President Obama recently signed two bills into law that are designed to encourage the development of hydroelectric projects, especially certain types with a lower environmental impact. These bills, the Hydropower Regulatory Efficiency Act and the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act, earned overwhelming support in Congress and are designed to assist project developers, investors, and lenders by reducing regulatory requirements or shortening the regulatory approval process for certain types of new hydroelectric projects.

The Hydropower Regulatory Efficiency Act is designed to encourage the development of certain low-impact hydropower facilities by:

  • Increasing from 5 MW to 10 MW the maximum size of a hydroelectric facility to be located at the site of certain existing dams that FERC may exempt, on a case-by-case basis, from its licensing requirements 
  • Increasing to 40 MW the maximum size of a hydropower facility installed at a conduit (i.e., a pipe, canal, or other manmade water conveyance system) that FERC may exempt on a case-by-case basis from its licensing requirements (the previous maximum capacity was 40 MW for certain government-owned projects, but 15 MW for all others)
  • Categorically exempting from FERC’s licensing authority certain hydropower facilities up to 5 MW utilizing non-federally owned conduits
  • Ordering FERC to investigate the feasibility of developing a process to limit the licensing process to two years for (1) hydropower development at existing non-powered dams and (2) closed-loop pumped storage projects 

The Hydropower Regulatory Efficiency Act also provides potential regulatory assistance to all types of hydropower developers by granting FERC the discretion to extend a three-year preliminary permit an additional two years, allowing additional time and flexibility for pre-construction activities before a permittee submits a license application. 

The Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act authorizes the Bureau of Reclamation to contract for the development of hydropower facilities of 5 MW or less at its facilities. The Bureau must provide a right of first refusal to an irrigation district or water users association already operating the applicable conduit.


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