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Hydro Licensing Reforms in Draft Energy Bill by CBB Staff Columbia Basin Bulletin - September 26, 2003

Republican congressional leaders this week modified a hydroelectric dam relicensing reform provision in the comprehensive energy bill to win the support of state fish and game agencies.

Environmental groups and key Democratic members of Congress remained opposed to the reforms, which are backed by the hydropower industry. But further changes to the section could come next week.

Hoping to complete work on a final energy bill as soon as possible, the chairmen of the House and Senate energy committees over the past two weeks have jointly negotiated and released "discussion drafts" of almost all sections to other members. The House passed its energy bill last spring and the Senate approved its version in late July.

In response to last month's massive power blackout in the Northeast, the two chairmen, Sen. Pete Domenici, R-N.M., and Rep. Billy Tauzin, R-La., have been under pressure to reach agreement quickly on a final bill that can pass Congress and be sent to President George Bush for his signature.

Aides said the chairmen plan to release new revisions to almost every section early next week and seek final approval for the bill from the rest of the House-Senate negotiating team by the end of the week. If approved by the conference committee, the bill could go to the full House and Senate for votes on final passage in early October.

Currently, federal and state fish and wildlife and land management agencies largely determine environmental and fish passage requirements for hydroelectric projects. The Federal Energy Regulatory Commission imposes the requirements as conditions for 30-to-50-year-long federal permits or license renewals.

With licenses of more than 500 dams on 150 rivers in 38 states expiring in the next 15 years, changes in the regulatory process for renewing them could affect fish populations and thousands of miles of rivers and streams for decades to come. The hydropower industry, which has sought legislative and regulatory changes for several years, complains that the process can take years and result in costly and unnecessary new fish passage structures, minimum stream flows and other environmental improvements.

The chairmen's proposed hydroelectric licensing reform section is based on the House-passed provision. The primary change would allow dam owners to propose less costly alternatives to mandatory conditions and have them accepted by federal agencies if they meet basic requirements. If their proposals were rejected, applicants could appeal and have their arguments heard in "trial-type" sessions.

The National Hydropower Association praised the chairmen's proposal for bringing "much needed balance, accountability and transparency to the hydropower licensing process." The new language released Monday will give "licensees creativity and flexibility in meeting important and necessary environmental protection goals," NHA executive director Linda Church Ciocci said. "It is a moderate and responsible approach to repairing a process that has long been broken."

The group said the hydro licensing reform proposal will:

• allow a licensee to propose a cost or energy-saving alternative condition and have it accepted by federal resource agencies if the agencies determined the alternative met the existing statutory requirements for environmental protection;
• provide the applicant an opportunity for an agency hearing on the record on any disputed issues of material fact once mandatory conditions are drafted by federal resource agencies;
• require agencies to document that they gave "equal consideration" to the energy, economic, environmental and other public impacts of their mandatory conditions before imposing them on licensees;
• provide a non-binding dispute resolution process if FERC found a final mandatory condition to be inconsistent with its requirements under the Federal Power Act.

In addition, some opponents want to eliminate another provision that would establish a Department of Energy hydropower incentive payment program of up to $200 million over 10 years for owners who make capital improvements.

The chairmen's discussion draft made two major changes to the House relicensing reforms. One eliminated the ability of an applicant to propose building a fish hatchery as an alternative to fish passage measures. State fish and wildlife agencies said the provision could undermine native populations.

The other change restored the standard that an alternative condition must meet. Instead of being required to be "no less protective of fish resources," a proposed alternative would have to provide the equivalent benefits of the mandatory fish passage condition prescribed by the U.S. Fish and Wildlife Service or National Marine Fisheries Service.

The two changes were sought by the International Association of Fish and Wildlife Agencies, which represents state agencies, the American Sportfishing Association and American Fly Fishing Tackle Association. The three groups said in a letter to Tauzin on Monday that they could support the hydropower reform section with the modifications.

"These changes will help ensure that our nation's rivers can continue to be appropriately used not only to deliver efficient electricity but also to sustain our fishery resources," the letter said. "With the adoption of these recommended changes," the organizations said they "can support" the chairmen's section.

But Andrew Fahlund, an official with American Rivers, said environmental groups do not support the modified proposal. It is "still completely one-sided" and is prejudiced against tribes, states, environmental groups and landowners who want to participate in developing conditions for fish passage and protection of public lands. "At a minimum, we'd like to see a fair and balanced playing field," Fahlund said.

American Rivers, Trout Unlimited and other groups issued a joint statement in opposition, saying the reforms would create new red tape and procedures for agencies "bogging down the process" and adding months if not years to the licensing process."

The National Hydropower Association disputed the charges. All parties to a licensing proceeding would have the right to participate in appeal hearings in the same manner as a licensee, and resource agencies would have the discretion to expedite the trial-type hearings, NHA said. Federal Energy Regulatory Commission administrative law judges have conducted similar hearings in as little as two months, it said.

Under current law, a license applicant may only challenge agency mandatory conditions on substantial evidence grounds in the federal Court of Appeals after a final license has been issued. The availability of an agency trial-type hearing will reduce the need to utilize the two to three year-long Court of Appeals judicial review process, NHA said.

"The hearings will help ensure that mandatory conditions for important environmental protections are supported by the facts, practical and indeed necessary. This will save ratepayers served by hydroelectric projects significant amounts of money over time and will help make sure that the many benefits of our nation's hydropower projects are better recognized in the licensing process," said Ciocci.

Some conservationists have called for dropping all hydropower licensing language from the bill and allowing the Federal Energy Regulatory Commission to proceed with administrative reforms. FERC announced revised hydropower licensing rules earlier this year to improve agency coordination and to engage FERC staff earlier in working out agreements for fish passage, flows and other requirements.