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Letter from Congressman Doug LaMalfa and Congressman Cliff Bentz regarding Klamath hydroelectric dam destruction: unknown and undisclosed local, state and federal and ratepayer costs and liabilities, legal authority, Keno Dam authority and plans, additional burdens for agriculture  ...

Congress of the United States Washington, DC 20515 

June 16, 2022 

 TO:

The Honorable Kate Brown Governor of Oregon Office of the Governor 900 Court Street, Suite 254 Salem, OR 97301-4047 

The Honorable Gavin Newsom Governor of California Office of the Governor 1021 O Street, Suite 9000 Sacramento, CA 95814 

Honorable Deb Haaland Secretary US Department of the Interior 1849 C Street, N.W. Washington, DC 20240 

The Honorable Richard Glick Chairman Federal Energy Regulatory Commission 888 First Street NE, Room 1A Washington, DC 20426 

Mark Branson Chief Executive Officer Klamath River Renewal Corporation 2001 Addison Street, Suite 317 Berkeley, CA 94704 

Stefan Bird President and CEO Pacific Power 825 NE Multnomah Street Portland, OR 97232 

Re: 

Proposed Hydropower License Surrender and Decommissioning of the Lower Klamath Project No. 14803-001 and Klamath Hydroelectric Project No. 2082-063 

Dear Governor Brown, Governor Newsom, Secretary Haaland, Chairman Glick, Mr. Branson, and Mr. Bird, 

As representatives of the Congressional Districts that include the Upper Klamath Basin, we have serious concerns regarding the proposed surrender of license and decommissioning related to four renewable energy resources on the Klamath River, all of which lie in our districts. Although we have individually communicated on our opinions about dam removal as a policy, we believe it is critical that the Federal Energy Regulatory Commission (FERC), Congress, states, and our constituents, be informed of known and unknown costs and liabilities concerning the currently proposed dam removal project. By all appearances, these issues are being sidestepped or swept under the rug by policy directives that dam removal, for its own sake, is the only thing that matters in the Klamath Basin. 

We are aware that FERC is reviewing comments on the draft Environmental Impact Statement (DEIS) for license surrender and decommissioning. We are informed that reviewing state and federal agencies are applying a light touch in their comments, lest the dam removal freight train be slowed down. We hope FERC will give thoughtful attention to comments and concerns of people and communities and local governments that have something to lose. The comments below relate in some ways to the DEIS, but also to FERC's consideration of the public interest. 

Undisclosed and Unknown Federal and Local Costs and Liabilities 

Accumulated Federal Expenditures 

For over a decade, political selling points of dam removal under the Klamath Hydroelectric Settlement Agreement (KHSA) have been that there would be no federal costs, and that the exposure of states and PacifiCorp ratepayers was limited by a hard and fast "state cost cap." Both of those policy points generated policy momentum, and were necessary for regulatory approvals, actions, and inactions that occurred long ago. Now it is clear that the selling points were false. But the political inertia has not gone away. 

Needless to say, federal employees have committed tens of thousands of hours to planning and advocating dam removal, which comes at a cost to taxpayers. That is not news, but not insignificant. 

On top of that, as we recall, the Department of the Interior used somewhere between $8 and $15 million of funding to prepare a draft environmental impact statement (EIS), soon after the KHSA was signed in 2010. That stimulus funding overall was directed to "shovel ready" projects to help the country out of the recession that began in 2008. The Department of the Interior instead used funds to generate paper: a draft EIS and other paper to support a "Secretarial Determination" that was not authorized under law. Under the original KHSA, the dams would be removed only if the Secretary determined dam removal to be in the public interest. That decision is within FERC's exclusive purview, and thus the dam removal advocates proposed that Congress enact legislation substituting the Secretary as the decision maker for FERC, at least in the Klamath Basin. Congress never enacted the legislation, the Secretary made no public interest determination, and the economic stimulus funding was spent to support a process that was not, and is not, legal. 

We request that the Secretary of the Interior report to FERC and our offices the. specific amount of federal funds that were applied between 2010 and 2015 toward developing an EIS and other documents to support a Secretarial decision on dam removal, even though the Secretary will not be the decisionmaker. 

Keno Dam: Uncertain Costs, Authority, Liabilities 

There are very significant legal, regulatory, and cost considerations associated with federal takeover of Keno.Dam. These large issues have apparently become an inconvenience for dam removal advocates, and they are being ignored. This is not acceptable. 

As we understand the KHSA, the lower four dams cannot be removed until after the Bureau of Reclamation (Bureau) takes title to Keno Dam. As signed in 2010, implementation of the KHSA was contingent on Congress passing legislation that authorized the Bureau to 

itle to Keno Dam and operate the facility as part of the Klamath Irrigation Project. When it became clear that Congress would not authorize the legislation, parties amended the KHSA such that federal legislation is unnecessary, and the Department of the Interior agreed 

to take title to, make improvements on, and operate Keno Dam in perpetuity, all without . Congressional authority. 

The end-run of Congress is bad enough by itself. It is compounded by the Department of the Interior's secrecy about the implications of the federal government taking over the currently privately-owned facility. Since its original adoption 12 years ago, the KHSA (section 7.5) has required that the Bureau complete a comprehensive due diligence process in coordination with stakeholders. The agreement requires the Bureau to complete necessary improvements to the dam prior to taking title to it. There are also potential new costs and liabilities associated with the dam, including establishing adequate fish passage and addressing water quality due to the presence of anadromous fish. 

We, our colleagues in Congress, FERC, and the public have no idea how much the Department of the Interior's commitments with respect to Keno Dam will ultimately cost taxpayers. If the Bureau has even evaluated those costs, it has not made them public, apparently so that this issue will not slow down dam removal. This approach is not consistent with the KHSA and is terrible policy. 

Finally, it is our understanding that federal reclamation law and the Bureau's own directives and standards include specific requirements for feasibility studies, and in some cases Congressional authorization, for the types of work that could occur at Keno Dam. But we have no information on whether the Bureau has completed or even considered undertaking the necessary work. 

We request that the Secretary of the Interior inform FERC and our offices: 

a. 

What the Bureau considers to be its legal authority to take title to Keno Dam and operate and maintain it under the terms and conditions of the KHSA. 

How much it will cost the federal government to improve, make upgrades to, and maintain, Keno Dam and related infrastructure, and provide all reports and studies that have been completed that relate to those activities. 

What type of feasibility studies are required prior to modifications to Keno Dam, and when will they be completed. 

Is the Bureau requesting funding for Keno Dam-related studies or improvements or operation in its budgets for FY 2023, 2024, or 2025. 

Regulatory Burdens for Agriculture, and More Costs 

A major goal in dam removal is to bring anadromous fish to the Upper Klamath Basin, The unmitigated zeal for dam removal stands in contrast with the complete lack of attention to the negative impacts that will result for the users of water and water for irrigation in the areas above Iron Gate Dam. To our knowledge, the state and federal governments have done nothing to protect our constituents from the increased regulatory burdens that can be expected from new species constraining their operations. 

Related, we are aware that federal and state governments have supported that irrigators in the Klamath Irrigation Project not be responsible for costs of fish screens or other mechanisms to reduce salmon entrainment. The most probable source of payment for that 

infrastructure, if it is feasible at all, is the federal government, But we are aware of no work being undertaken to bring about these protections. 

We request that the Secretary of the Interior and the states of Oregon and California inform FERC and our offices: 

a. 

What the state or federal governments have done, or will do, to prevent new regulatory burdens for agriculture as a result of dam removal. 

How much it will cost to install and operate facilities to reduce fish entrainment between Link River Dam and Keno Dam, and provide all reports and studies that have been completed that relate to those activities. 

Undisclosed and Unknown Federal, State, and Ratepaver Costs and Liabilities Related to "Cost" 

Like many others, we have a longstanding concern about cost overruns for dam removal. There are many opinions about whether overruns are likely, but it cannot be denied that overruns are possible. This risk is exacerbated by the current rate of inflation, distribution problems, and other threats to our economy. The KHSA as written has no concrete strategies for what to do in the event that the state "cost cap" of $450 million is exceeded. That situation could result in a major problem and/or a need for additional money, from somewhere. In that circumstance, it would not come as a surprise if dam removal advocates were to ask Congress to fix the problem, 

In July of 2020, FERC conditionally approved license transfer (which would take effect upon subsequent surrender), but only on a significant condition. 172 FERC 761,062, In particular, although FERC found that the KRRC seemed to have the wherewithal to, FERC ruled that PacifiCorp would have to remain as a co-licensee with the KRRC. FERC noted PacifiCorp's experience and expertise and also effectively recognized that if the cost estimates are somehow wrong, there will be a need to backstop. overruns. 

This development triggered a KHSA "notice of potential termination event" from PacifiCorp. PacifiCorp reasonably asserted that its bedrock principles included cost protection for customers and that it would itself not be involved in actual removal of the dams. Other parties responded very aggressively and politically to PacifiCorp's notice, which had the potential to lead to termination of the deal. 

However, after a period of negotiation, the amended KHSA was rescued. Specifically, on November 16, 2020, the Governors of Oregon and California, PacifiCorp, the KRRC, and the Yurok and Karuk Tribes in California announced and signed the Memorandum of Agreement (MOA). 

Under section 3 of the MOA, Oregon and California agree to apply to become co licensees of the four dams, along with KRRC, for purposes of dam removal. This application 

has now been filed and approved by FERC, with the approval to become effective only subsequently if the parties receive and accept a license surrender order from FERC. 

In section 7, Oregon, California, and PacifiCorp also agree to backstop cost overruns. Although on its surface, this provision only refers to each of the three providing up to $15 million each, the final sentence of the section provides that if there are still-further cost overruns, the three parties would share equally. In other words, the $15 million is not a cap. 

In this respect, the MOA seems very much at odds with the state cost cap of $450 million ($200 million ratepayers in both states, $250 million California taxpayers) specified in section 4.1 of the amended KHSA. This cost cap had very much been a political and regulatory selling point up until the time of the MOA. 

With that said, we have observed that recital H and section 9.a of the MOA both refer to the funding commitments as being contingent on necessary legislative authorization, which somewhat begs the case of whether the states have actual committed to anything in the MOA, If they have not, the long-standing questions about cost overruns are still very relevant. 

We request that the states of Oregon and California and PacifiCorp inform FERC and our offices: 

Whether each state is legally committed to provide funding for cost overruns under the MOA, and 

If so, the basis for the Governors legal authority to make that open ended commitment; 

If not, whether the MOA cost provisions are no more than a political commitment from the current Governors to seek additional funds if needed. 

b. 

Whether PacifiCorp's share of cost overruns would be funded by ratepayers, or whether PacifiCorp's share would be funded by shareholders. 

The source of the Governors' authority to make the commitments in section 8 of the MOA. 

Other Hidden Costs 

We request that the Department of the Interior and the KRRC advise FERC and our offices as to whether the federal government will be looked to for other costs, specifically, including costs for recreation facilities. 

Conclusion 

In summary, we believe that FERC, Congress, federal and state executive branches, taxpayers, and ratepayers should be informed of all of the following: 

a. 

The specific amount of federal funds that were applied between 2010 and 2015 toward developing an EIS and other documents to support a Secretarial decision on dam removal, even though the Secretary will not be the decision maker. 

b. 

What the Bureau considers to be its legal authority to take title to Keno Dam and operate and maintain it under the terms and conditions of the KHSA. 

How much it will cost the federal government to improve, make upgrades to, and maintain Keno Dam and related infrastructure, and provide all reports and studies that have been completed that relate to those activities. 

What type of feasibility studies are required prior to modifications to Keno Dam, and when will they be completed. 

Is the Bureau requesting funding for Keno Dam-related studies or improvements or operation in its budgets for FY 2023, 2024, or 2025. 

What the state or federal governments have done, or will do, to preventi new regulatory burdens for agriculture as a result of dam removal. 

How much it will cost to install and operate facilities to reduce fish entrainment between Link River Dam and Keno Dam, and provide all reports and studies that have been completed that relate to those activities. 

Whether each state is legally committed to provide funding for cost overruns under the MOA; and 

If so, the basis for the Governors legal authority to make that. open-ended commitment; 

If not, whether the MOA cost provisions are no more than a political commitment from the current Governors to seek additional funds if needed. 

Whether PacifiCorp's share of cost overruns would be funded by ratepayers, or whether PacifiCorp's share would be funded by shareholders. 

The source of the Governors' authority to make the commitments in section 8 of the MOA. 

Whether the federal government will be looked to for other costs, specifically including costs for recreation facilities. 

We request that the Secretary of the Interior, the states of Oregon and California, PacifiCorp, and the KRRC provide responses to each of these questions by July 16, 2022. 

Sincerely, 

Doug LaMalfa Member of Congress C

Cliff Bentz Member of Congress

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