ii;«*-.-.7.-_

MONTANA STATE LIBRARY

. II' M I H :

PRELIMINARY ISSUE PAPER

THE PROPOSED ADDITION

HYDROPOWER UNITS AND A REREGULATION

FACILITY TO THE CORPS OF ENGINEERS'

LIBBY DAM PROJECT IN

LINCOLN COUNTY, MONTANA

STATE DOCUMENTS COLLECTION
MAR 2 7 2001

MONTANA STATE LIBRARY
.,„ 1515 E. 6th AVE.
HELENA, MONTANA 59620

MONTANA DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION
TED J. DONEY, DIRECTOR

32 SOUTH EWING
HELENA, MONTANA 59601

SEPTEMBER 1978

u)(n^

•^ *

yh

T.'

■1

V

-»*

It

-,-»*■

PREFACE

Concerns over the present operation of outflows from Libby Dam and
opposition to the proposed addition of four generating units and a re-
regulating facility have recently been expressed by northwestern Montana
residents. Governor Judge, Lieutenant Governor Schwinden, Senator Hatfield
and Congressman Baucus have received numerous requests to initiate or
support a reevaluation of present operating criteria for Libby Dam and
to reconsider the state's position with regard to the proposed project.

A group of pub! ic organizations opposed to the project filed suit
against the Corps of Engineers, claiming that the Corps has not adequately
justified the project and that the project is not Congressional ly authorized,
The preliminary judgement of Federal Judge Murray is that the project is
not authorized and, as a result, an injunction was granted and a halt to
construction was ordered.

In response to many requests, questions and opposition, a few key
state departments have researched seven relevant issues and the findings
of their coordinated efforts are herein presented.

i

TABLE OF CONTENTS

Background 1

Summary of Issues 3

Economics 3

Endangered Species 5

Fluctuation Criteria and Discharge Limits 7

Mitigation for Fish and Wildlife Losses 9

Fisheries 9

Wildlife 10

Geology 11

Reserving Power Generated from Libby Dam for Montana 11

Authorization 12

Montana Options 13

Option 1. Endorse the Project 14

Option 2. Condition Endorsement on Possible Modifications 14

Option 3. Oppose Construction Pending a Complete Reevaluation 15

Option 4. Do Nothing 15

Recommendation 15

Background Papers and Acknowledgement

Appendix A - Economics of Peaking Power at Libby Dam

Appendix B - The Endangered Species Act

Appendix C - Fluctuation Criteria and Discharge Limits

Appendix D - Mitigation for Fish and Wildlife Losses

Appendix E - Geology

Appendix F - Reserving Power Generated from Libby Dam and the Reregulating

Dam for Montana
Appendix G - Individuals Contributing to Issue Paper Presentation

n

BACKGROUND

The Kootenai River enters Montana from British Columbia. It flows south for
approximately 50 miles, turns abruptly to the northwest, into Idaho, and eventually
into British Columbia again, where it empties into the Columbia River. Its some-
what V-shaped journey through Montana is roughly 100 miles long and is entirely
within Lincoln County. Its average annual discharge is 12,000 cfs, making it the
state's second largest river. Only the Clark Fork of the Columbia River discharges
more water out of Montana.

The Flood Control Act of 1950 (Public Law 515) authorized the construction of
Libby Dam on the Kootenai River. Its primary purposes are for hydropower generation
and flood control .

Construction of the dam began in 1966 and the reservoir began filling in 1973;
however, it was not until 1975 that power was first generated at Libby Dam and since
that time all outflows from the reservoir have passed through the turbines.

Presently, the powerhouse in Libby Dam has four generators, each with a rated
capacity of 105 megawatts (MW). The power operation is characterized as a "load
shaping" mode of generation. Load shaping, according to the Corps of Engineers, is
a flexible, middle ground between base and peak load generation. When the mode of
power generation resembles, or in fact is a peaking operation, outflows from Libby
Dam create the most pronounced fluctuations in the river stage downstream.

Libby Dam was constructed with provisions for eight 105 megawatt generators.
With four additional generators (units five through eight), as proposed, peaking
capabilities would be increased. However, a total of eight generators, permitting
a combined rated capacity of 840 MW, would require a reregulating facility to smooth
the great fluctuations that would result from such a peaking operation.

In January 1970, basic design information regarding the proposed reregulatory
facility was presented in the Corps' Design Memorandum 50. The dam would be con-
structed 10 miles below Libby Dam. It would be 70 feet high, 1,600 feet long and
create a reservoir with a capacity of 30,000 acre-feet of water. The reservoir's
maximum surface area would be 1,350 acres. The estimated cost of additional units
and a reregulating facility is $225 million and the proposed project was to have
been completed in 1933.

With a reregulating facility, the average daily releases from Libby Dam would
be in the range of 5,000 to 9,000 cfs, April through mid-July. With Lake Koocanusa
filled by the end of July (maximum elevation, 2,459 feet), outflow into the reregu-
lating reservoir would be gradually increased to an average of approximately 20,000
cfs. Natural inflow into Lake Koocanusa would normally pass through Libby Dam until
it drops below 8,000 cfs. In most years, this occurs during October. Discharge
from Libby Dam would average 10,000 to 20,000 cfs through the winter while the re-
servoir is lov/ered in the interest of power production and to provide space for the
upcoming snovmielt.

Instantaneous discharge, on the other hand, would vary from almost zero flow
to as much as 45,000 cfs. In fact, if its full peaking capacity is utilized, the
discharge could rise from almost zero flow to 45,000 cfs in one hour, remain at 45,000
cfs for five to ten hours and return to almost zero within an hour. Generally, peak-
ing operations would be high during the day time and low at night. At certain times,
perhaps v/eekends, the peaking requirements will be less and the discharge could be
held relatively costant for several days.

The minimum discharge from the reregulating dam has been established as 2,000

cfs. Tailwater fluctuations would be limited to a maximum of one foot per hour,
but not more than four feet per day during the period of May through September;
and to a maximum of one foot per half hour, but not more than six feet per day
during the period of October through April. These constraints are the same as those
imposed at Libby Dam with four units operating.

The energy produced by any hydropower source depends upon the volume of water
passing through the turbines and the elevation difference, or head, between the re-
servoir level and the river level below the dam. Since the addition of four gener-
ators to the Libby Dam powerhouse changes neither the inflow to the reservoir nor
the head, eight generators will not produce more energy than the four existing
generators over extended time. Additional generators will, however, produce more
energy over a relatively short-lived peak electrical demand period (i.e. one to as
many as tv/elve hours).

In July 1973, the Corps' Seattle District Engineers recommended to the Senate
Public Works Committee that generators be incorporated into the design of the rereg-
ulating dam. Phase I studies for advanced engineering and design for that purpose
were authorized by the Water Resources Development Act of 1974 (Public Law 93-29).
Congressional authorization for the inclusion of power generators in the reregulating
dam, however, is still pending. Indeed, Congressional authorization for the rereg-
ulatory facility itself could not be demonstrated to the satisfaction of Federal
Judge Murray, who recently granted a preliminary injunction and ordered a halt to all
construction activities associated with the reregulatory project. The Corps had
claimed that the project was authorized in 1950 as part of authorization for the
Libby Dam Project.

The question of authorization, the question of a real need for additional peaking
power in the northwest United States, the uncertainty as to what impacts a reregula-
ting facility will have on the endangered bald eagle, the wisdom of inundating ten
more miles of the Kootenai River, the adequacy of existing wildlife and fishery mitiga-
tion plans, and the long term effects of fluctuation criteria portray the controversy
over the reregulating dam and additional generating units at Libby Dam.

Summaries of these important issues follow and they represent a coordinated state
response to the controversy.

»

SUMMARY OF ISSUES

The summaries presented in the following pages do not include references to the
sources from which necessary information was obtained. Appropriate references are
given in the appendices, which also present the issues in a more detailed manner.

Economics

This critique of the Corps' benefit cost analysis concludes that (1) additional
peaking capacity will be of little or no value for about seven years after the pro-
ject is scheduled to be operational (2) the deliberate omission of archeological costs
from the B/C analysis understates project costs (3) project benefits are overstated
because peaking capacity available without the project is counted as a benefit of the
project and (4) recreational losses due to the project were not adequately considered.

Current standard procedures for estimating the benefits of additional generating
capacity require two separate evaluations. The first is to consult projected future
power demands to determine if the projected demands from the regional power pool ex-
ceed the projected regional capacity by the output of the proposed project. For pro-
jects in the Pacific Northwest, the Corps uses projections supplied by the Pacific
Northwest Utilities Conference Commission (P'lUCC), a group of public and investor-
owned utilities. If the first step in a project evaluation reveals that the projected
capacity falls short of the projected demand, then the second step, an evaluation
of alternative methods for meeting the projected demand, is performed. The purpose
of the second evaluation is to determine whether the proposed project will produce
power at a lower cost than the next best alternative. Since the economic benefits
of a project are defined as the costs avoided by building the proposed project, rather
than the next best alternative, any project that is cheaper than the next best alter-
native will have a benefit cost ratio greater than 1:1.

The PNUCC projections of future power demand are described by the Bonneville
Power Administration (BPA) Role Environmental Impact Statement (1977) as follows:

In the Pacific Northwest, where virtually all utilities are either
directly or indirectly interconnected with one another and with BPA
whose facilities are in turn connected with the two federal agencies
which own and operate the largest hydroelectric generating facilities
in the region, load-resource planning is done for the region as a
whole. Each year a forecast of the total loads of all the cooperating
utilities together is juxtaposed in tabular form with the current
schedule of existing, under construction, and planned generating re-
sources to determine the potential need for additional new generat-
ing facilities beyond those already planned. The load-resource tables
which extend 20 years into the future, are used to determine optimal
size of such additional generation, the time that would be required
to meet forecasted demands, whether the planned new facilities should
provide peaking capacity or energy (or both), the general location
of such new facilities, and whether they should be constructed and
owned by the Federal Government, by investor-owned utilities, or by
public agencies, or by some combination thereof.

The PNUCC projections define a peaking surplus as the capacity (net resources)
available in the period of lowest recorded streamflow that is surplus to the highest
one hour load to occur during the year after both capacity and load projections have
been modified to allow for a substantial reserve margin. An average surplus is the
capacity available after adjustments for reserves in the period of lowest recorded
streamflow that is surplus to the capacity needed to produce the expected energy (kilo-

watt-hours) to be consumed during the year.

The most recent projections (1977) indicate that in the absence of the Libby
project peak surpluses will be available through 1989-1990. This means that the
value of even more surplus capacity is near zero because it can only serve to pro-
vide additional reserves to a system with very substantial reserve margins already
built in.

The past three years' projections of future power demands, as presented by
the PNUCC in 1975, 1975 and 1977, s how chat (a) there is a steady decline in the
load demands projected for the period of 1978-1990, (b) there is a steady decline
in the net resources^ projected for the same period and (c) there is an increase
in the peaking capacity surpluses projected for the same period. The projected
surpluses of peaking capacity have resulted because the load demand projections
are declining faster than the projected net resources. For example, the surplus
of peaking capacity projected in 1975 for the period 1982-1933 was 338 MW; how-
ever, more recent projections (1977) show that a surplus of 1278 MW will exist in
1982-1983.

Table 1 shows projected surpluses and deficits of net firm resources, as pro-
jected by the PNUCC. The values shown are the differences between projected load
demands and projected net resources.

TABLE 1

PNUCC PROJECTIONS OF POWER SURPLUSES MADE IN 1975, 1976 AND 1977

(MW)

Projected

Peak Surpluses

(deficits)

Projected

Average Surpluses

(deficits)

Period

1975

1975

1977

1975

1976

1977

78-79

2,025

2,025

3,108

(2,153)

(2,297)

(1,060)

79-80

2.508

2,508

3,410

(2,232)

(2,375)

(1,598)

80-31

1,505

1,555

2,395

(2,353)

(2,517)

(2,139)

81-82

927

887

2,406

(2,419)

(2,592)

(2,198)

82-83

338

298

1,278

(2,522)

(2,696)

(2,275)

83-84

2,254

2,214

1,957

(1,089)

(1,253)

(2,373)

84-85

239

199

2,654

( 941)

(1,115)

(1,085)

85-85

706

656

3,306

( 467)

( 641)

( 779)

85-87

85

46

3,145

( 447)

( G21)

( 450)

87-88

( 704)

(1,982)

3,451

( 283)

(1,443)

( 598)

88-89

(2,993)

(3,003)

1,792

(1,394)

(1,771)

(1,292)

89-90

(5,389)

(5,409)

987

(2,592)

, (2,308)

(1,578)

SOURCES: Power Planning Committee, PNRBC, "Review of Power Planning in the Pacific
Northwest Calendar Year 1975" p. 95 and "Review of Power Planning in the Pacific North-
west Calendar Year 1977", p. 58, BPA Role EIS, page V-228.

^Net resources are gross resources minus reserve requirements and other capacity
adjustments. Gross resources are the combined capacity of all generating plants in the
power pool. Reserve requirements and other adjustments are subtracted because gross
resources are not always available due to lowered streamflows, plant maintenance, and
other factors.

Table 1 indicates that the period from 1978-1990 is projected to have surpluses
of peaking capacity and deficits of average energy.

Due to a revision in 1975 by the Federal Povjer Commission (now the Federal Energy
Regulatory Commission) of the method for calculating hydropower benefits the B/C ratio
dropped below 1.0. Because a project can't receive federal funding unless project
benefits exceed costs the Corps began a search for cost-cutting measures. In addition
trimming non-essential project features, archeological costs were deleted from the tabu-
lation of costs. This was defended by noting that they are non-reimbursable costs.
This is a violation of the federal guidelines for economic analysis and basic econ-
omic principles and produces an understatement of true project costs.

The benefits of converting Libby Dam to peaking operations are the value of the
peaking power gained minus the value of power from current operations that is lost.
The value of the proposed operation and the current operations are measured by the
least-cost alternatives to these operations. Although the current operations at Libby
Dam are semi-peaking because output during peak hours is often several times greater
off-peak output the Corps selected as the least-cost alternative to current operations
a nuclear plant. Nuclear plants are typically used only for baseload operations be-
cause capital costs are very high and operating costs dre low and a change in power
output takes several hours.

The selection of a nuclear plant as the least-cost alternative assumes that
currently Libby Dam produces only baseload power and incorrectly calculates the bene-
fits of the proposal as the difference in power values between a baseload plant and a
peaking plant. If the project were needed the benefits would only be the difference
between the power values of a semi-peaking operation and a peaking operation rather
than the difference between baseload and peaking operations. The method used by the
Corps incorrectly counts current peaking benefits from the existing semi-peaking oper-
ation that are available in the absence of the project as benefits of the project.

The Corps also failed to adequately consider the recreational losses would re-
sult from the inundation of 10 more miles of the Kootenai River. Recreators would
surely be displaced, being forced to seek an alternate site--perhaps a less desirable
one. Other recreational losses would include those associated with the blockage of
the Fisher River and those related to option values. Those who would pay for the
option of future use, even though they may not be present users, should be consider-
ed. Certainly those who pass and sign petitions protesting the project would suffer
option losses if they are not regular users. Active opposition by the Libby Rod and
Gun Club, among others, clearly indicates that many local residents believe they
would suffer a substantial loss if the project is built.

Endangered Species

The Endangered Species Conservation Act of 1969 and the Endangered Species Act
of 1973 afford protection to plant and animal species deemed by the Secretary of the
Interior or the Secretary of Commerce as endangered or threatened with extinction.
Section four of the latter gives final authority for the determination of a plant or
animal as an endangered species to the Secretary of the Interior.

Notification of the addition of the bald eagle to the federal endangered species
list became formal on flarch 16, 1978. While the bald eagle has not yet been given
special designation under Montana's own endangered species provisions, it is antici-
pated that the 1979 Legislature may do so.

The recent designation of the bald eagle as an endangered species has resulted
in the need to examine more closely the activities associated with the construction
of the reregulating dam below Libby Dam.

Section seven of the Endangered Species Act requires a formal, interagency con-
sultation process in the event that man-induced activities might in any way produce
adverse impacts on a threatened or endangered species. It reads:

The Secretary of the Interior shall review other programs administered
by him and utilize such programs in furtherance of the purpose of this
Act. All other Federal departments and agencies shall, in consultation
with and with the assistance of the Secretary, utilize their authorit-
ies in furtherance of the purposes of this Act by carrying out programs
for the conservation of endangered species and threatened species listed
to insure that actions authorized, funded, or carried out by them do not
jeopardize the continued existence of such endangered species and threat-
ened species which is determined by the Secretary, after consultation as
appropriate with the affected States, to be critical (Section 7, P.L. 93-
205, December, 1973).

In accordance with Section seven, the U.S. Army Corps of Engineers initiated a
formal consultation process with the Fish and Wildlife Service on February 22, 1978.
The Corps of Engineers requested a biological opinion regarding the impacts of con-
struction of the proposed additional generating units and reregulating facility near
Libby on the bald eagle.

The Regional Director of the Fish and Wildlife Service in Denver was delegated
the authority of responding to the Corps' request. Following a preliminary exam-
ination, it was concluded that insufficient information was available to permit a
sound biological opinion as to whether or not the additional generating units and
reregulating dam"... will jeopardize the continued existence of the endangered bald
eagle orresultin the destruction or adverse modification of its habitat." The
Fish and Wildlife Service therefore requested the Corps to provide specific infor-
mation regarding the number of eagles in the area, their nesting, perching, and
feeding habits and their seasonal movements. In response, the Corps has contracted
Dr. John Craighead of Missoula to perform studies at the site and provide the infor-
mation required. However, Dr. Craighead's results will not be available until April
or May, 1979, and another 60 days may be required for the Fish and Wildlife Service
to evaluate those findings and submit its biological opinion to the Corps.

The federal regulations that establish procedures for interagency consultation
in accordance with Section seven of the Endangered Species Act of 1973, state:

Until consultation has been completed and a biological opinion issued,
good faith consultation shall preclude a Federal agency from making an
irreversible or irretrievable commitment of resources which would fore-
close the consideration of modifications or alternatives to the ident-
ified activity or program." (Part 402, Chapter IV, Title 50 of the Code
of Federal Regulations).

In spite of the obviously unsettled nature of the formal consultation process,
the Corps of Engineers has sought to begin construction activities that are directly
related to the reregulation dam project. A request was submitted to the Regional
Director of the Fish and Wildlife Service to consider construction of the haul bridge
as an activity separate from all other scheduled construction activities. In brief,
it v^as concluded by the Fish and Wildlife Service that construction of the haul bridge
alone would probably have minimal impact on the bald eagle or its habitat. The re-
quirements of Section 404 of the Federal Water Pollution Control Act were then met,
and v;ork on the haul bridge began following a 51-day delay of the regular construc-
tion schedule.

The haul bridge will be a temporary structure with the single purpose of allow-
ing for the transport of fill material, personnel and supplies needed for construction

of the reregulating facility. Its cost to taxpayers will be slightly in excess of
$2'a million.

To what extent the Corps of Engineers will attempt to carry out other activities
related to the construction of additional generating units and the reregulating facil-
ity is speculative at this point. But, the decision to proceed with the haul bridge
is an indication that a piecemeal approach may be forthcoming. Such an approach
would be in conflict with the intent of the Endangered Species Act and that portion
of the Code of Federal Regulations which establishes procedures for good faith inter-
agency consultation and a biological opinion befor an irreversible or irretrievable
commitment of resources is made.

Fluctuation Criteria and Discharge Limits

Presently, operation of the four 105 megawatt generators in Libby Dam is re-
stricted by the following discharge limits and maximum fluctuation criteria:

1. A minimum instantaneous discharge of 2,000 cfs.

2. Maximum fluctuations of one foot per hour, four feet per day. May
through September; two feet per hour, six feet per day, October
through April .

According to representatives of the Corps of Engineers, those fluctuation cri-
teria and discharge limits were established following consultations with the Bonne-
ville Power Administration, the U.S. Fish and Wildlife Service and the Montana De-
partment of Fish and Game. The criteria are admittedly a compromise.

Originally, the Fish and Wildlife Service, in concurrence with the Department
of Fish and Game, recommended the following discharge limits and maximum fluctuation
criteria:

1. A sustained flow in the Kootenai River of not less than 2,500 cfs
(as measured at the dam).

2, A rate of change of water releases should be made as gradually as possible
and should not exceed 1 foot per hour as measured at a point just upstream
from the confluence of the Fisher River.

These recommended criteria, according to the Fish and Wildlife Service, were in-
tended to minimize the detrimental effects to aquatic organisms, as well as decrease
hazards to anglers.

Streamflow records for the Kootenai River are available from 1911 through the
present. The average annual discharge, as measured at Libby before impoundment was
12,070 cfs. The maximum recorded discharge was 121,000 cfs on June 21, 1916. The
minimum was 895 cfs on January 11, 1930. Regulation of the outflow through Libby
Dam has, of course, changed the seasonal flow patterns. In fact, a reversal of the
natural flow regime is inherent in peaking hydropower operations and such a reversal
has occurred below Libby Dam. With a reregulating dam, it is estimated that down-
stream flows during the period of November through March would be about 15,000 cfs
higher than historical flows for the same period. The present operation of Libby Dam,
which allows for peaking in the absence of a reregulating reservoir, is problematical
and may in fact be in violation of earlier agreements. In any case, during the first
two years of Libby Dam's operation, numerous violations of the criteria established
by the Corps occurred.

Discharges from the main dam into the proposed reregulating reservoir would be
determined largely by power generation schedules. With eight 105 megawatt genera-
tors in the main dam operating for peaking power production, those discharges would
vary from a low of less than 1,000 cfs--sometimes almost zero flow--to as much as

50,000 cfs. (Historically, a flow of 50,000 cfs had a statistical probability of
occurring once in 100 years). Up to 40,000-45,000 cfs will be released routinely
into the reregulating reservoir.

Discharges from the proposed reregulating dam will apparently conform to those
criteria established by the Corps and now in effect below the main dam. As stated
previously, those criteria include a minimum discharge limit of 2,000 cfs.

The Corps has stated on numerous occasions, both orally and in writing, that
flows below 4,000 cfs will occur infrequently or in emergency situations only. In
its Design Memorandum 50, the Corps stated that a minimum flow of approximately
4,000 cfs will be considered below the reregulating dam during the summer months
in order to maintain the aesthetic value of Kootenai Falls. Yet, in the same docu-
ment,water release from the proposed reregulating dam during the summer is charac-
terized in terms of being reduced from 46,000 cfs to 2,000 cfs in 49 hours 45 min-
utes.

Furthermore, in an invitation for bids for Phase I of reservoir clearing, a
revised minimum discharge limit of 1,500 cfs was recently introduced by the Corps.
The Fish and Wildlife Service, having received no forewarning, questioned the re-
vised limit, and the issue was raised again at the last meeting of the Environ-
mental Coordinating Committee, May 9, 1978. No response has yet been given. The
intent or validity of 1,500 cfs as a newly established discharge limit is simply
not known, but it is vital to this issue. Such inconsistencies should be clari-
fied.

Throughout the Corps' planning process for additional generating units and re-
regulation at Libby Dam, it has generally been feared that the reregulating dam
and reservoir will not be used primarily for smoothing out the wild fluctuations
caused by peaking operations. The Corps has attempted to allay this and other fears
on numerous occasions and has responded to countless inquiries into its operating
assumptions; however, the fears have not been allayed and questions continue to
arise. Senator Hatfield's recent letters to the Governor of Montana and the Corps
bear witness to these doubts.

The adequacy of the existing minimum discharge limit and maximum fluctuation
criteria--from both an operational and environmental viewpoint--is unsettled. With-
in the last month, the Department of Fish and Game, based on experiences to date
with fluctuations below Libby Dam, has revised its recommendation regarding maximum
fluctuations and minimum discharge limits. Prompted by Senator Hatfield's query
"Is Montana satisfied with the criteria"? the Department of Fish and Game has rec-
ommended:

1. Fluctuations not in excess of three feet per day, one-half foot per
hour, year around

2. A minimum instantaneous discharge of 4,000 cfs

3. A steady flow three hours before sunset until dark and a steady flow
during weekends. May through October.

The third recommendation was made to accommodate fishermen. The second is part-
icularly important during the periods of April through June and October through Nov-
ember, as they represent the spawning periods of the most abundant fishes in the river
and it is believed that continuous flows of at least 4,000 cfs will ensure inundation
of spawning beds.

The timing of fluctuations is as important as the magnitude of those fluctuations-
perhaps more important. The Corps has given assurances that the reregulating dam,
whether equipped with generators or not, will permit peaking operations and that the
resulting fluctuations below the reregulating dam will conform to the established cri-

8

teria. On the other hand, apparently no indication has been given by the Corps re-
garding the frequency with which the maximum fluctuation or minimum discnarge limits
will be attained by incorporating pov;er into the reregulating dam. The terms "infre-
quently" and "emergency situations" do not adequately define frequency limitations.
It is feared that emergency situations could arise in a peaking operation every week
and be a weekend in duration. The State of Montana should not endorse maximum fluc-
tuation criteria and minimum discharge limits that are, in fact, normal operating
criteria.

Mitigation for Fish and Wildlife Losses

Opposing viewsare held with regard to the mitigation of fish and wildlife losses
associated with Libby Dam and the proposed reregulating facility.

The Corps of Engineers maintains the position that all fish and wildlife losses
resulting from the project should be treated as a single issue. That is, the exist-
ing dam and the proposed dam are to be considered as a single project in terms of
fish and wildlife mitigation measures.

The Montana Department of Fish and Game, on the other hand, with the concurrence
of the U.S. Fish and Wildlife Service, maintains the position that fish and wildlife
losses associated with the existing dam and any future losses resulting from the con-
struction of a reregulating facility are separate issues. According to this position,
after measures have been taken to mitigate losses already realized (i.e. losses rea-
lized as a result of Libby Dam), additional compensation for losses that would re-
sult from the construction of the reregulating facility will be necessary.

Fisheries

Prior to impoundment, the Kootenai River was a good fishery along its entire
length in Montana, capable of sustaining harvests far in excess of present or antic-
ipated demands. The mainstem and nearly all of its tributaries of significant size
were self-sufficient in terms of reproduction. And, although the Kootenai River re-
ceived rather light fishing pressure, due largely to the area's low human populat-
tion, it was classified as a Class two stream. Class two stream are those considered
to possess qualities of statewide significance or value.

Since Libby Dam's construction, fishing below the dam has improved, particularly
between Libby and the dam. Slightly warmer water temperatures, the el imination--or
at least reduction--of natural and man-induced pollution from upstream, and the dam
itself, acting as a barrier to the natural upstream movements of fishes, are a few
factors to which improved fishing may be attributed. How long the condition will last
is unknown.

On the other hand, Libby Dam has adversely affected the Kootenai River fishery
upstream. A fluctuating reservoir with annual drawdowns ranging up to 175 feet and
the flooding of 90 miles of the mainstem and roughly 14 miles of important tributary
stream present conditions that favor rough fish. Past experiences with reservoirs
such as Hungry Horse and numerous others support this feeling of pessimism.

Congressional authorization was given by the Omnibus Bill of 1974 for the miti-
gation of fishery losses associated with the Libby Dam project not to exceed :j4 mil-
lion. The major portion of that money will be used to construct and operate a fish
hatchery at Murray Springs.

It is agreed that the Department of Fish and Game will operate the hatchery
under contract with the Corps of Engineers, but the length of time the Corps can
fund the operation of the hatchery under the $4 million appropriation is not knovm
at present. The acquisition of land for the water supply is under a condemnation

proceeding, therefore its eventual cost is unknown. If the court determines a reason-
able land price, then adequate funds should remain for 10 to 15 years of hatchery oper-
ation. Although the Corps supports the concept that additional funds should be provid-
ed for operating and maintaining the hatchery for the life of the Libby Dam project,
it maintains that it is Montana's responsibility to seek the additional funding from
Congress.

The Fisher River, which would be "cut off" between the main dam and the reregu-
lating dam, should the latter be built, has traditionally been one of the most im-
portant tributaries of the Kootenai River. A vital spawning run for cutthroat trout,
dolly varden, and whitefish will be lost. And with fluctuations of up to 30 feet
during peaking operations at the main dam, the proposed reregulating reservoir will
scarcely support viable populations of aquatic organisms. Another 10 miles of excel-
lent river fishing will therefore be lost. And, if the Corps' position on mitigations
is upheld, mitigation for losses already incurred and already deemed inadequate by the
state must suffice for the proposed project as well.

Wildlife

Lake Koocanusa inundated approximately 24,000 acres of prime bottomlands wild-
life habitat. Much of it was critical winter range for big game species such as
deer, elk, moose, and bighorn sheep; however, it was equally critical for numerous
other game and non-game animals. The relocation of roads and railroads also produced
adverse impacts on existing wildlife populations and their habitats.

The Omnibus Bill of 1974, which authorized $4 million for fisheries mitigation
measures, also authorized the purchase of up to 12,000 acres of land at a cost not to
exceed $2 million. Even if land had been purchased as early as 1974, it would have
been difficult to purchase 6,000 acres of land with $2 million. Today, the Corps
is negotiating the purchase of little more than 3,000 acres and has thus far actually
purchased a total of 1,375 acres north of Eureka at a cost of $811,000.

As in the case of funding mitigative measures for fishery losses, the Corps
maintains that once the $2 million has been spent on land acquisitions, it is not
authorized to seek additional lands or funds.

Although the Corps has assisted the Department of Fish and Game and the U.S.
Forest Service in determining ways to improve the carrying capacity of lands for
certain wildlife species, considerably more than 12,000 acres would be required to
actually mitigate the 24,000 acres inundated by Lake Koocanusa alone. It must be
recognized that wildlife already inhabit those lands being purchased. New wildlife
habitat is not being created by such purchases. To fully mitigate the 24,000 acres
inundated, 24,000 acres of new, comparable habitat would be necessary. However, a
funding limit of $2 million remains in effect, and it is apparent that little more
than 3,000 acres can be purchased for that amount.

The purchase of 3,000 acres will not properly mitigate the loss of 24,000 acres
of prime wildlife habitat to Lake Koocanusa. To presume that the purchase of the
same 3,000 acres will properly mitigate all anticipated losses, including an addi-
tional 10 miles of bottomlands habitat, should the reregulating facility be built,
is unreasonable.

The total cost of Libby Dam, as it stands, was approximately $485 million. The
estimated cost of adding four generating units and reregulating dam will be approxi-
mately $225 million more. The $6 million authorized for mitigating fish and wildlife
losses--both incurred and anticipated--represents less than one percent of the total
estimated cost of the project.

10

Geology

Libby Dam and the proposed reregulating dainsite are located on a geologic area
known as the Wallace Formation. The main constituents of this formation are calcar-
eous and dolomitic limestone.

Pleistocene ice was up to 4,000 feet thick in this region and today glacial
sediments form the bulk of soil overburden. The Corps believes that these glacial
deposits are rather constant and undisturbed and has stated that there has been
little tectonic activity since the last glacial advance, some 10,000 years ago. The
Corps has concluded that major faults in the area are inactive.

One of the major faults, the Thompson Lakes Fault, is under the west side of the
proposed reregulating damsite, according to one reconnaissance level study. However,
according to the Corps, the fault lies 1,500 feet east of the east riverbank, but has
two branches under the proposed damsite.

The U.S. Department of Commerce has categorized the area as a "moderate damage
earthquake potential zone", but much of the western United States is similarly cate-
gorized.

Dr. Richard Konizeski of the University of Montana contends that the Corps
should have collected microearthquake data for one year before filling Lake Koocanusa
(a microearthquake is one that registers less than 3.5 on the Richter scale). He
further contends that a strong correlation exists between the filling of certain large
reservoirs and the increased potential for earthquakes. While seismologist are gen-
erally not willing to accept the latter contention, they agree that seismologic data
should be gathered before, during and after a large reservoir is formed.

The Corps has recently installed three stations that record microseismic activity
in the Libby area. The greatest earthquake recorded within a seismologically signif-
icant radius of the proposed damsite registered 5.4 and was 20 to 30 miles southeast
of Libby Dam. For this reason, the proposed reregulating dam has been designed to
withstand a probable maximum earthquake of 5.5, within I'i to 14 miles of the damsite.

Reserving Power Generated From Libby Dam for Montana

Two major hydroelectric dams have been federally funded and constructed in
Montana--Hungry Horse Dam on the South Fork of the Flathead River and Libby Dam.

The records are clear and it has been established tfirough both public law and
Congressional intent that Montana should receive geographical power preference for
the sale and distribution of energy produced by federal hydroelectric projects with-
in Montana.

The preference to which Montana consumers are entitled in the sale of energy
produced by the Hungry Horse Project was clearly implied in legislation which author-
ized the construction of the project. That legislation (Public Law 329) declared
the purpose of the Hungry Horse Project to be:

...irrigation and reclamation of arid lands, for controlling floods,
improving navigation, regulating the flow of the South Fork of the
Flathead River, for the generation of electric energy, and for other
beneficial uses, primarily in Montana but also in downstream areas
..." (emphasis added)

Other BPA and Congressional records are replete with reference to Montana's pre-

11

ference in this regard.

Recognition of Montana's preference in the sale and distribution of federal
energy attributable to projects in the state was not intended to be limited to acts
and determinations at the time the Hungry Horse Project was constructed. The Con-
gress passed and the President signed legislation in 1963 to guarantee electric
consumers in the Pacific Northwest first call on electric energy generated at fed-
eral hydroelectric plants in that region. Thus, legislative history supports the
application of the state's geographical preference with respect to the second ma-
jor federal hydroelectric project in western Montana--Libby Dam--and the additional
energy that would be produced by the proposed units, should they become a reality,
would surely be similarly intended.

Authorization

Libby Dam was constructed with provisions for eight generators. With the addi-
tion of proposed units five through eight, the plant would have an increased capab-
ility of supplying peaking power to Montana and the northwestern United States. How-
ever, a reregulating dam would be required.

According to the Corps, Congressional authority for the additional units and re-
regulating facility was granted at the same time Libby Dam itself was authorized--by
the Flood Control Act of 1950. In the act, a single reference was made to a rereg-
ulating facility. It reads "if it becomes necessary to reduce this fluctuation, re-
regulation will be considered when the need arises" (House Document 531, Volume II,
page 464. 81st Congress, 2nd Session).

A suit was filed by the Libby Rod and Gun Club and others challenging, among
other aspects of the proposed project, that statement as being Congressional authori-
zation.

On September 8, Judge W. D. Murray, Federal District Court, Butte Division,
granted a preliminary injunction on the grounds that (a) the project is not, in
his opinion, authorized and (b) the Corps failed to adequately consider alternatives
to the project. Thus the decision has forced a halt on further construction and a
trial date will be set.

12

MONTANA OPTIONS

The preceding discussions have identified significant problem areas concerning
the addition of hydropower units at Libby Dam and placement of a reregulating dam
downstream. Montana can pursue a number of alternative measures in an attempt to
ensure that the project represents the best interest of the State. Practically,
however, it must be realized that Montana does not, and traditionally has not,
played a major role in the planning, authorization, or construction phases of Corps
projects--for good reasons.

The Corps of Engineers has claimed that its navigational servitude rights apply
to this project, precluding the need for the Corps to follow any state permit procedures.
At Montana statehood, the federal government retained the right to control navigable
rivers, primarily for the purpose of interstate commerce. Development of federal
water resource projects is one of the rights retained under navigational servitude.

In addition, federal projects are Congressionally authorized and funded. While
Montana's Congressional delegates may influence those decisions, it is obvious that
they do not have the full discretionary authority regarding federal projects in the state.

President Carter's water policy explicitly declares that states must have more
control over the planning and construction of federal projects within state boundaries
and has instructed federal departments to work more closely with states in developing
water resource projects. Significantly, the president is also having legislation
drafted that would require states to cost share these projects in the amount of 10
percent of construction costs, but not to exceed one-fourth of one percent of the
state's annual revenues for projects producing vendible products (hydropower, for
example). For most large projects, the percentage of state revenues would apply.
Montana's share in such cases would be approximately $500,000 per year. The policy,
if implemented through legislation, would give states more control over the develop-
ment of federal water resource projects, but it would apply only to projects not yet
authorized. If the Corps can successfully defend its claim that the additional units
and reregulating facility are authorized, presumably, cost sharing would not apply.
If, on the other hand, a summary judgment is issued contrary to that claim, and
assuming the Corps then seeks Congressional authorization, cost sharing provisions
would probably apply. Cost sharing provisions would probably apply also to the
proposed installation of generators in the reregulating dam.

The Corps has established an Environmental Coordinating Committe for the Libby
project so that state and other federal agencies can monitor construction activities
and suggest modifications based on environmental concerns. It is apparent to the
state members of that committee that few, if any, suggested changes in project con-
struction will be accommodated by the Corps.

The Department of Natural Resources and Conservation has issued an opinion re-
garding the applicability of the Montana Major Facility Siting Act to the proposed
project. It was determined that the act does not apply to the proposed project under
the allegations stated in a petition requesting the state's opinion. Nevertheless,
the department is continuing legal research into the matter to determine whether
other aspects of the proposed project, should it be authorized, would subject it to the
Major Facility Siting Act.

The following options are based on the assumption that the proposed project is
I not Congressionally authorized.

13

Option 1. Endorse the Project

This option endorses the addition of four more generators at Libby Dam, construc-
tion of the reregulating dam and the proposed construction and operating plans and
environmental programs associated vn"th the project.

The issue papers have identified serious problems associated with the project
that must be accepted if the project is endorsed. These include concerns over rec-
reational losses, mitigation of environmental damage, and the determination on whether
the project is really needed. Endorsement of this option assumes that regional
concern for additional peaking power production and local interests in construc-
tion employment outweigh the problems associated with the project and that the en-
vironmental issues do not merit further consideration.

Effective endorsement of the project could include support of Congressional
authorization and efforts to hasten the EIS process associated with the Major Fac-
ility Siting Act if it should apply.

Option 2. Condition Endorsement on Possible Modifications

This option assumes that additional peaking capacity and/or local construction
employment is needed and attempts to accomplish these goals with minimal environmental
degradation. Completion of the eagle study, a reevaluation of fluctuation criteria
and a review of mitigation measures associated with the project should be completed
before the state supports the project. State support would be contingent upon ac-
ceptance of state recommendations arising from the studies mentioned above.

Implementation requires initiation of the studies that will determine the con-
ditions upon which state support will depend. The reevaluation of fluctuation criteria
should identify the tradeoffs between the economic value of the peaking power and the
environmental and recreational benefits to be gained by reducing fluctuations.

Mitigation of fish, wildlife, and recreation losses due to the reregulating dam
and reservoir has never been satisfactorily resolved. A "habitat unit" type of
evaluation could be prepared by the Fish and Wildlife Service and the Fish and Game
Department. Mitigation and compensation measures would be based on the aquatic and
terrestial evaluations.

This option is only viable if the state has effective methods to ensure that the
recommended conditions would be adopted by the Corps. In addition there should be
sound reasons for believing that modifications in project design and operation can be
recommended which will not cripple the peaking capabilities whicn justify the pro-
ject.

Implementation of the option would be difficult. An attempt could be made to use
the Environmental Coordinating Committee as the vehicle to accomplish the alterations.
However, those involved with the committee don't believe much can be accomplished
througb the committee.

Support of Montana's Congressmen of an authorization bill could be hinged upon
project modification in accordance with the state's conditions.

14

Option 3. Oppose Construction Pending a Complete Reevaluation

Selection of this option would be based on a recognition that (a) the Corps has
failed to demonstrate the need for additional peaking capacity and the economic feas-
ibility of the project, and (b) the project is environmentally degrading and recrea-
tional losses due to the project have not been adequately considered.

This option calls for a complete reevaluation of the project's economic feasib-
ility, the existing fluctuation criteria and mitigation measures. The Corps and the
state should work jointly on the economic assessment. Construction would be opposed
until it is determined that the project is economically feasible, fluctuation criteria
are adequate, all mitigation is sufficient and guaranteed, the bald eagle won't be ad-
versely affected, and public sentiment is generally in favor of the project. If these
conditions could not be satisfactorily achieved then the project would be reformulated
or dropped.

A variation of this option would require that a regional environmental impact
statement (EIS) be prepared for the Kootenai River Basin. In light of Troy ASARCO,
Northern Lights, and the Libby controversy, it is important that the cumulative
effect of these possible actions be identified. Construction at Libby would remain
halted while the EIS is prepared. Clearly the selection of an option which recom-
mends extensive, expensive studies is based on the belief that the existing studies
are inadequate and that the results of these studies will be valuable in developing
a state position on the project and/or reformulating the project.

This option could be implemented by opposing Congressional authorization until
^ studies formulated by the state are completed and demonstrate that the project is
^ worthy of state support.

Option 4. Do Nothing

^,, This option could be justified by any of the following assumptions:

■-,1. The project if halted will not be revived by Congressional authorization and
that this outcome is desirable.

.Z. No effective means exist to implement the other options since the state has
MQry limited control over federal water projects.

3. The project is desirable, will receive Congressional authorization and no
special efforts are required to produce a desirable result.

The implausibil ity of assumption 2 and the uncertainty about assumptions 1 and
3 make this an unattractive option.

Recommendation

Opponents to the project are vocal , numerous, wel 1 -organized and they've won the
first battle. Supporters of the project, although they may not be any fewer than the
opponents, have been much less noticeable. Until last Saturday .^events were going
their way and no display of support was necessary. s-^t 9,

^ The Department of Natural Resources and Conservation will hold hearings in the
Libby area to obtain public opinion on the project. The growing controversy makes
it increasingly important that public opinion be carefully considered before any option
is selected. Subsequent to those hearings, a state position will be recommended to
the Governor.

15

V

t