Daniel Meyers on Glen Spain's post: "This is so much spin!"

Glen Spain has emerged as one of the most enthusiastic and energetic supporters of the Klamath Dam and Water Deals. Glen, a lawyer who represents the Pacific Coast Federation of Fishermen's Associations (PCFFA) on Klamath River issues, was invited to publish his analysis of the deals on KlamBlog. His KlamBlog piece appeared on the Blog on November 16th.  

Daniel Meyers is the Water Committee Chair for the Redwood Chapter of the Sierra Club. Daniel, who is a volunteer, has traveled extensively to participate in Shasta, Scott and Klamath TMDL development meetings and hearings as well as meetings about Klamath dams. Daniel has concentrated his analysis on the dam part of the Klamath Deals, the proposed Klamath Hyrdoelectric Settlement Agreement (KHSA).

Below you will find Glen Spain's KlamBlog post with Daniel Meyer's comments in red font inserted within Glen's text. Daniel's comments are his own and do not reflect the position of the Sierra Club which as of this date has not taken a position on the KBRA and KHSA.

GUEST WRITER: GLEN SPAIN

NW Regional Director

Pacific Coast Federation of Fishermen’s Associations (PCFFA)

(541)689-2000 Email to: fish1ifr@aol.com

Reference to KlamBlog entry for 10/1/09

Though such mistakes in these complex issues are certainly understandable, the analysis of the KBRA and the new Klamath Hydropower Settlement Agreement (KHSA) outlined in the KlamBlog October 1, 2009 entry is both over-simplistic as well as incorrect, for a number of reasons. Hopefully this response will clarify the facts and help separate them from the myths as part of this healthy debate.

The facts are these:

(1) NEITHER THE KLAMATH HYDROPOWER SETTLEMENT AGREEMENT (KHSA) NOR THE PARALLEL KLAMATH BASIN RESTORATION AGREEMENT “WAIVE” THE FEDERAL OR CALIFORNIA ESA TO ANY DEGREE. The only “waiver” of any provision of California wildlife laws that will be required to remove the Klamath Dams is a very limited one to allow dam removal (which will create sediment, which will harm some fish) that may adversely affect certain “fully protected species” from a short list codified in Cal. Fish & Game Code sections 3511 and 5515. These sections predate the California Endangered Species Act (CESA) and were largely replaced by CESA (except for this remaining list of species in sections 5515 and 3511) because they are a “zero tolerance” impacts policy. Those specific species from this statutory list which occur in the Klamath include: Lost River sucker, shortnose sucker, bald eagle, American peregrine falcon and golden eagle.

In other words, it would currently be LEGALLY IMPOSSIBLE to remove dams in the Klamath or anywhere else in California that “might” adversely affect any of these specifically named so-called “fully protected” species without a statutory waiver. There simply IS no CESA-like “incidental take” exemption available under Fish & Game Code section 3511, even when the small short-term harm is a necessary price for much greater long-term benefits, such as large-scale river restoration. CESA was adopted much later to remedy that problem, but the old statute was never actually repealed.

A placeholder statement that legislation will be introduced resolving these conflicts to allow dam removal appears in the KHSA Appendix G-3. A much older (and now superseded) statement of specific proposed bill language to resolve that conflict appears in the KBRA at Appendix A-3, but this KBRA language will probably disappear in the final version of the KBRA because it was: (a) overly complex and a bit too broad, and; (b) the issue is now better covered in the KHSA Appendix G-3 specifically as a dam removal issue. 

To keep Fish & Game Code Secs. 3511 and 5515 on the books, according to Fish and Game, legally blocks the Department’s ability to do many forms of watershed restoration, not to mention dam removals, all over the state – wherever any of these so-called “fully protected” species are present. Since these species are already covered under the far more inclusive as well as more flexible modern CESA process, these old statutes, they argue, are now obsolete. 

CESA and the federal ESA would still apply regardless, and cannot be changed by a mere contractual agreement in any event. The specific exemption would also only apply to dam removal impacts – not to irrigation or other farming activities, to which the regular CESA and ESA would still always apply.

(2) THERE ARE NO CONCEIVABLE SCENARIOS IN WHICH PACIFICORP SHAREHOLDERS (AS OPPOSED TO ITS CUSTOMERS) WILL BE EXPECTED TO SHOULDER COSTS OF EITHER FERC RELICENSING OR DAM REMOVAL. Public utilities are nothing more state-regulated pass-through organizations. All their costs and operational expenses, whether for power facilities building, relicensing or demolition, are always simply passed through the company to be divided up among its ratepayer-customers. The only restriction on the Company’s ability to pass these costs through is that those costs must be “prudently incurred” (as determined by the state Public Utilities Commission (PUC) in an appropriate rate setting case) in the course of the utilities’ business. Neither Warren Buffett nor any of the Company’s other shareholders would be ever required to shoulder prudently incurred costs by FERC or otherwise. Utilities just do not work that way.

Under a FERC process PacifiCorp would bare all the costs of removal and  might be able to recover some or all of them over a long period of time if justifiable cost and not previously accrued under their rate structure. In this case they do not put out any funds---it is a very large difference in cash flow. 

If  Glenn's position is correct, why aren't all the costs passed through to the rate payers. Instead  more than half the funding is to be provided by a California Bond Fund. Perhaps more importantly they are avoiding liability of dam removal in addition which may not be a cost they could recover from rate payers. All of the expense and risk of PacifiCorp has been  "bargained" away for others to pay.

In the presentation of Glenn and Trout Unlimited the other day, TU took the position that they didn't care very much who pays as long as they get the deal. I would agree with that only if we were to receive equivalent tangible benefits in return is a wonderful deal but only for PacifiCorp.

(3) THE TEN (10) YEAR TIME FRAME FOR KLAMATH DAM REMOVAL IS BOTH REASONABLE AND NECESSARY. It can take a long time to tear down a dam right. The other major PacifiCorp dam involved in a removal settlement agreement, Condit Dam, will also take about 10 years to remove if (as currently scheduled) it comes down in 2010. The recently removed Savage Rapids Dam on the Rogue River took something like 18 years to remove. 

There is no ten year time frame for dam removal. There is a prohibition of ten years preventing dam removal. The agreement is very clear that dam removal is to be started and completed in 2020 in just those  twelve months. The ten year delay and the one year to take the dams indefensible.

There are many studies still to be done on how to engineer the removal, minimize fish damage and sediment, and avoid other environmental problems. There is almost certainly going to be litigation to resolve, and additionally the Klamath Trust Fund ratepayer funding for dam removal will not be all there until 2020 at the modest ~$1.50/month rate increase it was possible (barely) to pass into law in Oregon (SB 76). There simply is not enough time to have the $200 million required by SB 76 before 2020, nor enough time before then to accomplish all the other myriad of details that such an undertaking will require.

None of these points justify PacifiCorp's ten year absolute control  and ability to terminate the agreement. If the project has the funding on the March 2012 date PacifiCorp has the benefits of free funding and limitation from liability the project should proceed free of PacifiCorp's  control on a much shorter time frame subject to adjustment for contingencies Glenn has raised.

In fact, 2020 seems optimistic to many. Fortunately, however, numerous dam removal studies have already been done, and many more are in the pipeline right now, as part of the FERC process and in anticipation of an extensive NEPA-CEQA process. This has given us several years head start on meeting the 2020 deadline.

(4) THE REGULAR FERC PROCESS WOULD LIKELY NOT GET DAMS DOWN ANY SOONER – AND PERHAPS NOT AT ALL. FERC has never, during its entire history, unilaterally ordered a dam down against the wishes of a relicensing Applicant. The only arguable exception of the Edwards Dam in Maine -- which ultimately also resulted in a negotiated settlement -- still only gives you odds of such a FERC action at about 1/2 of 1 percent of all dam relicensing cases to come before FERC in the last 20 years. These are not good odds for getting FERC to unilaterally order dams down in the Klamath without the Company’s consent. 

This is why this must be resolved during the current administration. PacifiCorp has insisted on this schedule that precludes any dam removal in an Obama administration. It would not be cynical to think PacifiCorp's motives are to avoid dam removal , it would naive to think otherwise.

In order to get the dams decommissioned through the regular FERC process by other means, first you have to win the Clean Water Act 401 Certification fights in BOTH CA and OR, with both states firmly saying no (or making conditions PacifiCorp cannot live with). Then you have to win ALL the legal appeals, without exception, all the way through the state court system, then once again thorough the federal system on preemption and related issues, and finally to the US Supreme Court -- and this could easily be 7-8 years of litigation right there. And THEN, all PacifiCorp has to do to start the whole process over again would be to withdraw the original Application for 401 Certification and resubmit a new and slightly modified Application -- giving them one more year to obtain State 401 Certification administratively each time they do so, followed perhaps by more years of litigation, on and on well past 2020 and maybe past 2030.

This is so much spin. The dams have a spot light on them that a FERC process could not ignore. The dams have been under review of FERC and the California Energy Commission for several years who found that relicencing would be the highest risk to  the ratepayers. Even Glenn's worst case scenario for FERC is still better than the KHSA. 

He acknowledged they are “aware of the Hydro Agreement's (KHSA) uncertainties and contingencies.  And it indeed may not work -- causing us to have to ultimately revert to the rather unsatisfactory FERC track…”   It is illogical to start down a long and uncertain path only to return to another more certain venue where time is critical.

 

And all this time, absent the KHSA, PacifiCorp does not have to do any "interim measures" of any sort, because they get an automatic annual status quo renewal of the current license. FERC has always been upheld on this in every past legal challenge of such rubber-stamp existing annual license extensions.

And, of course, without any sort of negotiated settlement you get no water reforms in the process as provided for in the KBRA. You might also wind up with at least one dam (J.C. Boyles, in Oregon) in the end, with a few patched-up fish passage measures. Oregon’s case against state 401 Certification for J.C. Boyle is much weaker than the case in California where most of the Clean Water Act problems within the reservoirs exist. J.C. Boyle Dam is also by far the most valuable part of the Hydro Project to PacifiCorp for power production.

By tying the two agreements together it provide Pacificorp with complete control.  We were advised that it was a risk the signatories were willing to take.

At least with a negotiated FERC settlement you know what you are getting – all four dams down by 2020. Without such a settlement, facing many years of litigation and disputed hearings before FERC, you would not know with any certainty in advance that the dams will in fact be removed. 

This technique is called transferrence.

(5) FINALLY, THE “NEW SPENDING” IN THE KLAMATH CONTEMPLATED BY THE KBRA IS NOT “$500 MILLION” ALL IN ONE CHUNK AS IMPLIED, BUT OVER A PERIOD OF 10 FULL YEARS – THAT IS, ONLY ABOUT $50 MILLION/YEAR. This is not very much money by Congressional standards, but will do a great deal of good – and help the Klamath Basin avoid expensive future conflicts. 

We are told that an obligation of a private profit oriented company is now to be paid by Callifornia tax payers and the electrical consummers, that it will go on for ten years without any dam removal but its a good thing because it is only $50,000,000.00 per year.

There is always competition for funding in Congress these days, but this problem is endemic to all federal funding programs, not just to the Klamath’s. To maximize the odds of full funding, however, requires Congressional authorization for at least that 10-year amount. Authorized programs always have first budget priority over ad hoc needs. So potential funding problems are an argument FOR Congressional authorization of the KBRA, not against it.

Fortunately, dam removal itself will be paid from non-federal funds ($200 million from PacifiCorp rate surcharges, and up to $250 more from future California bond funding) and so requires no Congressional funding. However, taking the dam removal decision entirely out of FERC’s hands does require Congressional approval – which is why this is provided for in the KHSA.

*****

Hopefully the above helps to shed more light on these complex issues as groups analyze the Agreement in more detail. The KHSA documents are available at www.edsheets.com by following the Klamath link. KBRA References above are to the May 6, 2009 Draft KBRA available at: www.klamathbasincrisis.org/settlement/documents/KBRA05060.pdf .

People should read these documents and think through these issues for themselves. These decision are too important to leave to speculation and rumor.