New Klamath Settlement Targets
BuRec As Likely Removal Entity
Four dams operated by PacifiCorp on the upper Klamath
River would be removed in the year 2020, according to a
draft agreement announced Sept. 29.
Under the Klamath Hydroelectric Settlement Agreement (KHSA),
the Secretary of the Interior will complete an investigation
by March 31, 2012, to affirm a preliminary view that removal
of the 169-MW project [FERC No. 2082] is in the
public interest because the benefits outweigh the costs.
The Secretary will also make a determination designating
a dam removal entity (DRE), which is likely to be the Bureau
The KHSA is a follow-on to the November 2008 Agreement in
Principle (AIP) signed by PacifiCorp, Interior, and the
states of Oregon and California. They and 24 parties
finalized the new agreement last week. However, a signing
ceremony is not expected until late this year because the
agreement must still be approved by the governing boards and
councils of the other negotiating parties. These include
three counties, three irrigation districts, four tribes and
10 nongovernmental organizations, although the draft
agreement itself has signature lines for 50 entities.
After the governing boards review the deal, Interior will
conduct a formal process enabling "the general public to
help inform the secretarial review process and the related
The agreement specifies that "public agency parties" will
comply with all applicable federal laws, including NEPA, ESA,
CWA, the Wild and Scenic Rivers Act, and California's CEQA.
The deal contemplates that the environmental reviews will
get under way and be completed so that removal can commence
in 2020 and be effectively completed by Dec. 31, 2020.
Until then, PacifiCorp will spend $500,000 a year
implementing a range of interim measures to improve coho
salmon habitat on the Klamath's California tributaries.
"At this junction, PacifiCorp believes that this
hydropower agreement is in the best interests of customers,
as opposed to the alternative of relicensing," said Dean
Brockbank, vice president and general counsel for PacifiCorp
Energy and lead negotiator for the company in the talks.
Brockbank said the new deal's biggest departure from the
previous agreement is that the AIP precluded the federal
government from serving as the DRE, while "in this, the
federal government will likely serve as the DRE." That is
still subject to a final decision, however, when the
Secretary of the Interior makes a determination on whether
dam removal is in the public interest. Under the settlement,
the Secretary may designate Interior or a "non-federal
entity" as the DRE.
Some parties are wary of the announced settlement.
"There's been no affirmative determination as to who is
going to assume the liability of which PacifiCorp is
relieved," said Tom Guarino, county counsel for Siskiyou
County, where three of the dams are located. "And there's
been no affirmative determination of who is liable for the
The county also has doubts about the wisdom of a
non-federal entity accepting liability.
The Hoopa Valley Tribe, which joined the negotiations in
August, and Waterwatch, which was thrown out of an earlier
round of talks, both complained the 10-year timeline is too
long, risking the survival of endangered fish species.
Klamath Riverkeeper, which has not been involved in the
talks but has pursued litigation against PacifiCorp and
regulators over water quality problems in the river,
acknowledged substantial improvements in the agreement.
However, it said, there's no mention of who will pay for the
clean-up of a stretch of the river below the nearby Keno
Under the KHSA, water quality issues at Keno--a separate
project that would remain after the Klamath projects are
removed--will be subject to a separate but concurrent study
by the Secretary. But Klamath removal is contingent on
negotiations to transfer Keno to Interior, another element
that makes Riverkeeper and Siskiyou County nervous because
the project needs work to meet Interior safety standards.
The KHSA exempts PacifiCorp from paying those costs but
doesn't say who will cover them instead.
Riverkeeper also said the deal doesn't address drought
Pacific's Brockbank said he didn't think the new
agreement changes PacifiCorp's liability exposure compared
to the AIP, which provided immunity for past operations. As
a practical matter, the statute of limitations only allows
liability going back five or six years. He said the number
of "off-ramps"--what the parties call "terminable events"
allowing parties to pull out of the deal--has not
substantially changed from the AIP.
The agreement does not finalize terms of the January 2008
Klamath Basin Restoration Agreement reached by many of the
same parties to "rebuild fisheries, sustain agricultural
communities, and resolve other longstanding disputes related
to the allocation of water resources" in the basin.
PacifiCorp is not a KBRA signatory, although dam removal is
contemplated in provisions of the KBRA.
Many of the parties supporting release of the KHSA
emphasized the import of turning now to the KBRA, including
Interior Secretary Ken Salazar, who said he has directed
federal negotiators "to immediately begin to finalize" the
In a joint statement, the Klamath Water Users
Association, Klamath Water and Power Agency and Upper
Klamath Water Users Association said the new agreement "is
not where the bulk of the irrigation parties' power
interests are dealt with."
"We look forward to turning our full attention now to the
KBRA and finalizing terms that combine federal power and
renewable energy investment to provide affordable power for
our members," said UKWUA's Becky Hyde.
In a separate statement, another group of the negotiating
parties called the KHSA "a major step toward restoring the
health" of the Klamath River, but added it "would be
complemented by the implementation" of the basin restoration
agreement, which "significantly increases water flows for
fish, provides greater reliability of irrigation water
delivery, undertakes Basin-scale habitat restoration, and
makes critical economic investments to ensure the economic
viability of Basin fishing and farming communities into the
The statement was signed by the Karuk Tribe, Klamath
Tribes of Oregon, Yurok Tribe, American Rivers, Trout
Unlimited, California Trout, Pacific Coast Federation of
Fishermen's Associations, Salmon River Restoration Council,
Northern California Council of the Federation of Fly
Fishers, National Center for Conservation Science and
Policy, and the Natural Heritage Institute.
Federal legislation will be required to authorize the
Secretary's review and Interior's service as DRE, to provide
PacifiCorp immunity from dam-related liability, and to make
a half-billion dollars in new appropriations under the KBRA.
The 132-page KHSA includes 13 appendices on federal
legislation, state legislation, interim measures, a timeline
and study process guidelines.
Oregon has already passed legislation authorizing
PacifiCorp to collect up to $200 million in rates to pay for
the state's share of removal costs, along with PacifiCorp's
undepreciated investment in the dams, its cost to operate
the project prior to removal, and for replacement power.
The new agreement also includes an AIP provision calling
on California to pass a bond measure for up to $250 million
to cover any costs beyond those incurred by PacifiCorp. That
money was reportedly folded into one of the bills that make
up a $12-billion bond package aimed principally at water
system improvements in the Sacramento-San Joaquin River
Delta. It would require voter approval at a time when polls
show it would likely not pass.
The bond package died in early September for lack of
Republican support, and the session is now over. But a Rules
Committee aide said the Legislature and governor are still
negotiating, and there will likely be a move to bring the
legislation back during an "interim session" later this
month. The measure could possibly be split into separate
ballots of $5.9 billion each, one in 2010 and 2014.
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