their habitats, we work with our partner bureaus and agencies 
to evaluate and mitigate these impacts. Further, hydropower is 
very flexible and reliable when compared to other forms of 
generation. Reclamation has nearly 500 dams and dikes and 
10,000 miles of canals and owns 58 hydropower plants, 53 of 
which are operated and maintained by Reclamation. On an annual 
basis, these plants produce an average of 40 million megawatt 
(MW) hours of electricity, enough to meet the entire 
electricity needs of over 9 million people on average.
    Reclamation is the second largest producer of hydroelectric 
power in the United States, and today we are actively engaged 
in looking for opportunities to encourage development of 
additional hydropower capacity at our facilities. This 
afternoon, Reclamation will publish the Hydropower Resource 
Assessment at Existing Reclamation Facilities (Assessment), a 
comprehensive review of power potential at all Reclamation 
facilities. The Assessment benefitted from public comment 
received this past winter. The Assessment will detail our 
findings on hydropower potential, providing information on 
whether or not hydropower development at existing Reclamation 
facilities would be economically viable and warrant further 
investigation. In addition to the Assessment, Reclamation will 
be publishing two Federal Register notices in the near future 
regarding Lease of Power Privilege opportunities at Granby and 
Pueblo dams in Colorado (two facilities that were identified to 
have good hydropower development potential in the Assessment). 
Reclamation and DOE are also working on a funding opportunity 
announcement to conduct several pilot studies on a low-head 
hydropower unit at Reclamation facilities.
    I am pleased to report on these recent activities as they 
relate to the directives in S. 629. Subsection 10(a) of the 
bill calls for study of non-Federal hydropower development at 
Bureau of Reclamation projects. Reclamation is directed to 
conduct a study of barriers to non-Federal hydropower 
development at Reclamation projects. This provision may 
duplicate efforts already underway. For example, the 
constraints analysis outlined in Chapter 3 of the Assessment, 
titled Site Analysis Methods and Assumptions (specifically, 
Chapter 3.5 of the Assessment), examines how land or water use 
regulations and legal requirements could potentially affect 
development of hydropower. These factors were taken into 
account when assessing the potential for hydropower development 
on existing Reclamation facilities. Further, the identified 
regulatory constraints have been mapped within Reclamation's 
regions using Geographic Information System (GIS) data. Local 
information for fish and wildlife and fish passage constraints, 
issues that could add significant development costs to a 
project site but are important to address from an environmental 
and natural resource standpoint, were identified by 
Reclamation's regional and area offices and accounted for in 
the Assessment as well.
    Subsection 10(b) of S. 629 calls for Reclamation and FERC 
to develop and issue a memorandum of understanding to improve 
the coordination and timeliness of the non-Federal development 
of hydropower resources at Reclamation projects. Reclamation 
and FERC already have an MOU, signed in 1992, that addresses 
the establishment of processes for early resolution of issues 
related to the timely development of non-federal hydroelectric 
power at Bureau of Reclamation facilities. Reclamation and FERC 
recently met to discuss how to improve the timeliness of the 
processes developed in that MOU and other issues.
    Section 8 of the bill would allow low-head hydropower 
development on Reclamation-owned conduits to be eligible for 
inclusion in FERC's conduit exemption program. Currently, 
Reclamation is assessing the potential for developing low-head 
hydroelectric generating capacity on our Federally-owned canals 
and conduits. A report, similar to the Resource Assessment, is 
expected to be released for public review by the end of this 
year. We expect that the provisions in Section 8 of the bill 
would help address uncertainty in the approval process for new 
licenses and would facilitate the development of new capacity 
at existing facilities. Reclamation supports the opportunity to 
enter into new agreements with private or quasi-public entities 
to develop low-head hydropower potential in an environmentally-
sustainable manner.
    Overall, the Department shares the Committee's view that 
interagency coordination can leverage Federal and private 
sector investment in additional hydropower development. This 
consideration was foremost in the Department's signing a 
Memorandum of Understanding with the Department of Energy and 
U.S. Army Corps of Engineers on March 24, 2010, to increase 
communication between federal agencies and strengthen the long-
term relationship among them to increase in a sustainable 
manner hydropower production at existing Federal facilities.
    In conclusion, Reclamation recognizes the importance of 
hydropower. We hope that the Assessment and the new efforts 
described will provide a lasting contribution to the power 
supplies of our nation. We will of course continue to 
coordinate with other agencies and look forward to working with 
the Congress in this important area to avoid duplication, and 
utilize existing authority and resources.
    This concludes my written statement. I am pleased to answer 
any questions the Committee may have.

   Testimony of Jeff C. Wright, Director, Office of Energy Projects, 
                  Federal Energy Regulatory Commission

    Chairman Bingaman, Ranking Member Murkowski, and Members of 
the Committee: My name is Jeff Wright and I am the Director of 
the Office of Energy Projects at the Federal Energy Regulatory 
Commission (Commission or FERC). I appreciate the opportunity 
to appear before you to discuss S. 629, S. 630, and S. 1462. As 
a member of the Commission's staff, the views I express in this 
testimony are my own, and not those of the Commission or of any 
individual Commissioner.

                             i. background

    The Commission regulates over 1,600 hydropower projects at 
over 2,500 dams pursuant to Part I of the Federal Power Act 
(FPA). Together, these projects represent 54 gigawatts of 
hydropower capacity, more than half of all the hydropower in 
the United States. Hydropower is an essential part of the 
Nation's energy mix and offers the benefits of an emission-
free, renewable, domestic energy source with public and private 
capacity together totaling about nine percent of U.S. electric 
generation capacity.
    Under the FPA, non-federal hydropower projects must be 
licensed by the Commission if they: (1) are located on a 
navigable waterway; (2) occupy federal lands; (3) use surplus 
water from a federal dam; or (4) are located on non-navigable 
waters over which Congress has jurisdiction under the Commerce 
Clause, involve post-1935 construction, and affect interstate 
or foreign commerce.
    The FPA authorizes the Commission to issue either licenses 
or exemptions for projects within its jurisdiction. Licenses 
are generally issued for terms of between 30 and 50 years, are 
renewable, and carry with them the right to exercise federal 
eminent domain to obtain property necessary for the 
construction, operation, and maintenance of a project. 
Exemptions are perpetual, and thus do not need to be renewed, 
but do not permit the use of eminent domain. Congress has 
established two types of exemptions. First, section 30 of the 
FPA allows the Commission to issue exemptions for projects that 
utilize for generation only the hydroelectric potential of 
manmade conduits that are operated for the distribution of 
water for agricultural, municipal, or industrial consumption, 
and not primarily for the generation of electricity. Conduit 
projects must be located on nonfederal lands, and have a 
maximum capacity of 15 megawatts (40 megawatts if the exemptee 
is a state or local government entity). Second, in section 
405(d) of the Public Utility Regulatory Policies Act, Congress 
authorized the Commission to grant exemptions for small 
hydroelectric power projects having an installed capacity of 
5,000 kilowatts or less. To qualify for this type of exemption, 
a project must be located at an existing dam that does not 
require construction or the enlargement of an impoundment, or 
must use the hydropower potential of a natural water feature, 
such as a waterfall. Both types of exemptions are subject to 
mandatory fish and wildlife conditions provided by federal and 
state resource agencies.
    The Commission has established three licensing processes, 
with the intent of allowing parties to select the process that 
is best suited to individual proceedings. The integrated 
licensing process (ILP) frontloads issue identification and 
environmental study to the period before an application is 
filed, and is thus well-suited to complex cases with 
substantial issues. The alternative licensing process (ALP) 
allows participants significant flexibility to tailor licensing 
procedures in a manner that may work well for unique cases. The 
traditional licensing process (TLP), in which environmental and 
other work can occur after the application is filed appears to 
work best for less controversial matters. The TLP may be the 
process that is best-suited for many simple cases involving 
exemptions or small, low impact licenses. Commission staff has 
also developed a pilot licensing process for hydrokinetic 
projects in which, with the assistance of federal and state 
resource agencies, a project can be licensed in as little as 
six months.
    It is extremely important to note that project developers 
and other stakeholders, not the Commission, in most instances 
play the leading role in determining project success and 
whether the regulatory process will be short or long, simple or 
complex. The first key issue is site selection and proposed 
project operation. For example, the processing of applications 
tends to be expedited when applicants propose projects that: 
(1) are located at an existing dam where hydropower facilities 
do not currently exist, (2) would result in little change to 
water flow and use, (3) are unlikely to affect threatened and 
endangered species and are unlikely to need fish passage 
facilities, and (4) involve lands and facilities that are 
already owned by the applicant. To the extent that a proposed 
project, even one of small size, raises concerns about water 
use and other environmental issues, it may be difficult for the 
Commission to quickly process an application. It is important 
to remember that the small capacity of a proposed project does 
not necessarily mean that the project has only minor 
environmental impacts.
    Another, and related, factor is the extent to which project 
developers reach out to affected stakeholders. If a developer 
contacts concerned citizens, local, state, and federal 
agencies, Indian tribes, and environmental organizations, and 
works with them to develop consensus as to what information is 
needed to understand the impacts of a project and what 
environmental measures may be appropriate, and to develop 
support for the project, the application and review process is 
likely to be simpler and quicker. Where a project comes as a 
surprise to affected entities or where a developer does not 
respond to expressed concerns, the Commission's job becomes 
much more difficult, because the Commission must, and does, 
ensure that all expressed concerns are addressed.
    A final, and again related, matter is the development of 
the full record that the Commission needs to act on an 
application. A potential applicant needs to work with 
Commission staff and with federal and state resource agencies 
and other stakeholders to determine what information is needed 
to support an application, and to provide the Commission with a 
complete application. Where Commission staff or other 
stakeholders must ask an applicant to provide information that 
is missing from an application, the regulatory process slows 
down.
    The other entities with roles in the licensing and 
exemption process regarding small hydropower projects are also 
key to its success. The quickest, most efficient process can be 
achieved only where federal and state agencies, as well as 
other stakeholders, devote the resources early on to help 
project review move ahead, and where they display the 
flexibility to look at the merits of individual projects and 
the willingness to shorten the process in appropriate cases. 
Commission staff is dedicated to making the regulatory process 
as short and cost-effective as possible. We can only do that 
where applicants, resource agencies, and other stakeholders 
serve as willing partners in the process.

     ii. commission efforts regarding small and innovative projects

    The majority of the hydropower projects regulated by the 
Commission are small projects, with about 71 percent having an 
installed capacity of 5 megawatts (MW) or less. In recent 
years, the Commission has seen a greatly increased interest in 
small hydropower projects, in innovative hydrokinetic projects, 
and in pumped storage projects, particularly closed loop pumped 
storage, which does not involve regular water withdrawals from 
rivers or other water sources. The Commission has responded by 
implementing a number of measures to facilitate efficient 
review of project proposals. In 2007, in order to provide 
personalized, responsive service to entities seeking to develop 
small hydropower projects, Commission staff established a 
dedicated phone line and email address for inquiries on small 
hydropower, developed a brochure to provide guidance to 
potential developers of small, low impact hydropower projects, 
and put these resources and a list of frequently-asked 
questions on the Commission's website.
    In light of the continued growing interest in such 
development, the Commission held a technical conference on 
December 2, 2009, at its Washington, D.C. headquarters to 
explore issues related to licensing, and exempting from 
licensing, small non-federal hydropower projects in the U.S. 
The December technical conference generated discussion on 
recommendations that could improve the process for authorizing 
small hydropower projects. In addition to insights received 
from the panelists and attendees at the December conference, 
written comments were solicited and over 40 comment letters 
were received from industry representatives; federal, state, 
and local agencies; private citizens; and non-governmental 
organizations. At the Commission's April 15, 2010 meeting, 
staff reported on the conference and the comments received, and 
presented an action plan to assist and expedite the review of 
small hydropower proposals. The action plan adopted the 
following immediate changes: (1) adding new web-based resources 
to the Commission's website (www.ferc.gov) to make it easier 
for applicants to understand and complete the licensing 
process; (2) updating or creating Memoranda of Understanding 
(MOUs) with other agencies to improve coordination; (3) 
continuing our small hydropower hotline and email address to 
answer applicant questions; and (4) educating potential small 
hydropower developers through a new education and outreach 
program.
    The Commission has, under its small hydro initiative, held 
numerous outreach meetings with small hydropower developers and 
interested stakeholders, and implemented web based tools, such 
as conduit application templates and application checklists, 
which potential applicants can use to prepare their 
applications. The small hydro website further contains guidance 
and sample letters that applicants can use to obtain waivers 
from fish and wildlife agencies for part of the prefiling 
consultation process. The Commission staff has also relaxed 
some of the standards, under Section 4.39 of its regulations, 
for exhibits and drawings for conduit applications. For those 
applicants that have filed complete and adequate applications, 
and for which the Commission has determined that impacts are 
minimal, the Commission has reduced the public notice period 
from 60 days to 30 days and the reply period from 45 days to 15 
days. A number of conduit exemptions have been approved in as 
short as two months from the date that an application has been 
deemed complete.
    Since the April 15, 2010 Commission meeting, we have signed 
an MOU with the State of Colorado to expedite the small hydro 
licensing process (August 2010); launched a small hydro program 
website (August 2010); participated in small hydro workshops in 
Oregon (September 2010), Massachusetts (October 2010), and New 
Hampshire (November 2010); conducted two webinars on our small 
hydro website (November/December 2010); and updated our small 
hydro brochure. Upcoming outreach efforts will include: 
participating in small hydro workshops in Washington, DC, 
Vancouver, BC, and California as well as conducting another 
webinar this summer. We have also completed an update on our 
MOU with the Army Corps of Engineers.
    The MOU with the State of Colorado provides an excellent 
example of a Federal-State solution for developing a pilot 
process to find flexible and innovative ways to reduce barriers 
to small hydro and conduit project development. In order to 
facilitate the Commission approval of such projects, the MOU 
provides that Colorado will prescreen any proposals and ensure 
that the applications are complete and meet Commission 
regulations before they are filed.
    With this background, I will turn to the draft legislation.

                              iii. s. 629

    S. 629, the Hydropower Improvement Act of 2011, has the 
laudable goal of increasing hydropower capacity and generation 
in United States. I strongly support that goal, and offer 
comments on specific sections of the bill.

                          a. sections 5 and 6

    Sections 5 and 6 of the bill would authorize the Secretary 
of Energy to issue grants to increase hydropower generation, 
and to support hydropower research, development, and 
demonstration projects. I support these sections, which would 
assist in the development of additional renewable energy.

                              b. section 7

    Section 7 would require the Commission to investigate the 
feasibility of implementing a two-year licensing process, in 
particular, with respect to hydropower development at existing, 
non-powered dams, and for closed-loop pumped storage projects.
    I support the goal of an expedited licensing process. 
Indeed, as I have discussed, it is Commission staff's goal to 
act on all license applications as quickly as possible, and the 
Commission has established processes that allow for great 
flexibility and efficiency. I am thus not certain whether an 
additional licensing process is necessary. During the last few 
years, we have been able to issue some licenses in a matter of 
a few months, where the project proponent had selected a site 
wisely, stakeholders had agreed on information needs, and state 
and federal agencies performed their responsibilities quickly. 
Moreover, the Commission operates under significant constraints 
imposed by the FPA, and by other legislation affecting the 
licensing process--the Clean Water Act, Coastal Zone Management 
Act, Endangered Species Act, and National Historic Preservation 
Act among them. In the absence of the ability to waive sections 
of the FPA and other acts, or to set enforceable schedules in 
licensing proceedings, it is not clear that the Commission, 
under its existing authorities, can mandate a shortened 
process.

                              c. section 8

    Section 8 would establish various measures to promote 
conduit and small hydropower projects. Again, this goal is 
consistent with Commission policy and has been a major focus of 
Commission's staff's effort in the last few years.
    Section 8(a)(1) would amend section 30 of the FPA to allow 
conduit projects to be located on federal lands. I support this 
provision, which would remove the current bar on siting conduit 
projects on federal lands. This section would also amend the 
FPA to provide conditioning authority to federal land 
management agencies. These agencies already have the ability to 
impose conditions on proposed projects through the requirement 
that developers obtain special use authorizations under the 
Federal Land Management and Policy Act, so this amendment may 
not alter the current regulatory regime. As a general matter, 
however, I do have some concern that authorizing additional 
mandatory conditioning authority may slow down the licensing 
process and result in increased potential bars to hydropower 
development.
    Section 8(a)(3) would require the Commission and the 
Commissioner of Reclamation to conduct regional public 
workshops on reducing barriers to conduit hydropower projects 
and thereafter report any recommendations to Congress. We have 
worked successfully with the Bureau of Reclamation in the past 
and are prepared to join Reclamation in this effort.
    Section 8(b) would require the Commission to conduct 
regional public workshops on reducing barriers to small 
hydropower projects, and to report the results of this effort 
to Congress. Noting the outreach efforts described above, we 
are prepared to undertake this additional effort should 
Congress deem it helpful.

                              d. section 9

    Section 9 would amend the FPA to authorize the Commission 
to extend the term of a preliminary permit issued under FPA 
section 5 once for up to two years. Preliminary permits grant 
the permittee a ``first-to-file'' preference with respect to 
license applications for projects being studied under a permit. 
Commission staff has heard anecdotally that developers are 
concerned that the need for environmental studies in some 
instances makes it difficult to complete a license application 
within the current maximum three-year term of a permit, with 
the result that a developer which has invested substantial time 
and money studying a project may face the possibility of losing 
its project based on competition from other entities--
particular those with statutorily-granted municipal 
preference--if it needs to seek a subsequent permit. I 
therefore support the proposed FPA amendment, which could 
ameliorate this problem. It might be worth considering, as an 
alternative, authorizing the Commission to issue permits for 
terms of up to five years, which could avoid the need for 
developers to go through the process of seeking an extension.

                             e. section 10

    Section 10 would require the Commissioner of Reclamation, 
in consultation with the Commission, to study barriers to non-
federal hydropower development at Bureau of Reclamation 
projects and to develop a memorandum of understanding to 
improve the coordination and timeliness of such development. We 
have already begun working with the Bureau of Reclamation on 
this matter, and we have no objection to Section 10.

 iv. the marine and hydrokinetic renewable energy promotion act of 2011

    S. 630 would authorize the Secretary of Energy to take 
various steps to promote marine and hydrokinetic renewable 
energy technology. As a general matter, the bill is consistent 
with the Commission's initiatives to support the development of 
appropriate marine and hydrokinetic projects, which I have 
previously described. I have only two comments on the bill.
    Section 3 of S. 630 would allow the Secretary of Energy to 
issue grants to support national testing facilities for marine 
and hydrokinetic technology research, development, and 
demonstration. Commission staff has informally discussed this 
concept with DOE staff over the last year or so, and I believe 
that testing centers could be extremely helpful in the 
development of new renewable technologies. Section 3 provides 
that test centers may be nonprofit institutions, state or local 
governments, national laboratories, or National Marine 
Renewable Energy Research, Development, and Demonstration 
Centers established pursuant to section 634 of the Energy 
Independence and Security Act of 2007. The Federal Power Act 
contains no provisions allowing the Commission to authorize the 
testing of jurisdictional hydropower facilities; accordingly, 
with some limited exceptions, tests centers operated by private 
entities or by state and local government may be required to be 
licensed by the Commission. Moreover, if a test center were to 
use a variety of technologies with differing environmental 
impact, the Commission might be required to issue separate 
authorizations for individual tests. This would not be the case 
for centers under the aegis of other federal entities, such as 
DOE, which do not fall within the Commission's jurisdiction. 
Therefore, to allow for the maximum flexibility and simplicity, 
it may be worth considering either placing any test centers 
under the authority of DOE or another federal agency or 
providing an exemption from the provisions of Part I of the FPA 
for such test centers.
    Second, section 6 of the bill would authorize the Secretary 
of Energy to issue grants to advance the development of marine 
and hydrokinetic renewable energy; to help fund the costs of 
environmental analysis, the collection and dissemination of 
environmental data; and to support demonstration projects. The 
provision of grant funding to address the environmental 
information needs surrounding these new technologies directly 
addresses an issue of concern to federal agencies and other 
stakeholders. Environmental information is essential to the 
development and regulation of energy projects, yet, because 
marine and hydrokinetic technology is relatively new, and 
because these projects may be sited in areas, such as coastal 
zones, where the environment is not as well understood as 
onshore areas, much necessary information has yet to be 
developed. The cost of obtaining environmental information 
falls in large part on pioneering developers, and may thus 
discourage their efforts. The Commission and other federal 
agencies are partnering to reduce this burden by assembling and 
sharing environmental information. However, there are still 
issues which will require new studies, some of which are 
relevant to many developers. Federal funding to support 
gathering such information will help the regulatory process and 
advance the development of the technology as a whole.

          v. the american clean energy leadership act of 2009

    Title I, subtitle D of the American Clean Energy Leadership 
Act deals with the integration of energy and water resources. 
While this subtitle would not impose any direct requirements on 
the Commission, I note that the Commission recognizes the link 
between energy development and the use of our Nation's water 
resources. In siting natural gas and hydropower projects, the 
Commission conducts thorough analyses of the impact of proposed 
projects on water resources, authorizes only those projects 
that appropriately balance energy development and environmental 
protection, and imposes mitigation measures to ensure that 
approved projects are developed in an environmentally 
responsible manner.

                             vi. conclusion

    There is a great deal of potential for the development of 
additional hydropower projects throughout the country, 
including small projects and marine and hydrokinetic projects. 
Working within the authority given it by Congress, the 
Commission continues to adapt its existing, flexible procedures 
to facilitate the review and, where appropriate, the approval 
of such projects. Commission staff remains committed to 
exploring with project developers, its sister federal agencies, 
Indian tribes, the states, local government, and other 
stakeholders every avenue for the responsible development of 
our nation's hydropower potential. The legislation under 
consideration will, as I have testified, assist in realizing 
that potential.
    This concludes my remarks. I would be pleased to answer any 
questions you may have.

 Statement of Steven G. Chalk, Chief Operating Officer & Acting Deputy 
 Assistant Secretary for Renewable Energy, Office of Energy Efficiency 
               and Renewable Energy Department of Energy

    Chairman Bingaman, Ranking Member Murkowski, Members of the 
Committee, thank you for the opportunity to discuss the three 
pieces of legislation before us today: S. 629, the Hydropower 
Improvement Act of 2011; S. 630, the Marine and Hydrokinetic 
Renewable Energy Promotion Act of 2011; and Title I, subtitle D 
of the American Clean Energy Leadership Act of 2009 (ACELA, S. 
1462 from the 111th Congress).
    In his State of the Union address in January, President 
Obama referred to America's need to transition to a clean 
energy economy as ``our generation's Sputnik moment,'' a goal 
so important that we need to ``reach a level of research and 
development we haven't seen since the height of the Space--
Race.''\1\ S. 629 and S. 630 would dramatically increase the 
federal government's investment in both conventional hydropower 
and marine and hydrokinetic (MHK) renewable energy 
technologies.
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    \1\http://www.whitehouse.gov/the-press-office/2011/01/25/remarks-
president-state-union-address.
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    The provisions being considered from ACELA address the 
interdependence of our energy and water consumption. Water is 
an integral component of many traditional and alternative 
energy technologies used for transportation, fuels production 
and electricity generation. Energy-related water demands are 
beginning to compete with other demands from population growth, 
agriculture and sanitation. This competition could become 
fiercer if climate change increases the risk of drought, making 
our water supply more vulnerable. The Department of Energy 
(DOE) has initiated many activities over the last few years to 
address this energy-water nexus.\2\
---------------------------------------------------------------------------
    \2\See, for example, the activities undertaken by the National 
Energy Technology Laboratory, http://www.netl.doe.gov/technologies/
coalpower/ewr/water/index.html.
---------------------------------------------------------------------------
    Since fiscal year 2008, when DOE restarted its Water Power 
Program, it has made significant strides in advancing next-
generation water power technologies, assessing existing 
resources, promoting deployment opportunities, and cooperating 
with other government agencies to accelerate water power 
development. About 45 percent of all hydropower in the United 
States is generated at Federally-owned facilities, providing 
clean, renewable power to the grid.\3\ DOE's estimates indicate 
that there could be an additional 300 gigawatts of hydropower 
through efficiency and capacity upgrades at existing 
facilities, powering non-powered dams, new small hydro 
development and pumped storage hydropower.\4\
---------------------------------------------------------------------------
    \3\http://eia.doe.gov/cneaf/electricity/page/eia906_920.html.
    \4\FY09 DOE Interim Conventional Hydro Resource Assessment, Oak 
Ridge National Lab.
---------------------------------------------------------------------------
    DOE works on both conventional hydropower and on marine and 
hydrokinetic (MHK) technologies. The combined FY 2012 Budget 
Request for conventional hydropower and MHK technologies is 
$38.5 million. Conventional hydropower--energy derived from 
water using dams, diversionary structures, or impoundments for 
electric power--generates more electricity than any other 
renewable energy source in the U.S. Conventional hydropower 
represented 65 percent of U.S. renewable electricity generation 
in 2010, and seven percent of total U.S. electricity generation 
that year.\5\ Conventional hydropower principally serves as a 
baseload electricity supply, but can also function as a 
dispatchable resource to balance variable renewable energy 
technologies such as wind and solar.
---------------------------------------------------------------------------
    \5\http://www.eia.doe.gov/cneaf/electricity/epa/epa.pdf.
---------------------------------------------------------------------------
    MHK technologies include energy devices that can extract 
energy from moving water, including waves and currents in 
oceans, rivers, and tidal areas, and from ocean thermal and 
salinity gradients. These resources if also developed in an 
environmentally responsible manner hold potential for helping 
our nation meet its clean energy goals.
    In a March 2007 report, the Electric Power Research 
Institute indicated that its conservative estimate was that MHK 
power (from wave and tidal sources alone) could provide an 
additional 13,000 megawatts (MW) of capacity by 2025.\6\ MHK 
power and ocean thermal energy are resources that typically can 
have higher capacity factors than some other renewable energy 
sources. In addition, they may not present the same level of 
integration challenges that large-scale development of variable 
renewable energy sources such as wind and solar may create for 
electricity grid planners and operators.
---------------------------------------------------------------------------
    \6\http://www.aaas.org/spp/cstc/docs/07_06_1ERPI_report.pdf.
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    Through its Power Marketing Administrations (PMAs), DOE 
promotes and creates opportunities for new conventional 
hydropower technologies and development. PMAs encourage the 
most widespread use of hydropower possible at the lowest rates 
consistent with sound business principles. Some PMAs have 
established an active hydropower modernization program, adding 
hundreds of megawatts of capacity at existing facilities by 
updating equipment, while others have faced challenges in 
arranging financing. Because some of the challenges are 
statutory in nature, the PMAs and their customers may consult 
with the Committee on measures that would actively encourage 
expansion of hydropower capacity through updates to existing 
facilities.
    Last year, DOE, the Bureau of Reclamation, and the Army 
Corps of Engineers signed a memorandum of understanding (MOM on 
hydropower that aims to build long-term working relationships 
between agencies by prioritizing similar goals and aligning 
ongoing and future renewable energy development efforts.\7\ The 
objectives of the MOU include deploying new, environmentally 
sustainable hydropower capacity, including upgrading existing 
facilities; powering non-powered dams; and research, 
development and deployment (RD&D) into new hydropower 
technologies, among other objectives. The pursuit and ultimate 
achievement of these goals will serve to strengthen our 
economy, enhance our national security, and protect our 
environment.
---------------------------------------------------------------------------
    \7\http://www.energy.gov/news/8793.htm.
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    Water is an integral aspect of energy consumption and 
generation for many energy technologies other than hydropower 
as well. Many types of energy production make use of water, 
particularly for cooling, and increasingly, water-efficient 
technologies are being developed to reduce these impacts and 
help America use less water to meet its energy demands and use 
less energy to meet its water demands. Still, power generation 
from thermal energy sources (which include coal, natural gas 
and nuclear energy) accounted for approximately 41% of U.S. 
freshwater withdrawals in 2005.\8\ Although most of the water 
withdrawn for cooling thermal power plants is subsequently 
returned to the source, this still can have disruptive effects 
on water flows and temperatures, which in turn negatively 
affect aquatic organisms, namely fish populations such as 
salmon. DOE estimates that there are significant opportunities 
to reduce water consumption for both electricity and fuels 
production. For example, in the electricity sector, development 
of hybrid wet-dry cooling systems may reduce water consumption 
by 70-80 percent compared to recirculating cooling systems. 
Moving, pumping and treating water and wastewater is in itself 
quite energy-intensive, representing roughly four percent of 
U.S. electricity consumption.\9\
---------------------------------------------------------------------------
    \8\http://pubs.usgs.gov/circ/1344/pdf/c1344.pdf.
    \9\http://www.circleofblue.org/waternews/wp-content/uploads/2010/
08/EPRI-Volume-4.pdf.
---------------------------------------------------------------------------
    The Department, through its National Laboratories and 
collaboration with universities and the private sector, is 
pursuing three major objectives to address the energy-water 
challenge. First, to address the increasing limited supplies of 
freshwater, DOE is considering strategies to increase use of 
nontraditional water resources in the power sector. Second, DOE 
is working to reduce the consumption of fresh water when 
generating electricity, while considering the full life-cycle 
of various energy technologies to determine how much water they 
demand and what kind of water quality they need. Finally, DOE 
is researching water-efficient technologies for the production 
of alternative or unconventional fuels for transportation.
    I am pleased to offer the Department's perspective on these 
pieces of legislation. I will discuss these bills in the order 
they appeared in my invitation to testify before this 
Committee.

               s. 629: hydropower improvement act of 2011

    The Hydropower Improvement Act of 2011, S. 629, seeks to 
substantially increase hydroelectric capacity and generation 
and improve its environmental performance.
    A recent report from the Federal Energy Regulatory 
Commission (FERC) demonstrates that little additional 
hydropower is in the pipelines.\10\ Concerns include 
environmental issues and nontechnical barriers to reduce the 
expense and uncertainty of the regulatory process is needed.
---------------------------------------------------------------------------
    \10\http://www.ferc.gov/legal/staff-reports/03-17-11-energy-
infrastructure.pdf.
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    The most significant provision of S. 629 is a proposed 
authorization to DOE of $50 million per year for competitive 
grants and $50 million per year for RD&D to increase hydropower 
generation. This authorization level is significantly higher 
than the FY 2012 Budget Request for EERE's conventional 
hydropower program of $20 million, and would also represent a 
substantial increase to the FY 2010 Budget for conventional 
hydropower of $13 million. These additional resources, if 
appropriated would enable increases in renewable hydropower 
generation, and provide for the accelerated demonstration of 
innovative technologies that can improve environmental 
performance.
    In FY 2010, DOE funded the Hydropower Advancement Project 
(HAP) for $3 million. The HAP is focused on the most cost-
effective, least-controversial types of new hydropower 
development, and seeks to stimulate further hydropower 
development and generation without new dams. The project has 
already identified multiple opportunities for adding generation 
and/or improving environmental performance without sacrificing 
energy efficiency. Current funding allows for fifty initial 
facility assessments and three to five detailed engineering 
design studies. Additional resources would be used to support 
facility improvements that could result in increased hydropower 
generation at the most cost-effective sites.
    DOE has invested in a three year program of research and 
development (R&D) to address issues related to the 
environmental performance and siting of hydropower 
technologies. These efforts focus on increasing fish passage, 
investigating adequate environmental flows and improving water 
quality and will help ensure that increases in conventional 
hydropower generation are coupled with concurrent improvements 
in the environmental sustainability of the industry, issues 
that DOE has been working on since the mid 1990s. If realized, 
the additional funding authorized by S. 629 would help scale-up 
the advanced turbines and optimize operational scenarios.
    A quicker, two-year FERC licensing process, as proposed by 
S. 629 would help accelerate development of conventional 
hydropower resources. A streamlined licensing approach already 
has been implemented by FERC for small hydropower projects; 
expanding this quicker process would be welcomed by DOE and the 
hydropower industry. At the same time, we must be sure that 
this quicker licensing process does not sacrifice rigorous 
maintenance of environmental standards and ensures adequate 
opportunity to allow for public input. Providing a quicker 
regulatory process when all environmental and public concerns 
have been addressed is a valuable goal.
    S. 629 would require FERC and the Bureau of Reclamation to 
conduct workshops on small hydropower projects and conduit 
hydropower.\11\ These workshops would provide opportunities for 
the federal government, including natural resource agencies, 
industry, environmental organizations and other stakeholders to 
reach consensus on strategies to overcome barriers to greater 
hydropower deployment, including conflicting definitions of 
eligible projects and complicated, poorly understood permitting 
and licensing processes.
---------------------------------------------------------------------------
    \11\Conduits are defined as tunnels, canals, pipelines, aqueducts, 
flumes, ditches, or similar manmade water conveyance systems that 
distribute water for agricultural, municipal, or industrial consumption 
and not primarily for the generation of electricity.
---------------------------------------------------------------------------
    S. 629 would define a ``small hydroelectric power project'' 
according to the definition found in Section 4.30 of title 18 
in the Code of Federal Regulations. DOE finds this definition 
problematic in this context, since this definition specifies 
that a small hydroelectric power project cannot be ``owned or 
operated by the United States or by an instrumentality of the 
Federal Government.'' A majority of the non-powered dams that 
are proposed to be powered through this legislation are 
federally-owned by the U.S. Army Corps of Engineers and the 
Bureau of Reclamation. In fact, initial analysis by DOE for a 
forthcoming report indicates that the ten largest non-powered 
dams in the U.S. with potential to produce more than one 
megawatt are all operated by the Army Corps of Engineers.\12\ 
DOE accordingly recommends that the definition of small 
hydroelectric power project that appears in this legislation 
delete the requirement that the dam not be federally-owned or 
operated.
---------------------------------------------------------------------------
    \12\The National Hydropower Asset Assessment Project, to be 
released in April 2011.
---------------------------------------------------------------------------
    The Department appreciates that S. 629 recognizes the non-
application of this legislation to the PMAs. In addition, the 
PMAs believe that they should have the approval right for 
efficiency power or capacity additions, improvements or 
replacements at Federal projects, made in association with this 
legislation, where the Army Corps of Engineers and the Bureau 
of Reclamation seek appropriations.
    All other provisions of S. 629 would either build on or 
support current DOE activities and areas of interest.

 s. 630: marine and hydrokinetic renewable energy promotion act of 2011

    S. 630, the Marine and Hydrokinetic Renewable Energy 
Promotion Act of 2011, seeks to accelerate the growth of the 
MHK industry through additional federal aid, and expansion of 
the scope and scale of DOE's MHK activities. The additional 
funding authorized by this bill would represent a significant 
increase in DOE's program for MHK technologies and is 
significantly higher than either the FY 2012 Budget Request of 
$18 million or the FY 2010 Budget of $37 million.
    DOE already has several MHK systems engineering efforts 
underway, but the additional systems engineering required by S. 
630 would be used to accelerate these programs.
    S. 630 would also require DOE to devote more R&D funding to 
develop open interface standards. This would ensure consistent 
design and development and allow unbiased comparison between 
competing technologies to achieve optimal energy generation in 
resulting systems. As the U.S. market develops, it will be 
crucial to avoid the pitfalls seen in the development of MHK 
technologies in Europe, where, despite tremendous strides that 
have been 12 The National Hydropower Asset Assessment Project, 
to be released in April 2011. made in device development and 
deployment, the interface standards with devices and data are 
still being developed.
    The creation of a competitive grant program for MHK RD&D 
test facilities would mimic similar innovative activities 
already sponsored by DOE for other renewable energy 
technologies. DOE is currently investing in three MHK test 
facilities that focus on the demonstration of multiple MHK 
technologies. Investment in these National Marine Renewable 
Energy Centers (NMRECs) is critically important in order to 
help MHK technologies realize their full potential and to 
support their rapid commercialization if done in an 
environmentally responsible way. Each Center is currently 
developing plans for the development of open-water test 
facilities. Further investment in NMRECs, as called for by this 
legislation, would enable the open-water test berths to be 
established. Third-party testing and evaluation of device 
performance and reliability would enable private sector 
investment in these emerging technologies.
    All three of DOE's existing NMRECs are unrestricted in 
terms of the device types they develop and support. Although 
none are geographically located for in-stream testing, tidal 
device research and development can substitute. It is 
unnecessary to distinguish between ``marine'' and 
``hydrokinetic'' centers as the existing NMRECs could conduct 
research on any type of device.
    On June 29, 2010, the Department of Energy and the 
Department of the Interior (DOI) signed an MOU for the 
coordinated deployment of renewable energy technologies on the 
OCS. The MOU's Action Plan includes a number of MHK-related 
activities, including coordination of studies and other 
activities to support future BOEMRE-issued MHK research leases, 
the development of environmental monitoring and mitigation 
protocols and collaboration on environmental study efforts, and 
development of a plan for MHK resource management and 
prediction. Additionally, on August 3, 2010, DOE announced the 
designation of Florida Atlantic University (FAU) as a national 
center for ocean energy research and development. With this 
designation, DOE awarded the new Southeast National Marine 
Renewable Energy Center $250,000 to undertake research and 
development of technologies capable of generating power from 
ocean currents and ocean thermal energy. FAU has applied for a 
five-year limited lease under BOEMRE's Interim Policy. If 
issued, this lease would allow for limited testing of ocean 
current devices on the OCS offshore Florida. DOE has also 
provided funding to the Northwest National Marine Renewable 
Energy Center to aid in the development of facilities to serve 
as an integrated, standardized test center for developers of 
wave and tidal energy, and the Hawaii National Marine Renewable 
Energy Center for the development of a site for the testing of 
wave energy conversion devices and ocean thermal energy 
conversion systems. DOE may seek to obtain research leases from 
DOI.
    If funding is realized under S. 630, development of MHK 
technologies would be accelerated, speeding their 
transformation from promising but fledgling technologies to 
commercially viable, clean, renewable energy sources.

title i, subtitle d of the american clean energy leadership act of 2009

    Title I, Subtitle D of ACELA contains provisions that would 
create an energy-water clean technology grant program in DOE 
and would require several studies on the energy-water nexus.
    The grant program created under ACELA could serve as a 
useful way to spur industry to devote time and resources to 
develop strategies to minimize water consumption in energy 
processes. These provisions would also require DOE and other 
agencies to collaborate on several studies on this subject. The 
study that would be run by the Natural Academy of Sciences 
regarding the effects of energy development and production on 
U.S. water resources would be a useful, in-depth analysis. 
However, in this legislation, the analysis appears limited to a 
current assessment. While this in itself would be useful, DOE 
recommends that any such study also consider the expected 
increase in water demand from projected growth in energy 
production, and the water implications of moving to a clean 
energy economy. This will be especially important since certain 
clean energy technologies (carbon capture and storage, 
bioenergy, concentrated solar power, etc.) may result in 
increased water demands. The effects of climate change on water 
availability should also be analyzed in order to better 
understand the potential vulnerability of the energy sector to 
water constraints.
    One of the other studies included in ACELA would require 
the Department of the Interior (DOI) to evaluate the amount of 
energy used in water storage and delivery operations. This 
study would be useful, but DOE suggests that the proposed study 
would benefit from consultation with other agencies with 
expertise in the energy-water area, including DOE.
    In general, interagency consultation must be an integral 
component of our national strategy to address the energy-water 
nexus. Along with energy production, agriculture uses more 
water than any other sector in the U.S., so engagement with the 
U.S. Department of Agriculture will be essential. The U.S. Army 
Corps of Engineers must also play a vital role in developing 
more efficient water usage strategies. DOE welcomes efforts to 
build on existing collaborations with these and other agencies, 
such as the MOU referenced above.
    These provisions would also require DOE to develop an 
Energy-Water R&D Roadmap to define future RD&D and 
commercialization efforts necessary to address emerging water-
related challenges to future clean energy generation and 
production. DOE has already produced a report examining these 
issues, which it transmitted to Congress in January of 2007, 
and has developed a follow-up report, ``Energy-Water Challenges 
and Research and Development Issues,'' that we expect will be 
finalized and transmitted to Congress shortly.

                               conclusion

    In conclusion, I would like to again thank this Committee 
for its leadership in supporting both conventional hydropower 
and MHK energy technologies and in confronting the challenges 
associated with the interrelation of our energy and water 
consumption.
    As Secretary Chu stated last year, ``While hydropower is 
the largest source of renewable electricity in the nation, 
hydropower capacity has not increased significantly in decades. 
As the single largest owner of hydropower generation in the 
United States, it is important for the federal government to 
tap this valuable asset so it can continue to contribute to our 
clean energy portfolio and energy security.''\13\ S. 629 and S. 
630 both contain provisions that would help realize this goal; 
however, both bills contain authorizations significantly in 
excess of the 2012 Budget request within EERE for Water 
Programs. The President's FY 2012 budget represents DOE's 
priorities for applied R&D in energy efficiency and renewable 
energy technologies.
---------------------------------------------------------------------------
    \13\http://www.energy.gov/news/8793.htm.
---------------------------------------------------------------------------
    Transitioning to a clean energy economy will be greatly 
enhanced if we also identify ways to minimize or eliminate 
water use associated with energy generation. The ACELA 
provisions could be the catalyst to finding these solutions.
    I would be pleased to address any questions the Committee 
might have.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as ordered reported, are shown as follows (existing 
law proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):
    Section 5 of the Federal Power Act (16 U.S.C. 798) is 
amended as follows:

                           FEDERAL POWER ACT

           The Act of June 10, 1920, Chapter 285, as Amended

                               AN ACT To

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,

           *       *       *       *       *       *       *

    [Each preliminary permit issued under this Part shall be 
for the sole purpose of maintaining priority of application for 
a license under the terms of this Act for such period or 
periods, not exceeding a total of three years, as in the 
discretion of the Commission may be necessary for making 
examinations and surveys, for preparing maps, plans, 
specifications, and estimates, and for making financial 
arrangements. Each such permit shall set forth the conditions 
under which priority shall be maintained. Such permits shall 
not be transferable, and may be canceled by order of the 
Commission upon failure of permittees to comply with conditions 
thereof or for other good cause shown after notice and 
opportunity for hearing.]
    (a) Each preliminary permit issued under this Part shall be 
for the sole purpose of maintaining priority of application for 
a license under the terms of this Act for such period or 
periods, not exceeding a total of three years, as in the 
discretion of the Commission may be necessary for making 
examinations and surveys, for preparing maps, plans, 
specifications, and estimates, and for making financial 
arrangements.
    (b) Extension.--The Commission may extend the term of a 
preliminary permit once for not more than 2 additional years if 
the Commission finds that the permittee has carried out 
activities under the permit in good faith and with reasonable 
diligence.
    (c) Each such permit shall set forth the conditions under 
which priority shall be maintained.
    (d) Such permits shall not be transferable, and may be 
canceled by order of the Commission upon failure of permittees 
to comply with conditions thereof or for other good cause shown 
after notice and opportunity for hearing.

           *       *       *       *       *       *       *

    Section 30 of the Federal Power Act (16 U.S.C. 823a) is 
amended as follows:
    (a) Exemption Qualifications.--Except as provided in 
subsection (b) or (c), the Commission may grant an exemption in 
whole or in part from the requirements of this part, including 
any license requirements contained in this part to any facility 
(not including any dam or other impoundment) constructed, 
operated, or maintained for the generation of electric power 
which the Commission determines, by rule or order--
          [(1) is located on non-Federal lands, and
          [(2) utilizes for such generation only the 
        hydroelectric potential of a manmade conduit, which is 
        operated for the distribution of water for 
        agricultural, municipal, or industrial consumption and 
        not primarily for the generation of electricity.]
          (1) is located on non-Federal lands or Federal lands; 
        and
          (2) uses for the generation only the hydroelectric 
        potential of a conduit.
    (b) Maximum Installment Capacity for Exemption.--The 
Commission may not grant any exemption under subsection (a) to 
any facility the installed capacity of which exceeds 15 
megawatts (40 megawatts in the case of a facility constructed, 
operated, and maintained by an agency or instrumentality of a 
State or local government solely for water supply for municipal 
purposes).
    (c) Consultation With Federal and State Agencies.--In 
making the determination under subsection (a) the Commission 
shall consult with [the United States Fish and Wildlife 
Service, National Marine Fisheries Service and the State 
agency] the Secretary of the department that supervises the 
land on which the facility is or will be located, the United 
States Fish and Wildlife Service, the National Marine Fisheries 
Service and the State agency exercising administration over the 
fish and wildlife resources of the State in which the facility 
is or will be located, in the manner provided by the Fish and 
Wildlife Coordination Act ( 16 U.S.C. 661, et seq.), and shall 
include in any such exemption--
          (1) such terms and conditions as the [Fish and 
        Wildlife Service, National Marine Fisheries Service] 
        the Secretary of the department that supervises the 
        land on which the facility is or will be located, the 
        United States Fish and Wildlife Service, the National 
        Marine Fisheries Service, and the State agency each 
        determine are appropriate to prevent loss of, or damage 
        to, such resources and to otherwise carry out the 
        purposes of such Act, and
          (2) such terms and conditions as the Commission deems 
        appropriate to insure that such facility continues to 
        comply with the provisions of this section and terms 
        and conditions included in any such exemption.

           *       *       *       *       *       *       *

    (f) Savings Clause.--Nothing in the section alters or 
affects the authority of the Secretary of the Interior under 
the reclamation laws-
          (1) to authorize private hydropower development under 
        a lease of power privilege; or
          (2) to develop other hydropower generation at 
        facilities of the Bureau of Reclamation.
    (g) Definition of Conduit.--In this section, the term 
''conduit'' means any tunnel, canal, pipeline, aqueduct, flume, 
ditch, or similar manmade water conveyance that is operated for 
the distribution of water for agricultural, municipal, or 
industrial consumption and not primarily for the generation of 
electricity.

                                  

```