August 2020; Issue 16
KLAMATH RIVER DAMS: WILL THEY STAY OR WILL THEY GO?
On July 16, 2020, the Federal Energy Regulatory Commission (FERC) issued an order that has implications for potential removal of four hydroelectric dams on the mainstem Klamath River. The order approves the transfer of the Dams’ FERC license to the Klamath River Renewal Corporation (KRRC), an organization formed to pursue the removal of the dams, but the transfer is contingent on dam owner and current licensee PacifiCorp remaining a co-licensee.
Public responses have ranged from “dam removal is dead” to “this is a bump in the road, and dam removal is on track.” Klamath Water Users Association (KWUA) is not a party to, and has no position on, the Amended Klamath Hydroelectric Settlement Agreement (KHSA), the 2016 agreement that laid out terms under which the dams could be removed. However, it is important that interested persons have an understanding of the basic facts and business considerations that are in play.
What Is FERC’s Role?
FERC is a federal agency with authority over the development of hydropower resources across the United States since 1927. FERC decides whether it is in the overall public interest to allow hydropower development and, if so, what conditions should be imposed. The approvals and terms and conditions of approval are reflected in a FERC license.
How Did the KHSA Come to Be?
The FERC license that authorizes hydropower development at J.C. Boyle, Copco I, Copco II, and Iron Gate Dams became effective in 1956 and expired in 2006. However, and as provided in the Federal Power Act, because PacifiCorp filed a timely application for renewal of the license, the old license is automatically renewed, one year at a time, for a one-year period, until FERC has acted on the new license application. As a result, PacifiCorp has operated under one-year renewals of the 1956 license each year since 2006.
Under contemporary FERC re-licensing, other agencies are given significant power to dictate license conditions. The U.S. Fish and Wildlife Service and National Marine Fisheries Service can provide FERC with license conditions for fish passage that FERC is obliged to accept and impose. Federal land-managing agencies can also develop conditions to protect federal land-holdings that must be incorporated into a license. And, states can impose mandatory conditions to protect water quality.
In this context, during the licensing process, federal agencies authored conditions that would both reduce power generation significantly and require the construction of very expensive facilities for fish passage. This also occurred in an environment of strong and capable advocacy for dam removal by several interested parties.
Ultimately, and under strong pressure from various parties, PacifiCorp negotiated a settlement – the KHSA – under which it would agree that the four dams could be removed. The KHSA was signed in 2010 and overhauled in 2016. In both cases, however, the settlement was not simply an agreement for dam removal. It was an agreement for dam removal under specific conditions. The conditions negotiated by PacifiCorp were intended to protect customers. The conditions of re-licensing would impose large costs on customers and PacifiCorp agreed to an alternative to that approach.
As a result of customer surcharges approved by Public Utilities Commissions and the availability of California water bond funds, the KRRC has access to $450 million. Under the current KHSA, parties would seek transfer of the license for the four dams to the KRRC, which would then obtain necessary permits, surrender the license, and remove the dams.
What Does FERC’s Recent Order Mean?
A fundamental principle for PacifiCorp has been customer (ratepayer) protection. In essence, it said that the company is not in the dam removal business, but will allow someone to remove the dams if various conditions are met. Critical conditions included that PacifiCorp have no potential liability or residual responsibility, so that its customers’ contributions to the settlement (payment of the surcharge) would be their maximum possible exposure.
FERC’s July 16 order approves the transfer of the license to the KRRC, but only if PacifiCorp agrees to remain a co-licensee. FERC recognized the KRRC’s extensive work to be in a position to remove the dams within budget but ultimately concluded that the public interest requires that PacifiCorp retain a role and responsibility, because of the magnitude of the undertaking and PacifiCorp’s relatively greater experience with the facilities. A reasonable characterization of the logic is that FERC believed the KRRC had put forward a strong case that it has the wherewithal to pull off the dam removal within the cost cap, but also believed that the public as a whole should not shoulder the risk of things not going according to plan.
What Happens Now?
On July 23, PacifiCorp provided a formal notice to the other KHSA parties. In it, the company emphasizes that, for over a decade, cost certainty, liability protection and dam removal by a third party had been “bedrock” principles of any agreement that would lead to dam removal. The notice triggers procedures under which the agreement will terminate in mid-January unless parties agree on some resolution of the inconsistency of the FERC order with PacifiCorp’s conditions in the KHSA.
Although PacifiCorp would have to make new or modified commitments in order for the KHSA to go forward, it is not necessarily the only party with a controlling opinion. For example, if the situation were to be resolved through amendment of the KHSA, the amendment would require the approval of state and federal parties and the KRRC. Also, the Public Utilities Commissions of Oregon and California authorized customer surcharges to contribute to dam removal, and may have to be persuaded to approve the continued use of the money for dam removal if customers’ potential exposure is not in fact capped.
Dam removal proponents have asserted that the FERC order should not impair dam removal. They urge that PacifiCorp’s best business option is still dam removal. They maintain that the KRRC’s work in recent years has narrowed any potential residual risk of cost overruns or liability, or insured against it. Thus, they maintain, it would be of minor consequence for PacifiCorp to accept the change in expectations and go forward, or for the parties to make minor adjustments in the KHSA that would allow it to go forward.
If the KHSA terminates, regulatory and political attention would return to PacifiCorp’s original application to re-license the facilities.
KWUA does not have independent positions about these subjects. They do contribute to the never-dull dynamics of the Klamath Basin.
TRIBAL WATER RIGHTS ISSUES TEED UP IN KLAMATH BASIN ADJUDICATION
Beginning on August 25, the Klamath County Circuit Court will consider, and ultimately rule upon, several issues of importance concerning water rights claims of the Klamath Tribes and its trustee, the U.S. Bureau of Indian Affairs. The rulings on these issues will, eventually, be incorporated into a court decree that will guide water rights-based regulation for the future.
The purpose of Oregon’s Klamath Basin Adjudication (KBA) is to determine and quantify rights to the use of the Klamath River and its tributaries in Oregon. The process involves an administrative phase in which the Oregon Water Resources Department (OWRD) makes its findings, and a judicial phase in which a court considers the exceptions and objections to OWRD’s findings, and modifies or affirms findings in a final judgment.
The most consequential and controversial tribal water rights claims are claims for instream flows and water levels. The approval of these claims, which are the most senior claims in the basin, results in the availability of water for diversion when and where the diversion would deplete flows below levels of any approved water right.
In its order concluding the KBA’s administrative phase, OWRD granted some tribal claims and denied others. In general, it granted claims for instream flows and lake elevations on water bodies within, or bordering, the former Klamath Indian Reservation, which lay upstream of Upper Klamath Lake. It denied claims in locations off the former reservation, even if the given stream flows through the former reservation; in other words, only the portion of a stream or lake within, or bordering, the former reservation was determined to have a water right. The standard for the quantification of recognized rights for fisheries was “productive habitat.”
Irrigation parties, the United States, and the Klamath Tribes have all filed exceptions to OWRD’s administrative determinations. In the meantime, the administratively-determined rights are enforceable and have resulted in curtailment, via water right calls, of irrigation in areas tributary to Upper Klamath Lake.
Parties recently completed briefing of legal issues on their exceptions to OWRD’s determinations of tribal claims. The arguments cover a spectrum of legal issues regarding the existence, source, locations, and proper standard for quantification of any recognized tribal rights.
The first round of oral arguments on these issues commences on August 25, before the Honorable Cameron Wogan, Klamath County Circuit Court Judge. Additional arguments will occur later this year.
Ultimately, the Klamath County Circuit Court will issue its rulings on the exceptions. The rulings will be incorporated into the final judgment/decree on all water rights claims (tribal and non-tribal), which will be issued when all proceedings in the KBA are completed.
KWUA Washington, D.C Representatives’ Report
Senior Trump Administration officials and the Oregon/California congressional delegations have continued to work closely with KWUA leadership to identify remedies addressing the water shortage crisis the Klamath Project is facing. Pending in the House of Representatives – and expected to be taken up in September – is Senate-passed legislation strongly supported by the congressional delegation that would ensure Reclamation has the authority to utilize federal funds for water banking and land idling in the Klamath Basin.
Regarding COVID-19 relief legislation, negotiations between the White House and Democratic leaders were suspended after several days of fruitless talks. However, a series of executive memos and an executive order signed by President Trump to address some COVID‑19 related economic fallout have impacted those negotiations. The President’s executive orders seek to extend the eviction moratorium and maintain unemployment benefits at a reduced rate as well as temporarily suspend the payroll tax and collection of student loan debt. Agreement regarding the level of funding required for this relief package will likely need to fall between the House-passed $3.4 trillion relief bill and the Republicans’ proposed $1 trillion COVID package.
On appropriations, the House has passed a $1.3 trillion spending package, H.R. 7617, which includes the FY 2021 Energy-Water, Transportation-Housing, and Urban Development, Commerce-Justice-Science, Defense, Labor-Health and Human Services-Education, and Financial Services-General Government bills. The House has now passed 10 of its 12 annual spending bills (minus Legislative Branch and Homeland Security measures). Congress will likely need to pass a continuing resolution – a temporary spending bill that maintains funding of the agencies at FY 2020 levels – to keep the government open beyond the end of the fiscal year (September 30), as the Senate has yet to move any of their FY 2021 spending bills. The House has passed its version of a Water Resources Development Act (WRDA), which authorizes Army Corps projects and includes several provisions addressing climate change. Senate action on bipartisan transportation and water legislation is expected to be voted on sometime after Congress returns in September.
KWUA WELCOMES FAMILY FARM ALLIANCE REPRESENTATIVES FROM WASHINGTON INCLUDING FORMER KID MANAGER, DAVE SOLEM
On August 6 and 7, KWUA had the privilege of meeting with irrigation and agricultural leaders from Washington state, including two members of the Board of Directors of the Family Farm Alliance. Members of that delegation met with Family Farm Alliance Executive Director Dan Keppen at KWUA. These individuals had come to Klamath because they were interested in getting first-hand knowledge of the Project, and the remainder of their time involved meeting with Project representatives and touring portions of the Project operated by Tulelake Irrigation District, Klamath Drainage District, and Klamath Irrigation District.
* Mark Hansen, who raises irrigated forage crops (primarily timothy hay and alfalfa) and cattle in the Kittitas Valley near Ellensburg, Washington. He is a director of the Kittitas Reclamation District, the Kittitas Farm Bureau, and the Family Farm Alliance.
* Charles Lyall, a third-generation farmer in the lower Yakima Valley and Columbia Basin. His family farm, Lyall and Sons, grows cherries, apples, and concord grapes. He is a director on the Board of South Columbia Irrigation District and the Family Farm Alliance.
* Dave Solem, the general manager of South Columbia Basin Irrigation District in Pasco, Washington. Dave was the Manager at Klamath Irrigation District for roughly 20 years, ending in 2010, and he served on the KWUA board and as KWUA President. He sits on the Family Farm Alliance Advisory Committee.
* Chris Voigt is the executive director of the Washington Potato Commission and a long-time member of the Family Farm Alliance Advisory Committee.
KWUA thanks Dan Keppen for bringing these leaders to the basin, and thanks the growers and district managers who were generous with their time in helping our visitors understand our Project and circumstances.
What has KWUA been working on…
KWUA’s Board of Directors strives to keep member districts and their patrons, and other interested parties, informed. Board members help with the dissemination of information received at our monthly Board meetings, and staff produces a monthly newsletter.
The KWUA Board convened on August 12, 2020. Below is a recap of ongoing activities. If you would like more in-depth information, we encourage you to contact your respective district board member, on member district page.
Secretary Bernhardt and Commissioner Burman’s Visit: The board discussed the July 11 visit to the Klamath Basin by Secretary of the Interior David Bernhardt and Bureau of Reclamation Commissioner Brenda Burman. Since then, there have been encouraging signs that Klamath Project irrigators’ concerns were taken to heart and are being addressed. The new science initiative reflects items that KWUA has recommended. There are also important regulatory issues needing attention; Paul Simmons discussed this issue and related communications with the board.
Additional Science Expertise: Over its past few meetings, the KWUA board has discussed potential needs for additional scientific expertise, both related to regulatory (Endangered Species Act) and other overlapping needs for districts in the KBA. The most recent development in that process is the solicitation of four firms to provide proposals on defined subjects. The proposals are due September 1, and the board established an interview committee.
Klamath Hydroelectric Settlement Agreement: The board discussed FERC’s order approving license transfer subject to the condition of PacifiCorp remaining co-licensee, and discussions that have occurred with KHSA parties including the federal parties.
KWUA Director Reports
Litigation Status: A litigation development of significance in the past month occurred in Klamath Irrigation District’s (KID) most recent lawsuit against the OWRD. The Marion County Circuit Court’s August 6 ruling provides that OWRD is to stop releases from Link River Dam for uses that do not have a water right. A formal order or judgment is expected soon. The next development will be OWRD’s actions in compliance with the judgment. That will presumably be followed by OWRD issuing an order to Reclamation. The question then could be how Reclamation responds. The board discussed this development in relation to other pending matters and discussions among KWUA and federal agencies.
Drought Response Agency Funding: The Klamath Project Drought Response Agency (DRA) has accumulated approximately $5.6 million to date. It should be possible to accumulate the full $8.3 million under the current contract with Reclamation if outstanding and anticipated proposals are approved. The funds will be used toward the DRA groundwater substitution and non-irrigation programs. There are applications on approximately 36,000 acres for non-irrigation programs.
Additional funding is needed for the DRA programs in 2020. Such funding likely can only occur with congressional action, and KWUA continues to pursue that objective for the immediate future. KWUA has offered a handful of legislative approaches to our congressional delegation that could accomplish Klamath Project goals for USDA funding. Larger, national, policy, and political issues will determine whether the opportunity exists to incorporate those approaches into a legislative measure this summer. Senator Merkley is in an important position and doing what is possible, with support from all others in the delegation. (See hydro report for an update on acres and wells figures.)
Regional Conservation Partnership Program: KWUA staff and member districts have been meeting and planning with waterfowl and wildlife organizations in order to advance shared and compatible goals. A recent focus has been the Natural Resources Conservation Service’s (NRCS) Regional Conservation Partnership Program (RCPP). On August 11, KWUA became aware that the Klamath Basin has been identified as a “critical conservation area” under the RCPP, which improves the opportunity for receiving part of the $350 million that will be available nation-wide. The board directed staff to step up engagement on this issue and dialogue with partners, including further investigation of whether a Project-oriented program, administered by KWUA or the DRA, is a possibility.
KBAO Office Building: In recent years, Reclamation has communicated with KWUA and others about limitations and concerns with the suitability of the current Reclamation building on Joe Wright Road. As a result of recent inquiries, Paul Simmons proposed a mutual listening session involving Reclamation, and presidents and managers of Project contractors. That discussion has since been put on hold. The board gave direction to staff on this issue.
Reinitiated ESA Consultation Process: KWUA has provided several communications to Reclamation recently regarding technical and legal and regulatory issues related to the ongoing ESA consultation that is scheduled for completion after the 2022 irrigation season. The board discussed the status of specific issues. In the meantime, following a discussion with attorneys for districts in the Klamath Project, KWUA staff will prepare a document identifying proposed sequencing and deadlines for resolution of critical regulatory issues that affect the process.
Power Costs for Irrigation: The Executive Director reported on the status of settlement negotiations in PacifiCorp’s general rate case at the Oregon Public Utilities Commission. In that case, PacifiCorp seeks approval of an increase in the irrigation tariff for retail customers in Oregon, which includes all irrigators in the Upper Klamath Basin in Oregon. KWUA is participating jointly in the case with the Oregon Farm Bureau Federation.
Klamath On-Farm Improvements Grants/Cost Share Meeting: KWUA’s Deputy Director Mark Johnson will attend a meeting with several entities to discuss potential grant opportunities for on-farm irrigation efficiency projects available for 2021. The meeting will focus on the coordination of grant proposals to address infrastructure improvements such as piping, hardware, technology, and ongoing activities throughout the Basin.
USGS Stakeholder Meeting: The USGS Oregon Water Science Center contacted KWUA to participate in a workshop to discuss the data needs of stakeholders in the region. The workshop will focus on how USGS data can support decision-making and solicit input in shaping the USGS information delivery systems. Mark Johnson will report back to the board after the workshop.
Sustainable Northwest Electric Tractor Program: Sustainable Northwest is rolling out an electric tractor pilot program in the fall of 2020. They are looking for interested producers or businesses to test the equipment free of charge. Interested individuals should contact Mark Johnson for more details at 541-883-6100 or email at email@example.com.
OSU Juvenile Chinook Sentinel Trial Update: OSU recently concluded a third sentinel trial, which exposes juvenile hatchery Chinook for 72 hours at several locations in the Klamath River to monitor C. shasta disease progression. The overall mortality rate for fish exposed between May 18-22 at the Beaver Creek index site was 12.5 percent. The C. shasta spore concentrations were 20 spores per liter, and sampled natural Chinook at the Kinsman trap during the exposure period was 84 percent.
DID YOU KNOW…
· KWUA offers notary services
Chelsea Shearer is a certified Notary Public and KWUA offers her notary services free to all members and patrons of member districts. To schedule an appointment with Chelsea, call the office at 541-883-6100.
- KWUA offers meeting room facilities for member districts,
Available Monday–Friday 8am- 5pm based on availability. There will be two meeting room spaces available. To schedule a meeting, call the office at 541-883-6100.
· Precipitation at Klamath Falls for the year is 7.5 inches below normal.
· Upper Klamath Lake inflow projections through September have increased 20 percent from the previous forecast.
· The use of Project Supply to date is approximately 110,000 acre-feet of the 147,000 acre-feet allocation.
· The districts continue to manage to get through September 30 with the remainder, but that will be very tight.
· Deliveries to Lower Klamath Refuge have been approximately 30 cubic feet per second since July 15 through Ady Canal, but the ability to continue is uncertain at this time.
· Tulelake Irrigation District is making direct delivery to Sump 1A via Lost River for ESA sump elevations and benefiting duck populations. These deliveries do not affect Project Supply.