29–010 

Calendar No. 72 

113TH CONGRESS REPORT " ! SENATE 1st Session 113–39 

BUREAU OF RECLAMATION SMALL CONDUIT 

HYDROPOWER DEVELOPMENT AND RURAL JOBS ACT 

JUNE 3, 2013.—Ordered to be printed 

Mr. WYDEN, from the Committee on Energy and Natural 

Resources, submitted the following 

R E P O R T 

[To accompany H.R. 678] 

The Committee on Energy and Natural Resources, to which was 

referred the Act (H.R. 678) to authorize all Bureau of Reclamation 

conduit facilities for hydropower development under Federal Reclamation law, and for other purposes, having considered the same, 

reports favorably thereon without amendment and recommends 

that the Act do pass. 

PURPOSE

The purpose of H.R. 678 is to authorize all Bureau of Reclamation conduit facilities for hydropower development under Federal 

Reclamation law. 

BACKGROUND AND NEED

The Bureau of Reclamation is the largest wholesale water supplier, operating 337 reservoirs with a total storage capacity of 245 

million acre-feet of water. These reservoirs provide irrigation water 

to 10 million farmland acres through hundreds of miles of canals. 

Reclamation is also the second largest producer of hydroelectric 

power in the western United States. Fifty-three Bureau of Reclamation power plants annually provide more than 40 billion kilowatt hours generating nearly a billion dollars in power revenues 

and produce enough electricity to serve 3.5 million homes. 

There is potential to develop additional hydropower on existing 

small conduits at Reclamation’s water canals and pipelines. Small 

conduit hydropower projects are defined as projects producing 5- 

megawatts or less. According to a study completed by the Bureau 


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of Reclamation, 373 existing canals and conduits have the combined potential of generating over 365,000 MW-hours of additional 

hydropower annually. 

In order to develop small conduit hydropower, developers must 

use the Lease of Power Privilege (LOPP) process where hydropower 

is an authorized use. In developing small conduit hydropower, the 

Secretary of the Interior must first offer the LOPP to the irrigation 

district or municipality that currently operates the project. H.R. 

678 facilitates small hydropower development at existing conduits 

by expediting and improving the LOPP process. 

LEGISLATIVE HISTORY

Representative Tipton introduced H.R. 678 on February 13, 2013. 

The House Committee on Natural Resources held a hearing on the 

bill on March 25, 2013, and reported the bill favorably out of committee. The bill passed the House by a rollcall vote of 416–7 with 

amendments. At its business meeting on May 8, 2013, the Senate 

Energy and Natural Resources Committee ordered H.R. 678 favorably reported. 

Senator Barrasso introduced similar legislation, S. 306, on February 13, 2013. The bill is co-sponsored by Senators Crapo, Enzi, 

Risch, and Flake. The Senate Committee on Energy and Natural 

Resources held a hearing on S. 306 on April 23, 2013. The bill was 

reported favorably by voice vote on May 8, 2013, with an amendment in the nature of a substitute to conform S. 306 to the text 

of H.R. 678. 

In the 112th Congress similar legislation, H.R. 2842, was introduced by Representative Tipton on September 6, 2011. H.R. 2842 

passed the House on March 7, 2012, by a rollcall vote of 265 to 154. 

The Senate Committee on Energy and Natural Resources, Subcommittee on Water and Power, held a hearing on H.R. 2842 on 

September 19, 2012 (S. Hrg. 112–301). 

COMMITTEE RECOMMENDATION

The Senate Committee on Energy and Natural Resources, in an 

open business session on May 8, 2013, by voice vote of a quorum 

present, recommends that the Senate pass H.R. 678. 

SECTION-BY-SECTION ANALYSIS

Section 1 provides the short title 

Section 2 amends section 9(c) of the Reclamation Project Act of 

1939 (43 U.S.C. 485h(c)) to authorize sales of electric power and 

leases of power privileges as a function at all Bureau of Reclamation conduits. Section 2 of H.R. 678 clarifies that the Bureau of 

Reclamation, not the Federal Energy Regulatory Commission, is responsible for authorizing conduit hydropower development on Reclamation-owned facilities through its Lease of Power Privilege program. 

This section further amends section 9(c) of the Reclamation 

Project Act of 1939 by adding a number of new provisions as it relates to small conduit hydropower development. Section 9(c)(2) of 

the Reclamation Project Act of 1939, as added by section 2, requires that power privilege leases be offered first to an irrigation 

district or water users association operating or receiving water 


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from the applicable transferred or reserved conduit. The Secretary 

is directed to determine a reasonable time frame for the irrigation 

district or water users association to accept or reject a lease of 

power privilege so that the Secretary can offer the lease of power 

privilege to other parties if the irrigation district or water users association elects not to develop small conduit hydropower at the applicable conduit. 

Section 9(c)(3) of the Reclamation Project Act of 1939, as added 

by section 2, requires the Bureau of Reclamation to ‘‘apply its categorical exclusion process under the National Environmental Policy 

Act of 1969 . . . to small conduit hydropower development under 

this subsection, excluding siting of associated transmission facilities on Federal lands.’’ A ‘‘categorical exclusion’’ is defined by the 

Council on Environmental Quality (CEQ) as a category of actions 

that normally do not have a significant effect on the environment 

and thus do not normally require preparation of either an environmental assessment or an environmental impact statement under 

the National Environmental Policy Act. 40 CFR 1508.4. The CEQ’s 

regulations authorize federal agencies to adopt categorical exclusions for such actions, subject to ‘‘extraordinary circumstances in 

which a normally excluded action may have a significant environmental effect,’’ in which case an environmental assessment or environmental impact statement may be required. 

Under its current authority, the Bureau of Reclamation has 

adopted a categorical exclusion for lease of power privilege projects 

‘‘if the scope of the project is consistent with the terms’’ of the categorical exclusion, ‘‘and there are no extraordinary circumstances.’’ 

Reclamation Manual, Directives and Standards, FAC 04–08 at 10 

(Sept. 28, 2012). Extraordinary circumstances are identified in the 

Department of the Interior’s NEPA rules at 43 CFR 46.215. The 

Bureau’s manual provides that ‘‘where any extraordinary circumstances exist, a higher level of NEPA evaluation will be required.’’ 

Paragraph (3) does not create a new statutory categorical exclusion. It simply provides that the Bureau shall apply its existing 

categorical exclusion process, which includes review for possible extraordinary circumstances, to small conduit hydropower development under subsection 9(c). The Bureau’s witness testified at the 

Committee’s hearing that, if H.R. 678 is enacted, the Bureau 

‘‘would interpret this language as endorsing its current directive 

and standard to potentially apply categorical exclusions, provided 

that no extraordinary circumstances exist, pursuant to 40 CFR 

1508.4.’’ He went on to state that the Bureau believes section (3) 

would ‘‘preserve its discretion to determine whether a closer review 

under NEPA is appropriate.’’ 

Section 9(c)(4) of the Reclamation Project Act of 1939, as added 

by section 2, designates the Power Resources Office in Reclamation’s Denver headquarters as the lead office for small conduit hydropower policy and procedure setting activities. 

Section 9(c)(5) of the Reclamation Project Act of 1939, as added 

by section 2, clarifies that the Western Area Power Administration, 

the Bonneville Power Administration and the Southwestern Power 

Administration are not obligated to purchase or market the conduit 

hydropower generated at Reclamation facilities and that none of 


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the costs associated with the generation shall be assigned to these 

agencies’ power rates. 

Section 9(c)(6) includes provisions that declare nothing in the bill 

will alter or impede the delivery and management of water for 

original project purposes, and deems water used for conduit hydropower generation to be incidental to use of water for the original 

project purposes. 

Section 9(c)(7) includes provisions that declare nothing in the bill 

will alter or affect any existing agreements for conduit hydropower 

development projects or disposition of revenues. 

Section 9(c)(8) specifies that nothing in this bill shall alter or affect any existing permit, license, or exemption issued by FERC 

under Part I of the Federal Power Act or any project with a pending application at FERC as of the date of enactment of this Act. 

Section 9(c)(9) defines key terms used in section 9(c), as amended. 

COST AND BUDGETARY CONSIDERATIONS

The following estimate of costs of this measure has been provided 

by the Congressional Budget Office: 

H.R. 678—Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act 

CBO estimates that enacting H.R. 678 would increase federal offsetting receipts by about $1 million over the 2014–2023 period because it would authorize the Bureau of Reclamation to permit private entities to develop hydropower at certain facilities owned by 

the bureau. Pay-as-you-go procedures apply because enacting the 

legislation would increase offsetting receipts (a credit against direct 

spending). Enacting the bill would not affect revenues. 

H.R. 678 would clarify that the jurisdiction over small hydropower development by private entities on all bureau irrigation canals and conduits lies solely with the bureau. Under current law, 

the bureau or the Federal Energy Regulatory Commission (FERC) 

has jurisdiction over hydropower development at such facilities. 

CBO expects that this change would result in a small increase in 

receipts from hydropower development because the federal government collects no funds from project developers if a project is authorized by FERC. 

Typically the bureau’s agreements with private developers of hydropower facilities on small conduits generate annual receipts to 

the federal government ranging from about $10,000—at most facilities—up to $100,000 for a few larger sites. Selecting the lessee, negotiating the leasing contract, and constructing new facilities usually takes two to four years depending on the size of the project. 

Under the legislation, CBO expects that the federal government 

would receive some additional receipts beginning two years after 

enactment and that those additional collections would grow to 

about $200,000 a year by 2023. 

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct 

spending or revenues. H.R. 678 would increase offsetting receipts 

beginning in 2015. The budgetary changes that are subject to those 

pay-as-you-go procedures are shown in the following table. 


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CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 678, AS ORDERED REPORTED BY THE 

SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES ON MAY 8, 2013 

By fiscal year, in millions of dollars— 

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2013– 

2018 

2013– 

2023 

NET INCREASE OR DECREASE (¥) IN THE DEFICIT 

Statutory Pay-As-YouGo Impact ............. 0 0 0 0 0 0 0 0 0 0 0 0 ¥1 

H.R. 678 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

impose no costs on state, local, or tribal governments. 

On March 25, 2013, CBO transmitted a cost estimate for H.R. 

678, the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act, as ordered reported by the House 

Committee on Natural Resources on March 20, 2013. On May 17, 

2013, CBO transmitted a cost estimate for S. 306, the Bureau of 

Reclamation Small Conduit Hydropower Development and Rural 

Jobs Act, as ordered reported by the Senate Committee on Energy 

and Natural Resources on May 8, 2013. All three pieces of legislation are similar and CBO’s cost estimates are the same. 

The CB0 staff contact for this estimate is Aurora Swanson. The 

estimate was approved by Theresa Gullo, Deputy 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 

H.R. 678. 

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 H.R. 678 as ordered reported. 

CONGRESSIONALLY DIRECTED SPENDING

H.R. 678, 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 Bureau of Reclamation at the 

April 23, 2013, Full Committee hearing on H.R. 678 follows. 

STATEMENT OF LOWELL PIMLEY, DEPUTY COMMISSIONER OF

OPERATIONS,BUREAU OF RECLAMATION, DEPARTMENT OF

THE INTERIOR

Chairman Wyden, members of the Committee, I am 

Lowell Pimley, Deputy Commissioner of Operations at the 


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1http://www.usbr.gov/power/SignedHydropowerMOU.pdf, 2010. 

Bureau of Reclamation (Reclamation). I am pleased to provide the views of the Department of the Interior (Department) on S. 306 and H.R. 678, the Bureau of Reclamation 

Small Conduit Hydropower Development and Rural Jobs 

Act. The Department supports the goals of S. 306 and H.R. 

678, which aim to increase the generation of clean, renewable hydroelectric power in existing canals and conduits, 

and believes these bills will provide greater certainty and 

administrative streamlining of these types of projects. As 

noted in previous hearings, the Department has an aggressive sustainable hydropower agenda, which we continue to 

implement under existing authorities. My testimony today 

will summarize the areas where the Administration supports the objectives of S. 306 and H.R. 678, as well as detail the areas in the bills where we believe improvements 

could be made, recognizing that the House of Representatives amended H.R. 678 to address many of the Department’s concerns. 

Reclamation is the second largest producer of hydropower in the country. A 2010 Hydropower Memorandum of 

Understanding (2010 MOU) 1 signed by the Secretaries of 

Energy and the Interior, and the Assistant Secretary of 

the Army (Civil Works) provides a strategy to facilitate the 

development of sustainable hydropower on federal facilities. Before I share the Department’s views on S. 306 and 

H.R. 678, I want to highlight some of the activities underway at the Department to develop additional renewable 

hydropower capacity. In March 2011, Secretary Salazar 

and the U.S. Department of Energy Secretary Steven Chu 

announced nearly $17 million in funding over three years 

for research and development projects to advance hydropower technology. The funding included ten projects that 

will receive a total of $7.3 million to research, develop, and 

test low-head, small hydropower technologies that can be 

deployed at existing non-powered dams or constructed waterways. The funding will further the Obama Administration’s goal of meeting 80 percent of our electricity needs 

from clean energy sources by 2035. 

In March 2011, the Department released the results of 

an internal study, the Hydropower Resource Assessment 

at Existing Reclamation Facilities, that estimated the Department could generate up to one million megawatt hours 

of electricity annually and create jobs by addressing hydropower capacity at 70 of its existing facilities. In March 

2012, Reclamation completed the second phase of its investigation of hydropower development, Site Inventory and 

Hydropower Energy Assessment of Reclamation Owned 

Conduits, as referenced in the 2010 MOU. While the first 

phase, completed in 2011, focused primarily on Reclamation dams, the second phase focused on constructed Reclamation waterways such as canals and conduits, and estimated the Department could generate over 365,000 megawatt hours of electricity annually by addressing hydroVerDate Mar 15 2010 06:32 Jun 09, 2013 Jkt 029010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6969 E:\HR\OC\SR039.XXX SR039

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2The 1992 MOU is available in the Federal Register at: 58 Fed. Reg. 3269 (Jan. 8, 1993). 

power capacity on 373 of its existing canals. In total, the 

two studies revealed that an additional 1.5 million megawatt-hours of renewable energy could be generated 

through hydropower at existing Reclamation sites. 

Reclamation worked diligently with our stakeholders 

and the hydropower industry to improve our Lease of 

Power Privilege (LOPP) processes, and this collaboration 

culminated in the release of an updated and improved 

LOPP directive and standard in September 2012. These 

new procedures better define roles, timelines and responsibilities that will allow us to better support and encourage 

sustainable hydropower development at Reclamation facilities. 

In summary, both S. 306 and H.R. 678 would do two 

things: 1) provide a blanket authorization for the installation of small hydropower units on all Reclamation-owned 

canals and conduits and 2) require that Reclamation offer 

preference to water user organizations for the development 

of canal/conduit hydropower under a LOPP. Additionally, 

S. 306 would exempt small canal/conduit hydropower 

projects below 5 MW from the requirements of the National Environmental Policy Act (NEPA), while H.R. 678 

directs Reclamation to apply its categorical exclusion process under NEPA to small conduit hydropower development. Finally, S. 306 designates Reclamation’s Power Resources Office (PRO) as the lead point of contact for requests to develop canal/conduit hydropower under a LOPP. 

Per the Department’s recommendation, H.R. 678 was 

amended to direct Reclamation’s PRO as the lead office for 

policy and procedure setting activities. 

Section 2 of S. 306 and H.R. 678 would clarify that Reclamation is responsible for authorizing conduit hydropower 

development on Reclamation-owned facilities through 

LOPP contracts. As background, Reclamation is authorized 

by existing law to issue LOPP contracts that utilize Reclamation-owned facilities for private hydropower development under Section 5 of the Townsites and Power Development Act of 1906, 43 U.S.C. § 522, and Section 9(c) of the 

Reclamation Project Act of 1939, 43 U.S.C. § 485h(c). Statutes that are specific to individual Reclamation projects 

may also apply. Similar to the LOPP process, the Federal 

Energy Regulatory Commission (FERC) may also issue licenses for hydropower development under the authority of 

the Federal Power Act, 16 U.S.C. § 791 et seq. To resolve 

potential confusion over whether a Reclamation LOPP contract or a FERC license should govern hydropower development at Reclamation facilities, Reclamation and FERC 

entered into agreements in 1981 and 1992 to address hydropower development. In particular, a 1992 memorandum 

of understanding between Reclamation and FERC (1992 

MOU) 2 established a process to resolve questions of jurisdiction over hydropower development at Reclamation facilities. Reclamation and FERC continue to work together 


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to improve that process and make the process more efficient. 

Section 2 of S. 306 and H.R. 678 would specifically authorize Reclamation to develop or enter into LOPP contracts for the development of new hydropower on conduits 

or canals on Reclamation-owned projects. This language 

would streamline the issuance of LOPP contracts by simplifying the Reclamation-FERC jurisdictional consultation 

that was established in the 1992 MOU. This language also 

could provide Reclamation with an opportunity to discuss 

programmatically resolving jurisdiction over hydropower 

development on Reclamation conduits with FERC, thus 

creating the potential to eliminate case-by-case jurisdictional consultations for development on Reclamation conduits. 

Section 2 of S. 306 and H.R. 678 would also require that 

Reclamation offer preference in the award of LOPPs to ‘‘irrigation districts or water users associations’’ with which 

Reclamation has an existing contract for operations and 

maintenance (O&M) of that project or project feature. 

While Reclamation already provided preference to existing 

irrigation districts and water user associations pursuant to 

Section 9(c) of the Reclamation Projects Act of 1939 we 

agree that these irrigation districts and water users currently operating and maintaining Reclamation transferred 

works should get additional favorability. In September 

2012 we incorporated this concept into our revised LOPP 

directive and standard. Reclamation would be happy to 

work with the sponsors of the bills and the Committees to 

resolve any concerns regarding preference. 

Section 2 of S. 306 would provide that NEPA ‘‘shall not 

apply to small conduit hydropower development, excluding 

siting of associated transmission on Federal lands[.]’’ The 

Department opposes a waiver of NEPA. Furthermore, this 

language is in contrast to the existing provision in Section 

30 of the Federal Power Act (16 U.S.C. 823a) that allows 

FERC to approve an application to develop hydropower 

within conduits located on non-federal lands under certain 

conditions. Accordingly, as provided in FERC’s regulations 

at 18 CFR § 380.4(a)(14), FERC is not required to prepare 

an environmental assessment or environmental impact 

statement for certain conduit hydropower projects that 

meet the statutory and regulatory criteria and do not have 

the potential for significant environmental impacts. 

The Department understands the intent of S. 306 to be 

that conduits and canals are existing, manmade structures 

where environmental impacts associated with construction 

have already occurred and/or been mitigated. However, the 

Department’s view is that low-impact hydropower, particularly in conduits and canals, can be efficiently developed 

by utilizing existing environmental review provisions that 

will not unduly delay project development and ensure environmental health and safety. Environmental analysis for 

many LOPP contracts has, for example, been addressed 

through environmental assessments rather than environVerDate Mar 15 2010 06:53 Jun 09, 2013 Jkt 029010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6969 E:\HR\OC\SR039.XXX SR039

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mental impact statements. Reclamation’s newly published 

LOPP procedures also allow for an existing categorical exclusion under NEPA to be applied to low-impact hydropower projects where low impact is defined by their impact 

to project operations as opposed to the size of the project. 

Reclamation believes that low-impact hydropower developed in conduits or canals may be appropriately analyzed 

under the same categorical exclusion procedures that are 

documented in the Departmental Manual at 516 DM 

14.5(C)(3) and (D)(4). 

H.R. 678, as amended by the House of Representatives, 

directs Reclamation to ‘‘apply its categorical exclusion 

process under the National Environmental Policy Act of 

1969 (42 U.S.C. 4321 et seq.) to small conduit hydropower 

development under this subsection, excluding siting of associated transmission facilities on Federal lands.’’ The Department recognizes the intent of H.R. 678 to encourage 

the use of the categorical exclusion procedures that are allowed for in its LOPP directives and standards and documented in the Departmental Manual. If enacted, Reclamation would interpret this language as endorsing its current 

directive and standard to potentially apply categorical exclusions, provided that no extraordinary circumstances 

exist, pursuant to 40 CFR § 1508.4. Under Section 2 of 

H.R. 678, Reclamation does not guarantee that categorical 

exclusions will apply on every small hydropower project. 

Reclamation believes it should preserve its discretion to 

determine whether a closer review under NEPA is appropriate. 

The Department believes that environmental protections 

should continue to apply in the context of new construction 

undertaken on federal lands, and will continue to apply 

NEPA through the use of categorical exclusions or environmental assessments. We understand the value and importance of expedient environmental review and believe development of hydropower within Reclamation’s existing conduits and canals can be efficiently analyzed utilizing these 

existing review processes. 

I would also like to address concerns raised by language 

in Section 2 of S. 306 specifying that ‘‘the Power Resources 

Office of the Bureau of Reclamation shall be the lead office 

of small conduit hydropower activities conducted under 

this subsection.’’ The Department understands the bill 

sponsor’s desire to simplify points of contact for entities 

seeking to develop hydropower. However, in practice, 

project-specific expertise concerning Reclamation facilities 

resides first at the field level where ownership responsibility for the specific infrastructure resides. It is preferable 

for developers to approach the appropriate Reclamation regional or area office with proposals to develop conduit hydropower, and contact the PRO as needed. There is a robust channel of communication between the PRO, other 

Denver Offices, and Reclamation regional and field offices 

that allows for successful implementation of a LOPP 

agreement. Reclamation organizes its workforce as approVerDate Mar 15 2010 06:32 Jun 09, 2013 Jkt 029010 PO 00000 Frm 00009 Fmt 6659 Sfmt 6969 E:\HR\OC\SR039.XXX SR039

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priate to maximize the efficiency and expertise of personnel. 

For these reasons, the Department is pleased to support 

the House amended language in H.R. 678 specifying that 

‘‘the Power Resources Office of the Bureau of Reclamation 

shall be the lead office of small conduit hydropower policy 

and procedure-setting activities conducted under this subsection.’’. 

S. 306 and H.R. 678 would amend 9(c) of the Reclamation Project Act of 1939, which in addition to providing 

LOPP authority, authorizes the Secretary to enter into 

contracts for municipal water supply and miscellaneous 

purposes. Several of the definitions in S. 306 as drafted 

would affect the other authorities in the 1939 Act. In particular, the proposed definition of ‘‘transferred work’’ is too 

narrow to refer to all works affected by subsection 9(c) of 

the 1939 Act, since that subsection authorizes contracts involving works other than conduits. Either the definition 

would need to be broadened to include all affected works, 

or the term defined narrowed from ‘‘transferred work’’ to 

‘‘transferred conduit.’’ Also, the existing 1939 Act has a 

definitions section. Any definitions that are of general application should be included in the existing definitions section, rather than in subsection 9(c). Definitions that apply 

solely to conduit hydropower need to do so explicitly, to 

avoid misapplication or confusion. The Department would 

be happy to work with the Committee on S. 306 to make 

these technical changes to the language of the proposed 

definitions and their placement within the existing 1939 

Act. The Department appreciates and supports the language in H.R. 678 that narrows the terms defined as recommended above. 

As referenced above, Reclamation has procedures in 

place through the LOPP process for the sites where Reclamation has the authority to develop hydropower. In September 2012 we released an updated LOPP Directive and 

Standard that improved our processes, especially for conduits and canals, and incorporated the concept of additional favorability for irrigation districts and water user 

associations with O&M responsibility on Reclamation 

projects. 

Finally, H.R. 678 provides that ‘‘nothing in this subsection shall alter or affect any existing preliminary permit, license, or exemption issued by the Federal Energy 

Regulatory Commission under Part I of the Federal Power 

Act (16 U.S.C. 792, et seq.) or any project for which an application has been filed with the Federal Energy Regulatory Commission as of the date of the enactment of the 

Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act.’’ This language allows for existing and pending FERC licenses to remain within 

FERC’s jurisdiction, rather than be redirected into Reclamation’s LOPP process. 

In conclusion, as stated at previous hydropower hearings 

before this committee, Reclamation will continue to review 


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and assess potential new hydropower projects that provide 

a high economic return for the nation, are energy efficient, 

and can be accomplished in accordance with protections for 

fish and wildlife, the environment, or recreation. As the 

nation’s second largest hydropower producer, Reclamation 

strongly believes in the past, present and bright future of 

this important electricity resource. With these recommended revisions, S. 306 and H.R. 678 will go a long 

way towards meeting the Administration’s goals of developing clean, reliable, cost-effective, and sustainable hydropower in the United States. 

Thank you for the opportunity to discuss S. 306 and 

H.R. 678. This concludes my written statement, and I am 

pleased to answer questions at the appropriate time. 

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 H.R. 

678, as ordered reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is 

printed in italic, existing law in which no change is proposed is 

shown in roman): 

RECLAMATION PROJECT ACT OF 1939 

Act of August 4, 1939 (53 Stat. 1187; 43 U.S.C. 485 et seq.) 

AN ACT To provide a feasible and comprehensive plan for the variable payment of 

construction charges on United States reclamation projects, to protect the investment of the United States in such projects, and for other purposes. 

* * * * * * * 

SEC. 9. (a) 

* * * * * * * 

SEC. 9. (c) øThe Secretary is authorized to enter into contracts 

to furnish water¿ 

(1) The Secretary is authorized to enter into contracts to furnish water for municipal water supply or miscellaneous purposes: Provided, That any such contract either 

ø(1) shall¿ (A) shall require repayment to the United 

States, over a period of not to exceed forty years from the 

year in which water is first delivered for the use of the 

contracting party, with interest not exceeding the rate of 

31⁄2 per centum per annum if the Secretary determines an 

interest charge to be proper, of an appropriate share as determined by the Secretary of that part of the construction 

costs allocated by him to municipal water supply or other 

miscellaneous purposes; or 

ø(2) shall¿ (B) shall be for such periods, not to exceed 

forty years, and at such rates as in the Secretary’s judgment will produce revenues at least sufficient to cover an 

appropriate share of the annual operation and maintenance cost and an appropriate share of such fixed charges 

as the Secretary deems proper, and shall require the payment of said rates each year in advance of delivery of 

water for said year. Any sale of electric power or lease of 


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power privileges, made by the Secretary in connection with 

the operation of any project or division of a project, shall 

be for such periods, not to exceed forty years, and at such 

rates as in his judgment will produce power revenues at 

least sufficient to cover an appropriate share of the annual 

operation and maintenance cost, interest on an appropriate share of the construction investment at not less 

than 3 per centum per annum, and such other fixed 

charges as the Secretary deems proper: Provided further, 

That in said sales or leases preference shall be given to 

municipalities and other public corporations or agencies; 

and also to cooperatives and other nonprofit organizations 

financed in whole or in part by loans made pursuant to the 

Rural Electrification Act of 1936 [7 U.S.C. 901 et seq.]. 

Nothing in this subsection shall be applicable to provisions 

in existing contracts, made pursuant to law, for the use of 

power and miscellaneous revenues of a project for the benefit of users of water from such project. The provisions of 

this subsection ørespecting the terms of sales of electric 

power and leases of power privileges shall be in addition 

and alternative to any authority in existing laws relating 

to particular projects.¿ respecting the sales of electric power 

and leases of power privileges shall be an authorization in 

addition to and alternative to any authority in existing 

laws related to particular projects, including small conduit 

hydropower development. No contract relating to municipal 

water supply or miscellaneous purposes or to electric 

power or power privileges shall be made unless, in the 

judgment of the Secretary, it will not impair the efficiency 

of the project for irrigation purposes. 

(2)(A) When carrying out this subsection, the Secretary shall 

first offer the lease of power privilege to an irrigation district 

or water users association operating the applicable transferred 

conduit, or to the irrigation district or water users association 

receiving water from the applicable reserved conduit. The Secretary shall determine a reasonable time frame for the irrigation district or water users association to accept or reject a lease 

of power privilege offer for a small conduit hydropower project. 

(2)(B) If the irrigation district or water users association 

elects not to accept a lease of power privilege offer under subparagraph (A), the Secretary shall offer the lease of power privilege to other parties in accordance with this subsection. 

(3) The Bureau of Reclamation shall apply its categorical exclusion process under the National Environmental Policy Act of 

1969 (42 U.S.C. 4321 et seq.) to small conduit hydropower development under this subsection, excluding siting of associated 

transmission facilities on Federal Lands. 

(4) The Power Resources Office of the Bureau of Reclamation 

shall be the lead office of small conduit hydropower policy and 

procedure-setting activities conducted under this subsection. 

(5) Nothing in this subsection shall obligate the Western Area 

Power Administration, the Bonneville Power Administration, or 

the Southwestern Power Administration to purchase or market 

any of the power produced by the facilities covered under this 

subsection and none of the costs associated with production or 


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delivery of such power shall be assigned to project purposes for 

inclusion in project rates. 

(6) Nothing in this subsection shall alter or impede the delivery and management of water by Bureau of Reclamation facilities, as water used for conduit hydropower generation shall be 

deemed incidental to use of water for the original project purposes. Lease of power privilege shall be made only when, in the 

judgment of the Secretary, the exercise of the lease will not be 

incompatible with the purposes of the project or division involved, nor shall it create any unmitigated financial or physical 

impacts to the project or division involve. The Secretary shall 

notify and consult with the irrigation district or water users association operating the transferred conduit before offering the 

lease of power privilege and shall prescribe terms and conditions that will adequately protect the planning, design, construction, operation, maintenance, and other interests of the 

United States and the project or division involved. 

(7) Nothing in this subsection shall alter or affect any existing agreements for the development of conduit hydropower 

projects or disposition of revenues. 

(8) Nothing in this subsection shall alter or affect any existing preliminary permit, license, or exemption issued by the Federal Energy Regulatory Commission under Part I of the Federal 

Power Act (16 U.S.C. 792 et seq.) or any project for which an 

application has been filed with the Federal Energy Regulatory 

Commission as of the date of the enactment of the Bureau of 

Reclamation Small Conduit Hydropower Development and 

Rural Jobs Act. 

(9) In this subsection: 

(A) CONDUIT.—The term ‘‘conduit’’ means any Bureau of 

Reclamation 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. 

(B) IRRIGATION DISTRICT.—The term ‘‘irrigation district’’ 

means any irrigation, water conservation or conservancy, 

multicounty water conservation or conservancy district, or 

any separate public entity composed of two or more such 

districts and jointly exercising powers of its member districts. 

(C) RESERVED CONDUIT.—The term ‘‘reserved conduit’’ 

means any conduit that is included in project works the 

care, operation, and maintenance of which has been reserved by the Secretary, through the Commissioner of the 

Bureau of Reclamation. 

(D) TRANSFERRED CONDUIT.—The term ‘‘transferred conduit’’ means any conduit that is included in project works 

the care, operation, and maintenance of which has been 

transferred to a legally organized water users association 

or irrigation district. 


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(E) SMALL CONDUIT HYDROPOWER.—The term ‘‘small conduit hydropower’’ means a facility capable of producing 5 

megawatts or less of electric capacity. 

* * * * * * * 

Æ 


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