Energy & Environmental Law Adviser

Congress Passes Legislation to Assist Small Scale Hydropower Development

Posted in Hydroelectric

In a summer marked by partisan bickering on Capitol Hill, little noticed energy legislation moved through Congress before the traditional August recess. On August 1, 2013, the Senate approved by unanimous consent H.R. 267, the Hydropower Regulatory Efficiency Act, and H.R. 678, Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act, two bills aimed at relieving some of the regulatory constraints that have impeded the development of small scale hydropower production in recent years. Both bills had sailed through the House of Representatives earlier this year, passing by overwhelming majorities.  With this action by the Senate, the bills now head to the President’s desk for his approval.

In brief, each bill would facilitate the development of small hydropower production.  H.R. 267, which was introduced by Congressman McMorris-Rogers (R-WA), changes select Federal Energy Regulatory Commission (FERC) regulations to make it easier to develop smaller output hydropower stations. FERC issues licenses and regulates hydroelectric facilities under the Federal Power Act.  H.R. 267 Act amends the current law to allow FERC to exempt small hydroelectric facilities with a generating capacity of 10 megawatts or less from FERC’s licensing requirements.  Under current law, only projects of up to 5 MW are exempt. The legislation further allows FERC to exempt from the licensing process small conduit projects (described below) with an installed capacity of 5 MW or less and certain conduit projects with capacity between 5 and 40 MW.

The Hydropower Regulatory Efficiency Act will also foster hydro power development at conduits such as “any 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.” Small conduit projects under 5 MW would be excluded from FERC’s federal licensing requirements following a 45-day FERC public noticing period if they meet certain criteria. As noted above, the H.R. 267 allows FERC to exempt projects between 5 MW and 40 MW from federal licensing requirements.

Finally, the Hydropower Regulatory Efficiency Act allows FERC to extend the period of a preliminary permit once for not more than 2 additional years beyond the 3 years currently permitted, for a total of five years, to allow a permit holder enough time to develop and file a license application. Under current law, a permittee may file for an extension of its permit so long as the extension would not cause the total term to exceed three years.

In addition to the H.R. 267, the Senate approved Congressman Tipton’s (R-CO) bill, H.R. 678 which will authorize all Bureau of Reclamation conduit facilities for hydropower development under Federal Reclamation law. It changes federal regulations to foster the development of small conduit hydropower projects. Notably, H.R. 678 allows the Bureau of Reclamation to apply its categorical exclusion process under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) to certain small conduit hydropower development, excluding siting of associated transmission facilities on Federal lands. In addition, it calls for first offering leases of power privilege to an irrigation district or water users association that operates the applicable transferred conduit or that receives water from the applicable reserved conduit. If the irrigation district or water users association declines a lease of power privilege, the lease of power privilege will be offered to other parties. Thus, the newly passed legislation requires that preference is offered to water user organizations for the development of canal and conduit hydropower under the lease of power privilege process.