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[Senate Report 113-36]
[From the U.S. Government Publishing Office]

                                                        Calendar No. 69
113th Congress                                                   Report
                                 SENATE
 1st Session                                                     113-36

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

 
                    HYDROPOWER REGULATORY EFFICIENCY

                                _______
                                

                  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 S. 545]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 545) 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:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Hydropower 
Regulatory Efficiency Act of 2013''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Promoting small hydroelectric power projects.
Sec. 4. Promoting conduit hydropower projects.
Sec. 5. FERC authority to extend preliminary permit periods.
Sec. 6. Promoting hydropower development at nonpowered dams and closed 
          loop pumped storage projects.
Sec. 7. DOE study of pumped storage and potential hydropower from 
          conduits.

SEC. 2. FINDINGS.

  Congress finds that--
          (1) the hydropower industry currently employs approximately 
        300,000 workers across the United States;
          (2) hydropower is the largest source of clean, renewable 
        electricity in the United States;
          (3) as of the date of enactment of this Act, hydropower 
        resources, including pumped storage facilities, provide--
                  (A) nearly 7 percent of the electricity generated in 
                the United States; and
                  (B) approximately 100,000 megawatts of electric 
                capacity in the United States;
          (4) only 3 percent of the 80,000 dams in the United States 
        generate electricity, so there is substantial potential for 
        adding hydropower generation to nonpowered dams; and
          (5) according to one study, by utilizing currently untapped 
        resources, the United States could add approximately 60,000 
        megawatts of new hydropower capacity by 2025, which could 
        create 700,000 new jobs over the next 13 years.

SEC. 3. PROMOTING SMALL HYDROELECTRIC POWER PROJECTS.

  Subsection (d) of section 405 of the Public Utility Regulatory 
Policies Act of 1978 (16 U.S.C. 2705) is amended by striking ``5,000'' 
and inserting ``10,000''.

SEC. 4. PROMOTING CONDUIT HYDROPOWER PROJECTS.

  (a) Applicability of, and Exemption From, Licensing Requirements.--
Section 30 of the Federal Power Act (16 U.S.C. 823a) is amended--
          (1) by striking subsections (a) and (b) and inserting the 
        following:
  ``(a)(1) A qualifying conduit hydropower facility shall not be 
required to be licensed under this part.
  ``(2)(A) Any person, State, or municipality proposing to construct a 
qualifying conduit hydropower facility shall file with the Commission a 
notice of intent to construct such facility. The notice shall include 
sufficient information to demonstrate that the facility meets the 
qualifying criteria.
  ``(B) Not later than 15 days after receipt of a notice of intent 
filed under subparagraph (A), the Commission shall--
          ``(i) make an initial determination as to whether the 
        facility meets the qualifying criteria; and
          ``(ii) if the Commission makes an initial determination, 
        pursuant to clause (i), that the facility meets the qualifying 
        criteria, publish public notice of the notice of intent filed 
        under subparagraph (A).
  ``(C) If, not later than 45 days after the date of publication of the 
public notice described in subparagraph (B)(ii)--
          ``(i) an entity contests whether the facility meets the 
        qualifying criteria, the Commission shall promptly issue a 
        written determination as to whether the facility meets such 
        criteria; or
          ``(ii) no entity contests whether the facility meets the 
        qualifying criteria, the facility shall be deemed to meet such 
        criteria.
  ``(3) For purposes of this section:
          ``(A) 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.
          ``(B) The term `qualifying conduit hydropower facility' means 
        a facility (not including any dam or other impoundment) that is 
        determined or deemed under paragraph (2)(C) to meet the 
        qualifying criteria.
          ``(C) The term `qualifying criteria' means, with respect to a 
        facility--
                  ``(i) the facility is constructed, operated, or 
                maintained for the generation of electric power and 
                uses for such generation only the hydroelectric 
                potential of a non-federally owned conduit;
                  ``(ii) the facility has an installed capacity that 
                does not exceed 5 megawatts; and
                  ``(iii) on or before the date of enactment of the 
                Hydropower Regulatory Efficiency Act of 2013, the 
                facility is not licensed under, or exempted from the 
                license requirements contained in, this part.
  ``(b) Subject to subsection (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) utilizes for such generation only the hydroelectric 
        potential of a conduit; and
          ``(2) has an installed capacity that does not exceed 40 
        megawatts.'';
          (2) in subsection (c), by striking ``subsection (a)'' and 
        inserting ``subsection (b)''; and
          (3) in subsection (d), by striking ``subsection (a)'' and 
        inserting ``subsection (b)''.
  (b) Conforming Amendment.--Subsection (d) of section 405 of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2705), as 
amended, is further amended by striking ``subsection (a) of such 
section 30'' and inserting ``subsection (b) of such section 30''.

SEC. 5. FERC AUTHORITY TO EXTEND PRELIMINARY PERMIT PERIODS.

  Section 5 of the Federal Power Act (16 U.S.C. 798) is amended--
          (1) by designating the first, second, and third sentences as 
        subsections (a), (c), and (d), respectively; and
          (2) by inserting after subsection (a) (as so designated) the 
        following:
  ``(b) The Commission may extend the period of a preliminary permit 
once for not more than 2 additional years beyond the 3 years permitted 
by subsection (a) if the Commission finds that the permittee has 
carried out activities under such permit in good faith and with 
reasonable diligence.''.

SEC. 6. PROMOTING HYDROPOWER DEVELOPMENT AT NONPOWERED DAMS AND CLOSED 
                    LOOP PUMPED STORAGE PROJECTS.

  (a) In General.--To improve the regulatory process and reduce delays 
and costs for hydropower development at nonpowered dams and closed loop 
pumped storage projects, the Federal Energy Regulatory Commission 
(referred to in this section as the ``Commission'') shall investigate 
the feasibility of the issuance of a license for hydropower development 
at nonpowered dams and closed loop pumped storage projects in a 2-year 
period (referred to in this section as a ``2-year process''). Such a 2-
year process shall include any prefiling licensing process of the 
Commission.
  (b) Workshops and Pilots.--The Commission shall--
          (1) not later than 60 days after the date of enactment of 
        this Act, hold an initial workshop to solicit public comment 
        and recommendations on how to implement a 2-year process;
          (2) develop criteria for identifying projects featuring 
        hydropower development at nonpowered dams and closed loop 
        pumped storage projects that may be appropriate for licensing 
        within a 2-year process;
          (3) not later than 180 days after the date of enactment of 
        this Act, develop and implement pilot projects to test a 2-year 
        process, if practicable; and
          (4) not later than 3 years after the date of implementation 
        of the final pilot project testing a 2-year process, hold a 
        final workshop to solicit public comment on the effectiveness 
        of each tested 2-year process.
  (c) Memorandum of Understanding.--The Commission shall, to the extent 
practicable, enter into a memorandum of understanding with any 
applicable Federal or State agency to implement a pilot project 
described in subsection (b).
  (d) Reports.--
          (1) Pilot projects not implemented.--If the Commission 
        determines that no pilot project described in subsection (b) is 
        practicable because no 2-year process is practicable, not later 
        than 240 days after the date of enactment of this Act, the 
        Commission shall submit to the Committee on Energy and Commerce 
        of the House of Representatives and the Committee on Energy and 
        Natural Resources of the Senate a report that--
                  (A) describes the public comments received as part of 
                the initial workshop held under subsection (b)(1); and
                  (B) identifies the process, legal, environmental, 
                economic, and other issues that justify the 
                determination of the Commission that no 2-year process 
                is practicable, with recommendations on how Congress 
                may address or remedy the identified issues.
          (2) Pilot projects implemented.--If the Commission develops 
        and implements pilot projects involving a 2-year process, not 
        later than 60 days after the date of completion of the final 
        workshop held under subsection (b)(4), the Commission shall 
        submit to the Committee on Energy and Commerce of the House of 
        Representatives and the Committee on Energy and Natural 
        Resources of the Senate a report that--
                  (A) describes the outcomes of the pilot projects;
                  (B) describes the public comments from the final 
                workshop on the effectiveness of each tested 2-year 
                process; and
                  (C)(i) outlines how the Commission will adopt 
                policies under existing law (including regulations) 
                that result in a 2-year process for appropriate 
                projects;
                  (ii) outlines how the Commission will issue new 
                regulations to adopt a 2-year process for appropriate 
                projects; or
                  (iii) identifies the process, legal, environmental, 
                economic, and other issues that justify a determination 
                of the Commission that no 2-year process is 
                practicable, with recommendations on how Congress may 
                address or remedy the identified issues.

SEC. 7. DOE STUDY OF PUMPED STORAGE AND POTENTIAL HYDROPOWER FROM 
                    CONDUITS.

  (a) In General.--The Secretary of Energy shall conduct a study--
          (1)(A) of the technical flexibility that existing pumped 
        storage facilities can provide to support intermittent 
        renewable electric energy generation, including the potential 
        for such existing facilities to be upgraded or retrofitted with 
        advanced commercially available technology; and
          (B) of the technical potential of existing pumped storage 
        facilities and new advanced pumped storage facilities, to 
        provide grid reliability benefits; and
          (2)(A) to identify the range of opportunities for hydropower 
        that may be obtained from conduits (as defined by the 
        Secretary) in the United States; and
          (B) through case studies, to assess amounts of potential 
        energy generation from such conduit hydropower projects.
  (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary of Energy shall submit to the Committee on 
Energy and Commerce of the House of Representatives and the Committee 
on Energy and Natural Resources of the Senate a report that describes 
the results of the study conducted under subsection (a), including any 
recommendations.

                                Purpose

    The purpose of S. 545 is to promote hydropower development 
in the United States by statutorily exempting qualifying 
conduit hydropower facilities from licensing and regulation 
under the Federal Power Act, expanding existing exemptions for 
certain other conduit hydropower facilities and small 
hydroelectric power projects, and requiring the Federal Energy 
Regulatory Commission (FERC) to study ways to improve the 
licensing of hydropower development at nonpowered dams and 
closed loop pumped storage projects.

                          Background and Need

    Hydropower is the largest source of clean, renewable 
electricity in the United States. Today, we have 100,000 
megawatts of hydroelectric capacity, providing about 7 percent 
of the nation's electricity needs, and avoiding approximately 
200 million metric tons of carbon emissions each year. Last 
Congress, DOE testified before the Committee on Energy and 
Natural Resources that the nation could realize 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. In 
addition, there is an unknown amount of potential power that 
can be generated from existing conduits such as irrigation 
canals, and pumped storage facilities can help integrate 
intermittent renewable resources.
    FERC's current licensing process takes five years or more. 
A shorter process, if feasible, would be much less burdensome 
and costly for a low-impact project such as installing hydro at 
an existing non-hydro dam. With only three percent of existing 
dams in the United States currently generating power, there is 
great potential for adding hydropower generation to existing 
non-powered dams. Improving and shortening the licensing 
process will help ensure that additional hydropower can be 
developed while maintaining environmental protections and the 
opportunity for public input into the licensing process. 
According to a study completed by the National Hydropower 
Association, the U.S. could add approximately 60,000 megawatts 
(MW) of new hydropower capacity at existing dams by 2025.

                          Legislative History

    S. 545 was introduced by Senator Murkowski on March 13, 
2013. Senators Wyden, Risch, Cantwell, Crapo, Murray, Begich, 
Bennet, Coons, Udall of Colorado, Feinstein, and Casey are 
cosponsors. The House of Representatives passed similar 
legislation, H.R. 267, on February 13, 2013, by a vote of 422 
to 0.
    The Committee on Energy and Natural Resources held a 
hearing on both S. 545 and H.R. 267 on April 23, 2013. The 
Committee adopted an amendment in the nature of a substitute to 
S. 545 to conform S. 545 to H.R. 267, and ordered S. 545, as 
amended, and H.R. 267 favorably reported on May 8, 2012.
    The Committee considered similar legislation, S. 629, in 
the 112th Congress. S. 629 was also introduced by Senator 
Murkowski. The Committee held a hearing on S. 629 on March 31, 
2011. S. Hrg. 112-26. The Committee ordered the bill reported 
favorably, with an amendment, on May 18, 2011. S. Rept. 112-19.

                        Committee Recommendation

    The 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 S. 545, if amended as 
described herein.

                          Committee Amendment

    During its consideration of S. 545, the Committee adopted 
an amendment in the nature of a substitute to conform S. 545 to 
the text of H.R. 267. The amendment is described in the 
section-by-section analysis.

                      Section-by-Section Analysis

    Section 1 provides a short title and a table of contents.
    Section 2 sets forth findings.
    Section 3 amends section 405 of the Public Utility 
Regulatory Policies Act of 1978 to increase rated capacity of 
small hydropower projects eligible for the licensing exemption 
from 5 MW to 10 MW.
    Section 4 amends the small conduit hydropower exemption in 
section 30 of the Federal Power Act to create a new statutory 
exemption for certain qualifying small conduit facilities from 
the licensing and regulatory requirements of the Federal Power 
Act and to expand the scope of the existing exemption in 
section 30.
    Subsection (a)(1) amends section 30(a) of the Federal Power 
Act to provide a statutory exemption for qualifying conduit 
hydropower facilities from the licensing requirements of the 
Federal Power Act. As amended, section 30(a)(3) defines a 
``qualifying conduit hydropower facility'' as a project that: 
(1) uses a non-Federally owned conduit; (2) has an installed 
capacity of 5 MW or less; and (3) does not currently have a 
license or exemption.
    Section 30(a)(2) of the Federal Power Act, as amended, 
provides that an entity proposing to construct a qualifying 
conduit hydropower facility is required to file a notice of 
intent with FERC that includes sufficient information to 
demonstrate that the facility meets the qualifying criteria. If 
FERC makes an initial determination that the proposed project 
meets the criteria, it shall publish a public notice of the 
notice of intent to construct the project. If no entity 
contests that the project meets the criteria within 45 days, 
the project is deemed to meet the criteria. If an entity 
contests whether the project meets the criteria, FERC is 
required to promptly issue a written determination as to 
whether the facility meets the criteria.
    Subsection 4(a) of the bill also amends section 30(b) of 
the Federal Power Act, which currently authorizes FERC to grant 
exemptions for small conduit hydropower facilities with 
installed capacity of up to 15 MW (40 MW in the case of State 
or local government facilities used solely for municipal water 
supply purposes), to increase the scope of the exemption from 
15 MW to 40 MW. Small conduit hydropower facilities granted an 
exemption by FERC under the amended section 30(b) will still be 
subject to state and federal fish and wildlife terms and 
conditions pursuant to section 30(c) of the Federal Power Act. 
Small conduit hydropower facilities statutorily exempt from 
Federal Power Act licensing under section 30(a), as amended, 
will not be subject to fish and wildlife terms and conditions 
pursuant to section 30(c).
    Paragraphs (2) and (3) of subsection 4(a) of the bill make 
conforming amendments to section subsections (c) and (d) of 
section 30 of the Federal Power Act.
    Section 4(b) of the bill makes a conforming amendment to 
section 405 of the Public Utility Regulatory Policies Act of 
1978 (16 U.S.C. 2705).
    Section 5 amends section 5 of the Federal Power Act to 
provide FERC with the authority to extend preliminary permit 
periods for up to 2 years, for a total of 5 years if FERC finds 
that the permittee has carried out activities under the permit 
in good faith and with reasonable diligence.
    Section 6 promotes hydropower development at non-powered 
dams and closed-loop pumped storage projects by directing FERC 
to examine through a pilot process the feasibility of 
establishing a 2-year licensing process for hydropower 
development at non-powered dams and closed-loop pumped storage 
projects. The results of the program shall be reported to 
Congress.
    Section 7 directs the Secretary of Energy to complete a 
study of: (1) the technical flexibility and potential of 
certain new and existing pumped storage facilities to support 
intermittent renewable generation and provide grid reliability 
benefits; and (2) the range of opportunities for hydropower 
from conduits in the United States.

                   Cost and Budgetary Considerations

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

S. 545--Hydropower Regulatory Efficiency Act of 2013

    Under the Federal Power Act, the Federal Energy Regulatory 
Commission (FERC) issues licenses and regulates hydroelectric 
facilities, regardless of size. S. 545 would amend current law 
to allow FERC to extend certain permits related to 
hydroelectric facilities and exempt small hydroelectric 
facilities with a generating capacity of 10 megawatts or less 
from FERC's licensing requirements. In addition, the bill would 
direct the Secretary of Energy to study the feasibility of 
generating hydroelectric power using water flowing through 
conduits or at facilities that store water. Finally, the bill 
would authorize FERC to carry out pilot projects to demonstrate 
the potential of generating hydroelectric power at nonpowered 
dams and water-storage facilities.
    Based on information from FERC and the Department of Energy 
(DOE), CBO estimates that implementing S. 545 would have no 
significant net impact on the federal budget. CBO anticipates 
that the proposed changes to FERC's permitting and licensing 
requirements would reduce the commission's workload. We also 
estimate that FERC would spend about $1 million on pilot 
projects authorized under the bill, assuming appropriation of 
the necessary amounts. However, because FERC recovers 100 
percent of its costs through user fees, any change in the 
agency's costs (which are controlled through annual 
appropriation acts) would be offset by an equal change in fees 
that the commission charges, resulting in no net change in 
federal spending. Finally, CBO estimates that any increased 
costs to DOE to prepare the study that would be required under 
S. 545 would be negligible because the proposed study is 
similar to ongoing efforts to analyze the potential for 
developing hydropower resources. Enacting S. 545 would not 
affect direct spending or revenues; therefore, pay-as-you-go 
procedures do not apply.
    S. 545 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.
    CBO has issued two cost estimates for legislation that are 
similar to S. 545. On January 13, 2013, CBO transmitted a cost 
estimate for H.R. 267, the Hydropower Regulatory Efficiency Act 
of 2013, as ordered reported by the House Committee on Energy 
and Commerce on January 22, 2013. On May 14, 2013, CBO 
transmitted a cost estimate for H.R. 267 as ordered reported by 
the Senate Committee on Energy and Natural Resources. All three 
pieces of legislation are similar, and our cost estimates are 
the same.
    The CBO staff contact for this estimate is Megan Carroll. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                   Congressionally Directed Spending

    S. 545, 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.

                      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. 545.
    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. 267 as ordered reported.

                        Executive Communications

    The testimony provided by the Federal Energy Regulatory 
Commission at the April 23, 2013, Full Committee hearing on S. 
545 follows.

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

    Chairman Wyden, 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 the following legislation: S. 545, 
``Hydropower Improvement Act of 2013'' and H.R. 267, 
``Hydropower Regulatory Efficiency Act of 2013.'' 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 seven percent of U.S. 
electricity generation.
    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 use, for generation, 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 non-federal 
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 marine and 
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.
    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.
    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 70 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 at existing dams, in innovative 
marine and 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 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 technical conference, 
written comments were solicited and over 40 comment letters 
were received from industry representatives; federal, state, 
and local agencies; private citizens; and nongovernmental 
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 to maintain our small hydropower contact list on our 
web site 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 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 exemption 
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 and small 
hydro exemptions have been approved in as short as two months 
and original licenses in as short as 6 months from the date 
that an application has been deemed complete.
    Since the April 15, 2010 Commission meeting, we have 
updated our MOU with the U.S. Army Corps of Engineers (March 
2011) and entered into an MOU with the U.S. Coast Guard (March 
2013); launched a small hydro program website (August 2010); 
participated in small hydro workshops across the U.S.; 
conducted webinars on our small hydro website (November 2010, 
December 2010, June 2011, and January 2012); and updated our 
small hydro brochure. Upcoming outreach efforts will include 
participating on a small hydro panel at the National Hydropower 
Association's annual conference in Washington, D.C., working 
with the state of Colorado on providing state guidance 
documents on our small hydro licensing process; and updating 
our small hydro licensing web site in response to user input. 
As a result of these efforts, consultation has improved, 
applications are more complete, and application processing 
times have been reduced. With this background, I will turn to 
the draft legislation.

    iii. hydropower improvement act of 2013 (s. 545) and hydropower 
              regulatory efficiency act of 2013 (h.r. 267)

    The Hydropower Improvement Act of 2013 and the Hydropower 
Regulatory Efficiency Act of 2013 have the commendable goal of 
increasing hydropower production in the United States. I 
strongly support this goal, and offer comments on specific 
sections of the draft legislation.
A. Section 5 of S. 545 and Section 6 of H.R. 267
    Section 5 of S. 545 and Section 6 of H.R. 267 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.
B. Section 6 of S. 545 and Section 4 of H.R. 267
    Section 6 of S. 545 and Section 4 of H.R. 267 would 
establish various measures to promote conduit hydropower 
projects. This goal is consistent with Commission policy and 
has been a major focus of Commission staff's effort in the last 
few years. These sections would amend section 30 of the FPA to 
establish a procedure whereby conduit projects with an 
installed capacity of 5 MW or less would not be required to be 
licensed, provided the applicant makes a showing that the 
project qualifies as a conduit project. These sections would 
also allow the Commission to grant conduit exemptions on 
federal lands and would permit the Commission to issue conduit 
exemptions for those projects with an installed capacity of up 
to 40 MW. This proposed upper limit would apply to non-
municipal, as well as municipal applicants. I support these 
provisions, which should serve to increase the amount of 
electric generation derived from conduits.
C. Section 7 of S. 545 and Section 3 of H.R. 267
    Section 7 of S. 545 and Section 3 of H.R. 267 would amend 
Section 405(d) of the Public Utility Regulatory Policies Act of 
1978 to increase the installed capacity of a project to which 
the Commission could grant a small hydropower exemption from 
5,000 to 10,000 kilowatts. This change would promote the 
development of small hydropower at the nation's existing non-
powered dams by allowing a larger pool of small, low-impact 
projects to qualify for small hydropower exemptions. Such 
exemptions are attractive to developers in that the exemptions 
are perpetual, and thus the developer need not expend the cost 
and effort to renew the authorization as is the case with 
licenses. I, therefore, support this provision.
D. Section 8 of S. 545 and Section 5 of H.R. 267
    Section 8 of S. 545 and Section 5 of H.R. 267 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--particularly 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 9 of S. 545 and Section 7 of H.R. 267
    Section 9 of S. 545 and Section 7 of H.R. 267 would require 
the Department of Energy to study the flexibility and 
reliability that pumped storage facilities can provide and the 
opportunities and potential generation from conduits. While I 
cannot speak for the Department of Energy, I support this 
research.

                             iv. 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.

                        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 S. 545, 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):

             PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978

                    (Public Law 95-617, as amended)

AN ACT To suspend until the close of June 30, 1980, the duty on certain 
doxorubicin hydrochloride antibiotics.

           *       *       *       *       *       *       *

TITLE IV--SMALL HYDROELECTRIC POWER PROJECTS

           *       *       *       *       *       *       *

SEC. 405. SIMPLIFIED AND EXPEDITIOUS LICENSING PROCEDURES.

    (a) Establishment of Program.--The Commission shall 
establish, in such manner as the Commission deems appropriate, 
consistent with the applicable provisions of law, a program to 
use simple and expeditious licensing procedures under the 
Federal Power Act for small hydroelectric power projects in 
connection with existing dams.

           *       *       *       *       *       *       *

    (d) Exemptions From Licensing Requirements in Certain 
Cases.--The Commission may in its discretion (by rule or order) 
grant an exemption in whole or in part from the requirements 
(including the licensing requirements) of part I of the Federal 
Power Act to small hydroelectric power projects having a 
proposed installed capacity of [5,000] 10,000 kilowatts or 
less, on a case-by-case basis or on the basis of classes or 
categories of projects, subject to the same limitations (to 
ensure protection for fish and wildlife as well as other 
environmental concerns) as those which are set forth in 
subsections (c) and (d) of section 30 of the Federal Power Act 
with respect to determinations made and exemptions granted 
under [subsection (a) of such section 30] subsection (b) of 
such section 30; and subsections (c) and (d) of such section 30 
shall apply with respect to actions taken and exemptions 
granted under this subsection. Except as specifically provided 
in this subsection, the granting of an exemption to a project 
under this subsection shall in no case have the effect of 
waiving or limiting the application (to such project) of the 
second sentence of subsection (b) of this section.

           *       *       *       *       *       *       *

                           FEDERAL POWER ACT

(The Act of June 10, 1920; 41 Stat. 1063, Chapter 685)

           *       *       *       *       *       *       *

PART I

           *       *       *       *       *       *       *

    Sec. 5. (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) The Commission may extend the period of a preliminary 
permit once for not more than 2 additional years beyond the 3 
years permitted by subsection (a) if the Commission finds that 
the permittee has carried out activities under such 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 the conditions thereof or for other good cause 
shown after notice and opportunity for hearing.

           *       *       *       *       *       *       *

    Sec. 30. [(a) 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.
    [(b) 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.]
    (a)(1) A qualifying conduit hydropower facility shall not 
be required to be licensed under this part.
    (2)(A) Any person, State, or municipality proposing to 
construct a qualifying conduit hydropower facility shall file 
with the Commission a notice of intent to construct such 
facility. The notice shall include sufficient information to 
demonstrate that the facility meets the qualifying criteria.
    (B) Not later than 15 days after receipt of a notice of 
intent filed under subparagraph (A), the Commission shall--
          (i) make an initial determination as to whether the 
        facility meets the qualifying criteria; and
          (ii) if the Commission makes an initial 
        determination, pursuant to clause (i), that the 
        facility meets the qualifying criteria, publish public 
        notice of the notice of intent filed under subparagraph 
        (A).
    (C) If, not later than 45 days after the date of 
publication of the public notice described in subparagraph 
(B)(ii)--
          (i) an entity contests whether the facility meets the 
        qualifying criteria, the Commission shall promptly 
        issue a written determination as to whether the 
        facility meets such criteria; or
          (ii) no entity contests whether the facility meets 
        the qualifying criteria, the facility shall be deemed 
        to meet such criteria.
    (3) For purposes of this section:
          (A) 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.
          (B) The term ``qualifying conduit hydropower 
        facility'' means a facility (not including any dam or 
        other impoundment) that is determined or deemed under 
        paragraph (2)(C) to meet the qualifying criteria.
          (C) The term ``qualifying criteria'' means, with 
        respect to a facility--
                  (i) the facility is constructed, operated, or 
                maintained for the generation of electric power 
                and uses for such generation only the 
                hydroelectric potential of a non-federally 
                owned conduit;
                  (ii) the facility has an installed capacity 
                that does not exceed 5 megawatts; and
                  (iii) on or before the date of enactment of 
                the Hydropower Regulatory Efficiency Act of 
                2013, the facility is not licensed under, or 
                exempted from the license requirements 
                contained in, this part.
    (b) Subject to subsection (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) utilizes for such generation only the 
        hydroelectric potential of a conduit; and
          (2) has an installed capacity that does not exceed 40 
        megawatts.
    (c) In making the determination under [subsection (a)] 
subsection (b) of this section the Commission shall consult 
with the United States Fish and Wildlife Service, 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, 
        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.
    (d) Any violation of a term or condition of any exemption 
granted under [subsection (a)] subsection b of this section 
shall be treated as a violation of a rule or order of the 
Commission under this chapter.

           *       *       *       *       *       *       *

                                  
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