by Andrew L. Rypel
As if 2020, wasn’t completely strange enough, it wound up also being a time when Warren Buffett was plunged headlong into California water. Buffett of course is an American business tycoon – primarily an investor, and currently the 4th richest person on the planet. Although 90 years old, Buffett continues as chairman and CEO of Berkshire Hathaway – a multinational holding company headquartered in Omaha, Nebraska – Buffett’s hometown. Buffett is also a mega-philanthropist that has pledged to give away 90% of his wealth, mostly through the Bill & Melinda Gates Foundation. Thus it was with some surprise that last year Warren Buffett found himself recently embroiled in a hugely important California water issue – removal of the Klamath River dams.
The socioecological effects of dams on the Klamath River have been massive, almost uniformly negative, and ongoing. The Klamath watershed has been estimated as the third-most productive drainage on the West Coast for salmon and steelhead. Yet salmon runs declined substantially over the last century in part because dams fragment and isolate salmon from their historical upland spawning habitats (Brown et al. 1994, Hamilton et al. 2016). Other complicated ecological problems that harm salmonids persist in the basin and can vary by taxa and watershed position (Quiñones et al. 2014). Finally, climate change and certain aspects of current dam operations increase vulnerability of salmon to disease, notably C. shasta (Som et al. 2019, Lehman et al. 2020).
Indigenous peoples have disproportionately dealt with the brunt of ecological impacts from dams on the Klamath River (Most 2007, Norgaard and Reed 2010, Hormel and Nogaard 2009). Fish kills and declining salmon populations have left indigenous nations and fishers scrambling to adapt, and developing legal strategies for defending their ancestral heritage and sacred natural resources. And as if fighting legal battles for the river and salmon weren’t enough, examples abound of tribal members being harassed for hunting and fishing using traditional methods. Technicalities and cover-ups were used to arrest and harass indigenous peoples and negate fishing rights. The landmark Boldt Decision of 1974 re-affirmed the rights of indigenous people to hunt and fish using ancestral methods, and to also co-manage their fisheries with the US and its state governments. Nonetheless, various other methods and campaigns were created after the Boldt Decision to functionally invalidate tribal fishing rights. These battles mirror unsavory behavior in other inland fisheries following the Boldt Decision, such as with the walleye fishery in the Ceded Territory of Wisconsin (Nesper 2002).
Plans to remove four large hydroelectric dams along the Klamath River have been developing for some time. The genesis of the Klamath Dam removals is multi-faceted. Part of it comes from endangered species like salmon and the native Klamath River suckers having gained protective ascendancy under the law. In addition, tribes have been exercising their senior water rights, which can date back to original treaties – making tribal nation owners some of the oldest water right holders on the river. However, there is also an important business case for removing the dams. Like all dams, these four (Iron Gate, John C. Boyle and Copco Dams 1 & 2) have been ageing. And unlike fine cheeses and wines, dams tend to get worse with age – not better. For example, there are concerns about structural stability and costs to rehabilitate or retrofit them for functionality and safety in the coming century. Ultimately, to renew the operating license for the dams, PacifiCorp would have had to shell out $400M for upgrades to ensure compliance. Part of this compliance would have included installation costs for fish ladders at each of three dams for fish migration. Removing the dams would likely cost less, but the theme is the same – PacifiCorp is the major entity on the hook.
Berkshire Hathaway, under Buffett’s leadership, acquired Pacificorp in 2006 for $9.4B from Scottish Power – a UK company. And while Buffett made his name on a reputation for acquiring good companies and letting them run more or less autonomously, that is not how the Pacificorp acquisition unfolded. Rather, the day of the merger with MidAmerican (Birkshire’s energy holdings subsidiary), Pacificorp was reorganized into three separate units and an East and West Division. Almost all top managers were replaced and a top-down chain-of-command structure established to run the company in the Birkshire way. That is – using financial discipline, respecting the chain-of-command, and focusing on the bottom line. Thus, the history of Birkshire’s involvement in the Pacificorp yielded a window into how the company might approach the Klamath dams quagmire.
A 2016 accord provided hope that the removals would indeed occur. Under this agreement, Pacificorp would transfer its federal hydroelectric licenses for the dams to the Klamath River Renewal Corporation – a nonprofit coalition of stakeholders deeply invested in the project. The removal cost is estimated at $450M, so the cost is more than the $400M it would take for PacifiCorp to upgrade the infrastructure – but not much more. Under the 2016 agreement, Pacificorp customers would contribute $200M for the project while the utility would avoid additional liability costs. The additional $250M would come from a 2014 water bond approved in California.
But things got spicy again in summer of 2020. The Federal Energy Regulatory Commission (FERC) decided to approve the transfer of the FERC license from PacifiCorp to the Klamath River Renewal Corporation, but on the stipulation that PacifiCorp remain as co-licensee. FERC expressed concerns that while the new nonprofit could likely carry out the work, they would undoubtedly be faced with issues they may not be equipped to deal with. This was a game changer because it meant PacifiCorp and its rate payers, and by proxy, Berkshire, would be on the hook for liabilities from any fish kills, lawsuits, blue green algae blooms, and other issues.
Fortunately, an accord was again struck in fall of 2020 with Buffett and Berkshire. Governors Gavin Newsom (CA) and Kate Brown (OR), together with partner tribes and NGOs, pushed Berkshire and Buffett hard towards a new solution. In the new agreement, California and Oregon will sign on as co-licensees of the dams alongside the Klamath River Renewal Corporation. The stipulation is that the two states and PacifiCorp will split costs equally should the project overrun funds set aside for the project. However, the deal still requires approval of the FERC board that rejected the previous proposal, so nothing is final yet. At a press conference announcing the deal, the Chairman of the Yurok tribe, Joseph James articulated the following (watch also in video below):
“To me this is who we are. We have a free-flowing river, just as those who have come before us, and here now for those generations to come. This is a place in time for our prayers, our songs, our dances, our ceremonies which will continue with more water and more fish. Our ecosystem will continue to heal and provide substance to all of us. We are connected with our heart and our prayers to these creeks, lands, animals, and our way of life will thrive with these dams being out. We’ll be able to have salmon and our traditional food once again because there is no other place than our villages and sense of place than along the Klamath River. I’d also like to highlight and discuss who we are. We’re a prayer people. We’re traditional people. We’re a natural resource tribe. It is our duty and our oath to bring balance to the river. In this effort, it is fulfilling that duty.”
The Berkshire Energy Chair Greg Abel later commented that “It was an honor to be there for the important milestone, which underscored his company’s commitment to “economic, social and racial justice.”
As is often the case, the road to water policy change in California has been long and winding. Some have pointed out that the deal isn’t perfect, claiming that the new deal struck is a bad one for California and Oregon taxpayers that are now on the hook for costs and liability. The dam removals also cut into the capacity to have a more reliable source of energy available for an ailing electric power grid. However, the Klamath dams are an example of what it takes to build real solutions for complex water problems. Critical decisions that were difficult to predict threw wrenches into already complicated processes. There will be more detours and problems in the coming years. Stakes are high. Patience is essential. Compromises were made. Yet culture, economics, politics, and ecology collide to pave and sometimes divert the road towards something quite special in California – this should be celebrated. The solution struck seems reasonable and ensures the Klamath River will finally have a chance to recover. We hope to provide more blogs on the Klamath dam removals and related Klamath basin topics in the coming years.
Brown, L. R., P. B. Moyle, and R. M. Yoshiyama. 1994. Historical decline and current status of coho salmon in California. North American Journal of Fisheries Management 14(2):237-261.
Hamilton, J. B., D. W. Rondorf, W. R. Tinniswood, R. J. Leary, T. Mayer, C. Gavette, and L. A. Casal. 2016. The persistence and characteristics of Chinook salmon migrations to the upper Klamath river prior to exclusion by dams. Oregon Historical Quarterly 117(3):326-377.
Hormel, L. M., and K. M. Norgaard. 2009. Bring the salmon home! Karuk challenges to capitalist incorporation. Critical Sociology 35(3):343-366.
Lehman, B., R. C. Johnson, M. Adkison, O. T. Burgess, R. E. Connon, N. A. Fangue, J. S. Foott, S. L. Hallett, B. Martinez–López, and K. M. Miller. 2020. Disease in Central Valley Salmon: Status and Lessons from Other Systems. San Francisco Estuary and Watershed Science 18(3).
Most, S. 2007. Salmon people: crisis and continuity at the mouth of the Klamath. California History 84(3):5-22.
Nesper, L. 2002. The Walleye War: The Struggle for Ojibwe Spearfishing and Treaty Rights. University of Nebraska Press, Lincoln, Nebraska USA.
Norgaard, K. M., and R. Reed. 2010. Salmon Feeds Our People: Challenging Dams on the Klamath River. Conservation International.
Quiñones, R. M., M. Holyoak, M. L. Johnson, and P. B. Moyle. 2014. Potential factors affecting survival differ by run-timing and location: linear mixed-effects models of pacific salmonids (Oncorhynchus spp.) in the Klamath River, California. PloS One 9(5):e98392.
Som, N. A., N. J. Hetrick, R. Perry, and J. D. Alexander. 2019. Estimating annual Ceratonova shasta mortality rates in juvenile Scott and Shasta River coho salmon that enter the Klamath River mainstem. U.S. Fish and Wildlife Service, Technical Report.