Hydroelectric Facility Relicensing Amendments of 1985

Hydroelectric Facility Relicensing Amendments of 1985 - Amends the Federal Power Act to provide that if the United States does not exercise its right to take over a hydroelectric project upon expiration of its license, then the Federal Energy Regulatory Commission (FERC) is directed to issue a new license to the applicant whose plans FERC determines are best adapted to serve the public interest. Prescribes guidelines for FERC to make such determination.

Directs FERC to give preference to the existing licensee if its application and those of competing applicants equally meet FERC guidelines.

Directs FERC to issue an annual license to an existing licensee under the terms of the existing license if the United States does not exercise the right to take over a project or issue a new license for such project.

Amends the Public Utilities Regulatory Policies Act of 1978 to make the cogeneration and small power production provisions of such Act inapplicable to a hydroelectric generation facility if such facility impounds or diverts water of a natural watercourse other than by means of an existing dam or diversion.