PROPOSED KLAMATH RIVER BASIN RESTORATION AGREEMENT FOR THE SUSTAINABILITY OF PUBLIC AND TRUST RESOURCES AND AFFECTED COMMUNITIES January 15, 2008 (Draft 11) January 15, 2008 (Draft 11) Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication PART I. GENERAL PROVISIONS 1. Introduction.........................................................................................................................1 1.1. Parties.......................................................................................................................1 1.2. General Recitals.......................................................................................................3 1.2.1. Klamath Hydroelectric Project. ...................................................................3 1.2.2. Klamath Reclamation Project and Other Irrigation Deliveries....................3 1.2.3. Sustainable Tribal Communities..................................................................3 1.3. Goals of the Agreement. ..........................................................................................3 1.4. Structure of Agreement............................................................................................3 1.5. Effectiveness............................................................................................................5 1.5.1. Initial Effectiveness. ....................................................................................5 A. Effective Date. .................................................................................5 B. Performance. ....................................................................................5 1.5.2. Further Effectiveness. ..................................................................................5 1.6. Term of the Agreement............................................................................................5 1.7. Definitions and Acronyms. ......................................................................................5 2. Legal Responsibilities, Reservation of Rights, and Precedents.........................................12 2.1. Compliance with Legal Responsibilities. ..............................................................12 2.2. Reservation of Rights.............................................................................................13 2.3. No Precedent..........................................................................................................13 3. Obligations under the Agreement. .....................................................................................13 3.1. Obligation to Support.............................................................................................13 3.1.1. Authorizing Legislation. ............................................................................13 3.1.2. Regulatory Approvals. ...............................................................................14 3.1.3. Defense of Agreement. ..............................................................................14 A. Litigation........................................................................................14 B. Comments. .....................................................................................14 C. Scientific Research.........................................................................14 3.2. Obligation to Implement........................................................................................14 3.2.1. General.......................................................................................................14 3.2.2. Cooperation Among the Parties.................................................................15 3.2.3. Lead or Responsible Party. ........................................................................15 3.2.4. Timeliness..................................................................................................15 A. General...........................................................................................15 B. Implementation of Obligations Consistent with Sequence in Appendix B.1. ................................................................................15 i. Dispute Resolution.............................................................15 ii. Funding. .............................................................................15 iii. Litigation............................................................................16 iv. Cooperative Efforts............................................................16 January 15, 2008 (Draft 11) i Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication 6 C. Extension of Time..........................................................................17 3.2.5. Force Majeure. ...........................................................................................17 A. Suspension of Obligation...............................................................17 B. Remedies........................................................................................17 4. Funding. .............................................................................................................................18 4.1. Budget....................................................................................................................18 4.1.1. Support.......................................................................................................18 4.1.2. Appendix B-2.............................................................................................18 4.1.3. Maximum Benefits.....................................................................................19 4.1.4. Availability of Public Funds. .....................................................................19 4.1.5. Other Funds................................................................................................19 4.2. Klamath River Basin Restoration Agreement Fund. .............................................19 4.2.1. Establishment of Accounts by Program or Sub-Program..........................19 4.2.2. Management of Fund. ................................................................................19 A. Receipt of Funds. ...........................................................................20 B. Disbursement. ................................................................................20 C. Accounting and Reporting. ............................................................20 4.3. Accountability for Use of Funding. .......................................................................20 5. Governance. .......................................................................................................................20 5.1. Purpose...................................................................................................................20 5.2. Structure.................................................................................................................20 5.3. Funding of Governance..........................................................................................20 5.4. Reporting and Accountability................................................................................21 5.5. Adaptive Management...........................................................................................21 5.6. Enrollment Procedure for Participants in Agreement Programs............................21 6. Dispute Resolution.............................................................................................................21 6.1. Cooperation............................................................................................................22 6.2. Costs.......................................................................................................................22 6.3. Implementation. .....................................................................................................22 6.4. Non-Exclusive Remedy. ........................................................................................22 6.5. Dispute Resolution Procedures..............................................................................22 6.5.1. Dispute Initiation Notice............................................................................22 6.5.2. Informal Meetings......................................................................................22 6.5.3. Referral to Klamath Basin Coordination Council......................................22 6.5.4. Mediation. ..................................................................................................23 6.5.5. Dispute Resolution Notice. ........................................................................23 7. Other General Provisions...................................................................................................23 7.1. Notice.....................................................................................................................23 7.2. Amendment of Agreement.....................................................................................23 7.2.1. General.......................................................................................................23 A. New Party.......................................................................................24 January 15, 2008 (Draft 11) ii Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication . Untimely or Inadequate Performance of Obligation......................24 C. Untimely or Inadequate Funding. ..................................................24 D. Severability. ...................................................................................24 E. Other Changed Circumstances.......................................................24 7.3. Severability. ...........................................................................................................25 7.4. Enforcement...........................................................................................................25 7.4.1. Contractual Obligations. ............................................................................25 A. Dispute Resolution.........................................................................25 B. Remedy. .........................................................................................25 C. Venue. ............................................................................................25 7.4.2. Regulatory Obligations. .............................................................................25 A. Dispute Resolution.........................................................................26 B. Remedy. .........................................................................................26 C. Venue. ............................................................................................26 7.4.3. Enforceability of Planning Obligations. ....................................................26 7.4.4. No Third Party Beneficiaries. ....................................................................26 7.5. Withdrawal.............................................................................................................26 7.6. Successors and Assigns..........................................................................................27 7.7. Joint Venture..........................................................................................................27 7.8. Governing Law. .....................................................................................................27 7.8.1. Contractual Obligation...............................................................................27 7.8.2. Regulatory Obligation................................................................................27 7.8.3. Reference to Statutes or Regulation...........................................................27 7.9. Elected Officials not to Benefit..............................................................................27 7.10. Entire Understanding. ............................................................................................27 PART II. KLAMATH HYDROELECTRIC PROJECT 8. General..............................................................................................................................28 8.1. Support for Hydropower Agreement. ....................................................................28 8.2. Keno Dam. .............................................................................................................28 8.2.1. Provisions in Hydropower Agreement.......................................................28 8.2.2. Provisions in Authorizing Legislation. ......................................................28 8.3. Link River Dam. ....................................................................................................29 8.3.1. Provisions in Hydropower Agreement.......................................................29 8.3.2. Provisions in Authorizing Legislation. ......................................................29 8.4. Relationship between Restoration Agreement and Hydropower Agreement........29 8.4.1. Concurrent Execution. ...............................................................................29 8.4.2. Coordinated Implementation. ....................................................................30 PART III. FISHERIES PROGRAM 9. Overview of Klamath Basin Fisheries Habitat Restoration, Reintroduction, and Monitoring Program...........................................................................................................30 January 15, 2008 (Draft 11) iii Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication 0 9.1.1. Blockage of Passage. .................................................................................30 9.1.2. Other Harmful Conditions. ........................................................................30 9.1.3. Benefits of Reintroduction.........................................................................30 9.1.4. Benefits of Restoration. .............................................................................31 9.2. Program Elements..................................................................................................31 9.2.1. Purpose.......................................................................................................31 9.2.2. Approaches. ...............................................................................................31 9.2.3. Geographic Scope. .....................................................................................31 9.2.4. Plans...........................................................................................................32 A. Plan Coordination. .........................................................................32 B. Mitigation of Adverse Impacts. .....................................................32 9.3. Funding ..................................................................................................................32 10. Fisheries Restoration Plan..................................................................................................32 10.1. Phase I of the Fisheries Restoration Plan...............................................................32 10.1.1. Preparation. ................................................................................................32 10.1.2. Plan Elements.............................................................................................33 10.2. Phase II of the Fisheries Restoration Plan. ............................................................33 10.2.1. Preparation and Adoption. .........................................................................33 10.2.2. Plan Elements.............................................................................................33 10.2.3. Plan Revision. ............................................................................................34 11. Fisheries Reintroduction and Management Plan. ..............................................................34 11.1. Oregon Wildlife Policy..........................................................................................34 11.1.1. General Policy............................................................................................34 11.1.2. Recommended Klamath Policy..................................................................34 A. Objective of Self-Sustaining Populations of Anadromous Fish. ...34 B. Level of Specificity........................................................................35 C. Adaptive Management...................................................................35 11.2. Fisheries Reintroduction and Management Plans..................................................35 11.2.1. Preparation and Adoption. .........................................................................35 11.2.2. Elements.....................................................................................................36 A. Schedule.........................................................................................37 B. Lost River.......................................................................................37 11.3. Implementation. .....................................................................................................37 11.3.1. Implementation of Phase I Reintroduction. ...............................................37 A. Above Upper Klamath Lake. .........................................................37 B. Below Upper Klamath Lake. .........................................................37 C. Sport and Commercial Fisheries....................................................38 D. Research.........................................................................................38 11.3.2. Implementation of Phase II Reintroduction...............................................38 12. Fisheries Monitoring Plan..................................................................................................38 12.1. Preparation and Adoption. .....................................................................................38 12.2. Fisheries Monitoring Plan......................................................................................39 January 15, 2008 (Draft 11) iv Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication 9 12.2.2. Data Related to Environmental Water. ......................................................39 12.2.3. Effectiveness Monitoring...........................................................................39 12.2.4. Limiting Factors.........................................................................................39 12.2.5. Data System. ..............................................................................................40 12.2.6. Specification of Responsibilities................................................................40 12.2.7. Periodic Review Regarding Fisheries Outcomes ......................................40 A. Review. ..........................................................................................40 B. Responsive Actions........................................................................41 C. Further Extension of the Agreement..............................................41 13. Funding and Implementation. ............................................................................................41 13.1. Funding Program Planning in 2008. ......................................................................41 13.2. Annual Funding Review. .......................................................................................41 13.3. Program Funding Allocation Prior to Council Charter..........................................41 13.3.1. Funding Proposals from Planning Groups.................................................41 13.3.2. Implementation by Funding Entities..........................................................42 13.4. Annual Reporting...................................................................................................42 13.5. Funding Process Subsequent to Council Charter...................................................42 PART IV. WATER RESOURCES PROGRAM 14. Overview of Water Resources Program. ...........................................................................42 14.1. Elements.................................................................................................................43 14.2. Consistency with Applicable Law. ........................................................................43 14.3. Funding ..................................................................................................................43 15. On-Project Water Users Program. .....................................................................................43 15.1. Water Diversions for Klamath Reclamation Project and Klamath Basin National Wildlife Refuges. ...................................................................................................43 15.1.1. Klamath Reclamation Project. ...................................................................43 A. Collaboration on Irrigation Diversions and Environmental Water Management...................................................................................44 i. Purpose and Scope. ............................................................44 ii. Obligations.........................................................................44 15.1.2. Water Diversions for Tule Lake and Lower Klamath National Wildlife Refuges. .....................................................................................................45 A. Recitals...........................................................................................45 B. Purpose and Scope. ........................................................................47 C. Effective Date and Support for Agreement Terms. .......................48 D. Klamath Reclamation Project Diversions......................................48 E. Refuge Allocation. .........................................................................49 F. Shortages........................................................................................52 G. Delivery Facilities..........................................................................53 H. Other. .............................................................................................55 January 15, 2008 (Draft 11) v Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication . Contracts. .......................................................................................56 J. Interim Agreement.........................................................................56 K. Term and Effect of Section 15.1.2.................................................57 15.1.3. Modification of Klamath Reclamation Project Purposes...........................57 15.2. On-Project Plan......................................................................................................57 15.2.1. Purpose and Scope .....................................................................................57 15.2.2. Preparation. ................................................................................................58 A. Funding. .........................................................................................58 B. Schedule.........................................................................................58 i. Adoption. ...........................................................................58 ii. Implementation. .................................................................58 iii. Periodic Amendment. ........................................................59 15.2.3. Elements.....................................................................................................59 15.2.4. Measures Related to Groundwater.............................................................59 A. Objective of No Adverse Impact. ..................................................59 i. Definition. ..........................................................................59 ii. Baseline for Determination of Adverse Impact. ................60 B. Technical Investigation..................................................................61 i. Purpose and Scope. ............................................................61 ii. Lead Agency. .....................................................................61 iii. Funding for Investigation...................................................61 iv. Cooperation among Parties and Use of Results.................61 v. Implementation and Periodic Amendment of Plan............62 vi. Costs Associated with Remedy for Adverse Impact or Other Modification of Plan. ...............................................63 vii. Further Consideration of Results of Investigation and Monitoring. ........................................................................63 C. Existing Wells................................................................................63 D. New Wells......................................................................................63 E. Use of Further Investigations Related to Fisheries........................64 15.3. Water Rights Assurances Related to Water Diversions to the Klamath Reclamation Project, the Klamath Basin Adjudication, The Klamath Tribes, the Three California Indian Tribes, and the United States as Trustee. ........................65 15.3.1. Assurances by the Klamath Reclamation Project Regarding Project Water.65 A. Diversion Limitation......................................................................65 B. Validation.......................................................................................66 C. Dedication......................................................................................66 D. Enforceability of Diversion Limitations. .......................................66 15.3.2. Assurances by the KPWU Regarding Tribal Water Rights.......................67 A. Certain Klamath Tribal Water Rights Unaffected. ........................67 B. Resolution of Adjudication Contests Related to Klamath Tribal Water Rights. .................................................................................67 C. Tribal Rights Unresolved-Unquantified. .......................................67 15.3.3. Assurances by the United States Bureau of Indian Affairs and Klamath Tribes. ........................................................................................................68 January 15, 2008 (Draft 11) vi Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication . Quantification of Tribal Water Rights to Upper Klamath Lake and Klamath River in Oregon...............................................................68 B. Assurance of Non-Interference with KIP Diversions. ...................68 15.3.4. Notice and Publication by the Secretary of the Interior.............................69 15.3.5. Klamath Tribes’ Waiver of Claims Against the United States..................70 15.3.6. Assurances By and Between the Yurok Tribe and the United States........71 A. Assurance by the Yurok Tribe and the United States....................71 B. Yurok Tribe Waiver of Claims Against the United States. ...........72 15.3.7. Assurances By and Between the Hoopa Valley Tribe and the United States..........................................................................................................73 A. Assurance by the Hoopa Valley Tribe and the United States........73 B. Hoopa Valley Tribe Waiver of Claims Against the United States.74 15.3.8. Assurances By and Between the Karuk Tribe and the United States. .......75 A. Assurance by the Karuk Tribe and the United States. ...................75 B. Karuk Tribe Waiver of Claims Against the United States.............76 15.3.9. Interim Assurances by All of the Tribes and Schedule for Enforceability of Diversion Limitations ................................................................................77 15.4. Other Terms Related to Klamath Reclamation Project Operations, Water Rights, Agriculture, and Wildlife Refuges.........................................................................78 15.4.1. Purpose.......................................................................................................78 15.4.2. D Pumping Plant........................................................................................79 A. D Pumping Plant Costs. .................................................................79 B. Nonpayment of D Plant Pumping Costs. .......................................79 C. Term and Effect of Section 15.4....................................................79 15.4.3. Wildlife and Agriculture on Wildlife Refuge Lease Lands and Other Klamath Reclamation Project Agricultural Lands.....................................79 A. Refuge Lease Lands.......................................................................79 B. Non-Federal Lands.........................................................................80 15.4.4. Disposition of Refuge Lease Land Revenues. ...........................................80 A. Past Net Revenues from Leasing of Refuge Lands. ......................80 B. Future Net Revenues from Leasing of Refuge Lands....................81 16. Upper Klamath Basin Water Program. ..............................................................................83 16.1. Purposes. ................................................................................................................83 16.2. Resolving Upper Basin Water Use Issues. ............................................................83 16.2.1. Off-Project Water Settlement. ...................................................................83 A. Support for OPWAS. .....................................................................84 B. Reciprocal Assurances...................................................................84 C. Water Use Retirement Program within the OPWAS.....................84 D. Schedule for Negotiation. ..............................................................84 E. Participation by Parties. .................................................................84 F. Procedures in the Klamath Basin Adjudication.............................85 i. Stay. ...................................................................................85 ii. Filing the OPWAS. ............................................................85 iii. Failure or Incomplete Filing. .............................................85 G. Groundwater Model Scope. ...........................................................85 January 15, 2008 (Draft 11) vii Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication 6 A. Upper Basin Team. ........................................................................86 i. Function. ............................................................................86 ii. Membership. ......................................................................86 iii. Federal Lead Party. ............................................................86 iv. Governance. .......................................................................87 B. Program Goal.................................................................................87 C. Program Area.................................................................................88 D. Voluntary Program.........................................................................88 E. Considerations for Transactions. ...................................................88 F. Protection of Purchased Rights......................................................88 G. OWRD Policy. ...............................................................................88 16.3. Fisheries Habitat Improvement Program. ..............................................................89 16.3.1. Purpose.......................................................................................................89 16.3.2. Program Elements......................................................................................89 17. Additional Water Conservation and Storage. ....................................................................89 17.1. General...................................................................................................................89 17.2. Measures to Increase Water Supply in Upper Klamath Lake................................89 17.2.1. Williamson River Delta. ............................................................................89 17.2.2. Barnes Ranch/Agency Lake.......................................................................90 17.2.3. Wood River Ranch Restoration Project.....................................................90 17.2.4. Off-Project Land and Water Right Retirements above Upper Klamath Lake............................................................................................................90 17.3. Future Storage Opportunities.................................................................................90 17.3.1. Technical Investigation..............................................................................90 A. Klamath Basin................................................................................90 B. Rogue Basin Project.......................................................................90 17.3.2. Use of Additional Storage..........................................................................91 A. Reservations...................................................................................91 B. Support...........................................................................................91 18. Drought, Climate Change, and Emergency. ......................................................................92 18.1. Purpose and Scope. ................................................................................................92 18.2. Drought. .................................................................................................................92 18.2.1. Lead Entity to Develop and Implement Drought Plan...............................92 18.2.2. Content of the Plan.....................................................................................92 18.2.3. Schedule.....................................................................................................95 18.2.4. Extreme Drought Declaration....................................................................95 18.2.5. Implementation and Enforcement..............................................................95 18.3. Emergency. ............................................................................................................95 18.3.1. Definition of Emergency............................................................................95 18.3.2. Lead Agencies............................................................................................95 18.3.3. Content of the Plan.....................................................................................96 18.3.4. Schedule.....................................................................................................96 18.3.5. Response Procedures. ................................................................................96 January 15, 2008 (Draft 11) viii Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication . Notice.............................................................................................96 B. Emergency Requiring Immediate Response..................................96 C. Response. .......................................................................................97 D. Dispute Resolution.........................................................................97 18.3.6. Permissible Responses...............................................................................97 18.4. Climate Change......................................................................................................97 18.4.1. Purpose.......................................................................................................97 18.4.2. Technical Assessment................................................................................98 18.4.3. Schedule.....................................................................................................98 18.4.4. Use of Results. ...........................................................................................98 18.4.5. Response. ...................................................................................................98 19. Environmental Water.........................................................................................................99 19.1. Purpose and Scope. ................................................................................................99 19.2. Measures to Produce Environmental Water. .........................................................99 19.3. Managed Environmental Water. ..........................................................................100 19.3.1. Water Rights and other Legal Requirements...........................................100 19.3.2. Governance. .............................................................................................100 19.3.3. Real-Time Management...........................................................................101 19.3.4. Link River Dam. ......................................................................................101 19.4. Interim Flow and Lake Level Program Pending Implementation of Irrigation Plans.....................................................................................................................101 19.4.1. Purpose.....................................................................................................101 19.4.2. Definition. ................................................................................................101 19.4.3. Interim Operations. ..................................................................................101 19.4.4. Expenditures. ...........................................................................................102 A. Technical Advisory Team............................................................102 B. Reduction and Termination of Expenditures. ..............................103 19.5. Protection of Environmental Water. ....................................................................103 19.5.1. General.....................................................................................................103 A. Not Available for Consumptive Use............................................103 B. PacifiCorp. ...................................................................................104 19.5.2. Oregon Protections...................................................................................104 A. Existing Instream Water Right Applications. ..............................104 B. New Instream Water Right Applications.....................................104 C. Existing Instream Water Right Claims of Various Federal Agencies.......................................................................................105 D. Conversion of Existing PacifiCorp Water Rights to Instream Water Rights. ..........................................................................................105 E. Identification of Needs and Priorities for Stream Flow Restoration for the Klamath Basin in Oregon.................................................105 19.5.3. California Protections. .............................................................................105 A. Dedication of Instream Flows......................................................105 19.5.4. Additional Measures to Protect and Improve Water Quality...................106 A. Water Quality Generally..............................................................106 B. State TMDLs................................................................................106 January 15, 2008 (Draft 11) ix Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication . Out-of-Basin Water Transfers......................................................106 PART V. REGULATORY ASSURANCES 20. Overview of Regulatory Assurances for Fisheries and Water Resources Programs. ......106 20.1. Consequences of Reintroduction. ........................................................................106 20.1.1. Recitals.....................................................................................................106 A. Consequences on Land and Water Users.....................................106 B. Interests of Land and Water Users...............................................107 C. Resulting Commitments...............................................................107 20.1.2. Avoidance or Minimization of Adverse Impact. .....................................107 20.1.3. Screening Klamath Reclamation Project Diversions and Related Actions.107 A. Screening......................................................................................107 B. Related Actions............................................................................108 C. Coordination with Fisheries Program. .........................................108 20.1.4. Unforeseen Circumstances.......................................................................108 A. Unforeseen Circumstances Affecting Commitments...................108 B. Meet and Confer Procedure. ........................................................109 20.2. Consequences of Restoration...............................................................................109 20.3. Consequences of Water Deliveries. .....................................................................109 20.3.1. Changed Circumstances...........................................................................110 20.4. Reservations.........................................................................................................115 20.4.1. Reservation of Rights by the Tribes.........................................................115 20.4.2. Water Rights. ...........................................................................................115 20.4.3. No Implied Existence of Regulatory Authority.......................................115 20.5. Funding. ...................................................................................................116 21. Federal Endangered Species Act. ....................................................................................116 21.1. Section 7 Consultation. ........................................................................................116 21.1.1. Measures to Increase Water Supply in Upper Klamath Lake..................116 21.1.2. Water Deliveries to Klamath Reclamation Project..................................116 21.1.3. NMFS and FWS Biological Opinions. ....................................................117 21.2. Section 10 Incidental Take Permit.......................................................................117 21.2.1. Section 10(a)(1)(B) Permit for Listed and Unlisted Species. ..................117 21.2.2. General Conservation Plan for Use in Application for Section 10(a)(1)(B) Permit.......................................................................................................118 A. Development of a General Conservation Plan.............................118 B. Standards for the General Conservation Plan. .............................118 C. Covered Activities and Potential Measures for the General Conservation Plan. .......................................................................119 21.2.3. Alternative to Develop Habitat Conservation Plans for Use in Application for Section 10(a)(1)(B) Permit.................................................................119 21.2.4. Alternative to Apply for Section 10(a)(1)(A) Permit. .............................119 21.2.5. Participation of Other Parties and the Public...........................................120 21.2.6. Changed Circumstances...........................................................................120 January 15, 2008 (Draft 11) x Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication 0 21.2.8. Duty to Support........................................................................................121 21.2.9. Dispute Resolution...................................................................................121 21.3. Integration of Section 7 and Section 10 Processes. .............................................121 21.4. Reconsideration of Limitations on Diversions. ...................................................121 21.5. Reservation. .........................................................................................................122 21.6. Integration of Essential Fish Habitat Consultations.............................................122 22. Bald and Golden Eagle Protection Act and Migratory Bird Treaty Act..........................123 22.1. Applicants. ...........................................................................................................123 22.2. Actions by FWS...................................................................................................123 22.3. Reservation of Authority......................................................................................123 23. California Laws................................................................................................................123 23.1. California Endangered Species Act. ....................................................................123 23.1.1. Application...............................................................................................123 23.1.2. Coordination. ...........................................................................................124 23.1.3. Geographic Scope. ...................................................................................124 23.2. California Fully Protected Species.......................................................................124 23.2.1. Recital. .....................................................................................................124 23.2.2. New Legislation.......................................................................................124 23.3. Reservation of Authority......................................................................................124 24. Oregon Laws....................................................................................................................125 24.1. Water Quality.......................................................................................................125 24.1.1. New Designated Use................................................................................125 24.1.2. Agriculture. ..............................................................................................125 24.1.3. Forestry. ...................................................................................................125 24.1.4. Alternative Measures. ..............................................................................125 24.1.5. Existing Obligations.................................................................................125 24.2. Fish Passage and Screening. ................................................................................126 24.3. Reservations.........................................................................................................126 PART VI. POWER RESOURCES PROGRAM 25. Overview of Power Resources Program..........................................................................126 25.1. Purpose.................................................................................................................126 25.2. Program Elements................................................................................................126 25.3. Eligibility. ............................................................................................................127 25.3.1. Interim Power Sustainability and Long-Term Renewable Power Programs.127 A. On-Project Customers..................................................................127 B. Off-Project Customers. ................................................................127 25.3.2. Federal Power Program............................................................................128 25.4. Funding. ...............................................................................................................128 25.5. Program Management..........................................................................................128 January 15, 2008 (Draft 11) xi Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication 8 25.5.2. Authorities................................................................................................128 25.5.3. Guidelines for Power Resources Program. ..............................................128 25.5.4. Administration. ........................................................................................129 A. Distributing Funds to Eligible Customers. ..................................129 B. Independent Entity.......................................................................129 25.5.5. Reporting..................................................................................................129 25.6. Regulatory Approvals. .........................................................................................129 25.7. Net Metering. .......................................................................................................129 26. Interim Power Sustainability Program.............................................................................130 26.1. Purpose.................................................................................................................130 26.2. Duration. ..............................................................................................................130 26.3. Implementation. ...................................................................................................130 27. Federal Power Program for Specified Loads in Klamath Reclamation Project...............130 27.1. Program Purpose..................................................................................................130 27.1.1. General.....................................................................................................130 27.1.2. Authorizing Legislation. ..........................................................................130 27.2. Program Scope.....................................................................................................131 27.2.1. Eligible Meters and Power Loads............................................................131 27.2.2. Excluded Meters. .....................................................................................131 27.3. Program Elements................................................................................................131 27.3.1. Cooperation..............................................................................................131 27.3.2. Transmission............................................................................................131 28. Investment in Energy Efficiency and Renewable Resource Generation. ........................131 28.1. Program Purpose..................................................................................................131 28.2. Financial and Engineering Plan. ..........................................................................132 PART VII. COUNTIES' MITIGATION AND BENEFITS PROGRAM 29. Overview of Counties’ Impacts Mitigation and Benefits Program. ................................132 29.1. Recitals.................................................................................................................132 29.2. General Obligations. ............................................................................................132 29.3. Purposes. ..............................................................................................................133 29.4. Funding. ...............................................................................................................133 30. Klamath County...............................................................................................................133 30.1. Recitals.................................................................................................................133 30.2. Adoption and Governance. ..................................................................................133 30.3. Approach..............................................................................................................133 30.3.1. Economic Development...........................................................................134 30.3.2. Property Taxes. ........................................................................................134 30.3.3. Other. .......................................................................................................134 January 15, 2008 (Draft 11) xii Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication 4 31.1. Approach..............................................................................................................134 31.1.1. Funding. ...................................................................................................135 31.1.2. Treatment of CEQA Overriding Consideration.......................................135 31.1.3. Fishing Closure. .......................................................................................135 31.2. Certain Claims. ....................................................................................................135 32. Humboldt County.............................................................................................................136 32.1. Recital. .................................................................................................................136 32.2. Approach..............................................................................................................136 32.3. Certain Claims. ....................................................................................................136 PART VIII. TRIBAL PROGRAM 33. Overview of Tribal Program............................................................................................136 33.1. Recitals.................................................................................................................137 33.2. Purposes. ..............................................................................................................137 33.3. Funding. ...............................................................................................................137 34. Tribal Participation in Fisheries and Other Programs......................................................137 34.1. Purpose.................................................................................................................137 34.2. Term of Funding. .................................................................................................138 34.3. Other Funding. .....................................................................................................138 35. Long-term Economic Revitalization Projects..................................................................138 35.1. Other Funds..........................................................................................................138 35.2. Mazama Project. ..................................................................................................138 36. Klamath Tribes’ Interim Fishing Site. .............................................................................138 36.1. Petition. ................................................................................................................139 36.2. Alternative Procedure. .........................................................................................139 36.3. No Adverse Impact. .............................................................................................139 PART IX. EXECUTION OF AGREEMENT 37. Authority.........................................................................................................................139 37.1. General.................................................................................................................139 37.2. Public Agency Parties..........................................................................................139 37.3. Federal Agency Parties. .......................................................................................139 38. Counterparts....................................................................................................................140 39. Concurrent Execution. .....................................................................................................140 January 15, 2008 (Draft 11) xiii Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Appendix A. Authorizing Legislation for Klamath River Basin Settlement Agreement ..........A.1 Appendix A-1. Proposed Federal Legislation.............................................................................A.2 Appendix A-2. Proposed California Legislation ........................................................................A.3 Appendix A-3. Proposed Oregon Legislation.............................................................................A.7 Appendix B. Schedule and Budget for Implementation of Agreement......................................B.1 Appendix B-1. Schedule for Implementation of Agreement......................................................B.2 Appendix B-2. Budget for Implementation of Agreement.........................................................B.6 Appendix C. Governance of Klamath River Settlement Agreement..........................................C.1 Appendix C-1. Klamath Basin Coordinating Council and Subgroups.......................................C.2 Appendix C-2. Technical Advisory Team and Managed Environmental Water.........................C.6 Appendix D. Klamath River Project Settlement Agreement between PacifiCorp and Klamath Restoration Group............................................................................................................D.1 Appendix E. Implementing Documents for Klamath Reclamation Project................................. E.1 Appendix E-1. Klamath Reclamation Project Delivery Limitations .......................................... E.2 Appendix E-2. Groundwater Investigation Scope of Work...................................................... E.39 Appendix E-3. Instream Water Right Applications and Protests ............................................. E.47 Appendix E-4. Federal Instream Water Right Claims Not to be Opposed...............................E.50 Appendix E-5. Simulated Klamath River Flows and Upper Klamath Lake Levels ................. E.56 Appendix E-6. Klamath Basin Adjudication Case 282 and 286 Documents ........................... E.68 Appendix E-7. Tribal Waivers to the United States ................................................................. E.69 Appendix F. Authorized Representatives of the Parties ............................................................. F.1 January 15, 2008 (Draft 11) xiv PART I. GENERAL PROVISIONS 1. Introduction. 1.1. Parties. The following Parties enter into this “Klamath River Basin Restoration Agreement for the Sustainability of Public and Trust Resources and Affected Communities,” on February ____, 2008. Other entities may subsequently become Parties by following the procedures established in Section 7.2.1.A. United States U.S. Department of Agriculture, Forest Service U.S. Department of Commerce’s National Marine Fisheries Service U.S. Department of the Interior, including Bureau of Indian Affairs, Bureau of Land Management, Bureau of Reclamation, and Fish and Wildlife Service State of California California Department of Fish and Game State of Oregon Oregon Department of Environmental Quality Oregon Department of Fish and Wildlife Oregon Water Resources Department Tribes Hoopa Valley Tribe Karuk Tribe Klamath Tribes Yurok Tribe Counties Humboldt County, California Klamath County, Oregon Siskiyou County, California January 15, 2008 (Draft 11) Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Tulelake Irrigation District Klamath Irrigation District Klamath Drainage District Klamath Basin Improvement District Ady District Improvement Company Enterprise Irrigation District Malin Irrigation District Midland District Improvement Company Pine Grove Irrigation District Pioneer District Improvement Company Poe Valley Improvement District Shasta View Irrigation District Sunnyside Irrigation District Don Johnston & Son Modoc Lumber Company Bradley S. Luscombe Randy Walthall and Inter-County Title Company Reames Golf and Country Club Winema Hunting Lodge, Inc. Van Brimmer Ditch Company Collins Products, LLC Plevna District Improvement Company Klamath Water Users Association Klamath Water and Power Agency Klamath Off-Project Water Users Association Non-Governmental Organizations American Rivers California Trout Friends of the River Klamath Forest Alliance National Center for Conservation Science and Policy Northcoast Environmental Center Northern California/Nevada Council Federation of Fly Fishers Pacific Coast Federation of Fishermen’s Associations Salmon River Restoration Council Trout Unlimited. January 15, 2008 (Draft 11) 2 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication General Recitals. 1.2.1. Klamath Hydroelectric Project. The Klamath Hydroelectric Project (FERC No. 2082), located on the Klamath River and its tributaries, blocks the upstream passage of anadromous and other fish at River Mile 195 and has other adverse impacts as a result of flow regulation. Through the Klamath Hydroelectric Project Settlement Agreement (Appendix D) (Hydropower Agreement), the Parties and PacifiCorp have agreed to propose for Regulatory Approvals measures for interim operations and eventual removal of dams and appurtenant facilities as an alternative to a new license. 1.2.2. Klamath Reclamation Project and Other Irrigation Deliveries. The Parties enter into this Agreement to resolve longstanding disputes between them regarding the amounts, timing, and other conditions of diversion and delivery of water for irrigation, National Wildlife Refuges, and related uses within the Klamath Reclamation Project and by non-federal entities in the Upper Klamath Basin; regarding flows and lake levels that support Fish Species and wildlife. The resolution achieved here is intended to protect the sustainability of the agricultural uses and communities along with public and trust resources. 1.2.3. Sustainable Tribal Communities. Tribes in the Klamath River Basin have lived in the Basin for millennia and are expected to continue to do so using sustainable resource-based economies. There are tribal fishing rights in various locations that have associated water rights for the fish to propagate and produce sufficient numbers for harvest. The Tribes, irrigators, and the United States have differed in administrative and judicial settings over the amounts of water needed for fish. This Agreement seeks to resolve these substantial differences and also to provide the Tribes with both sustainable natural resources and sustainable communities. 1.3. Goals of the Agreement. The Agreement is intended to result in effective and durable solutions which: (i) in concert with Dam Removal, restore and sustain natural production and provide for Full Participation in Harvest Opportunities of Fish Species throughout the Klamath Basin; (ii) establish reliable water and power supplies which sustain agricultural uses and communities and National Wildlife Refuges; (iii) contribute to the public welfare and the sustainability of all Klamath Basin communities through these and other measures provided herein to resolve the disputes described in Section 1.2. 1.4. Structure of Agreement. The Agreement consists of nine parts. January 15, 2008 (Draft 11) 3 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Part II (Section 8) states the Parties’ obligations to support the Hydropower Agreement (Appendix D). This provides for the removal of the Hydropower Project under conditions that protect and advance the public interest. Part III (Sections 9 - 13) states the Fisheries Habitat Restoration, Reintroduction, and Monitoring Program. This will contribute to the sustainability and robust harvestable surplus of anadromous and other fisheries throughout the Klamath Basin. Part IV (Sections 14 - 19) states the Water Resources Program. This consists of schedules, plans, and other provisions to substantially change the management of delivered water supply for irrigation and related uses in the Klamath Reclamation Project, Upper Klamath Basin, and National Wildlife Refuges. Additionally, it addresses other matters related to the Klamath Reclamation Project and the National Wildlife Refuges. Part V (Sections 20 – 24) states the regulatory assurances under the federal Endangered Species Act and other laws, related to the performance of the Fisheries and Water Resources Programs. Part VI (Sections 25 - 28) states the Power Resources Program. This will provide power cost security for the Klamath Reclamation Project and Off-Project Water Users and will result in efficiency improvements and renewable power. Part VII (Sections 29 – 32) states the Counties’ Impacts Mitigation and Benefits Program. This will assure that the removal of the Hydropower Project and the performance of other obligations under this Agreement will occur in a manner that benefits the interests of Klamath County, Oregon; Humboldt and Siskiyou Counties, California and their residents. Part VIII (Sections 33 - 36) states the Tribal Program. This will assure that the removal of the Hydropower Project and the performance of other obligations under this Agreement will occur in a manner that benefits the interests of the Hoopa Valley Tribe, Karuk Tribe, Yurok Tribe, and Klamath Tribes and their members. Part IX (Sections 37 – 39) provides for execution of the Agreement. The Appendices are certain documents which implement the Agreement. January 15, 2008 (Draft 11) 4 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Effectiveness. 1.5.1. Initial Effectiveness. A. Effective Date. This Agreement shall take effect on February____, 2008 (Effective Date), when executed by the Parties (other than the Federal Agency Parties) as listed in Section 1.1. As provided in Sections 8.4.1 and 39, this Agreement shall be executed concurrently with the Hydropower Agreement. B. Performance. When this Agreement has been so executed, the Parties shall perform obligations which are performable under their existing authorities. Until Authorizing Legislation is enacted, the Parties shall not perform, or be expected to perform, any obligations which require new authorities arising from the Authorizing Legislation. 1.5.2. Further Effectiveness. The Agreement will remain effective for its Term if, by December 30, 2010, the Secretary of the U.S. Department of the Interior publishes a finding that the following events have occurred: A. Authorizing Legislation Consistent with Appendix A has been enacted respectively by Congress and the States of California and Oregon; and B. Event in Hydropower Agreement, to be specified upon completion of Appendix D. The Secretary shall Timely publish the notice upon the occurrence of the above conditions. The Parties may agree, pursuant to Section 7.2, to extend the period during which the Agreement will continue prior to such finding. 1.6. Term of the Agreement. Except as otherwise expressly provided, the term of the Agreement as to Contractual Obligations shall be 50 years from the Effective Date. 1.7. Definitions and Acronyms. Applicable Law shall mean: general law which (i) exists outside of this Agreement, including a Constitution, statute, regulation, court decision, or common law, and (ii) January 15, 2008 (Draft 11) 5 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Authorizing Legislation shall mean: the proposed legislation for enactment by Congress and the Oregon and California Legislatures, as necessary or appropriate to implement this Agreement, as proposed in Appendices A-1 – A-3. BIA shall mean: U.S. Department of the Interior’s Bureau of Indian Affairs. BLM shall mean: U.S. Department of the Interior’s Bureau of Land Management. CDFG shall mean: California Department of Fish and Game. CESA shall mean: the California Endangered Species Act set forth in California Fish and Game Code sections 2050 et seq. Charter shall mean: charters for the Klamath Basin Coordinating Council, the Technical Advisory Team, the Upper Basin Team, and any other appropriate sub-group, under which non-Public Agency Parties will provide recommendations to the federal Public Agency Parties regarding the implementation of federal obligations under this Agreement. The Charters may be secured through the Authorizing Legislation or other appropriate mechanism mutually agreeable to the Parties. Collaborative Management shall mean: the participation by mutual agreement of the Tribes, federal agencies, and/or state agencies as partners in the management of Klamath Basin anadromous fisheries and related tribal trust resources to the extent allowed by Applicable Law and this Agreement. Consensus shall mean: the absence of opposition by any Party to a proposal, following any Dispute Resolution Procedures as stated in Section 6.5. Consistent with the Agreement, or Consistency, shall mean: the absence of any material modification of this Agreement, including material omission of an applicable provision or material addition of a provision, in any Regulatory Approval or enactment of Authorizing Legislation. For this purpose, “material” means integral to the bargained-for benefits for the Parties collectively and for each given Party. Contractual Obligation shall mean: those obligations under this Agreement that are not subject to Regulatory Approval. Dam Removal shall mean: the removal of Iron Gate, Copco 1, Copco 2, and J.C. Boyle Dams and appurtenant facilities of the Hydropower Project, and preparatory activities, as specified in the Hydropower Agreement attached as Appendix D. Dam Removal Lead shall mean: the entity which is responsible for the performance of Dam Removal, as specified in Section ____ of the Hydropower Agreement. January 15, 2008 (Draft 11) 6 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication . DIVERSION shall have the meaning assigned by Appendix E-1, Term 1.b. Drought shall mean: a drought of lesser scale than Extreme Drought as addressed in the Drought Plan under Section 18.2. Due Diligence shall mean: a Party’s taking all reasonable steps to implement its obligations under this Agreement. Effective Date shall mean: the date when the Parties execute this Agreement, as described in Section 1.5.1. Emergency shall mean: an event as defined in Section 18.3.1. Environmental Water shall mean: the quantity and quality of water produced pursuant to Section 19 or other provisions of this Agreement to benefit Fish Species and other aquatic resources. ESA shall mean: the federal Endangered Species Act, 16 U.S.C. §§ 1531 et seq. Extreme Drought shall have the meaning established in the Drought Plan and as required by Section 18.2.2.A.i. FACA shall mean: the Federal Advisory Committee Act, 5 U.S.C. Appendix 2. Federal Agency Party shall mean: each of the Federal entities that are listed as Parties in Section 1.1. FERC shall mean: Federal Energy Regulatory Commission. Fish Managers shall mean: a federal, state, or tribal agency which has responsibility under Applicable Law to manage one or more Fish Species or their habitat in the Klamath Basin. Fish Species, Fish, or Species (when referencing Fish), shall mean: species (including races) of fish. Force Majeure shall mean: for the purpose of performing Contractual Obligations under this Agreement, an event beyond the reasonable control of a Lead or Responsible Party that prevents the Timely performance of an obligation despite the exercise of Due Diligence. Such events may include natural disasters as well as all unavoidable legal impediment or prohibitions. Forest Service shall mean: USDA’s Forest Service. January 15, 2008 (Draft 11) 7 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Fully Protected Species shall mean: a species listed as fully protected under applicable provisions of the California Fish and Game Code. FWS shall mean: U.S. Department of the Interior’s Fish and Wildlife Service. Governance Team shall mean: each of those entities described in this Agreement, including Appendix C, for the purpose of implementing the programs and other obligations of this Agreement. Hydropower Agreement shall mean: the Klamath Hydroelectric Project Settlement Agreement between PacifiCorp and the Parties (Appendix D). Hydropower Order shall mean: a final order by FERC approving Appendix D, following exhaustion of any appeal. Hydropower Project shall mean: PacifiCorp’s Klamath Hydroelectric Project (FERC no. 2082). Inconsistent with this Agreement shall mean: any material modification of this Agreement, including material omission of an applicable provision or material addition of a provision, in any Regulatory Approval or enactment of Authorizing Legislation. For this purpose, “material” means integral to the bargained-for benefits of the Parties individually and collectively. Instream Use of Water shall mean: the use of water in lakes, rivers, and their tributaries. Klamath Basin Coordinating Council or KBCC shall mean: the coordinating entity established by this Agreement as described in Appendix C.1. KDD shall mean: Klamath Drainage District. KID shall mean: Klamath Irrigation District. Klamath Off-Project Water Users Association, or KOPWU, shall mean: a non-profit organization representing the interests of its members, off-project power users (Off- Project power users are Pacific Power, agricultural customers in the state of Oregon within the Klamath and Lost River Drainages outside the Klamath Reclamation Project. Klamath Project Water Users or KPWU shall mean: the following of the contractors associated with the Klamath Reclamation Project: Tulelake Irrigation District, Klamath Irrigation District, Klamath Drainage District, Klamath Basin Improvement District, Ady January 15, 2008 (Draft 11) 8 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Klamath Project Water Entities shall mean those Klamath Project Water Users who will file a validation or confirmation action pursuant to Section 15.3.1.B: Tulelake Irrigation District, Klamath Irrigation District, Klamath Drainage District, Klamath Basin Improvement District, Ady District Improvement Company, Enterprise Irrigation District, Malin Irrigation District, Midland District Improvement Company, Pine Grove Irrigation District, Pioneer District Improvement Company, Poe Valley Improvement District, Shasta View Irrigation District, and Sunnyside Irrigation District. Klamath Reclamation Project shall mean: the federal reclamation project authorized, constructed, managed, and operated under the federal Reclamation Act of June 17, 1902, 32 Stat. 388, as amended and supplemented, including dams, canals, and other works and interests for water diversion, storage, delivery, drainage and flood control, and similar functions. When used in reference to a geographic area or area of use or reuse of water, the term shall mean: all land in the Upper Klamath River Basin which is any one or more of the following: (i) within the boundary or service area of any public district or other water distribution entity which has contracted with the United States, pursuant to the Federal Reclamation laws for water service or for the repayment of the costs of construction, operation and maintenance of irrigation, drainage or other reclamation works benefiting such district or other entity, and/or operation and maintenance of such works,, and all land of individuals or companies or other entities who are parties to contracts with the United States of such nature; (ii) within the Service Area of the Klamath Project as identified on the map incorporated by reference under Article II.B. and D of the Klamath River Basin Compact; or (iii) within the boundaries of TLNWR or LKNWR. Klamath River Basin or Klamath Basin shall mean: the lands tributary to the Klamath River in Oregon and California. The term includes the Lost River and Tule Lake Basins. Klamath Tribes shall mean: the Klamath and Modoc Tribes and the Yahooskin Band of Snake Indians, parties to the Treaty of Council Grove of 1864. Klamath Water and Power Agency (KWAPA) shall mean: the intergovernmental entity of that name established under an intergovernmental agreement in ____ 2008 pursuant to Oregon Revised Statutes Chapter 190 and Chapter 5 (commencing with section 6500) of Division 7 of Title 1 of the California Government Code. Lead Party shall mean: the Party identified as having primary responsibility (as among the Parties) for implementation of an obligation under the Agreement. The term does not January 15, 2008 (Draft 11) 9 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Lead Responsibility shall mean: the responsibility of the Lead Party. Lower Klamath Basin shall mean: the lands tributary to the Klamath River below the current site of Iron Gate Dam in Siskiyou County, California. LKNWR shall mean: Lower Klamath National Wildlife Refuge, Managed Environmental Water shall mean: the quantity and quality of Environmental Water that is legally stored or maintained, or could legally be stored or maintained, in Upper Klamath Lake or any subsequently-developed stored water under the authority of Reclamation or other federal agency. This is a subset of Environmental Water, which includes water not stored or otherwise maintained in Upper Klamath Lake. National Wildlife Refuges or Refuges shall mean: two refuges associated with the Klamath Reclamation Project, specifically, LKNWR and TLNWR. NMFS shall mean: U.S. Department of Commerce’s National Marine Fisheries Service. Notice shall mean: written notice pursuant to the requirements and procedures of Section 7.1. ODEQ shall mean: Oregon Department of Environmental Quality. ODFW shall mean: Oregon Department of Fish and Wildlife Off-Project Customer shall mean: any Oregon retail customer of PacifiCorp which is or would have been eligible for service from PacifiCorp pursuant to the terms of the Agreement dated 1956 between the California Oregon Power Company, predecessor in interest of PacifiCorp, and Klamath Basin Water Users Protective Association, as the predecessor in interest of the Klamath Off-Project Water Users Association, for uses described in that Agreement. Off-Project Irrigator shall mean: any water user who is a Claimant in the Klamath Basin Adjudication in the sub-basins identified in Section 16.2.2.C, or a holder of a State water right permit or certificate for irrigation use in the sub-basins identified in Section 16.2.2.C. On-Project Customer shall mean: any customer of PacifiCorp, to the extent that such customer is operating, during the term of this Agreement, the type or class of pumps described in Exhibit B including Rate Schedule B of Contract No. 14-06-200-5075, dated January 31, 1956, between the United States, Department of the Interior, and California Oregon Power Company. January 15, 2008 (Draft 11) 10 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication OWRD shall mean: Oregon Water Resources Department. Participants mean non-Parties who participate in one or more of the programs in this Agreement. Parties shall mean: the signatories of this Agreement as listed in Section 1.1 and, with respect to Federal Agency Parties, as provided in Section 37.3. Additional entities may become Parties after the Effective Date as provided in Section 7.2.1.A; Public Agency Party shall mean each Tribe and each other Party which is a public agency established under Applicable Law. Reclamation shall mean: the U.S. Department of the Interior’s Bureau of Reclamation. Refuge, National Wildlife Refuge, or Wildlife Refuge shall mean: LKNWR or TLNWR, as applicable in context. Regulatory Agency Party shall mean each Public Agency Party which has regulatory authority to permit or otherwise regulate implementation of obligations under the Agreement or activities of Parties contemplated by this Agreement. Regulatory Approval shall mean: each permit or other approval under a regulatory statute necessary to implement any of the obligations, or activities of Parties as contemplated, under this Agreement. Regulatory Obligation shall mean: each of those obligations proposed, or activities of Parties contemplated, by this Agreement which are subject to Regulatory Approval and, upon such approval, are enforceable under regulatory authority. Responsible Party shall mean: a Party identified as having significant but not primary responsibility for the implementation of an obligation under this Agreement. The term is not intended to mean “Responsible Agency” under California Environmental Quality Act or other Applicable Law. Secretarial Finding shall mean: a finding by the Secretary of the U.S. Department of the Interior pursuant to Section 1.5.2. Settlement Points of Diversion shall have the meaning assigned by Appendix E-1, Term 1.a. SWRCB shall mean: State of California Water Resources Control Board. Technical Advisory Team or TAT shall mean: the team established by Appendix C-2 of this Agreement. January 15, 2008 (Draft 11) 11 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Timely or Timeliness shall mean: performance of an obligation by the deadline established in the applicable provision, and otherwise in a manner reasonably calculated to achieve the bargained-for benefits of the Agreement. TLNWR shall mean: Tule Lake National Wildlife Refuge. Tribes shall mean: the Hoopa Valley Tribe, Yurok Tribe, Karuk Tribe, and Klamath Tribes. Upper Basin Team shall mean: that team constituted pursuant to Section 16.2.2.A Upper Klamath River Basin or Upper Klamath Basin shall mean: the lands tributary to the Klamath River above the current location of Iron Gate Dam in Siskiyou County, California and including Lost River and Tule Lake Basins. USGS shall mean: the U.S. Geological Survey. USDA shall mean: the U.S. Department of Agriculture. Water Managers shall mean: entities, including federal, state, tribal, agencies, irrigation and drainage districts, and other entities that have responsibility under Applicable Law for management of water resources, including storage and diversion, in the Klamath Basin. Water Use Retirement Program shall mean: the retirement of irrigation surface water uses in the sub-basins above Upper Klamath Lake identified in Section 16.2.2.C through the purchase of irrigation surface water rights and the transfer of those water rights to instream use, cancellation of those water rights, or protection of those water rights by such other mechanisms as specified by the Off-Project Water Settlement, or such other means of permanently retiring irrigation surface water uses as approved by the Klamath Tribes. 2. Legal Responsibilities, Reservation of Rights, and Precedents. 2.1. Compliance with Legal Responsibilities. Except as otherwise expressly provided, by entering into this Agreement, each Party represents that it believes that this Agreement is Consistent with its statutory, regulatory, or other legal obligations for conservation, use, or management of affected resources of the Klamath River Basin. In the implementation of this Agreement, Public Agency Parties shall comply with existing legal authorities, including National Environmental Policy Act, Endangered Species Act, Clean Water Act, and other Applicable Law, and shall act Consistent with the terms of the Authorizing Legislation. January 15, 2008 (Draft 11) 12 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Reservation of Rights. Nothing in this Agreement is intended to, or shall be construed to, affect or limit the authority or obligation of any Party to fulfill its constitutional, statutory, and regulatory responsibilities or comply with any judicial decision. The Parties expressly reserve all rights not granted, recognized or relinquished in this Agreement. Except as expressly provided herein, nothing in this Agreement is intended to diminish the rights of those Parties which are sovereign Indian Tribes. Further, no Party shall be deemed to have approved, admitted, accepted, or otherwise consented to any issue, position or other principle underlying any of the subject matters covered by this Agreement, except as expressly provided herein. Nothing in this Agreement is intended or shall be construed to be an irrevocable commitment of the funds or resources of a Public Agency Party (pursuant to Section 4.1.4below), a pre-decisional determination by a Public Party, or a waiver of sovereign immunity. 2.3. No Precedent. This Agreement is entered into for the purpose of resolving issues that may arise with respect to the rights, claims, contests, and other matters from hydropower relicensing proceedings and water rights litigation, contained in this Agreement. Therefore, the Agreement shall not be offered for or against a Party as argument, admission, admission of wrongdoing, liability, or precedent regarding any issue of fact or law in any mediation, arbitration, litigation, or other administrative or legal proceeding whatsoever, except that the Agreement may be used in any future proceeding to interpret or enforce the terms of this Agreement. This Agreement may also be used by any Party in litigation by or against non-Parties to implement or defend this Agreement. This section shall survive any termination of this Agreement. 3. Obligations under the Agreement. 3.1. Obligation to Support. 3.1.1. Authorizing Legislation. The Parties acknowledge that implementation of certain obligations under this Agreement will require additional authorizations by the United States Congress, the California Legislature, and the Oregon Legislature. Obligations that require such additional authorization shall become effective upon enactment of that legislation. Subject to Section 2.2, the Parties shall support the proposal and enactment of Authorizing Legislation contained in Appendix A; provided that nothing in this Agreement shall be deemed to limit the authority or discretion of the federal or state Executive Branch Consistent with Applicable Law. January 15, 2008 (Draft 11) 13 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Regulatory Approvals. Consistent with the obligations and subject to Section 2.2 the Parties shall support the application for and granting of Regulatory Approvals not Inconsistent with the Agreement. 3.1.3. Defense of Agreement. Subject to Section 2.2, each Party shall support and defend this Agreement in each applicable venue or forum, including any administrative or judicial action in which it participates, and which concerns the validity of any Regulatory Approval or Authorizing Legislation. A. Litigation The form of support or defense in such administrative or judicial action shall be left to the discretion of each Party. This section does not apply to a dispute or action challenging the adequacy of a Party’s performance of an obligation under this Agreement. B. Comments. Each Party may comment on the Consistency of any plan, other document, or data arising in the implementation of this Agreement and not otherwise set forth in the appendices. The Parties acknowledge that their comments may conflict due to differing good-faith interpretations of the applicable obligations under this Agreement. C. Scientific Research. Nothing in this Agreement shall prevent scientific research or the publication of the same by any Party. 3.2. Obligation to Implement. 3.2.1. General. Each Party shall implement each of its obligations under this Agreement in good faith and with Due Diligence. Any obligation identified as an obligation of all of the Parties does not obligate any individual Party to take any action itself or itself make any specific commitment other than to participate in the applicable procedures. January 15, 2008 (Draft 11) 14 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Cooperation Among the Parties. The Parties shall cooperate in the implementation of this Agreement. A Party shall not act in a manner that results in an action or requirement that is Inconsistent with the Agreement unless necessary to comply with statutory, regulatory or other legal responsibility; in which event, the Party shall provide Timely Notice to other Parties to permit Dispute Resolution Procedures pursuant to Section 6.5. 3.2.3. Lead or Responsible Party. As designated in certain provisions of the Agreement, Public Agency Parties are Lead or Responsible Parties with specified responsibilities for the performance of obligations under this Agreement. 3.2.4. Timeliness. A. General. The Parties shall implement their obligations in a Timely way. B. Implementation of Obligations Consistent with Sequence in Appendix B.1. The Parties adopt Appendix B-1 to describe the sequence of performance of specific obligations necessary to achieve the bargained for benefits of this Agreement. The Parties shall make maximum reasonable efforts to implement this Agreement in a manner Consistent with this sequence. i. Dispute Resolution. The Parties shall make maximum reasonable efforts to use Dispute Resolution Procedures under Section 6 at the earliest possible time that a claim of untimely performance or any other form of non-performance of the Appendix B-1 sequence arises. ii. Funding. Subject to Sections 2.2 and 4.1.4, the Parties shall make maximum reasonable efforts to Timely secure public or private funding in the amounts estimated in Appendix B-2 on a schedule Consistent with Appendix B-1. January 15, 2008 (Draft 11) 15 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Litigation. A Party may bring an action to enforce a Regulatory or Contractual Obligation, as provided in Section 7.4. Recognizing the cost and other consequences of such litigation, a Party has discretion whether and how to use litigation to assist in the implementation of the obligations under this Agreement. iv. Cooperative Efforts. The obligation to assist in the implementation of the Appendix B-1 sequence is joint and several to all Parties, as well as individual to each Party. In seeking funding, or using dispute resolution or litigation, as described above, each Party will be mindful of the efforts of other Parties and will seek to cooperate to achieve efficiencies and avoid duplication or other unnecessary costs or efforts. Thus, a given Party’s obligation to use maximum reasonable efforts in general requires that a given Party seek to perform each applicable obligation in good faith and with diligence, zeal, and loyalty to this Agreement. In addressing non-performance of an obligation under this Agreement, the duty of maximum reasonable efforts may be satisfied either if: (1) the given Party takes the initiative, as among other Parties, to invoke and apply the applicable procedure(s) to resolve the dispute, or (2) another Party takes such initiative, and the given party supports or participates in the resulting procedure(s) as appropriate, to add value to such resolution. v. Obligation to Cure. The filing of an action by one Party against another Party over matters addressed in this Agreement is deemed to constitute a failure of the mutual obligations set forth in this Agreement. Such failure triggers on the part of all Parties, an obligation to preserve the benefits of the Agreement for all Parties including any Party who is, or could be adversely affected by such litigation. Parties directly affected by the action, as well as other Parties with interests in, or obligations in this Agreement related to, the subject of the action, shall: (1) meet and confer promptly and in good faith to confirm that the Dispute Resolution Procedures in Section 6 have identified the nature of the dispute, the provisions of this Agreement which failed to achieve the bargained-for benefits as to affected Parties, and the potential remedies for the defect; or (2) if not already January 15, 2008 (Draft 11) 16 3.2.5. Confidential and Privileged Settlement Communication completed, take appropriate steps to secure Timely performance of obligations under this Agreement; or (3) seek amendment of the Agreement pursuant to Section 7.2; or (4) otherwise develop and implement a functional cure to preserve the bargained-for benefits under the Agreement for all Parties, including the Parties adversely affected by the litigation; and (5) seek a supervised settlement conference in the adjudicatory forum and advise the court or presiding officer of their Contractual Obligations under this Agreement, including this provision of the Agreement. Further, if an action is commenced against a Party by a non-Party, that relates to matters addressed in this Agreement, the Parties shall to the maximum extent practicable and applicable, comply with the obligations of (2) through (5) above. C. Extension of Time. Except as otherwise provided in this Agreement, if any Party requires more time than permitted by this Agreement to perform an obligation, that Party shall provide Notice to other Parties thirty days before the applicable deadline. The Notice shall explain: (i) the obligation that the Party is attempting to perform, (ii) the reason that performance is or may be delayed, (iii) the steps the Party has taken or proposes to take to Timely complete performance, and (iv) the Party’s request for additional time to complete performance. If any other Party disputes the request for additional time, that other Party shall initiate the Dispute Resolution Procedures stated in Section 6. This provision does not apply to any applicable deadline imposed by Applicable Law. The Parties shall follow the procedures for amendment to the Agreement, if no Party objects to the extension. Force Majeure. A. Suspension of Obligation. During a Force Majeure event, and except as otherwise provided in this Agreement, the Lead or Responsible Party shall be relieved of any specific obligation directly precluded by the event, as well as those other obligations whose performance is materially impaired, but only for the duration of such event. B. Remedies. If a Force Majeure event occurs, and except as otherwise provided in this Agreement: January 15, 2008 (Draft 11) 17 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication . The Lead or Responsible Party shall provide Notice within three days of the onset of the event. Such Notice shall describe the occurrence, nature and expected duration of such event. That initial Notice shall be followed by further Notice within seven days of the onset of the event, describing the steps the Party has taken or proposes to be taken to prevent or minimize the interference with the performance of any affected obligation under this Agreement; ii. The Lead or Responsible Party shall thereafter provide periodic Notice to the other Parties of the efforts to address and resolve a Force Majeure event; and iii. If any other Party disputes the Lead or Responsible Party’s claim of a Force Majeure event, or the adequacy of the efforts to address and resolve such event, such Party shall initiate the Dispute Resolution Procedures stated in Section 6. 4. Funding. 4.1. Budget. 4.1.1. Support. Subject to Section 2.2, each of the Parties shall support authorizations and appropriations of public funds, as well as securing of non-public funds, to implement the Agreement. Further, subject to that same limitation, each of the Parties shall support allocation and reprogramming of existing funds to implement this Agreement prior to the enactment of Authorizing Legislation or the Secretarial Finding described in Section 1.5.2. However, each funding entity shall retain its discretion and authority to make final decisions regarding allocation and reprogramming of existing funds, Consistent with Applicable Law. 4.1.2. Appendix B-2. As of the Effective Date, Appendix B-2 estimates the amounts and sources of funding necessary for the implementation of each of the programs of this Agreement, as well as the performance of specific obligations, over the ten years following the Effective Date. Unless otherwise provided, these amounts are stated in 2007 dollars, subject to adjustment using federal Office of Management and Budget guidelines. Periodically, the Parties shall adopt a successor form of Appendix B-2 to estimate required funding for the continued implementation of each of these programs. January 15, 2008 (Draft 11) 18 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Maximum Benefits. The Parties shall in good faith and with Due Diligence seek to expend funds in a cost-effective manner to optimize the public benefits resulting from performance of obligations arising under this Agreement. 4.1.4. Availability of Public Funds. Funding by any Public Agency Party under this Agreement is subject to the requirements of the Anti-Deficiency Act, 31 U.S.C. §§ 1341 et seq., and other Applicable Law. Nothing in this Agreement is intended or shall be construed to require the obligation, appropriation, or expenditure of any funds from the United States Treasury, or of any fund controlled by California, Oregon, a County or other local agency, or a Tribe, except as otherwise permitted by Applicable Law. 4.1.5. Other Funds. An estimate in Appendix B-2 does not limit non-Public Agency Parties from seeking additional or other funds to perform an obligation under this Agreement or for a related purpose; provided that any such effort shall not be Inconsistent with the obligation of the Parties to support authorizations and appropriations for programs and obligations under this Agreement as estimated in Appendix B-2. 4.2. Klamath River Basin Restoration Agreement Fund. Within six months of the Effective Date, and Consistent with Applicable Law, the Parties other than Public Agency Parties shall establish the Klamath River Basin Restoration Agreement Fund. This will be a dedicated account to hold funds which are both: (i) received from non-federal sources to perform obligations under this Agreement and (ii) not otherwise under the lawful control by the United States, or by California, Oregon, a County or other local agency, or a Tribe, pursuant to Authorizing Legislation or other Applicable Law. 4.2.1. Establishment of Accounts by Program or Sub-Program. The Restoration Agreement Fund shall include an account for implementation of each program or sub-program of this Agreement, as appropriate. 4.2.2. Management of Fund. The Parties other than Public Agency Parties shall agree to a manager for the Restoration Agreement Fund and to procedures for management. Such procedures shall include requirements for: January 15, 2008 (Draft 11) 19 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Receipt of Funds. Receipt of funds from any lawful source, including but not limited to charitable foundations for performance of obligations under this Agreement; B. Disbursement. Application by Parties or non-Parties for disbursement of funds to perform obligations as specified by this Agreement, and reviews of such application by the Parties, and resolution of any disputes about the sufficiency or otherwise the approvability of the application; and C. Accounting and Reporting. Accounting and reporting by the Parties, funding sources, and the public, to assure that expenditures comply generally with Section 4.1.1 and specifically with any other conditions established by the sources of funding managed by the Restoration Agreement Fund. 4.3. Accountability for Use of Funding. Funding through Federal and state agencies will be provided through contract, agreement, or other arrangements, as appropriate under Applicable Law and applicable policy. 5. Governance. 5.1. Purpose. Governance of this Agreement shall provide and facilitate coordination, cooperation, and accountability by Parties such that all obligations of the Agreement are performed effectively, Timely, and at the appropriate scales. Such governance does not supplant existing authorities or supersede Applicable Law. It shall provide for public involvement to help guide implementation of the Agreement. 5.2. Structure. The Parties shall adopt, support, and participate in the governance structure stated in Appendix C. 5.3. Funding of Governance. Subject to Section 2.2, the Parties shall support authorizations and appropriations of funding, in the amount of $3.3 million as estimated in Appendix B-2, to fund the governance structure for the first ten years after the Effective Date. January 15, 2008 (Draft 11) 20 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Reporting and Accountability. The Parties agree that the Klamath Basin Coordinating Council, subject to compliance with Applicable Law and within six months of the Effective Date, shall adopt and thereafter implement procedures to report on the status of performance of each obligation under this Agreement. Such report shall include a statement and analysis of the causes for any non-performance as well as efforts to cure such non-performance. The reporting shall include an annual report and shall be real-time (e.g., through a KBCC website) as appropriate to contribute to Timely dispute resolution under Section 6 as well as adaptive management under Section 5.5. In addition, the Council shall prepare a periodic report, not less frequently than every ten years, to evaluate overall progress in implementation of the obligations of this Agreement and the results of such implementation relative to the goals stated in Section 1.3 as well as the more specific purposes or objectives of the several programs. 5.5. Adaptive Management. In the performance of the obligations under this Agreement, the Parties generally agree to use an adaptive management process provided in the applicable provision. This process will include objectives, metrics for the achievement of those objectives, monitoring and evaluating the monitoring results, and using the results of that evaluation to inform and improve future management decisions. 5.6. Enrollment Procedure for Participants in Agreement Programs. The Parties intend that the Restoration Program pursuant to Section 10 the Water Rights Retirement Program pursuant to Section 16.2.2, the Fisheries Habitat Improvement Program pursuant to Section 16.3, and Regulatory Assurances pursuant to Sections 20 – 24, will partly be implemented by Participants who enroll in any of those programs. Consistent with Applicable Law, the Lead Party for each of those programs, or the Klamath Basin Coordinating Council as appropriate, shall establish enrollment procedures as a mandatory element of each program and shall maintain a roster of enrolled Participants. Enrollment procedures may include: procedures for Participants to enroll or for the Lead Party to list the Participants in such a program. 6. Dispute Resolution. All disputes among the Parties regarding the implementation of this Agreement, including disputes regarding any Party’s performance of Contractual or Regulatory Obligations, shall be the subject to the Dispute Resolution Procedures stated in Section 6.5, except as otherwise provided in this Agreement. The Parties agree that each dispute shall be brought and resolved in a Timely manner. January 15, 2008 (Draft 11) 21 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Cooperation. Disputing Parties shall devote such resources as are needed and as can be reasonably provided to resolve the dispute expeditiously. Disputing Parties shall cooperate in good faith to promptly schedule, attend and participate in the dispute resolution. 6.2. Costs. Unless otherwise agreed among the Disputing Parties, each Disputing Party shall bear its own costs for its participation in these Dispute Resolution Procedures. 6.3. Implementation. Each Disputing Party shall promptly implement any resolution of the dispute. 6.4. Non-Exclusive Remedy. These Dispute Resolution Procedures do not preclude any Party from Timely filing and pursuing an action to enforce a Contractual Obligation under this Agreement, or to appeal a Regulatory Approval Inconsistent with the Agreement, or enforce a Regulatory Approval or Applicable Law; provided that such Party Timely attempts in good faith to resolve the dispute through the Dispute Resolution Procedures stated in Section 6.5. The Parties agree that litigation will be initiated as a last resort and only after careful consideration of the matters in dispute and the potential collateral consequences to this Agreement. 6.5. Dispute Resolution Procedures. 6.5.1. Dispute Initiation Notice. A Party claiming a dispute shall give Notice of the dispute. Such Notice shall describe: (i) the matter(s) in dispute, (ii) the identity of any other Party alleged to have not performed a Contractual or Regulatory Obligation, and (iii) the specific relief sought. Collectively, the Party initiating the procedure, the Party complained against, and any other Party which provides Notice of its intent to participate in these procedures, are “Disputing Parties.” 6.5.2. Informal Meetings. Disputing Parties shall hold at least two informal meetings to resolve the dispute, commencing within 30 days after the Dispute Initiation Notice. 6.5.3. Referral to Klamath Basin Coordination Council. In the absence of resolution and following the informal meetings described in Section 6.5.2, the Disputing Parties shall refer a dispute to the KBCC. Upon such January 15, 2008 (Draft 11) 22 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication 6.5.4. Mediation. If the dispute is not resolved in the informal meetings or by the KBCC, the Disputing Parties shall decide whether to use a neutral mediator. The decision whether to pursue mediation shall be made within 30 days after the failure to resolve the dispute by referral to the KBCC. The Disputing Parties shall agree on an appropriate allocation of any costs of the mediator employed under this section. Mediation shall not occur if the Disputing Parties cannot agree on the allocation of costs. The Disputing Parties shall select a mediator within 30 days of the decision to pursue mediation, including the agreement of allocation of costs. The mediation process shall be concluded not later than 60 days after the mediator is selected. The above time periods may be shortened or lengthened upon mutual agreement of the Disputing Parties. 6.5.5. Dispute Resolution Notice. The Disputing Parties shall provide Notice of the results of the Dispute Resolution Procedures. The Notice shall: (i) restate the disputed matter, as initially described in the Dispute Initiation Notice; (ii) describe the alternatives which the Disputing Parties considered for resolution; and (iii) state whether resolution was achieved, in whole or part, and state the specific relief agreed to as part of the resolution. 7. Other General Provisions. 7.1. Notice. Except as otherwise provided, any Notice required by this Agreement shall be written and distributed to all Parties. Such Notice shall be effective upon receipt, but if provided by U.S. Mail, seven days after the date on which it is mailed. The Parties agree that, to the maximum extent practicable, electronic mail or facsimile is the preferred method of providing Notice. When this Agreement requires Notice in fewer than seven days, Notice shall be provided by telephone, facsimile, or electronic mail and shall be effective when received. The Klamath Basin Coordinating Council shall maintain a current roster of the authorized representatives of the Parties. Each Party shall provide Notice of any change in the authorized representative designated in Appendix F as of the Effective Date. 7.2. Amendment of Agreement. 7.2.1. General. The Parties may amend this Agreement only by Consensus and in written form and only in the circumstances specified in (A) – (E) below. January 15, 2008 (Draft 11) 23 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication New Party. An entity who did not execute this Agreement on the Effective Date subsequently submits a written application to become a Party and, in that application, demonstrates to the satisfaction of all Parties by Consensus that: (i) it supports both this and the Hydropower Agreements and (ii) its participation will contribute to the effective implementation of the agreements. Any such subsequent Party shall execute both agreements concurrently. This provision applies to a proposed assignee or successor of a Party. B. Untimely or Inadequate Performance of Obligation. A Party’s performance of an obligation is delayed or impaired by Force Majeure, or other good cause established pursuant to Section 3.2.4.C, and the other Parties agree to a modification of the schedule or other element of the obligation. C. Untimely or Inadequate Funding. Notwithstanding Due Diligence in seeking the funding as described in Appendix B-2, the Parties do not secure adequate funding on a Timely basis to perform a particular obligation; and the Parties, having met and conferred pursuant to Section 6.5, agree to an alternative schedule and other appropriate remedies to permit the performance of that particular obligation. Certain provisions of this Agreement provide that a particular obligation will be performed only after performance of other obligations; and any amendment will preserve that sequence. D. Severability. After any provision is severed as provided in Section 7.3, the Parties who have not withdrawn pursuant to Section 7.5 determine that an alternative to such severed provision will preserve the bargained-for benefits of the Agreement. E. Other Changed Circumstances The Parties believe that other changed circumstances, subsequent to the Effective Date, justify an amendment to preserve the bargained-for benefits. January 15, 2008 (Draft 11) 24 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication Severability. This Agreement is made on the understanding that each provision is a necessary part of the entire Agreement. However, if any provision of this Agreement is held to be invalid, illegal, or unenforceable by a Regulatory Agency or a court of competent jurisdiction: (i) the validity, legality and enforceability of the remaining provisions of this Agreement are not affected or impaired in any way; and (ii) the Parties shall negotiate in good faith in an attempt to agree to another provision (instead of the provision held to be invalid, illegal, or unenforceable) that is valid, legal, and enforceable and carries out the Parties’ intention to the greatest lawful extent under this Agreement. Further, if timely performance of this Agreement is prevented by inadequate funding or other cause not controlled by the Parties, or a cure expressly provided by this Agreement does not timely occur, the Parties shall reconvene and, pursuant to Sections 6 and 7.2, agree whether an alternative provision secures to the Parties the bargained-for benefits of the Agreement. 7.4. Enforcement. 7.4.1. Contractual Obligations. A Party may bring an action to enforce any Contractual Obligation under this Agreement. A. Dispute Resolution. A Party may seek to enforce a Contractual Obligation only after compliance with the Dispute Resolution Procedures in Section 6. B. Remedy. In such an action, a Disputing Party may only seek specific performance of the Contractual Obligation, or declaratory or other equitable relief, to the maximum extent permitted by Applicable Law. This Agreement does not establish a right to seek relief, or jurisdiction for such relief, against a Party if such relief or jurisdiction does not otherwise exist under Applicable Law. C. Venue. The venue for an action to enforce a Contractual Obligation shall be as provided under Applicable Law for obligations of the type of the disputed Contractual Obligation. As provided in Section 2.2, this Agreement does not waive any Party’s sovereign immunity. 7.4.2. Regulatory Obligations. January 15, 2008 (Draft 11) 25 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication A. Dispute Resolution. A Party may seek to enforce a Regulatory Obligation against another Party, only after compliance with the Dispute Resolution Procedures in Section 6. B. Remedy. In such action, a Disputing Party may seek whatever remedies are ordinarily available for enforcement of obligations of the type of the disputed Regulatory Obligation. This Agreement does not establish any special remedy for such enforcement. C. Venue. The venue to enforce a Regulatory Obligation shall be as provided under Applicable Law. 7.4.3. Enforceability of Planning Obligations. This Agreement commits the Parties to the development of plans and policies for possible future actions which the Public Agency Parties have not yet approved, adopted or funded as of the Effective Date. This Agreement does not commit any Public Agency Party to any action which may result in physical environmental change. Each Public Agency Party shall comply with Applicable Law before committing to such action. Among other things, an environmental analysis will be prepared, where required by Applicable Law, as early as feasible in the planning process to enable environmental considerations to properly influence project program and design. No Party may enforce this Agreement against a Public Agency Party to interpret an obligation for a plan or policy as a pre- decisional commitment to any action which may result in physical environmental change. 7.4.4. No Third Party Beneficiaries. This Agreement does not create any right in the public, or any member thereof, as a non-Party beneficiary. It does not authorize any non-Party (including enrolled Participant) to maintain an action at law or equity pursuant to this Agreement. The rights and obligations of the Parties with respect to non-Parties shall remain under Applicable Law. 7.5. Withdrawal. January 15, 2008 (Draft 11) 26 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication 7.6. Successors and Assigns. This Agreement shall be binding on and inure to the benefit of the Parties and their approved successors and assigns, unless otherwise specified in this Agreement. 7.7. Joint Venture. Except as expressly provided, this Agreement does not and shall not be deemed to make any Party the agent for, partner of, or joint venture with any other Party. 7.8. Governing Law. 7.8.1. Contractual Obligation. A Party’s performance of a Contractual Obligation arising under this Agreement shall be governed by (i) applicable provisions of this Agreement and (ii) Applicable Law for obligations of that type. 7.8.2. Regulatory Obligation. A Party’s performance of a Regulatory Obligation, once approved as proposed by this Agreement, shall be governed by Applicable Law for obligations of that type. 7.8.3. Reference to Statutes or Regulation Any reference in this Agreement to any Applicable Law shall be deemed to be a reference to a statute or regulation, or successor, in existence as of the date of the action in question. 7.9. Elected Officials not to Benefit. This Agreement shall not provide any benefit for any elected official, other than the benefits provided to all Parties. 7.10. Entire Understanding. This Agreement constitutes the entire understanding among the Parties. This Agreement constitutes the final, complete and exclusive agreement and understanding among the Parties with respect to the subject matter of this Agreement. It supersedes all prior agreements and understandings, whether oral or written, concerning the subject matter hereof. Other than the Appendices to this Agreement, which are attached hereto and January 15, 2008 (Draft 11) 27 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication PART II. KLAMATH HYDROELECTRIC PROJECT 8. General. 8.1. Support for Hydropower Agreement. In consideration for the benefits flowing to the Parties from the Agreement as a whole, the Parties shall support the Hydropower Agreement (Appendix D). This obligation includes but is not limited to best efforts to support: all regulatory and other required approvals for the Hydropower Agreement; preparation of scope of works and preliminary and final Dam Removal Plans by the Dam Removal Lead; coordination between the Dam Removal Lead and Parties; cooperation in study and permit Due Diligence pursuant to the Hydropower Agreement; and, performance of Dam Removal. Parties shall also support efforts to coordinate and cooperate during implementation of the two agreements for the benefit of both agreements. 8.2. Keno Dam. 8.2.1. Provisions in Hydropower Agreement. Parties shall support conditions in the Hydropower Agreement to ensure that the interim operation and disposition of Keno Dam do not create new cost responsibilities for Klamath Reclamation Project contractors. Parties also shall support conditions in the Hydropower Agreement to maintain existing management of water levels behind the dam before transfer to Reclamation. Reclamation shall operate Keno Dam to maintain water levels for diversion and canal maintenance consistent with existing contracts of PacifiCorp and historic practice and in compliance with Applicable Law. Notwithstanding Section 1.6, this obligation shall remain in effect until modified with the agreement of Klamath Reclamation Project contractors; and the Parties shall support a comparable resolution for current contractors of PacifiCorp in the Hydropower Agreement; provided, the obligation to comply with Applicable Law shall not expire. The Parties shall support terms in the Hydropower Agreement requiring that PacifiCorp provide funds to Reclamation to address water quality impacts associated with Keno Dam after transfer to Reclamation. 8.2.2. Provisions in Authorizing Legislation. The Parties support the following term in the federal Authorizing Legislation: “The Secretary is authorized to take title to Keno Dam and any necessary associated real property from PacifiCorp in the course of implementing the January 15, 2008 (Draft 11) 28 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication 8.3. Link River Dam. 8.3.1. Provisions in Hydropower Agreement. Parties shall support conditions in the Hydropower Agreement to ensure that interim operation, decommissioning, and disposition of Eastside and Westside powerhouses do not create new cost responsibilities for Reclamation contractors. Reclamation shall operate Link River Dam in a manner that ensures the availability of water for diversion for the Klamath Reclamation Project and is Consistent with Section 19.3 in regard to Managed Environmental Water for fisheries benefits. During the term of this Agreement, this Section 8.3 may be modified only by amendment pursuant to Section 7.2. Notwithstanding Section 1.6 and subject to Applicable Law, the obligation to operate the Link River Dam to ensure the availability of water for diversion for the Klamath Reclamation Project shall remain in effect until modified with the agreement of Klamath Reclamation Project contractors. 8.3.2. Provisions in Authorizing Legislation. The Parties support the following term in the federal Authorizing Legislation: “The Secretary is authorized to take operational responsibility for Link River Dam and any necessary associated real property from PacifiCorp in the course of implementing the Klamath Hydroelectric Project Settlement Agreement subject to the conditions defined in Sections ____ of the Klamath Hydroelectric Project Settlement Agreement; provided, however, the Bureau of Reclamation shall operate Link River Dam in a manner that ensures the availability of water for diversion for the Klamath Reclamation Project. Klamath Reclamation Project contractors shall not bear any cost associated with Link River Dam or any related lands or facilities or dikes or levees around Upper Klamath Lake, whether cost of operation, maintenance, rehabilitation, betterment, liabilities of any kind, or otherwise.” 8.4. Relationship between Restoration Agreement and Hydropower Agreement. 8.4.1. Concurrent Execution. January 15, 2008 (Draft 11) 29 Confidential and Privileged Settlement Communication Confidential and Privileged Settlement Communication 8.4.2. Coordinated Implementation. The Parties shall implement this Agreement and the Hydropower Agreement in a coordinated and Timely manner, to the maximum extent reasonably practicable, recognizing that such performance is necessary to assure the bargained-for benefits. This Agreement contains certain provisions which on their face provide for performance in advance of the physical performance of Dam Removal. PART III. FISHERIES PROGRAM 9. Overview of Klamath Basin Fisheries Habitat Restoration, Reintroduction, and Monitoring Program. The Parties adopt and shall implement the Klamath Basin Fisheries Habitat Restoration, Reintroduction, and Monitoring Program (Fisheries Program). 9.1. Recitals. 9.1.1. Blockage of Passage. The Parties acknowledge that the Hydropower Project has excluded coho salmon, Chinook salmon, steelhead, and Pacific Lamprey from the Klamath Basin upstream of Iron Gate Dam. The Parties also acknowledge that coho salmon, Lost River and shortnose suckers and bull trout are presently listed under the Federal Endangered Species Act. 9.1.2. Other Harmful Conditions. The river reaches controlled by the Hydropower Project, and reaches upstream (including Upper Klamath Lake and tributaries, the Klamath Reclamation Project area, and t