[DOCID: f:sr304.109]
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Calendar No. 547
109th Congress Report
SENATE
2d Session 109-304
======================================================================
EXTENSION FOR HYDROELECTRIC PROJECT IN THE STATE OF IDAHO
_______
July 31, 2006.--Ordered to be printed
_______
Mr. Domenici, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany S. 2035]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 2035) to extend the time required for
construction of a hydroelectric project in the State of Idaho,
and for other purposes, having considered the same, reports
favorably thereon with an amendment and recommends that the
bill, as amended, do pass.
The amendment is as follows:
On page 2, line 6, strike ``expired'' and insert ``has been
terminated''.
PURPOSE OF THE MEASURE
The purpose of S. 2035 is to extend the time required for
commencement of construction of the Arrowrock Dam Project in
the State of Idaho, and for other purposes.
BACKGROUND AND NEED
Section 13 of the Federal Power Act (FPA) requires that the
construction of a licensed project commence within two years
from the date the license is issued. The Federal Energy
Regulatory Commission (FERC or Commission) is authorized under
the FPA to extend this deadline once, for a maximum of two
additional years, upon a finding that such extension is ``not
incompatible with the public interest.'' Consequently, a
license is subject to termination if a licensee fails to begin
construction within four years after the date the license is
issued, unless legislation authorizing an additional extension
is enacted.
On March 27, 1989, FERC granted five Idaho irrigation districts (the
Boise-Kuna Irrigation District; the Nampa & Meridian Irrigation
District; the New York Irrigation District; the Wilder Irrigation
District; and the Big Bend Irrigation District, hereinafter, the
Districts) a license to construct and operate the Arrowrock Dam Project
No. 4656 (Arrowrock Project or Project). The Project is to be located
at the U.S. Bureau of Reclamation's Arrowrock Dam and Reservoir on the
Boise River, in Elmore and Ada Counties, Idaho. As originally licensed,
the 60-MW Project was to include two 30-MW generating units and two
180-foot-long penstocks, which would pass through tunnels constructed
through the dam.
The Project's original construction commencement deadline
of March 26, 1991 was extended by FERC to March 26, 1993. In
1992, Congress further extended the deadline to March 26, 1999
(P.L. 102-486). In 2000, Congress again extended the deadline
to March 26, 2005 (P.L. 106-343).
On March 25, 2005, the Districts requested FERC to stay the
license and backdate the stay for 120 days to allow additional
time for compliance. On May 27, 2005, the Commission denied the
request and notified the Districts of the probable termination
of the license. The Districts timely filed a request for
rehearing. On September 1, 2005, FERC denied the rehearing
request. However, the license for Project No. 4656 has not yet
been terminated.
According to the Districts, the March 26, 2005 deadline was
not met because the U.S. Fish and Wildlife Service would not
begin Endangered Species Act consultation on the Arrowrock
Project for Columbia River bull trout and bald eagles until
after the agency completed consultation on the U.S. Bureau of
Reclamation Projects in the Upper Snake River Basin. This Upper
Snake River consultation was prioritized due to the
requirements of the Snake River Water Rights Act of 2004 and
the Nez Perce Agreements of 2004.
Moreover, the Districts now contemplate a 15-MW project,
consisting of two 7.5 MW generating units. With this smaller
project, there would be no penstock or tunneling through the
dam. Instead, the generating units would receive water through
existing valves downstream of the dam. The Districts argue that
the new design will significantly reduce any environmental
impacts from the Arrowrock Project.
S. 2035 would extend the time for construction commencement
for an additional three year period beginning on the date of
enactment, or, if the license for the project has been
terminated, the bill would reinstate the license and extend the
construction commencement period for an additional three years.
The last several Chairmen of the Commission have had a
policy of opposing legislation extending commencement of
hydropower project construction deadlines that would allow an
entity more than 10 years to develop a project. However, that
policy has been based on the notion that allowing an entity
that is not showing progress in developing a project to control
a hydropower site for a greater length of time is not
consistent with the public interest in developing clean,
renewable hydroelectric energy.
It has taken more than 16 years for the licensees to
develop this project. However, the Committee received testimony
and voluminous exhibits from proponents of the Arrowrock
Project indicating their readiness to begin construction within
the near future, and outlining the reasons for the delays, some
of which were either directly or indirectly caused by other
Federal Government actions. The licensees have also finalized a
power sales agreement with the Clatskanie Public Utility
District in Oregon to take power from the plant. In addition,
FERC has indicated that an updated environmental review of the
Project will be conducted pursuant to applicable law.
LEGISLATIVE HISTORY
S. 2035 was introduced by Senators Craig and Crapo on
November 17, 2005, and referred to the Committee on Energy and
Natural Resources. The Water and Power Subcommittee held a
hearing on S. 2035 on March 30, 2006. At the business meeting
on May 24, 2006, the Committee on Energy and Natural Resources
ordered S. 2035 favorably reported, with an amendment.
H.R. 4377, the companion measure to this bill, was
introduced by Representative Otter (R-ID) on November 17, 2005,
and referred to the House Energy and Commerce Committee.
COMMITTEE RECOMMENDATION
The Committee on Energy and Natural Resources, in open
business session on May 24, 2006, by voice vote of a quorum
present, recommends that the Senate pass S. 2035, if amended as
described herein. Senator Bingaman asked to be recorded as
voting against the measure.
COMMITTEE AMENDMENT
An amendment was adopted to strike the term ``expired'' on
page 2, line 6, and insert ``has been terminated.''
SECTION-BY-SECTION ANALYSIS
Section 1 directs FERC, upon the request of the licensee
for the project numbered 4656, to extend the time required for
construction commencement of the project for an additional
three year period beginning on the date of enactment. If the
license for the project has been terminated prior to
Congressional action, FERC is directed to reinstate the license
and extend the period for construction commencement for an
additional three years after the date of enactment.
COST AND BUDGETARY CONSIDERATIONS
The following estimate of costs of this measure has been
provided by the Congressional Budget Office.
S. 2035--A bill to extend the time required for construction of a
hydroelectric project in the state of Idaho, and for other
purposes
S. 2035 would authorize the Federal Energy Regulatory
Commission (FERC) to extend the deadline for commencing
construction of a hydroelectric project (number 4656) in Idaho
by up to three years. CBO estimates that implementing S. 2035
would have no net effect on the federal budget. The bill would
have a minor impact on FERC's workload. Because FERC recovers
100 percent of its costs through user fees, any change in its
administrative costs would be fully offset by an equal change
in the fees that the commission charges. Because FERC's
administrative costs are limited in annual appropriations, the
bill would not affect direct spending or revenues.
S. 2035 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act. The
bill would benefit water districts in Idaho by authorizing the
reinstatement and extension of their license for construction
of a hydroelectric project. Any costs they might incur would
result from complying with conditions for receiving federal
assistance.
The CBO staff contact for this estimate is Megan Carroll.
This estimate was approved by Peter H. Fontaine, 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 S. 2035. The bill is not a regulatory measure in
the sense of imposing Government-established standards or
significant economic responsibilities on private individuals
and businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 2035, as ordered reported.
EXECUTIVE COMMUNICATIONS
The testimony provided by FERC at the Subcommittee hearing
on S. 2035 follows:
Statement of J. Mark Robinson, Director, Office of Energy Projects,
Federal Energy Regulatory Commission
Madam Chairman and Members of the Subcommittee:
My name is J. Mark Robinson, and I am the director of the
Office of Energy Projects at the Federal Energy Regulatory
Commission. Our office is responsible for non-federal
hydroelectric licensing, administration, and safety;
certification of interstate natural gas pipelines and storage
facilities; and, authorization and oversight over the
construction, operation, and safety of Liquefied Natural Gas
(LNG) terminals.
I appear today as a Commission staff witness speaking with
the approval of the Chairman of the Commission. The views I
express are my own and not necessarily those of the Commission
or of any individual Commissioner.
I appreciate the opportunity to comment on S. 2028 and S.
2035. S. 2028 would reinstate the license and extend until
December 31, 2007 the deadline for the commencement of project
construction for the Tygart Dam Project No. 7307, located in
West Virginia. S. 2035 would provide for reinstatement of the
license and extend the deadline for the commencement of project
construction for the Arrowrock Project No. 4656, located in
Idaho, for a three-year period from the enactment of the
legislation.
Under Part I of the Federal Power Act (FPA), the Commission
issues licenses to non-Federal interests authorizing the
construction, operation and maintenance of water power projects
on federal lands, on navigable waters of the United States,
which utilize the surplus water or water power from a federal
dam, and on streams over which the Congress has jurisdiction.
Licenses may be issued under the FPA only if, in the judgment
of the Commission, the proposed project is best adapted to a
comprehensive plan for the development and utilization of the
water resources of the river basin involved for all public
purposes. The licenses are issued for terms of up to 50 years
and contain terms and conditions that are designed to ensure
that the comprehensive development standard is met.
The FPA requires that the licensee will proceed
expeditiously with the development and construction of the
proposed project once a license has been issued. Section 13 of
the FPA requires that construction of a licensed project be
commenced within two years of issuance of the license and
authorizes the Commission to extend this deadline once, for a
maximum of two additional years. If project construction has
not commenced by the deadline, the Commission is required to
terminate the license.
arrowrock project
S. 2035 would provide for license reinstatement and extend
the deadline for the commencement of project construction for
the Arrowrock Project No. 4656, located in Idaho, for a three-
year period from the date of enactment of the legislation. The
Arrowrock Project was licensed on March 27, 1989, to the Boise-
Kuna Irrigation District, the Nampa & Meridian Irrigation
District, the New York Irrigation District, the Wilder
Irrigation District, and the Big Bend Irrigation District
(Districts). The license gave the Districts the maximum two-
year time permitted by Section 13 to start construction--that
is, until March 26, 1991. On January 9, 1991, pursuant to
Section 13, the Commission granted the Districts' request for
the one additional two-year extension to commence construction
permitted by the statute, thereby extending the deadline for
commencement of construction to March 26, 1993.
Section 1701(c) of the Energy Policy Act of 1992
subsequently authorized the Commission to extend the deadline
for commencement of construction of the project for an
additional six years, until March 26, 1999. The Commission
granted this extension.
On March 23, 1999, three days prior to the expiration of
the extended deadline, the Districts requested a stay of the
commencement of construction and compliance deadlines, while
they sought Congressional legislation permitting further
extensions of the construction deadline. The Commission denied
that request, and on May 19, 1999, issued an order noticing
probable termination of the license for failure to meet the
commencement of construction deadline.
In June, 1999 legislation was introduced in the Senate (S.
1236) authorizing a further extension of the Section 13
deadline for the project until March 26, 2005. Former
Commission Chairman James Hoecker submitted written testimony
to the Senate Energy and Natural Resources Committee on July
28, 1999 stating that because this bill would extend the
construction commencement date beyond 10 years from the
issuance date of the project license, he did not support its
enactment.
This legislation, which was subsequently enacted and signed
into law in October, 2000 as Public Law No. 106-343, authorized
the Commission, upon the Districts' request, to reinstate the
license, if necessary, and to further extend the deadline for
commencement of construction for three consecutive two-year
periods, to take effect on the date of the expiration of the
last extension issued by the Commission (i.e., as of March 26,
1999).
As requested by the Districts, the Commission thereafter
granted three extensions, making the new final deadline for
starting construction March 26, 2005.
On March 25, 2005, the Districts filed a request for a stay
of the license, and to backdate the stay for 120 days to allow
them time to comply with license articles containing
requirements that must be completed before start of
construction.
On May 27, 2005, the Commission denied the request for stay
of license and, in the same order, issued notice of the
probable termination of the project license. The Commission
denied rehearing by order issued September 1, 2005.
s. 2028 and s. 2035
I do not support either S. 2028 or S. 2035. Grafton had
more than 11 years after license issuance to begin construction
on the Tygart Dam Project, following which it failed to make
substantial progress during the term of one three-year
preliminary permit, and had a second permit application
dismissed for the failure to provide adequate information.
The Districts have had more than 16 years after license
issuance to start construction of the Arrowrock Project, and
have been unable to do so. The licensee has cited numerous
reasons for their delays, ranging from inability to obtain
financing or a power sales agreement to several technical
redesigns of the project.
As a general matter, enactment of bills authorizing or
requiring commencement of construction extensions for
individual projects leaves the development of an important
energy resource in the hands of an entity that has shown an
inability to develop a project, and therefore has not been
recommended. The last several Chairmen of the Commission have
had a policy of opposing legislation extending commencement of
construction deadlines that would allow an entity more than 10
years to develop a project. This policy has been based on the
notion that allowing an entity that is not showing progress in
developing a project to control a hydropower site for a greater
length of time is not consistent with the public interest in
developing clean, renewable hydroelectric energy.
Recent Commission orders have also noted that the purposes
of the provisions of Section 13 of the FPA are to require
prompt development of a licensed project. These instances
demonstrate why that policy makes sense.
In addition, the record on which the projects were
originally licensed in the 1980s, including the examination of
environmental and developmental issues, may be out of date in
various respects. For example, in the case of the Arrowrock
Project, in 1998, after the license was issued, the U.S. Fish
and Wildlife Service listed the Columbia River bull trout as a
threatened species pursuant to the Endangered Species Act, for
the stream on which the project is located. The Service has
requested that endangered species consultation be conducted for
that project. To ensure that the public interest is served
would require not simply reinstating the license and/or
extending the license timeframes for commencement of
construction, but reexamining and, as necessary, updating the
record.
I appreciate the opportunity to present my views to the
Subcommittee. Thank you.
MINORITY VIEWS OF SENATOR JEFF BINGAMAN
The Federal Power Act authorizes the Federal Energy
Regulatory Commission to grant licenses for the construction
and operation of hydroelectric projects on navigable waters.
Section 13 of the Act requires the licensee to begin
construction of a project within two years from the date of the
license. The Commission may extend the deadline for beginning
construction, but only once, and for no more than two
additional years. If the licensee fails to begin construction
within the statutory period, section 13 requires the Commission
to terminate the license. 16 U.S.C. 806.
The purpose of the time limitations in section 13 is to
ensure the prompt development of the licensed project. As the
Commission has correctly observed, ``Congress has . . .
expressed, in language too clear for misinterpretation, its
will that . . . the maximum combined periods which may be
allowed for the commencement of construction is 4 years.''
Empire District Electric Co., 1 FPC 15, 19 (1932). Nonetheless,
Congress has routinely enacted bills to extend the deadline for
individual projects to begin construction on a case-by-case
basis.
In commenting on several such bills in 1995, the Chairman
of the Commission objected, ``as a matter of policy . . . to
granting a licensee more than ten years from the issuance date
of the license to commence construction.'' She testified that
``ten years is a more than reasonable period,'' and thought
that if a licensee could not begin construction within ten
years, ``the license should be terminated pursuant to section
13 of the Federal Power Act. S. Hrg. 104-65 at 3. Although the
Commission has never formally adopted the ten-year benchmark as
an official Commission policy, subsequent chairmen have
continued to apply it when commenting on license extension
bills pending before the Committee.
Similarly, while the Committee has never formally adopted
the ten-year benchmark as a binding Committee policy, it has
continued to inform the Committee's consideration of license
extension bills since it was first proposed eleven years ago.
Indeed, to the best of my knowledge, since 1995, Congress has
enacted only two laws (Public Law 104-241 and Public Law 106-
343) extending the deadline for commencement of construction
for more than ten years.
S. 2035 would extend the deadline for commencement of
construction of the Arrowrock Project in Idaho. The Commission
first licensed the Arrowrock Project on March 27, 1989. In
accordance with section 13 of the Federal Power Act, the
license required the licensee to commence construction within
two years, namely by March 26, 1991. Shortly before the
deadline, the Commission granted the licensee an additional two
years, extending the deadline to March 26, 1993.
Congress has statutorily extended the deadline for the
Arrowrock Project twice before. Section 1701(c) of the Energy
Policy Act of 1992 authorized the Commission to extend the
deadline for an additional six years, until March 26, 1999, a
total of ten years from the issuance of the license. When the
licensee failed to meet the new deadline, the Commission
terminated the license on May 19, 1999. Congress subsequently
ordered the Commission to reinstate the terminated license and
to extend the commencement of construction deadline for six
more years, until March 26, 2005, a total of 16 years from the
original issuance of the license. The latest deadline expired
more than a year ago.
Enactment of S. 2035 will extend the deadline for three
additional years, until the latter half of 2009, more than 20
years after the original issuance of the license, more than ten
times the original two-year period, more than five times the
extended statutory limit, and more than twice the customary
ten-year benchmark.
During the Committee's consideration of S. 2035, the
Chairman stated that he was ``not unsympathetic to the notion
that there should be a finite amount of time for construction
of these projects to begin.'' Even then, he added, the
Committee ought to ``allow for consideration of circumstances
that might argue for a longer period when one of our colleagues
presents us with a situation in their State that they believe
merits additional consideration.''
In this case, the licensee represents that the earlier
deadlines were missed because the Fish and Wildlife Service had
failed to consult under the Endangered Species Act in a timely
fashion, but that everything is now in place, and it is ready
to commence construction.
The Commission tells a different story. A year ago, the
Commission found that construction had not commenced, not
because of the fault of the Fish and Wildlife Service, but
``because of the licensee's own actions or inactions.'' It
found that the licensee had materially redesigned the project,
necessitating a license amendment application, which had yet to
be filed. It also said that the need for the endangered species
consultation ``is driven in large part'' by the licensee's
decision to ``materially redesign the project.'' Boise-Kuna
Irrigation District, 111 FERC para.61, 271 (May 27, 2005)
(order denying request for stay of license); 112 FERC para.61,
240 (Sept. 1, 2005) (order denying rehearing). In addition, the
Commission's witness testified on March 30, 2006 that the
record on which the project was originally licensed ``may be
out of date in various respects,'' and that it may be necessary
to reexamine and update the record.
In ordering S. 2035 reported, the Committee repudiates the
ten-year benchmark that has guided the Committee over the past
eleven years and sets an uncertain precedent. It is unclear
what standard the Committee used in this case or expects to use
in future cases to determine whether an extension is warranted.
The Committee asked for no showing of special circumstances
beyond the mere representations of the licensee that the delay
was not its fault and that it is now ready, or soon will be, to
begin construction. It gave no weight to the Commission's
expert judgment that the licensee was at fault and is still not
ready.
In my view, the time limitations in section 13 of the
Federal Power Act serve the important public interest in the
timely development of licensed hydroelectric power projects. As
the Federal Power Commission long ago said, ``the time
limitations in section 13, prohibiting delays by licensees in
constructing projects, and other provisions of the Act indicate
a Congressional intent that water power resources be utilized
in the best possible manner and at the earliest possible
time.'' Idaho Power Co., 14 FPC para.55, 68 (1955), aff'd sub
nom., National Hells Canyon Ass'n v. FPC, 237 F.2d 777 (D.C.
Cir. 1956), cert. denied, 353 U.S. 924 (1956). Those time
limitations should not be laid aside lightly, for to do so
``leaves the development of an important energy resource in the
hands of an entity that has shown an inability to develop a
project,'' which ``is not consistent with the public interest
in developing clean, renewable hydroelectric energy.''
In deciding whether to exercise its discretion to grant the
one-time two-year permitted under section 13, the Commission
applies a very liberal standard. It will exercise its
``discretion to grant the requested extension so long as it is
not clearly unreasonable and capricious to do so.'' Maine
Hydroelectric Development Corp., 15 FERC para.61, 107 (1981).
The ten-year benchmark previously recognized by the Committee
afforded a similarly generous standard. It provided what
amounted to a rebuttable presumption that extending the
deadline for commencing construction by six more years (for a
total of ten years from the issuance of the license) would not
be unreasonable or capricious, but that any extension beyond
that point would be.
I agree with Senator Domenici's observation that the
Committee ought to consider, on a case-by-case basis, whether
special circumstances warrant giving a licensee more time. When
special circumstances warrant relief, Congress ought to grant
an extension. But when the licensee has already exhausted the
Commission's two-year extension and a statutory six-year
extension (or, in this case, two statutory six-year
extensions), the standard for granting further extensions ought
to be a demanding one. Licensees should not be entitled to
another extension on the mere representation that it is at long
last ready to begin construction, especially where, as here,
the Commission has testified otherwise.
To extend the deadline for the Arrowrock Project yet again,
for three more years, after two prior statutory extensions of
six years apiece proved unavailing, can only undermine the
important statutory purpose of ensuring timely development of
hydroelectric projects underlying section 13 of the Federal
Power Act. I can find nothing in the record before the
Committee to warrant another extension, and for that reason, I
have voted against reporting S. 2035.
Jeff Bingaman.
CHANGES IN EXISTING LAW
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, the Committee notes that no
changes in existing law are made by the bill S. 2035, as
ordered reported.
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