Environmental and Land Use Department Update
Fall 2001
The Alsea Decision: ESA Off-Ramp or Passing Sideshow?
By William Stelle, Jr.
A recent district court decision voiding the
listing by the National Marine Fisheries
Service (NMFS) of Oregon coastal coho1
seriously implicates the listings of numerous
salmonid stocks in the Columbia Basin and
the Pacific coast from Puget Sound to
central California. It will trigger additional
lawsuits challenging some or all of these
other listings. How it plays out in the end
will depend in part on whether the Bush Administration decides
to appeal and how NMFS decides to cure the “defects” in the
other listings in light of this decision if they don’t appeal. It will
also turn on the persuasiveness of the science associated with
the role of hatchery stocks in the rebuilding of wild salmonid
populations.
On September 13, 2001, U.S. District Judge Michael
Hogan found that NMFS arbitrarily excluded hatchery fish from
its listing of Oregon coastal coho as threatened in 1998. The
court ruled that the 1998 listing decision was based on
distinctions below that of taxonomic level of a distinct
population segment (DPS), as that term is defined by the
Endangered Species Act (ESA), and thus violated the ESA’s
prohibition of listing populations of fish or wildlife below the
DPS level. It further found that under the ESA, NMFS (and the
U.S. Fish and Wildlife Service) may consider only an entire
species, subspecies, or DPS, and that once NMFS determined
that hatchery spawned coho and naturally spawned coho were
part of the same DPS2, the listing decision should have been
made without further distinctions. In short, NMFS cannot on the
one hand determine that hatchery populations are part of a DPS
but then decide to exclude them from the listed unit. The judge
then proceeded to vacate the listing and remand the matter to
the agency for further action.
A coalition of environmental and fishing groups are seeking
to intervene in the Alsea case in order to appeal, and the U.S.
Department of Justice must also decide whether to appeal.
Meanwhile, a coalition of irrigators in the Columbia Basin have
formally petitioned
NMFS to de-list seven
other stocks in the
The Klamath Basin Water Crisis . . . . . . . . . . .2
Columbia in light of the
decision, and served
Court of Appeals Extends Date
notice of their intention
for Recovering Cleanup Costs from
Insurance Carriers . . . . . . . . . . . . . . . . . . . . . . . . . .3
to litigate the issue.
There are numerous
other listing decisions that appear to share similar character as
coastal coho, including Puget Sound chinook, Snake River
steelhead, middle Columbia steelhead, lower Columbia
steelhead and chinook, upper Willamette steelhead and
chinook, and Columbia River chum. If the government does not
appeal Alsea, then NMFS will in all likelihood re-examine its
listing decisions in these other circumstances in light of the
Alsea decision to determine if the hatchery stocks should be
included in the Evolutionary Significant Units (ESUs) and,
if so, whether the status of the ESUs as a whole continue to
warrant listing status based upon the best available information.
One thing is for certain, there were only two parties in the
Alsea litigation — the plaintiffs and the United States, and that
won’t happen again. ■
Inside This Issue:
Environmental and Land Use Department
Seattle
wills@prestongates.com
Alsea Valley Alliance v. Dept. of Commerce
(99-6265-HO, D.Or)(Sept. 13, 2001).
1
NMFS has coined the term “evolutionary significant unit” as the
equivalent of a “distinct population segment” for purposes of Pacific
salmonids. See Policy on Applying the Definition of Species under the
ESA to Pacific Salmon, 56 Fed. Reg. 58, 612 (Nov. 20, 1991). The
Alsea court found the ESU policy a permissible construction of the
statutory term distinct population segment.
2
Environmental and Land Use Department Update
Page 2
The Klamath Basin Water Crisis
By James A. Goeke
The Klamath Basin along
the Oregon and California
border is the site of the
latest dispute between
Indian tribes, farmers,
environmentalists, fishers,
and power producers over
the allocation of limited
western water resources.
Water in the Klamath Basin is regulated by
a series of dams, reservoirs, canals, and
other waterworks that comprise the United
States Bureau of Reclamation’s (the
“Bureau”) Klamath Project (“Project”).
Project water supports two species of
endangered fish and a threatened run of
coho salmon, supplies irrigation water for
thousands of acres of agricultural land in
the Klamath Basin, generates hydroelectric
power, and provides the lifeblood for several
National Wildlife Refuges. The Bureau’s
management of Project water affects the
treaty rights of Native American tribes along
the Klamath River, the economic vitality of
Klamath Basin farmers, power generation,
and the sustainability of non-Indian salmon
fisheries along the Oregon and California
coast.
Matters came to a head for the Klamath
Basin on April 3, 2001, when a federal
district court judge ruled that the Bureau’s
operation of the Klamath Project violated
the Endangered Species Act (ESA).
(Pacific Coast Federation of Fisherman’s
Associations v. United States Bureau of
Reclamation, 138 F. Supp. 2d 1228 [N.D.
Cal. 2001].) The Court issued an injunction
requiring the Bureau to increase the
minimum amount of in-stream water
available for the threatened Southern
Oregon/Northern California Coast
Evolutionary Significant Unit of Coho
Salmon (the “Klamath coho salmon”). The
Court’s decision came in the midst of one of
the worst droughts on record for the
Klamath Basin. The Bureau later cut off
water for irrigation to over 150,000 acres of
farmland and was forced to call upon armed
federal agents to prevent unauthorized
diversions of water from the Project.
Competing Demands for Limited Water
The Klamath Project is located within the
Upper Klamath and Lost River Basins along
the Oregon and California border. Congress
authorized the Project in 1905 pursuant to
the Reclamation Act of 1902. The United
States appropriated all available water rights
from the Klamath River and Lost River and
their tributaries in Oregon for the Project
and built a series of diversion projects
designed to store water in Upper Klamath
Lake.
The Bureau’s water allocation decisions
are dictated by its contracts with various
water districts and individual water users as
well its obligations under federal laws such
as the ESA, and its trust responsibility to
protect fishing and water rights for the
Klamath, the Yurok, the Karuk and the
Hoopa Valley tribes. The Klamath Tribes’
rights are guaranteed by treaty and include
the right to rely on traditional tribal
fisheries. The Yurok, the Karuk and the
Hoopa Valley tribes hold similar rights
guaranteed by Executive Order. The tribes’
water rights are the most senior in the
Klamath Basin. (See United States v. Adair,
723 F.2d 1394, 1408-11, 1414-15 [9th
Cir. 1983].) The Lower Klamath and Tule
Lake National Wildlife Refuges within the
Klamath Basin also hold junior federal
reserved water rights for water necessary to
fulfill the primary purposes of the refuges.
In addition to the Bureau’s water allocation
decisions, both Oregon and California have
granted numerous state water rights permits
in the Klamath Basin.
Water for the Project is stored primarily
in Upper Klamath Lake, a naturally
occurring lake located wholly in Oregon. In
1917 the Bureau constructed the Link River
Dam near the mouth of Upper Klamath
Lake to regulate the lake level for increased
water storage. The Link River Dam allows
manipulation of Upper Klamath Lake’s water
level both below and above the natural lake
level. PacifiCorp, a private power company,
owns and operates several hydroelectric and
re-regulating dams on the Klamath River
under license by the Federal Energy
Regulatory Commission, including Iron Gate
Dam. Iron Gate Dam is located in California
along the Klamath River and controls the
water flow below the Klamath Project and is
the furthest downstream dam in the Project.
Available water in the Project varies from
year to year based on yearly snowfall,
rainfall, and temperature.
The shortnose sucker and Lost River
sucker are listed as endangered under the
ESA and are found in Upper Klamath Lake
and nearby Project waters behind the Link
River Dam, but nowhere else. The two
species of suckers need certain minimum
amounts of water in Upper Klamath Lake.
The National Marine Fisheries Service
(NMFS) listed the Klamath coho salmon as
threatened under the ESA and designated
the waters along the Klamath River below
Iron Gate Dam as critical habitat in 1997.
The salmon need certain minimum amounts
of water in the Klamath River to protect
stream edge habitat. The in-stream flows
along this part of the Klamath River are
necessarily controlled by the operations of
Iron Gate Dam. PacifiCorp operates Iron
Gate Dam consistent with annual operating
plans devised by the Bureau.
The Court’s Injunction Under the ESA
The Court’s injunction was the result of a
lawsuit over the needs of the threatened
Klamath coho salmon, brought by nonIndian fisherman dependant on the salmon
and a coalition of environmental groups.
Following NMFS’s listing of the salmon as
threatened under the ESA, the Bureau
became obligated to perform a biological
assessment regarding any actions that could
affect the salmon. A biological assessment
is required under section 7(c) of the ESA. If
the biological assessment concludes that
agency action is likely to have an affect on a
listed species, the Bureau must engage in
formal consultation with NMFS (as the
listing agency) regarding the proposed
action. Formal consultation is required
under section 7(a)(2) of the ESA. After
formal consultation, NMFS is required to
prepare a biological opinion stating whether
the proposed action is likely to jeopardize
the salmon.
In 1999, NMFS and the Bureau
engaged in formal consultation over the
Bureau’s 1999 Operations Plan for Iron
Gate Dam. NMFS’s resulting biological
opinion concluded that the 1999
Operations Plan would not jeopardize
Klamath coho salmon, but did require
certain minimum water flows for the
protection of the salmon. The 1999
Operations Plan and NMFS’s associated
biological opinion expired in March 2000.
After the 1999 Operations Plan expired,
the Bureau worked to create a 2000
Operations Plan. The Bureau’s efforts to
complete the 2000 Operations Plan were
complicated by projections of a dry water
year for the Klamath Basin in 2000. A dry
water year causes higher demand for
irrigation water. The Bureau proposed new
in-stream flow levels below 1999 levels, but
did not engage in formal consultation with
NMFS under the ESA to devise the 2000
Operations Plan. Rather, the Bureau
engaged in informal consultations, began
work on a biological assessment, and
Court of Appeals Extends Date for Recovering Cleanup
Costs from Insurance Carriers
By John C. Bjorkman
Businesses and
municipalities with
exposure to large
environmental cleanup
costs and property
damages arising out of
historic contamination
problems typically look to
their old comprehensive
general liability policies for insurance
coverage. In the past, these carriers have
refused to pay site investigation costs,
emergency removal costs, and the costs of
defending agency enforcement actions or
private party litigation if the insured incurred
the costs before it tendered the claim to the
carrier. In some circumstances, these costs
can be substantial and therefore the loss of
the right to a defense significant. In Griffin
v. Allstate Insurance Company, Division I
of the Washington Court of Appeals recently
clarified Washington law on this issue and
held that carriers are generally liable for
pre-tender defense costs absent either a
demonstration of prejudice resulting from
the late tender or specific contractual
defenses.
The Griffins cleared and graded a field
on their 40-acre farm for a pasture and
horse track. Their neighbors sued claiming
that in the process the Griffins had
improperly filled a stream, obstructed its
natural flow, and threatened the neighbors’
domestic water supply. The Griffins hired a
lawyer who secured a stipulated dismissal
because of defective service of process. The
neighbors re-filed their complaint and the
Griffins tendered to Allstate. The adjuster
inspected the property, conducted
interviews, and then denied both coverage
and a duty to defend. The Griffins sued
Allstate and the trial court awarded them
their defense costs but refused to award the
costs of securing the original dismissal as
the Griffins incurred those costs before
tendering the claim to Allstate.
The Court of Appeals reversed noting
that in Washington the insurer’s duty to
defend arises upon the filing of a covered
Complaint or demand against the insured,
not upon the insured’s tender of defense.
Absent a showing of actual and substantial
prejudice from the delay in tender, the
carrier will be liable for costs of defense
from the date the insured first receives the
Complaint or demand. While not at issue in
this case because of the specific language
of the policy, the Court even opined that if
the policy expressly required tender before
the duty to defend arose, the insurer would
still have to demonstrate prejudice to avoid
its defense obligation. The Court
distinguished its own 1999 decision in
Unigard Insurance v. Leven because the
carrier in that case had successfully proved
prejudice from Leven’s seven-year delay in
tendering defense.
While potentially opening the door to full
reimbursement for all defense costs, the
Court noted it will continue to apply clearly
stated contractual limitations on the defense
obligation. For example, where the policy
expressly allows the carrier to select defense
counsel (as the Griffins’ policy did), the
insured’s selection of counsel who charges
higher rates or who fails to pursue
appropriate defense strategies may
demonstrate prejudice.
Griffin represents yet another positive
development for Washington insureds
seeking insurance coverage for historical
contamination of real property. ■
Environmental and Land Use Department
Seattle
johnb@prestongates.com
The Klamath Basin Water Crisis (cont’d)
continued to gather information. The
Bureau contended that continued operation
of the Iron Gate Dam in the absence of
formal consultation was appropriate
because the Bureau was engaging in
informal consultations with NMFS over
operation of the dam. On May 31, 2000,
the plaintiff environmental groups and
fisher association filed suit alleging, among
other claims, that the Bureau was in
violation of the ESA. (Pacific Coast
Federation, 138 F. Supp. 2d at 1238.)
The Court ultimately concluded that the
Bureau violated the ESA for failing to
formally consult with NMFS over operation
of the Iron Gate Dam. The Court issued an
injunction on April 3, 2001, requiring
minimum in-stream flow levels significantly
higher than the Bureau’s previous operating
levels. (Id. at 1249-50.) The Court’s
injunction effectively gave the threatened
Klamath coho salmon first priority for
available water in the Klamath Project.
Complicating matters, the Court’s
injunction was entered as drought
conditions continued to constrain the
overall water available in the Klamath
Project.1
As a result of the Court’s injunction, the
Bureau denied water to over 150,000 acres
of normally irrigated farmland for most of
the summer. In defiance of the Court’s
order, some residents of the Klamath Basin
ultimately attempted to force open the
Bureau’s headgates in an effort to divert
water from the Klamath River onto their
fields. The situation became so tense that
armed federal agents were required to
guard key Project facilities to prevent the
diversion of water intended for the
protected salmon.
Conclusion
The ingredients of the water crisis in the
Klamath Basin are present along almost
every other heavily allocated western river
system. The Klamath Basin’s problems
bring the need for comprehensive water
management into stark relief. Absent
sustained and comprehensive efforts to
manage the competing needs and rights of
a myriad of stakeholders for an increasingly
precious resource, the Klamath Basin crisis
is only a preview of events to come along
the West’s great river systems. ■
Environmental and Land Use Department
Seattle
jgoeke@prestongates.com
1
Prior to the District Court’s decision in Pacific
Coast Federation, the Ninth Circuit had held
that the Bureau was not liable for breach of
contract for not delivering water for irrigation
purposes in the Klamath Basin as a
consequence of operating Iron Gate Dam in
compliance with the ESA. (Klamath Water
Users Protective Ass’n v. Patterson, 204 F.3d
1206 [9th Cir. 2000].) The Ninth Circuit
rejected the irrigators’ arguments that they were
third party beneficiaries under contracts
between the Bureau and PacifiCorp. (Id. at
1214.) The Ninth Circuit’s decision appears to
conflict with a recent decision from the United
States Court of Federal Claims, Tulare Lake
Basin Water Storage District, et al. v. United
States, 49 Fed. Cl. 313 (2001) holding that
the United States had taken property without
just compensation in violation of the Fifth
Amendment when the Bureau decreased the
amount of water available to irrigators to
comply with the ESA.
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