Hydropower Licenses and Relicensing Conditions: Current Issues and Legislative Activity

Publication Date: November 2004

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Energy; Environment

Type:

Abstract:

In the next ten years, more than 40% of the nation’s non-federal 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 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. However, 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, etc.). Specifically, sections 4(e) and 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 fish passageways, schedule periodic water releases for recreation, release minimum flows of water for fish migration, or control water release rates to reduce erosion. Once an agency issues such conditions, FERC must include them in any license it issues. 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, legislation has been passed by both chambers of the 108th Congress, as part of various energy bills, to alter federal agencies’ license-conditioning authority. On November 17, 2003, a conference agreement was reached on H.R. 6. It passed the House the next day, but has not passed the Senate. Other energy bills have been introduced. One version, H.R. 4503, was introduced in the House on June 3, 2004, and passed the House on June 15, 2004. H.R. 4503/H.R. 6 would allow stakeholders to propose alternative license conditions and would require federal agencies to consider alternatives proposed by license applicants, but not any other stakeholder. The legislation would also require an agency to 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 will be no less protective of the fish resource than the fishway initially prescribed, and (2) costs less to implement, and/or will result in improved operation of the project for electricity production.

Response to the proposed legislation has been mixed. While FERC and the hydropower industry generally support the legislation, some environmental organizations oppose the bills, and officials within some conditioning agencies have expressed concerns. Opponents of the legislation argue that resource agencies are taking adequate steps to improve the conditioning process, and that the legislation could increase relicensing time, weaken environmental protections, give applicants undue standing in the conditioning process, and weaken FERC’s new Integrated Licensing Process. On the other hand, proponents of the legislation argue that it would create accountability on the part of conditioning agencies, decrease the cost of license conditions without diminishing agencies’ conditioning authority, and enhance FERC’s licensing processes.