ATTACHMENT A THE DEPARTMENT OF THE INTERIOR’S PRELIMINARY CONDITIONS, PRESCRIPTIONS, AND RECOMMENDATIONS FILED PURSUANT TO SECTIONS 4(e), 18, 10(j), AND 10(a) OF THE FEDERAL POWER ACT WITH THE FEDERAL ENERGY REGULATORY COMMISSION FOR THE SPOKANE RIVER HYDROELECTRIC PROJECT AND POST FALLS HYDROELECTRIC DEVELOPMENT SPOKANE RIVER, IDAHO AND WASHINGTON I. INTRODUCTION The United States Department of the Interior (ADepartment@), including its component agencies the Bureau of Indian Affairs, the U.S. Fish and Wildlife Service, the National Park Service, the Bureau of Land Management, and the Bureau of Reclamation, is a party to the relicensing of the Spokane River Hydroelectric Project, FERC No. 2545-091, including the Post Falls Hydroelectric Development, FERC No. 12606-000 (Project). The Department has reviewed the Federal Energy Regulatory Commission=s (“Commission@) Notice of Application Ready for Comments, Recommendations, Terms and Conditions, and Prescriptions for the Project, located on the Spokane River in Idaho and Washington. The deadline for filing comments, recommendations, terms and conditions, and prescriptions with the Commission is July 17, 2006. As outlined in detail below, the Department has numerous concerns associated with the Project=s continuing direct and indirect effects on fish and wildlife in and around the Project area, as well as the Project=s continuing direct and indirect effects on the natural, cultural, and recreational resources of the Coeur d’Alene Indian Reservation (Reservation). Pursuant to its authorities and responsibilities under sections 4(e), 18, 10(j), and 10(a) of the Federal Power Act (FPA), the Department has developed preliminary conditions, prescriptions, and recommendations that address these concerns. In this document, the Department identifies and explains these conditions, prescriptions, and recommendations, as well as their legal and evidentiary basis. The Department does not intend to object to issuance of a new license for the Project, provided its recommendations, terms and conditions, and prescriptions are incorporated into the new license. The Department, however, reserves the right and opportunity to amend, modify or add to these recommendations, terms and conditions, and prescriptions herein if resource conditions change, Project plans are altered, or new information is developed. A. Project Description The Spokane River Hydroelectric Project, including the Post Falls Hydroelectric Development (HED), is located on the Spokane River in portions of Steven and Lincoln counties in Washington and portions of Kootenai and Benewah counties in Idaho. The current license for the Project expires in August 2007. The Project is composed of five 1 hydroelectric developments which together have an installed capacity of 137.67 megawatts. Post Falls HED, the most upstream of the developments, is located on the Spokane River at river mile 102, approximately 9 miles downstream of its headwaters at Lake Coeur d’Alene. Post Falls HED impounds the 9 miles of the Spokane River upstream, and controls the water levels in Lake Coeur d’Alene for six to seven months of each year. Post Falls HED creates an operating reservoir that encompasses Lake Coeur d’Alene, the lower portions of the St. Joe, St. Maries and Coeur d’Alene Rivers in Idaho, and the portion of the Spokane River between the lake outlet and the dam. The reservoir has a useable storage capacity of approximately 223,100 acre-feet. Post Falls HED includes three dams (north channel, middle channel and south channel), spillways along the top of the north and south channel dams, six penstocks, and a powerhouse integral to the middle channel. It has a total nameplate capacity of 14.75 megawatts. Upper Falls HED is located downstream of Post Falls HED at river mile 74.2 in downtown Spokane, Washington. It creates a reservoir with a volume of 800 acre-feet and consists of two dams, a penstock and a single-unit powerhouse with a total nameplate capacity of 10 megawatts. Monroe Street HED is located just downstream of Upper Falls HED at river mile 74. It creates a 30 acre-foot reservoir, consists of a single, concrete gravity dam and has a single-unit powerhouse with a generator nameplate capacity of 14.82 megawatts. Nine Mile HED is located on the Spokane River at river mile 58. It consists of a single dam and associated powerhouse with a nameplate capacity of 26.4 megawatts. Long Lake HED is located approximately 24 miles downstream of Nine Mile HED. It creates a 23.5-mile-long reservoir (Lake Spokane) with a storage capacity of 105,080 acre-feet. Long Lake HED is a storage-type facility and consists of a 213-foot high main dam, a cutoff dam, four intake structures integral to the main dam, three penstocks and a powerhouse with four turbines and a total nameplate capacity of 71.7 megawatts. B. Licensing history The Spokane River Hydroelectric Project consists of five HEDs that were originally constructed between 1889 and 1922. When Post Falls HED, the dam located just nine miles downstream of the headwaters of the Spokane River at Lake Coeur d’Alene, was completed in 1906, nearly 6,000 acres of land on the Coeur d’Alene Indian Reservation were inundated. Until 1965, these HEDs were unlicensed. In 1965, Avista Utilities (Avista) filed an application with the Federal Energy Regulatory Commission (Commission) to license four of the Project HEDs (Upper Falls, Monroe Street, Nine Mile and Long Lake). In the application, Avista contended that the Post Falls HED was exempt from licensing. In August 1972, the Commission issued Avista a license for the four HEDs but reserved for further consideration the issue of including Post Falls HED in the Project license. The Department intervened in the licensing proceeding in February 1973, and requested in its intervention that Post Falls HED be included in the Project license and that the 2 Commission fix a reasonable annual charge to be paid to the Coeur d’Alene Tribe for the use of inundated lands. The Coeur d’Alene Tribe also intervened in the proceeding, noting in its intervention that the Tribe had yet to receive compensation for the occupation and use by Avista of submerged lands within the Coeur d’Alene Reservation. In July 1977, the Commission issued an order providing for hearing concerning the Commission’s jurisdiction over Post Falls HED. In 1979, as part of an uncontested offer of partial settlement, Avista agreed to include Post Falls HED in Project 2545. As part of that settlement agreement, the United States, the Tribe, and Avista agreed to litigate before an administrative law judge the ownership of submerged lands within the boundaries of the Coeur d’Alene Reservation. On February 3, 1980, Avista filed an application to license the Post Falls HED. In April of that same year, an administrative law judge concluded that the submerged lands within the boundaries of the Coeur d’Alene Reservation passed to Idaho at statehood. On July 22, 1981, the Commission amended the Project license to include the Post Falls HED along with Lake Coeur d’Alene and its tributaries as part of the Spokane River Project No. 2545.1 In 1983, the Commission reversed the 1980 decision and concluded that Congress did not convey to Idaho on statehood a permanent occupancy right to the submerged lands within the Reservation. In 1988, the Commission ruled that it was without authority to determine title to ownership of submerged lands within the Reservation. II. PRELIMINARY SECTION 4(e) CONDITIONS Section 4(e) of the FPA provides that the Commission shall issue licenses within any federal reservation only after a finding by the Commission that the license will not interfere or be inconsistent with the purpose for which such reservation was created and acquired. 16 U.S.C. ' 797(e). Section 4(e) also provides that licenses for hydropower projects on federal reservations shall contain such conditions as the secretary of the department under whose supervision such reservation falls shall deem necessary for the adequate protection and utilization of such reservation. Thus, section 4(e) gives the Secretary of the Interior (ASecretary@) authority to impose conditions on licenses issued by the Commission for hydropower projects located on Areservations@ under the Secretary=s supervision. See 16 U.S.C. '' 796(2), 797(e); see also Escondido Mutual Water v. La Jolla Band of Mission Indians, 466 U.S. 765 (1984). According to the FPA, Areservations@ means: national forests, tribal lands embraced within Indian reservations, military reservations, and other lands and interests in lands owned by the United States, and withdrawn, reserved, or withheld from private appropriation and disposal under the public land laws; also lands and interests in lands acquired and held for any public purposes; but shall not include national monuments or national parks. 1 16 FERC 62,096. 3 16 U.S.C. ' 796(2). The Project occupies lands owned by the United States, including approximately *** acres of Indian trust land on the Coeur d’Alene Indian Reservation, which is a reservation for purposes of the FPA. Accordingly, the Project license shall contain shall contain such conditions as the Secretary deems necessary for the adequate protection and utilization the Reservation. The Coeur d’Alene Tribe, a legally constituted Indian Tribe recognized by the Department of the Interior and the United States Government, is headquartered within Idaho on the Coeur d’Alene Indian Reservation. Since time immemorial, the Tribe lived in a four million-acre area known as northern Idaho, eastern Washington and northwestern Montana. The heart of the Coeur d’Alene country has always been their lake and its three rivers, now known as Lake Coeur d’Alene and the St. Joe, Coeur d’Alene and Spokane Rivers. The Coeur d’Alene were a water people. Their villages were built around their lake and rivers.