Congress Passes Two Hydropower Bills During a Summer of Gridlock

by Mintz Levin - Energy & Clean Technology Matters
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The 113th Congress, which is on track to pass fewer bills than any recent Congress, did pass two hydropower bills that were signed by President Obama on August 9, 2013. The two bills, the Hydropower Regulatory Efficiency Act of 2013 (“HERA”) and the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act (“Reclamation Act”), will expand the federal government’s authority to develop hydropower on existing water resources and streamline the permitting process for new, small hydropower projects.

Although in the past four years Congress has extended tax credits for renewable projects, notably one for wind energy, this is the first significant piece of energy legislation since 2009. The bills do not make major changes to the hydropower permitting, licensing and development process, but rather take small steps to speed up the production of hydropower in the U.S.

Both HERA and the Reclamation Act Amendment passed the House and Senate with overwhelming majorities. One contributing factor to their popularity was a finding in HERA showing, as Senator Lisa Murkowski noted, that of the 80,000 dams existing in the country, only about 3% of them generate hydropower. Additionally, the U.S. could add an estimated 60,000 MW of new hydropower generation by 2025 according to a Navigant study. Section 2 of the HREA, “Findings,” cites a study estimating that the legislation could create 700,000 new jobs over the next 13 years by utilizing untapped hydropower resources.

HERA, which was introduced by Congressman McMorris-Rogers (R-WA), allows for the easier development of smaller output hydropower stations by easing select Federal Energy Regulatory Commission (FERC) requirements for certain projects. It amends Section 405 of the Public Utility Regulatory Policies Act by allowing projects with up to 10 MW of generation capacity, doubling the old figure of 5 MW, to be eligible for an exemption from licensing under Part I of the Federal Power Act. An applicant is eligible depending on the amount of federal land involved with the project. If it is only on federal land, then the applicant is eligible. If some federal lands are involved, the applicant is eligible if he holds the real property interest in the nonfederal lands necessary to develop and operate the project.

Additionally, small conduit projects, which are “any…manmade water conveyance that is operated for the distribution of water…[and] not primarily for the generation of electricity,” can also gain an exemption from FERC’s licensing process if they meet certain criteria. Finally, HERA extends the period of a preliminary permit to 5 years. Preliminary permits act as “placeholders” for potential license applicants and give the applicants priority while preparing their license applications over other potential applicants. HERA also requires FERC to study the possibility of creating a two-year license process for closed-loop pumped storage projects at non-power dams. Similarly, it requires DOE to study the technical feasibility of retrofitting pumped storage facilities to generate renewable power intermittently within one year.

The Reclamation Act, sponsored by Congressman Tipton (R-CO), authorizes all Bureau of Reclamation conduit facilities to be used for hydropower development. Specifically, the Secretary of Interior now has a “lease of power privilege.” A non-federal entity can pay a rental fee to the federal government for the right to generate hydropower at the conduit facilities. The secretary must first offer these privileges to the direct beneficiaries of the conduit, including the irrigation district or water users association that operates the conduit or receives water from it. If they decline, then the lease will be offered to outside parties.

The Act also exempts small conduit hydropower, defined as 5 MW or less, from the National Environmental Policy Act (“NEPA”), but still subjects these facilities to environmental laws including the Clean Water Act. The Reclamation Act allows the Bureau of Reclamation Process to use its categorical exclusion process under NEPA to exclude the siting of transmission facilities on federal lands associated with hydropower generation from these conduit facilities.

In passing these bills, Senator Ron Wyden (D-OR), who is Chairman of the Senate Energy Committee, commented that “capitalizing on the power potential of existing dams, pipes and conduits is the kind of practical thinking our country needs to generate more renewable energy and cut our carbon footprint.” While the bills are relatively minor, as one Senate aid acknowledged, they prove that bipartisan energy legislation is possible.

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Mintz Levin - Energy & Clean Technology Matters
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