Hydropower Applications

SUMMARY: The Forest Service proposes to revise current policy and

procedures, implemented in February 1987, concerning administration of

hydropower authorizations and the processing of proposals for

hydropower projects affecting National Forest System lands. This notice

contains the proposed revision, clarifies the current policy, and

modifies procedures. These revisions are necessary to make agency

policy and procedures consistent with regulatory changes by the Federal

Energy Regulatory Commission (FERC) and to address issues raised in

appeals related to authorizing hydropower projects. This proposed

revision also includes revised fee structures that developers would pay

for hydropower projects on National Forest System lands exempted from

FERC licensing. The fees were revised to ensure that the United States

receives fair market value for the use of National Forest System lands

for hydropower development. Public comment is invited.

DATES: Comments must be received in writing on or before July 21, 1995.

ADDRESSES: Send written comments to Director of Lands (2770), 4th

Floor, South Wing, Auditors Building, Forest Service, USDA, P.O. Box

96090, Washington, DC 20090-6090.

The public may inspect comments received on this proposed policy in

the Office of the Director of Lands, 4th Floor, South Wing, Auditors

Building, 201 14th Street, SW., Washington, DC, between the hours of

8:30 a.m. and 4:30 p.m. Those wishing to inspect comments are

encouraged to call ahead (202-205-1367) to facilitate entry into the

building.

FOR FURTHER INFORMATION CONTACT:

Questions about this proposal or requests for the entire Forest Service

Handbook 2709.15, Hydropower Handbook, should be addressed to J.

Kenneth Myers, Assistant Director, Realty Management Group, Lands Staff

202-205-1248.

SUPPLEMENTARY INFORMATION:

Background and Need for Policy

Presently, there are more than 240 non-Federal hydropower projects

on National Forest System lands that are either licensed or exempted

from licensing by the Federal Energy Regulatory Commission (FERC).

Hydropower developers must receive authorization from both FERC and the

Forest Service to construct and operate projects on National Forest

System lands. The Forest Service is authorized under the Federal Power

Act (16 U.S.C. 791 et seq.) to set mandatory terms and conditions in a

FERC license necessary to protect National Forest System resources. The

Forest Service also has authority under the Federal Land Policy and

Management Act (FLPMA) (43 U.S.C. 1701) to issue special use

authorizations for the occupancy and use of National Forest System

lands for hydropower purposes. Both the Forest Service and FERC must

review applications for proposed hydropower projects for adequacy and

prepare environmental analyses under the National Environmental Policy

Act (42 U.S.C. 4371 et seq.).

Hyrdopower development proposals affecting National Forest System

lands nearly quadrupled in 1981 as a result of legislation promoting

the construction of energy projects utilizing renewable resources,

namely, the Public Utility Regulatory Policies Act of 1978 (16 U.S.C.

260) and the Energy Security Act of 1980 (Pub. L. 96-294; 42 U.S.C.

8855). In 1984, the Supreme Court in Escondido Mutual Water Co. v.

LoJolla Band of Mission Indians, 466 U.S. 765 (1984) (hereafter

``Escondido ruling''), clarified the role of the Secretary of

Agriculture in the licensing of hydropower projects on National Forest

System lands. The Escondido ruling makes it clear that when National

Forest System lands are to be occupied by a hydropower project, the

Secretary may impose conditions on a FERC license necessary for the

adequate protection and utilization of the National Forest. This

affirmation of the Secretary's authority was incorporated into a

February 1987 revision of Forest Service Manual Chapter 2770, which

sets our broad direction to Forest Service managers on how to respond

to applications for FERC licenses. Simultaneously, the agency issued a

new Handbook (FSH 2709.15) in February 1987 to provide field direction

on hydropower licenses and permits.

In August 1989, the forest Service initiated a process to identify

the topics or aspects of the agency's hydropower project direction that

need revision.

Numerous modifications to existing policy and procedures were

identified during the process. As a result, the agency is proposing a

revision of all hydropower direction in the Manual and Handbook. A

discussion of the important modifications follows. Because of the

length of the Handbook, only the proposed Manual direction and the

following parts of the Handbook are set forth at the end of this

Federal Register notice: (1) The Forest Service conditions for a FERC

license, (2) special use authorization provisions for licensed

projects, (3) direction on charging fees to hydropower developers, and

(4) direction on rehabilitating dams in wilderness areas. Those

interested in reviewing a copy of the entire Handbook may obtain a copy

by calling the FOR FURTHER INFORMATION CONTACT listed in the beginning

of this notice.

Modifications to Existing Policy and Procedures

1. Recognition of Hydropower as an Appropriate Use of National Forest

System Lands

Current Forest Service policy recognizes hydropower as an

appropriate use of National Forest Service land but the policy is not

clearly stated.

In the proposed Manual revision, this agency policy is rewritten

and clarified. These changes appear in the draft Forest Service Manual

(FSM) in sections FMS 2770.2 and 2770.3. In summary, (1) energy is a

recognized use of National Forest System lands; (2) hydropower is a

valuable energy resource and a legitimate use of National Forest System

lands; (3) sites with hydropower development potential are unique and

rare; (4) the Forest Service will favorably consider hydropower

development that does not conflict with other important uses or

allocations of National Forest System resources; and (5) potential

hydropower use should be carefully considered in the forest planning

process.

2. Resource Balance

The Forest Service must balance energy development with protection

and use of National Forest System resources. Furthermore, the agency

strives to mitigate adverse environmental impacts whenever possible.

The Forest Service often sets instream flow requirements and requires

other measures necessary for the adequate protection and utilization of

National Forest System resources. Consistent with the Escondido ruling,

FERC is precluded from requiring a less stringent instream flow than

the Forest Service's required flow even if their information indicates

less stringent flows are justified and in the public interest.

Consistent with its responsibility to administer National Forest

System lands [[Page 27155]] in the public interest, the Forest Service

reviews and considers recommendations of other agencies, as well as the

licensee, in developing its position. The agency, however, will not

simply include recommendations of other agencies as part of its

mandatory conditions. Independent analysis of all recommendations by

the Forest Service is necessary to put in perspective the project's

impact against the Forest Service's general responsibility to protect

all National Forest System resources. The Manual direction is being

revised to reflect the Forest Service's obligation to balance resource

needs in arriving at decisions related to hydropower development. The

proposed revisions appear in the proposed Manual in FSM 2770.3 and

2773.2.

3. Relicensing Policy

The Manual lacks specific Forest Service policy relicensing

hydropower projects and the role of the agency.

Under the proposed revision, the Forest Service would use the

authority under section 4(e) of the Federal Power Act to condition the

license of a project being relicensed. The responsibility has been

affirmed by FERC. The proposed policy would recognize that such

projects have been part of the environment for 50 years or more and

that the Forest Service should not attempt, by virtue of its

conditioning authority, to recreate the pre-license environment.

However, the agency would mitigate unacceptable impacts to resources.

The proposed changes appear in the Manual in FSM 2776.

4. Unlicensed Projects

The Forest Service does not have a policy regarding unlicensed

hydropower projects. Before 1976, the Federal Power Commission (now

FERC) allowed the Forest Service to authorize by a special use

authorization minor hydropower projects. This authority was withdrawn

in 1976; however, several unlicensed projects still exit on National

Forest System lands. The agency proposes policy and guidance regarding

the special use authorizations for unlicensed projects which would

encourage their owners to obtain appropriate authorization for FERC.

This proposed change appears in the Manual in FSM 2772.24. The agency

shall not authorize amendments to these projects unless they first

comply with FERC's regulations.

5. Cooperative Forest Service/FERC Environmental Assessments

Until recently, the Forest Service and FERC prepared separate

environmental assessments but prepared environmental impact statements

as cooperating agencies. The Forest Service has recently adopted an

environmental analysis process that is generally conducted

cooperatively with FERC. The new process is explained in the proposed

Manual in FSM 2773.

6. Recreation Plans and Development

The Forest Service proposes to clarify direction regarding

recreation development and other recreation mitigation and enhancement

needs associated with hydropower project development.

A new Manual section (FSM 2774) has been developed, in accordance

with section 4(e) of the Federal Power Act, addressing recreation

development at hydropower projects. This proposed section clarifies the

licensee's full responsibility for the recreation needs resulting from

project development and operation. And, even though the Forest Service

could operate recreation facilities at a hydropower project according

to a written agreement with the licensee, the licensee would remain

financially responsible for the operation, as well as for the

construction, maintenance, and replacement of the recreation

facilities. Several items related to recreation plan development,

operation, liability, and user fees may be the subject of voluntary and

consensual agreement between the Forest Service and the licensee. These

items may include, but are not limited to, licensee responsibility for

construction, operation, maintenance, and replacement of recreation

facilities on National Forest System lands, collection of fees to

offset Forest Service operating costs, and the need for recreation

planning for lands beyond the area directly influenced by the project.

7. Wild and Scenic Rivers

The Forest Service proposes to update the direction relating to

hydropower development affecting designated and potential Wild and

Scenic Rivers. The authority for this direction is section 7 of the

Wild and Scenic Rivers Act (16 U.S.C. 1271-1287). The Forest Service

proposes to prepare eligibility determinations for rivers not in the

Wild and Scenic Rivers System that are affected by a hydropower

proposal. Such determinations shall be prepared in a timely manner,

usually accompanying the initial 4(e) report. Rivers found eligible for

inclusion through this process would then be studied by the Forest

Service for suitability. This Wild and Scenic River suitability study

would be completed within 18 months or in conjunction with the

environmental document for the hydropower project. While not legally

bound to do so, it has been FERC's practice to refrain from acting upon

the license application until completion of the suitability study if

the Forest Service makes timely determinations. Under the proposed

policy, for rivers found suitable under this process, the Forest

Service shall forward recommendations for Wild and Scenic River

designation to the Secretary of Agriculture for review and submission

to Congress. Once a suitability determination is made and for a period

not to exceed three years after Congress has received the formal

recommendation for Wild and Scenic River designation from the

Secretary, the Forest Service shall use its authority under section

4(e) of the Federal Power Act to protect a suitable river from impacts

that would ``invade or unreasonably diminish the values'' which make it

eligible and suitable for inclusion in the Wild and Scenic Rivers

System. If Congress fails to take action to protect the proposed river

within three years, the Forest Service shall manage the river as a

multiple-use resource and resume consideration of the original

hydropower proposal. The proposed changes appear in the Manual in FSM

2775.1

For Congressionally designated rivers and designated study rivers,

the Manual has been updated to clarify the procedures for section 7

determinations pursuant to the Wild and Scenic Rivers Act. The updated

direction is in the Manual in FSM 2775.1

8. Term of the Special Use Authorization.

Current Forest Service direction for a special use authorization of

a hydropower project exempted from the FERC licensing requirements does

not address the amortization or financing period of the project.

The Forest Service proposes to revise its direction for special use

authorizations for exempt projects to require the issuing officer to

consider the amortization and financing periods of a project in

determining the term of the special use authorization. The proposed

change appears in the Manual in FSM 2772.4.

9. Fees

A proposed Forest Service policy on hydropower fees for licensed

projects was published in the Federal Register in 1984 (49 FR, p.

23902, June 8, 1984). Due to the length of time since that notice, the

agency is again seeking comments on a revised fee structure

[[Page 27156]] proposed in section 65.3 of the Handbook.

a. Fees for Projects Exempt from Licensing

In 1987, the Forest Service implemented policy that set fair market

value for use of National Forest System lands by hydropower projects

exempted from licensing by FERC at three percent of the gross power

sales from the project. This was based upon a market survey of land

rental fees charged for hydropower use on private land. Upon

administrative appeal, that policy was rescinded pending public notice

and opportunity to comment. This notice seeks that involvement. In the

interim, the Forest Service has been charging fair market value for the

use of National Forest System lands, as determined by appraisal. Fees

for the few projects that receive an exemption from licensing from FERC

are contained in section 65.3 of the Handbook.

b. Fees for Licensed Projects

To date, Forest Service policy has been that it has the authority

to collect fees for hydropower projects licensed by FERC. The Forest

Service, however, presently waives the collection of fees for these

projects since FERC already collects fees for the use of National

Forest System land; although the fees collected by FERC for run-of-the-

river projects (projects that operate whereby instantaneous inflow to

the project equals instantaneous outflow) are often far below the

market value of the use of those lands for power purposes.

The Forest Service proposes that, for licensed projects, fees shall

not be charged because to do so may be inconsistent with the Federal

Power Act (16 U.S.C. 803(e)) (FSH 2709.15, sec. 65.2).This position is

consistent with the Federal Land Policy and Management Act (43 U.S.C.

1702(a)(9)) which does not require the collection of fees where another

statute, in this case the Federal Power Act, also provides for fee

collection.

10. New Mandatory 4(e) License Conditions

The Forest Service is proposing to update and revise those

conditions required to be incorporated in all licenses issued by FERC

for projects occupying National Forest System lands. These conditions

would be applied to all proposed projects that would occupy National

Forest System lands. Once these conditions have gone through the public

notice process and are included in the final Handbook, they will not be

subject to appeal under Department of Agriculture administrative appeal

regulations at 36 CFR 215 and 251. The proposed revisions of mandatory

license conditions appear in the draft Handbook in section 55.6,

exhibit 01.

11. New Special Use Authorization Provisions

The Forest Service proposes to revise the special use authorization

conditions for hydropower projects (FSH 2709.15, sec. 77, ex. 01).

These revisions are based on issues raised in appeals related to the

open-ended nature of special use authorization conditions. Those

provisions identified as mandatory will no longer be subject to appeal

if they are incorporated into the final notice of policy.

12. Other License and Special Use Authorization Conditions

Other proposed conditions which may be used or adapted for use for

a proposed project have also been developed in standardized form (Form

FS 2700-4g) and are proposed in the Handbook. These conditions may be

applied to projects as site-specific needs dictate. Their application

is appealable, since the authorized Forest Officer has the discretion

to require them. These conditions can be found in the Handbook in

section 55.6, exhibit 01, and in section 77, exhibit 01.

13. Open-ended Nature of the Special-use Authorization

Under existing procedures, the licensee of a FERC-licensed

hydropower project on National Forest System lands obtains a special

use authorization from the Forest Service after FERC issues a license.

(The FERC license contains an explicit clause to this effect as a

condition of the license.) This procedure places the licensee in the

awkward position of accepting a license without knowing what conditions

the special use authorization may impose on the project's operation.

The Forest Service proposes to revise the Handbook procedures to

limit the use of open-ended Forest Service conditions in the license

(issued by FERC) and in the special use authorization issued by the

Forest Service (Form FS-2700-4g); instead, the Forest Service would

provide prospective licensees with a special use authorization prior

to, and contingent upon, issuance of a license. This reversal of the

special use authorization process will ensure that licensees will know

ahead of time the requirements and costs associated with the special

use authorization throughout the term of the license. In order to guard

against modification in the design or operation of the project

subsequent to issuance of the special use authorization, the special

use authorization would contain a provision which states that it is to

become effective only if the project is licensed substantially as it

was proposed during the time the Forest Service was developing the

conditions for the special use authorization. These changes would

require modification of the Forest Service special use authorization

(FSH 2709.15, sec. 77, ex. 01, Form FS-2700-4g) and of the FERC license

conditions currently required by the Forest Service (FSH 2709.15, sec.

55.6, ex. 01, condition 101).

14. Revocation of the Special Use Authorization

Current policy provides for revocation of a hydropower project

special use authorization based on breach of the terms or conditions

therein or for reasons to further the public interest.

Since FERC already has procedures in place which permit revocation

of the license upon a public interest determination, the Forest Service

believes that revocation of a special use permit on the basis of the

public interest is redundant and adds unnecessary uncertainty to

operations under the license. Therefore the Forest Service proposes to

eliminate public interest as a basis for revocation of the special use

authorization. The proposed change appears in the Handbook in section

77, exhibit 01, condition V.B.

15. Modification of the Special Use Authorization

At any time during the license term, which varies from 30 to 50

years, FERC may reopen and amend the license if it is in the public

interest. Furthermore, FERC must review the project as a new proposal

when the licensee applies for a license renewal when the license term

ends. Currently, FERC licenses contain a mandatory condition under

section 4(e) of the Federal Power Act that allows the Forest Service to

unilaterally change the terms of special use authorizations for

hydropower projects after 30 years, subject to loosely defined

guidelines.

Forest Service special use regulations (36 CFR 251) provide for

revision of special use authorization conditions at specified intervals

to reflect changing times and conditions if the term of the special use

authorization exceeds 30 years.

Based on its review, the agency proposes to provide for revision of

conditions in hydropower project special use authorization only if the

project is amended or when the license terminates and the relicensing

process is [[Page 27157]] initiated. In those cases where the Forest

Service determines that special use authorization revision is necessary

and appropriate prior to license termination or project amendment, the

agency proposes to petition FERC to reopen the license. If FERC grants

a Forest Service petition, FERC will be able to balance the need to

amend the license against the hardship such amendment would cause the

licensee. The Forest Service believes this system is more equitable

than the current unilateral right of the agency to periodically change

a special use authorization if its term is greater than 30 years. Under

this proposal, the Forest Service would no longer require a section

4(e) condition for reopening the FERC license at intervals. This

proposed change appears in the draft Handbook in section 77, exhibit

01, condition I.D.

16. Continuation of the Special Use Authorization During Annual

Licenses

The current Forest Service special use authorization does not

provide for any interim authorization between termination of the

original license and issuance of a new license through the relicensing

process. During this period, a hydropower project operates on an annual

license, which generally is granted and renewed by FERC as a matter of

course until relicensing is completed.

The Forest Service proposes to modify the terms and conditions of

the special use authorization for hydropower projects to provide that

it remains in force for a particular project during relicensing as long

as (1) FERC issues annual licenses and (2) there is not a critical need

to immediately modify the authorization to provide for protection and

management of National Forest System resources before the issuance of a

new license and special use authorization. The proposed change appears

in the draft Handbook in section 77, exhibit 01, condition II.A.

17. Improvement Relocation

The current special use authorization for hydropower projects

requires the licensee to move hydropower and appurtenant facilities, if

necessary, to accommodate future government access needs. This

provision subjects the license to uncertainty regarding project costs.

Accordingly, the Forest Service proposes to modify this provision

slightly. Rather than speaking solely to relocation of facilities, the

proposed direction would recognize that modification of hydropower

facilities also may be appropriate under certain circumstances. The

special use authorization also would make explicit that this provision

would apply only in furtherance of Federal Government purposes. In

other words, the licensee would not incur additional costs to

accommodate other forest users absent a Federal need. Instead, other

forest users would have to pay for facility relocation or modification

expenses resulting from their actions or needs. The proposed change

appears in the Handbook in section 77, exhibit 01, condition III.I.

18. Nonexclusive Use of National Forest System Lands

The Forest Service may permit other uses of National Forest System

lands within FERC-licensed project boundaries which do not materially

interfere with the hydropower project. To this end, the special use

authorization expressly prohibits exclusive use of National Forest

System lands for project purposes and authorizes other nonconflicting

uses on lands within a FERC-licensed project boundary. On the other

hand, FERC typically authorizes licensees to exclude other uses from

lands within the project boundary and holds the licensee responsible

for accidents occurring therein. Due to this inconsistency between the

Forest Service and FERC requirements concerning exclusive use of

project lands, licensees contend that they may be held liable in tort

claims for injuries occurring on project lands by users over which they

had no knowledge or control.

The agency agrees that the licensee should not be held liable for

injuries or damage caused by the actions of another Forest Service

permittee if the licensee had no knowledge of or control over the other

permittee. The Forest Service does not believe it is in the interest of

sound management of National Forest System lands to change its policy

of authorizing nonconflicting uses within the licensed boundary;

however, the agency does believe it is appropriate to revise the

standard terms and conditions of the special use authorization for

licensed or relicensed projects to permit the exclusion of the public

from certain areas within the project boundaries for safety reasons.

This proposed revision appears in the draft Handbook in section 77,

exhibit 01, as condition I.G.

19. Plan Approvals, Amendments, and Approval Authority

Current license and special use authorization provisions reserve to

the Forest Service authority to approve project construction, design

and mitigation plans. Based on this authority there is the potential

for delays and additional costs resulting from (1) required Forest

Service approval of plans, (2) Forest Service authority to modify

plans, (3) Forest Service authority to require amendments to the

project, (4) Forest Service authority to suspend construction

operations for noncompliance with the terms of the special use

authorization, and (5) Forest Service final approval authority. There

is some question regarding the extent to which the Forest Service can

exercise control over a FERC license through this reserved authority.

In order to provide the licensee greater certainty regarding

project operation, the Forest Service proposes to modify its standard

4(e) license condition that currently allows the Forest Service to

impose changes in the operation and location of project facilities once

a project has been licensed and issued a special use authorization. The

intent of this proposal is to limit the discretion of the Forest

Service by requiring Forest Service consistency in the agency's review

and approval of project plans. For example, if the Forest Service had

initially approved the concept of a powerhouse on the south side of a

stream, it should not require the licensee to move the powerhouse to

the north side during review of the final plan absent compelling

information (justifying the change) not available during the initial

review.

The proposed license conditions also provide for expedited higher

level resolution of disputes regarding Forest Service approval of plans

and Forest Service imposed suspensions. While the Forest Service will

consult with FERC and the licensee on such disputes to the extent

possible, it ultimately is and will remain the Forest Service's

responsibility to make the final determination when licensee actions

affect surface resources on National Forest System lands. Note that

FERC has responsibility for dam safety and overall public safety, and

therefore the Forest Service should not interfere with FERC's

responsibilities in these areas. These changes appear in the Handbook

in section 55.6, exhibit 01, conditions 102, 105, and 106.

20. Annual Review of Project

A standard license condition used by the Forest Service requires

the licensee to meet annually with the Forest Service and review the

project with a subsequent report to FERC. In order to reduce the amount

of paperwork and reviews and to increase flexibility, the Forest

Service proposes to modify the condition to require a meeting only

every 5 years or for a period mutually agreeable to the Forest Service

and the [[Page 27158]] licensee. The proposed change is in the draft

Handbook in section 55.6, exhibit 01, condition 104.

21. Project Rehabilitation in Wilderness

The existing Manual and Handbook do not address hydropower project

maintenance and rehabilitation in units of the National Wilderness

Preservation System. These projects were in place before the

establishment of the wilderness area. Direction would be incorporated

in the Hydropower Handbook with this proposed revision. Maintenance and

rehabilitation of hydropower projects in wilderness is necessary for

safety and other reasons but it would be achieved subject to the

provisions and intent of the Wilderness Act (16 U.S.C. 1131-1136).

Decisions on access to the project would consider, among other things,

the type of rehabilitation, the most reasonable and efficient method to

conduct such work, the manner in which the original project was

constructed, and ways in which to minimize the impact on wilderness

values. Due to the restrictions imposed by the Wilderness Act, project

rehabilitation must often be done by primitive means and will be more

costly than similar project maintenance and rehabilitation outside

designated wilderness. Nevertheless, necessary project rehabilitation

would be allowed. The proposed revision is in the handbook, section

64.7.

Environmental Impact

This proposed policy would establish direction to Forest Service

employees on the review, authorization, and administration of

hydropower proposals on National Forest System lands. The environmental

impacts of proposed projects will be addressed in environmental

documents specific to each proposed project. Section 31.1b of Forest

Service Handbook 1909.15 (57 FR 43180, Sept. 18, 1992) excludes from

documentation in an environmental assessment or impact statement

``rules, regulations, or policies to establish Service-wide

administrative procedures, program processes, or instructions.'' The

agency's preliminary assessment is that this policy falls within this

category of actions and that no extraordinary circumstances exist which

would require preparation of an environmental assessment or

environmental impact statement. A final determination will be made upon

adoption of the final policy.

Controlling Paperwork Burdens on the Public

This policy does not contain any recordkeeping or reporting

requirements or other information collection requirements as defined in

5 CFR 1320 and, therefore, imposes no paperwork burden on the public.

Accordingly, the review provisions of the Paperwork Reduction Act of

1980 (44 U.S.C. 3507) do not apply. The Forest Service uses information

provided to FERC as a basis for reviewing hydropower project impacts on

National Forest System lands. Any further additional information is

covered by the Forest Service's special use regulations (36 CFR part

251).

Regulatory Impact

This proposed policy has been reviewed under USDA procedures and

Executive Order 12866 on Regulatory Planning and Review. It has been

determined that this is not a significant rule. The policy will not

have an annual effect of $100 million or more on the economy nor

adversely affect productivity, competition, jobs, the environment,

public health or safety, nor State or local governments. This rule will

not interfere with an action taken or planned by another agency nor

raise new legal or policy issues. Finally, this action will not alter

the budgetary impact of entitlements, grants, use fees, or loan

programs or the rights and obligations of recipients of such programs.

Accordingly, this proposed policy is not subject to OMB review under

Executive Order 12866.

Moreover, this proposed policy has been considered in light of the

Regulatory Flexibility Act (5 U.S.C. 601 et seq.), and it has been

determined that this action will not have a significant economic impact

on a substantial number of small entities as defined by that Act. In

short, little or no effect on the National economy will result from

this policy, since this action consists primarily of technical and

administrative changes to existing policy and procedures. In fact, it

may reduce costs to the Government and users of the National Forest

System.

Takings Executive Order

This proposed policy has been analyzed in accordance with the

principles and criteria contained in Executive Order 12630, and it has

been determined that this proposed policy does not pose the risk of

taking of Constitutionally protected private property.

First, special use authorizations are not private property

compensable under the Fifth Amendment if taken by the Government. The

special use authorization is a benefit or privilege bestowed on a

private individual to use National Forest System lands. In the event

that special use authorizations are found to have certain contractual

rights associated with them, those rights are consensual in nature and

require the prior informed consent of the parties to form the

agreement. Such consensual agreements generally do not result in

takings claims against the Government. Finally, the proposed policy

does not purport to modify the existing special use authorizations.

Instead, only special use authorizations that will be issued after the

date this guidance is adopted will be subject to the revisions and

clarification described herein.

Comments Invited

The proposed policy and procedures for hydropower uses of National

Forest System lands would replace existing policy and procedures

contained in the Forest Service Manual (FSM 2770) and Forest Service

Handbook (FSH 2709.15). The text of the Manual and sections of the

Handbook containing the Forest Service standard license 4(e) conditions

and the Forest Service special use authorization conditions for

licensed projects are set out at the end of this notice. Single copies

of the entire Handbook are available free of charge upon request to the

further information contact listed at the beginning of this notice. The

Forest Service invites written comments and will analyze and consider

those comments in the development of the final notice of policy which

will be published in the Federal Register.

Dated: May 15, 1995.

David G. Unger,

Associate Chief.

Proposed Manual Revision

Note: The Forest Service organizes its directive system by

alpha-numeric codes and subject headings. Only those sections of the

Forest Service Manual and Handbook that are the subject of this

notice are set out here. The audience of this direction is Forest

Service employees charged with reviewing, processing, and approving

hydropower proposals on National Forest System lands.

Title 2700--Land Uses Management

Chapter 2770--Federal Power Act Projects

Contents

2770.1 Authority

2770.2 Objectives

2770.3 Policy

2770.4 Responsibility

2770.41 Chief

2770.42 Director of Lands, Washington Office

2770.43 Regional Forester

2770.6 Federal Energy Regulatory Commission (FERC) Responsibility

and Authority

2771. Forest Service involvement with FERC on Hydropower

Projects [[Page 27159]]

2771.1 Response to Applications

2771.11 Response to License Applications

2771.12 Response to Preliminary Permit Applications

2771.13 Response to Exemption Applications

2771.2 Requirements

2771.21 Section 4(e) Reports

2771.22 Section 4(e) Conditions

2771.23 Projects Exempted from Licensing

2771.24 National Forest Purposes

2771.25 Recommendation that Project is Not in Public Interest

2771.3 Coordination

2771.31 Other Actions within Project Boundaries

2771.32 Project Surrender, Termination, or Abandonment

2771.33 Federal Takeover of Project Facilities

2771.4 Federal Power Act and Powersite Withdrawals

2771.41 Exchange within Federal Power Act and Powersite Withdrawals

2771.42 Retraction of Licensed Project Boundaries and Withdrawals

2772 Special-Use Authorizations

2772.1 Applications

2772.2 Authorization of Projects

2772.21 Authorization of Licensed Projects

2772.22 Denial of Special-use Authorization to Licensed Project

2772.23 Authorization of Projects under Preliminary Permit

2772.24 Authorization of Projects Exempt from Licensing

2772.25 Requirement To Have Special-use Authorization

2772.3 Conditions

2772.4 Term

2772.5 Revocation or Suspension of Special-use Authorization

2772.6 Special-use Authorization Fees

2773 Environmental Analysis

2773.1 Environmental Analysis and Documentation

2773.11 Licensed Projects

2773.12 Projects Exempted from Licensing

2773.2 Mitigation

2774 Recreation Uses at Hydropower Projects

2774.1 Licensee Responsibility

2774.2 Facility Operation, Maintenance, and Replacement

2774.3 Campgrounds

2774.4 Signs

2774.5 Project Recreation Plan

2774.6 Recreation Planning during Relicensing

2775 Special Management Areas

2775.1 Projects Proposed in Wild and Scenic River Areas

2775.11 Projects Proposed on All Other Waterways

2775.12 Projects Proposed on Wild and Scenic Rivers on Lands in

Conservation Units in Alaska

2775.2 Projects Proposed in Designated Wilderness Areas

2775.3 Projects Proposed in Roadless Study Areas

2775.4 Projects Proposed in Research Natural Areas

2775.41 Projects Proposed in Candidate Research Natural Areas

2775.5 Projects Proposed in Other Special Areas

2775.51 Projects Proposed in Study Special Areas

2775.6 Projects Proposed in State-Designated Special Areas

2775.7 Projects Proposed in National Monuments

2776 Relicensing

2776.1 Section 4(e) Conditions in New License

2776.2 Removal of Project

Title 2700--Land Uses Management

Chaper 2770--Federal Power Act Projects

This chapter covers the review of proposals for hydropower

projects; the use of authority granted by section 4(e) of the Federal

Power Act (16 U.S.C. 797(e)) to set conditions in licenses for

hydropower projects issued by the Federal Energy Regulatory Commission

(FERC) for the protection and utilization of National Forest System

lands; the granting of special-use authorizations for hydroelectric

projects; and the granting of special-use authorizations for primary

transmission lines subject to licensing by FERC that are partly or

wholly on National Forest System land. The chapter also covers the

relationship of the Forest Service and FERC during project planning,

construction, and operation.

2770.1--Authority

See FSM 2701.1 for statutory authorities that govern the general

issuance and administration of special use authorizations on National

Forest System lands. The following statutes and regulations

specifically govern the issuance and administration of hydropower

projects on National Forest System lands:

1. The Federal Power Act of August 26, 1935 (49 stat. 847; 16

U.S.C. 797). This act grants the Forest Service the authority to

require conditions in a Federal Energy Regulatory Commission (FERC)

license for a hydropower project on National Forest System lands.

2. The Wild and Scenic Rivers Act of October 2, 1968 (82 Stat. 906;

16 U.S.C. 1271-1287). This act, specifically in sections 7(a), 7(b) and

5(d), sets forth Forest Service responsibilities for determining

acceptability for projects that impact designated and study wild and

scenic rivers. Section 7 gives the Secretary of Agriculture the

authority to determine whether a proposed project would be on or

directly affect a wild and scenic river or would degrade or

unreasonably diminish the values for which the river was designated.

Under section 5(d), the Forest Service is authorized to study rivers

for suitability for designation as wild and scenic.

3. Title V. Section 501, Federal Land Policy and Management Act of

October 21, 1976, as amended (90 Stat. 2743; 43 U.S.C. 1761-1771).

Title V of the Federal Land Policy and Management Act (FLPMA)

authorizes the Secretary of Agriculture to issue, renew, or grant

permits or easements to occupy, use, or traverse National Forest System

lands for the generation, transmission, and distribution of electric

power. Under section 501, as amended by the Energy Policy Act of

October 24, 1992 (106 Stat. 2776; 42 U.S.C. 13201), permits or

easements are not required for the continued operation of projects

licensed by FERC or exempted as of October 24, 1992, unless additional

project area or the project had received a permit or easement under

section 501 of FLPMA at some time in the past.

4. Title 36, Code of Federal Regulations, Part 297, Subpart A. This

regulation provides direction concerning projects affecting wild and

scenic rivers administered in whole or in part by the Secretary of

Agriculture.

2770.2--Objectives

1. To facilitate hydropower production where it is compatible with

the purposes for which a National Forest was created or acquired.

2. To ensure that planning, construction, and operation of

hydropower projects are performed in a manner that provides adequate

protection and utilization of National Forest System lands and

resources.

3. To ensure that Forest Service planning and the evaluation of the

hydropower proposals recognize the rarity of sites which are suitable

for potential hydropower development because of a unique combination of

resources and circumstances.

2770.3--Policy

1. Hydropower development is an appropriate use of National Forest

System land, unless one or more of the following circumstances exist:

a. Hydropower development is inconsistent with and would interfere

with the purposes for which the affected area was created or acquired

as determined by the following: The Organic Administration Act, the

Multiple Use-Sustained Yield Act, subsequent acts making special

designations within the National Forest System, and legislation or

Presidential proclamation specifically establishing a National Forest.

b. Hydropower development is inconsistent with the management

direction in the Forest land and resource management plan, and

significant adverse effects on the [[Page 27160]] management and

utilization of National Forest System resources cannot be mitigated

sufficiently to achieve plan consistency with the Forest plan.

c. The project is not in the public interest (FSM 2771.25)

2. Weight energy resource development with the protection and

utilization of other National Forest resources when determining what

mitigation is necessary to provide the best balance of protection and

utilization of those resources.

3. Cooperate and coordinate activities in the development of the

Nation's energy resources for hydropower with the Federal Energy

Regulatory Commission (FERF); Federal, State, and local resource

agencies; tribal governments; coordinating bodies, such as the

Northwest Power Planning Council; and potential developers.

2770.4--Responsibility

2770.41--Chief

1. For projects proposed in designated wilderness areas or other

special areas which require Presidential approval:

a. The Chief reserves authority to approve reports and sign

correspondence that make recommendations to the Secretary for approval

of projects when the Forest Service considers them to be in the public

interest, and

b. The Chief may deny approval for projects when the Forest Service

considers them not to be in the public interest (FSM 1923 and FSM

2323).

2. The Chief also reserves the authority to approve a Forest

Service recommendation to FERC that the Federal Government take over a

project whose license period is ending (FSM 2771.33).

2770.42--Director of Lands, Washington Office

Except for the authority reserved to the Chief (FSM 2770.41), the

Director of Lands, Washington Office has authority and responsibility

to:

1. Approve reports and sign correspondence to the Federal Energy

Regulatory Commission (FERC) relating to activities under the Federal

Power Act, as amended.

2. Represent the Department of Agriculture in contacts with FERC at

the National level in matters relating to hydropower projects (FSM

1043).

3. Coordinate the review of matters pertaining to hydropower

projects with other agencies of the Department.

4. Control the assignment of Forest Service personnel as witnesses

in FERC hearings, secure Office of the General Counsel review, and

approve testimony prior to its being filed with FERC.

5. Review prior to signature, any Regional Forester decision for

hydropower project proposals involving section 7 of the Wild and Scenic

Rivers Act. (See review and routing procedures in FSH 2709.15, sec.

24.41)

6. Review prior to signature, any Regional Forester decision

involving section 4(e) of the Federal Power Act, except when the

Director specifically waived such a review because the Regional

Forester has staff sufficiently experienced in hydropower procedures.

(See review and routing procedures in FSH 2709.15, sec. 52.2)

7. Approve recommendations to FERC for the Federal Government to

take over hydropower project facilities (FSM 2771.33).

2770.43--Regional Forester

The Regional Forester has authority and responsibility to:

1. Subject to the delegations of authority to the Washington Office

Director of Lands in FSM 2770.42, paragraphs 5 and 6, approve reports

and signed correspondence to FERC on behalf of the Secretary of

Agriculture relating to licensing activities under the Federal Power

Act, as amended, including reports under section 4(e) of the Federal

Power Act, except as noted in the following paragraph 8. This authority

may not be redelegated.

2. Establish Region-wide quidelines for analysis and administration

of hydropower projects on National Forest System lands.

3. Coordinate with FERC staff as necessary.

4. Maintain an information base for use in managing Federal Power

Act project activities.

5. Respond to FERC on behalf of the Secretary of Agriculture on

applications for licenses. Coordinate review of applications for FERC

licenses, field investigations, and preparation of 4(e) reports.

6. Respond to FERC on behalf of the Secretary of Agriculture on

applications for preliminary permits and exemptions.

7. Establish procedures for contacting licensees or special-use

holders at least 5 years prior to the expiration of their license or

special-use authorization to ascertain their intentions concerning

continuation of the project.

8. For projects proposed in wilderness areas or other areas which

require Presidential approval:

a. Prepare, for the Chief's review, the environmental impact

statement (EIS) necessary for the Secretary to make recommendations to

the President concerning such projects.

b. Approve reports recommending to the Chief approval of projects

when the Forest Service considers them to be in the public interest.

c. Approve reports and sign correspondence for denial of approval

when the Forest Service considers projects not to be in the public

interest.

The authority to sign the recommendation to the Chief or to deny

approval for a project may not be redelegated.

9. Subject to the delegation of authority to the Washington Office

Director of Lands (FSM 2770.42, para. 5 and 6) approve reports and sign

correspondence to FERC on behalf of the Secretary of Agriculture

relating to decisions made under section 7 of the Wild and Scenic

Rivers Act for hydropower projects.

10. As appropriate, authorize Forest Supervisors to correspond

directly with FERC on all administrative and construction matters

during construction and operation of a project.

11. Issue special-use authorizations for hydropower projects that

have been licensed or exempted from licensing by FERC. The authority to

issue special-use authorizations for these projects may be redelegated

to the Forest Supervisor, but the authority may not be redelegated by

the Forest Supervisor to lower level officials.

2770.6--Federal Energy Regulatory Commission (FERC) Responsibility and

Authority

Forest Service officers must coordinate actions regarding

hydropower matters with the Federal Energy Regulatory Commission

(FERC). Review the information regarding FERC in FSH 2709.15, chapter

10.

2771.--Forest Service Involvement With FERC on Hydropower Projects

For a summary of the typical steps involved in the hydropower

approval and administration process, see FSH 2709.15, sec. 28.

2771.1--Response to Applications

2771.11--Response to License Applications

Use the 4(e) report (FSM 2771.2) to state the official position of

the Secretary regarding the licensing of specific projects affecting

National Forest System land and resources (FSH 2709.15, ch. 50). Where

appropriate, include comments on the effects of the project on the

programs of the Department of Agriculture. Also, see FSM 2774.5 for

coordination with license applicants on recreation project

plans. [[Page 27161]]

2771.12--Response to Preliminary Permit Applications

The Regional Forester must provide comments to FERC on potential

problems, concerns, and conditions for applications for preliminary

permits on projects affecting National Forest System lands and

resources. Do not prepare a 4(e) report for a preliminary permit;

submit these comments through correspondence.

2771.13--Response to Exemption Applications

The Regional Forester shall identify potential problems and provide

comments and recommendations to FERC on applications for exemptions.

Incorporate standard and special conditions required on exemptions in

the special-use authorization. Do not prepare 4(e) report for an

exemption; submit these comments through correspondence.

2771.2--Requirements

2771.21--Section 4(e) Reports

Respond to a Federal Energy Regulatory Commission (FERC) notice

that an application for license is ready for environmental analysis

with a report pursuant to section 4(e) of the Federal Power Act

(hereafter called a 4(e) report) for any project that would occupy

National Forest System land. An original and 8 copies of the 4(e)

report must be provided to FERC within 60 days of the FERC notice.

FERC's regulations allow FERC to consider 4(e) conditions filed after

the 60-day deadline as recommendations rather than mandatory

conditions. The exception is when FERC grants the Forest Service an

extension of time because of extenuating circumstances or because the

Forest Service and FERC are conducting a cooperative environmental

analysis under the National Environmental Policy Act (NEPA). In these

cases the Forest Service must provide preliminary 4(e) reports within

the 60-day timeframe and final 4(e) conditions within 45 days after the

cooperative NEPA analysis is completed (FSH 2709.15, sec. 13.32).

Regional Foresters shall transmit draft 4(e) reports (preliminary

and final) to the Washington Office Director of Lands for procedural

review prior to the Regional Forester's decision and transmittal to

FERC in conformance with the review and routing procedures in FSH

2709.15, section 52.2. However, if the Washington Office Director of

Lands notifies the Regional Forester that such reviews are not

necessary because of sufficient Regional staff experience in hydropower

matters, the Regional Forester may send 4(e) reports to FERC without

Washington Office review. The Regional Forester shall send copies of

the signed 4(e) reports to the Washington Office Director of Lands.

The 4(e) report should provide FERC with:

1. A statement of the conclusion as to the project's consistency or

interference with the purposes for which the National Forest was

created or acquired, and as appropriate, advice on whether the project

is in the public interest (FSM 2771.24 and 2771.25 and FSH 2709.15,

sec. 27).

2. Appropriate comments regarding the project application for

license.

3. Conditions (FSM 2771.22) to be included in the FERC license

necessary for the adequate protection and utilization of the National

Forest System lands and resources (FSH 2709.15, ch. 50).

4. The appropriate environmental documentation and documentation of

decision in support of the conditions that the Forest Service will

require in the license 4(e) conditions) and in the special-use

authorization (FSH 2709.15, ch. 30).

5. A copy of the special-use authorization that will be issued if

the project is licensed (FSH 2709.15, sec. 77). See FSH 2709.15,

chapter 50, for instructions on responding to FERC under various

situations.

2771.22--Section 4(e) Conditions

For a project which would occupy National Forest System lands, the

Forest Service may impose conditions through the 4(e) report the FERC

must make part of any license it issues for the project. Such

conditions must be reasonable and necessary for the adequate protection

and utilization of National Forest System lands and resources.

Do not impose the recommendations of other agencies as 4(e)

conditions without an independent analysis by the Forest Service so

that they become Forest Service conditions. Generally, limit 4(e)

license conditions to those measures that have substantial effects on

the economics or siting of the project. Other conditions of a more

routine nature relating to project impacts on National Forest Systems

lands may be imposed through the special-use authorization (FSM

2772.3). (See FSH 2709.15, sec. 21.4, for limits on the scope of 4(e)

conditions for amendments to a license see also FSH 2709.15, sec.

52.23, 55.1, and 55.6). Chapter 70 of the Handbook contains direction

on the forms to complete for various special-use permits for hydropower

projects. (See FSH 2709.15, sec. 77, ex. 01 through 04).

2771.23--Projects Exempted From Licensing

An exemption from licensing (FSH 2709.15, sec. 12) by FERC does not

grant or imply a grant to any land-use rights to the exemptee. Advise

FERC of substantial concerns regarding potential effects of exempt

project proposals on National Forest resources. Make an independent

determination of whether to authorize such projects (FSM 2772.2).

2771.24--National Forest Purposes

FERC may not license projects which it finds would be inconsistent

and that would interfere with the purposes for which the National

Forest was created or acquired (section 4(e) of the Federal Power Act).

Those purposes are defined in the Organic Administration Act of 1897

(16 U.S.C. 473 et. seq.) and expanded by the Multiple-Use Sustained-

Yield Act of 1960 (16 U.S.C. 528 et. seq.) and subsequent acts (FSM

2701.1). In addition, some National Forest enabling legislation or

proclamations state specific purposes. Since Congress has the authority

to change or expand the National Forests, those purposes do not have to

have been stated at the time the National Forest was originally

reserved or acquired to be ``purposes for which they were created or

acquired.'' Specific legislation (the Wilderness Act for example; 16

U.S.C. 1131-1136) and specific designations (Research Natural Areas for

example) also determine the purposes for which portions of the National

Forests are created or acquired.

Through the Forest and Rangeland Renewable Resources Planning Act

of 1974 (16 U.S.C. 1601 et seq; as amended by the National Forest

Management Act of 1976), Congress requires land and resources

management planning to determine management direction for the National

Forests. Such plans must be consistent with the purposes for which

those lands were created or acquired. Therefore, also use the Forest

land and resource management plan in determining the consistency of a

project with the purposes for which the National Forest was created or

acquired. Fully disclose to FERC in the 4(e) report, a recommendation

concerning the nature and extent of any significant inconsistency or

interference the project would cause for those purposes. FERC makes the

decision whether to authorize the project through licensing. In so

doing, FERC makes the actual determination regarding whether the

project is inconsistent with or would interfere with the purposes for

which the National Forest was created or acquired. [[Page 27162]]

2771.25--Recommendation That Project is Not Public Interest

The Forest Service is not responsible for determining or

recommending whether a hydropower project (with an application for

license) is in the public interest. Consider making such a

recommendation to FERC if the available information supports such a

conclusion. Make sure the 4(e) report fully explains the nature and

extent of reasons for the Forest Service recommendation. Use the Forest

land and resource management plan as a basis for evaluating the needs

of the public.

FERC makes the actual determination of whether the project is in

the public interest under section 10(a) of the Federal Power Act.

2771.3--Coordination

2771.31--Other Actions Within Project Boundaries

Do not initiate non-project related resource management activities

or authorize use by others on lands covered by a hydropower project use

authorization or license unless it is determined that such activities

or uses will not adversely affect project operations and will not

conflict with the terms and conditions of the project special-use

authorization or license. Also, prior to granting special-use

authorizations to third parties, the authorized officer must review

with the Federal Energy Regulatory Commission (FERC) and the affected

licensee proposed non-project uses within the boundaries of licensed

projects.

2771.32--Project Surrender, Termination, or Abandonment

FERC is responsible for procedures for termination, surrender, and

abandonment of licensed projects (18 CFR Part 6). See FSM 2772.5 for

termination requirements for Forest Service special-use authorizations

(36 CFR 251.60).

2771.33--Federal Takeover of Project Facilities With Expired License

Federal takeover of a project whose license period is ending is a

rarely used process which requires Congressional action. If warranted,

the Forest Service may file a recommendation with FERC that the United

States exercise its right to take over a hydropower project no earlier

than five years before the license expires and no later than the end of

the comment period for a notice of an application for a new license, a

nonpower license, or an exemption. The Forest Service rarely would

propose to the Federal Energy Regulatory Commission (FERC) that the

United States take over a project. The Chief must approve a Forest

Service recommendation for the Federal Government to take over project

facilities. If a project is taken over, the Federal Government must

compensate the licensee for the net investment. See Title 18, Code of

Federal Regulations, Part 16, Subpart C, sections 16.14 through 16.17,

for procedures for recommending to FERC for Federal takeover of a

project. See FSM 2716.4 for direction regarding Forest Service takeover

of unlicensed projects by default, surrender, abandonment, and so

forth.

2771.4--Federal Power Act and Powersite Withdrawals

(For further direction see FSH 2709.15, sec. 21.8.)

2771.41--Exchange Within Federal Power Act and Powersite Withdrawals

Lands withdrawn for power purposes within licensed project

boundaries are available for disposal through exchange or other means

only after:

1. FERC vacates or amends the withdrawal, and thus opens (restores)

the lands for exchange and other related actions, or

2. FERC makes a determination that the lands may be conveyed

subject to a reservation in the patent or deed under section 24 of the

Federal Power Act.

2771.42--Retraction of Licensed Project Boundaries and Withdrawals

When a project boundary contains National Forest System lands that

are in excess of what is needed for the project, the authorized officer

should formally request that the licensee and FERC retract the

boundary; then, request FERC to vacate (terminate) the withdrawal of

these excess lands.

When withdrawn lands are associated with an inactive project (that

is, one not currently authorized or being considered by FERC for some

type of action), request FERC to vacate the withdrawal.

2772--Special-Use Authorizations

FSH 2709.11, Special Uses Handbook, provides direction on the

authorization and administration of special uses on National Forest

System land. Chapters 60 and 70 of FSH 2709.15, Hydropower Handbook,

provide detailed instructions for special-use authorizations related to

hydropower projects on the following forms: Form FS-2700-4e, Special-

Use Permit Exempted or Unlicensed Hydropower Project; Form FS-2700-4g,

Special-Use Permit, Licensed Hydropower Project; and Form FS-2700-4f,

Special-Use Permit, Hydropower Investigation.

2772.1--Applications

Applicants for Federal Energy Regulatory Commission (FERC)

licenses, preliminary permits, and exemptions from licensing must also

apply to the Forest Service for authorization when projects involve

National Forest System land (36 CFR 251 Part B; FSM 2772.25).

Authorizing officers should encourage applicants to file applications

for special use authorizations with the Forest Service concurrently

with filing a FERC license or exemption application.

2772.2--Authorization of Projects

Project special-use authorizations shall become effective only

after the project is licensed or exempted from licensing by FERC.

2772.21--Authorization of Licensed Projects

Issue special-use authorizations for all hydropower projects

licensed by FERC in accordance with FSM 2772.25. If the Forest Service

determines that a project (whose proponent is seeking a license) should

not be constructed on National Forest System land, then the Forest

Service must advise FERC, before the licensing decision is made, that

the project is inconsistent or would interfere with National Forest

purposes or that it would not be in the public interest. Promptly

notify the Washington Office Director of Lands is issuance of a

special-use authorization to a project licensed by FERC might violate a

law or cause unacceptable damage to National Forest System resources

before preparing a section 4(e) report.

2772.22--Denial of Special-Use Authorization to Licensed Project

Licensed projects may not be denied a special-use authorization

(FSM 2772.21)

2772.23--Authorization of Projects Under Preliminary Permits

The Forest Service may issue investigative special use permits to

authorize studies to be carried out by prospective applicants that have

received a FERC preliminary permit. An investigative special-use permit

(FS-2700-4f) may be issued to allow investigation of potential

projects. This type of permit must contain conditions necessary for

resource protection commensurate with the scope of investigation (FSH

2709.15, sec. 62.11 and 74). [[Page 27163]]

2772.24--Authorization of Projects Exempt From Licensing

For a project exempted from licensing by FERC, the Forest Service

may issue a special-use authorization (Form FS-2700-4e) if it

determines the project is an appropriate use of National Forest System

lands and is in the public interest. (See FSH 2709.15, sec. 53.2, for

additional information on exemptions.)

2772.25--Requirement To Have Special-use Authorization

Pursuant to the Federal Land Policy and Management Act (FLPMA) of

October 21, 1976, the holder of a FERC license or a hydropower project

proponent who is exempt from licensing also must obtain a Forest

Service special-use authorization. This requirement to have a special-

use authorization applies to original licenses (first license for

project) and new licenses issued as a result of relicensing. However,

pursuant to the Energy Policy Act of 1992 (42 U.S.C. 13201), a special

use authorization is not required for the continued operation of

licensed or exempted projects that had not received a authorization

under section 501 of FLPMA at any time prior to the passage of the Act

unless FERC determines that additional National Forest System lands

would be affected. Before passage of FLPMA, FERC licensees were not

required to have a Forest Service special-use authorization. See FSH

2709.15, section 63.1, for direction regarding the reasonable and

orderly phase-in of FLPMA requirements in regard to licensed and

relicensed projects.

A special-use authorization is also required for the use of

National Forest System lands affected by a material license amendment,

even if the current license was issued prior to passage of FLPMA. See

FSH 2709.15, section 63.1 for direction regarding the reasonable and

orderly phase-in of FLPMA requirements in regard to amendments of

license.

2772.3--Conditions

Special-use authorizations for licensed projects (Form FS-2700-4g)

shall authorize the occupancy and use of National Forest System lands.

In addition to the mandatory standard provisions (FSH 2709.15 sec. 72),

the special-use authorization shall include those conditions and

requirements which are necessary for comprehensive and compatible use

of land, water, and hydropower resources consistent with the purposes

for which the National Forests are managed (FSM 2772.5, and FSH

2709.15, sec. 62.13 and 72). These conditions, however, should not

duplicate what is already required in the FERC license.

1. In the Forest Service special-use authorization for a FERC-

licensed project (Form FS-2700-4g), do not include conditions and

requirements that:

a. Substantially affect power production capability (through limits

on water use or through high costs), or

b. Substantially affect facility siting. Such requirements are to

be imposed through conditions in the section 4(e) report (FSM 2771.21).

2. The limitations on conditions in special use authorizations in

the preceding paragraph 1 do not apply to:

a. A Federally owned dam under the jurisdiction of the Forest

Service, or

b. A project exempted from licensing by FERC.

Special-use authorizations for projects exempted from licensing

(Forms FS-2700-4e) by FERC must also include conditions to protect the

public interest normally covered by the FERC license (FSH 2709.15, sec.

12, 62.12, and 73).

An investigation special-use permit (Form (FS-2700-4f) may be

issued to allow investigation of potential projects. This type of

permit must contain conditions necessary for resource protection

commensurate with the scope of investigation (FSH 2709.15, sec. 62.11

and 74).

2772.4--Term

For FERC-licensed projects, issue a special-use authorization (Form

FS-2700-4g) for the same term as the license. For projects exempted

from licensing by FERC, the authorized Forest Service officer shall

determine the term of the permit (Form FS-2700-4e), up to 30 years.

Temporary facilities and investigations may be authorized for up to 3

years (Form FS-2700-4f) (FSH 2709.15, sec. 62.1).

2772.5--Revocation or Suspension of Special-Use Authorization

A special-use authorization for a FERC-licensed project (Form FS-

2700-4g) has a term matching that of the license and normally is not

revoked unless and until the license terminates. However, a special-use

authorization for a licensed project may be revoked or suspended for

breach of its conditions, if negotiations to remedy the breach in

consultation with FERC such as those outlined in FSH 2709.15, section

64, fail to obtain the compliance of the holder (see also FSM 2771.32).

Special-use authorizations for FERC-exempted projects may be revoked in

accordance with 36 CFR 251.60.

2772.6--Special Use Authorization Fees

See FSH 2709.15, section 65 for policy on charging fees for:

1. Investigation permits,

2. Licensed project authorizations, and

3. Exempted project authorizations.

2773--Environmental Analysis

2773.1--Environmental Analysis and Documentation

(FSM 1950, FSH 1909.15, FSH 2709.15, ch. 30.) If an environmental

impact statement (EIS) is to be prepared, FERC usually will be the lead

Federal agency. Line officers should request FERC to designate the

Forest Service as a cooperating agency when National Forest System

lands are affected. When an environmental assessment (EA) is to be

prepared, the Forest Service and FERC will usually perform a

cooperative environmental analysis and prepare a cooperative EA.

2773.11--Licensed Projects

The Federal Energy Regulatory Commission (FERC) is responsible for

National Environmental Policy Act (NEPA) compliance for projects

licensed by FERC. The Forest Service is responsible for NEPA compliance

on decisions regarding the determination of the conditions imposed

through the 4(e) report (FSM 2771.21); and special-use permit

conditions necessary for the protection and utilization of National

Forest System lands; and compatibility decisions under Section 7 of the

Wild and Scenic Rivers Act.

2773.12--Projects Exempted From Licensing

When National Forest System lands are involved, the Forest Service

is responsible for NEPA compliance for projects exempt from licensing

by FERC.

2773.2--Mitigation

Determine the effects of the project as proposed and the effects of

identified alternatives. Devise alternatives which provide for

mitigation of adverse resource impacts. Analyze alternatives and their

associated resource protection measures, and balance resource

protection needs and resource utilization needs.

1. Identify measures necessary for the adequate protection and

utilization of the National Forest and

a. Include the measures in the 4(e) report which will then be

incorporated into the license; as appropriate, require implementation

plans as a 4(e) condition or as a condition of the special-use

authorization to provide site-specific details for applying those

measures on the ground; and/or [[Page 27164]]

b. Include them as appropriate in the special-use authorization.

2. The effects of a project should be known before authorization is

granted through the license or special-use authorization. Therefore,

determine resource protection measures in the environmental analysis

before authorization. The license or special-use authorization may

require plans to implement the mitigation measures, but in general, the

plans would not be used to determine the impacts (FSH 2709.15, sec.

55.23).

3. Required mitigation measures must be reasonable and necessary

for the adequate protection and utilization of the National Forest and

should be designed to prevent unnecessary impacts to forest resources.

As noted in FSM 2271.22, do not require, through 4(e) conditions,

measures that do not meet that standard.

4. Tradeoffs in uses of the National Forest can be evaluated and

certain enhancement measures may be required through 4(e) conditions

for the adequate protection and utilization of the National Forest. For

example, in allowing an important hydropower development, a resource or

use (such as dispersed recreation) may be severely impacted or

eliminated from the affected area--an unmitigated impact. Through

evaluation of the project, another related resource or use (such as

developed recreation) may be enhanced by actions or developments (such

as campgrounds) the licensee could provide. Such enhancements may be

required through section 4(e) conditions as offsetting the impacts of

the development. Carefully negotiate such enhancements with the

potential licensee to obtain agreement if possible. In cases where it

may be difficult to substantiate project impacts with the need for

enhancement, be aware that such measures may be challenged by the

potential licensee for their imposition as 4(e) conditions. Seek the

advice of the Washington Office Lands Staff before requiring offsetting

enhancement without the potential licensee's consent.

5. Developing offsite resources as mitigation for resources lost by

development in the project area is acceptable as called for by a

balanced evaluation of the effects of the project. However, it is not

necessary that resource losses be mitigated by such offsite

replacement. Determine whether offsite replacement is appropriate based

on the evaluation of effects of the project and the balancing of the

hydropower needs with resource needs; consider whether potentially lost

resources are unique or in short supply; and determine the feasibility

of replacing the resources. See FSM 2276.1, for offsite mitigation

direction regarding projects in relicensing.

2774--Recreation Uses at Hydropower Projects

(See also FSM 2314 for additional direction.)

2774.1--Licensee Responsibility

Licensees and exemptees are responsible for providing recreation

and interpretive facilities to mitigate (FSM 2773.2) the recreation

pressures induced by the construction and operation of the hydropower

facilities. That induced recreation need is often the result of

reservoir construction or stream flow alterations that create a water

attraction or new access to existing roads (such as by snow removal).

These attractions may invite the recreating public to existing

locations in increased numbers, to new places, and to places or at

times not previously used.

Require developers of hydropower facilities that induce or displace

recreational use of the National Forest to provide facilities and

otherwise mitigate those increases and losses in recreation use in an

appropriate manner, consistent with the Forest land and resource

management plan. Specify necessary facilities and mitigation measures

as conditions in the 4(e) report submitted to FERC (FSH 2709.15, ch.

50). Forest Service requirements for recreation facilities and

mitigation measures must be reasonable and necessary for the adequate

protection and utilization of the National Forest and its resources

(Federal Power Act, sec. 4(e); 16 U.S.C. 797(e)).

Hold the licensee or exemptee responsible for construction,

operation, maintenance, and replacement of recreation facilities that

accommodate project-induced use or mitigate impacts from projects

constructed through licenses or exemption issued by the Federal Energy

Regulatory Commission (FERC). Do not relieve the licensee of the

obligation to provide those facilities and to cover the costs for

facility operation, maintenance, and replacement.

See FSH 2709.15, section 24.2, for additional direction on Forest

Service and licensee responsibilities; in particular, see section 24.22

regarding displaced recreation uses.

2774.2--Facility Operation, Maintenance, and Replacement

Control licensee's construction, operation, maintenance, and

replacement of recreation facilities on National Forest System lands

through the project special-use authorization (FSM 2772, FSH 2709.15,

ch. 60).

Negotiation is the preferred method of determining which party

should assume operation and maintenance of licensee-constructed project

recreation facilities (FSM 2774.2). If negotiations fail, the Forest

Service may require the licensee to turn over operation and maintenance

of these facilities on National Forest System lands to the Forest

Service as long as the standards of FSH 2709.15, section 24.31 are met.

When it is desirable for the Forest Service to operate the

recreation facilities (FSH 2709.15, sec. 24.3), negotiate a memorandum

of understanding (FSH 2709.15, sec. 42.2) with the licensee for such

operation at the licensee's expense. Ownership of facilities is not

necessary for the Forest Service to operate facilities through a

memorandum of understanding or license conditions. Use a collection

agreement to allow the licensee to make payments for Forest Service

operation, maintenance, and replacement of facilities.

Licensees may be allowed to operate Forest Service-owned facilities

through the authority of the Granger-Thye Act (16 U.S.C. 580(d); see

FSM 2711.7). The licensee may improve National Forest facilities and

the facilities operated by the licensee under authorization of the

Forest Service project special-use authorization by adding appropriate

conditions from the standard Granger-Thye permit (FSM 2713.12a).

Negotiate shared financial responsibility with the licensee when

facilities are constructed which accommodate both project induced

recreation and non-project induced recreation.

See FSH 2709.15, section 24.3, for additional direction on

determining who is responsible for operating, maintaining, and

replacing recreation facilities.

Generally, do not accept ownership of recreation facilities

constructed by the licensee. Such acceptance may make the Forest

Service responsible for operation and maintenance of the facility, as

well as replacement. If the licensee desires to transfer ownership to

the Forest Service, ensure that the transfer agreement specifies the

licensee's continuing responsibility, including replacement of

facilities as appropriate. In addition, make sure that project-induced

facilities remain within the project boundary so that they remain

within the jurisdiction of the FERC license.

2774.3--Campgrounds

Campgrounds constructed on National Forest System lands, regardless

[[Page 27165]] of who builds, operates, or maintains them, are to be

identified and managed as National Forest campgrounds. They are subject

to Forest Service standards and to National programs, such as the

``Golden Age and Golden Access Passports.''

Monitor literature produced by the licensee to ensure that

campgrounds are identified as National Forest campgrounds and as

licensed and/or operated by the licensee as required by a condition of

the special use authorization or FERC license.

2774.4--Signs

Recreation facility signs must be from the Forest Service family of

signs for campgrounds (FSM 7160 and FSH 7109.11). Give visible and

equal credit in such signs to the licensee for its role in the

campground development, construction, and operation, as appropriate.

The licensee is responsible for the cost of such signs.

Interpretive signs for the project are the responsibility of the

licensee, except to the extent they interpret the Forest Service

mission or activities.

Coordinate with FERC and the licensee with regard to placement and

design of signs required by FERC for the project.

2774.5--Project Recreation Plan

As part of the application for a FERC license, a project applicant

normally prepares a project recreation plan to address future

recreation needs associated with the project. The Forest Service should

work with a license applicant to ensure that the applicant's plan

adequately anticipates and plans for future recreation needs. In the

plan, develop and include criteria or measurable events that will

trigger future additional facility needs.

Do not use open-ended special-use authorization or 4(e) conditions

for the FERC license to require unspecified future recreation

developments; however, provide flexibility for modifying the project

recreation plan if unanticipated needs for different recreation

developments arise in the future. Keep in mind that costs for any

future modifications must be within the total cost of the future

recreation expansion required in the license.

2774.6--Recreation Planning During Relicensing

Recreation guidelines for relicensing existing FERC-licensed

projects are the same as for original licenses. Needs induced by the

project are the responsibility of the licensee, regardless of when

those needs were originally induced or who is currently meeting those

needs.

The Forest Service has constructed many recreation facilities in

the past to accommodate recreation induced by FERC-licensed projects

when the licensee would not construct the facilities. During

relicensing, use appropriate 4(e) conditions (FSH 2709.15, ch. 50) to

require the licensee to assume appropriate financial responsibility for

those facilities constructed by the Forest Service, unless the Forest

Service has reasons to retain this responsibility (see also related

direction in FSM 2774.2 and FSH 2709.15, sec. 24.15).

2775--Special Management Areas

2775.1--Projects Proposed in Wild and Scenic Rivers Areas

Rivers and study rivers designated for protection under sections 3

or 5(a) of the Wild and Scenic Rivers Act (16 U.S.C. 1271 et seq.) may

not be used for hydropower projects on or directly affecting such

rivers. Hydropower projects not on or directly affecting a designated

wild and scenic river, but having some indirect affects on the river,

may be permitted only where they do not invade or unreasonably diminish

the existing wild and scenic river values (this provision also affects

rivers designated for study under section 5(a) of the Wild and Scenic

River Act).

By law, the Secretary of Agriculture must make the determination of

whether a project is ``on or directly affecting'' the designated river

or would ``invade or unreasonably diminish the values for which the

river was designated,'' in accordance with section 7 of the Wild and

Scenic Rivers Act. This is called a section 7 determination. This

authority has been delegated to the Regional Forester, who must make

this determination prior to issuance of an exemption or license by FERC

on rivers administered by the Department of Agriculture. See FSM

2354.04 and 2770.4 for the delegation of authority for making this

determination. For further direction on wild and scenic rivers, see FSH

2709.15, sec. 25; 36 CFR Part 297; and FSH 1909.12, ch. 8.

2775.11--Projects Proposed on All Other Waterways

The proposed use of rivers on National Forest System lands for

hydropower projects must be consistent with the requirements of section

5(d) of the wild and Scenic Rivers Act which Authorizes the Forest

Service to study the Suitability of rivers for wild and scenic

protection through the forest planning process. Therefore, the Regional

Forester must ensure that eligibility determinations have been

completed for all National Forest rivers proposed for use by hydropower

projects by the time of the interim 4(e) report (FSH 2709.15, sec. 25;

FSM 2354). If the river is not eligible for inclusion in the Wild and

Scenic Rivers System, note that fact in the interim 4(e) report to

FERC. If the river is eligible for inclusion in the Wild and Scenic

Rivers system, ask FERC to delay the licensing decision until the

suitability determination for inclusion in the Wild and Scenic Rivers

System has been completed as outlined in FSH 2709.15, section 25.3.

This requirement to complete eligibility requirements and, if the river

is eligible, to complete suitability determinations applies to rivers

identified on the Nation-wide Rivers Inventory and to rivers identified

for consideration through Forest land and resource management plans

(FSM 1924).

2775.12--Wild and Scenic Rivers on Lands in Conservation Units in

Alaska

Dams and hydropower plants on a designated wild and scenic river in

Alaska would not be an appropriate use and could not be licensed by

FERC if they are ''on or directly affecting'' the river (Wild and

Scenic Rivers Act, sec. 7, and sec. 1107 of the Alaska National

Interest Lands Conservation Act (ANILCA; 94 Stat. 2464; 16 U.S.C.

3167)). A transportation or utility system, including linear facilities

associated with a hydropower project, may use lands within the

boundaries of a designated river in Alaska National Forests when the

following conditions are met (16 U.S.C. 3167(b)):

1. Facilities do not interfere with or impede the streamflow of and

transportation on the river.

2. The transportation or utility system (linear facilities, such as

pipelines, ditches, tunnels and powerlines; 16 U.S.C. 3162(4)) is

located and constructed in an environmentally sound manner.

2775.2--Projects Proposed in Designated Wilderness Areas.

(FSM 2320), and FSH 2709.15, sec. 26.) A new hydropower project may

occupy land in a wilderness only if the President approves (16 U.S.C.

1133(d)(4)). The Secretary of Agriculture is responsible for a

recommendation to the President to approve a hydroelectric use in a

designated wilderness. The Chief is responsible for the recommendation

to the Secretary to approve such a hydroelectric use. The Regional

Forester is responsible for evaluating such a proposal. The

[[Page 27166]] Secretary, Chief, or Regional Forester (FSM 2770.4) may

determine that a proposal is not in the public interest and dismiss the

project proposal.

Even though the Forest Service is responsible for initiating a

recommendation for a project in wilderness, the Federal Energy

Regulatory Commission (FERC) is responsible for the environmental

impact statement (EIS) needed to evaluate proposed licensing of the

project (FSM 2773). Such an EIS generally is prepared with the

cooperation of the Forest Service through the Regional Forester.

If the Chief determines that a proposed project in wilderness is in

the public interest, the Chief transmits the EIS, along with the

recommendation, to the Department of Agriculture for the Secretary's

recommendation to the President for a decision. If the President

approves the project and the associated use of the wilderness, the

Regional Forester must submit a 4(e) report to FERC consistent with

that decision.

A special-use authorization (Form FS-2700-4f) for study of a

potential hydropower development and other non-ground-disturbing

activities in a wilderness may be issued without Presidential approval

(FSM 2772.3, and FSH 2709.15, sec. 62.11 and 74).

Existing facilities in wilderness areas that have been properly

authorized by a FERC license continue to be authorized by that license.

See FSH 2709.15, section 64.7, for further guidance on administering

existing projects in the wilderness.

2775.3--Project Proposed in Roadless Study Areas

Roadless study areas include legislatively unreleased Roadless Area

Review and Evaluation II (RARE II) areas, further planning areas, and

Congressionally mandated wilderness study areas (FSM 1923 and FSM

2320).

When roadless study lands are included in an application for

license for a proposed hydropower project, advise FERC through an

interim 4(e) report (or other appropriate correspondence) of the study

and pending land allocation decision. Recommend that FERC:

1. Reject the application for license and advise the applicant to

reapply if the lands in question are allocated to non-wilderness uses

that would not conflict with hydropower development, or

2. Delay the licensing decision until the land allocation decision

is made, preferably through the Forest land and resource management

plan. If the land use decision must be made before the forest land and

resource management plan can be implemented, conduct a suitable

analysis in compliance with the National Environmental Policy Act (FSM

1920; FSH 1909.12 and 1909.15).

Generally, grant investigation special-use authorizations (Form FS-

2700-4f) in these areas only for study and other non-ground-disturbing

activities.

2775.4--Projects Proposed in Research Natural Areas

Most surface hydropower facilities would be incompatible with the

purposes of a research natural area (FSM 4063). However, the research

natural area management plan may allow for hydropower or similar uses;

in this case, evaluate a proposed project and respond to FERC in a 4(e)

report. Coordinate advice to FERC and the issuance of any special-use

authorizing actions within the research natural area with the Research

Station Director.

1. If a proposed hydropower project is incompatible with the

purposes of the research natural area, then:

a. In response to a notice of application to FERC for license, or

in the 4(e) report, inform FERC that such surface uses would be

incompatible with the purposes of the research natural area.

b. Do not issue a special-use authorization for a project exempted

from licensing by FERC when the project includes surface lands within a

research natural area boundary.

2. When the Station Director believes that the hydropower values

that would be forgone are of greater public benefit than keeping the

research natural area fully protected, the Station Director may

request, with Regional Forester concurrence, that the Chief reconsider

or modify the designation order establishing the research natural area

(see direction on authority of Station Directors in FSM 4062).

3. In general, do not issue an investigation special-use

authorization (Form FS-2700-4f) to a project proposing to use lands of

a research natural area; however, a non-ground disturbing investigation

special-use authorization may be issued in situations such as:

a. The research natural area's management plan allows actions which

include or are similar to those proposed by the hydropower project;

b. There would be no direct or indirect modification to the

ecological processes of the research natural area; for example, a

tunnel under the research natural area might not adversely affect the

area; or

c. The Station Director anticipates that a proposed hydropower

development may have significant public benefits.

2775.41--Projects Proposed in Candidate Research Natural Areas

When candidate research natural area lands are included in an

application for license for a proposed hydropower project, advise FERC

of the study and pending land allocation decision. Recommend that FERC:

1. Reject the application for license and advise the applicant to

reapply if these lands are allocated to non-research natural area uses

that would not conflict with hydropower development, or

2. Delay the licensing decision until the land allocation decision

is made, preferably through the Forest land and resource management

plan. If the land use decision must be made before the land and

resource management plan can be implemented, conduct a suitable

analysis in compliance with the National Environmental Policy Act (FSM

1920; FSH 1909.12 and 1090.15).

Issue investigation special-use authorizations (Form FS-2700-4f)

for candidate research natural areas where no ground disturbance will

take place. Coordinate the issuance of any special-use authorizing

actions within the candidate research natural area with the Research

Station Director.

2775.5--Projects Proposed in Other Special Areas

1. Other special areas may be established by the Forest land and

resource management plan or unit plan for which the Forest Service may

determine that a proposed hydropower development would not be

compatible. Special interest areas established by the Forest Service

may include:

a. Scenic, geological, botanical, zoological, and paleontological

areas (FSM 2360.2).

b. Cultural resources areas (FSM 2361).

c. National scenic or historic trails (FSM 2353.4).

d. Other special land allocations established through the forest

land and resource management plan or other procedure where hydropower

development would be incompatible.

2. Other special land allocations may have been established by

legislation, such as national recreation areas, where hydropower

development may be incompatible.

3. When hydropower use would be incompatible with the management

and purposes for establishing the special area, take the following

actions:

a. In response to a notice of application to FERC for license,

inform FERC in the 4(e) report that such use [[Page 27167]] would be

incompatible with National Forest purposes of the special management

area (FSH 2709.15, sec. 26.4).

b. In response to an application for special-use authorization for

a project exempted from licensing by FERC, do not issue a special-use

authorization for such a project that includes lands within the special

management area.

4. When project impacts can be adequately mitigated to protect the

management and purposes for establishing the special management area,

impose appropriate conditions on the license and special-use

authorization through the 4(e) report or through the special-use

authorization alone for a project exempted from licensing.

2775.51--Projects Proposed in Study Special Areas

When study special management area lands are included in an

application for license for a proposed hydropower project, advise FERC

of the study and pending land allocation decision. Recommend that FERC:

1. Reject the application for license and advise the application to

reapply if the lands in question are allocated to non-special area uses

that would not conflict with hydropower development, or

2. Delay the licensing decision until the land allocation decision

is made, preferably through the Forest land and resource management

plan. If the land use decision must be made before the Forest land and

resource plan can be implemented, conduct a suitable analysis in

compliance with the National Environmental Policy Act (FSM 1920; FSH

1909.15).

Issue investigation special-use authorizations (Forms FS-2700-4f)

for study special areas, and as appropriate, carefully regulate

potential ground disturbance.

2775.6--Projects Proposed in State-Designated Special Areas

The States may designate special areas, such as State wild and

scenic rivers, wild trout streams, and State game refuges, which may

include National Forest System land. State laws may prohibit State

permits for hydropower projects on these special areas, but these laws

are not binding on Federally authorized projects. However, in the

spirit of cooperation, give such State laws and areas very careful

analysis when considering hydropower projects. Under section 4(e) of

the Federal Power Act, the Forest Service is not authorized to:

1. Impose conditions on the license to ensure protection of the

State's designated special areas; or

2. Impose conditions on the license to protect other State

interests not directly a result of the need for ``adequate protection

and utilization of the National Forest.''

However, the Forest Service and the State may request that FERC

provide protections which promote the interest of the state-designated

area.

2775.7--Projects Proposed in National Monuments

FERC is prohibited from licensing a project that would occupy lands

of a national monument administered by the Forest Service or other

Federal agency (41 Stat. 1353; 16 U.S.C. 797(a)); such action would

require an act of Congress.

2776--Relicensing

In general, follow the same procedures for projects whose owners

are applying for a new license under relicensing procedures as used for

those for projects whose applicants are applying for an original

license. The procedural differences apply mainly to the project owners,

not the Forest Service (sec. 15 of the Federal Power Act, 16 U.S.C.

808; 18 CFR Part 16, subpart B, sec. 16.8 through 16.13).

2776.1--Section 4(e) Conditions in Relicensing

The Forest Service may specify 4(e) conditions in a new license

issued by FERC under relicensing procedures. Such conditions must be

reasonable and necessary for the adequate protection and utilization of

the National Forest as it exists at the time of relicensing.

Existing projects provide public benefits and have been in place

long enough to be the ``normal'' situation where they exist. Therefore

avoid disruption of these projects and carefully evaluate the need for

change. However, it is essential to require reasonable measures to

protect the environment. For example, it may be reasonable to provide

fish passage over a dam, but not to restore a stream fishery that was

converted to a lake fishery. Do not seek in relicensing offsite

replacement of resources lost during the original licensing decision.

Generally, limit the resource protection measures to those which

the project could afford to provide and still operate; avoid as much as

possible actions that would cause projects to operate in a marginal

economic condition.

2776.2--Removal of Project

If special circumstances indicate a project that is under

consideration for relicensing should be removed, recommend in a 4(e)

report to FERC that no new license be issued and that the area be

restored. Do not use the conditioning authority under section 4(e) of

the Federal Power Act to force removal of a project. See FSM 2771.33,

for direction regarding Federal takeover of a project.

Proposed Handbook Revision

Following are the sections of the Hydropower Handbook (FSH 2709.15)

cited in this Federal Register notice. For a copy of the entire

Handbook, call the For Further Information Contact listed at the

beginning of the notice. This Handbook provides detailed direction to

Forest Service personnel for evaluating hydropower project proposals

and for coordinating with the Federal Energy Regulatory Commission

(FERC). See FSM 2770 for policy and overall direction on Forest Service

hydropower matters.

64.7--Administration of Projects in Wilderness Areas

Facilities in wilderness areas that have been properly authorized

by a FERC license will continue to be authorized by that license. When

FERC relicenses a project, the Forest Service issues a companion

special-use authorization (Form FS-2700-4g), usually under the Federal

Land Policy and Management Act (FLPMA) (FSM 2770.1). Since FLPMA

authority cannot be used for facilities in a wilderness, use the

Organic Act (16 U.S.C. 551) for the Forest Service authorization of

that portion of the project in the wilderness.

These hydropower projects are considered as valid existing rights

and administered as such under section 4(c) of the Wilderness Act of

September 3, 1964 (16 U.S.C. 1133(c); FSM 2775.2).

Existing special use authorizations may be modified for maintenance

and reconstruction work on projects in wilderness areas. Any

modifications to such facilities must be made in conformance with the

requirements of the license and any special-use authorization, and

section 4(c) of the Wilderness Act, except that modifications to

increase storage capacity or similar improvements must receive

Presidential approval (sec. 4(d)(4) of the Wilderness Act).

Hydropower dams in wilderness areas must meet the requirements of

Federal and State law, including the Wilderness Act, the Dam Safety Act

(33 U.S.C. 467a-367n), the Federal Power Act, the [[Page 27168]] law

and regulation that provides for the special use authorization, and the

terms of the authorization. The Wilderness Act provides for the

maintenance of existing dams and related facilities in wilderness areas

if they are valid existing rights.

Maintenance can include work that will improve the safety of the

dam, such as enlarging the spillway or increasing the freeboard on the

dam. In some instances the installation of a water measuring device may

be added when required by State law and when there is no suitable

location available outside of the wilderness area.

FSM 2320 provides direction for evaluating proposed improvements

and reconstruction of facilities, including access alternatives to the

dam or water conveyance system. Consideration of proposals for work on

dams and related access should be made on a case-by-case basis using

the NEPA process (FSM 1950), balancing wilderness values with licensee

rights and public safety. Historic methods of access and economics also

should be considered in the analysis.

Hydropower projects licensed by FERC do not qualify for an easement

under the Act of October 27, 1986 (Pub. L. 99-5545, the ``Ditch Bill'';

FSM 2770.1) which amended parts of the Federal Land Policy and

Management Act of 1976 (43 U.S.C. 1761(c)).

65--Special-Use Authorization Fees

Fees may be charged for investigation special use permits (Form FS-

2700-4f), as well as for project special use authorizations.

65.1--Investigation Permit Fee

Unless the market conditions indicate that a higher fee is

appropriate, charge $200.00 for the term of a hydropower investigation

permit (Form FS-2700-4f).

65.2--Licensed Project Authorization Fee

Waive the fee for this type of authorization since FERC already

charges fees for the use of National Forest System land.

The holder shall pay a fee, as described in section 65.31, for

areas outside the license boundary that are under temporary permit.

65.3--Exempted Project Authorization Fee

65.31--Fee for Construction Period (Minimum Operation Fee)

Charge the annual minimum fee of 10 percent of the land value of

the area under permit for periods when power is not being sold. At the

option of the Regional Forester, determine such land value by appraisal

or other sound business practices. The holder shall pay the minimum fee

in advance at the beginning of each year. Calculate the fee for

temporary permits issued for temporary areas outside the main permit

area at 10 percent, annually, of the land value of the area under those

permits.

65.32--Operation Fee

Unless local market conditions indicate otherwise, the holder shall

pay a fee of 3 percent of the gross power sales from the start of

project operation until the end of the fifth year. From the start of

the sixth year to the end of the tenth year, the holder shall pay a fee

of 5 percent of the gross power sales. The fee from the start of the

eleventh year until the end of the term of the authorization may

increase up to 10 percent. Determine the final rate through a

reevaluation of the market, during the tenth year.

The holder pays the minimum operation fee (sec. 65.31) in advance

each year and that amount is credited toward the operation fee. The

holder does not start paying the quarterly operation fees each year

until the year's accumulated operation exceeds the minimum operation

fee. The holder pays the operation fee quarterly, within 45 days of the

end of each quarter, unless the average annual fee is less than $2,000

(in which case the holder pays at the end of the year).

65.33--Fee Adjustment of Mixed Ownership

Adjust the operation fee when the Federal Government land under

permit is less than 90 percent of the total linear distance actually

occupied by the project excluding access roads and transmission lines.

Make the adjustment by measuring slope-distance length of the project

from the outlet of the lowest powerhouse tailrace to the upstream edge

of the impoundment created by the diversion. The percentage of that

length that is on Government land is the percentage of the total fee

that is due the Government. For example, if the government owns 800

feet of a 1,000-foot-long project, the initial operation fee would be

80 percent of 3 percent of the gross power sales or 2.4 percent of the

gross power sales.

If there is more than one diversion, include the additional lengths

of those other diversions from the point of intersection with those

already measured in the total length.

65.34--Transmission Line Fee

The holder shall pay a separate fee for the area under permit for

the transmission line portion of the project if such a line is the only

facility under permit or if the transmission line exceeds 2,500 feet on

National Forest System land to the point of interconnection with an

existing transmission line. A separate special use authorization for a

transmission line greater than 2,500 feet is not necessary, but may be

used at the discretion of the authorizing officer; that is, the

authorizing officer has the discretion to charge an additional fee for

the transmission line within the hydropower permit, instead of issuing

a separate transmission line permit for lines over 2,500 feet.

Determine fees by the procedures for transmission line fees (see also

sec. 62.24).

65.35--Conduit Exemption Fee

While conduit exemptions cannot be issued for projects that occupy

Federal lands, FERC grants exemptions to such projects as long as the

powerhouse is not on Federal lands and there is no new construction on

Federal lands; for example when the powerhouse would be on non-Federal

lands and the existing water pipeline or ditch on Federal lands does

not need modification.

Regardless of FERC's action, treat the project in its entirety when

calculating fees. Consistent with section 65.33, measure the linear

distance of the water system from the powerhouse to the upper end of

the diversion or to the next powerhouse, if any. The percentage of that

length that is on National Forest System land is the percentage of the

total fee that would be charged.

BILLING CODE 3410-11-M

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[FR Doc. 95-12337 Filed 5-19-95; 8:45 am]

BILLING CODE 3410-11-C