Contract for Hydroelectric Power Development at the C-Drop, a Feature of the Klamath Project, Klamath Falls, OR, 6820-6825 [2011-2675]

Agencies

• DEPARTMENT OF THE INTERIOR
• Bureau of Reclamation

[Federal Register Volume 76, Number 26 (Tuesday, February 8, 2011)]
[Notices]
[Pages 6820-6825]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-2675]


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DEPARTMENT OF THE INTERIOR

Bureau of Reclamation


Contract for Hydroelectric Power Development at the C-Drop, a 
Feature of the Klamath Project, Klamath Falls, OR

AGENCY: Bureau of Reclamation, Interior.

ACTION: Notice of intent to accept proposals, select one lessee, and 
contract for hydroelectric power development at the Klamath Project, C-
Drop.

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SUMMARY: On March 24, 2010, the Department of the Interior (DOI), 
through the Bureau of Reclamation (Reclamation), U.S. Department of 
Energy, and Department of the Army through the U.S. Army Corps of 
Engineers, signed a Memorandum of Understanding (MOU) between the 
Federal agencies to promote the development of hydropower. Pursuant to 
this MOU and the current Federal policy encouraging non-Federal 
development of electrical power resource potential on Federal water 
resource projects, Reclamation will consider proposals for non-Federal 
development of hydroelectric power at C-Drop of the Klamath Project, 
Oregon. This Notice presents background information, proposal content 
guidelines, and information concerning selection of one or more non-
Federal entities to develop hydroelectric power at C-Drop, and power 
purchasing and/or marketing considerations. Interested entities are 
invited to submit a proposal on this project.

DATES: A written proposal and seven copies must be submitted on or 
before 12 p.m. (PST), on March 31, 2011.

ADDRESSES: Send written proposals and seven copies to Mr. Paul Landry, 
Lease of Power Privilege Coordinator, Bureau of Reclamation, Mid-
Pacific Region, Central Valley Operations Office (CVO-600), 3310 El 
Camino Ave, Suite 300, Sacramento, CA 95821. For additional information 
on:
    (1) Western Area Power Administration's (Western) purchasing and/or 
marketing the power, contact Ms. Sonja Anderson, Power Marketing 
Manager, Western Area Power Administration, Sierra Nevada Region, 114 
Parkshore Drive, Folsom, CA 95630, Telephone: 916-353-4421.
    (2) Operation and maintenance of Link River Dam and Upper Klamath 
Lake, contact Mr. Cecil Lesley, Special Assistant to the Area Manager, 
Bureau of Reclamation, Mid Pacific Region, Klamath Project Office (KO-
100), 6600 Washburn Way, Klamath Falls, OR 97603, Telephone: 541-880-
2546.
    (3) Operation and maintenance of the C-Canal, contact Mr. Mark 
Stuntebeck, Manager, Klamath Irrigation District, 6640 KID Lane, 
Klamath Falls, OR 97603, Telephone: 541-882-6661.

FOR FURTHER INFORMATION CONTACT: Mr. Paul Landry at 916-979-0255, or 
plandry@usbr.gov.

[[Page 6821]]


SUPPLEMENTARY INFORMATION: The Secretary of the Interior authorized 
development of the Klamath Project on May 15, 1905, pursuant to the 
Reclamation Act of 1902. As part of the Klamath Project, the United 
States constructed A, B, and C-Canals, which carry water south from the 
Link River Dam to the vicinity of Henley, OR. The Klamath Irrigation 
District (District), under its contracts with the United States, has 
certain operation, maintenance, replacement, and repayment 
responsibilities and obligations concerning the C-Drop, which includes 
such responsibility for and the supply water for the C-Canal. The C-
Drop is a transition structure between the A-Canal and the C-Canal. It 
is a drop structure which produces the head needed to drive a 
powerplant. There has been previous development of hydropower resources 
by a Klamath Project water district at the C-Drop.
    Reclamation is considering hydroelectric power development at the 
Klamath Project through a lease of power privilege. A lease of power 
privilege is a congressionally authorized alternative to Federal 
hydroelectric power development. A lease of power privilege grants to a 
non-Federal entity the right to utilize, consistent with Klamath 
Project purposes, water power head or storage at and/or operationally 
in conjunction with the C-Drop, for non-Federal electric power 
generation and sale by the entity. Leases of power privilege have terms 
not to exceed 40 years. The general authority for lease of power 
privilege under Reclamation law includes, among others, the Town Sites 
and Power Development Act of 1906 (43 U.S.C. 522) and the Reclamation 
Project Act of 1939 (43 U.S.C. 485h(c)) (1939 Act).
    Reclamation will be the lead Federal agency for ensuring compliance 
with the National Environmental Policy Act (NEPA) of any lease of power 
privilege considered in response to this Notice. Leases of power 
privilege may be issued only when, upon completion of the NEPA process, 
Reclamation determines that the affected hydroelectric power sites are 
environmentally acceptable.
    Any lease of power privilege at the Klamath Project must 
accommodate existing contractual commitments related to operation and 
maintenance of such existing facilities. Western would have the first 
opportunity to purchase and/or market the power that would be generated 
under any lease of power privilege. Under this process, Western would 
both purchase and market the power independently by first offering it 
to preference entities and secondly to non-preference entities. All 
costs incurred by the United States related to development and 
operation and maintenance under a lease of power privilege, including 
but not limited to NEPA compliance, development of the lease of power 
privilege, design reviews, construction oversight, and any other 
associated documents, would be the expense of the lessee. In addition, 
the lessee would be required to make annual lease payments to the 
United States for the use of a Federal facility. This payment will be 
equivalent to the current graduated flat rate Government Dams Charge, 
charged by the Federal Energy Regulatory Commission (FERC) under 
Federal Power Act Section 11.3, which states: ``Annual charges for the 
use of Government dams or other structures owned by the United States 
are 1 mill per kilowatt-hour for the first 40 gigawatt-hours of energy 
a project produces, 1\1/2\ mills per kilowatt-hour for over 40 up to 
and including 80 gigawatt-hours, and 2 mills per kilowatt-hour for any 
energy the project produces over 80 gigawatt-hours.''
    Additional information regarding the annual lease payment will be 
made available upon formal request through the Lease of Power Privilege 
Coordinator at the above address.
    Proposal Content Guidelines: Interested parties should submit one 
or more proposals explaining, in as precise detail as is practicable, 
how the hydropower potential at each site would be developed. Proposals 
should consider and address, but are not limited to, the following:
    a. Provide all information relevant to the qualifications of the 
proposing entity to plan and implement such a project, including, but 
not limited to, information about preference status, type of 
organization, length of time in business, experience in funding, design 
and construction of similar projects, industry rating(s) that indicate 
financial soundness and/or technical and managerial capability, 
experience of key management personnel, history of any reorganizations 
or mergers with other companies, safety record, and any other 
information that demonstrates the interested entity's organizational, 
and technical and financial ability to perform all aspects of the work. 
Include a discussion of past experience in operating and maintaining 
similar facilities and provide references as appropriate. The term 
``preference entity,'' as applied to a lease of power privilege, means 
an entity qualifying for preference under Section 9c of the 1939 Act, 
as a municipality, public corporation or agency, or cooperative or 
other nonprofit organization financed in whole or in part by loans made 
pursuant to the Rural Electrification Act of 1936, as amended.
    b. Provide geographical locations and describe principal structures 
and other important features of the proposed development including 
roads and transmission lines. Estimate and describe installed capacity 
and the capacity of the power facilities under dry, average, and wet 
hydrological conditions. Also describe seasonal or annual generation 
patterns. Include estimates of the amount of electrical energy that 
would be produced from each facility for each month of average, dry, 
and wet water years. If capacity and energy could be delivered to 
another location, either by the proposing entity or by potential 
wheeling agents, specify where capacity and energy could be delivered. 
Include concepts for power sales and contractual arrangements, involved 
parties, and the proposed approach to wheeling, if required.
    c. Indicate title arrangements and the ability to acquire title to 
or the right to occupy and use lands necessary for the proposed 
development, including such additional lands as may be required during 
construction.
    d. Identify water rights applicable to the operation of the 
proposed development, the holder of such rights, and how these rights 
would be acquired or perfected.
    e. Discuss any studies necessary to adequately define impacts on 
the Klamath Project and the surrounding environment required by the 
development. Describe any significant environmental issues associated 
with the development and the proposing entity's approach for gathering 
relevant data and resolving such issues to protect and enhance the 
quality of the environment. Explain any proposed use of the hydropower 
development for conservation and utilization of the available water 
resources in the public interest.
    f. Describe anticipated contractual arrangements with the entity or 
entities having operation and maintenance responsibility for the C-Drop 
feature(s) that are proposed for utilization in the hydropower 
development under consideration. Define how the hydropower development 
would operate in harmony with the Klamath Project, not impact Klamath 
Project operations, existing applicable contracts related to operation 
and maintenance of C-Drop feature(s) that are proposed for utilization 
in the hydropower development under consideration, and any other 
applicable water-related contracts.
    g. Identify the organizational structure planned for the long-term 
operation and

[[Page 6822]]

maintenance of any proposed hydropower development.
    h. Provide a management plan to accomplish such activities as 
planning, NEPA compliance, lease of power privilege development, 
design, construction, facility testing, and start of hydropower 
production. Prepare schedules of these activities as applicable. 
Describe what studies are necessary to accomplish the hydroelectric 
power development and how the studies would be implemented.
    i. Estimate development cost. This cost should include all 
investment costs, such as feasibility studies, NEPA compliance, design, 
construction, associated bonding and financing, as well as the 
amortized annual cost of the investment; annual operation, maintenance, 
and replacement expense for the hydropower development; lease payments 
to the United States; and expenses that may be associated with the C-
Drop project. Additionally, transmission or wheeling expenses 
associated with the development of the hydropower development, if any, 
should be included. Identify proposed methods of financing and 
hydropower development. Present an economic analysis that compares the 
present worth of all benefits and costs of the hydropower development.
    Selection of Lessee: Reclamation will evaluate proposals received 
in response to this published notice. Reclamation will give more 
favorable consideration to proposals that (1) are well-adapted to 
developing, conserving, and utilizing the water and natural resources, 
(2) clearly demonstrate that the offeror is qualified to develop the 
hydropower facility and provide for long-term operation and 
maintenance, and (3) economically develop the hydropower potential. A 
proposal will be deemed unacceptable if it is inconsistent with Klamath 
Project purposes, as determined by Reclamation.
    Reclamation will give preference to those entities that qualify as 
preference entities as defined under Proposal Content Guidelines, item 
A, provided that their proposal is at least as well-adapted to 
developing, conserving, and utilizing the water and natural resources 
as other submitted proposals and that the preference entity is well 
qualified. Preference entities would be allowed 90 days to improve 
their proposals, if necessary, to be made at least equal to a proposal 
that may have been submitted by a nonpreference entity.
    Power Purchasing and/or Marketing Considerations: Western would 
have the first opportunity to purchase and/or market the power that 
would be generated by the project under a lease of power privilege. 
Western will consult with Reclamation on such power purchasing and/or 
marketing considerations. In the event Western elects to not purchase 
and/or market the power generated by the hydropower development, or 
such a decision cannot be made prior to execution of the lease of power 
privilege, the lessee would be responsible for marketing the power 
generated by the project with priority given to preference entities as 
heretofore defined in Proposal Content Guidelines, item A.
    Notice and Time Period to Enter into Lease of Power Privilege: 
Reclamation will notify, in writing, all entities submitting proposals 
of Reclamation's decision regarding selection of the potential lessee. 
The selected potential lessee will have two (2) years from the date of 
such notification to enter into a lease of power privilege for the site 
or sites identified in the proposal. Such leases of power privilege 
will state whether and how Western will be involved in purchasing and/
or marketing the power. Any excessive delay resulting from compliance 
with the provisions of Federal environment laws or administrative 
review by a Federal agency, pertaining to the project, may extend the 
two (2) year time period for a period equal to that of the delay. In 
the event of litigation related to the proposed project, the two (2) 
year time period will be extended for a period equal to that of the 
delay, provided such litigation was initiated by parties other than the 
selected potential lessee or its employees, officers, agents, assigns, 
shareholders, customers, or persons or groups served by or in privity 
with the potential lessee.
    Reclamation Up Front Expenses: The Lessee will provide, in advance 
of expenditures, the necessary funding to cover all Reclamation costs 
related to the development, construction, and security of the Lessee's 
power facilities and any related administrative costs. Reclamation will 
give the Lessee an estimate of these costs and the Lessee will pay in 
advance. Any unused funds will be returned.
    Specific Guidelines for Hydropower Development under a Lease of 
Power Privilege: This section outlines the specific Reclamation process 
for developing a lease of power privilege agreement on an existing 
Region dam or canal. It is to be used as a guide for Reclamation 
personnel and prospective lease of power privilege applicants during 
the application, selection, and agreement phases of a lease.
    The following factors will be considered when entering into a 
Lease:
    a. Title to the existing Federal facility remains with the United 
States. Title to the proposed powerplant facilities is with the Lessee 
unless contracted otherwise. Title to any modifications to the Federal 
facility will remain with the United States. Leases may not be 
transferred or facilities sold without written approval of Reclamation. 
The Lease will include language giving the Government the first right 
to purchase or take over the Lease should the Lessee need to sell the 
facilities.
    b. Title to existing Federal Lands under Lessee's completed 
Facilities will remain with the United States. Land easements on 
Federal Lands will be addressed giving particular attention to current 
access, as well as identifying needed access. Land easements for non-
Federal lands will be the responsibility of the Lessee.
    c. The structural and operational integrity of existing Reclamation 
facilities or associated Federal projects must not be impaired by 
construction, operation, or maintenance of the Lessee's powerplant 
facilities. Powerplant construction and operation must not interfere 
with the existing or future project operations, jeopardize existing 
water rights, alter compliance with environmental requirements or 
commitments, impair the efficiency of the project for irrigation 
purposes, impair the efficiency of other hydroelectric facilities on 
the project, impair security, or create any dam safety related 
deficiency, recreation hazards, or other safety problems.
    d. Access to and operation of the existing Reclamation facilities 
must be sustained during construction and operation of the Lessee's 
powerplant facilities.
    e. Reclamation will review and approve all analyses, designs, 
plans, specifications, and related material associated with the 
proposed powerplant facilities. Such reviews will be to the level of 
detail deemed necessary by Reclamation to ensure that the structural, 
operational, safety and security of the Reclamation project is not 
impaired by construction, operation, or maintenance of the proposed 
powerplant facilities.
    f. Reclamation will maintain the right to approve in advance any 
third party contracts prior to execution by the Lessee.
    g. The purpose of Reclamation's review of analyses, designs, plans, 
and specifications for the proposed development and related materials 
will be to ensure the continued, safe operation of the Reclamation 
facilities, the integrity of Reclamation's structures, and compliance 
with environmental

[[Page 6823]]

commitments. Any modifications required for construction of the 
powerplant that may affect the safe operation of Reclamation 
facilities, such as installation of penstocks, excavation into dam 
embankments and foundations, etc., will be reviewed by, approved, and 
performed under the direct oversight of Reclamation and all costs of 
those modifications and related expenses will be paid by the Lessee. 
Construction of such modifications may be contracted by either the 
Lessee or Reclamation. If contracted by the Lessee, Reclamation will 
have advance prior approval of such contract.
    h. The Lessee will be responsible for the designs, construction, 
operation, maintenance, safety, and security of the powerplant 
facilities. Reclamation will review the designs, provide inspection 
during construction and testing, and review the operation and 
maintenance of the facility. Any discrepancies found during any review 
will be corrected by the Lessee.
    i. Reclamation will inspect powerplant and related facilities to 
the extent necessary to ensure the continued safe operation and 
structural integrity of Reclamation facilities and to ensure compliance 
with environmental commitments. Reclamation's inspections will be in 
addition to inspections performed by the Lessee. The Lease will contain 
provisions requiring the developer to immediately address any 
recommendations issued by Reclamation. These recommendations will be 
tracked by the Lessee according to the time frames established in the 
Lease Any costs incurred will be the responsibility of the Lessee.
    j. All Lessee powerplant operations must be consistent with 
operations of the Reclamation project for project purposes.
    k. Under circumstances where a water or power user organization 
that is also the project/program beneficiary is not a participant in 
the power development, the Lease must include their involvement, as 
appropriate.
    l. Reclamation can deny the issuance of a Lease or withdraw a 
previously issued Lease at any time prior to the start of construction 
based on inadequate design information, unsatisfactory environmental 
impacts, or detrimental impact to the Reclamation project, as 
determined by Reclamation.
    m. Reclamation will be reimbursed by the Lessee for all costs of 
Reclamation activities related to the development, reviews of studies, 
designs, plans, specifications, activities required for NEPA, National 
Historic Preservation Act (NHPA), and Endangered Species Act (ESA) 
compliance, construction inspections, operation, inspection, and 
maintenance of the powerplant and any related administrative costs.
    n. Physical security of existing facilities will be maintained by 
Reclamation, or its designee, during construction, operation, and 
maintenance activities. The Lessee will not interfere with Reclamation 
security activities and will be subject to search, background checks, 
etc., as deemed necessary by Reclamation to protect the physical and 
information technology security of Reclamation facilities. The Lessee 
will be responsible for any incremental security costs incurred by 
Reclamation that result from the construction of the Lessee's proposed 
powerplant and associated facilities. The Lessee will be required to 
have security procedures and practices commensurate with Reclamation 
security requirements.
    Process Guidelines: The following paragraphs describe major steps 
associated with the development of hydroelectric powerplants under a 
Lease of Power Privilege with Reclamation. The steps are generally in 
sequence but may require preparation well in advance to ensure 
completion in a timely manner. Additional requirements may be 
necessary, depending upon the nature and impacts of the proposed 
hydroelectric project. If water user organization involvement occurs, 
the following paragraphs would be modified as appropriate to 
accommodate their involvement.
    a. After determining jurisdiction, Reclamation will advertise a 
formal notice of intent to enter into a Preliminary Permit through an 
appropriate public process, such as the Federal Register and local 
newspapers. Such notice will also be provided to Western and the 
representatives of the current project/program beneficiaries 
responsible for repayment of the project.
    b. Reclamation will accept competing proposals for a period of 180 
days. Reclamation will evaluate all reasonable proposals for 
development, select the potential Lessee, and issue a Preliminary 
Permit. Preference will be granted according to Section A in Proposal 
Content Guidelines above. Where developers have an equal standing with 
respect to preference, priority of the proposals submitted will be 
based on the date and time that Reclamation receives the application 
(the applicant that submitted the earliest dated application will be 
given preference). A proposal will be considered timely only if it is 
received in the office of the Lease of Power Privilege Coordinator by 
or before 12 p.m. (PST) on the designated date. Interested entities are 
cautioned that delayed delivery to this office due to failures or 
misunderstandings of the entity and/or of mail, overnight, or courier 
services will not excuse lateness and are advised to provide sufficient 
time for delivery. Late proposals will not be considered. Reclamation 
will be available to meet with interested entities only upon written 
request to the Lease of Power Privilege Coordinator at the above 
address. Reclamation reserves the right to schedule a single meeting 
and/or visit to address at one time the questions of all entities that 
have submitted questions or requested site visits.
    c. Reclamation and the Preliminary Permit holder (Permittee) will 
enter into a letter agreement, memorandum of understanding, or other 
acceptable agreement to identify roles and responsibilities of the 
parties, activities to be addressed prior to the execution of a formal 
contract and to establish a reimbursable account to provide/cover 
Reclamation's costs. The Permittee will make advances sufficient to 
maintain a positive balance for ongoing and required work.
    d. The Permittee must coordinate with Western to determine 
Western's interest in marketing the power generated under the Lease. 
Western will be given first right of refusal to purchase power from the 
non-Federal Lessee. The power price charged by the Lessee will be 
equivalent to the cost of production plus a reasonable rate of return. 
Western will have the responsibility for negotiating power prices with 
the Lessee. Western will have the responsibility for consulting with 
the firm power contractors in advance of negotiations regarding such 
right of first refusal and the pricing of any such power to be 
purchased. If Western refuses to purchase power from the Permittee, the 
Permittee must coordinate with another appropriate transmission 
provider.
    e. The Permittee, Reclamation, and project water beneficiary (if 
not the Permittee) enter into contracts. Subject to negotiation, the 
contract(s) would be structured to address two phases of development 
and leasing as follows:

Phase 1 Guidelines

    a. A preliminary permit would be issued to the proposed Lessee and 
provide for contractor completion of investigations, studies, plans, 
preliminary/conceptual designs, estimates, and for making financial 
arrangements (in general this includes, but is not limited to, steps 
(ii) through (x) below.)

[[Page 6824]]

    b. An evaluation of environmental impacts, as required under NEPA, 
National Historic Preservation Act (NHPA), and the Endangered Species 
Act (ESA), would be included in this phase. Reclamation will be the 
lead Federal agency for NEPA and NHPA compliance.
    c. NEPA, NHPA, and ESA compliance activities will be the financial 
responsibility of the Permittee and will be completed prior to 
execution of the Lease. Terms and conditions resulting from these 
compliance activities will be incorporated by reference in the Lease.
    d. The Permittee would have a maximum of two (2) years from the 
date of issuance of the permit to complete the requirements set forth 
in the permit.
    e. The Preliminary Permit will not be transferable, and may be 
canceled by order of Reclamation upon failure of the Permittee to 
comply with the conditions of the permit (per the notification 
requirements, response timeframes, etc., established under the 
Preliminary Permit).
    f. Reclamation and Permittee, or developer, representatives will be 
named.
    g. The Permittee and Reclamation discuss plans for development and 
identify needed studies. The Permittee (or their consultant) performs 
studies; Reclamation reviews and offers comments. Alternatively, the 
Permittee may elect to fund Reclamation to perform the studies. Studies 
should include, but are not limited to, the following topics: Safety of 
Dam Impacts/Modifications, Site Characteristics and Existing 
Facilities, Land Acquisition and Easements, Hydraulics and Hydrology, 
Water Rights, Project Features and Design, Power Production, 
Transmission, Interconnection and Wheeling, Project Costs, Financial 
Alternatives and Energy Cost, Power Value and Marketing, Benefit/Cost 
Evaluation (Reclamation Benefit/Cost procedure not applicable), 
Environmental Analysis Suitable for Reclamation's Use in the NEPA, 
NHPA, and ESA Compliance, Safety Assessment, Project Development Plan 
and Construction Schedule, and Operation and Maintenance Plan.
    Proposed modifications to existing Reclamation facilities must be 
described in detail. Examples include changes in penstock transient 
pressures, impacts construction of the project will have on the 
performance of Reclamation's facilities during normal, hydrologic 
(flooding) and seismic (earthquake) loading conditions, drainage, 
increased noise, vibration or heat above the Occupational Safety & 
Health Administration (OSHA) standards, operator safety, effects on 
discharge capacity, impacts construction and operation of the proposed 
project will have on current operational and maintenance plans and 
practices, etc.
    Structural changes must be shown in detail. Examples include 
excavation requirements, new pipe alignments, flanging details, valving 
requirements, pressure ratings, thrust blocking plans, clearance 
problems, dewatering plans, venting requirements, concrete removal 
requirements, fill material requirements, etc.
    The need for electrical and hydraulic surge protection must be 
evaluated.
    Any modifications required for construction of the powerplant that 
may affect the safe operation of Reclamation facilities, such as 
installation of penstocks, excavation into dam embankments and 
foundations, etc., will be scoped, planned, and estimated at this 
point. Should facility modification be necessary to address concerns 
identified, such modifications will be required to be completed prior 
to Reclamation authorizing the start of construction on the proposed 
power project.
    a. Permittee coordinates project planning with the U.S. Fish and 
Wildlife Service in compliance with the Fish and Wildlife Coordination 
Act.
    b. Permittee submits cultural resources survey to Reclamation for 
approval.
    c. Permittee submits water rights documentation to Reclamation.
    d. Permittee submits evidence of power sales contract/wheeling 
agreement to Reclamation.
    e. Permittee submits NEPA, NHPA, and ESA documentation, including 
the Record of Decision or Finding of No Significant Impact to 
Reclamation for approval and signature.
    f. Reclamation, Permittee, and project water beneficiaries, as 
appropriate, supplement Lease with Environmental Commitment Plan and 
Environmental Commitment Checklist.
    g. Reclamation issues the Lease. Leases may not be transferred or 
facilities sold without written approval of Reclamation.

Phase 2 Guidelines

    In general this includes, but is not limited to steps (i) through 
(xvi) below.
    Subsequent to Reclamation's review and approval of the requirements 
identified in the permit, a Lease would be issued to the Lessee that 
would provide for final designs, specifications, construction, 
operation, and maintenance of the facility by the Lessee. Reclamation 
will not be held responsible for the economic and technically 
feasibility of the powerplant and associated facilities. The Lessee 
must agree to indemnify the United States for any injury, loss, or 
damage incurred, resulting from actions under the Lease and any 
negligent act or omission of the Lessee in connection with the Lessee's 
performance under the Lease. The Lessee will have no claim against the 
United States for loss of generation caused by normal or extraordinary 
operation or maintenance of the Reclamation project including, but not 
limited to, the quantity or quality of water delivery by the 
Reclamation project.
    The potential Lessee would have a maximum of two (2) years from the 
date of issuance of the Preliminary Permit to complete the requirements 
set forth in the permit. The Lessee would have a maximum of two (2) 
years from the date of the execution of the Lease to develop contract 
and complete final designs, specifications, etc., and an additional 
year (1) to begin construction. The Lessee would have an additional two 
(2) years to complete construction. A maximum of seven (7) years is 
allowed, from the date of Preliminary Permit execution to construction 
completion. Such timeframes may be adjusted for just cause resulting 
from actions and/or circumstances that are beyond the control of the 
Lessee.
    a. Lessee will prepare technical specifications and drawings 
(typically 30 percent design, 60 percent design, 90 percent design, and 
final stages are required). Reclamation will review the specification, 
drawings and provides comments. Reclamation will have the 
responsibility of approving modifications to Reclamation features.
    b. Lessee will finalize technical specifications and drawings for 
submittal to Reclamation. Lessee will submit construction schedule and 
operations and maintenance agreement to Reclamation.
    c. Reclamation is responsible for approving technical 
specifications, drawings, construction schedule, and operations and 
maintenance Agreement.
    d. Lessee will submit certificate of liability insurance to 
Reclamation. Project size will determine the need for extended 
(property damage) coverage. Reclamation will determine the insurance, 
bonding limits, and other related requirements.
    e. Performance bond will be submitted by Lessee to Reclamation.
    f. Lessee will notify Reclamation of construction start date in 
advance of onsite construction and provide a copy of the construction 
schedule.

[[Page 6825]]

    g. Pre-construction meeting will be held with Lessee, Reclamation, 
and contractor.
    h. Lessee is responsible for obtaining required Federal, State, and 
local permits.
    i. Lessee will prepare Designers' Operating Criteria (DOC), 
Standard Operating Procedure (SOP), and Emergency Action Plan (EAP) and 
submit to Reclamation for review and approval, as appropriate.
    j. Interim and final construction inspections will be conducted by 
Reclamation and Lessee.
    k. Lessee will submit Start-Up Testing Plan to Reclamation. The 
plan will include new system fault study. Reclamation may require the 
Lessee to perform additional testing to ensure the integrity of the 
Reclamation project.
    l. Lessee will conduct powerplant testing; Reclamation personnel 
will witness.
    m. Testing documentation and results will be submitted to 
Reclamation by Lessee; Reclamation approval required on results that 
are pertinent to the Reclamation project.
    n. Lessee will furnish as-built drawings to Reclamation.
    o. Reclamation will grant permission for commercial operation after 
satisfactory testing is complete and documentation submitted to 
Reclamation. Lessee will submit first annual lease payment to 
Reclamation one (1) year from date of approval for commercial 
operation.
    p. Reclamation will coordinate with Lessee to update Reclamation 
project SOPs, DOC, EAP, Continuity of Operations Plan, Security Plan, 
etc.

    Dated: November 10, 2010.
Barry S. Mortimeyer,
Chief, Power Operations Division, Mid-Pacific Region.
[FR Doc. 2011-2675 Filed 2-7-11; 8:45 am]
BILLING CODE 4310-MN-P