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                                                       Calendar No. 495
106th Congress                                                   Report
                                 SENATE
 2d Session                                                     106-265

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



 
         DEADLINE EXTENSION OF HYDROELECTRIC PROJECT IN ALABAMA

                                _______
                                

                 April 12, 2000.--Ordered to be printed

                                _______
                                

  Mr. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S.1836]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1836) to extend the deadline for 
commencement of construction of a hydroelectric project in the 
State of Alabama, having considered the same, reports favorably 
thereon without amendment and recommends that the bill do pass.

                         purpose of the measure

    The purpose of S. 1836 is to require the Federal Energy 
Regulatory Commission, upon the request of the licensee, to 
extend for three consecutive two year periods the deadline for 
the licensee to commence construction of hydroelectric project 
No. 7115.

                          background and need

    Section 13 of the Federal Power Act requires a 
hydroelectric licensee to commence the construction of its 
project within two years of the date of the issuance of the 
license. That deadline can be extended by the FERC one time for 
as much as two additional years. Unless additional legislation 
is enacted, if construction has not commenced by the end of the 
time period the license is terminated by the FERC. Thus, in the 
absence of this legislation, the license will be terminated.
    On May 22, 1987, the Commission issued a license to the 
city of Dothan, Alabama, and the Municipal Electric Authority 
of Georgia (Authority) to construct and operate the 24-megawatt 
George W. Andrews Dam Project, FERC No. 7115, to be located at 
the U.S. Army Corps of Engineers' George W. Andrews Lock and 
Dam on the Chattahoochee River in Houston County, Alabama and 
Early County, Georgia. In 1989, the city of Dothan withdrew 
from the license. At the Authority's request, the deadline for 
the commencement of project construction, originally May 21, 
1989, was extended by the Commission to May 1, 1991.
    In 1990, the Commission accepted the Authority's surrender 
of the license for the project, which the Authority had 
concluded was financially infeasible. However, less than 30 
days later, the acceptance was rescinded so that the Commission 
could consider an application for the Authority to transfer the 
project license to Consolidated Hydro Southeast, Inc. In order 
to ensure that the municipal preference the Authority had 
enjoyed in the licensing proceeding did not improperly inure to 
the benefit of Consolidated, a non-municipality, the Commission 
established a competitive transfer proceeding. Two additional 
entities applied separately for the license: Southeastern 
Hydro-Power, Inc. (Southeastern), and Synergics, Inc. At the 
Authority's request, the Commission stayed, effective January 
29, 1991, the license's deadline for the commencement of 
project construction pending the outcome of that proceeding. 
This meant that, for every day the stay was in effect, the 
construction deadline was pushed back a day.
    For a variety of reasons, including issues concerning the 
project design, the competitive transfer proceeding was very 
lengthy. Finally, in 1997, the Commission transferred the 
project license to Southeastern, but kept the construction-
deadline stay in place in order to afford Southeastern time to 
prepare and file an application to amend the license consistent 
with its approved transfer proposal. In May 1999, the 
Commission approved transfer of the project license from 
Southeastern to Homestead Energy Resources, LLC (Homestead). In 
June 1999 the Commission approved the amendment to the license, 
and the following month it lifted the stay of the construction 
deadline, effective July 15, 1999. At that point 113 days 
remained before the deadline. In September 1999, the Commission 
granted Homestead's request for more time to prepare the 
necessary pre-construction filings, obtain necessary 
authorizations, and commence construction. Pursuant to that 
order, the construction deadline is now September 21, 2000.

                          legislative history

    S. 1836 was introduced on November 1, 1999. A hearing was 
held by the Subcommittee on Water and Power on March 22, 2000.

            committee recommendation and tabulation of votes

    The Senate Committee on Energy and Natural Resources, in 
open business session on April 5, 2000, by a voice vote with a 
quorum present, recommends that the Senate pass the bill 
without amendment.

                   cost and budgetary considerations

    The Congressional Budget Office estimate of the costs of 
this measure has been requested but was not received at the 
time the report was filed. When the report is available, the 
Chairman will request it to be printed in the Congressional 
Record for the advice of the Senate.

                      regulatory impact evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out this measure.
    The bill is not a regulatory measure in the sense of 
imposing Government-established standards or significant 
economic responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the provisions of the bill. Therefore, there would be no impact 
on personal privacy.
    Little, if any, additional paperwork would result from the 
enactment of this measure.

                        executive communications

    The pertinent communications received by the Committee from 
the Federal Energy Regulatory Commission setting forth 
Executive agency views relating to this measure are set forth 
below:

  Statement of James J. Hoecker, Chairman, Federal Energy Regulatory 
                               Commission

    Mr. Chairman and members of the subcommittee, I appreciate 
the opportunity to comment on S. 1836, a bill to extend the 
construction deadlines applicable to a hydroelectric project 
licensed by the Federal Energy Regulatory Commission.
    Section 13 of the Federal Power Act requires that 
construction of a licensed project be commenced within two 
years of issuance of the license. Section 13 authorizes the 
Commission to extend this deadline once, for up to two 
additional years. If project construction has not commenced by 
this deadline, the Commission is required to terminate the 
license.
The project
    On May 22, 1987, the Commission issued a license to the 
City of Dothan, Alabama, and the Municipal Electric Authority 
of Georgia (Authority) to construct and operate the 24-megawatt 
George W. Andrew Dam Project, FERC No. 7115, to be located at 
the U.S. Army Corps of Engineers' George W. Andrews Lock and 
Dam on the Chattahoochee River in Houston County, Alabama and 
Early County, Georgia. In 1989, the City of Dothan withdrew 
from the license. At the Authority's request, the deadline for 
the commencement of project construction, originally May 21, 
1989, was extended by the Commission on May 21, 1991.
    In 1990, the Commission accepted the Authority's surrender 
of the license for the project, which the Authority had 
concluded was financially infeasible. However, less than 30 
days later, the acceptance was rescinded so that the Commission 
could consider an application for the Authority to transfer the 
project license to Consolidated Hydro Southeast, Inc. In order 
to ensure that the municipal preference the Authority had 
enjoyed in the licensing proceeding did not improperly inure to 
the benefit of Consolidated, a non-municipality, the Commission 
established a competitive transfer proceeding. Two additional 
entities applied separately for the license: Southeastern 
Hydro-Power, Inc. (Southeastern), and Synergics, Inc. At the 
Authority's request, the Commission stayed, effective January 
29, 1991, the license's deadline for the commencement of 
project construction pending the outcome of that proceeding. 
This meant that, for every day the stay was in effect, the 
construction deadline was pushed back a day.
    For a variety of reasons, including issues concerning the 
project design, the competitive transfer proceeding was very 
lengthy. Finally, in 1997, the Commission transferred the 
project license to Southeastern, but kept the construction-
deadline stay in place in order to afford Southeastern time to 
prepare and file an application to amend the license consistent 
with its approved transfer proposal. In May 1999, the 
Commission approved transfer of the project license from 
Southeastern to Homestead Energy Resources, LLC (Homestead). In 
June 1999 the Commission approved the amendment to the license, 
and the following month it lifted the stay of the construction 
deadline, effective July 15, 1999. At that point 113 days 
remained before the deadline. In September 1999, the Commission 
granted Homestead's request for more time to prepare the 
necessary pre-construction filings, obtain necessary 
authorizations, and commence construction. Pursuant to that 
order, the construction deadline is now September 21, 2000. 
This date is arrived at by adding to the four years after the 
date of license issuance the nine years and four months that 
the deadline was stayed.
    Construction of the project entails installation of new 
headworks, a powerhouse, a tailrace, and an 18-mile-long 
primary transmission line.
S. 1836
    S. 1836 would require the Commission, upon the request of 
the licensee and an accordance with the good faith, due 
diligence, and public interest requirements of Section 13 of 
the Federal Power Act, to extend deadline for commencement of 
construction of Project No. 7115 for up to six additional years 
after September 21, 2000, the current deadline.
    As a general principle, I do not support the enactment of 
bills authorizing or requiring construction extensions for 
individuals projects. However, if such extensions are 
authorized by the Congress, I would object to granting a 
licensee more than ten years from the issuance date of the 
license to commence construction. In my view, ten years is a 
more than reasonable period for a licensee to determine 
definitively whether a project is economically viable and to 
sign a power purchase agreement. If a licensee cannot meet such 
a deadline, I believe the license should be terminated pursuant 
to Section 13, so that the site is once again available for 
whatever uses current circumstances may warrant.
    Where the Commission has stayed the construction deadlines, 
or the entire license, for example pending judicial appeal of 
the license or the completion of pre-construction proceedings, 
the period of the stay is not counted in applying the 10-year 
policy.
    Because S. 1836 would not extend the construction 
commencement date beyond ten non-stayed years from the issuance 
of the Project No. 7115 license, I have no specific objection 
to its enactment.

                        changes in existing law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by S. 1836 as ordered 
reported.