3. Decision-Making Processes

Question No. 1 posed by the Commission: How were decisions made?

3.1 Historical Conditions Prior to Development

3.2 Early Interest in Dam Construction

3.3 Major Studies Leading to Construction of Grand Coulee Dam

3.4 Roosevelt's Decision to Support Grand Coulee Dam

3.5 An Act to Prevent Land Speculation

3.6 Influence of World War II

3.7 Columbia Basin Joint Investigations

3.8 Columbia Basin Project Act of 1943

3.9 Columbia River Treaty and Pacific Northwest Co-ordination Agreement

3.10 Northwest Power Planning Council

3.11 System Operation Review

3.12 Issues To Be Addressed

3.1 Historical Conditions Prior to Development

Before extensive non-native settlement and development efforts began in the basin, several Native American tribes largely populated the area. The basis of these tribes' livelihoods and cultures was anadromous fish, particularly salmon. The spring, summer, and fall runs of salmon and steelhead trout from the Pacific Ocean to ancestral spawning grounds in the riverbeds were enormously productive. Some fish caught were as large as 125 pounds and 5 feet long. Prior to extensive water resources development, this river was one of the most productive salmon regions in the world, with annual runs of fish ranging from 10 to 16 million. The fish populations supported a number of Native American villages.

Beginning in the 1840s, thousands of American immigrants followed the Oregon Trail to the Columbia Gorge, and then eventually settled in Oregon's Willamette Valley. Over time, migration into the area continued and the settlers needed a large area of land. In 1855, Native American Indian tribes, most notably the Umatilla, Nez Perce, Warm Springs, and Yakima, were forced to sign treaties ceding most of their traditional lands to the U.S. government. The reservation land that they were left with was located far from the river. From the mid- to late 1880s, settlement continued to increase, as did industrial development in the form of commercial fisheries, water transport, and railroads.

During the late 1800s, the commercial fishing industry was at its height, and with the development of food processing technology, canning salmon became a dominant regional industry. In the late 1880s and 1890s, the adverse effects of over-harvesting, mining, logging, and farmer practices were recognised as contributing to declining harvests of fish; however, annual yields still remained relatively high. After peaking in the mid-1880s, catch levels began dropping. The 1920s and 1930s pronounced declines in yields.

Many settlers who arrived in the Pacific Northwest in the 1870s and 1880s had previously led agrarian lifestyles. The climate and soil characteristics of the basin were quite different from the areas they had left. Settlers took to raising cattle, sheep, and wheat. By the late 1880s, wheat had become the primary crop, but it could only grow in areas of the basin that received adequate amounts of rainfall. From 1910 to 1930, the number of farms in the region declined. Depending on the year, farmers often suffered water shortages and crop yields fluctuated. Agricultural activity was increasing, however, in places where small irrigation projects had been successfully implemented. Irrigation was widely viewed as the key to settlement, but most private attempts at irrigation failed. Increasingly, settlers on the Columbia plateau urged both the state and federal governments to establish irrigation and thereby promote settlement of the area. Regional leaders had ambitions to "make the desert bloom" by irrigating the basin's predominantly arid land.

3.2 Early Interest in Dam Construction

The federal government had the authority to provide irrigation to farmers in the West under the Reclamation Act of 1902, a statute that set the stage for creating the Reclamation Service (within the U.S. Geological Survey), which later became the Bureau of Reclamation. Notwithstanding the existence of the Reclamation Act of 1902, Senators and Congressmen in eastern states resisted having the federal government provide subsidised irrigation water to western farmers. These legislators argued that the U.S. already had agricultural outputs sufficient to meet national needs. They also worried about the competition from western farms supported by government irrigation projects, and about the effects of increased agricultural outputs on prices.

Although the Reclamation Service looked at the possibility of developing an irrigation project in eastern Washington as early as 1904, it was discouraged by estimates indicating a relatively high cost per irrigated acre. The Reclamation Service had reason to be cautious, since many farmers receiving government-subsidised irrigation water under the Reclamation Act of 1902 were going broke. Reclamation experienced difficulty obtaining repayments from farmers on many of the initial projects, and this led Congress (in 1914) to extend the period that farmers had to repay their debt to the Reclamation Service from ten to twenty years. Indeed, throughout the first two decades of the 20th century, western farmers defaulted on millions of dollars in irrigation securities, and dozens of irrigation districts in Washington faced bankruptcy.

During the time the Reclamation Service was doing its early studies of irrigation projects in the Columbia River basin, the U.S. Army Corps of Engineers (referred to herein as "the Corps") was conducting its own, independent investigations. The Corps studies emphasised navigation and hydroelectric power production. Engineers working for the Corps concluded that commercial demand for navigation would not be sufficient to justify Corps' projects on the Columbia. In their view, any dams on the Columbia would have to be primarily for power production.

3.3 Major Studies Leading to Construction of Grand Coulee Dam

Both the Corps and the Reclamation Service (later the Bureau of Reclamation) maintained independent interests in developing projects on the Columbia through the mid-1920s, but those interests were not very active. A turning point occurred when Congress passed the Rivers and Harbours Act of 1925, which authorised the Corps and the Federal Power Commission to conduct surveys of navigable streams with potential power sites. These surveys resulted in House Document No. 308 (69th Congress, 1st session), which is the first of the so-called "308 reports." House Document No. 308 called for detailed studies of many rivers, including the Columbia. The Corps commenced a detailed investigation of navigation, hydroelectric power, irrigation, and flood control on the Columbia in 1928. It assigned Major John Butler, the District Engineer in the Corp's Seattle office, to investigate the portion of the Columbia upstream of its confluence with the Snake River. Part of Butler's study involved core drilling in 1929 around what eventually became the Grand Coulee Dam.

Shortly before Major Butler began conducting studies of a dam at the Grand Coulee, Reclamation had been engaged in its own study of a Columbia River basin irrigation project. At the time, however, Reclamation's major attention was directed at the Boulder Project on the Colorado River (i.e., what is now the Hoover Dam). Reclamation's study of the Columbia Basin Project (which had been authorised by a 1923 Congressional act creating a Federal Columbia Basin Commission) led to a 1925 report that convinced both the Bureau of Reclamation and the administration of Calvin Coolidge to hold back on a Columbia Basin irrigation project because of technical and financial impediments. Reclamation's interest in the irrigation project revived after results of Major Butler's investigation were made public in 1931, and it became reasonable to suppose that power revenues could pay for part of the relatively high irrigation costs.

The report prepared by Major Butler concentrated on four project purposes: navigation, power, flood control, and irrigation. Interestingly, navigation was viewed as a non-benefit, since the proposed Grand Coulee Dam would cut off the possibility of commercial traffic to Canada. In terms of irrigation, the Butler report described possible benefits in terms of expected farm production and its economic value; it also described expected changes in land prices. Since a formal benefit-cost analysis was not required for federal water projects until 1936, Major Butler made no mention of expected monetary benefits as that term is used today.

Major Butler's voluminous report, which was published by Congress in 1932 (House Document No. 103, 73rd Congress) emphasised that power revenues from a dam at the Grand Coulee would have to be used to offset the cost of irrigation. The Bureau of Reclamation endorsed the Butler report and maintained that Reclamation also favoured irrigation using water stored at Grand Coulee Dam and funded by revenue from hydropower. In 1932, Reclamation submitted to Congress a report that endorsed the Corps' proposal for a large dam at the Grand Coulee, along with hydroelectric facilities, and various irrigation canals and drainage works.

The Army Corps of Engineers and the Bureau of Reclamation had reconciled differences in their independent reports in 1931, and both agencies agreed that the proposed project would completely pay for itself in 60 to 90 years. Although the Corps report played the central role in establishing the feasibility of a dam at the Grand Coulee, it did not provide details on who should build the project, when it should be built, or how it should be paid for. Herbert Hoover, who was president at the time the reports by Reclamation and the Corps were released, was determined to balance the budget as a way of responding to the financial depression that had followed the stock market crash in October, 1929. Thus, Hoover offered no funds for the proposed project.

3.4 Roosevelt's Decision to Support Grand Coulee Dam

The election of Franklin Delano Roosevelt (FDR) in 1932 changed the fate of the proposed Grand Coulee Dam. FDR was convinced that the way to revive the economy and get people back to work was to build large, public infrastructure projects. Roosevelt was particularly interested in projects in the Columbia Basin that would generate inexpensive power, because he was intent on having the price of public power serve as a yardstick for gauging the cost of private power. FDR's first commitment in the Columbia River basin was for a hydroelectric power plant at the so-called Warrendale/Bonneville site just east of Portland, Oregon. Supporters of the Grand Coulee Dam urged Roosevelt to spend $400 million to build the Columbia Basin Project advocated by Reclamation. (The Corps had since reversed itself on the immediate desirability of the Grand Coulee Dam, and this allowed Reclamation to promote the dam without competition from the Corps.)

Because of concerns about the region's ability to use all the power from the Bonneville project, and because of the high cost of Reclamation's proposed Columbia Basin Project, FDR eventually endorsed only a low dam at the Grand Coulee, one that would be used primarily for hydropower production. On July 27, 1933, the Public Works Board appropriated the $63 million needed to build the low dam. (This action was taken using authorities contained in the National Industrial Recovery Act of June 16, 1933.) While the low dam was a disappointment to Reclamation and various agricultural interests in eastern Washington, it was a start. On November 1, 1933, Secretary of the Interior Harold L. Ickes (as Administrator of Public Works) announced that the Grand Coulee Dam project would be constructed, operated and maintained by Reclamation, and that revenues would repay the project cost from hydroelectric power. Soon thereafter, Reclamation announced plans to build a low dam with strength adequate to serve as a foundation for a high dam and the full-blown Columbia Basin irrigation project that it had detailed a few years earlier.

By 1935, Roosevelt was convinced that a high dam at the Grand Coulee could meet his administration's goals of providing relief to unemployed workers, cheap public power, and a planned relocation of farmers who were struggling to eke out a living on poor farm lands in other parts of the county. Although Roosevelt attempted to have the high dam at the Grand Coulee paid for using Public Works Administration funds (thereby short-circuiting the congressional authorisation process); a Supreme Court decision in 1935 forced a change in plans. Based on the Court's decision, the Roosevelt administration moved to have the high dam at the Grand Coulee, along with numerous other dams, authorised by Congress in the Rivers and Harbours Act of 1935 (Public Law No. 409, 74th Congress).

In the 1935 Rivers and Harbours Act, Congress authorised the Grand Coulee Dam for purposes of flood control, navigation, stream flow regulation, storage for and delivery of stored waters, and reclamation of public lands and Indian reservations. The generation of electric energy was to be used "as a means of financially aiding and assisting such undertakings." This statute moved the Grand Coulee Dam project from a New Deal relief measure to a full-fledged national project.

Issues concerning the use of electricity generated at Grand Coulee Dam (and Bonneville Dam) were addressed a few years later. As Grand Coulee and Bonneville were being constructed, Congress debated a number of bills concerning the marketing and distribution of electricity from federal dams on the Columbia. In the end, the Congress decided to create the Bonneville Project to market and distribute the hydroelectric power output from Bonneville Dam, with preference given to public customers. When it was created in 1937, the Bonneville Project was intended to be a provisional entity tied to Bonneville Dam, but it soon lost its temporary status and took on a new name (i.e., Bonneville Power Administration, BPA). This re-named organisation had authority that extended to the Grand Coulee Dam and other federal dams on the Columbia.

Although recreation was not among the authorised project purposes, Reclamation realised that the public had enormous interest in visiting the project site at the Grand Coulee. Thus, as early as 1936, Reclamation had constructed parking lots and grandstands at vista points on each side of the Columbia. It provided places for some of the 40,000 visitors each month to listen to guides interpret various dam-related activities.

3.5 An Act to Prevent Land Speculation

The Roosevelt administration was very concerned that as word of the irrigation project linked to Grand Coulee Dam spread, individuals would buy up land with hopes that land prices would rise and windfall profits could be made by selling at inflated prices. In response, the Interior Department sponsored the Anti-Speculation Act, which was passed by Congress on May 27, 1937. This statute limited each project farm in the Columbia Basin Project to forty acres for an individual, and eighty acres for a husband and wife. Holders of land exceeding those limits could sell their land, but only after the government appraised the land based on its value before irrigation water had been delivered. The price for excess holdings had to be set at or below this appraised value.

In recognition of the continuing difficulties that farmers had in paying their debts to the Bureau of Reclamation, the Reclamation Act of 1939 granted irrigators on new projects a ten-year grace period before having to start what was, by then, a forty year repayment schedule with an interest rate of zero. The Anti-Speculation Act passed two years earlier also contained provisions concerning repayment: 1) some Columbia Basin Project costs could be charged off to flood control and navigation, and 2) farmer's obligations were to be based on their ability to repay, rather than actual construction costs.

3.6 Influence of World War II

Soon after the Grand Coulee Dam was completed, the U.S. entered World War II, and this had a number of implications for the Columbia Basin Project:

1. Aluminium manufacturing was of central importance to supplying the U.S. aeroplanes used in World War II, and many aluminium smelters were located in the Pacific Northwest because of the availability of large quantities of low-cost power from the Bonneville Dam and the Grand Coulee Dam. There was an immediate demand for low-cost electric power because aluminium smelting required enormous quantities of electricity.
2. The "atomic reservation" at Hanford, Washington, a secret facility built to produce plutonium, requested sizeable blocks of power from Bonneville Dam and Grand Coulee Dam.
3. The industrial activity that was created around the aluminium and aeroplane industries in the Pacific Northwest led to the creation of cities and an industrial base at a rate that was much greater than anyone could have anticipated.
4. The war effort led to postponement of some project features. For example, the full complement of 18 generators was only completed after World War II was over, and most plans for irrigation were put off until after the war.

3.7 Columbia Basin Joint Investigations

During the war years, planning for the irrigation of over one million acres within the Columbia Basin Project began in earnest. The Reclamation Act of 1939 required that Reclamation develop its irrigation projects in an orderly way by dividing them into blocks, each with a fixed number of units. The law, which applied directly to the Columbia Basin Project, called for the kind of orderly and systematic planning advocated by New Deal leaders.

As part of this orderly planning process, the Columbia Basin Joint Investigations were launched. These studies explored twenty-eight potential problems related to the Columbia Basin irrigation project. During the 1941-43 period, over 300 people representing about forty agencies as well as private sector organisations (e.g., railroads and chambers of commerce) pursued questions, such as the following:

• What types of crops and crop programs are best suited to the project area?
• How can excessive uses of irrigation water be prevented?
• What is the optimum size of farm units, and how should farm units be laid out?
• Should downstream activities, such as power projects downstream of the Grand Coulee Dam, and Columbia River navigation, be assigned an "equitable share" of the cost of the dam? (This would reduce the share of joint costs assigned to irrigation works).
• At what annual rate should lands be brought into the project?
• How many new villages should be created, how should they be designed, and where should they be located?
• What other infrastructure services (e.g., roads, railroads, and electricity), recreational resources, community centres, and so forth, were required for the area?

3.8 Columbia Basin Project Act of 1943

The Columbia Basin Joint Investigations provided the basis for the Columbia Basin Project Act, which Congress passed in 1943, and then soon amended (in response to settlers concerns about the authority granted to the federal government). This law and its amended version (signed on March 10, 1943), was sponsored by the Bureau of Reclamation and the Interior Department, and it replaced the Anti-Speculation Act of 1937. The Act also reauthorizes the Columbia Basin Project and brought it under provisions of the Reclamation Act of 1939.

The Columbia Basin Project Act stipulated that the government could not deliver water until contracts were signed by Reclamation and irrigation districts. (By 1943, three irrigation districts had been formed in the project area: Quincy, South, and East districts.) Significantly, the Columbia Basin Project Act allowed farm units to range in size from ten to 160 acres, depending on land quality, and it allowed owners of record before 1937 to retain up to 160 acres regardless of the quality of their land.

Speculation was controlled with the following provision: for five years after irrigation water first arrived, a farm owner could not sell land for more than the value of the land before water had been provided. The shift in the maximum size of holdings from 80 acres (in 1937) to 160 acres (in 1943) was the beginning of a trend toward increasingly larger land holdings that continued over many decades.

3.9 Columbia River Treaty and Pacific Northwest Co-ordination Agreement

We are grateful to Tim Newton, Vice President of Marketing for Powerex in British Columbia for his contributions to this section.

In the period immediately following the end of World War II, the Pacific Northwest experienced a region-wide power shortage that led to discussions of how best to increase the generating capacity of the Grand Coulee Dam. The key to increased power was an augmentation in upstream storage capacity. Expanded upstream storage could be used to capture excess flow during wet periods and make it available during periods when the river lacked sufficient flow to turn on all the generators at the dam. The expanded storage would also made it possible to store more water in Canada when demand for electric power was low and make that water available to produce power at the Grand Coulee Dam when the demand for power in the U.S. was high. Thus, the treaty produces benefits through two mechanisms: 1) avoiding spill during wet weather, and 2) shifting power production to periods when demand is greatest.

Since most of the Columbia River upstream of the Grand Coulee Dam is in Canada, the task of exploring possibilities for upstream storage fell to the International Joint Commission, which created an International Columbia River Engineering Board (composed of two members from each county) to analyse the situation. Work on the upstream storage issue progressed slowly, as the U.S. and Canada differed on how much the U.S. should compensate Canada for the increased water that would be supplied to generators in the U.S. Canada also sought compensation for the considerable reduction in flood damages that would result from storing wet-weather flows in Canada.

Key Provisions of the Treaty
After nearly two decades of study and negotiations, the Columbia River Treaty and Protocol were signed on January 17, 1961 by the president of the United States and the Prime Minister of Canada. The treaty and its associated protocol came into force on September 16, 1964, when both documents were ratified by an exchange of diplomatic notes. The treaty included provisions for the following:

• Canada would complete Duncan Dam by 1968, Arrow Lakes (later named High Keenleyside Dam) in 1969, and Mica Creek Dam in 1973 to provide a total of 15.5 million acre feet (MAF) of treaty storage.
• To compensate Canada for paying for all costs of the Canadian dams Canada would be entitled to receive half the additional power and flood control benefits produced downstream in the United States at generating plants paid for (or to be paid for) by the U.S.
• Canada and the U.S. agreed to plan the entire Columbia River Basin to produce flood control benefits and optimum hydropower production. Unless agreed otherwise, optimum hydropower would be calculated using the power produced in both countries.
• The U.S. would only be required to consider optimum hydropower generating capacity calculating the Canadian Entitlement. The U.S. would not be required to actually operate the projects in accordance with plans for optimum power. Canada must operate Canadian Treaty storage in accordance with plans for optimum power.
• The treaty permitted the parties to agree to any operation that produced benefits to both parties.
• The treaty allowed the U.S. to build Libby Dam in Montana and flood the associated land in Canada.

When the treaty was implemented, the Canadian province of British Columbia, which had accepted the treaty benefits and obligations on behalf of Canada, decided to build projects on both the Peace River in northern British Columbia, and those required on the Columbia River at the same time. Since there was no immediate need for all this power, British Columbia elected to sell the Canadian Entitlement for the first 30 years of each project, and negotiated a power sale with a consortium of companies in the U.S. This sale specified full payment up front, and British Columbia used this payment to pay for a significant portion of the construction of the treaty dams.

The Columbia River Treaty had specific plans for only two water uses: hydropower and flood control. The central idea was to use upstream storage to change the shape of the Columbia River's hydrograph: the magnitude of the peak flows, which typically occur in May and June, were to be reduced, while the relatively low flows occurring in fall and winter were to be increased. With a more uniform flow regime, more power could be generated and the risk of flood damage could be reduced. Three agencies were charged with implementing the Columbia River Treaty-British Columbia Hydro, Bonneville Power Administration, and the U.S. Army Corps of Engineers.

The provision of the treaty that states: "The Treaty permits the parties to agree to any real operation that produces benefits to both parties." provides a good deal of flexibility in implementation. The main requirements of joint operations are that agreement between the two nations is required and that both parties benefit. This condition has sometimes been interpreted to mean accommodating water quality enhancements and other uses aside from hydropower and flood control cannot take place unless payment are made by beneficiaries of these other uses. However, this view is not necessarily true. In fact, there are many examples in which Canada and the U.S. have agreed to an operation for fish, and both countries have lost small amounts of hydropower. In these cases, agreement was reached because both parties considered the modest hydropower loss to be more than offset by the other benefits of the revised operation. Flood control is still considered to be primary, and flood control operations are not modified for other project purposes, including hydropower.

Pacific Northwest Co-ordination Agreement
The co-operation in river operations envisioned by the Columbia River Treaty is reflected in a 1964 accord called the Pacific Northwest Co-ordination Agreement, which continues to govern power operations on the Columbia. Parties to the agreement included the U.S. Army Corps of Engineers, the Bonneville Power Administration, and the region's utilities. The agreement is founded on the notion that the Columbia River power system is connected in terms of both hydraulics and electric power: upstream storage influences downstream hydroelectric power generation. By co-ordinating operations of dams as if they were owned by a single organisation, the overall benefits to co-operating parties can be much greater than if each party operated as an independent, self-optimising entity.

The Pacific Northwest Co-ordination Agreement defines "firm power" by assuming that flows will be at the lowest level recorded in the past half century. These flows are translated into firm power projections used in meeting each party's obligations. Each year, an Annual Operating Plan is drawn up for the entire Columbia River basin, and the parties' co-ordinate their operations to maximise power production after satisfying non-power water uses. The Agreement also includes provisions concerning payments for upstream water releases that benefit downstream generators and compensation (in the form of "in lieu" energy payments) when water held at one dam decreases energy generation at a downstream dam.

3.10 Northwest Power Planning Council

Beginning in the 1970s, the U.S. Congress began enacting legislation that would, directly or indirectly, have significant consequences for how the Grand Coulee Dam and other dams in the Columbia River Basin would be operated. One of these laws, the Northwest Power Act of 1980 (Public Law 501, 96th Congress) required that planning for the energy future of the Pacific Northwest involve public participation in a process that considered the full environmental and economic cost of energy alternatives. The Act also required establishment of a fish and wildlife program based on recommendations of the region's fish and wildlife agencies, Indian tribes and others.

Planning under the Northwest Power Act was to be guided by the Northwest Power Planning Council, composed of representatives from the states in the Northwest. The Act requires that the Council's program for offsetting the effects of dams on salmon and other fish and wildlife populations be financed by BPA hydropower revenues and by the federal agencies controlling the dams producing hydropower.

3.11 System Operation Review

Bonneville Power Administration, the U.S. Army Corps of Engineers, and the U.S. Bureau of Reclamation operate what is known as the Federal Columbia River Power System (i.e., the Grand Coulee Dam plus thirteen other federal dams that dominate in hydroelectric power production on the Columbia and Lower Snake rivers). During the 1990s, these three agencies teamed up to use the environmental impact statement process (established by the National Environmental Policy Act of 1969) to develop a "system operating strategy" for the co-ordinated operation of the Federal Columbia River Power System. This process, called the System Operation Review, was also to be used as a means for examining issues tied to a new Pacific Northwest Co-ordination Agreement (since the original will expire in 2003), and a new Canadian entitlement agreement. (The original Canadian Entitlement Allocation Agreement, which concerns power that Canada agreed to sell the U.S. when the Columbia River Treaty and Protocol was signed in 1964, will expire in 2003.)

Notwithstanding the multiple goals of the System Operation Review, issues related to salmon habitat began to overshadow the review process as the prospect increased that certain species of salmon would become listed as an endangered species under the Endangered Species Act. According to one knowledgeable observer, the System Operation Review "allowed the federal agencies to play a much more constructive role in the salmon debates than they would have otherwise" (Volkman, 1997: 83).

3.12 Issues To Be Addressed

1. Describe processes for making key decisions by reviewing historical records and conducting interviews as appropriate. We will consider how various interest groups, including Native Americans, participated in decision making. For some key issues, we will also analyse how and why certain decisions were made. This part of the study will concentrate on the following: the federal decision to authorise the low dam at Grand Coulee; the shift from the low dam to the high dam; the decision to construct the Third Powerplant; the decision not to include irrigate CBP "second half" lands; and the fish mitigation plan associated with the construction of the Grand Coulee Dam.