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Hydropower Licenses and Alternative Licensing Conditions in H.R. 6, 109th Congress

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Abstract:

In the next ten years, nearly 20% of the nation's nonfederal hydropower projects will require new federal licenses to continue operating. New licenses will establish facilities' operating parameters for the next 30 to 50 years. These operating parameters will affect the total quantity and timing of electricity production. They will also affect flood control, irrigation, municipal and industrial water supplies, recreation, fish and wildlife habitat, and transportation.

Under the 1920 Federal Power Act (FPA), the Federal Energy Regulatory Commission (FERC) has primary responsibility for balancing multiple water uses and evaluating licensing and relicensing applications. The FPA also creates a role in the licensing process for federal agencies that are responsible for managing fisheries or federal reservations (e.g., national forests). Specifically, Section 4(e) and Section 18 of the FPA give certain federal agencies the authority to attach conditions to FERC licenses. For example, federal agencies may require applicants to build passageways for fish (fishways), schedule periodic water releases for recreation, release minimum flows for fish migration, or control water release rates to reduce erosion. Once an authorized agency issues such conditions, FERC must include them in the project's license. While these conditions often generate environmental or recreational benefits, they may also require construction expenditures and may increase generation costs by reducing operational flexibility.

Reflecting recommendations by FERC and the hydropower industry, the House included a provision to alter federal agencies' license-conditioning authority in the Energy Policy Act of 2005 (H.R. 6). This provision would allow stakeholders to propose alternative license conditions and would require federal agencies to consider and accept the applicant's proposed alternative if it found that the alternative (1) provides for the adequate protection and utilization of the federal reservation, or would be no less protective of the fish resource than the fishway initially prescribed, and (2) costs less to implement, and/or would result in improved operation of the project for electricity production. It also requires that the Secretary of the relevant conditioning agency submit a written statement showing it gave equal consideration to the effects of the original and alternative conditions on energy, flood control, navigation, air quality, and water supply.

Response to the pending provision has been mixed. While the hydropower industry supports the legislation, some environmental organizations oppose the bill, and officials within some conditioning agencies have expressed concerns. Opponents of the legislation contend that it could increase relicensing time, weaken environmental protections, give applicants undue standing in the conditioning process, and weaken FERC's new Integrated Licensing Process. Proponents contend that it would create accountability for the conditioning agencies, decrease the cost of license conditions without diminishing agencies' conditioning authority, and enhance FERC's licensing processes.

This report will be updated as events warrant.