Landmark Settlement Balances Need for Power, Tribal Water Rights in Klamath

Oregon’s Klamath Basin comprises 5,600 square miles,[1] yet is one of the few basins in the State where water right claims have not been officially resolved or “adjudicated.” This has greatly complicated State management of this already notorious battleground over limited water resources.[2] Efforts to resolve competing claims through the Klamath Basin Adjudication began in 1975.[3] The adjudication has since drawn over 700 claims and more than 5,600 contests to those claims.[4] Most of those claims are now resolved,[5] but the most weighty, treaty-based claims of the Klamath Tribes have been saved for last. Many of these claims compete squarely with irrigation (93% of all water withdrawals in Klamath County are for irrigation) and with Klamath River hydropower generation.

The seemingly intractable contests among the parties in the Klamath River and Upper Klamath Lake portion of the adjudication, however, recently took an important step toward resolution by a settlement among PacifiCorp, the owner of the Klamath River hydropower dams, the Tribes, and the United States Bureau of Indian Affairs. Under the settlement, PacifiCorp agreed to withdraw its challenges to the claims of the Klamath Tribes for in-stream water rights. In exchange, PacifiCorp will continue to produce hydroelectric power from its J.C. Boyle dam, without interference from a potentially senior instream tribal water right, until the day comes when that dam is removed. This article examines the PacifiCorp agreement (“Settlement Agreement”) in the context of the larger Klamath controversy.

The Basis of the Tribal Treaty Right

Under the Treaty of October 14, 1864 between the United States of America and the Klamath and Modoc Tribes and the Yahooskin Band of Snake Indians (collectively, the “Klamath Tribes” or the “Tribes”), the Tribes reserved the exclusive right to hunt, fish and gather on the reservation established by that treaty. A definitive interpretation of those treaty rights was provided by United States v. Adair (“Adair”)[6]. Even though the Klamath Reservation was itself terminated in 1954, Adair held that the Tribes have a water right, with a priority date of time immemorial, “to as much water on the Reservation lands as they need to protect their hunting and fishing rights.”[7] Because fish need water, and especially flowing water, for their habitat and migration, the tribal reserved water rights for fishing are instream water rights.

While the federal law priority of tribal rights relative to other water rights was decided by Adair, the court did not quantify those instream rights: “Actual quantification of the rights to the use of the waters of the Williamson River and its tributaries within the litigation area will be left for judicial determination …”[8] In Oregon, quantifying water rights that vested before the water code was enacted in 1909 occurs in a two-tier process. Fact-finding is done before an administrative tribunal, the Office of Administrative Hearings (“OAH”), where the Tribes must introduce evidence to quantify their reserved right; and later judicial review of the administrative findings.

The Potential Impact of Tribal Instream Water Rights

The possibility of an adjudicated tribal instream water right, with its time immemorial priority, has particular importance in this adjudication. This is because all other rights will be subordinate to it. Tribal enforcement of such a right would require that the water stay in the river reach or lake in question, and not be diverted for any purpose. Other users in the basin have therefore viewed the tribal claims as a high-stakes challenge to current livelihoods and economies — this in a region already embattled by declining water supplies and increased demands for water for fish.[9]

The PacifiCorp Contests and Settlement

PacifiCorp was one among many contestants to the tribal claims. If proved and enforced, the super-priority tribal in-stream claims could impair PacifiCorp’s hydroelectric generation at J.C. Boyle Dam, which serves the region with power (by forcing more water to remain in a bypass reach rather than be diverted through turbines for power generation). The Settlement Agreement, however, provides that PacifiCorp withdraws its contests to the tribal claims in exchange for PacifiCorp’s right to continue power production while the J.C. Boyle Dam remains. These discussions occurred parallel with those on the Klamath Hydroelectric Settlement Agreement (“KHSA”), which provides the framework for potential decommissioning of PacifiCorp’s Klamath River dams. One challenge in achieving settlement was to be sure that any settlement in the Klamath Basin Adjudication would not be inconsistent with the KHSA.

The Principal Focus: the Klamath River

The tribal claims to the waters of the Klamath River are only one facet of the Klamath Adjudication, but the case has some unique characteristics. There is no question that the Klamath River is outside of the boundaries of the former Klamath Reservation. The Tribes, however, made a comprehensive claim to the waters of the Klamath River for 700 cubic feet per second[10] year-round to allow for the migration of anadromous fish from the Lower Klamath River up into Upper Klamath Lake and to the Upper Klamath Basin on former reservation lands. The migratory corridor for an anadromous fish on off-reservation lands is not a situation plainly covered in the reserved water rights doctrine. The Adair case was concerned with water rights within the former Klamath Reservation. Adair did not touch on the issue of if and when a tribal in-stream water right is justified for an off-reservation anadromous fish corridor. The Tribes contend that, if such a water right is not granted, then the restoration of fish on the formal tribal reservation can not be assured. While this remains a matter of dispute, it is a central factor in both the uniqueness of the river and importance to the Tribes of the Klamath River case in the adjudication.

The Klamath River Dams

The Klamath River is also unique in that the fish passage is currently obstructed by various dams in the river, including PacifiCorp’s J.C. Boyle facility. However, the Klamath Hydropower Settlement Agreement (KHSA), which was concluded during the adjudication negotiations, provides for the removal of these dams by 2020. There are numerous contingencies in the KHSA, including federal approval, which can change that outcome. The challenge in drafting the Settlement Agreement was to take into account both the existence and potential non-existence of the KHSA.

Dam Removal Scenario

If the KHSA is implemented, it means that, barring certain circumstances, all of PacifiCorp’s hydropower generating facilities will remain in place and continue producing power until 2020 or thereabouts. If decommissioning occurs thereafter, the J.C. Boyle Dam is intended to be the last facility to be removed. It was thus important that the Settlement Agreement not endorse fish flows which would impair hydropower production before that time. When the J.C. Boyle Dam is decommissioned and when anadromous fish are present in the J.C. Boyle bypass reach below the dam, it is equally important to the Tribes that the full tribal in-stream flow right of 700 cubic feet per second will be implemented and enforced. Anadromous fish presence there will define the beginning of the “Critical Period” in the Settlement Agreement when the tribal instream flows would begin in the Klamath River. These flows, however, must not impair the actual process of dam decommissioning.

Dam Continuation Scenario

On the other hand, if the KHSA is not implemented, and it falls away, then it becomes important for hydropower generation to continue unimpaired. In this “all bets are off” scenario, the Tribes would still have the stipulated tribal instream right, but it would not be enforceable at or below the J.C. Boyle Dam.

No Advocacy for Different Flows

The Settlement Agreement defines an “Initial Period” as the time during which the lower dams on the Klamath are still in place and anadromous fish have not arrived at J.C. Boyle. During this “stand down period” where the Tribes are not permitted to make the call on their tribal in-stream flow right, neither side is permitted to assert in any forum that the J.C. Boyle bypass flows should be anything other than as set forth in the Settlement Agreement. This however does not prohibit tribal advocacy on the larger tribal concerns of dam removal and habitat restoration in the Klamath Basin. The Settlement Agreement provides an appendix giving examples of how the contractual provisions should be interpreted.

Other Provisions of the Settlement Agreement

The Settlement Agreement includes closely-negotiated definitions of anadromous fish presence, dam removal, and the nature and implications of the respective agreements made by each party. It also contains provisions for tribal access to the Klamath River, certain technical assistance for biomass energy projects, as well as more standard provisions that are found in other Klamath Basin Adjudication settlements. Each party, for example, pledges to support the Settlement Agreement in the event it should be challenged by a third party. Of particular note is a contractual disclaimer that the Oregon Water Resources Department had any role in negotiating the Settlement Agreement or the tribal in-stream rights to which it refers.

Since the case is before the OAH, the Settlement Agreement provides that a stipulation on the key water terms be executed by the parties and the OWRD and filed in the case. This stipulation is to be the watermaster’s guide to regulation consistent with the Settlement Agreement.

Finally, the Settlement Agreement calls for PacifiCorp’s withdrawal of its contests to both the Tribes’ Klamath River claims and the Upper Klamath lake claims.

The Bigger Picture

The KBA Settlement Agreement represents the third of three important agreements in the Klamath Basin. The Klamath Basin Restoration Agreement (“KBRA”) provides for comprehensive strategy for basin restoration, scientific studies, monitoring, and management, but will require considerable funding to implement. The KHSA, as the second key component, has been described above. The Settlement Agreement and the KHSA together provide perhaps the best chance for the return of anadromous fish to the former Klamath reservation lands.

The Future

The settlement with PacifiCorp in the Klamath River and Upper Klamath Lake cases does not suggest the end of contests to the Tribes’ in-stream water rights in the Klamath Basin Adjudication. The upper basin contestants (UBC) who are mostly irrigators who have a deep stake in the outcome of this adjudication, and some other contestants not affiliated with UBC, have not settled. Hearings have already been held on the Sycan, Sprague, Williamson, and Wood Rivers. Briefing on those cases is due in October. The contests on other cases (including the lake and the Klamath River) remain for those parties who have not settled. It is unknown whether settlement in those cases will occur.

For more information on the Settlement Agreement or the Klamath Basin adjudication in general, please contact Douglas MacDougal or any member of Marten Law’s Water Resources practice group. Douglas MacDougal represented PacifiCorp in the matter described in this article.