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House Panel Takes Up Hydro Licensing Reform by CBB Staff Columbia Basin Bulletin - March 14, 2003

Federal hydropower relicensing reforms recently proposed by House Republicans are a step backward from those included in last year's failed energy bill, environmental groups and Democrats said this week.

But a Northwest utility official endorsed the changes as a balance between industry and environmental protection needs. The comments came during a hearing on comprehensive energy legislation conducted by the House Energy and Air Quality Subcommittee.

Subcommittee Chairman Joe Barton, R-Texas, a key author of last year's House energy bill, has been holding a series of hearings to take testimony on his recently released "discussion draft," which will be used to develop this year's comprehensive bill. The draft incorporates a hydroelectric dam relicensing reform measure, H.R. 1013, that was recently introduced by Reps. George Radanovich, R-Calif., Greg Walden, R-Ore., and Ed Towns, D-N.Y.

The hydropower industry for years has sought legislative and regulatory "fixes" to the time-consuming and costly federal licensing process, which usually results in adding new requirements for fish passage, minimum stream flows and other environmental conditions. The licenses of over 500 dams on 150 rivers in 38 states will expire in the next 15 years, and owners must seek new permits from the Federal Energy Regulatory Commission, according to American Rivers. The projects supply over 50 percent of the nation's hydroelectricity, the National Hydropower Association said.

The House energy bill draft "would let dam owners off the hook from their most basic environmental obligations and strangle everyone that might object in red tape," Rob Masonis, Northwest regional director of American Rivers, said in testimony. The hydropower section, he contended, "is actually worse than anything" in either the House or Senate energy bills last year. Although each chamber passed an energy bill, they were unable to agree on a compromise before the session ended.

Energy and Commerce Committee ranking Democrat John Dingell of Michigan, agreed that Barton's draft undercut last year's hydro title in the energy bill, which gave equal weight to industry, environmentalists and the public in the relicensing process and required better coordination among environmental and resource agencies and FERC.

Conservationists called for dropping all hydropower licensing language from the new bill and allowing the Federal Energy Regulatory Commission to proceed with its administrative reforms.

FERC announced plans for revising hydropower licensing rules on Feb.y 21 and is expected to issue a final rule by July 2003. The initial proposal seeks makes several administrative changes to improve agency coordination and to engage FERC staff earlier in working out agreements for fish passage, flows and other requirements.

Masonis said the commission proposal draws heavily on consensus positions developed by industry moderates, the conservation community, and state representatives during negotiations over the past several years.

The House draft hydropower section would make it easier for utilities and other dam owners to propose alternatives to federal and state fish and land management agency conditions on relicensing and to have their alternatives approved by administration officials and FERC.

This would allow owners to avoid the extra costs and slight power losses associated with installing fish ladders or other passage improvements if they artificially propagate fish, protect offsite habitat, or contribute to environmental trust funds, Masonis said.

Also it would also tie the hands of federal and state natural resource agencies and reduce the public's ability to participate in and influence hydropower licensing negotiations, he said.

But Julie Keil, director of hydropower licensing and water rights for Portland General Electric, called the provision "reasonable and environmentally responsible." Keil said a congressional fix was urgently needed along with FERC's regulatory reform efforts in order "to preserve consumer access to clean, reliable, domestic, and cost-efficient hydropower."

PGE, which owns five dams, is in the process of relicensing nearly 600 megawatts by 2006. "They are vital to the successful operation of my company, as indeed hydropower is essential to the entire Western power grid," and were made more important by the recent Western energy crisis, she said.

Keil, who testified on behalf of the National Hydropower Association, said the industry has been encouraged by bipartisan support in Congress and is hopeful "that this year we can finally see hydro licensing reform legislation enacted into law."

The House reform language is based on an amendment by Sens. Ben Nelson, D-Neb., Larry Craig, R-Idaho, and Gordon Smith, R-Ore., that passed the Senate last year as part of its energy bill.

The House bill would:

• allow owners to contest factual issues in mandatory conditions drafted by federal resource agencies;
• allow license applicants to propose cost and energy-saving alternative conditions that federal resource agency would have to accept if officials determined they met legal requirements for environmental protection;
• require federal resource agencies to give "equal consideration" to energy, economic, environmental and other public impacts before imposing mandatory conditions;
• establish a non-binding dispute resolution process for cases in which FERC finds a mandatory condition to be inconsistent with its requirements under the Federal Power Act.