'A Moment of Opportunity' 

A multi-county, regional coalition of organizations bidding to take over Pacific Gas and Electric Co.'s Potter Valley Project didn't get what it was asking for, but some believe that may be a good thing for the Eel River and the fish that depend on it.

The Federal Energy Regulatory Commission (FERC) on Sept. 23 rejected a request from the Two Basin Partnership — a budding group that includes the counties of Humboldt and Mendocino, the nonprofit CalTrout, the Sonoma County Water Agency, the Mendocino County Inland Water and Power Commission and the Round Valley Indian Tribes — that sought more time to form a singular entity to take over the project from PG&E with an operating agreement that would benefit both Eel River and Russian River basin interests. On the surface, the ruling seemed to derail a years-long effort — spearheaded in large part by North Coast Congressmember Jared Huffman — to forge what's been dubbed the Two Basin Solution to advance fish restoration efforts on the Eel River while still diverting some of its water to communities to the south which have come to depend on it. But there's also reason to believe FERC's decision will actually serve to fast-track efforts to find a viable solution, one that brings increased flows and improved water quality to the Eel River and its beleaguered fish populations.

"We always knew that this would be a major challenge," Huffman said in a Sept. 23 press release. "Today's ruling by FERC is just a new chapter in seeking a Two Basin Solution, and I am committed to doing the hard work needed to achieve that end. This partnership and the stakeholders in the Eel and Russian river basins are strong and ready to take on this new challenge."

While years of drought and dwindling salmon and steelhead populations have shifted the focus to water, the Potter Valley Project at its core is about electricity. In 1900, the Eel River Power and Irrigation Co. began construction on Cape Horn Dam on the Eel River about four miles north of the town of Potter Valley, creating the van Arsdale Reservoir, as well as a one-mile tunnel that sent Eel River water down hill through a powerhouse before releasing it to the East Fork Russian River. But natural flows in the Eel River only allowed the project to operate in winter months, so the power company in 1920 began constructing a second, larger dam about 12 miles upriver from Cape Horn. Scott Dam, which formed Lake Pillsbury, created enough water storage capacity to control flows leading to Cape Horn, allowing the power company to generate electricity year-round. Recent decades, however, have seen endangered species protections obligate PG&E to keep more water in the Eel River. And the less water that gets diverted, the less electricity the project generates, making it less profitable to the company.

So a century after its construction, PG&E is looking to rid itself of the Potter Valley Project altogether and after trying unsuccessfully to sell it off, announced in January of 2019 that it would instead simply look to surrender its license, likely leading to its decommissioning.

Thus launched the Two Basin Partnership as a divergent group of stakeholders looked to band together to control their own interests, whether they be fishery restoration or continued water diversions.

"For the past couple of years, we've been trying to do all the studies, figure out how all this would really work and how it would be managed," Craig Tucker, a project consultant for the county of Humboldt, told the Journal, explaining that the parties agreed on a basic framework that would remove Scott Dam — which blocks 100 miles of salmon and and steelhead spawning grounds and he dubbed "the biggest problem for fish" — and shift water diversions to winter months, when they would be less impactful on fish populations. "That was the concept."

The trip line is that FERC requires a host of costly environmental studies for a license transfer application and the Two Basin Partnership was unable to come up with the estimated $18 million needed for the process. And time is running out, as PG&E's project license expires in April. FERC had already waived application timelines to allow the partnership to submit an application by the date of the license's expiration but it still needed more time and, on Sept. 2, asked for another extension. Not everyone was on board with the request.

A week later, Friends of the Eel River (FOER) issued a press release stating that while it had supported the Two Basin effort up to that point, it had become evident to the environmental nonprofit that partnership's re-licensing efforts would not succeed. As such, FOER had come to believe the license surrender and decommissioning process would be the "surest and quickest" way to get the dams removed.

"Eel River fisheries are in crisis," FOER Executive Director Alicia Hamann said in a press release. "The project operations jeopardize the continued survival of Eel River Chinook salmon and steelhead, which are both listed under federal Endangered Species Act as threatened."

Removal of Scott Dam is essential if Northern California summer steelhead, listed as endangered by the state of California, "have any real hope of recovery," the press release contended, urging the Two Basin Partnership to withdraw its notice of intent to relicense the project.

While the partnership hasn't withdrawn its notice — Tucker says the group has yet to meet to officially discuss FERC's Sept. 23 decision and next steps — it seems clear the partnership's efforts to form a new regional entity to take over the dams' license are doomed.

"We simply don't have the time or the money needed to do the license application," Tucker said. "I think we'll be forced to contemplate how this partnership can interact with PG&E in the surrender scenario."

But the coalition remains, as Huffman indicated, and its focus will now likely shift to how it can achieve something resembling its Two Basin Solution through PG&E's license surrender and decommissioning process.

One possible scenario would be the creation of a new entity that would own and operate Cape Horn Dam and its water diversion apparatus, but that would likely require rights for that entity to sell the water to Russian River Basin interests in order to pay infrastructure and operational costs, and the willingness of those receiving Eel River water to pay for it.

Tucker said there remains "a lot of motivation" to address what is now a regional water crisis, noting that the South Fork Eel River recently ran dry before its confluence with the river's main stem for the first time in history, that the main stem looks "pretty awful" and some Russian River communities are already relying on bottled water.

"I do think the parties will stick together," he said. "If you've got a regional coalition, that's what you need to be able to ask for federal and state dollars. The only way to solve big problems is to have big, diverse coalitions. ... I do think there's a big opportunity here. Whenever a dam license expires, it is a moment of opportunity to make some change for the better."

Thadeus Greenson (he/him) is the Journal’s news editor. Reach him at 442-1400, extension 321, or [email protected]. Follow him on Twitter @thadeusgreenson.