[House Report 113-6]
[From the U.S. Government Publishing Office]
113th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 113-6
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HYDROPOWER REGULATORY EFFICIENCY ACT OF 2013
_______
February 4, 2013.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Upton, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
[To accompany H.R. 267]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 267) to improve hydropower, and for other
purposes, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for Legislation.............................. 2
Hearings......................................................... 4
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 5
Statement of General Performance Goals and Objectives............ 5
New Budget Authority, Entitlement Authority, and Tax Expenditures 5
Earmark, Limited Tax Benefits, and Limited Tariff Benefits....... 5
Committee Cost Estimate.......................................... 5
Congressional Budget Office Estimate............................. 5
Federal Mandates Statement....................................... 6
Duplication of Federal Programs.................................. 6
Disclosure of Directed Rule Makings.............................. 7
Advisory Committee Statement..................................... 7
Applicability to Legislative Branch.............................. 7
Section-by-Section Analysis of the Legislation................... 7
Changes in Existing Law Made by the Bill, as Reported............ 8
Purpose and Summary
H.R. 267, the ``Hydropower Regulatory Efficiency Act of
2013,'' was introduced by Representative Cathy McMorris Rodgers
(together with Representatives DeGette, Dingell, Latta, Lujan,
Markey, Matheson, Terry, and Walden) on January 15, 2013. The
legislation facilitates the development of new hydropower
resources in the United States by streamlining the federal
licensing requirements for small hydropower projects and
qualifying conduit hydropower facilities. The legislation also
requires the Federal Energy Regulatory Commission to study ways
to improve federal hydropower licensing for non-powered dams
and closed-loop pumped storage facilities.
Background and Need for Legislation
Hydropower is the nation's largest renewable energy
generation resource, providing nearly 8 percent of the
electricity generated in the United States. Including pumped
storage facilities, there are approximately 100,000 megawatts
(MW) of current installed hydropower capacity in the United
States. The hydropower sector employs approximately 200,000-
300,000 workers across the United States, and nearly 2,500 U.S.
companies participate in the development, licensing,
construction, and operation of hydropower projects.\1\
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\1\National Hydropower Association, ``Job Creation Opportunities in
Hydropower,'' Final Report (September 20, 2009), available at: http://
hydro.org/wp-content/uploads/2010/12/NHA_ JobsStudy_FinalReport.pdf;
NHA, ``U.S. Hydropower Supply Chain Snapshot,'' available at: http://
hydro.org/why-hydro/available/hydropower-supply-chain-snapshot/.
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Ninety-three percent of U.S. hydroelectric facilities are
operated by the private sector, public utilities, and State or
local governments.\2\ According to the Federal Energy
Regulatory Commission (FERC), which regulates non-Federal
projects, these entities operate over 1,650 hydropower
facilities in every region of the U.S.\3\ Many of these
facilities are much smaller than the large Federal dams
typically associated with hydropower. FERC records show that
approximately 71% of non-Federal hydropower facilities have a
capacity of less than 5 MW, demonstrating the importance of
small hydropower projects to the nation's energy portfolio.\4\
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\2\Idaho National Laboratory, ``A Study of United States
Hydroelectric Plant Ownership'' (June 2006), available at: http://
hydropower.inl.gov/hydrofacts/pdfs/a_study_of_united_
states_hydroelectric_plant_ownership.pdf.
\3\See FERC, ``Issued Licenses,'' available at: http://ferc.gov/
industries/hydropower/gen-info/
licensing/licenses.xls; and ``Issued Exemptions,'' available at: http:/
/ferc.gov/industries/
hydropower/gen-info/licensing/exemptions.xls.
\4\See Testimony of Jeff C. Wright, Director, Office of Energy
Projects, FERC, before the Subcommittee on Energy and Commerce (May 9,
2012).
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Hydropower's potential
Despite abundant resources, the production of electricity
from water resources is not fully utilized. With the right
Federal policies in place, it may be possible to double
hydropower capacity and create thousands of new domestic jobs.
For instance, a study completed on behalf of the National
Hydropower Association (NHA) concluded that by utilizing
currently untapped resources, the United States could add
approximately 60,000 MW of new hydropower capacity by 2025,
potentially creating as many as 700,000 jobs in the process.\5\
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\5\National Hydropower Association, ``Job Creation Opportunities in
Hydropower,'' Final Report (September 20, 2009), available at: http://
hydro.org/wp-content/uploads/2010/12/NHA_JobsStudy_FinalReport.pdf;
Final Report Update with state breakdowns (April 26, 2010), available
at http://hydro.org/wp-content/uploads/2011/02/NHA-Annual-Conf-
Frantzis-pres-Final-7.pdf.
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A significant amount of new hydroelectric generation could
come from maximizing existing infrastructure, particularly non-
powered dams. For example, only about 3 percent of the nation's
approximately 80,000 dams currently generate hydropower.\6\ The
U.S. Department of Energy and Oak Ridge National Laboratory
recently released a report identifying 12,000 MW of new
hydropower that could be developed at existing non-powered
dams.\7\
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\6\U.S. Army Corps of Engineers, National Inventory of Dams, chart:
``Dams by Primary Purpose,'' available at: http://geo.usace.army.mil/
pgis/f?p=397:5:48574067111801::NO.
\7\U.S. Department of Energy, ``An Assessment of Energy Potential
at Non-Powered Dams in the United States'' (April 2012), available at:
http://www1.eere.energy.gov/water/pdfs/npd_report.pdf.
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There also is significant growth potential in the small
hydropower and conduit power sectors of the industry, as
numerous project developers and local governments across the
country consider retrofitting local dam infrastructure or
investing in irrigation power projects and other conduit
applications. For instance, the U.S. Bureau of Reclamation
released a study identifying 373 existing canals and conduits
that have the combined potential of generating over 365,000 MW-
hours of additional hydropower annually.\8\
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\8\U.S. Bureau of Reclamation, ``Site Inventory and Hydropower
Energy Assessment of Reclamation Owned Conduits,'' Final Report (March
2012), available at: http://www.usbr.gov/power/CanalReport/index.html.
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Additional hydropower benefits
Hydropower is a clean, renewable, and zero-emission
electricity source; its utilization currently avoids 225
million metric tons of carbon dioxide in the U.S. each year--
equal to the output of approximately 42 million passenger cars,
according to NHA. Hydropower facilities also can provide grid
reliability and stability services, such as the ability to
quickly meet changing demand in electric load, firming for
intermittent variable resources, such as wind and solar, and
black start capability in times of an outage.
Regulation of hydropower development
Hydropower developments face a comprehensive regulatory
approval process that involves many participants, including
FERC, Federal and State resource agencies, local governments,
tribes, non-governmental organizations, and the public. The
regulatory process to license and construct a hydropower
facility can be considerably longer than the process for other
renewable energy resources. For example, FERC's Integrated
Licensing Process established specifically for hydropower
projects is structured to be completed in 5 years, while the
development timeline for wind and solar projects can be as
short as 18 to 24 months.
Developers of small hydropower projects told the Committee
that, due to the lack of economies of scale with smaller
projects, the costs associated with the licensing process serve
as a financial disincentive to pursue these facilities. In
recent years, FERC has taken steps to improve the licensing
process of small hydropower projects. However, FERC exemption
applications can be lengthy and time consuming to prepare. For
very small projects, the cost of FERC compliance can
potentially exceed the cost of hydro equipment.
According to the Colorado Small Hydro Association, a
typical exemption application for a small hydropower system may
be on the order of 100 pages, including all the necessary
explanatory text, diagrams, maps, letters, and appendices.
Compiling all the necessary information can take months,
requiring expensive consulting assistance from engineers,
attorneys, professionally-licensed surveyors, and environmental
consultants. Hiring consultants to complete FERC small hydro
exemptions for small projects may typically cost somewhere
between $10,000 and $30,000--a price tag that often outweighs
the total hydro equipment installation cost for a typical small
(1-2 kilowatt) residential micro-hydro system.
FERC currently reports 469 proposed projects with pending
license and license exemption applications, as well as issued
and pending preliminary permits.\9\ This represents nearly
60,000 MW in new hydropower capacity pending at FERC.\10\ By
improving the hydropower licensing process, H.R. 267 could
facilitate the development of many of these and future
hydropower projects.
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\9\These pending projects include all hydropower technologies:
conventional, conduit, pumped storage, and new marine hydrokinetic.
Arrived at by combining project figures from FERC generated
spreadsheets. See ``Pending Licenses, Relicenses and Exemptions''
(total projects: 64 equaling 3,030.350 MW), available at: http://
ferc.gov/industries/hydropower/gen-info/
licensing/pending-lre.xls; ``All Issued Preliminary Permits'' (total
projects: 316 equaling 52,651.181 MW), available at: http://ferc.gov/
industries/hydropower/gen-info/licensing/issued-pre-permits.xls; and
``All Pending Preliminary Permits'' (total projects 89 equaling
6,532.096 MW), available at: http://ferc.gov/industries/hydropower/gen-
info/licensing/pending-pre-permits.xls.
\10\Id.
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Previous consideration of the legislation
Identical legislation--H.R. 5892--was introduced in the
House of Representatives during the 112th Congress. The
Subcommittee on Energy and Power held a legislative hearing on
H.R. 5892, and subsequently, the Subcommittee met in open
markup session and favorably reported, by voice vote, H.R. 5892
to the full Committee. The full Committee ordered H.R. 5892
favorably reported, by voice vote, to the House of
Representatives. On July 9, 2012, under suspension of the
rules, H.R. 5892 was agreed to by the House by a vote of 372-0.
Supporters of the legislation
Supporters of the legislation include NHA, American Rivers,
the Colorado Small Hydropower Association, and Voith
Hydropower.
Hearings
The Committee on Energy and Commerce has not held hearings
on the legislation in the 113th Congress.
Committee Consideration
On January 22, 2013, the Committee on Energy and Commerce
met in open markup session. No amendments were offered during
the markup and the Committee ordered H.R. 267 favorably
reported, by unanimous consent, to the House of
Representatives.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto.
There were no record votes taken in connection with ordering
H.R. 267 reported. A motion by Mr. Upton to order H.R. 267
reported to the House, without amendment, was agreed to by
unanimous consent.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee made oversight findings
that are reflected in this report.
Statement of General Performance Goals and Objectives
H.R. 267 facilitates the development of new hydropower
resources in the United States by streamlining the federal
licensing requirements for small hydropower projects and
qualifying conduit hydropower facilities. The legislation also
requires the Federal Energy Regulatory Commission to study ways
to improve federal hydropower licensing for non-powered dams
and closed-loop pumped storage facilities.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
267, the ``Hydropower Regulatory Efficiency Act of 2013,''
would result in no new or increased budget authority,
entitlement authority, or tax expenditures or revenues.
Earmarks, Limited Tax Benefits, and Limited Tariff Benefits
In compliance with clause 9(e), 9(f), and 9(g) of rule XXI
of the Rules of the House of Representatives, the Committee
finds that H.R. 267, the ``Hydropower Regulatory Efficiency Act
of 2013,'' contains no earmarks, limited tax benefits, or
limited tariff benefits.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
January 31, 2013.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 267, the
Hydropower Regulatory Efficiency Act of 2013.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Megan
Carroll.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 267--Hydropower Regulatory Efficiency Act of 2013
Under the Federal Power Act, the Federal Energy Regulatory
Commission (FERC) issues licenses and regulates hydroelectric
facilities, regardless of size. H.R. 267 would amend current
law to allow FERC to extend certain permits related to
hydroelectric facilities and exempt small hydroelectric
facilities with a generating capacity of 10 megawatts or less
from FERC's licensing requirements. In addition, the bill would
direct the Secretary of Energy to study the feasibility of
generating hydroelectric power using water flowing through
conduits or at facilities that store water. Finally, the bill
would authorize FERC to carry out pilot projects to demonstrate
the potential of generating hydroelectric power at nonpowered
dams and water-storage facilities.
Based on information from FERC and the Department of Energy
(DOE), CBO estimates that implementing H.R. 267 would have no
significant net impact on the federal budget. CBO anticipates
that the proposed changes to FERC's permitting and licensing
requirements would reduce the commission's workload. We also
estimate that FERC would spend about $1 million on pilot
projects authorized under the bill, assuming appropriation of
the necessary amounts. However, because FERC recovers 100
percent of its costs through user fees, any change in the
agency's costs (which are controlled through annual
appropriation acts) would be offset by an equal change in fees
that the commission charges, resulting in no net change in
federal spending. Finally, CBO estimates that any increased
costs to DOE to prepare the study that would be required under
H.R. 267 would be negligible because the proposed study is
similar to ongoing efforts to analyze the potential for
developing hydropower resources. Enacting H.R. 267 would not
affect direct spending or revenues; therefore, pay-as-you-go
procedures do not apply.
H.R. 267 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 Megan Carroll.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Duplication of Federal Programs
No provision of H.R. 267 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that enacting H.R. 267 does not
specifically direct the completion of any specific rule makings
within the meaning of 5 U.S.C. 551.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of Legislation
Section 1: Short title; table of contents
Section 1 provides the short title of ``Hydropower
Regulatory Efficiency Act of 2013'' and provides a table of
contents.
Section 2: Findings
Section 2 sets forth findings on the potential power
generation and economic benefits resulting from increased
hydropower development in the United States.
Section 3: Promoting small hydroelectric power projects
Section 3 increases the licensing exemption threshold for
small hydropower projects from 5 megawatts (MW) to 10 MW.
Section 4: Promoting conduit hydropower projects
Section 4(a) provides that a ``qualifying conduit
hydropower facility'' is not required to obtain a FERC license.
The term is defined as a hydropower project that (1) uses a
non-Federally owned conduit, (2) has an installed capacity of 5
MW or less, and (3) does not currently have a license or
exemption. An entity proposing to construct a qualifying
conduit hydropower facility is required to file a notice of
intent with FERC that includes sufficient information to
demonstrate that the facility meets the qualifying criteria. If
FERC makes an initial determination that the proposed project
meets the criteria, it shall publish public notice of the
notice of intent to construct the project. If no entity
contests that the project meets the criteria within 45 days,
the project is deemed to meet the criteria. If an entity
contests whether the project meets the criteria, FERC is
required to promptly issue a written determination as to
whether the facility meets the criteria. Section 4(a) also
expands eligibility for the existing conduit exemption to
facilities with an installed capacity of up to 40 MW.
Section 4(b) makes conforming amendments to section 405 of
the Public Utility Regulatory Policies Act of 1978 (16 U.S.C.
2705).
Section 5: FERC authority to extend preliminary permit periods
Section 5 allows FERC to extend the term of a preliminary
permit for up to 2 years, for a total of 5 years if FERC finds
that the permittee has carried out activities under the permit
in good faith and with reasonable diligence.
Section 6: Promoting hydropower development at non-powered dams and
closed-loop pumped storage projects
Section 6 directs FERC to study the feasibility of
establishing a 2-year licensing process for hydropower
development at non-powered dams and closed-loop pumped storage
projects. The results of the program shall be reported to
Congress.
Section 7: DOE study of pumped storage and potential hydropower from
conduits
Section 7 directs the Secretary of Energy to complete a
study of: (1) the technical flexibility and potential of
certain new and existing pumped storage facilities to support
intermittent renewable generation and provide grid reliability
benefits; and (2) the range of opportunities for hydropower
from conduits in the United States.
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 (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978
* * * * * * *
TITLE IV--SMALL HYDROELECTRIC POWER PROJECTS
* * * * * * *
SEC. 405. SIMPLIFIED AND EXPEDITIOUS LICENSING PROCEDURES.
(a) * * *
* * * * * * *
(d) Exemptions From Licensing Requirements in Certain
Cases.--The Commission may in its discretion (by rule or order)
grant an exemption in whole or in part from the requirements
(including the licensing requirements) of part I of the Federal
Power Act to small hydroelectric power projects having a
proposed installed capacity of [5,000] 10,000 kilowatts or
less, on a case-by-case basis or on the basis of classes or
categories of projects, subject to the same limitations (to
ensure protection for fish and wildlife as well as other
environmental concerns) as those which are set forth in
subsections (c) and (d) of section 30 of the Federal Power Act
with respect to determinations made and exemptions granted
under [subsection (a) of such section 30] subsection (b) of
such section 30; and subsections (c) and (d) of such section 30
shall apply with respect to actions taken and exemptions
granted under this subsection. Except as specifically provided
in this subsection, the granting of an exemption to a project
under this subsection shall in no case have the effect of
waiving or limiting the application (to such project) of the
second sentence of subsection (b) of this section.
* * * * * * *
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FEDERAL POWER ACT
PART I
* * * * * * *
Sec. 5. (a) Each preliminary permit issued under this Part
shall be for the sole purpose of maintaining priority of
application for a license under the terms of this Act for such
period or periods, not exceeding a total of three years, as in
the discretion of the Commission may be necessary for making
examinations and surveys, for preparing maps, plans,
specifications, and estimates, and for making financial
arrangements.
(b) The Commission may extend the period of a preliminary
permit once for not more than 2 additional years beyond the 3
years permitted by subsection (a) if the Commission finds that
the permittee has carried out activities under such permit in
good faith and with reasonable diligence.
(c) Each such permit shall set forth the conditions under
which priority shall be maintained.
(d) Such permits shall not be transferable, and may be
canceled by order of the Commission upon failure of permittees
to comply with the conditions thereof or for other good cause
shown after notice and opportunity for hearing.
* * * * * * *
Sec. 30. [(a) Except as provided in subsection (b) or (c),
the Commission may grant an exemption in whole or in part from
the requirements of this part, including any license
requirements contained in this part, to any facility (not
including any dam or other impoundment) constructed, operated,
or maintained for the generation of electric power which the
Commission determines, by rule or order--
[(1) is located on non-Federal lands, and
[(2) utilizes for such generation only the
hydroelectric potential of a manmade conduit, which is
operated for the distribution of water for
agricultural, municipal, or industrial consumption and
not primarily for the generation of electricity.
[(b) The Commission may not grant any exemption under
subsection (a) to any facility the installed capacity of which
exceeds 15 megawatts (40 megawatts in the case of a facility
constructed, operated, and maintained by an agency or
instrumentality of a State or local government solely for water
supply for municipal purposes).]
(a)(1) A qualifying conduit hydropower facility shall not be
required to be licensed under this part.
(2)(A) Any person, State, or municipality proposing to
construct a qualifying conduit hydropower facility shall file
with the Commission a notice of intent to construct such
facility. The notice shall include sufficient information to
demonstrate that the facility meets the qualifying criteria.
(B) Not later than 15 days after receipt of a notice of
intent filed under subparagraph (A), the Commission shall--
(i) make an initial determination as to whether the
facility meets the qualifying criteria; and
(ii) if the Commission makes an initial
determination, pursuant to clause (i), that the
facility meets the qualifying criteria, publish public
notice of the notice of intent filed under subparagraph
(A).
(C) If, not later than 45 days after the date of publication
of the public notice described in subparagraph (B)(ii)--
(i) an entity contests whether the facility meets the
qualifying criteria, the Commission shall promptly
issue a written determination as to whether the
facility meets such criteria; or
(ii) no entity contests whether the facility meets
the qualifying criteria, the facility shall be deemed
to meet such criteria.
(3) For purposes of this section:
(A) The term ``conduit'' means any 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.
(B) The term ``qualifying conduit hydropower
facility'' means a facility (not including any dam or
other impoundment) that is determined or deemed under
paragraph (2)(C) to meet the qualifying criteria.
(C) The term ``qualifying criteria'' means, with
respect to a facility--
(i) the facility is constructed, operated, or
maintained for the generation of electric power
and uses for such generation only the
hydroelectric potential of a non-federally
owned conduit;
(ii) the facility has an installed capacity
that does not exceed 5 megawatts; and
(iii) on or before the date of enactment of
the Hydropower Regulatory Efficiency Act of
2013, the facility is not licensed under, or
exempted from the license requirements
contained in, this part.
(b) Subject to subsection (c), the Commission may grant an
exemption in whole or in part from the requirements of this
part, including any license requirements contained in this
part, to any facility (not including any dam or other
impoundment) constructed, operated, or maintained for the
generation of electric power which the Commission determines,
by rule or order--
(1) utilizes for such generation only the
hydroelectric potential of a conduit; and
(2) has an installed capacity that does not exceed 40
megawatts.
(c) In making the determination under [subsection (a)]
subsection (b) the Commission shall consult with the United
States Fish and Wildlife Service and the State agency
exercising administration over the fish and wildlife resources
of the State in which the facility is or will be located, in
the manner provided by the Fish and Wildlife Coordination Act
(16 U.S.C. 661, et seq.), and shall include in any such
exemption--
(1) * * *
* * * * * * *
(d) Any violation of a term or condition of any exemption
granted under [subsection (a)] subsection (b) shall be treated
as a violation of a rule or order of the Commission under this
Act.
* * * * * * *