Pacificorp Green Bond Framework

[Jude Petkus]

In2010, the Secretary of the Interior and the governors of Oregon and California, along with multiple interest groups, announced two interrelated settlement agreements, supported by the federal government and signed by numerous other parties. These agreements are meant to address many of the previous conflicts in the basin. The first agreement, known as the Klamath Basin Restoration Agreement (KBRA), provides for restoration, water deliveries, and related actions, including a defined range of water supplies for Reclamation project users as well as projects to restore and protect threatened and endangered fish species. The second agreement, known as the Klamath Hydroelectric Settlement Agreement (KHSA), lays out a process for studies and a decision by the Secretary of the Interior regarding whether the removal of four dams in the Lower Klamath Basin (funded by power customers in Oregon and California, as well as the State of California) would be in the public interest. Together, removal of the dams would constitute one of the largest, most complex dam removal projects ever undertaken.

Legislation currently before Congress (H.R. 3398 and S. 1851) would authorize the agreements, including approximately $800 million for federal actions (mostly in the KBRA). Considerations related to the Klamath agreements may include whether the federal government is obligated to act beyond current activities in the Klamath Basin (and, if so, to what extent) and what specific strategies should be authorized.

Allocation of the Klamath Basin's water has been contentious in the past. Controversy peaked in 2001 when the federal government halted irrigation water deliveries to protect species listed as threatened under the federal Endangered Species Act. Later issues with basin fisheries exacerbated these conflicts. Efforts to permanently settle many of the basin's water and species issues began during the Bush Administration and were continued by the Obama Administration.

More than forty groups are signatories (or "parties") to the Klamath agreements, including the states of Oregon and California, three area tribes, Reclamation Project irrigators, environmental interests, and others. In addition to these parties, many who were not formally involved in negotiations also support the agreements. Opponents of the agreements include a subset of non-Reclamation project ("off-project") irrigators, as well as some other environmental groups, tribes, Siskiyou County in California, and other area residents. The Obama Administration has endorsed the Klamath agreements, but Congress has to formally authorize both agreements for the federal government to move forward with most of their actions.

As is true in many regions in the West, the federal government plays a prominent role in the Klamath Basin's water management. This role stems from (1) operation and management of the Bureau of Reclamation's Klamath Water Project; (2) management of federal lands in the basin, including several national wildlife refuges managed by the Fish and Wildlife Service (FWS); and (3) implementation of federal laws, such as the Endangered Species Act (ESA), Clean Water Act (CWA), and National Environmental Policy Act (NEPA).

The Klamath Basin Restoration Agreement (KBRA) and the Klamath Hydroelectric Settlement Agreement (KHSA), collectively referred to as the "Klamath agreements" in this report, aim to settle many of the outstanding issues in the basin. The agreements were signed in 2010 by more than 40 groups, including state and non-federal interests. The KBRA defines limits to water allocations for irrigators and wildlife refuges under a range of conditions, and lays out restoration actions, monitoring and other actions that aim to recover fish species and provide economic stability for basin tribes. The KHSA lays out a process that could lead to removal of four non-federal hydroelectric dams currently owned and operated by a private entity. Under the KHSA, the Secretary of the Interior determines whether removal of these dams is in the public interest.

Congress has oversight over federal activities in the Klamath and has held hearings and appropriated funding to address issues in the Klamath Basin. In the past, congressional debate has focused on the role of the ESA in water management, the operation of the Klamath Project, and other topics, such as supplemental support for parties impacted by federal policies. Current congressional consideration is likely to focus on the agreements themselves. The agreements require congressional authorization to move forward on some of their most important components, which may result in Congress revisiting previous questions, as well as new ones.

The Klamath River Basin (also referred to in this report as the Klamath Basin) drains approximately 16,000 square miles in Oregon and California. It drains into the Klamath River, which originates in southern Oregon and travels 253 miles before emptying into the Pacific Ocean near Crescent City, California. Combined with the Trinity River, the system is the largest in the western United States other than the Sacramento and Columbia rivers in terms of flow and salmon production.2 However, the basin is also a sparsely populated area with some of the lowest per-capita incomes in either state. The total population is approximately 287,000, and total economic output in the basin was approximately $10 billion as of the late 1990s.3 Native American tribes account for 6% (15,000) of the basin's total population.

For water management purposes, the Klamath Basin is divided into two distinct subbasins. The Upper Basin lies upriver and east of Iron Gate Dam on the Klamath River, and contains Oregon's largest lake, Upper Klamath Lake. The Lower Basin includes nearly 200 miles of the Klamath River between Iron Gate Dam and the Pacific Ocean. Both basins contain smaller lakes, tributaries, and wildlife refuges that also play an important role in water allocation.

The Upper Klamath Basin is an area with limited water resources. It represents approximately 50% (8,060 square miles) of the Klamath Basin land area, but accounts for only 12% of its water runoff.4 Upper basin issues center largely around Upper Klamath Lake (UKL), a large, shallow natural lake covering about 60,000 acres. UKL has an active storage capacity of approximately 500,000 acre feet. It is naturally eutrophic (i.e., high in nutrients) because of its shallow depth and natural sources of nutrients, and these conditions have worsened over the past century in part due to agricultural development.5 As a result, the lake is now considered to be "hypereutrophic," a condition which can cause excessive algae blooms and, in some instances, harm fish and other resident species.

Management of Upper Basin water largely revolves around the Klamath Project, a federal project operated by the Bureau of Reclamation. The Klamath Project diverts Klamath and Lost River flows between Link River Dam, at the outlet of the UKL, and Keno Dam to the Southeast.6 When it was built in 1905, the project (fed by the Klamath River) converted some lands and waters that had historically been fish habitat into farmland. Today it provides irrigation water for approximately 210,000 acres in the Upper Basin, including an estimated 1,400 farms.7 The Klamath Project is different from other Reclamation projects because of its reliance on UKL, a natural lake, for project storage. Because of the shallowness of UKL, it is it difficult to store significant amounts of water for irrigation from year to year. As a result, the project is highly dependent on annual precipitation and snowmelt for its water supply. Additionally, in contrast to some Reclamation Projects, there is no hydroelectric component to the Klamath Project, which means that irrigators must look elsewhere for low-cost power for irrigation pumping.8

Irrigated lands in the upper basin also include approximately 180,000 acres of lands that are not dependent on the Klamath Project for deliveries. This land is located predominantly around the northern part of UKL and on the surrounding tributaries of the Sprague, Williamson, and Wood rivers. Irrigators operating in these areas are often referred to as "off-project" irrigators.

Agriculture is a major part of the Klamath Basin's economy. Major crops supported by irrigation in the Upper Basin include wheat, malt barley, potatoes, onions, and alfalfa. According to Reclamation, crops watered by the Klamath Project had an estimated annual value of $156 million in 2007.9 On off-project lands, water is mainly used to maintain pastures and forage crops. In the late 1990s it was estimated that agriculture accounted for 10% of the jobs and 7.3% of the direct economic activity in the region. As the region's largest industry, agricultural activity also supports other economic sectors.

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