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Water Rights Settlements in Oregon’s Klamath Basin Facing Uncertain Future

February 22, 2016

Oregon’s Klamath Basin has long been known as a hotbed of conflict over water rights, but over the past few years, a series of settlements among a diverse group of stakeholders have been hailed as a model for collaborative conservation. Implementation of the lynchpin settlement deal – the Klamath Basin Restoration Agreement – however, was contingent upon federal legislation being enacted before the close of 2015. With Congress having failed to pass legislation by this deadline, the recent peace in the Klamath Basin may be coming to a close. While efforts are being made to try to put Humpty Dumpty back together again, it remains to be seen whether this is possible. If not, the region likely faces a return to the water wars for which it is known.

I. Background: A History of Conflict

Like many places in the American West, the Klamath Basin faces difficult water management challenges. As elsewhere, water demand for instream and out-of-stream purposes often exceeds available supply. The wide variety of economic, political, geographical, and environmental interests affected by water management in the Klamath further complicates matters. For example, hundreds of private ranches above Upper Klamath Lake source their irrigation and cattle water from the streams and rivers which flow into Upper Klamath Lake (UKL). Downstream, however, the United States Bureau of Reclamation (Reclamation) diverts water from the UKL and the Klamath River to provide irrigation deliveries to the 210,000 acre federal Klamath Project. Reclamation diversions also are critical to maintaining water levels at several wildlife refuges straddling the California-Oregon border. These are important to large numbers of migratory waterfowl. Further straining the availability of scarce water supplies for irrigation and other beneficial uses, the Klamath Tribes have successfully claimed a right to maintain elevated lake levels in Upper Klamath Lake, which contains endangered Lost River and shortnose suckers. In contrast, downstream tribes and fishery advocates have called for greater releases from Upper Klamath Lake to maintain high flow levels in the Klamath River supporting healthy salmon runs, including Chinook and threatened Coho.

The KBRA was intended to help resolve the difficult challenge of water allocation in the Klamath Basin, including issues related to endangered species and tribal water rights. However, with the KBRA’s recent termination, regional stakeholders may be forced back to the drawing boards to come up with new solutions.

A. Federal Tribal Water Rights Litigation

 In 1975, the initial United States v. Adair litigation was filed. Since then, the Klamath Tribes, federal government, State of Oregon, and water users have been involved in near-constant litigation and administrative proceedings in an attempt to determine the nature and extent of water rights reserved by the Klamath Tribes as part of their Treaty of 1864 with the United States.[1] That process continues today.

1. Adair I

In 1975, the United States first filed suit for a declaratory judgment of the Klamath Tribes’ (the Tribes) water rights, as reserved by the Treaty of 1864. In United States v. Adair (Adair I),[2] the federal government argued that the water rights reserved by the Tribes through the Treaty of 1864 had passed to the United States along with the former reservation lands which had been previously purchased by the government upon termination of the Tribes in the 1950’s.[3] The Tribes (since restored to federal recognition) intervened in the case, agreeing with the government that the Tribes had reserved water rights in the Treaty of 1864, but arguing that they still retained the water rights associated with their hunting, fishing and gathering rights.

Relying on the Winters doctrine,[4] the court found that the “principal purpose” of the Treaty included continuing the tribal “traditional way of life which included hunting, fishing, trapping, and gathering.”[5] Further, the court held that the United States continued to hold the water rights in trust for the Tribes, which were “entitled to as much water on the Reservation lands as they need to protect their hunting and fishing rights.”[6]

2. Adair II

On appeal to the Ninth Circuit, the court generally upheld the district court’s findings, holding the “continuation of its traditional hunting and fishing lifestyle” to be among the “primary purposes” of the reservation.[7] Further, the court held that the associated water rights “carry a priority date of time immemorial [because they] were not created by the 1864 Treaty, rather, the treaty confirmed the continued existence of these rights.”[8]

Relying on the McCarran Amendment[9] and the Colorado River abstention doctrine,[10] the Ninth Circuit deferred to the comprehensive adjudication initiated by the State of Oregon and did not try to quantify the tribal water rights. However, recognizing that additional federal questions might arise in the future, the court retained continuing jurisdiction over the case.[11]

B. The Klamath Basin Adjudication

As noted above, the federal courts “announced the standard” by which to resolve the dispute over the tribal water rights, but left it to the State of Oregon to “appl[y] and quantif[y]” those rights as part of a comprehensive stream adjudication.[12] The Klamath Basin Adjudication (KBA), now ongoing for more than forty years, is the state process for determination of water rights predating Oregon’s 1909 Water Rights Act – before formal water rights permitting process was required to obtain a valid water right.

1. The Administrative Phase of the KBA

The KBA began in 1975, after the filing of the Adair I litigation. After notice by the Oregon Water Resources Department (OWRD) to over 25,000 local property owners, parties claiming pre-1909 water rights in the basin, such as the Klamath Tribes, were given the opportunity to validate such rights through the adjudication process. About 1,200 claims were initially filed. Hundreds more claims were later filed when the filing period was reopened in 1991 and again in 1996–97.

As part of the formal KBA process, a series of administrative hearings was held before the Office of Administrative Hearings (OAH), including the claims over the federal reserved water rights of the Klamath Tribes. After extensive discovery, motions practice, numerous hearings in front of multiple administrative law judges, a series of preliminary administrative decisions, and exceptions to those preliminary decisions – OWRD issued its final administrative decision in March 2013 in the form of Findings of Fact and Order of Determination (FFOD).

The FFOD approved most of the Tribes’ claimed instream flow rights as necessary for the exercise of tribal treaty rights. However, OWRD did reject some of the tribal claims, including claims outside the boundaries of the former reservation. The agency did, however, approve off-reservation rights to certain “boundary waters,” including Upper Klamath Lake. On the whole, OWRD’s decision generally upheld the instream flow values claimed by the Tribes and was largely considered a tribal victory.

2. The Judicial Phase of the KBA

After issuing the FFOD, OWRD then filed the FFOD along with – quite literally – a truckload of supporting documentary evidence with the Klamath County Circuit Court in March 2013, thereby concluding the administrative phase of the adjudication and starting the judicial phase.

While the adjudication proceedings at the Klamath County Circuit Court are pending, the FFOD remains enforceable until issuance of a judicial decree, unless the court issues a stay.[13] During the summer of 2013, water users were unsuccessful in seeking a stay of FFOD enforcement of the FFOD, and the FFOD remains in effect today.

Since 2013, parties to the case have filed Exceptions to the FFOD, outlining their grounds for challenging OWRD’s administrative order. Parties have also filed Requests to be Heard regarding the Exceptions filed by other parties. No substantive briefing on the merits of the Exceptions, however, has yet occurred. Instead, the court process has largely been taken up with the challenging logistical and administrative issues associated with managing a complex case with hundreds of claimants, Exceptions, and Requests to be Heard.

To help manage the complexity of the case, the Court has set up a Case Management Committee which has proposed a phased approach to this complex litigation. The parties are currently engaged in briefing regarding an initial list of Phase 1A issues for initial resolution. These are preliminary issues related to the adjudication as a whole, including: (1) the court’s general authority to hear the case (jurisdiction), (2) the legality of OWRD’s final order, (3) the right of certain parties to participate in the adjudication (standing), and (4) the court’s authority to enter a partial decree resolving some, but not all, claims at issue in the adjudication.

Subsequent phases of the adjudication are likely to address procedural issues (Phase 1B), cross-cutting legal issues (Phase 1C), uncontested Exceptions (Phase 2), litigation on the merits of Exceptions (Phase 3), court’s decision (Phase 4), and appeals (Phase 5). Phase 3 – the merits of Exceptions – will be further subdivided into categories of claims. While it is difficult to predict the pace and outcome of this process, it is safe to say that the KBA will be ongoing for many years to come.

II. The Klamath Settlements

In 2001, while the administrative adjudication process was still ongoing, the U.S. Fish and Wildlife Service (USFWS) and National Marine Fisheries Service (NMFS) issued separate Biological Opinions for the Klamath Project, evaluating the effects of the Project operations on listed Upper Klamath Lake sucker populations and Klamath River coho salmon, respectively. The Project was forced to dramatically reduce diversions to Project farmers, leading to highly-publicized protests in the summer of 2001, including a Bucket Brigade symbolically delivering Upper Klamath Lake water to Project canals. More concrete efforts (including blowtorches) were also repeatedly taken in an attempt to reopen closed Project head gates. Federal marshals were eventually called in to prevent illegal diversions and protect Project facilities.

In 2002, Reclamation provided substantial water deliveries to Project farmers, but a large Klamath River fish kill that summer resulted in further calls for curtailment of irrigation diversions. The USFWS ultimately identified a number of causes for the fish kill, including hot late summer temperatures, overcrowding due to the large size of the returning salmon run, disease, as well as low flows. Several years later, the 2006 commercial salmon fishing season was closed along 700 miles of the West Coast to protect weak Klamath River stocks.

In response to these recurring crises, Klamath Basin stakeholders, including the United States, the States of California and Oregon, the Klamath, Karuk, and Yurok Tribes, Klamath Project Water Users, Upper Klamath Water Users Association, and various environmental groups, began negotiations towards developing a more predictable and sustainable approach to long-term management of Klamath water resources. In 2010, the signing of the Klamath Basin Restoration Agreement (KBRA) and the Klamath Hydroelectric Settlement Agreement (KHSA) was touted as a significant milestone and achievement in collaborative natural resources management and local problem-solving.

A. The Klamath Basin Restoration Agreement

Coupled with the KHSA, the KBRA was intended to achieve the following goals: (1) Restoration and sustainability of natural fish production and full participation in ocean and river harvest of fish species throughout the Klamath Basin; (2) establishment of reliable water and power supplies for sustaining agricultural uses, communities, and National Wildlife Refuges; and (3) contribution to the public welfare and the sustainability of all Klamath Basin communities. Provisions were included to help restore riparian zones along rivers and streams in the Klamath Basin, provide assurances regarding irrigation water availability for Klamath Basin farmers, and facilitate the Klamath Tribes’ acquisition of the 90,000 acre Mazama Tree Farm (formerly a part of the Klamath Indian Reservation). The Klamath Tribes also agreed to limit calls Upper Klamath Lake water levels to mitigate impacts to Klamath Project irrigators resulting from the exercise of Tribal water rights.

B. Klamath Hydroelectric Settlement Agreement

The KHSA established a process for studying and developing a plan to remove four large hydroelectric dams on the Klamath River. This process includes detailed environmental review needed to support a determination by the Secretary of the Interior as to whether removal of the privately-owned dams would help advance the following overarching goals: 1) restoration of the salmonid fisheries of the Basin, and 2) the public interest, including consideration of the potential impacts on local communities and Indian Tribes. The KHSA also includes provisions for interim operation of the dams, as well as the process to transfer, decommission, and remove the dams in the event of a positive Secretarial determination.

In October 2012, the Department of Interior and Commerce (NMFS) issued a report, Klamath Dam Removal Overview Report for the Secretary of the Interior: An Assessment of Science and Technical Information, to assist the Secretary of the Interior in making fully informed decisions regarding the costs and benefits, as well as risks and uncertainties of dam removal. The report did not specifically answer the public interest question; such a determination was to be made by the Secretary of the Interior only after authorization by Congress. However, the report provided the Secretary of the Interior with sufficient information to make the formal Secretarial Determination needed for dam removal to proceed. Under the KHSA, however, such a Determination requires Congressional authorization, which is still lacking.

C. Upper Klamath Basin Comprehensive Agreement

In June 2013, after the issuance of the FFOD, the Klamath Tribes and the federal trustees made calls on many of their recently-approved instream claims, including the Wood River, Sprague River, and Williamson River. Simultaneously, the local watermaster also received calls for regulation from Reclamation, the various irrigation districts within the Klamath Project, as well as the U.S. Fish and Wildlife Service. The watermaster began shutting off non-Project water users and eventually regulated off nearly the entire Upper Klamath Basin above Upper Klamath Lake. By the end of the irrigation season, the calls had affected hundreds of ranches, shutting down irrigation on over 100,000 acres supporting 70,000 to 100,000 cattle.[14]

Facing the potential for regular curtailment of irrigation diversions to meet tribal water rights in the future, stakeholders above Upper Klamath Lake, including the Klamath Tribes, federal agencies, the Upper Klamath Water Users Association, private ranchers, and the State of Oregon, negotiated a follow-up agreement to the KBRA and KHSA – the Upper Klamath Basin Comprehensive Agreement (UKBCA) – which was eventually signed in the spring of 2014.

The UKBCA contains important economic development provisions, including a Tribal economic development fund and support for Tribal acquisition of a substantial land base. The UKBCA also establishes a Water Use Program and Riparian Program governing water use and riparian management actions in the Upper Basin. The Water Use Program requires retirement of irrigation water rights and adoption of other management measures needed to increase stream flows into Upper Klamath Lake by 30,000 acre-feet per year. It also establishes Specified Instream Flows (SIFs) to govern the Tribes’ enforcement of their instream flow rights. Instead of a preset table of minimum flows which remains static from year to year, the SIFs are to be calculated on a month-by-month basis based on actual flow conditions. Accordingly, in wet years, the SIFs will match the Tribal instream flow rights approved in the FFOD, but in drier conditions, the SIF levels will drop somewhat to allow for some out-of-stream uses. To ensure that streamflows do not drop below levels critical for fish populations, each SIF has a minimum floor that must always be maintained regardless of hydrologic conditions.

The Riparian Program requires establishing Riparian Management Areas in riparian areas where adjacent lands are irrigated. Specific management measures and restoration actions have not yet been finalized. However, the efforts are collectively intended to restore the rivers and streams of the basin to Proper Functioning Conditions, a scientifically-derived indicator of riparian health.

III. Political Failure, Agreement Collapse, and a Glimmer of Hope

The KBRA was initially scheduled to terminate if implementing federal legislation was not enacted by December 31, 2012. This deadline was later extended until December 31, 2015. When Congress failed to act before the end of 2015, the KBRA formally terminated. Further, while the expiration of the KBRA does not automatically terminate the KHSA and UKBCA, these agreements cannot be fully implemented without the KBRA. Accordingly, unless the KHSA and UKBCA are substantially amended, it is likely only a matter of time before they too must terminate.

After the signing of the UKBCA in the spring of 2014, there was a great deal of political momentum towards achieving a resolution of the Klamath Basin’s water woes. However, federal legislation, including the Klamath Basin Water Recovery and Economic Restoration Act of 2015 introduced by Oregon Senator Ron Wyden – ultimately failed to gain traction. A late proposal by Oregon Congressman Greg Walden would have stripped out the dam removal issue and left this as a FERC decision and also ceded some 100,000 acres of federal National Forest land each to Klamath and Siskiyou Counties. The bill, however, was never formally introduced and had little realistic chance of ever becoming law. Ultimately, the 2015 Congress adjourned without action on any legislation needed to implement the Klamath settlements.

After Congress failed to act, Interior Secretary Sally Jewel, who oversees Reclamation and the USFWS, issued a statement: “We still believe the future of the basin lies with negotiated agreements, and we will work hard with the parties to find ways to achieve their collective goals.”[15] However, Don Gentry, chairman of the Klamath Tribes, recognized that: “It would be very difficult if not impossible to pull the same parties to the table and reach a similar agreement.”[16]

On February 2, 2016, however, the possibility of new life was breathed into the KHSA, as the dam owner (PacifiCorp) signed an agreement in principle with the States of Oregon and California and federal agencies to “develop and pursue an administrative path at FERC for facilities removal that preserves the benefits of the KHSA without the need for congressional legislation.”[17] To achieve this result, however, the parties to the agreement in principle recognize that amendments to the KHSA are necessary. Accordingly, the agreement in principle outlines a process for pursuing the necessary amendments.

While focused on amendments to the KHSA, the agreement in principle also states that “the States of California and Oregon and the Departments of the Interior and Commerce intend this Agreement in Principle to be the first step toward a comprehensive solution for resource conflicts throughout the Klamath Basin. To that end, the States of California and Oregon and the Departments of the Interior and Commerce will continue working with Klamath Basin stakeholders on a basin-wide approach to ensure a sustainable future for the Basin’s tribes, agricultural communities, and communities reliant on the salmon fishery.”[18]

While resolving the dam removal question through the FERC process would likely help the political palatability of future legislation necessary to implement the KBRA and UKBCA, there are still many hurdles ahead. As a start, with the expiration of the KBRA, a new agreement would need to be negotiated among the critical parties. Formulating this new agreement may prove even more challenging than the original agreement given the outcome of the administrative phase of the KBA, which approved many of the Tribes’ instream claims. The currently ongoing status of the judicial proceedings may further complicate matters. Further, irrespective of the dam removal question, it is still not clear that Congress has any appetite for funding any of the high-dollar environmental restoration projects included within the original KBRA.

IV. Next Steps for the Klamath Basin

In the absence of agreement, a daunting relicensing process would face PacifiCorp, which would require constructing expensive fish ladders and other alterations. With the recent agreement in principle inked and progress towards an amendment to the KHSA, however, there appears to be a good chance that removal of the Klamath River dams will ultimately proceed. That said, parties to the KBRA and UKBCA, however, remain unconvinced that a standalone dam removal deal will help jumpstart negotiations towards a renewed tribal water rights settlement. Scott White, the executive director of the Klamath Water Users Association, has stated that the association “has not and will never support dam removal as a stand-alone agreement.”[19]

While negotiations towards an amendment of the KHSA proceed, parties to the ongoing adjudication are not likely sit around and wait. They will continue pressing ahead towards a judicial resolution of the adjudication, including the disputed tribal instream water rights. In the meantime, the Klamath Tribes are also likely to begin fully exercising their approved instream water rights in the rivers and streams above Upper Klamath Lake. This will potentially require substantial curtailment of irrigation diversions in some areas. At this writing, the 2016 snowpack is looking good so far.[20] However, a return to the drought conditions that have characterized the past few years could be devastating for Upper Basin irrigators subject to tribal instream flow levels.

V. Conclusion

Efforts to amend the KHSA and resurrect the KBRA are still ongoing. But Congress’s failure to act before the end of 2015 represented a significant setback to the efforts by Klamath Basin stakeholders to craft a win-win solution to the region’s water problems. Given substantial challenges facing rapid reinstatement of the KBRA or the negotiation of a new agreement, parties may return to the Klamath adjudication process with renewed energy, and conflict over scarce water resources is likely to continue. While wet El Nino conditions may help mitigate conflict during the 2016 irrigation season, a return to dry conditions would a real challenge to water users in the Klamath Basin, who would once again face the potential for widespread irrigation shutoffs to meet the instream flow rights of the Klamath Tribes.

For more information, please contact any of the attorneys in Marten Law’s Water Resources, Natural Resources, or Litigation practice areas.

[1] 16 Stat. 707, 708 (1864).

[2] 478 F. Supp. 336 (D. Ore. 1979), aff'd as modified, 723 F.2d 1394 (9th Cir. 1983),

[3] See id. at 341–42.

[4] See Winters v. United States, 207 U.S. 564, 575–77 (1908).

[5] Adair I, 478 F. Supp. at 345.

[6] Id.

[7] United States v. Adair (Adair II) 723 F.2d 1394, 1409 (9th Cir. 1983).

[8] Id. at 1414.

[9] 43 U.S.C. § 666 (providing that “consent is hereby given to join the United States as a defendant in any suit (1) for the adjudication of rights to the use of water of a river system or other source, or (2) for the administration of such rights, where it appears that the United States is the owner of or is in the process of acquiring water rights by appropriation under State law, by purchase, by exchange, or otherwise, and the United States is a necessary party to such suit.”

[10] Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 809–11 (1976) (permitting federal courts in limited instances to stay or dismiss proceedings that overlap with concurrent litigation in state court).

[11] In 2002, the district court exercised this continuing jurisdiction in Adair III, holding that the Treaty of 1864 not only reserved water rights for hunting and fishing, as decided by Adair I and Adair II, but also for gathering plants. United States v. Adair (Adair III), 187 F. Supp. 2d 1273, 1274 (D. Or. 2002), vacated sub nom. United States v. Braren, 338 F.3d 971 (9th Cir. 2003). On appeal, however, the district court’s decision was vacated as unripe, due to the ongoing state adjudication.

[12] Braren, 338 F.3d at 973.

[13] ORS 539.170, .180.

[14] S. Learn, Water Squeeze in Oregon’s Klamath Basin Pits Ranchers against Tribes, Both with Strong Ties to the Land, The Oregonian (July 8, 2013).

[15] U.S. Dept. of Interior, Press Release, Sec. Jewell Statement on Congressional Failure to Act on Klamath Agreement (Dec. 21, 2015).

[16] B. Boxall, Demise of Klamath River Deal could Rekindle Old Water-Use Battles, LA Times (Jan. 10, 2016).

[17] Agreement in Principle (Feb. 2, 2016); See also U.S. Dept. of Interior, Press Release, Parties Agree to New Path to Advance Klamath Agreement (Feb. 2, 2016).

[18] Id.

[19] L. Jarrell, Dam Demolition Revived, Herald and News (Feb. 3, 2016).

[20] USDA, Natural Resources Conservation Service, Basin Data Report, Klamath Basin (Feb. 1, 2016) (showing average snowpack of 135% of normal).

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