Bill would exempt hydro project non-federal land from FERC use fees

A lawyer for the Federal Energy Regulatory Commission told a Senate panel Sept. 19 that the commission has no objection to legislation that would prevent FERC from collecting federal land use fees from hydroelectric projects for land the federal government no longer owns.

The Senate Water and Power Subcommittee conducted a hearing on S.3265, a bill by Sen. Lisa Murkowski, R-Alaska, that would remove FERC's authority to collect land use fees for hydro project land that has been sold, exchanged, or otherwise transferred from federal ownership but that still is subject to a federal power site reservation.

The Federal Power Act requires non-federal hydroelectric project licensees to pay the United States reasonable annual charges to compensate for the use of federal lands. The revenues are allocated 12.5 percent to federal miscellaneous receipts, 50 percent to the Reclamation Fund, and 37.5 percent to the state or Indian reservation in which the project is located.

Under proposed rulemaking RM11-6, FERC currently is revising its formula for calculating government land use fees, which is expected to result in significant increases in fees paid by FERC-licensed hydroelectric projects.

The Murkowski bill deals only with a narrow aspect of land use fees, those situations in which the federal government actually transferred some lands to the licensee or another owner but retained a power site reservation. A licensee group filed comments on the rulemaking in January citing as examples the 134-MW Yale project (No. 2071) in Washington and four Alaska projects, 16.5-MW Green Lake (No. 2818), 22-MW Swan Lake (No. 2911), 20-MW Tyee Lake (No. 3015), and 36-MW Terror Lake (No. 2743) that now are located wholly or partially on non-federal lands, but still are assessed federal land use fees for that land.

FERC Deputy Associate General Counsel John Katz testified Sept. 19 that FERC has no position on the proposed legislation, saying S.3265 would affect neither FERC's ability to protect developmental and non-developmental values nor FERC's funding.

"It has been the commission's policy for many years that, where federal lands subject to a power site reservation are transferred to a licensee, the licensee still must pay annual charges for the use of the lands, given that the United States retains the power interest in the lands," Katz said.

"The commission has no record of the amount of acreage that falls into this category, because the commission assesses federal land use charges based on the amount of federal acreage that each licensed project occupies (typically, taken from information in a license application or license order) and for this purpose there is no practical distinction between lands that are wholly owned by the United States and those that have been transferred to a private entity subject to a power site reservation."

Unless a licensee elects to identify any acreage that has been transferred from federal ownership but is still subject to a power site reservation, Katz said the commission does not have that information.

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