[House Report 113-249]
[From the U.S. Government Publishing Office]
113th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 113-249
======================================================================
BUREAU OF RECLAMATION CONDUIT HYDROPOWER DEVELOPMENT EQUITY AND JOBS
ACT
_______
October 22, 2013.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hastings of Washington, from the Committee on Natural Resources,
submitted the following
R E P O R T
[To accompany H.R. 1963]
[Including cost estimate of the Congressional Budget Office]
The Committee on Natural Resources, to whom was referred
the bill (H.R. 1963) to amend the Water Conservation and
Utilization Act to authorize the development of non-federal
hydropower and issuance of leases of power privileges at
projects constructed pursuant to the authority of the Water
Conservation and Utilization Act, and for other purposes,
having considered the same, report favorably thereon with an
amendment and recommend 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 Conduit
Hydropower Development Equity and Jobs Act''.
SEC. 2. AMENDMENT.
Section 9 of the Act entitled ``An Act authorizing construction of
water conservation and utilization projects in the Great Plains and
arid semiarid areas of the United States'', approved August 11, 1939
(16 U.S.C. 590z-7; commonly known as the ``Water Conservation and
Utilization Act''), is amended--
(1) by striking ``In connection with'' and inserting ``(a) In
connection with''; and
(2) by adding at the end the following:
``(b) Except as otherwise provided in this section, the Secretary is
authorized to enter into leases of power privileges for electric power
generation in connection with any project constructed under this Act,
and shall have authority in addition to and alternative to any
authority in existing laws relating to particular projects, including
small conduit hydropower development, consistent with the terms of this
Act, the Reclamation Project Act of 1939 (43 U.S.C. 485h), and other
Federal reclamation laws.
``(c) All right, title, and interest to installed power facilities
constructed by non-Federal entities pursuant to a lease of power
privilege, and direct revenues derived therefrom, shall remain with the
lessee unless otherwise required in subsection (d).
``(d) Lease of power privilege charges or fees under this section
shall be credited to the facility from which those revenues were
derived.
``(e) When carrying out this section, 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
timeframe for the irrigation district or water users association to
accept or reject a lease of power privilege offer. If the irrigation
district or water users association elects not to accept a lease of
power privilege offer under paragraph (1), the Secretary shall offer
the lease of power privilege to other parties in accordance with this
section.
``(f) 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
section, excluding siting of associated transmission facilities on
Federal lands.
``(g) Nothing in this section shall obligate the Western Area Power
Administration or the Bonneville Power Administration to purchase or
market any of the power produced by the facilities covered under this
section and none of the costs associated with production or delivery of
such power shall be assigned to project purposes for inclusion in
project rates.
``(h) Nothing in this section 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 and shall not create any unmitigated financial or
physical impacts to the project or division involved. The Secretary
shall notify and consult with the irrigation district or legally
organized water users association operating the transferred conduit in
advance of offering the lease of power privilege and shall prescribe
such terms and conditions necessary to adequately protect the planning,
design, construction, operation, maintenance, and other interests of
the United States and the project or division involved.
``(i) Nothing in this section shall alter or affect any agreements in
effect on the date of the enactment of the Bureau of Reclamation
Conduit Hydropower Development Equity and Jobs Act for the development
of conduit hydropower projects or disposition of revenues.
``(j) In this section:
``(1) 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.
``(2) The term `irrigation district' means any irrigation,
water conservation or conservancy, multi-county 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.
``(3) 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.
``(4) 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.
``(5) The term `small conduit hydropower' means a facility
capable of producing 5 megawatts or less of electric
capacity.''.
Purpose of the Bill
The purpose of H.R. 1963 is to amend the Water Conservation
and Utilization Act to authorize the development of non-federal
hydropower and issuance of leases of power privileges at
projects constructed pursuant to the authority of the Water
Conservation and Utilization Act.
Background and Need for Legislation
Established in 1902, the Bureau of Reclamation's
(Reclamation) primary mission is to provide a reliable source
of water and power for irrigated agriculture and rural and
urban communities. While the larger, multi-purpose projects
such as Grand Coulee and Hoover Dams are well known for their
significant hydropower contribution, Reclamation has hundreds
of much smaller projects which, at the time of their creation,
were not considered for hydropower potential due to economics,
lack of technology and other factors. Today, with the improved
ability to harness the energy of moving water in canals,
ditches, and pipelines (collectively known as ``conduits''),
many are pursuing hydropower development on these smaller
projects. The potential is vast, as Reclamation currently owns
47,336 miles of canals, laterals, drains, pipelines and tunnels
in the western United States. In March 2012, Reclamation found
that at least 373 of its conduit sites had the potential for
such development. It is important to note that this list is
deemed by many to be conservative in scope, and interest in
non-federal hydropower development has been expressed by
several operators of facilities not included in the list.
To help spur development at these and other Reclamation
sites, Public Law 113-24 authorized non-federal hydropower
development through the use of a ``lease of power privilege,''
a contractual arrangement by which a non-federal entity may
generate hydropower and pay a rental fee to the federal
government for such generation at the specific Reclamation
facility on which the entity operates. This law makes clear
that hydropower development is explicitly authorized at
Reclamation's conduits, while protecting the original and
primary Congressionally-authorized purpose of such facilities
to provide water supplies. The law requires Reclamation to
offer the lease of power privilege first to the entity
operating the conduit or the conduit's direct beneficiaries,
and if that entity elects not to exercise the right, then to
other interested parties. This ``right of first refusal''
provision was intended to significantly decrease conduit
hydropower planning and study time, as well as staffing costs
associated with analyzing multiple conduit hydropower
development applications.
Public Law 113-24 also attempted to reduce regulatory costs
and paperwork while protecting the environment. A substantial
regulatory barrier to conduit hydropower development is
duplicative environmental analysis. The hydropower units
covered by Public Law 113-24 are on previously disturbed ground
within existing man-made facilities. As such, Public Law 113-24
directs Reclamation to apply its categorical exclusion process
under the National Environmental Policy Act to small conduit
hydropower development projects under the bill, excluding
transmission associated with this hydropower generation. Public
Law 113-24 applies to the vast majority of Reclamation
facilities that are covered under the Reclamation Project Act
of 1939. However, there are some Reclamation projects or
components of such projects that are not administered under the
Reclamation Project Act of 1939. H.R. 1963 applies to these
remaining 11 Reclamation facilities, all of which are governed
under the different and more complex authorities of the Water
Conservation and Utilization Act of 1939 (WCUA).
WCUA, unlike the Reclamation Project Act of 1939, prohibits
non-federal interests from developing hydropower at these
facilities and from collecting any revenues received from
selling hydropower at these facilities. While non-federal
developers are currently prohibited by federal law to build
hydropower units (with the exception of one case mandated by
Title 11 of Public Law 103-434 ), the federal government has
not developed hydropower at these sites due to lack of funds,
bureaucratic inertia, and other reasons. As a result, these 11
facilities have the potential to produce hydropower but remain
idle. H.R. 1963 encourages hydropower development by removing
these statutory barriers to non-federal investment. The
statutory change will also allow non-federal parties to retain
revenues derived from sales of the developed hydropower. Many
irrigation districts which plan to develop these hydropower
units view this revenue as a key source for repairing aging
infrastructure, offsetting fossil fuel sources used for pumping
water, and a way to keep water rates down. In addition, these
developers would pay a lease fee to the federal government
since they would be generating hydropower on a federal facility
in the same manner as provided by Public Law 113-24.
Taken together, Public Law 113-24 and H.R. 1963 authorize a
uniform, non-federal hydropower generation framework on all
Reclamation conduits that promotes cost-effective renewable
energy production and an environment for economic development
and job creation, while generating federal revenue and
protecting the environment.
Committee Action
H.R. 1963 was introduced on May 14, 2013, by Congressman
Steve Daines (R-MT). The bill was referred to the Committee on
Natural Resources, and within the Committee to the Subcommittee
on Water and Power. On May 23, 2013, the Subcommittee held a
hearing on the bill. On July 31, 2013, the full Natural
Resources Committee met to consider the bill. The Subcommittee
on Water and Power was discharged by unanimous consent.
Congressman Daines offered an amendment designated _009 to the
bill; the amendment was adopted by unanimous consent. No
further amendments were offered, and the bill, as amended, was
then adopted and ordered favorably reported to the House of
Representatives by unanimous consent.
Section-by-Section Analysis
Section 1. Short title
This section provides that the Act may be cited as the
``The Bureau of Reclamation Conduit Hydropower Development
Equity and Jobs Act.''
Section 2. Authorization
Section 2 amends Section 590z-7 of the Water Conservation
and Utilization Act of 1939 (WCUA) to provide the exclusive
authority to the Secretary of the Interior to contract with
non-federal entities for the development of small conduit
hydropower at facilities governed under WCUA, while leaving
intact the other existing authorities under WCUA. In addition,
Section 2 allows non-federal parties to retain revenues derived
from sales of the hydropower they develop on WCUA projects in
accordance with existing Reclamation law and in parity with
non-federal hydropower development authorized by Public Law
113-24.
It is also the intent of this section to authorize a lease
of power privilege program within WCUA so that facilities
constructed under WCUA are treated identically to those covered
by Public Law 113-24 for the purpose of small conduit
hydropower development. This authorization covers all potential
hydropower-related features of the 11 WCUA facilities to which
the legislation applies. This section also requires the Bureau
of Reclamation to offer the ``lease of power privilege'' first
to the entity operating the conduit or the conduit's direct
water user beneficiaries. This provision reinforces and
strengthens Reclamation's current arrangement of giving
irrigation districts the preference to lease hydropower
projects on canals that the districts operate and maintain on
behalf of the federal government. The Committee understands
that these long-time operators/beneficiaries know the operating
intricacies and primary water supply features of the respective
Reclamation facilities, and are often the best candidates to
take advantage of hydropower development on the facilities they
already operate for water supply delivery. As such, the
Committee expects Reclamation to work cooperatively and
communicate directly with these operators/beneficiaries prior
to and during the lease process, particularly because a
conduit's primary purpose is to deliver water.
Identical to Public Law 113-24, this provision does not
prohibit the operators/beneficiaries of the conduit facility
from participating with any third-party interest in the
hydropower development on the respective conduit. The Committee
also expects Reclamation to undergo a good faith effort to
allow the operators/beneficiaries a reasonable and justifiable
time frame to accept or reject a conduit lease of power
privilege offer. Such time frames should factor in the
complexity of the facility, prior communications, any stated
concerns of the operators/beneficiaries, and other matters. If
after such a good faith effort to communicate a lease
opportunity and a reasonable time frame during which to assess
the offer, the operator/beneficiary elects not to exercise its
right of first refusal, the Secretary is directed to offer the
lease of power privilege to other parties and consider their
applications according to existing Reclamation law.
This section also directs Reclamation to apply its
categorical exclusion process under the National Environmental
Policy Act to small conduit hydropower development projects
covered by the bill.
Section 2 also clarifies that the Western Area Power
Administration, the Bonneville Power Administration and the
Southwestern Power Administration are not obligated to purchase
or market the conduit hydropower generated at Reclamation
facilities and that none of the costs associated with the
generation shall be assigned to these agencies' power rates.
This provision is intended to allow the free market to decide
who will purchase the conduit hydropower. This section also
provides a number of water supply savings clauses. These
provisions specifically ensure conduit hydropower development
will not harm or impact existing water supplies and water
deliveries and acknowledges that water used for conduit
hydropower generation is incidental to water supply purposes.
This incidental purpose specifically means hydropower
development is subordinate to the original Congressionally-
authorized water supply project purposes.
This section also makes clear that Reclamation shall notify
and consult with the applicable water users benefitting from
the conduit. The Committee expects Reclamation to communicate
in written and verbal form with the operators and beneficiaries
of a Reclamation conduit facility prior to issuing any lease of
power privilege or when identifying a conduit for potential
hydropower development. These operators/beneficiaries are
acutely aware of facility operations and can provide valuable
knowledge and experience to determine the feasibility of the
contemplated small-scale hydropower development.
This section also requires the federal government to
completely protect the planning, design, construction,
operation, maintenance and other interests of the federally-
owned conduit. The Committee expects Reclamation to work with
the applicable conduit operator/beneficiary on these terms and
conditions prior to issuance. The Committee also expects that
such terms and conditions will be written and detailed in
nature, mandatory for the conduit hydropower developer, and
shall be enforced by Reclamation. The Committee is aware that
Reclamation has come under significant and justified criticism
for not adequately communicating with operators/beneficiaries
on existing conduit hydropower projects. Section 2 also ensures
that nothing in the bill shall alter or affect any existing
agreements for the development of conduit hydropower projects
or disposition of revenues.
Finally, this section provides definitions for terms used
in the bill.
Committee Oversight Findings and Recommendations
Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of
rule XIII of the Rules of the House of Representatives, the
Committee on Natural Resources' oversight findings and
recommendations are reflected in the body of this report.
Compliance With House Rule XIII
1. Cost of Legislation. Clause 3(d)(1) of rule XIII of the
Rules of the House of Representatives requires an estimate and
a comparison by the Committee of the costs which would be
incurred in carrying out this bill. However, clause 3(d)(2)(B)
of that rule provides that this requirement does not apply when
the Committee has included in its report a timely submitted
cost estimate of the bill prepared by the Director of the
Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974. Under clause 3(c)(3) of rule
XIII of the Rules of the House of Representatives and section
403 of the Congressional Budget Act of 1974, the Committee has
received the following cost estimate for this bill from the
Director of the Congressional Budget Office:
H.R. 1963--Bureau of Reclamation Conduit Hydropower Development Equity
and Jobs Act
H.R. 1963 would authorize the Bureau of Reclamation to
enter into leases with nonfederal entities to develop
hydropower at 11 water project facilities owned by the
government. Based on information from the bureau, CBO estimates
that enacting the bill would have an impact on direct spending;
therefore, pay-as-you-go procedures apply. However, we estimate
such effects would not be significant. Enacting the legislation
would not affect revenues or discretionary spending.
In 2011, the bureau completed an assessment of the 11
facilities and found the potential to develop hydropower at
seven of the locations. Under current law, the bureau is
authorized to develop federally financed and owned hydropower
production at those seven facilities; however, it has no plans
to do so. Under the bill, the bureau would also be authorized
to work with nonfederal entities to develop hydropower through
lease agreements at the 11 facilities. Under such agreements,
which we expect the bureau would take advantage of, nonfederal
entities would finance the necessary hydropower improvements
and own the electricity derived from those improvements in
exchange for a lease payment to the federal government. CBO
estimates that those lease payments would increase federal
receipts. However, because the receipts would be available to
the bureau to be spent without further appropriation on
rehabilitation work at the facility where they were collected,
we expect H.R. 1963 would have a negligible net impact on the
budget.
H.R. 1963 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Aurora Swanson.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
2. Section 308(a) of Congressional Budget Act. As required
by clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives and section 308(a) of the Congressional Budget
Act of 1974, this bill does not contain any new budget
authority, spending authority, credit authority, or an increase
or decrease in revenues or tax expenditures. Based on
information from the Bureau of Reclamation, CBO estimates that
enacting the bill would have an impact on direct spending;
therefore, pay-as-you-go procedures apply. CBO estimates that
lease payments from the hydropower projects authorized by the
bill would increase federal receipts. However, CBO estimates
such effects would not be significant.
3. General Performance Goals and Objectives. As required by
clause 3(c)(4) of rule XIII, the general performance goal or
objective of this bill is to amend the Water Conservation and
Utilization Act to authorize the development of non-federal
hydropower and issuance of leases of power privileges at
projects constructed pursuant to the authority of the Water
Conservation and Utilization Act.
Earmark Statement
This bill does not contain any Congressional earmarks,
limited tax benefits, or limited tariff benefits as defined
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of
the House of Representatives.
Compliance With Public Law 104-4
This bill contains no unfunded mandates.
Compliance with H. Res. 5
Directed Rule Making. The Chairman does not believe that
this bill directs any executive branch official to conduct any
specific rule-making proceedings.
Duplication of Existing Programs. This bill does not
establish or reauthorize a program of the federal government
known to be duplicative of another program. Such program was
not included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-139
or identified in the most recent Catalog of Federal Domestic
Assistance published pursuant to the Federal Program
Information Act (Public Law 95-220, as amended by Public Law
98-169) as relating to other programs.
Preemption of State, Local or Tribal Law
This bill is not intended to preempt any State, local or
tribal law.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
SECTION 9 OF THE ACT OF AUGUST 11, 1939
AN ACT Authorizing construction of water conservation and utilization
projects in the Great Plains and arid and semiarid areas of the United
States.
Sec. 9. (a) In connection with any project undertaken
pursuant to this Act, provisions, including contracts of sale,
may be made for furnishing municipal or miscellaneous water
supplies, or for developing and furnishing power in addition to
the power requirements of irrigation: Provided, That
expenditures from appropriations made directly pursuant to the
authority contained in section 12 (1) to meet costs allocated
to municipal or miscellaneous water supplies or surplus power
shall not exceed $500,000 for any one project: Provided
further, That no contract relating to a water supply for
municipal or miscellaneous purposes or to electric power shall
be made unless, in the judgment of the Secretary, it will not
impair the efficiency of the project for irrigation purposes.
On any project where such provisions are made, the Secretary
shall allocate to municipal or miscellaneous water purposes or
to surplus power the part of the estimated construction costs
of the project which he deems properly so allocable; and such
allocations shall not be included in the reimbursable
construction costs covered by the repayment contract or
contracts required under section 4. All right, title, and
interest in the facilities provided for such municipal or
miscellaneous water supplies or surplus power and the revenues
derived therefrom shall be and remain in the United States.
Contracts for such municipal or miscellaneous water supplies or
for such surplus power shall be at such rates as, in the
Secretary's judgment, will produce revenues at least sufficient
to cover the appropriate share of the annual operation and
maintenance cost of the project and such fixed charges,
including interest, as the Secretary deems proper. Contracts
for the sale of surplus power shall be for periods not to
exceed forty years and contracts for water supply for municipal
or miscellaneous purposes shall be for such periods as the
Secretary may determine and may include such renewal options as
the Secretary deems desirable: And provided further, That in
sales or leases of such power, 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 and any amendments thereof.
(b) Except as otherwise provided in this section, the
Secretary is authorized to enter into leases of power
privileges for electric power generation in connection with any
project constructed under this Act, and shall have authority in
addition to and alternative to any authority in existing laws
relating to particular projects, including small conduit
hydropower development, consistent with the terms of this Act,
the Reclamation Project Act of 1939 (43 U.S.C. 485h), and other
Federal reclamation laws.
(c) All right, title, and interest to installed power
facilities constructed by non-federal entities pursuant to a
lease of power privilege, and direct revenues derived
therefrom, shall remain with the lessee unless otherwise
required in subsection (d).
(d) Lease of power privilege charges or fees under this
section shall be credited to the facility from which those
revenues were derived.
(e) When carrying out this section, 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 timeframe
for the irrigation district or water users association to
accept or reject a lease of power privilege offer. If the
irrigation district or water users association elects not to
accept a lease of power privilege offer under paragraph (1),
the Secretary shall offer the lease of power privilege to other
parties in accordance with this section.
(f) 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 section, excluding siting of associated
transmission facilities on Federal lands.
(g) Nothing in this section shall obligate the Western Area
Power Administration or the Bonneville Power Administration to
purchase or market any of the power produced by the facilities
covered under this section and none of the costs associated
with production or delivery of such power shall be assigned to
project purposes for inclusion in project rates.
(h) Nothing in this section 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 and shall not create any unmitigated
financial or physical impacts to the project or division
involved. The Secretary shall notify and consult with the
irrigation district or legally organized water users
association operating the transferred conduit in advance of
offering the lease of power privilege and shall prescribe such
terms and conditions necessary to adequately protect the
planning, design, construction, operation, maintenance, and
other interests of the United States and the project or
division involved.
(i) Nothing in this section shall alter or affect any
agreements in effect on the date of the enactment of the Bureau
of Reclamation Conduit Hydropower Development Equity and Jobs
Act for the development of conduit hydropower projects or
disposition of revenues.
(j) In this section:
(1) 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.
(2) The term ``irrigation district'' means any
irrigation, water conservation or conservancy, multi-
county 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.
(3) 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.
(4) 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.
(5) The term ``small conduit hydropower'' means a
facility capable of producing 5 megawatts or less of
electric capacity.