[House Report 115-954]
[From the U.S. Government Publishing Office]
115th Congress } { REPORT
HOUSE OF REPRESENTATIVES
2d Session } { 115-954
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ENVIRONMENTAL COMPLIANCE COST TRANSPARENCY ACT OF 2018
_______
September 20, 2018.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Bishop of Utah, from the Committee on Natural Resources, submitted
the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 5556]
[Including cost estimate of the Congressional Budget Office]
The Committee on Natural Resources, to whom was referred
the bill (H.R. 5556) to provide for transparency and reporting
related to direct and indirect costs incurred by the Bonneville
Power Administration, the Western Area Power Administration,
the Southwestern Power Administration, and the Southeastern
Power Administration related to compliance with any Federal
environmental laws impacting the conservation of fish and
wildlife, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Environmental Compliance Cost
Transparency Act of 2018''.
SEC. 2. TRANSPARENCY AND REPORTING.
(a) Information Included in Monthly Billing to Power Customers.--The
Administrators of each of the Bonneville Power Administration, the
Western Area Power Administration, the Southwestern Power
Administration, and the Southeastern Power Administration shall include
in monthly billings sent to each of their power customers information
estimating and reporting all costs and factors affecting total power
costs, including the costs of the customer's share of the direct and
indirect costs that are incurred by the administration related to
compliance with any Federal environmental laws impacting the
conservation of fish and wildlife considered by the Administrator
concerned, at that Administrator's sole discretion after consultation
with consumers, to be relevant.
(b) Direct Costs.--Direct costs reported under this section shall
include Federal agency obligations related to costs of studies;
capital, operation, maintenance, and replacement costs; and staffing
costs.
(c) Indirect Costs.--Indirect costs reported under this section shall
include foregone generation (including as a result of water lost to
comply with any Federal environmental laws impacting the conservation
of fish and wildlife), and replacement power costs, including the net
costs of any transmission.
(d) Coordination.--The Commissioner of the Bureau of Reclamation and
the head of any other affected Federal agency shall assist the
Administrators with the identification of the costs.
(e) Report.--No later than January 30 of each year, each of the
Administrators referred to in subsection (a), in coordination with the
Bureau of Reclamation and other affected Federal agencies, shall
provide an annual report to the appropriate committees of the House of
Representatives and the Senate that includes--
(1) all estimated costs and factors affecting total power
costs, including estimates of the total direct and indirect
costs that are incurred by the administration related to
compliance with any Federal environmental laws impacting the
conservation of fish and wildlife considered by the
Administrator concerned, at that Administrator's sole
discretion after consultation with consumers, to be relevant;
and
(2) the sources of replacement power.
PURPOSE OF THE BILL
The purpose of H.R. 5556 is to provide for transparency and
reporting related to direct and indirect costs incurred by the
Bonneville Power Administration, the Western Area Power
Administration, the Southwestern Power Administration, and the
Southeastern Power Administration related to compliance with
any federal environmental laws impacting the conservation of
fish and wildlife.
BACKGROUND AND NEED FOR LEGISLATION
Under the Endangered Species Act of 1973 (ESA, 16 U.S.C.
1531 et seq.), the Secretary of the Interior has responsibility
for plants, wildlife and inland fish. The Secretary of Commerce
is responsible for implementing the ESA with respect to mostly
marine and anadromous species. Each agency follows a regulatory
process to list a species as ``endangered'' or ``threatened''
based on best available scientific and commercial data.\1\ If
federal actions--including permit approval or funding actions--
may affect a listed species, Section 7 of the ESA requires
federal agencies to consult with the Secretaries to ``insure
that any action authorized, funded or carried out by such
agency . . . is not likely to jeopardize the continued
existence'' of a species.\2\
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\1\Id., at p. 4.
\2\16 U.S.C. 1536.
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The ESA significantly impacts the four Power Market
Administrations (PMAs), their wholesale electricity customers,
and ultimately, the end-use retail customer. The PMAs market
and deliver (via transmission lines) electricity generated at
federal dams and reservoirs operated by the Bureau of
Reclamation and the U.S. Army Corps of Engineers.\3\ Hydropower
generated at these facilities, particularly in the western
United States, is first used to provide electricity to operate
irrigation pumps.\4\ Any excess power is then primarily sold by
the PMAs to preference customers, which, by federal statute,
largely consist of publicly-owned and cooperative-owned
utilities, Indian tribes, federal entities, investor-owned
utilities, and some industrial customers.\5\ Under numerous
authorizing statutes, the power is sold at rates designed to
repay the federal capital investment in federal electricity
generation and transmission facilities, annual operation and
maintenance of such facilities and federal staffing. These
rates also include the costs of environmental regulations and
replacement power services resulting from these mandates.\6\ In
certain regions of the country, such as the Pacific Northwest,
the Intermountain West and the Upper Midwest, federal power
generation and transmission services play a very significant
regional role in their respective electricity markets, as
discussed below.
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\3\Bracmort, Kelsi. ``Hydropower: Federal and Nonfederal
Investment.'' 22 January 2013. R42579. Pg. 9.
\4\Id. at 1.
\5\https://www.eia.gov/todayinenergy/detail.php?id=11651.
\6\https://www.bpa.gov/news/pubs/FactSheets/fs-201305-BPAs-Fish-
and-Wildlife-Program-the-Northwest-working-together.pdf.
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PMA Service Areas
There are numerous federal environmental statutes impacting
the PMAs, including the ESA, the Central Valley Project
Improvement Act (Public Law 102-575)\7\ and the Grand Canyon
Protection Act (Public Law 102-575)\8\ which have ultimately
altered and decreased some federal power generation due to
modification of water releases from dams. Since the PMAs are
typically under contract with their customers to provide a set
amount of power, the PMAs must purchase replacement power on
the open market to make up for lost federal generation to meet
these contractual needs. Additionally, the PMAs experience
costs for habitat restoration and protection, structural
modifications to facilities, fish hatcheries, and other on-the-
ground work. Much of these costs are built into the rate base
and have been factors in recent rate hikes, as discussed below.
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\7\http://www.usbr.gov/mp/cvpia/title_34/public_law_complete.html.
\8\http://www.usbr.gov/uc/legal/gcpa1992.html .
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Bonneville Power Administration (BPA)
BPA, created in 1937, markets and delivers wholesale
electrical hydropower generated at 31 federal facilities (known
as the Federal Columbia River Power System or FCRPS) to
wholesale customers in Oregon, Washington and parts of Idaho,
Montana, Wyoming and Nevada.\9\ BPA has a large impact on the
region's electricity market, providing nearly a third of the
region's electricity sales and almost three-fourths of its
transmission capacity.\10\ BPA also sells a significant amount
of ``surplus'' energy to California utilities in some years.
Like the other PMAs, BPA is required to set power rates
sufficient to repay the federal investment and recover costs
associated with the operation and maintenance of the federal
facilities. Costs associated with fish and wildlife enhancement
and protection attributable to power production in the
Columbia/Snake River system are imposed on wholesale customers
who then pass it on to their customers.
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\9\https://www.bpa.gov/Finance/FinancialInformation/AnnualReports/
Documents/AR2017.pdf, at 2.
\10\Id.
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Since the passage of the Northwest Power Act (Public Law
96-501)\11\ in 1980, BPA ratepayers have financed the agency's
Fish and Wildlife Program.\12\ This program was created to
``protect, mitigate and enhance'' fish and wildlife populations
and their habitat in the Columbia Basin.\13\ The costs of this
program include lost power generation caused by water spillage
used for environmental purposes, power purchases to replace
lost generation, and on-the-ground work including structural
modifications at dams, habitat protection, predator mitigation,
research and fish hatcheries.\14\ The vast majority of these
costs are dedicated to ESA compliance. At a June 2013 Water and
Power Subcommittee hearing, Mr. Scott Corwin, Executive
Director of the Public Power Council, which represents
consumer-owned utilities in the Pacific Northwest, testified,
``These efforts cost around $700 million per year (about 25 to
30 percent of the wholesale power cost), and some of the
measures impose large constraints on the production of clean
hydropower.''\15\
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\11\https://www.gpo.gov/fdsys/pkg/STATUTE-94/pdf/STATUTE-94-
Pg2697.pdf.
\12\https://www.bpa.gov/efw/FishWildlife/Pages/default.aspx.
\13\https://www.bpa.gov/news/pubs/FactSheets/fs-201305-BPAs-Fish-
and-Wildlife-Program-the-Northwest-working-together.pdf.
\14\https://www.bpa.gov/news/pubs/FactSheets/fs-201601-BPA-invests-
in-fish-and-wildlife.pdf.
\15\Testimony of Mr. Scott Corwin before the House Water and Power
Subcommittee, June 26, 2013, p. 5.
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In fiscal year 2017, the total fish and wildlife costs
including forgone revenue and power purchases for BPA was
reported to be $450.4 million. Much of that cost involves ESA-
listed salmon.\16\
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\16\https://www.nwcouncil.org/sites/default/files/2018-4.pdf, p. 8.
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Western Area Power Administration (WAPA)
WAPA, created in 1977, markets and delivers an average of
10,000 megawatts of hydro-electricity produced at Bureau of
Reclamation and Army Corps of Engineers dams.\17\ WAPA serves
about 700 wholesale customers over 1.3 million square miles in
Arizona, California, Colorado, Iowa, Kansas, Minnesota,
Montana, Nebraska, Nevada, New Mexico, North Dakota, South
Dakota, Texas, Utah and Wyoming through a 17,000-mile federal
transmission system.\18\ These wholesale customers, in turn,
supply 40 million retail customers.\19\ WAPA is financed by
annual customer funding and advance payments and
appropriations, which are then reimbursed with interest through
customer contractual repayment obligations. Since the Bureau of
Reclamation and the Army Corps of Engineers are required to
modify their hydropower generation services and flow
requirements to account for ESA and other federal mandates,
WAPA has lost base hydropower and must purchase replacement
power, as discussed below.
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\17\https://www.wapa.gov/newsroom/Publications/Documents/How-WAPA-
Does-Business.pdf p. 1, p. 3.
\18\https://www.wapa.gov/newsroom/FactSheets/Pages/About.aspx.
\19\https://www.wapa.gov/newsroom/FactSheets/Documents/WAPA-at-a-
glance.pdf.
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WAPA's customers are impacted by many ESA requirements,
including but not limited to constraints on releases of water
from dams. In one dramatic case, ESA-impacted flows have
contributed to the loss of over a third--or about 400-500
megawatts--of the average annual production of Glen Canyon Dam
at a cost of $50 million.\20\ At a 2011 Water and Power
Subcommittee legislative hearing on a similar bill, Ms. Leslie
James, Executive Director of the Colorado River Energy
Distributors Association (CREDA), testified:
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\20\Testimony of Mr. Timothy Meeks before the House Water and Power
Subcommittee, March 15, 2011.
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Specific examples of the environment-related costs
assessed to the [Colorado River Storage Project] are
the programmatic (i.e., ``direct'') costs of the Glen
Canyon Adaptive Management Program (AMP) and the Upper
Basin Endangered Fish Recovery Implementation Program
(RIP). Since approximately $743 million in purchased
power costs have been incurred by WAPA since 2000,
CREDA believes it is important that the customers have
visibility of those costs, which are included in their
firm power rates.\21\
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\21\Testimony of Ms. Leslie James before the House Water and Power
Subcommittee, September 22, 2011, p. 1.
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These costs, as well as drought, play a significant role in
WAPA's wholesale electricity rates.
H.R. 5556, Environmental Compliance Cost Transparency Act of 2018
In light of rising and uncertain federal environmental
compliance costs and questions over their effectiveness--
particularly in the Pacific Northwest--some PMA customers have
called for greater transparency in the way such costs are
reported. For example, the Northwest RiverPartners, a
consortium of water and power users, found in a 2005 poll that
``more than 70% either don't know how much they pay for salmon
recovery or believe less than 5% of their monthly bills go to
salmon recovery'' in the Northwest.\22\
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\22\http://mcmorris.house.gov/
mcmorris_rodgers_introduces_legislation_to_shed_light_on_esa_
compliance_costs-3/.
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As a result, H.R. 5556, as reported, requires the PMAs to
estimate and report all costs and factors affecting total power
costs, including the direct and indirect costs associated with
any federal environmental laws impacting the conservation of
fish and wildlife to each wholesale firm power customer on a
monthly billing basis. Direct costs are defined as ``Federal
agency obligations related to costs of studies; capital,
operation, maintenance, and replacement costs; and staffing
costs.''\23\ Indirect costs are defined as ``foregone
generation and replacement power costs, including the net costs
of any transmission.''\24\ Under the bill, the PMAs provide the
information to their wholesale customers, who can then decide
how or whether to report this information to their retail
consumers.
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\23\H.R. 5556, Section 2(b).
\24\H.R. 5556, Section 2(c).
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During Committee consideration of the bill, Ranking Member
Raul M. Grijalva offered a successful amendment that expanded
the information to be reported to include all costs and factors
affecting total power costs.
COMMITTEE ACTION
H.R. 5556 was introduced on April 18, 2018, by Congressman
Paul A. Gosar (R-AZ). The bill was referred to the Committee on
Natural Resources, and within the Committee to the Subcommittee
on Water, Power and Oceans. On July 11, 2018, the Subcommittee
held a hearing on the legislation. On July 18, 2018, the
Natural Resources Committee met to consider the bill. The
Subcommittee was discharged by unanimous consent. Congressman
Raul M. Grijalva (D-AZ) offered an amendment designated 180; it
was adopted by unanimous consent. Congressman Jim Costa (D-CA)
offered an amendment designated #1; it was adopted by unanimous
consent. No further amendments were offered, and the bill, as
amended, was ordered favorably reported to the House of
Representatives by unanimous consent.
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 AND CONGRESSIONAL BUDGET ACT
1. Cost of Legislation and the Congressional Budget Act.
With respect to the requirements of clause 3(c)(2) and (3) of
rule XIII of the Rules of the House of Representatives and
sections 308(a) and 402 of the Congressional Budget Act of
1974, the Committee has received the following estimate for the
bill from the Director of the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 13, 2018.
Hon. Rob Bishop,
Chairman, Committee on Natural Resources,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5556, the
Environmental Compliance Cost Transparency Act of 2018.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kathleen
Gramp.
Sincerely,
Keith Hall,
Director.
Enclosure.
H.R. 5556--Environmental Compliance Cost Transparency Act of 2018
Summary: Four federal power marketing administrations
(PMAs) within the Department of Energy (DOE)--the Bonneville
Power Administration (BPA), Southeastern Power Administration
(SEPA), Southwestern Power Administration (SWPA), and Western
Area Power Administration (WAPA)--sell electricity produced at
federal hydroelectric and other power facilities to wholesale
customers in western and southeastern states. H.R. 5556 would
direct those PMAs to provide customers with certain information
each month.
CBO estimates that implementing the bill would cost $10
million over the 2019-2023 bill period, assuming appropriation
of the necessary amounts.
Enacting H.R. 5556 would increase direct spending by BPA;
therefore, pay-as-you go procedures apply. However, CBO
estimates that the net effect on direct spending would be
negligible. The bill would not affect revenues.
CBO estimates that enacting H.R. 5556 would not
significantly increase net direct spending or on-budget
deficits in any of the four consecutive 10-year periods
beginning in 2029.
H.R. 5556 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Estimated cost to the Federal Government: The estimated
budgetary effect of H.R. 5556 is shown in the following table.
The costs of the legislation fall within budget function 270
(energy).
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By fiscal year, in millions of dollars--
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2018 2019 2020 2021 2022 2023 2019-2023
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INCREASES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level............ 0 4 3 1 1 1 10
Estimated Outlays........................ 0 2 5 1 1 1 10
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Basis of estimate: H.R. 5556 would direct four PMAs to
revise their monthly billing statements to include estimates of
each customer's share of the direct and indirect costs of
complying with federal laws regarding fish and wildlife
conservation, as well as information about other factors that
affect power costs. Other federal agencies would be directed to
assist those PMAs in developing those estimates and in
preparing annual reports to the Congress.
The operations of three PMAs--WAPA, SWPA, and SEPA--are
financed by annual appropriation acts. By contrast, BPA's
expenditures affect direct spending because they are not
subject to appropriation.\1\ All four agencies are required by
law to set electricity prices sufficient to recover most costs
over the useful life of their assets or activities.
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\1\BPA is authorized to finance its costs by directly spending
income received from the sale of electricity and by borrowing finds
from the Treasury, subject to statutory limits on the amount of debt
that can be outstanding at any time.
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Using information from the affected agencies, CBO estimates
that implementing the bill would cost about $10 million over
the 2019-2023 period, assuming appropriation of the necessary
amounts. Including costs for the Bureau of Reclamation and
Corps of Engineers, CBO estimates that the workload in the
first two years of the program would be equivalent to about 22
full-time employees, at an average cost of about $160,000 per
person. Most of those costs would be incurred by WAPA, which
would need to conduct various studies and develop software to
provide its customers with data specific to each of the 13
separate regions it uses for setting rates. The costs of
implementing the bill are projected to be lower for SWPA and
SEPA because their hydropower systems and conservation programs
are smaller and less geographically diverse than those at WAPA.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. Enacting the bill would increase direct spending by
BPA. However, that increase would not be significant because
BPA provides similar information to its customers under current
law. Furthermore, CBO expects that any increase in operating
costs would be recovered quickly because BPA would subsequently
increase the rates it charges customers. Thus, CBO estimates
that the net effect on direct spending by BPA would be
negligible. H.R. 5556 would not affect revenues.
Increase in long-term direct spending and deficits: CBO
estimates that enacting H.R. 5556 would not significantly
increase net direct spending or on-budget deficits in any of
the four consecutive 10-year periods beginning in 2029.
Mandates: H.R. 5556 contains no intergovernmental or
private-sector mandates as defined in UMRA.
Estimate prepared by: Federal Costs: Kathleen Gramp and
Aurora Swanson; Mandates: Zachary Byrum.
Estimate reviewed by: Kim P. Cawley, Chief, Natural and
Physical Resources Cost Estimates Unit; H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
2. 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 provide for transparency and
reporting related to direct and indirect costs incurred by the
Bonneville Power Administration, the Western Area Power
Administration, the Southwestern Power Administration, and the
Southeastern Power Administration related to compliance with
any federal environmental laws impacting the conservation of
fish and wildlife.
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
Directed Rule Making. This bill does not contain any
directed rule makings.
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
If enacted, this bill would make no changes to existing
law.
ADDITIONAL VIEWS
H.R. 5556, as introduced, required the Department of
Energy's four Power Marketing Administrations to make a special
note on customer bills highlighting only the costs of fish and
wildlife mitigation measures. The four Power Marketing
Administrations (PMAs) market wholesale power generated by
federally-owned hydroelectric dams. These federal dams can
negatively impact the survival of our nation's fish and
wildlife. Fish and wildlife mitigation measures can reduce the
negative environmental impacts of federal dams at a relatively
small cost. These mitigation measures also promote functioning
ecosystems that are a significant net benefit to the American
economy and pay for themselves many times over.
At markup, Ranking Member Raul M. Grijalva successfully
included an amendment to H.R. 5556 that would require the PMAs
to publish all costs that affect power rates. Requiring only
the publication of costs associated with fish and wildlife
mitigation would have excluded several other factors affecting
a customer's monthly power bill and provided a misleading,
wholly incomplete picture.
For example, the Bonneville Power Administration's failed
investment in a nuclear power plant cost rate-payers as much as
$200 million in Fiscal Year 2013\1\ and likely billions in
total. That information should be provided to the customers
paying those costs.
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\1\McCullough, R., Vatter, M., Anderson, R., Heimensen, J., Long,
S., May, C.,...Oursland, G. (December 11, 2013). Economic Analysis of
the Columbia Generating Station. Portland, Oregon: McCullough Research.
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Power customers also must pay billions to subsidize
irrigation contractors. Irrigation contractors are not required
to repay taxpayers for the costs of building federal dams
beyond what's deemed their ``ability to pay.'' The amount that
irrigators do not pay is then transferred to power customers.
The Western Area Power Administration recently estimated that
power customers are responsible for more than $1.7 billion in
irrigation assistance payments.\2\ These costs should be
disclosed on power bills as well.
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\2\Western Area Power Administration. 2017 Annual Report. U.S.
Department of Energy.
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Should H.R. 5556 continue to advance through the
legislative process, the bill text may need to be further
refined before enactment to ensure that all relevant
information is provided to power customers. Full transparency
means that customers are provided a full accounting of all
major factors impacting their power bills, not just the costs
of fish and wildlife mitigation.
Raul M. Grijalva,
Ranking Member Committee on
Natural Resources.
Nanette Diaz Barragan.
Alan Lowenthal.
[all]