Pail settlement meeting agenda Klamath agreement 012809

CONFIDENTIAL AND PRIVILEGED SETTLEMENT COMMUNICATION

January 23, 2009

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I.. DRAFT AGENDA FOR FINAL SETTLEMENT AGREEMENT PLENARY SESSION,

.: MEDFORD OR,

January 28, 2009

JANUARY 28TH (8:00 AM PST TO 6:00 PM PST)

I. Update on Interim Conservation Plan

II. Update on Interim Conditions

III. Calendar to June 30, 2009 ~

IV. Work Group reports

a. Biz Group

i. Oregon Legislation

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iii. Report and Recommendation on Trust Accounts

iv. Report on Matrix Conversion

v. Report on Billing Changes by PacifiCorp

b. PAIL Group

i. Re~latory Pathways

ii. CDM Study, CCC Studies, Science and the Secretary

iii. Next Steps on Water Quality

iv. Federal Legislation

c. State PacifiCorp Group

d. USA PacifiCorp Group

e. Drafting Group

f. External Strategies

g. Communications

V. FERC Public Hearing

..VI. SV\TRCB Meeting

VII. KSG Report

a. Report on Next Steps for KBRA

b. Discussion of Indivisibility

VIII. Next Steps

IX. Strategy and Communications

JANUARY 29TH (9:00 AM PST TO 10:30 AM PST)

.I. Message Meeting for FERC Hearing

CONFIDENTIAL AND PRIVILEGED SETTLEMENT COMMUNICATION

January 16,2009

PAIL MEETING MINUTES FRIDAY, JANUARY 16, 2009

11 :30 AM PST (NOON, MST, 2 :30 PM EST)

I. Roster (page 2)

n. Questions to be addressed by Final Agreement (continued from Regulatory

Pathway discussion on 1/12/2009):

.Will decommissioning of Wests ide /East side and disposition of Fall Creek be

handled through the traditional FERC procedures (and Offer of Settlement), or

be folded into the federal legislation?

-Right now legislation would anticipate this. Underlying assumption is

FERC would retain jurisdiction in annual licenses and as license was given

up FERC would have role in decommissioning Westside/Eastside.

-We need something in final agreement and possibly in -legislation if we are

taking it out of FERC's hands

-If FERC is to retain jurisdiction, we should state in settlement that we

should petition FERC for decommissioning

-Is there a preference among the parties?

-Cory and Steve assignment re Fall Creek- we envision in AlP that water

issues for Yreka were addressed appropriately. We should work with

County to help them understand this issue. Get contact at county to flush out

core position on operational issues- Tom Guarino 530-842-8100

-Paul Simmons- Last year firm hired lawyer who used to represent Siskiyou

County and client came with her. Making proper disclosure.

-Steve- people want additional water from Fall Creek for potential hatchery

and County had issue with continued viability of water supply that has same

source at or near Fall Creek Plant.

-Kurt- we need to pin down a procedure for this

.Annual License/Interim Measures

a. Do we use the federal legislation to categorically exempt FERC

approval of those interim measures not already addressed through the

ICP? And thus also exempt 401s for the interim measures?

.General approach is annual license adopts interim measures

.Kurt- purpose to interim ops is to put it in legislation and not open it up to

FERC proceedings and associated delay

.Need to pin down that these new interim measures are separate from the

existing license, so we either have to go through license amendment process

of 401 for new discharges unless legislation clearly rules that out

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.CONFIDENTIAL AND PRIVILEGED SETTLEMENT COMMUNICATION

January 16,2009

.Is Eastside/Westside an easier one to give to FERC? Annual licenses are ministerial so we would need an amendment.

..The more we reserve everything for legislation, the less chance that the legislation will pass.

..Need assurance that we would have enhanced interim operations. Other parties will want assurance that they will happen in timely fashion. If we leave it to a FERC proceeding, there is likely to be litigation delay and an uncertain outcome. It will be another 5 years before we see any enhanced interim measures. We are balancing- wouldn't have to expressly say 401 is exempt if we have already said that FERC does not have an approval function. FERC would have limited or no jurisdiction to second-guess

interim measures. AlP contemplated a fast track in relation to FERC .Should we clarify that 401 is restricted to effect of 404 and not an omnibus

401? Kurt- Corps will, not open up evaluation any more broadly than the

proposed work in the river.

.Art- Question is whether someone can delay the 401 who opposes it, but it would not substantively change the process, just delay. We should minimize delay

..Chip- if FERC had to adopt interim measures what happens if it goes back to a FERC process. It is a fine line. In ELWHA Congress has told FERC to sit back during interim measures.

..Oregon DEQ- interim measures re water quality is open to 401 not being required for interim phase if it would facilitate settlement being implemented for interim measures and dam removal

..FERC has limits on cost sharing, cost caps. Our interim measures are more comprehensive. Need to figure out whether FERC would be agreeable to our measures under their policies.

.Off-license agreements- we could consider these to get around FERC restrictions

.We don't need a 401 for many of the interim measures.

..Troy- it would help if there was a small write-out to properly follow on this topic. Someone should write out a strawman. What level of mitigation measures will trigger a 401 requirement? What are de minimis changes? It could be used as a future white paper in relation to legislation.

.Assignment: PC will add column to interim measures list identifying permitting issues with each and which are triggered.

b. Same question for the Corps, and related 401 s?

.We won't touch Corps and 404s because we can manage this process. Under current NEP A guidance, Corps will be limited to proposed action.

c. Alternatively, do we use the federal legislation to prescribe limited FERC, Corps, ESA, NEPA, 401, and CEQA review?

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.CONFIDENTIAL AND PRIVILEGED SETTLEMENT COMMUNICATION

January 16,2009

.NEPA- secretary's determination under federal legislation is non- discretionary act and thus will not trigger NEP A. Congress will have to

make this declaration and Congress frequently does this.

..A license extension of same license is ministerial but an amendment is discretionary that may need additional analysis

.Nothing would trigger CEQA until secretary makes determination. Decommissioning would trigger CEQA because of dam removal.

..In lieu of categorical exemption for FERC, if we left FERC with discretion over interim ops, federal legislation could say FERC review would be limited to As opposed to opening proceeding to other proposed actions, should dam be removed, etc. Legislation could be used as another approach to prescribe scope of FERC's jurisdiction. This would implicitly determine scope of review for 401, CEQA, ESA.

d. Should the legislation say anything about state and local permits? .Condit dam removal has been held up by local groups. Need to consider this. .Siskiyou has said it will require local permits.

.Some CA state permits will be required

.Oregon stream permits may be coordinated with Corps permits

..CA- possibility for opposition to ballot measure if there is not an opportunity for CEQA review. It needs to get through legislature. There may not be so much opposition if there is CEQA review before dam removal. Ballot measure doesn't have to do with interim ops. Problem is if we include some blanket exemption in legislation.

..Environmental analysis should be at decommissioning stage, not before .Mike- as to local permits, these would ordinarily preempted by FPA if before

FERC. For legislation to preempt local should not be very controversial. This is a good potential solution.

e. Do we use the final agreement or federal legislation to hard-wire implementation of TMDLs?

.If feds want to transfer Keno, need to address how water quality will be

handled

.Hard-wire leg- need agreement where PC says for TMDL purposes, this is what it will do for 10 years. We will fold in TMDL schedule the interim ops. On Keno, KBRA will generate 50 mil for water quality upstream. Necessary for TMDL compliance in states. We should have agreement on what agency should be in charge of permitting and implementation of TMDLs.

..Jon Hicks from Rec- Rec has been approached with this question before .PC has been having discussions with Reclamation re Keno and Link River

dam going forward towards an ultimate dam removal.

III. U.S. Detennination

a. Is NEPA integrated into the studies and determination, or saved for later during federal permitting of dam removal?

.Save NEPA for later?

CONFIDENTIAL AND PRIVILEGED SETTLEMENT COMMUNICATION

I January 16,2009

.Flag for follow-up that USDOJ is still on board with concept that we are saving NEPA for later

.Ask John Bezdek, it was report that he might be leaning toward something opposite of that, doing it sooner rather than later. Need to confer with federal family on when to satisfy NEPA.

..Wherever we land, we need to come back to consider is there something in settlement or legislation to capture our intent re NEPA?

.Steve Rothert- Two parallel NEPA paths and relation between NEPA determination and Secretarial determination and timing- is intent to complete NEPA before secretarial determination? We anticipate that

making secretary's determination is non-discretionary act (Congress would have to say this). Scope of any impact analysis necessary to support removal and env. consequences of activity would not be exempt. You can't litigate secretary's determination on range of alternatives, but as to impacts on how to implement secretary's decision, there would be full course NEPA process.

.Actual NEPA process may not conclude after secretary's determination .Need to determine action agency at that stage. Question will be re-visited

under new administration

.Jon Hicks- not sure how and where it will play in. Still having discussions with DOJ re how it plays out. Any NEPA or EIS will become stale by the time dam removal begins and will need to be redone.

..Would a programmatic agreement be better? NEPA doc alive for 8 years is not ideal. CEQA docs have a 5 year presumption.

IV 0 Removal Permitting

by Assuming the federal legislation will exempt FERC jurisdiction, should

the Corps retain 404 jurisdiction?

We are assuming that Corps jurisdiction would not be addressed by FSA or

legislation except to authorize the DRE to obtain a Corps permit prior to

dam removal.

If so, should the legislation prescribe the scope of NEPA, ESA, 401, and

CEQA review?

or'

~ .Contingent on FERC jurisdiction. If we make Corps vehicle for compliance [ with resource laws, legislation should say this.

, .Re scope- it would defeat U.S. determination if Corps would have discretion to reopen question of dam removal or second-guess definite plan. Hard until discussions re NEPA are concluded.

..We should put in legislation that any env review by fed, state and local agencies shall be pursuant to implementing sec's determination and will not consider alternatives to secretary's determination itself. Better than NEPA doesn't apply or Corps doesn't have jurisdiction.

.All times congress has restricted NEPA determination, it then directs that NEPA would be limited to consequences of determination, cumulative impacts in pursuit of determination. May also apply to scope of ESA, etc. We are not limiting applicability of any env laws. Scope of preventive

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.CONFIDENTIAL AND PRIVILEGED SETTLEMENT COMMUNICATION

January 16, 2009

measures should be limited to implementing secretary's determination and

consequences thereof.

d. Should the legislation say anything about state and local permits?

.Annual licenses- if still under FERC's jurisdiction, it would have effect on

local/state permits. Do we say anything about state and local permits?

.How do we preserve FERC handle on permitting?

.Local permits required- grading, zoning, road easements held and wide

enough for equipment. Suggest a white paper on this.

.Assignment: California (Kirk Miller)- will look at state and local permits.

..California Ocean Program requires a demolition permit? May be hard to

.Siskiyou county- does not have grading permit, but want to give authorization for any state or local action.

v. Oversight of Removal Implementation

b. What will be the vehicle for oversight by settlement parties of removal

implementation --enforcement of federal or state permits?

.Will DRE be empowered to get permits?

.Who will be supervisor of DRE as a matter of law?

.Every party wants assurance that performance will be adequate and avoid

environmental impacts and liability

.DRE has to agree to implement contract and stand in court to answer for

damages based on their action, and meet standards of final agreement going

forward. Responsible financially and technically.

c. Federal agency oversight of a contract with the dam removal entity?

.Issue of cost. Including a federal DRE may reduce costs.

.A non-federal DRE may bid for removing all 4 dams, whereas federal

government may find 4 different entities for 4 removals and save money?

..Federal DRE- you have protection of Federal Torts Claim Act, which would

reduce cost of dam removal. Federal DRE may be exempt from some

permits

Experience in CA using federal DRE has not been faster or cheaper (ex.

~ Battle Creek)

d. An oversight committee established under the final agreement?

.Steve Rothert's suggestion re separate workgroup for science- Rec is

doing background work on proposal for implementing secretary's

determination re Section V of AlP. Want to avoid advocating for science

instead of using a certain approach. Rec will make it available to settling

parties.

.Important to get agencies' views on capabilities before brainstorming on

science.