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113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     113-24

======================================================================



 
 BUREAU OF RECLAMATION SMALL CONDUIT HYDROPOWER DEVELOPMENT AND RURAL 
                                JOBS ACT

                                _______
                                

 March 25, 2013.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Hastings of Washington, from the Committee on Natural Resources, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 678]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 678) to authorize all Bureau of Reclamation 
conduit facilities for hydropower development under Federal 
Reclamation law, and for other purposes, having considered the 
same, report favorably thereon without amendment and recommend 
that the bill do pass.

                          Purpose of the Bill

    The purpose of H.R. 678 is to authorize all Bureau of 
Reclamation conduit facilities for hydropower development under 
Federal Reclamation law.

                  Background and Need for Legislation

    Congress established the Bureau of Reclamation 
(Reclamation) in 1902 to ``make the desert bloom.'' To this 
day, Reclamation's water projects play a significant role in 
the West by providing a reliable source of water and power for 
irrigated agriculture and rural and urban communities. While 
the larger, multi-purpose projects such as Grand Coulee and 
Hoover Dams are relatively well-known, Reclamation has a number 
of much smaller projects that significantly contribute to the 
agency's original mission of delivering water and power.
    Many of these smaller, single-purpose water supply projects 
were either authorized by Congress or created administratively 
over the last century. At the time of their creation, 
hydropower was usually not envisioned as a project component 
due to economics, lack of technology and other factors. Today, 
with the improved ability to harness the energy of moving water 
in canals and pipelines (collectively known as ``conduits''), 
many are looking at hydropower development on these smaller 
projects. Combined with non-federal conduits, there is enormous 
potential to develop vast amounts of hydropower at existing 
water supply infrastructure. For example, in the State of 
Colorado alone, over 1,400 megawatts or the equivalent of the 
original hydropower output of Glen Canyon Dam on the Colorado 
River--could be produced from conduit hydropower development. 
Indeed, Reclamation found in a March 2012 report that over 373 
of its sites had the potential for hydropower development:

----------------------------------------------------------------------------------------------------------------
                                                                  Potential installed    Potential Annual Energy
     Energy and capacity by state            Canal sites             capacity  (kW)                (kWh)
----------------------------------------------------------------------------------------------------------------
AZ...................................                       26                    5,061               28,464,753
CA...................................                       20                    1,570                4,802,925
CO...................................                       28                   27,286              100,230,315
ID...................................                        9                    2,771               11,451,814
MT...................................                       32                    9,885               26,316,565
NE...................................                       30                    5,501               13,793,995
NM...................................                        8                    1,427                3,573,029
NV...................................                       16                    1,533                8,671,966
OR...................................                       68                   20,404               75,943,044
SD...................................                        1                      131                  572,000
UT...................................                       12                    3,552                5,965,031
WA...................................                        2                    1,047                2,885,357
WY...................................                      121                   23,460               82,548,053
----------------------------------------------------------------------------------------------------------------

    H.R. 678 seeks to jumpstart hydropower development on 
Reclamation conduits by reducing unnecessary and duplicative 
administrative and regulatory costs while protecting the 
original Congressionally-authorized purposes of these 
facilities from any unmitigated financial or physical impacts 
as a result of such development. The legislation makes it clear 
that hydropower is explicitly authorized at Reclamation's 
conduits. This would allow Reclamation to issue a ``lease of 
power privilege,'' which would give a non-federal entity the 
right to generate hydropower and pay a rental fee to the 
federal government for such generation at a specific 
Reclamation facility. The legislation requires Reclamation to 
offer the lease of power privilege first to the entity 
operating the conduit or the conduit's direct beneficiaries. 
Most Reclamation water supply and delivery projects have an 
arrangement where operation and maintenance activities are 
transferred to the local water beneficiary as a way to reduce 
paperwork and other costs. This ``right of first refusal'' 
provision would significantly decrease conduit hydropower 
planning and study time by reducing staffing costs and time 
affiliated with analyzing competing and multiple conduit 
development applications. If the water beneficiary refuses 
development under Reclamation's terms and conditions, 
Reclamation could consider other proposals.
    The bill also attempts to reduce duplicative regulatory 
costs and paperwork while protecting the environment. A 
substantial regulatory barrier to future conduit hydropower 
development is duplicative environmental analysis. The 
hydropower units envisioned in H.R. 678 would be installed on 
already disturbed ground within existing man-made facilities 
that do not contain endangered fish and wildlife. In addition, 
the water projects in which the hydropower units would be 
contained have already gone through federal environmental 
review. Despite these facts, another National Environmental 
Policy Act (NEPA) analysis must still be done under existing 
federal regulations. For some, this has created a chilling 
effect on hydropower investment. For example, at a Water and 
Power Subcommittee hearing in 2011, one witness indicated that 
installing 15 very small hydropower units on a nearby 
Reclamation canal system in Arizona could cost over $450,000--
or $30,000 per unit--for additional NEPA reviews that would 
ultimately conclude no environmental impacts. These paperwork 
costs would be greater than the actual capital cost of the 
hydropower units.
    These costs and their time-consuming nature help make most 
conduit hydropower installations cost prohibitive. For this 
reason, H.R. 678 exempts ``small conduit hydropower'' (5 
megawatts or less) from NEPA, while retaining NEPA application 
for larger installations and for transmission siting on federal 
land. Each facility would still be subject to environmental 
laws such as the Clean Water Act and other laws that could 
require permits.
    Based on past consideration of this bill during the 112th 
Congress, Reclamation instituted a NEPA Categorical Exclusion 
policy on conduit hydropower development in September 2012. 
However, six months later, this new policy has not been 
implemented on any new conduit hydropower development at 
Reclamation's facilities. In addition, the policy is 
administrative in nature and can be subject to change.
    The net effect of H.R. 678 is that hydropower development 
would be explicitly authorized at almost 47,000 miles of 
Reclamation's conduits and that it will be developed at a cost-
effective way to produce renewable and emissions-free energy 
that will empower local economic development and jobs while 
generating federal revenue and protecting the environment.

                            Committee Action

    H.R. 678 was introduced on February 13, 2013, by 
Congressman Scott Tipton (R-CO). The bill was referred to the 
Committee on Natural Resources, and within the Committee to the 
Subcommittee on Water and Power. On March 5, 2013, the 
Subcommittee held a hearing on the bill. On March 20, 2013, the 
Full Natural Resources Committee met to consider the bill. The 
Subcommittee on Water and Power was discharged by unanimous 
consent. Congresswoman Grace Napolitano (D-CA) offered an 
amendment designated .004; the amendment was not adopted by 
voice vote. The bill was then adopted and ordered favorably 
reported to the House of Representatives by a bipartisan roll 
call vote of 17 to 12, as follows:


                      Section-by-Section Analysis


Section 1. Short title

    This Act may be cited as the ``Bureau of Reclamation Small 
Conduit Hydropower Development and Rural Jobs Act.''

Section 2. Authorization

    Section 2 amends Section 9(c) of the Reclamation Project 
Act of 1939 to authorize ``power'' as a function at all Bureau 
of Reclamation conduits. This authorization will allow the 
agency to pursue hydropower development on conduits under its 
exclusive jurisdiction and within the framework of federal 
reclamation law.
    The section further amends Section 9(c) of the Reclamation 
Project Act of 1939 by adding a number of new provisions 
relating to small conduit hydropower development. Given the 
exclusive hydropower authorization, the bill requires the 
Bureau of Reclamation to offer the ``lease of power privilege'' 
(lease) first to the entity operating the conduit or the 
conduit's direct water user beneficiaries. This provision 
reinforces and strengthens Reclamation's current arrangement of 
giving irrigation districts the preference to lease hydropower 
projects on canals that the districts operate and maintain on 
behalf of the federal government. The Committee understands 
that these longtime operators/beneficiaries know the operating 
intricacies and primary water supply features of the respective 
Reclamation facility, as opposed to some outside, non-local 
interests not invested in water supply delivery. As such, the 
Committee expects Reclamation to work cooperatively and 
communicate directly with these operators/beneficiaries prior 
to and during the lease process, especially because a conduit's 
primary purpose is to deliver water. This provision does not 
prohibit the operators/beneficiaries of the conduit facility 
from participating with any third-party interest in the 
hydropower development on the respective conduit. The Committee 
also expects Reclamation to undergo a good faith effort to 
allow the operators/beneficiaries a reasonable and justifiable 
time frame to accept or reject a conduit lease of power 
privilege offer. Such time frames would factor in the 
complexity of the facility, prior communication with, any 
stated concerns of the operators/beneficiaries and other 
matters.
    This section also streamlines the duplicative federal 
regulatory process impacting hydropower development covered in 
the bill. As referenced above, the facilities are man-made 
canals that have already gone through the National 
Environmental Policy Act (NEPA) process. This section also 
designates the Power Resources Office in Reclamation's Denver 
headquarters as the lead office for small conduit development. 
Unfortunately, a number of irrigation districts pursuing 
hydropower have been unable to receive uniform answers from 
Reclamation on conduit development. This provision will set up 
a centralized location for uniform policy and procedure-setting 
purposes, yet does not prohibit area offices from implementing 
specific conduit development.
    Section two also clarifies that the Western Area Power 
Administration, the Bonneville Power Administration and the 
Southwestern Power Administration are not obligated to purchase 
or market the conduit hydropower generated at Reclamation 
facilities and that none of the costs associated with the 
generation shall be assigned to these agencies' power rates. 
This provision intends to allow the free market to decide who 
will purchase the conduit hydropower. This section also 
provides a number of water supply savings clauses. These 
provisions specifically ensure conduit hydropower development 
will not harm or impact existing water supplies and water 
deliveries and acknowledges that water used for conduit 
hydropower generation is incidental to water supply purposes. 
This incidental purpose specifically means hydropower 
development is subordinate to the original Congressionally-
authorized water supply project purposes.
    The provisions also make clear that Reclamation shall 
notify and consult with the applicable water users benefitting 
from the conduit. The Committee expects the agency to 
communicate in written and verbal form with the operators and 
beneficiaries of a Reclamation conduit facility prior to 
issuing any lease of power privilege or when identifying a 
conduit for potential hydropower development. These operators/
beneficiaries are acutely aware of facility operations and 
would provide valuable knowledge and experience to determine 
the feasibility of the contemplated small-scale hydropower 
development.
    The provisions also require the federal government to 
completely protect the planning, design, construction, 
operation, maintenance and other interests of the federally-
owned conduit. The Committee expects Reclamation to work with 
the applicable conduit operator/beneficiary on these terms and 
conditions prior to issuance. The Committee also expects that 
such terms and conditions will be written and detailed in 
nature, mandatory for the conduit hydropower developer, and 
shall be enforced by Reclamation. The Committee is aware that 
Reclamation has come under significant and justified criticism 
for not adequately communicating with operators/beneficiaries 
on existing conduit hydropower projects. Section 2 also ensures 
that nothing in the bill shall alter or affect any existing 
agreements for the development of conduit hydropower projects 
or disposition of revenues.
    Finally, the section provides definitions for terms used in 
the bill.

            Committee Oversight Findings and Recommendations

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

                    Compliance With House Rule XIII

    1. Cost of Legislation. Clause 3(d)(1) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(2)(B) 
of that rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974. Under clause 3(c)(3) of rule 
XIII of the Rules of the House of Representatives and section 
403 of the Congressional Budget Act of 1974, the Committee has 
received the following cost estimate for this bill from the 
Director of the Congressional Budget Office:

H.R. 678--Bureau of Reclamation Small Conduit Hydropower Development 
        and Rural Jobs Act

    CBO estimates that enacting H.R. 678 would increase federal 
offsetting receipts by $1 million over the 2014-2023 period 
because it would authorize the Bureau of Reclamation to permit 
private entities to develop hydropower at certain facilities 
owned by the bureau. Pay-as-you-go procedures apply because 
enacting the legislation would increase offsetting receipts (a 
credit against direct spending). Enacting the bill would not 
affect revenues.
    H.R. 678 would clarify that the jurisdiction over small 
hydropower development by private entities on all bureau 
irrigation canals and conduits lies solely with the bureau. 
Under current law, the bureau or the Federal Energy Regulatory 
Commission (FERC) has jurisdiction over hydropower development 
at such facilities. CBO expects that this change would result 
in a small increase in receipts from hydropower development 
because the federal government collects no funds from project 
developers if a project is authorized by FERC.
    Typically the bureau's agreements with private developers 
of hydropower facilities on small conduits generate annual 
receipts to the federal government ranging from about $10,000--
at most facilities--up to $100,000 for a few larger sites. 
Selecting the lessee, negotiating the leasing contract, and 
constructing new facilities usually takes two to four years 
depending on the size of the project. Under the legislation, 
CBO expects that the federal government would receive some 
additional receipts beginning two years after enactment and 
that those additional collections would grow to about $200,000 
a year by 2023.
    The Statutory Pay-As-You-Go Act of 2010 establishes budget 
reporting and enforcement procedures for legislation affecting 
direct spending or revenues. H.R. 678 would increase offsetting 
receipts beginning in 2015. The budgetary changes that are 
subject to those pay-as-you-go procedures are shown in the 
following table.

          CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 678, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON NATURAL RESOURCES ON MARCH 20, 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2013   2014   2015   2016   2017   2018   2019   2020   2021   2022   2023  2013-2018  2013-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact.......................      0      0      0      0      0      0      0      0      0      0      0         0         -1
--------------------------------------------------------------------------------------------------------------------------------------------------------

    H.R. 678 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 Aurora Swanson. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.
    2. Section 308(a) of Congressional Budget Act. As required 
by clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives and section 308(a) of the Congressional Budget 
Act of 1974, this bill does not contain any new budget 
authority, spending authority, credit authority, or an increase 
or decrease in revenues or tax expenditures. CBO estimates that 
enacting H.R. 678 would increase federal offsetting receipts by 
$1 million over the 2014-2023 period because it would authorize 
the Bureau of Reclamation to permit private entities to develop 
hydropower at certain facilities owned by the bureau.
    3. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is to authorize all Bureau of 
Reclamation conduit facilities for hydropower development under 
Federal Reclamation law.

                           Earmark Statement

    This bill does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined 
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of 
the House of Representatives.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                       Compliance With H. Res. 5

    1. Directed Rule Making. The Chairman does not believe that 
this bill directs any executive branch official to conduct any 
specific rule-making proceedings.
    2. Duplication of Existing Programs. This bill does not 
establish or reauthorize a program of the federal government 
known to be duplicative of another program. Such program was 
not included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-139 
or identified in the most recent Catalog of Federal Domestic 
Assistance published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169) as relating to other programs.

                Preemption of State, Local or Tribal Law

    This bill is not intended to preempt any State, local or 
tribal law.

         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):

RECLAMATION PROJECT ACT OF 1939

           *       *       *       *       *       *       *


  Sec. 9. (a) * * *

           *       *       *       *       *       *       *

  (c) [The Secretary is authorized to enter into contracts to 
furnish water]
          (1) The Secretary is authorized to enter into 
        contracts to furnish water for municipal water supply 
        or miscellaneous purposes: Provided, That any such 
        contract either [(1) shall] (A) shall require repayment 
        to the United States, over a period of not to exceed 
        forty years from the year in which water is first 
        delivered for the use of the contracting party, with 
        interest not exceeding the rate of 3\1/2\ per centum 
        per annum if the Secretary determines an interest 
        charge to be proper, of an appropriate share as 
        determined by the Secretary of that part of the 
        construction costs allocated by him to municipal water 
        supply or other miscellaneous purposes; or [(2) shall] 
        (B) shall be for such periods, not to exceed forty 
        years, and at such rates as in the Secretary's judgment 
        will produce revenues at least sufficient to cover an 
        appropriate share of the annual operation and 
        maintenance cost and an appropriate share of such fixed 
        charges as the Secretary deems proper, and shall 
        require the payment of said rates each year in advance 
        of delivery of water for said year. Any sale of 
        electric power or lease of power privileges, made by 
        the Secretary in connection with the operation of any 
        project or division of a project, shall be for such 
        periods, not to exceed forty years, and at such rates 
        as in his judgment will produce power revenues at least 
        sufficient to cover an appropriate share of the annual 
        operation and maintenance cost, interest on an 
        appropriate share of the construction investment at not 
        less than 3 per centum per annum, and such other fixed 
        charges as the Secretary deems proper: Provided 
        further, That in said sales or leases preference shall 
        be given to municipalities and other public 
        corporations or agencies; and also to cooperatives and 
        other nonprofit organizations financed in whole or in 
        part by loans made pursuant to the Rural 
        Electrification Act of 1936 and any amendments thereof. 
        Nothing in this subsection shall be applicable to 
        provisions in existing contracts, made pursuant to law, 
        for the use of power and miscellaneous revenues of a 
        project for the benefit of users of water from such 
        project. The provisions of this subsection [respecting 
        the terms of sales of electric power and leases of 
        power privileges shall be in addition and alternative 
        to any authority in existing laws relating to 
        particular projects] respecting the sales of electric 
        power and leases of power privileges shall be an 
        authorization in addition to and alternative to any 
        authority in existing laws related to particular 
        projects, including small conduit hydropower 
        development. No contract relating to municipal water 
        supply or miscellaneous purposes or to electric power 
        or power privileges shall be made unless, in the 
        judgment of the Secretary, it will not impair the 
        efficiency of the project for irrigation purposes.
                  (2) When carrying out this subsection, the 
                Secretary shall first offer the lease of power 
                privilege to an irrigation district or water 
                users association operating the applicable 
                transferred work, or to the irrigation district 
                or water users association receiving water from 
                the applicable reserved work. The Secretary 
                shall determine a reasonable time frame for the 
                irrigation district or water users association 
                to accept or reject a lease of power privilege 
                offer.
                  (3) The National Environmental Policy Act of 
                1969 (42 U.S.C. 4321 et seq.) shall not apply 
                to small conduit hydropower development, 
                excluding siting of associated transmission on 
                Federal lands, under this subsection.
                  (4) The Power Resources Office of the Bureau 
                of Reclamation shall be the lead office of 
                small conduit hydropower activities conducted 
                under this subsection.
                  (5) Nothing in this subsection shall obligate 
                the Western Area Power Administration, the 
                Bonneville Power Administration, or the 
                Southwestern Power Administration to purchase 
                or market any of the power produced by the 
                facilities covered under this subsection and 
                none of the costs associated with production or 
                delivery of such power shall be assigned to 
                project purposes for inclusion in project 
                rates.
                  (6) Nothing in this subsection shall alter or 
                impede the delivery and management of water by 
                Bureau of Reclamation facilities, as water used 
                for conduit hydropower generation shall be 
                deemed incidental to use of water for the 
                original project purposes. Lease of power 
                privilege shall be made only when, in the 
                judgment of the Secretary, the exercise of the 
                lease will not be incompatible with the 
                purposes of the project or division involved, 
                nor shall it create any unmitigated financial 
                or physical impacts to the project or division 
                involved, and shall be on such terms and 
                conditions as in the judgment of the Secretary 
                in consultation with the appropriate irrigation 
                district or water users association, will 
                adequately protect the planning, design, 
                construction, operation, maintenance, and other 
                interests of the United States and the project 
                or division involved.
                  (7) Nothing in this subsection shall alter or 
                affect any existing agreements for the 
                development of conduit hydropower projects or 
                disposition of revenues.
                  (8) In this subsection:
                          (A) Conduit.--The term ``conduit'' 
                        means any Bureau of Reclamation 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) Irrigation district.--The term 
                        ``irrigation district'' means any 
                        irrigation, water conservation, 
                        multicounty water conservation 
                        district, or any separate public entity 
                        composed of two or more such districts 
                        and jointly exercising powers of its 
                        member districts.
                          (C) Reserved work.--The term 
                        ``reserved work'' means any conduit 
                        that is included in project works the 
                        care, operation, and maintenance of 
                        which has been reserved by the 
                        Secretary, through the Commissioner of 
                        the Bureau of Reclamation.
                          (D) Transferred work.--The term 
                        ``transferred work'' means any conduit 
                        that is included in project works the 
                        care, operation, and maintenance of 
                        which has been transferred to a legally 
                        organized water users association or 
                        irrigation district.
                          (E) Small conduit hydropower.--The 
                        term ``small conduit hydropower'' means 
                        a facility capable of producing 5 
                        megawatts or less of electric capacity.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

    H.R. 678 seeks to generate more hydropower at existing 
facilities by developing conduit and in-canal hydropower. Just 
like water recycling, water efficiencies, and energy 
efficiencies projects across the west, small hydropower 
projects on existing water infrastructure can have a positive 
cumulative impact.
    H.R. 678 would amend the Reclamation Project Act of 1939 to 
facilitate the private development of small conduit hydropower 
at Bureau of Reclamation (Reclamation) facilities. The 
legislation clarifies the question of whether Federal Energy 
Regulatory Commission (FERC) or Reclamation has jurisdiction 
over private hydropower development on Reclamation conduits by 
authorizing Reclamation to develop power at all such 
facilities. Small conduit hydropower projects are defined as 
projects producing 5-megawatts or less. The Power Marketing 
Administrations are not obligated to purchase or market the 
power produced. Unfortunately, the legislation also contains an 
unnecessary National Environmental Policy Act (NEPA) waiver.
    Almost identical legislation (H.R. 2842) was considered by 
the House during the 112th Congress. Since H.R. 2842's 
consideration, Reclamation released their final Directives & 
Standards for the Lease of Power Privilege (LOPP) on September 
28, 2012. Reclamation, on its own accord, applied a categorical 
exclusion (CE) under NEPA to small conduit hydropower projects 
as part of its final Directives & Standards for LOPP process. 
In fact, Reclamation's CE went even further: it can be used to 
expedite a wide variety of low-impact hydropower projects built 
on Reclamation's water infrastructure. Waiver of NEPA in this 
bill is unnecessary, since Reclamation has already implemented 
guidance for a CE. The legislation seeks to solve a NEPA 
problem that does not exist.
    The Majority argues that NEPA process for the LOPP is both 
time intensive and costly. Yet the witnesses who offered 
supporting testimony provided only vague theoretical estimates 
for environmental compliance costs without having actually 
developed or entered into a lease to develop a conduit 
hydropower project using Reclamation's LOPP process. 
Furthermore, the Committee has not received testimony from any 
developers who have demonstrated, based on experience, that 
Reclamation's NEPA process for LOPP--with or without the 
categorical exclusion--has posed a problem or an obstacle to 
development. FERC has used a CE for more than 15 years, 
demonstrating that conduit projects can be permitted quickly. 
Reclamation's Directives & Standards for the LOPP apply a CE 
that is functionally identical to FERC's small conduit project 
CE.
    The Majority argues that the CE does not work because no 
one has used it yet. The only reason that the CE has not yet 
been tested is that since updating its Directives & Standards 
in late September, Reclamation has not received a formal LOPP 
application, and therefore has not been able to apply a CE.
    Despite these new developments, the legislation that passed 
out of Committee in this Congress still contains the same 
unnecessary NEPA waiver that stopped the legislation from 
becoming law last Congress. There is a misconception that NEPA 
is solely an environmental issue. NEPA looks at the impacts on 
ALL uses of the system: irrigation, the environment, private 
property rights and more. NEPA analysis also helps Reclamation 
to ensure that any new project does not interfere with the 
primary authorized purposes of the project.
    Committee Democrats support legislation that promotes small 
conduit hydropower on Reclamation facilities while respecting 
and acknowledging the need for NEPA review, yet H.R. 678 is not 
such legislation. It unnecessarily waives NEPA and therefore 
disregards impacts on all uses of the system. Had the bill in 
the previous Congress not contained a NEPA waiver, it would 
have most likely become law. Instead, the Majority committed 
the Committee's time and resources to moving a nearly identical 
version of the bill that died in the 112th Congress and has 
slim chance of approval in the Senate. In an effort to work 
with the Majority, the Minority offered an amendment that would 
strike the unnecessary NEPA waiver. Unfortunately, our 
amendment was not adopted. For this reason we oppose this 
legislation.

                                   Edward J. Markey.
                                   Grace F. Napolitano.