[Senate Report 109-303]
[From the U.S. Government Publishing Office]
Calendar No. 546
109th Congress Report
SENATE
2d Session 109-303
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FEDERAL ENERGY REGULATORY COMMISSION PROJECT 7307 LICENSE REINSTATEMENT
_______
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. 2028]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 2028) to provide for the reinstatement of
a license for a certain Federal Energy Regulatory Commission
project, having considered the same, reports favorably theron
with an amendment and recommends that the bill, as amended, do
pass.
The amendment is as follows:
On page 2, strike lines 11 through 15 and insert the
following:
``(c) Reinstatement of Terminated License.--If a license of
the Commission for the project has been terminated before the
date of enactment of this Act, the Commission shall--
``(1) reinstate the license effective as of the date of the
termination of the license; and''.
PURPOSE OF THE MEASURE
The purpose of S. 2028 is to reinstate the license to
construct and operate the Tygart Dam Project in Taylor County,
West Virginia and to extend the time required for commencement
of construction until December 31, 2007.
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 September 27, 1989, FERC granted the City of Grafton,
West Virginia, an original license to construct and operate the
Tygart Dam Project No. 7307 (Tygart Project or Project). The
20-MW Project was to be located on the Tygart River in Taylor
County, West Virginia at an existing U.S. Army Corps of
Engineers dam. Project construction includes the installation
of an intake structure, a 350-foot penstock, a powerhouse, a
one-mile transmission line, and other project-related
facilities.
The Tygart Project's original construction commencement
deadline of September 26, 1991 was stayed, pending judicial
review, to April 15, 1993. Lengthy consultations with the Corps
regarding issues such as site access, project design and
construction, and power sales contracts led FERC to extend the
construction commencement deadline an additional two years, to
April 15, 1995. In 1996, Congress legislatively extended the
deadline until September 26, 1999 (P.L. 104-246).
Despite these extensions, project construction did not
commence by the September 26, 1999 deadline. Consequently, FERC
terminated the Project No. 7307 license on April 26, 2000.
On May 8, 2000, Universal Electric Power Corporation filed
a preliminary permit application (docketed as Project No.
11840) for the site. FERC has not acted on this permit
application.
S. 2028 would reinstate the terminated license and extend
the time for construction commencement to December 31, 2007.
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.
During the time the license was valid, the licensees had
more than 11 years to develop this project. However, the
Committee received testimony from proponents of the Project
regarding the reasons for the delays recent progress towards
construction, and the value of the project to the community.
FERC has indicated that an updated environmental review of the
Project will be conducted pursuant to applicable law.
LEGISLATIVE HISTORY
S. 2028 was introduced by Senators Byrd and Rockefeller on
November 11, 2005, and referred to the Committee on Energy and
Natural Resources. The Water and Power Subcommittee held a
hearing on S. 2028 on March 30, 2006. At the business meeting
on May 24, 2006, the Committee on Energy and Natural Resources
ordered S. 2028 favorably reported, with an amendment.
H.R. 4417, the companion measure to this bill, was
introduced by Representative Mollohan (D-WV) on November 18,
2005, and referred to the House Energy and Commerce Committee.
Legislation to extend the project construction commencement
deadline for Project No. 7307 was also considered during the
106th (S. 2942) and 107th (S. 639) Congresses.
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. 2028, if amended as
described herein. Senator Bingaman asked to be recorded as
voting against the measure.
COMMITTEE AMENDMENT
An amendment was adopted to replace references to an
``expired'' license with one that ``has been terminated.''
SECTION-BY-SECTION ANALYSIS
Section 1 directs FERC, upon the request of the licensee
for the project numbered 7307, to extend the time required for
construction commencement of the project until December 31,
2007, or, if the license for the project has been terminated,
the bill would reinstate the license and extend the
construction commencement period until December 31, 2007.
COST AND BUDGETARY CONSIDERATIONS
The following estimate of costs of this measure has been
provided by the Congressional Budget Office.
S. 2028--A bill to provide for the reinstatement of a license for a
certain Federal Energy Regulatory Commission project
S. 2028 would authorize the Federal Energy Regulatory
Commission (FERC) to reinstate the license for a hydroelectric
project (number 7307) in West Virginia. The bill also would
extend the deadline for commencing construction of that project
until December 31, 2007.
CBO estimates that implementing S. 2028 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. 2028 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act. The
bill would benefit the city of Grafton, West Virginia, by
authorizing the reinstatement and extension of its license for
construction of a hydroelectric project. Any costs to the city
would be incurred voluntarily.
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. 2028. 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. 2028, as ordered reported.
EXECUTIVE COMMUNICATIONS
The testimony provided by FERC at the Subcommittee hearing
on S. 2028 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
TYGART DAM PROJECT
S. 2028 would authorize the Commission to reinstate the
license and extend the deadline for the commencement of project
construction for the Tygart Dam Project No. 7307, located in
West Virginia, until December 31, 2007.
The Tygart Dam Project was licensed on September 27, 1989,
to the City of Grafton, West Virginia (Grafton). The license
gave Grafton the maximum two years permitted by Section 13 to
start construction--that is, until September 27, 1991.
On December 17, 1990, the Commission issued an order
granting partial stays of the licenses for the Tygart Project
and 11 other projects in the Ohio River Basin, pending
resolution of judicial appeals of the Commission's licensing
orders. On April 16, 1992, after the orders were affirmed, the
Commission issued an order lifting the stays.
On November 4, 1992, pursuant to a request by Grafton, the
Commission extended the deadline for commencement of
construction to April 15, 1995. This represented the maximum
period for the commencement of construction (two years plus one
two-year extension) that the Commission could grant under FPA
Section 13.
Subsequent legislation enacted as Public Law No. 104-246
directed the Commission to issue up to three additional two-
year orders granting further extensions of time to commence and
complete construction. After the Commission did so, September
26, 1999 became the final deadline to commence project
construction. On June 23, 1999, Grafton again requested a stay
of those license conditions that require pre-construction
filings because it was seeking another legislative extension of
the commencement of construction deadline. The Commission
dismissed this request on February 9, 2000.
Because the licensee did not commence project construction
by September 26, 1999, the Commission on November 19, 1999
issued a notice of probable termination of the license for
failure to meet the commencement of construction deadline.
Grafton did not respond to the notice. The Commission
subsequently terminated the license by order issued on March
27, 2000.
On July 24, 2000, Grafton subsequently filed an application
for a preliminary permit for the project, as a predicate for
filing a new license application. The Commission issued the
requested preliminary permit on March 16, 2001, for the Tygart
Dam Project No. 11851 (because the previous license had been
terminated, the preliminary permit received a new project
number). Grafton made very little progress towards developing
the project, and the three-year preliminary permit expired, by
its terms, on February 28, 2004. The Commission denied a
request for an extension of the preliminary permit term on
March 28, 2003.
On March 1, 2004 Grafton filed another application for a
preliminary permit for the Tygart Dam Project No. 12490. This
application was dismissed on March 28, 2005, for failure to
provide additional information related to Grafton's progress
towards developing the project. Currently, Grafton has pending
before the Commission a third application for a subsequent
preliminary permit for the Tygart Dam Project No. 12640. The
Commission also has before it a competing application for
preliminary permit filed on September 23, 2005, by Tygart LLC
for the Tygart Dam Project No. 12613.
* * * * * * *
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
On September 27, 1989, the Federal Energy Regulatory
Commission granted the City of Grafton, West Virginia a license
to build the Tygart Dam Hydroelectric Project. Under section 13
of the Federal Power Act, Grafton had two years, until
September 27, 1991, to begin construction of the Project. The
Commission later granted Grafton two additional years to begin
construction, as permitted by section 13. In 1996, Congress
legislatively extended the time Grafton had to begin
construction by six more years, until September 26, 1999. When
Grafton still had not begun construction by then, ten years
after the license was originally issued, the Commission
terminated the license, as required by section 13.
Subsequently, in March 2001, the Commission granted Grafton
a preliminary permit under section 5 of the Federal Power Act.
The preliminary permit protected Grafton's claim to the site
for three more years while Grafton developed a new license
application. Grafton made little progress on the project, and
its preliminary permit expired on February 28, 2004. The
Commission is now considering competing applications for
preliminary permits for the Tygart Dam Project from both the
Grafton and another applicant.
S. 2028 would reinstate Grafton's terminated license and
extend the deadline for commencing construction until December
31, 2007, notwithstanding section 13 of the Federal Power Act.
For the reasons more fully explained in my minority views on S.
2035, which the Committee ordered reported along with S. 2028,
I do not support either bill.
Section 13 of the Federal Power Act serves the important
public interest in the timely development of licensed
hydroelectric power projects. The time limitations in section
13 ensure that licensees who are unable to develop a proposed
hydroelectric project cannot tie up the power site
indefinitely, preventing others from developing it. Electric
Plant Board of the City of Augusta, Kentucky, 115 FERC
para.61,198 (May 18, 2006). In the words of the Commission's
witness at the Committee's hearing on S. 2028, enactment of
legislation waiving the time limitations of section 13 ``leaves
the development of an important energy resource in the hands of
an entity that has shown an inability to develop a project.''
Since 1995, the chairmen of the Federal Energy Regulatory
Commission have taken the view that ten years is more than
enough time for a licensee to begin construction. They have not
objected to bills that would extend the deadline for individual
projects up to ten years from the issuance of the license, but
have consistently objected to bills that would extend the
deadline beyond that point. In my view, the Committee should be
guided by that policy and should have applied it to S. 2028.
The Committee chose otherwise.
The Committee should, of course, be willing to consider
whether special circumstances warrant extending the deadline
beyond the ten-year benchmark on a case-by-case basis. But any
extension beyond the benchmark, I believe, should bear a heavy
burden of persuasion. I can find nothing in the record before
the Committee to persuade me that another extension is
warranted in this case, and for that reason, have voted against
reporting S. 2028.
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. 2028, as
ordered reported.