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Landmark Agreement Near in Upper Klamath Basin: Implementation Uncertain

April 1, 2014

The Upper Klamath Basin water users, the Klamath Tribes, the United States, and the State of Oregon tentatively reached an agreement on March 4, 2014 which may resolve years of litigation over water rights in the Klamath basin. The agreement, known as the Proposed Upper Klamath Basin Comprehensive Agreement[1] balances the rights of the Klamath Tribes to attain their goals of fish and habitat restoration in the Basin, with the interests of water users including irrigators, to achieve “a stable, sustainable basis for the continuation of agriculture” in the Basin. …”[2]

Implementation of the tentative Agreement depends on federal funding and on successful implementation of a host of ancillary issues, and its success remains uncertain. Still, after many years of protracted disputes, the Agreement offers the best hope for all participants to move forward.

The parties came together following judicial rulings last summer which turned down water users’ petitions to stay implementation of Tribal instream water rights. The talks were initially sponsored by Oregon Senator Ron Wyden, and carried forward by Richard Whitman, Governor Kitzhaber’s Natural Resources Advisor, who acted as facilitator in the process.

The resulting document is technical and complex. Of particular note in the 89 page text (and 100 pages of exhibits) is the high level of detail that went into crafting the two principal pillars of the agreement, namely the Water Use Program and the Riparian Program.

Overview of the Proposed Agreement

Basic trade-offs. The Agreement offers reductions in calls on the Tribal water rights in exchange for compensation for the retirement of irrigation water rights. It also provides for the establishment of riparian management corridors along streams in the basin, and funds to advance tribal economic development purposes.

Transactional emphasis. Two fundamental programs form the pillars of the settlement Agreement:

  • A Water Use Program (WUP) under which individual landowners are to voluntarily execute Water Use Agreements (whereby specific water rights are retired or reduced through other measures such as split-season leases), to put an average of 30,000 acre feet of additional water (over a baseline amount) into Upper Klamath Lake.[3]
  • A Riparian Program under which individual landowners are to voluntarily enter into Riparian Management Agreements to restore riparian habitats throughout the Upper Klamath Basin.[4]

There is also a Transition Period whereby these programs are to be phased in over a five-year period.[5] The programs are to be administered and overseen by a to-be-formed, basin-wide, Joint Management Entity (JME).[6]

Scope of the Agreement. The Agreement covers only the Upper Basin areas not previously settled with the so-called federal Project Water Users obtaining Upper Klamath Lake water. The regions subject to the Agreement are the Upper Sprague, Lower Sprague, Sycan, Middle Williamson, Lower Williamson, and the Wood Valley.

Litigation. The adjudication claims are “provisionally settled” by this Agreement, meaning that the adjudication parties reserve the right to resume litigation, pursuing their exceptions to the Tribal claims, in the event the contingencies in the Agreement are not satisfied and the Agreement is consequently terminated.

Contingencies. There are many contingencies to be satisfied before the Agreement becomes permanent. It requires federal legislation authorizing federal participation in the Water Use Program and the Riparian Program, as well as funding in the amount of $40 million for Tribal economic development (likely to be used for acquisition of the Mazama forest), and $1 million per year to the Tribes "to address tribal needs during the Transition Period beginning in 2014.”[7]

How the Water Use Program Works

Purpose. The purpose of the Water Use Program (WUP) from the Klamath Tribes’ perspective is to increase the average annual volume of water in Upper Klamath Lake by 30,000 acre feet. This is to happen by decreasing the “Net Consumptive Use” of water among six basins and sub-basins in the Upper Klamath.

Under the Agreement, each basin is to be metaphorically “taxed” an amount of water necessary, in the aggregate, to help replenish Upper Klamath Lake. The amount of water to be brought to the table by each of the basins is as follows:[8]

BasinAllocation (AF)
Upper Sprague6,900
Lower Sprague9,420
Sycan (below marsh)1,050
Middle Williamson330
Lower Williamson2,700
Wood Valley9,600

Transactions. From the perspective of the individual landowners, each must consider selling his or her water rights at “values mutually agreed to” in order to help meet the allocation quota established in each basin. The sale price will presumably be set out in “Water Use Agreements” between the landowner and a to-be-formed, basin-wide, Landowner Entity (LE) charged with all of these contractual arrangements.[9] Probably the weakest feature in the proposed Agreement is the lack of specificity as to how sale prices will be established when there is no mutual agreement. Experience shows that parties rarely agree on price, at least at the outset of negotiations and leverage (the external context) is often decisive.[10] Since compensation to the irrigators for their retired water rights is, from their perspective, a key benefit of their bargain in executing this Agreement, and since the Tribes want the transactional program to succeed to achieve their goals, clarity in this process is crucial for its ultimate success.

Accounting. Assuming a landowner has executed an approved Water Use Agreement which is funded at the negotiated price through the WUP program, the savings in consumptive use water is then entered into a “WUP Ledger” which is an important basin-wide accounting device to tally up contributions from all of the basins noted above.

The landowner’s water rights which are being retired have to go through several steps of translation before they enter the WUP Ledger as a new volume of water deemed added to Upper Klamath Lake. First, a calculation needs to be done to show the “amount of water to be realized instream resulting from reduced Net Consumptive Use.” This means reductions from a baseline (based on the years 2004 to 2006) called the “Initial Net Consumptive Use.” All of this calculation is done by a model, set forth in “WUP Guidelines”, strictly supervised by the JME; there are no parcel-specific actual measurements to determine actual reductions of consumptive use.[11]

To paraphrase the Agreement, “practices” ("Eligible WUP Practices" which count as retirements or nonuse of water)[12] lead to deemed changes in net consumptive use, which lead to deemed changes in flow volumes within each WUP Region, which are then accounted for in the WUP Ledger as the deemed collective contribution to Upper Klamath Lake's average annual water volume.[13]

Regulation. The Agreement provides for so-called Specified Instream Flow (SIF) levels at various listed measurement locations. Each measurement location is associated with a long-term SIF threshold, which is based on historic streamflow gauge data, “adjusted to reflect the instream flow results of restoring the WUP Region Volumes instream.” In other words, they are the target or goal of restoration. In some months they match the Tribal right; in many others they are less. They are fluctuating standards: when conditions are relatively wet the thresholds are near the applicable Tribal water right for that area; when conditions are dry, the thresholds decline, reaching minimum values in the driest conditions.[14] These thresholds are calculated each month during the irrigation season.[15]

The crucial importance of meeting and SIF threshold is this: When an SIF threshold is not met at a particular location due to hydrologic conditions, the Tribes may make a call at that measurement location until the SIF instream flow threshold is met.[16]

There is also a regional regulation provision. If the WUP Ledger shows that the target volume for a region is not met, then a call to the full Tribal water right may be made to eliminate the shortfall. The call will first be made within the applicable WUP Region (one of the basins mentioned above). If that doesn’t address the shortfall, then the Tribes can make calls on the nearest downstream reaches (presumably even if outside of the applicable WUP Region) to eliminate the shortfall (but not beyond that). If that still doesn’t do the job, then the Tribes may make a call on Upper Klamath Lake. This is the larger, global hammer that the Tribes have for regulatory calls when needed to make up deficient WUP Region Volume.[17]

Enforcement . The threshold for making a call may be raised for noncompliance with the Agreement. Here's how it works: If basin quotas for retiring water rights and for riparian restoration (discussed below) are not met, then, roughly speaking, the applicable “Call Threshold” is adjusted upward by the percentage shortfall, increased 1% for each month of continuing noncompliance.[18] Once a Call Threshold is met in a given calendar month, this penalty adjustment is reset to zero.[19] In short, the adjustment upward from the usual SIF level is the penalty for noncompliance with the Agreement.

Thus, an individual may have completely honored the terms of his or her Water Use Agreement, yet still be penalized (that is, subject to a higher Call Threshold for regulation) if his or her neighbors have not adequately contributed to reducing net consumptive use in the subbasin. There is unquestionably a strong incentive for individuals within sub-basins to work collaboratively since all can be affected if participation in the Water Use Program or Riparian Program is limited.

How the Riparian Program Works

Purpose. The riparian program's purpose is to “re-establish and/or maintain the full expression of successional dynamics of the riparian and plant community within Riparian Management Corridors…”[20] This is to be done by maintaining “Proper Functioning Conditions” (PFC) as specified in each Riparian Management Agreement.”[21] The PFC refer to the “long-term potential” of the soil and vegetation, based on scientific studies.[22]

Transactions. The mechanism to achieve riparian health will again be contractual: multiple Riparian Management Agreements are to be entered into between the Landowner Entity and individual riparian landowners within the applicable Riparian Management Corridors. These corridors include lands adjacent to perennial streams that are subject to specified instream flows, zoned for agricultural use, and within an irrigation water right’s place of use. They must also contain (or would contain when restored) vegetation “strongly influenced by the presence of stream water.”[23] It is expected that covered Riparian management Areas will be about 50 to 75 feet wide, though this could vary depending upon circumstances and selected options.

In addition to the Riparian Management Areas, there are also “Adjacent Transition Areas” and “Non-Irrigated Riparian Areas” which will have lesser management and monitoring requirements.[24] All of this oversight is in an adaptive management context, with performance goals and objectives, such that changes in management are expected from time to time to achieve applicable criteria.

Again, there will be guidelines, here called “Riparian Guidelines” which are fully set forth in complex detail in an exhibit to the Agreement.[25] They include how the boundaries of Riparian Management Areas will be established, fencing requirements, transition areas, grazing management criteria, and other restrictions.

Accounting. As with the Water Use Program, accounting for participation in compliance with the Riparian Program will be managed by ledger, known as the “RMA Ledger”.[26] And, as with the other program, entries will form the basis of enforcement.

Enforcement. There must be “Sufficient Participation” of eligible landowners along riparian areas in order to avoid penalties. These penalties are again in the form of adjustments to specified instream flows.

Sufficient Participation means that 80% of the length of the Riparian Management Corridor must be covered by Riparian Management Agreements, and that individual participants must be in compliance with those agreements. Thus, one will be subject to increased Call Thresholds if there is insufficient participation in the Riparian Program overall – another incentive to collaborate with neighbors to be sure that participation is fair and that "free riders" are discouraged.[27]


The foregoing review only skims the surface of this long and intricate document. Notable features not included here are provisions for groundwater regulation,[28] detailed specifications of the formation, functions, and decision-making authority of the Joint Management Entity and the Landowner Entity,[29] and a section on “Regulatory Assurances” addressing the interface between this Agreement and the Endangered Species Act and NEPA.[30]

It seems apparent from the sheer detail and complexity of this proposed Agreement that there will need to be kind of "adaptive management" on many levels (technical, social, cultural, legal, to name a few) for it to succeed. It will be an evolution and an experiment. The large question mark of course is whether there will be federal funding to make this ambitious project a reality, or whether this document will be simply another pause in the long and contentious path of litigation in this troubled basin.

For more information about the Klamath Basin settlement, please contact Douglas MacDougal or a member of Marten Law’s Water Resources practice group.

*The author and his firm represent water users, including  ranching interests, in the Klamath Adjudication who  contested the Tribal instream rights discussed in this article.

[1] The tentative Agreement and its exhibits may be found online at http://www.oregon.gov/gov/GNRO/Pages/Upper-Klamath-Basin-Agreement-and-Exhibits.aspx.
The document is currently being circulated for review, approval, and execution.

[2] Agreement, p. 5, Statement of Purpose.

[3] Agreement, section 3.

[4] Agreement, section 4.

[5] Agreement, section 5.

[6] Agreement, section 7.

[7] Agreement, sections 2 & 10. Permanency of the Agreement is also linked to funding and authorization of the Klamath Basin Restoration Agreement (KBRA), long stalled in Congress, and the Klamath Hydropower Settlement Agreement (KHSA). And the Agreement has to show success in its early stages: needed volumes of water have to actually appear in Upper Klamath Lake and there has to be sufficient participation in the Riparian Program to the levels specified in the Agreement. See generally Agreement, section 10.

[8] The accompanying chart is drawn Exhibit C of the Agreement.

[9] The landowner files a statement of intent which appears to be an application to be “accepted into the WUP.” Agreement, section 3.22. Not all landowners who want to be “enrolled” in water use agreements will necessarily be enrolled when they want. There will be a prioritization process by the Joint Management Entity based on where funding monies will accomplish the most benefit. Agreement, section 3.5.7. One priority, for example, is lands that have “higher than average Net Consumptive Use…”. Agreement, section

[10] Because of the Agreement’s enforcement tools (discussed further in the text) and for other reasons, such bargaining cannot be said to be negotiation within a free-market context (that is, with purely willing-buyers and willing-sellers, neither being respectively forced to buy or sell).

[11] The model used is the U. S. Geological Survey analysis of net consumptive use from its Open-File Report No. 2012-1199, entitled Hydrological Information Products for the Off-Project Water Program of the Klamath Basin Restoration Agreement. See section 3.7.2 of the Agreement.

[12] WUP Practices are actions which reduce the Consumptive Use of water for a specified time. They include, but are not limited to, Water Use Agreements and the items listed in sections 3.12 and 3.13 of the Agreement.

[13] To use the technical terminology of the Agreement, “The change in Net Consumptive Use resulting from a WUP Practice will be determined by subtracting the parcel-specific estimate of Post-Implementation Net Consumptive Use from the estimate of Initial Net Consumptive Use, and multiplying this difference by the number of acres affected by the WUP Practice.” Agreement, section 3.7.3.

[14] See section 3.9.1 of the Agreement and associated exhibit references for a full understanding of this mechanism.

[15] The Agreement provides extensive lists of SIF thresholds for each measurement location. See Agreement, Exhibit D. The calculations are based on the average daily flows of the previous month, which is the sole variable in determining the next month’s SIF. For example, in the month of July on the Wood River, if the month before, June, were very wet, the maximum SIF could be as high as 277 cfs, which is the same as the associated Tribal instream water right. But if that June were very dry, the minimum SIF could be as low as 140 cfs.

[16] The Agreement also prohibits dewatering. It proscribes “irrigation withdrawals within a perennial stream reach that results in a stream flow below 20% of the flow at the upstream end of that perennial stream reach.” Further calculation will need to be undertaken by irrigators to see what additional limits there may be to their irrigation withdrawals on particular surface water sources.

[17] Agreement, section 3.8.

[18] See section 3.9.4 of the Agreement. A formula determines the average percentage shortfall from the long-term SIF threshold in the preceding month. Beginning with the second month of a continuing shortfall at a particular location, 1% is added to the percentage shortfall determined. For each month that it continues, another 1% is added, then this total percentage shortfall in a given month is multiplied by the long-term SIF threshold to determine the adjustment. That amount is then added to the long-term SIF threshold as part of the calculation of the call threshold for the applicable month. This is laid out in sections through of the Agreement.

[19] Agreement, section 3.9.5. An adjustment to an SIF threshold for noncompliant flows is called a “Type A SIF Adjustment.” Agreement, section 3.9. An adjustment to an SIF threshold for noncompliance under the Riparian Program is called a “Type B SIF Adjustment.” Agreement, Section 3.10. See also Agreement, Exhibit E. The near-term thresholds are set forth in the section of the document dealing with the five-year Transition Period, which has fairly modest goals of increasing WUP volumes by 5,000 acre-feet per year for years 1 and 2, but more challenging volumes in the three years thereafter. Agreement, section 5.3 and Exhibit K.

[20] Agreement, section 4.2.1.

[21] Agreement, section 4.2.2.

[22] Agreement, section 15, page 85.

[23] Agreement, section 15, page 86.

[24] Agreement, sections 4.3 and 4.4.

[25] Agreement, Exhibit H.

[26] Agreement, section 4.12.

[27] The enforcement mechanism is essentially the same as with the Water Use Program with certain subtle differences. The Agreement states “Failure to achieve and maintain Sufficient Participation within a SIF Region may result in an increase in the Call Threshold for that SIF Region…” Agreement, section 5. As with the other program, the “percent shortfall” for a given month is determined (based on inadequate geographic extent or number of landowners out of compliance with agreements, or both). Beginning with the second month of shortfall, the months out of compliance are summed at 1% per month. Four months of noncompliance, for example, would mean a total shortfall of 3%, which is then multiplied by the Long-Term SIF Threshold and added to it to determine the new Call Threshold for that SIF region. Agreement, section 3.10. As noted above, an adjustment to an SIF threshold for noncompliance under the Riparian Program is called a “Type B SIF Adjustment.”

[28] Agreement, section 3.11.

[29] Agreement, section 7 (Joint Management Entity) and section 8 (Landowner Entity).

[30] Agreement, section 9.


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