When working toward a new Federal Energy Regulatory Commission operating license for its 762-MW Oroville Facilities hydroelectric project, the California Department of Water Resources collaborated extensively with the public. The lessons learned during the Oroville Facilities relicensing process are applicable to any hydro project owner using a collaborative approach to resolving complex resource issues.
By Henry M. (Rick) Ramirez and Anna L. West
To negotiate a new operating license for its 762-MW Oroville Facilities hydroelectric project (formerly called Feather River), in December 2000 the California Department of Water Resources (DWR) requested to use the Federal Energy Regulatory Commission’s (FERC) alternative licensing process (ALP). The original operating license for the Oroville Facilities project, on the Feather River in northern California, was issued in February 1957.
DWR chose the ALP over the traditional licensing process (TLP) for two primary reasons. First, the ALP encourages greater public involvement, enabling the licensee and stakeholders to collaboratively design the consultation process and jointly propose license terms and conditions. Second, the ALP permits the licensee to complete an applicant-prepared environmental assessment, which would let DWR take advantage of its internal expertise.
On March 24, 2006, DWR and stakeholders of the Oroville Facilities achieved a significant milestone with the filing of a settlement agreement for FERC’s consideration in issuing the new license. Stakeholders representing a wide array of state and federal regulatory agencies, local interests, water agencies, Native American interests, and recreational and environmental non-governmental organizations signed the comprehensive agreement.
Then, on September 29, 2006, FERC issued the draft environmental impact statement (EIS) for the project. In the draft EIS, FERC staff recommended that most of the terms in the settlement agreement be made conditions of the new operating license. DWR estimates it will pay more than $1 billion over 50 years if recreation, cultural, land use, and environmental measures recommended in the settlement agreement are adopted in the final license order.
While the Oroville Facilities relicensing process is estimated to conclude in 2009 with the issuance of a new license, the collaborative phase taught several valuable lessons. And even though FERC’s integrated licensing process (ILP) is now the default, lessons learned as a result of the Oroville Facilities ALP are applicable to any hydro project owner seeking a collaborative approach to resolving complex resource issues.
Understanding the project
The Oroville Facilities, which began operating in 1968, provide electricity, water supply and quality, flood management, recreation, and fish and wildlife enhancement to millions of Californians as part of the California State Water Project (SWP). The SWP is a series of canals, aqueducts, reservoirs, and pumping and generating plants running through two-thirds of the state. It provides water to more than 23 million people and about 750,000 acres of irrigated farmland.
With the exception of the state-owned hydropower facilities on the northern (Oroville) and southern ends of the system, most of this water delivery system does not fall under FERC jurisdiction. DWR holds separate licenses for the two hydro facilities, Oroville and California Aqueduct.
The 41,100-acre FERC-licensed project area of the Oroville Facilities includes Oroville Dam, Lake Oroville, three power plants (645-MW Edward Hyatt pumped-storage, 114-MW Thermalito pumped-storage, and 3-MW Thermalito Diversion), the Feather River Fish Hatchery, the Oroville Wildlife Area, the Lake Oroville State Recreation Area, and additional associated operating facilities.
Project features include some of the preeminent engineering structures of the past century. For example, because of the unmatched height of Oroville Dam – 770 feet – in May 2006 the U.S. Postal Service released a stamp recognizing it as one of the 40 “wonders” of the U.S. And when it was blasted out of sheer granite in 1967, the powerhouse for the Edward Hyatt plant was the largest underground power plant in the U.S.
DWR’s institutional background adds a unique dimension to the relicensing process. Its mission statement is “to manage the water resources of California in cooperation with other agencies, to benefit the State’s people, and to protect, restore, and enhance the natural and human environments.” This underscores a broad responsibility for power and non-power values that other FERC licensees may not face.
DWR is statutorily empowered to provide statewide dam safety regulation and flood management services, water management and conservation assistance for local water districts, and planning for future statewide water needs. Since January 2001, DWR has played a key role in helping alleviate the California energy crisis, pursuant to authority granted by an emergency proclamation of the Governor and related legislation.
Organizationally located within the state’s Resources Agency, DWR exercises its responsibilities alongside “sister agencies” such as the Department of Fish and Game, California Energy Commission, Department of Boating and Waterways, Department of Forestry and Fire Protection, Department of Conservation, and Department of Parks and Recreation.
DWR’s operation of the Oroville Facilities creates a focused interest common to every licensee. This interest was expressed in the relicensing program mission statement as “retain the license to provide continued cost-effective operation of the Oroville Facilities while addressing FERC and stakeholder concerns.” Indeed, DWR relies on economical operation of the Oroville Facilities to help offset the cost of operating the SWP. With annual SWP pumping loads ranging up to 9,000 gigawatt-hours (GWh), the 2,400 GWh generated on average each year by the Oroville Facilities is a significant asset.
Elements of the ALP
The Oroville Facilities relicensing was complex because of the many interested stakeholder groups (more than 50), state water supply needs, and DWR’s role as a state resource agency with major public interest responsibilities. In addition, the diversity of issues affecting the project ranged from shared use of recreational trails to multi-million dollar water temperature control structures. To attain a reasonable settlement agreement with stakeholders and regulatory agencies, DWR began preparing in 1997 and spent significant effort implementing a collaborative process that would foster an environment where stakeholders could reach agreement.
Preparations for collaboration
DWR took several steps to prepare for the collaborative process involved in the ALP.
–Plan early. DWR began internal preparations ten years before the license expiration date. This included devising preliminary schedules, as well as identifying needed staff resources and major issues DWR would face during the relicensing process. DWR performed this advance work with an understanding that all process design plans were flexible and that periodic updates would be a natural by-product of an unpredictable process. Starting early allowed for appropriate course corrections, such as scoping more expansive study plans, throughout the process.
–Recognize your strengths and weaknesses. DWR chose the ALP to take advantage of the project-specific expertise of its internal engineering and scientific staff in developing the applicant-prepared environmental assessment. To assist with this effort, DWR secured technical consultants, trained facilitators, and legal counsel. DWR also held frequent discussions with other hydro project owners who had recent relicensing experience.
–Synchronize the team. DWR assembled an internal relicensing team that consisted of technical, resource, and administrative specialists from five different divisions and located in different geographical areas. To provide common tools, perspectives, and understanding of the program mission, DWR held multiple workshops for this team both before engaging stakeholders and while discussions were under way. Topics discussed included DWR’s plan for addressing anticipated resource issues and the specialized nature of the relicensing process. These workshops allowed DWR to maintain a consistent message throughout the collaborative process.
Implementing the negotiation process
Once the process was established, DWR was prepared to begin negotiating with stakeholders and resolving key issues.
–Reach out to stakeholders. The trained facilitators DWR retained helped guide the collaborative aspect of the relicensing process on behalf of stakeholders. DWR and the facilitators maintained constant contact with stakeholders through numerous one-on-one meetings and multiple interest groups. The goal was to hear concerns and devise methods for addressing difficult issues.
In addition, the facilitators held telephone conversations or in-person meetings with stakeholders at least monthly to monitor issues of concern, inform them of recent relicensing developments, hear their thoughts on the relicensing process, and determine priority topics for negotiation meetings. These discussions provided a forum to resolve uncertainties or misunderstandings about the settlement subject material, as well as gave the facilitators the opportunity to identify stakeholder interests and provide guidance on how best to present them to other stakeholders.
–Implement changes early. During the first year of the collaborative process, in 2001, DWR established a sub-process to identify (subject to engineering, environmental, and economic considerations) activities that could be accomplished under the existing license, rather than waiting for the new license. One notable project was DWR funding for, and cooperation on, improvements to River Bend Park. This local community park is located near the project boundary and was recognized as central to the local community’s efforts to revitalize the area. This partnership effort provided early success and goodwill that showed all stakeholders the value of interest-based negotiations and building trust. These results proved invaluable during negotiation of more complex issues later in the process.
–Hold focused discussions. To allow for in-depth, focused negotiations, DWR separated issues by resource area. In April 2004, the settlement negotiation for the relicensing was split into three groups according to topic. The environment, recreation, and general (covering land use, engineering and operations, and cultural issues) topic groups met monthly until agreements were reached.
–Organize smaller group discussions. DWR also convened smaller subgroups as needed to resolve particularly complex issues, such as fish passage over the tallest dam in the country. These groups had significant success with devising solutions, which were then discussed by the main negotiation groups.
–Encourage executive-level negotiations. When negotiators were unable to reach agreement on key environmental matters, DWR convened several negotiation sessions among executive management of stakeholders who had the authority to re-examine policy areas. Once these executives clarified key concepts, staff negotiators were able to finalize agreements on outstanding measures.
–Choose an approval process. The settlement negotiation group used an approval process that let stakeholders make incremental conceptual progress while reserving final approval until the settlement package was complete. Specific issues were approved with a preliminary tally, subject to a second tally at the next month’s meeting after representatives gained approval from their organizations.
DWR recognized not all stakeholders would reach agreement on the settlement package. Instead, DWR worked with each organization to develop a package of measures that could be supported by as many settlement agreement signatories as possible.
The main lessons learned through the Oroville Facilities relicensing process are the importance of open, honest communication and good faith efforts, as well as establishment of a clear process for stakeholder involvement. The following guidelines can be useful for licensees in complex relicensing efforts.
–Communication agreements are invaluable. To foster an environment of creativity and brainstorming, it is helpful to establish an agreement on how to communicate discussions internally and externally. Such an agreement reassures participants that those affected by the negotiations will be kept informed but that discussions will not be prematurely disclosed or introduced into inappropriate forums.
–Work with stakeholders to develop process protocols. Investing time in developing a set of process protocols will both enhance stakeholder support and provide a stable administrative framework for the collaborative and subsequent negotiation discussions. For example, DWR developed a protocol for dissemination of study results and draft proposals after stakeholders expressed a desire to have equal and timely access to this information.
–Make information readily available. You will earn trust by making materials easily available to stakeholders and facilitating communication between relicensing staff and the collaborative group. DWR established a toll-free relicensing telephone number and posted materials in local libraries and on a relicensing website.
–Enable meeting attendance. Convene evening meetings to allow interested citizens to attend. To keep attendees on site, provide food and/or refreshments during meetings.
–Draft standard administrative materials in advance. Drafting the “boilerplate” section of the agreement while simultaneously negotiating protection, mitigation, and enhancement measures will save time once negotiations are complete.
–Make all proposed changes to a single document. When dealing with multiple commenters, collect all changes on a master document that is used for discussion. This greatly reduces the chance of misunderstandings and confusion at future meetings and improves the efficiency of the process.
–Develop tracking tools. Develop comprehensive and transparent tools to track issues, and chart progress during negotiation meetings with e-mail distribution of spreadsheets. When appropriately maintained by the facilitator, these tools build trust and assure stakeholders that issues are heard and addressed.
–Give stakeholders negotiation tools. To help stakeholders stay interest-based in their negotiations, work with them to improve their negotiation approaches and their communication with peers. As necessary, work with stakeholders to help them more effectively articulate and develop solutions for specific issues.
Keeping stakeholders informed about all aspects of hydro project relicensing is an important component of a truly collaborative process.
–Investigate other relicensing agreements. Become familiar with relicensing settlement agreements or relevant environmental agreements from other hydro projects. Previous agreements can be a great source of knowledge and ideas when trying to devise solutions.
–Establish a primary negotiator. When working with a large group of stakeholders, establish a primary negotiator for each organization who will speak during negotiations. If feasible, suggest that organizations with similar interests consolidate and speak with a single voice at negotiation sessions.
–Encourage a positive perspective. If relationships are strained, consider asking negotiators to say something positive about the negotiation process before addressing the issue at hand. This helps to develop or maintain a more balanced perspective and tone.
–Consider adaptive management. Adaptive management can help reach long-term goals. Detailed adaptive management agreements – including specific goals, ranges of acceptable outcomes, and monitoring plans – provide sufficient flexibility in approach. This can help minimize uncertainty while ensuring future resource gain.
–Know when negotiations are complete. In a complex negotiation with all stakeholders compromising, not everyone will feel the package is complete. Recognize the point at which the proposed protection, mitigation, and enhancement measures satisfy as many interests and needs as possible. This generally occurs when the preponderance of participants feel they can live with the inherent compromises of a proposed agreement rather than pursuing additional items that may unravel the entire package.
–Establish post-licensing committees. These committees, consisting of stakeholders who have signed the settlement agreement and members of the public, can provide continued stakeholder input in licensing implementation decisions. This will provide greater comfort to negotiators and will help continue the collaborative spirit into the post-licensing phase.
The draft EIS issued by FERC staff in September 2006 contains an alternative that accepts most of the settlement agreement proposals.
The spirit of partnership that arose through the many years of developing and implementing studies and negotiating the settlement agreement is yielding positive outcomes, as evidenced by the activities that have occurred since late 2006.
For example, in January 2007, DWR submitted to FERC a reconnaissance study of potential future facilities modifications pursuant to the settlement agreement. This study of future measures to address flow and temperature requirements was developed in partnership with the National Marine Fisheries Service, U.S. Fish and Wildlife Service, State Water Resources Control Board, Department of Fish and Game, State Water Contractors, and American Rivers.
In addition, in January 2007, the U.S. Forest Service filed Federal Power Act section 4(e) conditions for the anticipated new license that were consistent with the settlement agreement.
In April 2007, the U.S. Fish and Wildlife Service filed its Biological Opinion for the Oroville Facilities relicensing. This document provides “take” coverage for both the specific projects and the types of activities included in the settlement agreement, as well as generally supporting the activities in the agreement.
The following month, FERC issued its final environmental impact statement for the relicensing. This statement largely supports the settlement agreement.
Finally, in November 2007, DWR signed a Habitat Expansion Agreement with eight parties – including Pacific Gas & Electric (PG&E) – to expand spawning, rearing, and adult holding habitat for Central Valley spring-run chinook salmon and California Central Valley steelhead in the Sacramento River Basin. This agreement – which supports relicensing of the Oroville, 120-MW Poe, 362-MW Upper North Fork Feather River, and 182-MW Rock Creek-Cresta projects – provides greater gains for the species through identification, evaluation, selection, and implementation of the most promising and cost-effective actions.
Mr. Ramirez may be reached at California Department of Water Resources, 1416 Ninth Street, Room 1601, Sacramento, CA 95814; (1) 916-657-4963; E-mail: firstname.lastname@example.org. Ms. West may be reached at Kearns & West Inc., 475 Sansome Street, Suite 570, San Francisco, CA 94111; (1) 415-391-7900, ext. 103; E-mail: email@example.com.
Rick Ramirez, program manager for the California Department of Water Resources (DWR), played a key role in establishing the DWR relicensing program for the 762-MW Oroville Facilities and formulating DWR policy throughout the process. Anna West, principal with Kearns & West Inc., facilitated negotiations among stakeholders to reach a settlement agreement for the project.