Image provided by: The Confederated Tribes of Warm Springs; Warm Springs, OR
About Spilyay tymoo. (Warm Springs, Or.) 1976-current | View Entire Issue (May 26, 2005)
Page 12 Spi'lyqy Tymoo, Wi-m Springs, Oregon Mjy 26, 2005 1 ' Tribes take growing interest in hydro-power (On June 16 the law firm Karnopp Pi terse it LLP will host a dinner in celebration of the 50th anniversary of its service to tin Confederated Tribes. All tribal members are invited to at tend the celebration, which will bt held at the Warm Springs Museum at 5 p.m. In honor of this enduring relationship, the Spilyay is presenting a series of articles highlighting cases and events that embody the shared history between the tribes and the law firm.) it would lake several years to fill the reservoir behind Round Unite Oam, the dam was com pleted just before the floods of 14. As a result of the floods, the reservoir was filled in only a few weeks and the dam was fully operational. and a young, new attorney with dedicated in a ceremony on July trjH.s' onR u.rm ,,f ma,,. Pelton-Round Butte hy droelectric project The Pelton-Round Rune hydroelectric project, the larg est hydroelectric project in the state of Oregon, has been in operation for nearly 50 years. Since the beginning, the tribes have received compensation for the project s extensive' use of tribal lands. Other Indian tribes with hydro projects located on their reservations have received similar compensation. I lowever, the Confederated Tribes of Warm Springs was the first In dian tribe in the nation to be come a licensee and part owner of a federally licensed hydro power project. Because of great foresight and shrewd negotiat ing by tribal leaders and tribal representatives, the project has become a crucial source of in come for the tribes and an in vestment in the future of the Warm Springs reservation. Project history The area surrounding the confluence of the Crooked and Metolius rivers with the Deschutes has long been recog nized as having tremendous potential for hydropower pro duction. The site was set aside as an Indian Power Site Reserve back in 1910. The Federal Power Commission (now the Federal Energy Regulatory Commission, or "FERC") issued Pordand General Electric a li cense to build and operate the project in 1951. The project was to consist of three dams - Pelton, Round Butte and the Re-Regulating dam. As the dams were to uti lize extensive tribal lands, the li cense required PGE to negoti ate with the tribes to determine fair compensation for those lands. ' The negotiations continued until December 1955. PGE and the tribes agreed to a payment formula for Pelton dam that resulted in an average payment to the tribes of f 94,000 a year for the first 20 years. Impor tantly, as part of the deal, the tribes obtained the right to put power generators on the Re Regulating dam, if it should ever become economically feasible to generate power there in the fu ture. Pelton Dam was com pleted and became operational in 1958. Soon after, PGE decided that it would be beneficial to raise the height of the proposed Round Butte dam. Since this would result in flooding addi tional tribal lands, PGE was forced to renegotiate with the tribes to amend the initial agree ment. Tribal attorney Owen Panner took part in the negotia tions, which resulted in an amended agreement in 1961. The amendment provided that the amount of compensa tion paid to the tribes for use of tribal lands related to Round Butte Dam would be adjusted after 10 years, instead of the 20 years established under the Fed eral Power Act, and then re-adjusted every five years. The tribes also insisted that the amount of the compensation be decided by a board of arbitra tors rather than by FERC. Although it was expected that Renegotiating the tribes' compensation By 1974, ten years had passed since Round Butte Dam became operational and it was time to renegotiate the tribes' compensation. Since 1964, the tribes had received an average of $246,000 a year for Round Butte. PGE proposed an adjust ment based on the consumer price index that would result in an increase in the annual pay ment to approximately $406,000 a year. I lowever, the ' tribes believed this was unfair, as power values had increased a great deal more than the con sumer price index. After nego tiations failed, the matter went to arbitration as required in the amended agreement. After a six-day hearing, where both sides presented wit ness testimony and other evi dence, the arbitrators issued their decision on July 14, 1977, three years after the negotia tions began. The order effec tively raised the compensation from $246,000 a year to approxi mately $1.0$ million a year. PGE was required to make back payments dating to the expiration of the original com pensation term in 1974, along with 6 percent annual interest. PGE challenged the arbitrator's decision in federal court, where the decision was ultimately up held. By the following year, it was time to negotiate the adjusted compensation for Pelton Dam, as the first 20-ycar period of that dam's operation had passed. The tribes filed a petition with FERC for a price adjustment in January 1978. After two years of legal briefs, extensive filings and numerous hearings by a FERC administrative law judge, the judge issued an initial order increasing the tribes' compensa tion for Pelton from approxi mately $94,000 to a little over $1 million a year. The award went up and down the appeals process within FERC for a few more years, and finally resulted in a 1982 order granting the tribes compensation of $650,000 for 1978, to be increased annually in accordance with the consumer price index, as well as interest for the back payments. Thus, in 1983, the tribes' compensation for Pelton was $1.04 million. Meanwhile, the compensa tion for Round Butte was due to be adjusted again in 1979. The parties were unable - again - to agree to a fair price, so the issue went to arbitration - again. Power values had continued to increase substantially since the 1974 adjustment (which, of course, was not finalized until 1977). Because of the rising value of power, and after extensive, proceedings - again - the arbi trators awarded the tribes an increase from $1.09 million to $4.7 million annually for Round Butte. PGE challenged this de cision in federal court, where the decision w-as overturned. The tribes and the United States, as trustee, appealed that decision to die Court of Federal Appeals for the Ninth Circuit. Tribal leaders and the offic ers of Warm Springs Power Enterprises, which was estab lished in 1 98 1 , spent a great deal of time and energy on these drawn-out compensation adjust ment processes. In addition, tribal attorney Dennis Karnopp, the firm, Jim Noteboom, spent a substantial amount of their time during the late 1970's and 1980s on the negotiations, hear ings, arbitrations and endless appeals in order to ensure the tribes received fair compensa tion for the project. It was be coming increasingly clear that a more long-term solution should be sought. Accordingly, the tribes and PGE agreed to enter into settle ment negotiations, with federal judge Otto Skopil Jr. acting as mediator, in order to resolve the issue of compensation for both Pelton and Round Butte dams through the end of the FF.RC license in 2001. The case in the Ninth Circuit Court of Appeals was put on hold while the parries tried to reach settlement. Finally in 1985, after a seven-day' hearing before Judge Skopil, PGE and the tribes reached a settlement agreement. The settlement provided first that PGE would pay the tribes $18.15 million for all back pay ments due for both dams up until December 31, 1984. As for future compensation, the parties agreed to a fairly complex for mula. As a result, by the end of the license term, the tribes re ceived an annual payment of approximately $11 million as compensation for the Project. The Reregulating Dam Back in 1955 the tribes as tutely reserved the right to in stall and operate generators in the reregulating dam and sell the power if it ever became eco nomically feasible to do so. With the rising cost of power, that time came in the late 1970s and early 1980s. The Tribal Council presented a' referert-i dum proposing the construction ' of the Pelton Reregulating Dam Hydroelectric Project to the tribal membership. A landslide 84 percent of tribal members voted in favor of the proposal on May 15, 1979, and appro priated $10 million of tribal funds to construct the project. On February 20, 1980, FERC issued an order making the tribes a co-licensee with PGE for the Pelton project, making The Confederated Tribes of Warm Springs the first Indian tribe in the United States to be licensed by FERC to operate a hydroelectric project. The Reregulating Dam was 16, 1982. The Reregulating Dam has resulted in millions of dol lars of revenue for the tribes since that time. New license for the Pelton project The initial FERC license for the Pelton-Round Butte hydro electric project expired in 2001. PGF, submitted an application to FF.RC for renewal of the li cense in 1999. At the same time tribal leaders determined that, through Warm Springs Power Enterprises, the tribes were ca pable of operating the entire project. Thus, the tribes submitted a separate application to FERC for a license to own and operate the dams. Soon thereafter, PGE and thtf tribes began negotiating to reach a settlement over fu ture ownership of the project. The tribes and PGE entered into a Long Term Global Settle ment and Compensation Agree ment in April 2000. To avoid the redundant and adversarial renegotiations for compensation every few years, as in the first license term, the settlement terms cover the entire 50 year period of the new license. The settlement recognizes the Tbte Federal Energy Regulatory Commis sion has been in the final approval process since last July, and the 50.01 percent interest in the ,,,, ,vvf ppvr f0 Pelton project from PGF. at net . ' book value during the period of ISSUt the historic IKW license to PGB and the tribes in the very near future. aging and controlling all the natural resources of the reser vation, including hydropower. In light of this, the re-licensing agreement gives the tribes the right to purchase the controlling 50.0 the new license. The tribes initially obtained ownership, under the Settle ment, of one-third of the project in 2002. The tribes have two future purchase options, one in 2021 for 16.66 percent and one sometime between 2029 and 2038 for an additional .02 per cent, which will give the tribes the controlling interest in the project. In addition, the tribes retain its 100 percent ownership of the Reregulating Dam. The tribes arc now a co-owner and co-Iic-ensce of the entire Pelton Round Butte project with PGE. As licensees, PGE and the tribes entered in settlement ne gotiations with governmental regulators, including the U.S. Fish and Wildlife Service, the State of Oregon, and the tribes' Natural Resources Branch, as well as interested non-governmental organizations, such as WaterWatch, to establish the terms and conditions of the new FF.RC license. Those negotia tions culminated in a settlement agreement reached last year. In July of last year all the parties to the settlement agree ment gathered together to cel ebrate the success of their ef forts at a signing ceremony at the Museum at Warm Springs. The ceremony was attended by Gov. Kulongoski and Secretary of the Interior Gail Norton. FF.RC has been in the final ap proval process since last July, and the tribes expect I'ERC to issue the historic new license to PGE and the tribes in the very near future. V.I) -m t"l' Oft )() ll u I- w h. t . - 1 I I A ..ulU.A IJ'f. I 5S1 a 1 J Cold Beverages, Ice, Soda, Groceries & more Open 7 days a week, on HWY 97 in the old Outpost building, 475-9776 Open 7a.m. til midnight, Mon-Thurs. Weekends 7a.m. till a.m. I'' Mesa ui Kioto $35 Square Foot! Huge 4-bedroom, 2-bath Only one available Huge Island Kitchen 53 . Sln d fin 1 , mnmm m J ' 3 I I , r"H"r mmmn M S m-r wia ' J j. s tm-mifr t g i M. tiLJ SB SSI'S,, b B . a 5T lpO"" j 0 jj flMl Lmmkji It- . Y r I 1357 N. Hwy. 97,' Redmond, OR 97756; (541) 504-1402