89–010 

Calendar No. 663 

115TH CONGRESS REPORT " ! SENATE 2d Session 115–377 

BUREAU OF RECLAMATION PUMPED STORAGE 

HYDROPOWER DEVELOPMENT ACT 

NOVEMBER 26, 2018.—Ordered to be printed 

Ms. MURKOWSKI, from the Committee on Energy and Natural 

Resources, submitted the following 

R E P O R T 

[To accompany H.R. 1967] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Energy and Natural Resources, to which was 

referred the bill (H.R. 1967) to amend the Reclamation Project Act 

of 1939 to authorize pumped storage hydropower development utilizing multiple Bureau of Reclamation reservoirs, having considered the same, reports favorably thereon with an amendment in 

the nature of a substitute, and recommends that the bill, as 

amended, do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Bureau of Reclamation Pumped Storage Hydropower Development Act’’. 

SEC. 2. AUTHORITY FOR PUMPED STORAGE HYDROPOWER DEVELOPMENT USING MULTIPLE 

BUREAU OF RECLAMATION RESERVOIRS. 

Section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)) is amended— 

(1) in paragraph (1), in the fourth sentence, by striking ‘‘, including small conduit hydropower development’’ and inserting ‘‘and reserve to the Secretary the 

exclusive authority to develop small conduit hydropower using Bureau of Reclamation facilities and pumped storage hydropower exclusively using Bureau of 

Reclamation reservoirs’’; and 

(2) in paragraph (8), by striking ‘‘has been filed with the Federal Energy Regulatory Commission as of August 9, 2013’’ and inserting ‘‘was filed with the 

Federal Energy Regulatory Commission before August 9, 2013, and is still pending’’. 

2 

SEC. 3. LIMITATIONS ON ISSUANCE OF CERTAIN LEASES OF POWER PRIVILEGE. 

(a) DEFINITIONS.—In this section: 

(1) COMMISSION.—The term ‘‘Commission’’ means the Federal Energy Regulatory Commission. 

(2) DIRECTOR.—The term ‘‘Director’’ means the Director of the Office of Hearings and Appeals. 

(3) OFFICE OF HEARINGS AND APPEALS.—The term ‘‘Office of Hearings and Appeals’’ means the Office of Hearings and Appeals of the Department of the Interior. 

(4) PARTY.—The term ‘‘party’’, with respect to a study plan agreement, means 

each of the following parties to the study plan agreement: 

(A) The proposed lessee. 

(B) The Tribes. 

(5) PROJECT.—The term ‘‘project’’ means a proposed pumped storage facility 

that— 

(A) would use multiple Bureau of Reclamation reservoirs; and 

(B) as of June 1, 2017, was subject to a preliminary permit issued by the 

Commission pursuant to section 4(f) of the Federal Power Act (16 U.S.C. 

797(f)). 

(6) PROPOSED LESSEE.—The term ‘‘proposed lessee’’ means the proposed lessee 

of a project. 

(7) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of the Interior. 

(8) STUDY PLAN.—The term ‘‘study plan’’ means the plan described in subsection (d)(1). 

(9) STUDY PLAN AGREEMENT.—The term ‘‘study plan agreement’’ means an 

agreement entered into under subsection (b)(1) and described in subsection (c). 

(10) TRIBES.—The term ‘‘Tribes’’ means— 

(A) the Confederated Tribes of the Colville Reservation; and 

(B) the Spokane Tribe of Indians of the Spokane Reservation. 

(b) REQUIREMENT FOR ISSUANCE OF LEASES OF POWER PRIVILEGE.—The Secretary 

shall not issue a lease of power privilege pursuant to section 9(c)(1) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)(1)) (as amended by section 2) for a project 

unless— 

(1) the proposed lessee and the Tribes have entered into a study plan agreement; or 

(2) the Secretary or the Director, as applicable, makes a final determination 

for— 

(A) a study plan agreement under subsection (c)(2); or 

(B) a study plan under subsection (d). 

(c) STUDY PLAN AGREEMENT REQUIREMENTS.— 

(1) IN GENERAL.—A study plan agreement shall— 

(A) establish the deadlines for the proposed lessee to formally respond in 

writing to comments and study requests about the project previously submitted to the Commission; 

(B) allow for the parties to submit additional comments and study requests if any aspect of the project, as proposed, differs from an aspect of 

the project, as described in a preapplication document provided to the Commission; 

(C) except as expressly agreed to by the parties or as provided in paragraph (2) or subsection (d), require that the proposed lessee conduct each 

study described in— 

(i) a study request about the project previously submitted to the 

Commission; or 

(ii) any additional study request submitted in accordance with the 

study plan agreement; 

(D) require that the proposed lessee study any potential adverse economic 

effects of the project on the Tribes, including effects on— 

(i) annual payments to the Confederated Tribes of the Colville Reservation under section 5(b) of the Confederated Tribes of the Colville 

Reservation Grand Coulee Dam Settlement Act (Public Law 103–436; 

108 Stat. 4579); and 

(ii) annual payments to the Spokane Tribe of Indians of the Spokane 

Reservation authorized after the date of enactment of this Act, the 

amount of which derives from the annual payments described in clause 

(i); 

(E) establish a protocol for communication and consultation between the 

parties; 

(F) provide mechanisms for resolving disputes between the parties regarding implementation and enforcement of the study plan agreement; and 

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(G) contain other provisions determined to be appropriate by the parties. 

(2) DISPUTES.— (A) IN GENERAL.—If the parties cannot agree to the terms of a study plan 

agreement or implementation of those terms, the parties shall submit to the 

Director, for final determination on the terms or implementation of the 

study plan agreement, notice of the dispute, consistent with paragraph 

(1)(F), to the extent the parties have agreed to a study plan agreement. 

(B) INCLUSION.—A dispute covered by subparagraph (A) may include the 

view of a proposed lessee that an additional study request submitted in accordance with paragraph (1)(B) is not reasonably calculated to assist the 

Secretary in evaluating the potential impacts of the project. 

(C) TIMING.—The Director shall issue a determination regarding a dispute under subparagraph (A) not later than 120 days after the date on 

which the Director receives notice of the dispute under that subparagraph. 

(d) STUDY PLAN.— (1) IN GENERAL.—The proposed lessee shall submit to the Secretary for approval a study plan that details the proposed methodology for performing each 

of the studies— 

(A) identified in the study plan agreement of the proposed lessee; or 

(B) determined by the Director in a final determination regarding a dispute under subsection (c)(2). 

(2) INITIAL DETERMINATION.—Not later than 60 days after the date on which 

the Secretary receives the study plan under paragraph (1), the Secretary shall 

make an initial determination that— 

(A) approves the study plan; 

(B) rejects the study plan on the grounds that the study plan— 

(i) lacks sufficient detail on a proposed methodology for a study identified in the study plan agreement; or 

(ii) is inconsistent with the study plan agreement; or 

(C) imposes additional study plan requirements that the Secretary determines are necessary to adequately define the potential effects of the project 

on— 

(i) the exercise of the paramount hunting, fishing, and boating rights 

of the Tribes reserved pursuant the Act of June 29, 1940 (54 Stat. 703, 

chapter 460; 16 U.S.C. 835d et seq.); 

(ii) the annual payments described in clauses (i) and (ii) of subsection 

(c)(1)(D); 

(iii) the Columbia Basin project (as defined in section 1 of the Act of 

May 27, 1937 (50 Stat. 208, chapter 269; 57 Stat. 14, chapter 14; 16 

U.S.C. 835)); 

(iv) historic properties and cultural or spiritually significant resources; and 

(v) the environment. 

(3) OBJECTIONS.— 

(A) IN GENERAL.—Not later than 30 days after the date on which the Secretary makes an initial determination under paragraph (2), the Tribes or 

the proposed lessee may submit to the Director an objection to the initial 

determination. 

(B) FINAL DETERMINATION.—Not later than 120 days after the date on 

which the Director receives an objection under subparagraph (A), the Director shall— 

(i) hold a hearing on the record regarding the objection; and 

(ii) make a final determination that establishes the study plan, including a description of studies the proposed lessee is required to perform. 

(4) NO OBJECTIONS.—If no objections are submitted by the deadline described 

in paragraph (3)(A), the initial determination of the Secretary under paragraph 

(2) shall be final. 

(e) CONDITIONS OF LEASE.— 

(1) CONSISTENCY WITH RIGHTS OF TRIBES; PROTECTION, MITIGATION, AND ENHANCEMENT OF FISH AND WILDLIFE.— 

(A) IN GENERAL.—Any lease of power privilege issued by the Secretary for 

a project under subsection (b) shall contain conditions— 

(i) to ensure that the project is consistent with, and will not interfere 

with, the exercise of the paramount hunting, fishing, and boating rights 

of the Tribes reserved pursuant to the Act of June 29, 1940 (54 Stat. 

703, chapter 460; 16 U.S.C. 835d et seq.); and 

(ii) to adequately and equitably protect, mitigate damages to, and enhance fish and wildlife, including related spawning grounds and habiVerDate Sep 11 2014 02:04 Nov 29, 2018 Jkt 089010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6621 E:\HR\OC\SR377.XXX SR377
4 

tat, affected by the development, operation, and management of the 

project. 

(B) RECOMMENDATIONS OF THE TRIBES.—The conditions required under 

subparagraph (A) shall be based on joint recommendations of the Tribes. 

(C) RESOLVING INCONSISTENCIES.— 

(i) IN GENERAL.—If the Secretary determines that any recommendation of the Tribes under subparagraph (B) is not reasonably calculated 

to ensure the project is consistent with subparagraph (A) or is inconsistent with the requirements of the Reclamation Project Act of 1939 

(43 U.S.C. 485 et seq.), the Secretary shall attempt to resolve any such 

inconsistency with the Tribes, giving due weight to the recommendations and expertise of the Tribes. 

(ii) PUBLICATION OF FINDINGS.—If, after an attempt to resolve an inconsistency under clause (i), the Secretary does not adopt in whole or 

in part a recommendation of the Tribes under subparagraph (B), the 

Secretary shall issue each of the following findings, including a statement of the basis for each of the findings: 

(I) A finding that adoption of the recommendation is inconsistent 

with the requirements of the Reclamation Project Act of 1939 (43 

U.S.C. 485 et seq.). 

(II) A finding that the conditions selected by the Secretary to be 

contained in the lease of power privilege under subparagraph (A) 

comply with the requirements of clauses (i) and (ii) of that subparagraph. 

(2) ANNUAL CHARGES PAYABLE BY LICENSEE.— 

(A) IN GENERAL.—Subject to subparagraph (B), any lease of power privilege issued by the Secretary for a project under subsection (b) shall contain 

conditions that require the lessee of the project to make direct payments 

to the Tribes through reasonable annual charges in an amount that 

recompenses the Tribes for any adverse economic effect of the project identified in a study performed pursuant to the study plan agreement for the 

project. 

(B) AGREEMENT.— 

(i) IN GENERAL.—The amount of the annual charges described in subparagraph (A) shall be established through agreement between the proposed lessee and the Tribes. 

(ii) CONDITION.—The agreement under clause (i), including any modification of the agreement, shall be deemed to be a condition to the lease 

of power privilege issued by the Secretary for a project under subsection (b). 

(C) DISPUTE RESOLUTION.— 

(i) IN GENERAL.—If the proposed lessee and the Tribes cannot agree 

to the terms of an agreement under subparagraph (B)(i), the proposed 

lessee and the Tribes shall submit notice of the dispute to the Director. 

(ii) RESOLUTION.—The Director shall resolve the dispute described in 

clause (i) not later than 180 days after the date on which the Director 

receives notice of the dispute under that clause. 

(3) ADDITIONAL CONDITIONS.—The Secretary may include in any lease of 

power privilege issued by the Secretary for a project under subsection (b) other 

conditions determined appropriate by the Secretary, on the condition that the 

conditions shall be consistent with the Reclamation Project Act of 1939 (43 

U.S.C. 485 et seq.). 

(4) CONSULTATION.—In establishing conditions under this subsection, the Secretary shall consult with the Tribes. 

(f) DEADLINES.—The Secretary or any officer of the Office of Hearing and Appeals 

before whom a proceeding is pending under this section may extend any deadline 

or enlarge any timeframe described in this section— 

(1) at the discretion of the Secretary or the officer; or 

(2) on a showing of good cause by any party. 

(g) JUDICIAL REVIEW.—Any final action of the Secretary or the Director made pursuant to this section shall be subject to judicial review in accordance with chapter 

7 of title 5, United States Code. 

(h) EFFECT ON OTHER PROJECTS.—Nothing in this section establishes any precedent or is binding on any Bureau of Reclamation lease of power privilege, other than 

for a project. 

5 

PURPOSE

The purpose of H.R. 1967 is to amend the Reclamation Project 

Act of 1939 to authorize pumped storage hydropower development 

utilizing multiple Bureau of Reclamation (BOR or Reclamation) 

reservoirs. 

BACKGROUND AND NEED

Pumped storage hydropower projects generate electricity by moving water between an upper and lower reservoir based on electricity prices and demand, and other operational considerations. 

Under current law, and pursuant to two Memorandum of Understanding agreements between the BOR and the Federal Energy 

Regulatory Commission (FERC) dated 1981 and 1992, Reclamation 

has jurisdiction over hydropower development at its projects when 

hydropower is an authorized project purpose. For those BOR facilities where hydropower is not an authorized purpose, FERC has jurisdiction over hydropower development. BOR asserts its permitting authority through a Lease of Power Privilege (LOPP) program 

under the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)), 

while FERC is authorized by the Federal Power Act to issue hydropower licenses (16 U.S.C. 797). 

Given this framework, a pumped storage project using two Reclamation dams may require both a FERC license and a BOR LOPP 

where one reservoir is authorized for hydropower development but 

the other is not. Concerns have been raised that requiring two separate Federal permitting processes for a single project is inefficient 

and may serve as a disincentive for future pumped storage development. H.R. 1967 clarifies that BOR has exclusive authority to permit the development of non-Federal pumped storage hydropower if 

the project uses two BOR-owned facilities. 

At the time of this legislation’s consideration, the only active 

non-Federal pumped storage hydropower project now facing these 

dual processes is located in Washington State. The proposed project 

seeks to use Banks Lake and Lake Roosevelt, both of which are 

owned and operated by Reclamation. Developers are currently 

seeking a FERC license for Banks Lake (the upper reservoir), and 

will also be required to obtain a LOPP from BOR for Lake Roosevelt (the lower reservoir). 

This specific project is unique in that the project developer initiated a FERC licensing process prior to the introduction of H.R. 

1967 and the Confederated Tribes of the Colville Reservation and 

the Spokane Tribe of Indians of the Spokane Reservation (Tribes), 

with reservations located on Lake Roosevelt, have formally engaged 

on a number of issues through that process. Additionally, these 

Tribes maintain that they have dedicated significant resources to 

the process with the expectation that FERC’s dispute resolution 

process for study requests, the Federal Power Act’s mandatory conditioning authority for the Department of the Interior, and State 

and Federal fish and wildlife recommendations, would be available. 

As such, a detailed process to address this single project that was 

already seeking a FERC license has been included in H.R. 1967 as 

amended, but will not apply to any future pumped storage projects 

employing two Reclamation facilities. 

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LEGISLATIVE HISTORY

H.R. 1967 was introduced by Congressman Lamborn in the 

House of Representatives on March 6, 2017. The bill was favorably 

reported, as amended, by the Committee on Natural Resources on 

March 27, 2017, and passed the House of Representatives by voice 

vote on June 27, 2017. 

The Water and Power Subcommittee held a hearing on H.R. 1967 

on June 13, 2018. 

The Senate Committee on Energy and Natural Resources met in 

an open business session on October 2, 2018, and ordered H.R. 

1967 favorably reported, as amended. 

COMMITTEE RECOMMENDATION

The Senate Committee on Energy and Natural Resources, in 

open business session on October 2, 2018, by a majority voice vote 

of a quorum present, recommends that the Senate pass H.R. 1967, 

if amended as described herein. 

COMMITTEE AMENDMENT

During its consideration of H.R. 1967, the Committee adopted an 

amendment in the nature of a substitute. The substitute amendment made several technical changes to section 2 and added a section 3 that sets forth a detailed process for the only active project 

that would be impacted by the Act. The amendment is further described in the section-by-section analysis. 

SECTION-BY-SECTION ANALYSIS

Sec. 1. Short title 

Section 1 provides a short title. 

Sec. 2. Authority for pumped storage hydropower development using 

multiple bureau of reclamation reservoirs 

Section 2 amends the Reclamation Project Act of 1939 (43 U.S.C. 

485h(c)) to provide the Secretary of the Interior (Secretary) with 

the sole authority for development of pumped storage hydropower 

exclusively using Reclamation reservoirs. 

Sec. 3. Limitations of issuance of certain leases of power privilege 

Subsection (a) defines key terms for section 3. 

Subsection (b) prohibits the Secretary from issuing a LOPP for 

the project unless the proposed lessee and the Tribes have entered 

into a study plan agreement or the Secretary or the Director of the 

Office of Hearings and Appeals (Director), as applicable, make a 

final determination on a study plan agreement or a study plan. 

Subsection (c) specifies the requirements of a study plan agreement, including allowing the parties to submit additional comments and study requests, and requiring the proposed lessee to 

study any potential adverse economic effects of the project on the 

Tribes, including on annual payments to the Tribes as part of the 

Grand Coulee Dam Settlement (Public Law 103–436). This subsection also sets forth a protocol for communication and consultation between the parties, and dispute resolution procedures in the 

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event the parties cannot resolve the study plan agreement terms 

or implementation. 

Subsection (d) requires the project developer to submit the study 

plan to the Secretary for approval. The subsection also requires the 

Secretary to make an initial determination to approve, reject, or 

impose additional requirements on the study plan within 60 days 

of submittal. This subsection further allows the Tribes or the 

project lessee to submit to the Director an objection to the Secretary’s initial determination, and requires the Director to hold a 

hearing on the record regarding the objection and make a final determination within 120 days of receiving an objection. 

Subsection (e)(1) requires the Secretary to include conditions on 

the LOPP for the project, to be based on joint recommendation of 

the Tribes, to ensure that the Tribes’ paramount hunting, fishing 

and boating rights are not interfered with, that the project is consistent with those rights, and that fish and wildlife are adequately 

and equitably protected. This subsection also directs the Secretary 

to attempt to resolve any inconsistency with the Tribes’ recommendations, and requires the Secretary to publish findings, including a statement of the basis for each of the findings. 

Subsection (e)(2) directs the Secretary to condition the LOPP to 

require the lessee to make direct payments to the Tribes through 

reasonable annual charges for adverse economic effects, and sets 

forth a process to determine the payment amount and the settlement of disputes. 

Subsection (e)(3) authorizes the Secretary to impose additional 

conditions on the project consistent with the Reclamation Project 

Act of 1939. 

Subsection (f) allows the Secretary or any officer of the Office of 

Hearing and Appeals to extend deadlines set by the Act. 

Subsection (g) states that final actions made pursuant to this 

section remain subject to judicial review. 

Subsection (h) states that nothing in section 3 is precedential or 

binding on any future project. 

COST AND BUDGETARY CONSIDERATIONS

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

Under current law, nonfederal entities that propose to develop 

hydropower at reservoirs administered by the Bureau of Reclamation (BOR) must enter into a lease contract with BOR or obtain a 

license from the Federal Energy Regulatory Commission (FERC). 

The regulatory jurisdiction of each reservoir was previously negotiated by the agencies to ensure than nonfederal entities seeking 

to develop hydropower at a BOR reservoir would be subject to only 

one permitting process. 

At least one project proposed by a nonfederal entity to develop 

pumped storage hydropower within BOR’s Colombia Basin Project 

(CBP) in the state of Washington would need to seek permits from 

both agencies because it would be constructed on two reservoirs; 

Banks Lake would require a BOR lease contract and Lake Roosevelt reservoir would require a FERC license. (Pumped storage hydropower is a type of storage for hydroelectric energy used by electric power systems for load balancing.) Enacting H.R. 1967 would 

simplify the regulatory process by making BOR the sole regulatory 

8 

authority for pumped storage developers that are currently subject 

to regulation by both BOR and FERC. 

The bill also would require a nonfederal developer to negotiate 

an agreement with the Confederated Tribes of Colville Reservation 

and the Spokane Tribe of Indians of the Spokane Reservation as 

a condition for a BOR lease contract on CBP facilities. The agreement would establish the terms for interactions between the developer and tribes. The plan would involve preparing studies to analyze the potential adverse effects of the project on annual payments 

due to the tribes under their respective settlements; on hunting, 

fishing, and boating rights of the Tribes; and on the environment. 

The bulk of the costs for that work would be incurred by the developer and any cost incurred by BOR would be paid to BOR by the 

developer in advance. 

Enacting H.R. 1967 would increase offsetting receipts (which are 

recorded as reductions in direct spending) from payments the 

project developer would make to BOR for additional staff hours to 

negotiate lease agreements and to facilitate development of the 

planned studies and agreement between the developer and tribes. 

Using information from BOR, CBO estimates that those offsetting 

receipts would total about $500,000 over the 2019–2028 period; 

however, because BOR would spend those amounts over the same 

period, the net effect on direct spending would be negligible. Because enacting the bill would affect direct spending, pay-as-you-go 

procedures apply. Enacting the bill would not affect revenues. 

In addition, FERC recovers 100 percent of its costs, which are 

controlled by annual appropriations through user fees. Thus any 

reduction in FERC’s cost resulting from shifting its licensing responsibilities to BOR would be offset by an equal change in fees, 

resulting in no net change in discretionary spending. 

CBO estimates that enacting H.R. 1967 would not increase net 

direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2029. 

H.R. 1967 contains no intergovernmental or private-sector mandates as defined in Unfunded Mandates Reform Act. 

On May 31, 2017, CBO transmitted a cost estimate for H.R. 

1967, the Bureau of Reclamation Pumped Storage Hydropower Development Act, as ordered reported by the House Committee on 

Natural Resources on April 27, 2017. CBO’s estimates of the budgetary effects of implementing either piece of legislation are similar; 

however, CBO estimates the Senate version would affect direct 

spending. 

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

estimate was reviewed by H. Samuel Papenfuss, 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. 1967. The Act 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. 

9 

Little, if any, additional paperwork would result from the enactment of H.R. 1967, as ordered reported. 

CONGRESSIONALLY DIRECTED SPENDING

H.R. 1967, 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 Department of the Interior at the 

June 13, 2018, hearing on H.R. 1967 follows: 

STATEMENT OF TIMOTHY R. PETTY, PH.D., ASSISTANT SEC- RETARY FOR WATER AND SCIENCE, U.S. DEPARTMENT OF

THE INTERIOR

Chairman Flake, Ranking Member Cortez Masto and 

members of the Subcommittee, I am Dr. Tim Petty, Assistant Secretary for Water and Science at the U.S. Department of the Interior (Department). Thank you for the opportunity to provide the views of the Department on H.R. 

1967, the Bureau of Reclamation Pumped Storage Hydropower Development Act. For the reasons I will discuss 

below, the Department supports this bill. 

H.R. 1967 aims to streamline the development and permitting of non-federal pumped-storage hydroelectric 

projects on Reclamation reservoirs. As noted in previous 

hearings, the Department has an aggressive sustainable 

hydropower agenda, which we continue to implement 

under existing authorities. 

Pumped-storage can be a premiere, utility-scale energy 

storage solution, able to provide both firm power and ancillary services—to support the transmission of capacity and 

energy in a safe, reliable manner. With that said, pumpedstorage deployment requires both significant, up-front capital investment and specific topographical features. Therefore, we see this bill as providing opportunities to streamline the permitting process which may encourage the development of these projects. 

Reclamation is the second largest producer of hydroelectric power in the United States, operating 53 hydroelectric power facilities, comprising 14,730 megawatts of 

capacity. Each year, Reclamation generates approximately 

40 million megawatt-hours of electricity (the equivalent demand of approximately 3.5 million U.S. homes) and producing over one billion dollars in Federal revenue. 

In 2010, the Department of the Interior, Department of 

Energy, and Department of the Army (through the US 

Army Corps of Engineers) entered a Memorandum of Understanding (MoU) for Hydropower. The MoU advances reliable, low-cost, and environmentally sustainable hydropower through a collaborative, interagency framework, 

prioritizing like-goals and aligning ongoing and future renewable energy development efforts. Interior’s MoU parVerDate Sep 11 2014 02:04 Nov 29, 2018 Jkt 089010 PO 00000 Frm 00009 Fmt 6659 Sfmt 6969 E:\HR\OC\SR377.XXX SR377
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ticipation is administered through Reclamation, given our 

mission and authorities in hydropower generation. 

In 2011 and 2012, Reclamation coordinated with MoU 

partners to publish two resource assessment reports identifying technical hydropower potential at non-powered Reclamation dams and conduits. At this time, seven assessment sites, comprising over 21 megawatts have been developed by non-federal entities—with an additional nineteen assessment sites, comprising approximately 74 

megawatts in some stage of development. 

Reclamation has also coordinated with MoU partners to 

assess pumped-storage potential at existing Reclamation 

reservoirs and associated projects. Specifically, the assessment reports (one completed in 2013 and the other in 

2014) evaluated the technical, environmental, and economic merits of over 200 unique pumped-storage configurations at 60 Reclamation reservoirs that passed topography and storage screening criteria. Reclamation is using 

these assessment results to inform further study should 

sufficient customer interest exists. 

Reclamation would be happy to discuss with the Committee these, and other MoU products. All MoU documents 

are available on the Reclamation hydropower program 

webpage: https://www.usbr.gov/power/. 

In terms of non-federal development—both Reclamation 

and the Federal Energy Regulatory Commission (FERC) 

are authorized to permit the use of Reclamation dams and 

reservoirs to non-federal entities for the purposes of hydropower development—Reclamation via a Lease of Power 

Privilege (LOPP) contract or FERC via a License.1 Per the 

Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act of 2013 (Public Law 113–24), 

permitting authority on Reclamation conduits is reserved, 

exclusively to Reclamation via a LOPP. 

Reclamation is committed to facilitating the development 

of non-federal hydropower on our existing assets—through 

either Reclamation’s or FERC’s permitting processes. Acting on this commitment, Reclamation has worked diligently with our customer and stakeholder groups to define 

our LOPP permitting process, detailed in Reclamation 

Manual Directive and Standard (D&S) Lease of Power 

Privilege (LOPP) Processes, Responsibilities, Timelines, and 

Charges (FAC 04–08). Reclamation has conducted ongoing 

outreach to communicate and update LOPP permitting 

process requirements and revised LOPP materials to ensure consistent LOPP program administration. Current 

LOPP process requirements implement Public Law 113–24 

authorities related to non-federal development on Reclamation conduits. 

It is important to note that any non-federal hydroelectric 

project developed on a Reclamation asset must not impair 

the efficiency of any Reclamation generated power or 

water deliveries, jeopardize public safety, or negatively affect any other Reclamation project purpose. For these reasons, project oversight is necessary—either through the 

11 

LOPP contract or FERC License conditioning requirements. In addition, Reclamation would review any pumped 

storage application under this authority to ensure the proposed LOPP does not conflict with the statutory obligations of the Power Marketing Administrations (PMAs). 

Consistent with Reclamation’s existing directives and 

standards, Reclamation would contact the respective PMA 

when a non-federal developer approaches Reclamation to 

develop a non-federal hydroelectric project, and will work 

with the respective PMA on any necessary right of first refusal or other agreement that preserves the PMA’s statutory responsibilities. 

In total, 13 LOPP facilities currently operate on Reclamation assets, comprising 46 megawatts. Nine of the 13 

facilities were brought online since 2009, with three of the 

13 online facilities initiated following the passage of Public 

Law 113–24. Likewise, 52 FERC facilities currently operate on Reclamation assets, comprising 466 megawatts of 

capacity. Approximately 50 non-federal projects—through 

either the LOPP or FERC processes—are currently in 

some stage of active development on Reclamation assets. 

Based on feedback we have received from our customers 

and operating partners, industry, and other stakeholders, 

Reclamation, with this Committee’s support, has been successful in administering our leasing authorities. 

Under current law, both Reclamation and FERC are authorized to permit the use of Reclamation assets to nonfederal entities for the purposes of hydropower development. Reclamation and FERC have entered two MoUs (one 

in 1981 and one in 1992) to define jurisdictional boundaries and responsibilities. Per those MoUs, each Reclamation asset is subject to one—and only one—permitting 

process, meaning that non-federal entities seeking to utilize a Reclamation asset for the purposes of hydropower 

development would be required to obtain either a Reclamation LOPP or FERC License—but not both. 

The problem the bill addresses relates to non-federal 

pumped storage projects utilizing multiple Reclamation 

reservoirs which may, under the current regulatory framework, require both a LOPP and FERC License in the circumstance that one reservoir is within Reclamation’s jurisdiction and the other reservoir is within FERC’s jurisdiction. Whereas both agencies are acting within their respective authorities, the result is a fragmented, cumbersome 

permitting process. The legislation as drafted would minimize the regulatory burden in these circumstances by requiring only a single LOPP approval. 

The general premise of the MoU agreements is that, unless otherwise specified in law, Reclamation assets reserved exclusively for Federal power development under 

Federal Reclamation law require a LOPP, and all other 

Reclamation assets require a FERC License. An exception 

is for Reclamation conduits, which were reserved for LOPP 

development by Public Law 113–24. 

12 

Section 2 of the bill would specifically authorize Reclamation to enter into LOPP contracts that permit the development of non-federal pumped-storage hydropower utilizing multiple Reclamation reservoirs. Reclamation interprets this LOPP authorization to encompass all project 

works associated with the non-federal pumped-storage 

project sited on multiple Reclamation reservoirs. This language would streamline permitting requirements and development of affected projects. 

We interpret Section 2 as containing the same protections for authorized, existing uses of Reclamation assets as 

exist in any LOPP context. The LOPP authorization, for 

example, does not affect existing contracts for the use of 

power and miscellaneous revenues of a project for the benefit of users of water from such project, and LOPP contracts cannot, in the judgement of the Secretary, impair 

the efficiency of the project for irrigation purposes. In practice, these protections have meant that LOPP contracts 

generally do not modify the existing project operations that 

project users have come to rely on. To protect existing 

project users, Reclamation’s policy to implement LOPP 

contracts requires extensive consultation among existing 

project users and the non-federal LOPP applicant. 

Reclamation is aware of one, active non-federal pumpedstorage project that would benefit from the proposed legislation—sited on Banks Lake and Lake Roosevelt reservoirs, which are part of Reclamation’s Columbia Basin 

Project in Washington State. Given the current regulatory 

framework, non-federal project works sited on Banks Lake 

would proceed through a FERC License—and those works 

sited on Lake Roosevelt would proceed through a Reclamation LOPP. This legislation would streamline the permitting from two distinct processes to one. 

The bill’s language would not affect non-federal pumpedstorage projects utilizing one Reclamation reservoir and a 

second non-Reclamation reservoir (private or otherwise) 

outside Reclamation jurisdiction. Such projects would be 

required to obtain appropriate authorization to develop the 

Reclamation reservoir (either LOPP or FERC License, dependent upon the authorized reservoir purpose(s)), in addition to appropriate authorization from the non-Reclamation regulator (likely FERC) to develop the non-Reclamation reservoir. Reclamation would be happy to work with 

the Committee—and FERC—to discuss opportunities to 

streamline permitting and project development in this instance. 

In conclusion, as stated at previous hearings on hydropower-related issues before this subcommittee, Reclamation will continue to review and assess potential new hydropower projects that provide a high economic return for 

the nation, are both clean and energy efficient, and can be 

accomplished in accordance with protections for fish and 

wildlife, the environment, and recreation. As the nation’s 

second largest hydropower producer, Reclamation strongly 

13 

believes in the past, present and bright future of this important electricity resource. 

The Department is pleased to support this legislation. 

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 H.R. 1967, 

as 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 PROJECTS ACT OF 1939 

Act of August 4, 1939 (53 Stat. 1187; 43 U.S.C. 495 et seq.), as 

amended 

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) * * * 

* * * * * * * 

(c)(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 (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 (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 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. Nothing in this subsection 

14 

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 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 ø, including small conduit hydropower development¿ and reserve to the Secretary the exclusive authority to develop small conduit hydropower using Bureau of Reclamation facilities and pumped storage hydropower exclusively using Bureau of 

Reclamation reservoirs. 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. 

(B) If the irrigation district or water users association elects not 

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 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 involved. 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 planVerDate Sep 11 2014 02:04 Nov 29, 2018 Jkt 089010 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\SR377.XXX SR377
15 

ning, 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 øhas 

been filed with the Federal Energy Regulatory Commission as of 

August 9, 2013¿ was filed with the Federal Energy Regulatory 

Commission before August 9, 2013, and is still pending. 

(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. 

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

less of electric capacity. 

* * * * * * * 

Æ