Be it enacted by the Senate and House of Representatives of the United States of American in Congress assembled,

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1 A BILL To amend federal law to establish policies to substantially increase the nation s capacity and generation of sustainable hydropower at modified or new facilities and to improve environmental quality, supporting over 1.4 million American green energy jobs. Be it enacted by the Senate and House of Representatives of the United States of American in Congress assembled, SECTION 1. SHORT TITLE/TABLE OF CONTENTS (a) This Act may be cited as the Hydropower Renewable Energy and Jobs Act of (b) Table of Contents- The table of contents of this Act is as follows: Sec. 1. Short title; table of contents Sec. 2. Findings Sec. 3. Definitions Sec. 4. Hydropower Goal and Policy Sec. 5. Production Tax Credit Parity Sec. 6. Extension of the Production Tax Credit for Qualified Hydropower and Marine and Hydrokinetic Technologies Sec. 7. Expansion of Investment Tax Credit to Energy Storage Sec. 8. Sec. 9. Extension of the Investment Tax Credit Energy Storage Eligible for New Clean Renewable Energy Bonds Sec. 10. Increased Limitation on Issuance of New Clean Renewable Energy Bonds Sec. 11. Extension of Qualifying Advanced Energy Project Credit Sec. 12. Expansion of the Grants for Specified Energy Property in Lieu of Tax Credits Sec. 13. Extension of Specified Energy Property Grants In Lieu of Credit 1

2 Sec. 14. Expansion of 5-year Accelerated Depreciation for Qualified Hydropower and Marine and Hydrokinetic Renewables Sec. 15. Extension of Temporary Bonus Depreciation for Certain Property Sec. 16. Federal Energy Regulatory Commission Sec. 17. Research, Development and Demonstration Sec. 18. Corps of Engineers Sec. 19. Bureau of Reclamation Sec. 20. Loan Guarantees Sec. 21. Worker Training SEC. 2. FINDINGS Congress finds that (1) There are currently 96,000 megawatts of hydropower capacity in the United States, including pumped storage resources. Hydropower is the largest source of renewable electricity in the United States, currently providing approximately 7 percent of U.S. electricity generation, avoiding 225 million metric tons of carbon emissions a year. (2) Only 3 percent of the Nation s 80,000 dams currently generate electricity. There is substantial potential for adding renewable electric generation to non-powered dams. Further, much of the Nation s hydropower infrastructure is due for technology upgrades. Substantial opportunities are available to modernize existing hydropower projects with new and more efficient generating capabilities that also improve environmental quality. 2

3 (3) New hydropower capacity could support over 1.4 million cumulative direct, indirect and induced industry green energy jobs throughout every state across the country. Further, new hydropower capacity can help to meet greenhouse gas reduction goals, ensure greater electric power grid stability, and set a strong course toward national energy security. (4) The Army Corps of Engineers and the Bureau of Reclamation, as federal owners and operators of one half of U.S. hydropower generation, will be key partners in modernizing the facilities they respectively operate. (5) Hydropower pumped storage can be used to provide necessary firming for variable renewable electricity resources, such as wind and solar power. Emerging technologies that generate power without creating a dam or impoundment such as instream hydrokinetic, ocean and tidal power also have substantial potential. (6) Certain existing hydropower capacity licensed prior to the enactment of key modern environmental statutes has caused adverse impacts on fish, water quality, and other non-developmental uses of our nation s waters. Modernization of existing capacity, as well as any new development, should be accomplished in a manner that improves environmental quality and fully complies with all applicable environmental laws, including the Federal Power Act, National Environmental Policy Act, Clean Water Act and Endangered Species Act. SEC. 3. DEFINITIONS For purposes of this Act: (1) COMMISSION- The term Commission means the Federal Energy Regulatory Commission. 3

4 (2) SECRETARY- The term Secretary means the Secretary of Energy. (3) CORPS- The term Corps means the U.S. Army Corps of Engineers. (4) COMMISSIONER- The term Commissioner means the Commissioner of the Bureau of Reclamation, Department of the Interior. SEC. 4 HYDROPOWER GOAL AND POLICY It is the national goal and policy of the United States to substantially increase the nation s capacity and generation of sustainable hydropower at modified or new facilities and to improve environmental quality, supporting over 1.4 million American green energy jobs. SEC. 5. PRODUCTION TAX CREDIT PARITY Subparagraph (A) of section 45(b)(4) of the Internal Revenue Code of 1986 is amended by inserting `and before 2010' after `any calendar year after 2003'. SEC. 6. EXTENSION OF THE PRODUCTION TAX CREDIT FOR QUALIFIED HYDROPOWER AND MARINE AND HYDROKINETIC TECHNOLOGIES Each of the following provisions of subsection (d) of section 45 of the Internal Revenue Code of 1986 (relating to qualified facilities) is amended by striking January 1, 2014 and inserting January 1, 2019 : Subparagraphs (A) and (B) of paragraph (9) (relating to qualified hydropower facilities). Subparagraph (B) of paragraph (11) (relating to marine and hydrokinetic renewable energy facilities). SEC. 7. EXPANSION OF INVESTMENT TAX CREDIT FOR ENERGY STORAGE 4

5 (a) 20 Percent Credit Allowed- Subparagraph (A) of section 48(a)(2) of the Internal Revenue Code of 1986 is amended-- (1) by striking `and' at the end of subclause (IV) of clause (i), (2) by striking `clause (i)' in clause (ii) and inserting `clause (i) or (ii)', (3) by redesignating clause (ii) as clause (iii), and (4) by inserting after clause (i) the following new clause: `(ii) 20 percent in the case of qualified energy storage property, and'. (b) Qualified Energy Storage Property- Subsection (c) of section 48 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: `(5) QUALIFIED ENERGY STORAGE PROPERTY- `(A) IN GENERAL- The term `qualified energy storage property' means property-- `(i) which is designed to receive electrical energy, to store such energy, and to convert such energy to electricity and deliver such electricity for sale. Such term shall include hydroelectric pumped storage (c) Effective Date- The amendments made by this section shall apply to periods after the date of the enactment of this Act, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990). 5

6 SEC. 8. EXTENSION OF INVESTMENT TAX CREDIT (a) In General- Clause (ii) of Section 48(a)(5)(C) of the Internal Revenue Code of 1986 is amended to read as follows: (ii) Other facilities: Any qualified facility (within the meaning of section 45) described in paragraph (2), (3), (4), (6), (7), (9), or (11) of section 45(d) if such facility is placed in service in 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, or (b) Effective Date. The amendments made by this section shall apply to property placed in service after the date of enactment of this Act. SEC. 9. ENERGY STORAGE ELIGIBLE FOR NEW CLEAN RENEWABLE ENERGY BONDS (a) In General- Paragraph (1) of section 54C(d) of the Internal Revenue Code of 1986 is amended to read as follows: `(1) QUALIFIED RENEWABLE ENERGY FACILITY- The term `qualified renewable energy facility' means a facility which is-- `(A)(i) a qualified facility (as determined under section 45(d) without regard to paragraphs (8) and (10) thereof and to any placed in service date), or `(ii) a qualified energy storage property (as defined in section 48(c)(5)), and `(B) owned by a public power provider, a governmental body, or a cooperative electric company.'. 6

7 (b) Effective Date- The amendment made by this section shall apply to obligations issued after the date of the enactment of this Act. SEC. 10. INCREASED LIMITATION ON ISSUANCE OF NEW CLEAN RENEWABLE ENERGY BONDS (a) Additional Limitation- Section 54C(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: `(5) FURTHER INCREASE IN LIMITATION i - The national new clean renewable energy bond limitation shall be increased by $5,000,000,000. Such increase shall be allocated by the Secretary consistent with the rules of paragraphs (2) and (3).'. (d) Effective Date- The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act. SEC. 11. EXTENSION OF QUALIFYING ADVANCED ENERGY PROJECT CREDIT (a) In General. Subparagraph (B) of Section 48C(d)(1) of the Internal Revenue Code of 1986 is amended by striking $2,300,000,000 and inserting $4,800,000,000. (b) Effective Date. The amendment made by this section shall apply to allocations for applications submitted after December 31, SEC. 12. EXPANSION OF GRANTS FOR SPECIFIED ENERGY PROPERTY IN LIEU OF TAX CREDITS. 7

8 (a) Grants Allowed for Certain Governmental Units- Paragraph (1) of section 1603(g) of division B of the American Recovery and Reinvestment Act of 2009 is amended by inserting `other than a governmental unit which is a State utility with a service obligation (as such terms are defined in section 217 of the Federal Power Act),' after `thereof),'. (b) Grants Allowed for Public Power- Paragraph (3) section 1603(g) of division B of such Act is amended by striking `paragraph (4) of section 54(j)' and inserting `subparagraph (A) or (B) of section 54(j)(4)'. (c) No Grants for Property for Which CREBs Have Been Issued- Section 1603 of division B of such Act, as amended by section 2, is amended by redesignating subsections (h), (i), and (j) as subsections (i), (j), and (k), respectively, and by inserting after subsection (g) the following new subsection: `(h) Exception for Certain Projects- The Secretary of the Treasury shall not make any grant under this section to any governmental unit with respect to any specified energy property described in subsection (d)(1) if such entity has issued any bond-- `(1) which is designated as a clean renewable energy bond under section 54 of the Internal Revenue Code of 1986 or as a new clean renewable energy bond under section 54C of such Code, and `(2) the proceeds of which are used for expenditures in connection with the same qualified facility with respect to which such specified energy property is a part.'. 8

9 (d) Effective Date- The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act. Sec. 13. [EXTENSION OF SPECIFIED ENERGY PROPERTY GRANTS IN LIEU OF CREDIT] ii (a) In General Paragraph (2) of section 1603(a) of the American Recovery and Reinvestment Tax Act of 2009 is amended by striking during 2009 or and inserting the following: during the period that begins after December 31, 2008, and ends before January 1, (b) Effective Date The amendment made by this section shall apply to grants made after the date of the enactment of this Act. SEC. 14. EXPANSION OF 5-YEAR ACCELERATED DEPRECIATION FOR QUALIFIED HYDROPOWER AND MARINE AND HYDROKINETIC RENEWABLES (a) In General- Subclause (III) of section 168(e)(3)(B)(vi) of the Internal Revenue Code of 1986 is amended to read as follows: `(III) is described in section 45(d)(9) or in section 45(d)(11) (without regard to any placed in service date) and converts qualified hydropower renewable energy or marine and hydrokinetic renewable energy (as defined in section 45(c)(10)) into useable energy, and'. (b) Effective Date- The amendment made by this section shall apply to property placed in service after the date of the enactment of this Act. 9

10 SEC. 15 EXTEND TEMPORARY BONUS DEPRECIATION FOR CERTAIN PROPERTY (a) Extension of Special Allowance- (1) IN GENERAL- Paragraph (2) of section 168(k) of the Internal Revenue Code of 1986 is amended-- (A) by striking `January 1, 2011' and inserting `January 1, 2012', and (B) by striking `January 1, 2010' each place it appears and inserting `January 1, 2011'. (2) CONFORMING AMENDMENTS- (A) The heading for subsection (k) of section 168 of such Code is amended by striking `January 1, 2010' and inserting `January 1, 2011'. (B) The heading for clause (ii) of section 168(k)(2)(B) of such Code is amended by striking `PRE-JANUARY 1, 2010' and inserting `PRE-JANUARY 1, 2011'. (C) Subparagraph (B) of section 168(l)(5) of such Code is amended by striking `January 1, 2010' and inserting `January 1, 2011'. (D) Subparagraph (C) of section 168(n)(2) of such Code is amended by striking `January 1, 2010' and inserting `January 1, 2011'. (E) Subparagraph (B) of section 1400N(d)(3) of such Code is amended by striking `January 1, 2010' and inserting `January 1, 2011'. (b) Extension of Election To Accelerate the AMT and Research Credits in Lieu of Bonus Depreciation- Section 168(k)(4) of such Code (relating to election to accelerate the AMT and research credits in lieu of bonus depreciation) is amended-- (1) by striking `2009' and inserting `2010' in subparagraph (D)(iii) (as redesignated by subsection (a)(3)), and 10

11 (2) by adding at the end the following new subparagraph: `(I) SPECIAL RULES FOR EXTENSION PROPERTY- `(i) TAXPAYERS PREVIOUSLY ELECTING ACCELERATION- In the case of a taxpayer who made the election under subparagraph (A) for its first taxable year ending after March 31, `(I) the taxpayer may elect not to have this paragraph apply to extension property, but `(II) if the taxpayer does not make the election under subclause (I), in applying this paragraph to the taxpayer a separate bonus depreciation amount, maximum amount, and maximum increase amount shall be computed and applied to eligible qualified property which is extension property and to eligible qualified property which is not extension property. `(ii) TAXPAYERS NOT PREVIOUSLY ELECTING ACCELERATION- In the case of a taxpayer who did not make the election under subparagraph (A) for its first taxable year ending after March 31, `(I) the taxpayer may elect to have this paragraph apply to its first taxable year ending after December 31, 2009, and each subsequent taxable year, and `(II) if the taxpayer makes the election under subclause (I), this paragraph shall only apply to eligible qualified property which is extension property. 11

12 `(iii) EXTENSION PROPERTY- For purposes of this subparagraph, the term `extension property' means property which is eligible qualified property solely by reason of the extension of the application of the special allowance under paragraph (1) pursuant to the amendments made by section 3(a) of the Small Business Jobs and Tax Relief Act of 2010 (and the application of such extension to this paragraph pursuant to the amendment made by section 3(b)(1) of such Act). `(b) Limitation- The amount taken into account under subsection (a) shall not exceed $1,500 for each vehicle on which an idling reduction device is affixed.'. (c) Effective Dates- The amendments made by this section shall apply to property placed in service after December 31, 2009, in taxable years ending after such date. SEC.16 FEDERAL ENERGY REGULATORY COMMISSION (a) The Energy Independence and Security Act of 2007 (P.L ) is amended by adding the following new sections at the end thereof: Sec. LICENSING PROCESS FOR CERTAIN MINIMAL IMPACT HYDROPOWER PROJECTS. (a) Within 6 months of the date of enactment the Commission shall establish by rule through a notice and comment proceeding a hydroelectric licensing process for certain proposed minimal-impact hydroelectric projects that takes not more than 2 years from the beginning of the pre-filing licensing process to the issuance of a license by the Commission. 12

13 (b) For the purposes of this section, a minimal impact hydroelectric project shall mean: (i) the addition of hydropower generation to an existing non-hydroelectric dam in circumstances, including operating rules, that assure that the addition of the project will not cause any significant environmental impact; or (ii) closed-loop hydropower storage that does not require any change in existing diversion or impoundment of a river, and otherwise will not cause any significant environmental impacts under applicable law. (c) Nothing in this section shall be construed to modify the requirements of the Federal Power Act, National Environmental Policy Act, Clean Water Act, or Endangered Species Act, or other applicable law. (d) Nothing in this section shall be construed to modify, expand, contract or otherwise affect the scope of the Commission's jurisdiction over closed loop hydropower pumped storage projects. SEC EXTENSION OF TERM OF PRELIMINARY PERMIT. The Commission is authorized to extend, by means of a notice and comment proceeding, the term of a preliminary permit issued pursuant to Sec. 5 of the Federal Power Act by up to 12 months for permittees utilizing the Commission s integrated licensing process or other comparable pre-application filing process. Such extension shall only be granted if the permittee has exhibited timely due diligence in the completion of pre-filing licensing process requirements. 13

14 SEC. 17. RESEARCH, DEVELOPMENT AND DEMONSTRATION (a) PLAN. Not later than 3 months after the date of enactment of this Act, the Secretary of Energy shall complete a plan to facilitate through technology research, development and demonstration the achievement of the goal of doubling United States hydropower capacity by Such plan shall be reviewed and updated on an annual basis. (b) AUTHORIZATION OF APPROPRIATIONS. For the purposes of this section, there are authorized to be appropriated to the Secretary $200 million for each of the fiscal years 2011 to 2025 to implement the plan developed pursuant to this section. SEC. 18. CORPS OF ENGINEERS (a) The Water Resources Development Act is amended by adding at the end the following new section: SEC. NON-FEDERAL HYDROPOWER DEVELOPMENT AT CORPS OF ENGINEERS DAMS AND FACILITIES (a) It shall be the policy of the Corps of Engineers to facilitate non-federal hydropower development licensed by the Federal Energy Regulatory Commission at Corps dams and facilities (b) Not later than 3 months following enactment of this Act, the Federal Energy Regulatory Commission and the Corps of Engineers shall develop and issue an interagency Memorandum of Understanding to improve coordination and timeliness of the licensing and construction and operation of FERC licensed hydropower at Corps of Engineer dams and facilities. 14

15 (c) For the purposes of compliance with the National Environmental Policy Act regarding the licensing of non-federal hydropower development at a Corps dam or facility, the Federal Energy Regulatory Commission shall be the lead agency with the Corps serving as a cooperating agency. (d) [Corps permits issued pursuant to 33 U.S.C. 408 shall be issued concurrently with the FERC licensing order for the project.] iii (e) In addition to the memorandum described in subsection (b), the Corps shall adopt and implement a schedule to review the rules and plans of operations for all of its facilities with existing or potential hydropower capacity. In the course of such review, the Corps shall evaluate the comparative feasibility and cost-effectiveness of alternatives to: improve equipment, design, and operation of its federal facilities, and enhance coordination with any other hydropower facilities in the same basin, to enhance power generation, environmental restoration, and other beneficial uses of the nation s waters.[ iv ] (f) These amendments are not intended to diminish the rights of Licensees who obtained their FERC hydroelectric licenses, pursuant to Part I of the Federal Power Act ( FPA ), and such licensees will retain their rights under FPA Sections 6, 14 and 15(a)(2) if the Corps or any other entity seeks to take action at a Corps project that impacts a FERC licensed hydro project. SEC. 19. BUREAU OF RECLAMATION (a) The Reclamation Act is amended by adding at the end the following new section: SEC. FEDERAL ENERGY COMMISSION LICENSED NON-FEDERAL HYDROPOWER DEVELOPMENT AT BUREAU PROJECTS 15

16 (a) The Commissioner of Reclamation, in consultation with the Federal Energy Regulatory Commission, preference power customers, water users and other interested stakeholders shall not later than 6 months following enactment of this Act complete a study regarding barriers to non-federal development of power resources at Bureau projects. Such study shall include an examination of development barriers inherent to the the lease of power privilege process under Reclamation law. (b) Not later than 3 months following enactment of this Act, the Commission and the Bureau shall develop and issue a revised interagency Memorandum of Understanding to improve coordination and timeliness of the licensing and construction and operation of Commission licensed hydropower at Bureau of Reclamation projects. (c) For the purposes of compliance with the National Environmental Policy Act regarding the licensing of non-federal hydropower development at a Bureau project, the Commission shall be the lead agency with the Bureau serving as a cooperating agency unless the Commission and the Bureau otherwise specify. (d) In addition to the study described in subsection (a) and the Memorandum of Understanding described in subsection (b), the Bureau shall adopt and implement a schedule to review the rules and plans of operations for all of its facilities with existing or potential hydropower capacity. In the course of such review, the Bureau shall evaluate the comparative feasibility and cost-effectiveness of alternatives to: improve equipment, design, and operation of federal facilities, and enhance coordination with any non-federal facilities in the same basin, to enhance power generation, environmental restoration, and other beneficial uses of the nation s waters. 16

17 (e) These amendments are not intended to diminish the rights of Licensees who obtained their FERC hydroelectric licenses, pursuant to Part I of the Federal Power Act ( FPA ), and such licensees will retain their rights under FPA Sections 6, 14 and 15(a)(2) if the Bureau or any other entity seeks to take action at a Bureau project that impacts a FERC licensed hydro project. SEC. 20. [LOAN GUARANTEES] v (a) Section 1705 of the Energy Policy Act of 2005 is amended by inserting at the end thereof: SEC HYDROPOWER LOAN GUARANTEE PROGRAM. (a) Within 6 month of the date of enactment the Secretary of Energy shall establish by rule through a notice and comment proceeding a hydropower loan guarantee program. The purpose of such program shall be to facilitate the achievement of the goal of doubling hydropower generation capacity in an environmentally responsible manner by (b) Such loan guarantees shall be made subject to terms and conditions determined by the Secretary to be in the public interest. Recipients of loan guarantees pursuant to this section shall not be required to pay credit subsidy fees to offset default risk. The costs of such credit subsidies shall be backed by appropriations. (c) AUTHORIZATION OF APPROPRIATIONS. For the purposes of this Section there are authorized to be appropriated to the Secretary $5,000,000,000 to cover the costs of credit subsidy fees granted pursuant to this Section. SEC. 21 [HYDROPOWER WORKER TRAINING] vi 17

18 (a) The Energy Independence and Security Act of 2007 (P.L ) is amended by adding the following new sections at the end thereof: SEC. HYDROPOWER WORKER TRAINING Not later than 6 months after the date of enactment of this Act, the Secretary of Labor, shall, in consultation with the Secretary of Energy, establish a hydropower worker training program. For the purposes of this Section there are authorized to be appropriated to the Secretary not more than $5 million for each fiscal years 2011 to i Current legislative proposals already introduced request a $5 billion increase in the CREBs program. Alternatively, the program could also be uncapped for the period for which it is extended aligning the program with the PTC and other tax incentives that are also uncapped. ii In addition to the extension of the 1603 grant, some utilities have suggested a statutory fix of the ITC normalization rules applying to regulated utilities that claim the grants. iii In addition to the timing of CWA Section 408 permits, developers have seen delays in Section 404 permit issuances. Specific language in the title has not been included on timing of issuance of CWA Section 404 permits by the Corps, however developers have recommended the inclusion of some statutory deadline (i.e. 90 days has been proposed). iv Some developers have a question regarding the Corps ability to factor hydro development when evaluating their ecosystem restoration projects, such as those authorized under WRDA 2007, Section With new hydro technologies that can aid in the passage of fish as well as water quality, hydro development should be included in the list of considerations the Corps takes into account. v There has also been a question raised whether public power will be able to use loan guarantees with tax exempt bonds for hydropower. vi This section may be able to be aligned to introduced proposals on worker training as well as state and regional programs. 18