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104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-322
_______________________________________________________________________



                EXTENSION OF TIME LIMITATION FOR THE 
 
  FERC-ISSUED HYDROELECTRIC LICENSE FOR THE MT. HOPE WATERPOWER PROJECT
                                _______


November 7, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


  Mr. Bliley, from the Committee on Commerce, submitted the following

                              R E P O R T

                        [To accompany H.R. 1366]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Commerce, to whom was referred the bill 
(H.R. 1366) to authorize the extension of time limitation for 
the FERC-issued hydroelectric license for the Mt. Hope 
Waterpower Project, 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.........................................................     2
Committee consideration..........................................     3
Rollcall votes...................................................     3
Committee oversight findings.....................................     3
Committee on Government Reform and Oversight.....................     3
New budget authority and tax expenditures........................     3
Committee cost estimate..........................................     3
Congressional Budget Office estimate.............................     3
Inflationary impact statement....................................     4
Advisory committee statement.....................................     4
Section-by-section analysis and discussion.......................     4
Changes in existing law made by the bill, as reported............     5

                          Purpose and Summary

    The purpose of H.R. 1366 is to extend the deadline for the 
commencement of construction of a hydroelectric project in New 
Jersey licensed by the Federal Energy Regulatory Commission 
(FERC) until August 3, 1999.

                  Background and Need for Legislation

    Section 13 of the Federal Power Act (16 U.S.C. Sec. 806 
(1988)) establishes time limits for commencement of 
construction of a hydroelectric project once FERC has issued a 
license. The licensee must begin construction not more than two 
years from the date the license is issued, unless FERC extends 
the initial deadline. However, section 13 permits FERC to grant 
only one extension of that deadline for ``not longer than two 
additional years * * * when not incompatible with the public 
interests.'' Accordingly, FERC lacks authority to extend the 
deadline beyond a maximum of two years from the original 
deadline for commencement of construction. Therefore, a license 
is subject to termination if a licensee fails to begin 
construction within four years of the date the license is 
issued.
    H.R. 1366 would extend the deadline for the commencement of 
construction for a 2,000 megawatt pumped-storage project 
(Project No. 9401) until August 3, 1999. This would extend the 
deadline to seven years after the date the license was issued. 
The current deadline for commencement of construction for 
Project No. 9401 is August 3, 1996. According to the project 
sponsor, construction has not commenced for lack of a power 
sales contract. H.R. 1366 does not ease the requirements of a 
hydroelectric license, but merely extends the period for 
commencement of project construction.
    Lack of a power sales contract is the main reason 
construction of licensed hydroelectric projects has not 
commenced. It is very difficult for a hydroelectric project 
sponsor to secure financing until it has been granted a 
license, and once it has been granted a license the 
construction deadline begins to run. Without a power sales 
contract, a project generally cannot be financed. There are 
other obstacles to commencement of construction, such as 
protracted proceedings on a licensee's application for a dredge 
and fill permit from the Army Corps of Engineers under section 
404 of the Clean Water Act. FERC has testified that in such 
cases it has issued orders staying the license until matters 
are resolved, suggesting that extension legislation is not 
needed in order to address delays beyond the control of the 
licensee. However, this does not apply to delays that are 
subject to the control of the licensee, such as lack of a power 
sales contract.
    One reason it is difficult for project sponsors to obtain 
power sales contracts is the changing nature of the electric 
industry in the United States. As the industry has become more 
exposed to competition, utilities are seeking to lower their 
costs and increase their flexibility. The term of power sales 
contracts that finance hydroelectric projects range up to 25 to 
30 years, and utilities are trying to avoid purchase agreements 
with long terms. In addition, the generating cost of these 
projects may not be as favorable as other alternatives.

                                Hearings

    The Subcommittee on Energy and Power held a hearing on H.R. 
1366 and various other legislative proposals to extend the 
deadline for commencement of construction on October 18, 1995. 
Testimony was received from Ms. Susan Tomasky, General Counsel, 
Federal Energy Regulatory Commission.

                        Committee Consideration

    The Subcommittee on Energy and Power met in open markup 
session on October 18, 1995, and approved H.R. 1366 for Full 
Committee consideration by a voice vote, without amendment, a 
quorum being present. The Full Committee met in open markup 
session on October 25, 1995 and ordered H.R. 1366 reported to 
the House by a voice vote, without amendment, a quorum being 
present.

                             Rollcall Votes

    Clause 2(l)(2)(B) of rule XI of the Rules of the House 
requires the Committee to list the recorded votes on the motion 
to report legislation and on amendments thereto. There were no 
recorded votes taken in connection with ordering H.R. 1366 
reported. A motion by Mr. Bliley to order H.R. 1366 reported to 
the House, without amendment, was agreed to by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of 
the House of Representatives, the Subcommittee on Energy and 
Power held legislative hearings and made findings that are 
reflected in this report.

              Committee on Government Reform and Oversight

    Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of 
the House of Representatives, no oversight findings have been 
submitted to the Committee by the Committee on Government 
Reform and Oversight.

               New Budget Authority and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the Committee states 
that H.R. 1366 would result in no new or increased budget 
authority or tax expenditures or revenue.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 403 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of 
the House of Representatives, following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
403 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 27, 1995.
Hon. Thomas J. Bliley, Jr.
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 1366, a bill to authorize extension of time 
limitation for a FERC-issued hydroelectric license for the Mt. 
Hope Waterpower Project, as ordered reported by the House 
Committee on Commerce on October 25, 1995. CBO estimates that 
enacting the bill would have no net effect on the federal 
budget.
    The bill would extend the deadline for construction of a 
hydroelectric project currently subject to licensing by the 
Federal Energy Regulatory Commission (FERC). This provision may 
have a minor impact on FERC'S workload. Because FERC recovers 
100 percent of its costs through user fees, any change in its 
administrative costs would be offset by an equal change in the 
fees that the commission charges. Hence, the bill's provisions 
would have no net budgetary impact.
    Because FERC's administrative costs are limited in annual 
appropriations, enactment of this bill would not affect direct 
spending or receipts. Therefore, pay-as-you-go procedures would 
not apply to the bill. In addition, CBO estimates that enacting 
the bill would have no significant impact on the budgets of 
state or local governments.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kim Cawley.
            Sincerely,
                                                   June E. O'Neill.

                     Inflationary Impact Statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee finds that H.R. 1366 
would have no inflationary impact.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

             Section-by-Section Analysis of the Legislation

Section 1. Extension of Time for FERC Project.

     This section authorizes FERC, upon the request of the 
licensee for Project No. 9401, after reasonable notice, and in 
accordance with the good faith, due diligence, and public 
interest requirements of section 13 of the Federal Power Act 
and FERCs procedures under such section, to extend the time 
required for commencement of construction for such project 
until August 3, 1999.

          Changes in Existing Law Made by the Bill, as Reported

     In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, the Committee finds that no 
changes in existing law are made by H.R. 1366.