Where will hydropower go from here? Administrative law judge upholds Agencies’ proposed prescriptions for fish and habitat protection in Klamath River hydro relicensing
October, 2006
In the first use of the expedited trial-type hearing process created under the Energy Policy Act of 2005 ("EPAct")[i], a Coast Guard Administrative Law Judge has concluded recently that PacifiCorp's Klamath Hydroelectric Project operations have adversely affected fisheries and habitat, and that the proposed terms and conditions prescribed by the Department of Interior and the Department of Commerce[ii] (hereinafter, collectively, the "Agencies") under sections 4(e) and 18 of the Federal Power Act[iii] ("FPA") would benefit salmon, steelhead, and lamprey by providing access to approximately 58 miles of habitat between PacifiCorp's dams.[iv]
Legal and Factual Background
The hearing was requested by PacifiCorp, under the regulations promulgated by the Agencies under the EPAct,[v] in order to challenge the factual bases for the agencies' proposed terms and conditions for the relicensing of its 5-dam hydropower project on the Klamath River.[vi] At stake: whether PacifiCorp will be required to implement the Agencies' conditions, which FERC estimates would cost more than $28 million more per year to implement than the project would likely generate in revenue.[vii]
The Agencies are authorized under sections 4(e) and 18 of the FPA to require terms and conditions in hydropower licenses the Agencies deem necessary to adequately protect and utilize the lands under their jurisdiction; and to require the licensee to construct, operate and maintain "fishways" – fish ladders, screens, and other mechanisms for allowing fish passage around the dams.
Under the EPAct, when an Agency has prescribed conditions under Section 4(e) of the FPA, the license applicant or any other party to the proceeding may propose an alternative condition which the Agency must accept if the Agency determines, based on substantial evidence, that the alternative condition provides for the adequate protection and utilization of the federal land, and that the proposed alternative would either (i) cost significantly less to implement; or (ii) result in improved operation of the project works for electricity production.[viii]
Similarly, when an Agency has proscribed fishways under Section 18 of the FPA, the Agency must accept alternative fishways proposed by the applicant or any other party to the proceeding if the Agency determines, based on substantial evidence, that the alternative fishway prescription will be no less protective than the fishway initially prescribed by the Agency and that the alternative would either (i) cost significantly less to implement; or (ii) result in improved operation of the project works for electricity production.[ix]
The trial-type hearing was PacifiCorp's[x] opportunity to challenge the factual bases of the Agencies' section 4(e) and 18 conditions. PacifiCorp had the burden of proving its version of the facts on each of fourteen disputed issue of material fact,[xi] by a preponderance of the evidence.[xii]
The hearing was the first of its kind under the EPAct. The rules implementing the EPAct (the "EPAct Rules") generated substantial controversy because they were adopted by the Agencies without notice and comment and applied retroactively to license applications already pending before FERC, including those in which stakeholders had already agreed to environmental protection measures through the settlement process.[xiii]
Conservation groups predicted that dam owners would use process created by the EPAct Rules "to litigate their way into weaker environmental protections."[xiv] The EPAct Rules were recently upheld in a decision issued October 3, 2006 in American Rivers, et al. v. United States Dept. of Interior, et al., ("American Rivers").[xv] Under the rules, the ALJ's findings of fact with respect to each disputed issue of material fact are final and binding on the Agencies in their final actions under sections 4(e) and 18 of the FPA.[xvi]
Three days before the ALJ issued his decision, FERC released its Draft Environmental Impact Statement for the Klamath Hydroelectric Project ("DEIS"), selecting as its Preferred Alternative FERC's "Staff Alternative." The Staff Alternative incorporated most of PacifiCorp's proposed environmental measures, with slight modifications in some cases, but rejected most of the Agencies' mandatory section 4(e) and 18 conditions.[xvii] Notably, the Staff Alternative adopted a ‘trap and haul' program to drive fish around dams, rather than constructing fishways. Conservation groups blasted the DEIS, charging that FERC unduly deferred to PacifiCorp's wishes and recommended measures that "will do little to mitigate the impacts of the dams or restore damaged west coast salmon fisheries."[xviii]
The Decision
Despite dire predictions by the American Rivers plaintiffs that the EPAct Rules would "favor hydropower dam owners and allow them to avoid responsibility for the damage their dams cause to rivers," the ALJ concluded that PacifiCorp failed to prove its version of the facts with respect to the majority of the disputed issues of material fact, largely affirming the Agencies' prescriptions requiring PacifiCorp to (1) construct fish ladders to allow the migration of anadromous and resident fish through the project, (2) install screens to prevent turbines from chopping up fish, and (3) increase river flows to improve riparian and fish habitat.[xix]
Under the EPAct Rules, the matter is remanded to FERC for final licensing decisions. The ALJ's ruling, the DEIS, alternatives proposed by PacifiCorp, and comments received by the public will all be considered in finalizing the license terms and condition. The final prescriptions to be included in the license are expected to be submitted by the Agencies sometime early next year.[xx]
The Reaction
Conservation groups, fishermen, federal resource agencies, and Indian tribes in the Klamath River Basin consider the Klamath decision a victory, with some even suggesting that the decision paves the way for the removal of four PacifiCorp dams.[xxi] PacifiCorp has not commented publicly on the decision.
In mid-September FERC issued a policy statement on hydropower licensing settlements, affirming its support of settlements in licensing proceedings and identifying settlement terms that can properly be included in a FERC-issued license.[xxii]
In addition, the governors of Oregon and California announced that the states will hold a summit later this year to address issues that affect the health of the Klamath River Basin, as well as the environmental and economic concerns of stakeholders.[xxiii] The Secretaries of Interior and Commerce reportedly support the summit, which will call together stakeholder organizations and interests, including fishermen, irrigators, tribes, PacifiCorp, environmental organizations, state and federal resource agencies, and members of Congress. [xxiv] The governors have asked stakeholders to present specific proposals and legislative concepts for consideration by the states and federal government, and to work to identify priority issues and areas of mutual agreement before the summit convenes.[xxv]
Hydropower licensing is at an interesting crossroads, with the Klamath decision added to the recent decision by the D.C. Court of Appeals affirming FERC's authority to impose license terms and conditions that make a project uneconomic,[xxvi] and the open question of FERC's authority to impose the cost of decommissioning a project on a licensee who rejects a license rather than continuing to operate an uneconomic project. In the end, the Klamath case will likely be resolved through a negotiated settlement or a legislative fix, rather than through an adversarial process. It will be interesting to see whether that resolution involves the removal of one or more of the Klamath River dams.
For more information, contact Connie Sue Martin.
[i] § 241 of the Energy Policy Act of 2005, Pub. L. 109-58, § 241, 119 Stat. 594, 674 – 75 (Aug. 8, 2005) (codified in 16 U.S.C. §§ 797(e) and 811), and underlying procedural regulations codified in 50 C.F.R. Part 221.
[iii] 16 U.S.C. §§ 797(e) and 811.
[iv] In the Matter of Klamath Hydroelectric Project (License Applicant Pacific Corp.), Decision. Docket No.: 2006-NMFS-0001, FERC project No.: 2082 (September 28, 2006) ("Klamath Decision").
[vi] The EPAct added language to Section 4(e) to provide that "[t]he license applicant and any party to the proceeding shall be entitled to a determination on the record, after opportunity for an agency trial-type hearing of no more than 90 days, on any disputed issues of material fact with respect to such conditions." Similar language was added to Section 18 of the FPA, which requires licensees to construct, operate and maintain "such fishways as may be prescribed by the Secretary of the Interior or the Secretary of Commerce."
[vii] See Draft Environmental Impact Statement for the Klamath Hydroelectric Project, FERC Docket No. P-2082-027 (10/25/06), Executive Summary at xxxii.
[viii] See Order on Defendants' Motion to Dismiss and Plaintiffs' Motion for Summary Judgment, American Rivers v. United States Dept. of Interior, et al., Cause No. C05-2086P (10/3/06), at 4.
[x] Siskiyou County, California, where three of the five dams are located, intervened in support of PacifiCorp's request. The California Department of Fish and Game, the Klamath Tribes, the Hoopa Valley Tribes, and eight organizations collectively referred to as the Conservation Groups (American Rivers, Trout Unlimited, Northcoast Environmental Center, Pacific Coast Federation of Fisherman's Associations and the Institute of Fisheries Resources, WaterWatch of Oregon, California Trout, Friends of the River, and Oregon Natural Resources Council) also intervened.
[xi] The fourteen disputed issues of material fact were identified, with attribution to the prescribing Agency, as follows:
1. USFWS/NMFS Issue 2(A): Whether stocks of anadromous fish suitable to conditions above Iron Gate [dam] are available to use prescribed fishways?
2. USFWS/NMFS Issue 2(B): To what extent facilitating the movement of anadromous fish via prescribed fishways presents a risk of introducing pathogens to resident fish inhabiting the basin above Iron Gate?
3. USFWS/NMFS Issue 2(C): To what extent facilitating the movement of steelhead above Iron Gate Dam via prescribed fishways presents a risk of residualizing, and whether and to what extent that [residualization] would pose adverse effects to the resident trout fishery resource?
4. USFWS/NMFS Issue 3: Whether and how current Project operations affect the resident trout fishery resource in the absence of passage?
5. USFWS/NMFS Issue 4: Whether entrainment at Project facilities is adversely affecting resident fishery resources?
6. USFWS/NMFS Issue 6: Whether 58 miles of habitat suitable for use by anadromous fish exists with[in] the Project?
7. USFWS/NMFS Issue 7: Whether access to habitat within the Project would benefit coho salmon, and if so, to what extent?
8. USFWS/NMFS Issue 8: Whether access to habitat within the Project would benefit Pacific lamprey, and, if so, to what extent?
9. BLM Issue 10: Whether the seasonally high flows will help to improve riparian conditions in the J.C. Boyle bypass reach; and if so, whether and to what extent such improved riparian conditions will affect native riparian-focal bird species?
10. BLM Issue 11: Whether project operations adversely affect riparian resources and native riparian-focal bird species in the J.C. Boyle peaking and bypass reaches?
11. BLM Issue 14: Whether the seasonal high flow specified in BLM Conditions 4A.1(c) will have a net adverse effect on redband trout spawning?
12. BLM Issue 16: Whether and how current Project operations affect the redband trout fishery resources, insofar as that resource would be addressed by the River Corridor Management Condition?
13. BLM Issue 17: Whether and to what extent BLM's two-inch-per-hour upramp rate for the J.C. Boyle facility will affect fish resources and other aquatic organisms?
14. BLM Issue 19: How the flows proposed by BLM may affect the existing whitewater boating and flyfishing in the J.C. Boyle peaking reach?
[xii] Klamath Decision, at 2.
[xiii] Amended Complaint, American Rivers, (Document 19, Filed 3/3/06), at ¶ 2; see, also, "Hydropower Rules Allowed to stand at Expense of Rivers and Public Participation" (American Rivers 10/3/06 Press Release).
[xvi] 50 C.F.R. § 221.60.
[xvii] Executive Summary, DEIS at xxvii – xxxviii.
[xviii] "FERC's Klamath Draft EIS Falls Short," (American Rivers' 9/25/06 Press Release).
[xix] Klamath Decision, at 85 – 87.
[xx] "Findings of Fact Support Department of Interior and Commerce Proposed Prescriptions," (U.S. Fish & Wildlife Service 9/28/06 News Release).
[xxii] Policy Statement on Hydropower Licensing Settlements, 116 FERC ¶ 61,270, Docket No. PL06-5-000 (9/21/06). FERC is soliciting public comments on the policy. The deadline for submission is 45 days from the date of the policy's publication in the Federal Register, and may be filed electronically via the eFiling link on FERC's website at http://www.ferc.gov.
[xxiii] Oregon's Governor Kulongoski has proposed that the summit be held in Klamath Falls, Oregon , with a target date in December 2006.