Directs the Secretary of Agriculture to convey specified parcels of land (including roads) necessary for development of the small hydroelectric power project sites located within Mt. Baker-Snoqualmie National Forest, Washington, to persons holding preliminary permits issued by, or having filed license applications with, the Federal Energy Regulatory Commission covering such parcels during the period beginning on January 1, 1990, and ending on December 31, 1996.

Requires a licensee to pay the net proceeds from the sale of timber removed for project development to the Secretary. Requires such proceeds to be deposited in the Treasury and to remain available to the Secretary for use in watershed and species management activities to ensure proper implementation of the Northwest Forest Plan in the Mt. Baker-Snoqualmie National Forest.