NORTH CASCADES Contested Terrain North Cascades National Park Service Complex: An Administrative History

Hydroelectric developments, both existing and proposed, took center stage in the park complex's management in the late 1970s and early 1980s. The license for Seattle City Light's Skagit River Hydroelectric Project (FERC No. 553) expired, leading to the Park Service's involvement in the lengthy and complicated relicensing proceedings. Proposed hydropower projects appeared on the scene as well when dozens of applications for small hydropower projects were filed with the Federal Energy Regulatory Commission (FERC). Many of these were in or near Ross Lake National Recreation Area. These, in addition to some other hydropower issues, forced park managers to attempt to protect park resources without infringing on FERC's authority. In all cases, preservation became the ultimate goal; achieving it required diligence and creativity.

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One of the most important accomplishments in the management of the North Cascades complex was the relicensing of Seattle City Light's Skagit Project. Until the project was relicensed for a thirty-year period, the Park Service could not approach the protection of Ross Lake NRA in a comprehensive manner. As the High Ross Dam affair demonstrated, the future of Ross Lake was uncertain, and the way to ensure that there would be appropriate recreational developments and resource protection programs for this area was through the licensing process. The problem was that even though City Light's license for the project expired in 1977, its renewal was delayed until the High Ross controversy had been resolved in 1984. Until that time, and for sometime thereafter, FERC allowed the city to operate under an annual license.

Thus, in 1984 once the international treaty ending the High Ross dispute was signed, the Park Service prepared to move forward again as one of the intervenors in the licensing process. Besides High Ross, a number of plans in City Light's license concerned agency managers. One of these was the Thunder Creek project, which called for constructing a diversion dam on Thunder Creek and using a tunnel to divert its water through Ruby Mountain into Ross Lake. Another was the Copper Creek project, which called for building a dam near the western boundary of Ross Lake NRA. These were significant issues for the Park Service in its efforts to protect the recreation area's natural and cultural values, especially since the license would have such a lasting effect.

Initially, the Park Service picked up where it had left off in the 1970s. It began with Exhibit R, the section of the Skagit project's license that was essentially a recreation plan. In this regard, the Park Service could require from City Light that it develop a substantial portion of the recreational facilities managers believed would be necessary for the protection and public use of Ross Lake NRA. Even though the Park Service had no legal control over the project itself, it could under the Federal Power Act (and the authority of the Secretary of the Interior) direct City Light to mitigate any adverse effects caused by the project. In the early 1970s, park officials had concentrated on one element of City Light's operations, High Ross. They reached an agreement in which the city would compensate the agency for the loss of existing facilities -- campsites, bridges, trails, and boat docks, among other things -- and provide new ones, all of which would enhance recreation in the area. They also were aware that City Light's license was due to expire and that they would need to develop a plan to cover the entire project. [1]

By 1984, however, the Park Service had changed its views on what it wanted from Exhibit R. In one respect, this change reflected practical concerns. Regional Director Daniel Tobin noted that it was important that park managers act quickly because the recreation plan was out of date. In September 1977, nearly one month before the Skagit project's license expired, Seattle City Light had filed an application for a new license. [2] The application, Tobin asserted, contained provisions for an initial five-year program in which City Light would contribute $500,000 to fund the construction of four major facilities. The trouble with this plan was that the funds were in 1977 dollars. In addition, Exhibit R provided for a continuing program at five-year intervals beginning in the fourth year of the first phase. This continuing program would have been a cooperative effort between the Park Service and City Light. Although no dollar figure was attached to this second phase, the language in the plan suggested that it would be less than phase one of the program.

Tobin's interest stemmed from the fact that the plan had never really been implemented. Many of the facilities "included in the Initial Program have been constructed by the National Park Service with appropriated funds." He outlined several ways to approach City Light for reimbursement as part of the revised Exhibit R. One way was direct repayment to the government for the cost of facilities; another was reimbursement through donation to the Park Service for future development at the recreation area. A similar approach would have been the identification of other facilities needed at the recreation area which City Light would provide. And a final possibility was an approach that combined both financial compensation and the identification of new projects. Whatever approach managers chose, it should adjust the estimate for inflation. [3] Moreover, behind the regional director's interest was the fear that the international treaty might grant City Light unilateral authority over raising Ross Dam, should Canada break the agreement, and grant it similar authority over relicensing. This, it seems, was a view espoused by the attorneys for City Light. [4] Tobin's worry, that City Light might find a way to exclude the Park Service from the current relicensing proceedings by using the treaty, was unfounded, but it did underscore that the Park Service viewed relicensing seriously.

On another level, the Park Service approached relicensing with broader goals, goals that included recreation but also the preservation of natural and cultural values within the recreation area. As we have seen, the agency's interest sprang from a new environmental awareness, the passage of major environmental legislation, and changes in popular attitudes towards the construction of more hydroelectric dams on the nation's last free-running rivers. Thus, the Park Service looked for ways to mitigate the impacts of the project as a whole while enhancing the environment and other intrinsic qualities of the recreation area at the same time. To a large extent, this approach was what many intervenors supported. Indian tribes, environmental groups, and state and federal agencies, many of whom had participated in the High Ross battle, saw relicensing as an opportunity "to redress the unmitigated impacts of the Skagit Project." [5]

It was a situation City Light had not foreseen, for in the past its applications to develop and expand the Skagit Project had proceeded smoothly, its work viewed as a social amenity rather than as an ecological disaster. To City Light's credit, it established an Environmental Affairs Division to handle compliance with the numerous environmental regulations affecting hydroelectric operations in the late 1960s and early 1970s, and to take the lead in negotiations for the new license.

City Light's approach to relicensing grew from its experience on several fronts, such as with High Ross, but also with controversy surrounding its interim relicensing agreement after 1977. Indian tribes, state and federal agencies clashed with the city in 1979 when the Federal Power Commission accepted the utility's application for relicensing. The various parties filed motions asserting that City Light had not studied or presented ways to mitigate the project's major impacts on fisheries. Furthermore, the state of Washington severely criticized the city for a similar lack of consideration and measures for mitigating impacts on wildlife. The outcome of all of this was an interim agreement with the city, agencies, and tribes signed in 1981. The agreement recognized that more information was needed on fisheries issues, and thus stipulated that City Light would modify operations and conduct studies to assess the project's impacts on fisheries. Other studies, however, to address concerns for wildlife populations and recreation went unaddressed. To a large extent these were overwhelmed by the fisheries studies, which were scheduled for completion in the mid-1980s, and formed another reason for delaying the relicensing process. [6]

Public reactions against City Light's Copper Creek project offered perhaps the most visible example of the new circumstances faced by the utility. In 1979, the Seattle City Council approved an environmental impact statement for the dam. The dam, however, was controversial. Skagit County residents viewed the project with trepidation since it would be constructed in an area lined with dangerous fault zones. Other interests, such as environmental groups, fisherman's groups, and river rafters, opposed the project because it would have inundated a ten-mile stretch of the free-running Skagit River, harmed wintering bald eagle habitat, and destroyed highly productive salmon spawning grounds. Most importantly, the Skagit tribes had recently won a court decision over reserved treaty rights for fishing, and asserted their interest in stopping the project since it threatened to destroy the fishery for which they had fought to protect. The tribes assumed the lead in protesting against the dam, and other groups allied with them. [7]

Their arguments provided a convincing case. Studies showed that the dam would flood important salmon spawning beds, thus reducing the number of salmon in the river. Directly related to the fate of the salmon was the fate of the bald eagles who wintered on this section of the Skagit. Without the salmon carcasses, on which the eagles usually fed, the eagle population would suffer and decline. The Nature Conservancy, who owned a 300-acre eagle sanctuary downstream from the dam site, called for City Light to abandon the project. Other studies and events mounted against the public acceptance of the new dam as well. Adding to the Skagit's intrinsic value was its recent congressional designation as a wild and scenic river in 1978, under the Wild and Scenic River Act. The designation mandated that this federally-recognized "wild" river remain in its current condition and that all projects that might affect this be evaluated. This and other environmental legislation, like the Endangered Species Act, could have restricted the city's development of Copper Creek. Similar to the High Ross proposal, a report concluded that conservation and the use of solar energy rather than the construction of a new hydroelectric facility would provide more energy at a lower cost to City Light. Because of public opposition, concerns over environmental protection, and the small amount of power return (the project would have illuminated a few office buildings downtown for the cost of a $137 million dam), the Seattle City Council shelved the Copper Creek project indefinitely in August 1981. [8]

The effect, however, was not immediate, and tensions mounted. In 1986, leaders of the North Cascades Conservation Council, David Fluharty and Patrick Goldsworthy, urged City Light to engage in the relicensing proceedings. Specifically, they asserted that City Light was obligated to study ways to mitigate the effects of the Skagit Project's original inundations behind Gorge, Diablo, and Ross dams. In reply, Randall Hardy, superintendent of Seattle City Light, informed Fluharty and Goldsworthy that his agency's view on the matter was quite different from theirs. In the first place, progress in relicensing was, it seems, awaiting the completion of studies on the project's impacts on downstream fisheries, related directly to reservoir fluctuations. Second, Hardy believed that, contrary to the conservation council's opinion, City Light had conducted "extensive studies of adjacent habitat areas and recreational use...in connection with the High Ross proceedings and in support of the 1977 application for relicensing." These studies, according to the superintendent, provided a "sufficient base of field study" to understand generally the "effects of original inundation and to allow an approximate reconstruction of the habitats now submerged under Ross Lake." Hardy, it seems, was suggesting that the studies conducted for High Ross and those nearing completion for downstream fisheries should be enough for the entire project. Or, put another way, as Ross Lake went, so too did the rest of the Skagit Project. [9]

The council, though, had raised concerns far beyond what City Light's studies had addressed. They were concerns especially important to the Park Service. Council members stressed that in relicensing the Skagit Project, City Light should consider "mitigation for upstream impacts relating to wildlife populations and to recreational and scientific values associated with reservoir inundation, in other words, the area now included within Ross Lake NRA." According to Associate Regional Director Richard Winters, this was "a somewhat new direction for the deliberations," one that had "not been considered previously." This new dimension became more attractive to agency officials over the next several years, and recreational needs would soon be one of several areas of interest as they negotiated with City Light over its project's impact on the entire recreation area. [10]

In 1987, Superintendent John Reynolds and his staff made the first formal step in the negotiations when they submitted a recreational development proposal for Ross Lake NRA to be funded by City Light under its new license. But in a short period of time, the entire process and scope of the park's perspective changed. One reason for this change was that FERC seems to have grown tired of City Light's delays. In October 1988, FERC notified City Light that it had nine months to submit its application. More than ten years had passed since the city's license had expired, and it had yet to submit the various packages to the federal agency as required by the Federal Power Act and its amendments. Specifically, the city needed to complete mitigation studies under Exhibit E in 18 CFR Ch. 1; these were far more inclusive than Exhibit R (a section revised to become Exhibit E). The reports covered water use and quality; fish, wildlife, and botanical resources; historical and archaeological resources; recreational resources; and land management and aesthetics. [11]

In response to FERC's order, City Light asked for and received an extension of at least eighteen months, so it could seek a comprehensive, negotiated settlement agreed to by all parties to the relicensing proceedings. Broadly speaking, the city was attempting to streamline a complicated process. Each intervenor had the right to petition FERC independently, in a sense challenging City Light's application and compelling it to respond as to why it had not addressed such measures. This approach could, and often did, lead to hostile rather than amicable relations, and the chances for a fair settlement were remote. As it turned out, both City Light and the various parties, including the Park Service, saw the advantages to a settlement and agreed to negotiate an agreement which would then be presented to FERC for its approval. [12]

In January 1989, Jonathan Jarvis, the park complex's chief of resource management, expressed a second reason for the Park Service's shift in its approach to relicensing, a reason that was related directly to Exhibit E because of its full range of natural and cultural investigations. For the first time, park complex managers began to think that the entire process held indefinite possibilities for their understanding and protection of Ross Lake NRA. Central to the Park Service's involvement, Jarvis noted, was its position that the project should be "operated and the effects of its presence be mitigated so as to have 'no effect' on the function of the larger ecosystem." Thus, the agency decided that the "recreational potential be developed only to the point that the recreational use has 'no effect' on the function of the ecosystem." [13]

What Jarvis and other managers were suggesting was that this position was the best one available to them. The complex's original legislation, after all, prohibited the agency's outright opposition to the Skagit Project. And though the recently passed 1988 Washington Park Wilderness Act restricted FERC's authority to City Light's existing project and proposed projects within the recreation area, the fact remained that FERC still had authority over the Skagit Project's operations. Thus, the debate for park managers centered on understanding the consequences of the continued occupancy of the area by the Skagit Project. However attractive in an Edward Abbey sense of environmental reclamation, removing the project was not a viable option. But assessing the changes brought about to the natural and cultural environments of the Skagit country by the project was viable -- and critical to protecting the recreation area's values. [14]

The task ahead was not a simple one. North Cascades managers had to integrate all of the categories within Exhibit E into "a coherent package." The first stage in this process was determining the effects of the project's past and continued presence for the next three decades through a series of studies funded by City Light. Rather than rely on the utility to provide the information to the park, managers decided to participate in the studies. Park and regional office staff assisted City Light by writing scopes of work for contracts, serving as technical advisors, and participating on habitat evaluation teams. When it came to erosion and archaeological studies, the Park Service conducted the work for City Light under several memoranda of agreement.

The studies, conducted in the late 1980s, concluded that the project had significantly affected the upper Skagit Valley. Wildlife and vegetation studies indicated that large habitat losses contributed to the decline of at least ten wildlife species. Recreation studies found that over all the impoundments had a serious influence on the management of Park Service lands and limited the potential management of adjacent recreational resources. More specifically, the level of Ross Lake, dictated by power generation and flood control, directly affected recreational boating and fishing. Soil erosion studies concluded that the project caused, primarily through fluctuating lake levels, more than sixteen miles of eroding shoreline and resulted in an estimated loss of 1.5 acres a year. Visual quality and aesthetics studies indicated that the entire project, consisting of dams, reservoirs, company towns, roads, and power transmission corridors, affected the aesthetics of the recreation area. The transmission lines had the greatest visual impact. Studies of the upper Skagit basin's cultural resources revealed more than 120 prehistoric sites within the drawdown of Ross Lake. In all cases, Ross Lake's continuous fluctuations caused materials to erode from these archaeological sites, and in some cases, this action caused the loss of, or endangered, the integrity of these sites. Finally, the fisheries studies suggested that the flow of the Skagit River, controlled by power production and flood control, had an adverse effect on downstream fisheries. Spawning habitat was particularly damaged. While salmon and steelhead species were the primary focus of these studies, they also suggested that many other resident fish experienced similar disturbances due to stream flows, and that changing lake levels influenced the vitality of lake fisheries. [15]

The next stage in the process was one of the hardest, deciding what to ask for in the mitigation package. Initially, the park complex's various divisions, such as resource management and interpretation, held a series of meetings to draw up a "wish list" of projects and proposals. They had several park-wide plans on which to rely. The most important of these, perhaps, was the 1988 general management plan which outlined some long-range projects. More specifically, the recreational development proposal submitted to City Light in 1987, with some modifications, proved to be useful. Recently completed resource and wilderness management plans also identified a list of needs. The relicensing process, however, offered managers the opportunity to address issues and develop programs that the Park Service might not otherwise fund. Thus, the final list, complete with specific details and cost estimates, was a product of both approved plans and long-term needs. It also reflected a screening process involving a number of criteria; each project was evaluated for its environmental impact, consistency with approved park complex plans, opportunity for other sources of funding, and direct relationship to the impacts of the Skagit Project itself. One thing that was not a limiting factor in the development of the final package was cost. City Light had not set a cost ceiling, yet it was understood that the utility's net worth was $100 million.

The Park Service's mitigation package proved to be quite effective as the agency entered the next phase of the process, the negotiation forums. City Light's Environmental Affairs Division established five forums for negotiation, all of which reflected the topics listed under Exhibit E. These were fisheries, recreation and aesthetics, wildlife, erosion, and cultural resources. The division's specialists led the forums, and the intervenors attended those forums in which they had an interest. Given the range of the Park Service's responsibilities, North Cascades managers participated in all five. The meetings were time consuming and rigorous, especially since FERC's deadline was approaching. Members of the park complex's resource management staff, assisted by regional office specialists, attended more than one hundred meetings in a one-year period. Each forum was charged with developing both an agreement and a mitigation plan. This process, though complex enough considering the number of intervenors and interests, was made even more complex when one considers the overlap between forums; there was always the chance that mitigation procedures for one problem might have a negative effect on another. For those in the fisheries forum, for example, maintaining downstream river flows was essential to the protection of spawning salmon. Yet this meant that lake levels would fluctuate leading to problems with erosion, recreational boat launching, in-lake fish spawning, and lake aesthetics. The formation of loose coalitions among the forums and convening of informal conferences helped resolve many of these concerns.

What remained to be accomplished was the final settlement itself. There was little to no precedence for the approach City Light was taking to the relicensing process, and thus there was little upon which to base expectations. Moreover, there were few ground rules throughout the meetings, and each intervenor approached the negotiations differently. Some parties held their cards close. But as Jon Jarvis recalled, the Park Service showed its cards early. Having a package was quite effective because it told City Light everything his agency wanted, from greenhouses to an environmental institute and what it all would cost. The surprise, though, was that City Light seemed willing to accept the park's offer. The real test, however, came with legal review. Relicensing and settlement agreements were a legal process, and technical advisors and lawyers representing the various federal and state agencies and other intervenors worked with City Light lawyers to produce a legal document that actually "reflected the technical intent of the negotiators."

Still, bringing all of the parties together was stressful in the final months of negotiations. City Light was especially fearful that there would be a break in ranks, that one disgruntled party could derail the entire process and jeopardize relicensing. As a result, in September 1990 all parties signed a preliminary agreement in which they agreed to abide by the proposals already on the table. Though nonbinding, the agreement was the first formal commitment by the intervenors and Seattle City Light. The document seems to have served its purpose, because in November one First Nation from Canada, the Nlaka'pamux Nation (the Lower Thompsons), unexpectedly tried to join the proceedings. Seattle City Light refused the Nlaka'pamux Nation's request and negotiated an independent agreement with the group after it had a final settlement agreement. The signing of an official settlement by all parties took place on April 26, 1991, and City Light submitted it to FERC on May 1, 1991. [16]

Although subject to FERC's approval, the settlement was "unprecedented nationally," according to City Light, and had profound benefits for North Cascades. The agreement stipulated that City Light would pay $100 million for mitigation over a thirty year period (for a total of fifty years beginning when the original license expired in 1977). Some of the more noteworthy provisions were that City Light agreed to

• buy Diablo Lake Resort and construct an environmental learning center;
• construct, maintain, and renovate trails, campgrounds, and boat launches in Ross Lake NRA;
• purchase approximately 5,000 acres of land along the Skagit River and South Fork of the Nooksack River for wildlife protection;
• construct a greenhouse to grow 30,000 native plants a year for revegetation of damaged sites in the project area;
• establish a flow plan for the Skagit River to protect spawning salmon and steelhead;
• implement erosion control measures;
• document and protect archaeological and historic resources within the project area. [17]

The license also contained a controversial element. City Light still maintained that High Ross was viable, and included it in the license. In order to move negotiations along, intervenors decided to take High Ross off the table; however, they did not support the project, and the settlement agreement contained measures to reopen negotiations if High Ross should proceed. Finally, High Ross did not pose the great dilemma for the Park Service as it once had. The agency still could not oppose the project, but with the various natural and cultural resource studies conducted for the relicensing, managers could make a strong case that Ross Lake country was "a good piece of land that shouldn't be lost." [18]

Moving from negotiations to implementation of the settlement agreement awaited FERC's approval of Seattle City Light's license. Park officials expected approval to come sometime in 1994, after the commission had completed its review of the license application and conducted an environmental assessment for the agreement. It was this very process, however, that threatened the entire agreement. At least, that was how Seattle City Light and the parties to the settlement viewed the commission's actions. The critical measure upon which the settlement agreement rested was the condition that FERC accept the package as a whole; any "material modification" would void the agreement at the option of any party. Throughout 1991, FERC seemed poised to do just that with its environmental assessment of the Skagit Project, because it was considering it as part of its larger study of the cumulative impacts of hydroelectric projects (existing and proposed) in the Skagit Basin. The energy commission staff noted that by taking this approach it might require City Light to carry out more mitigation -- in addition to the settlement -- or in place of parts of the mitigation settlement. Either scenario, noted one City Light official, "could be a deal killer." [19]

The National Park Service requested that FERC reconsider its environmental assessment. It was unclear, Regional Director Charles Odegaard wrote, how the commission intended to integrate the Skagit Project with its larger study of the Skagit Basin. City Light's Skagit Project lay entirely within Ross Lake NRA and the "direct impacts on the park" were limited to the project. More importantly, Odegaard, echoing the concerns of all parties involved, urged FERC to consider the magnitude of the agreement at stake. More than a decade of work had gone into this settlement agreement that already contained a negotiated mitigation package, as required by the commission, for the Skagit Project's effects on the recreation area's various resources. [20] To the relief of park managers and others, FERC's environmental assessment exempted the Skagit Project from the cumulative environmental assessment because it did not have "the potential for adverse impacts to at least one target resource" (anadromous fish, recreation, cultural resources, and sensitive terrestrial ecological resources). Thus, the commission recommended a separate assessment for the project, which, it proclaimed, "would range from no effects to substantially beneficial effects" under conditions proposed in the settlement offer. [21]

Such a positive statement belied the energy commission's treatment of the settlement agreement. In its draft environmental assessment for the Skagit Project's license, which was released March 3, 1994, FERC included a preferred alternative that tracked the settlement agreement. But the license the agency issued did not. What the Park Service and other interested parties soon realized was that FERC had packaged the offer of settlement and modified some of the individual mitigation agreements to meet what it viewed as necessary for issuing a license. This did not necessarily reflect what the parties believed was the true intent of their agreement. Among other things, North Cascades managers argued that the proposed license terms were substantially different from any alternative evaluated by the environmental assessment. Managers also noted that the energy commission had omitted funds for long-term monitoring in Ross Lake NRA because the commission concluded in its assessment that relicensing the Skagit Project would have no cumulative adverse impacts and would even have beneficial effects on the Skagit Basin. (This applied to both environmental and cultural resources.) Therefore, FERC used this analysis when it reviewed City Light's license, all of which seems to have mystified City Light, the Park Service, and other intervenors. As the Department of the Interior related in its comments on the draft assessment, FERC's review was inadequate and fell short of the requirements under the Federal Power Act and the National Environmental Policy Act. The department recommended that the commission need not conduct its own environmental analysis of each of the settlement agreements. The proposed action was to "relicense the Skagit River Project as mitigated by the measures described in the Settlement Agreements and to implement those mitigation and enhancement measures." In other words, much of the commission's work had already been considered and it should have spent its time considering the various proposals as part of a comprehensive package designed to streamline the assessment process. [22]

In May 1995, Seattle City Light, along with all of the parties to the settlement agreements, petitioned the energy commission to reconsider its draft license for the Skagit Project; that is, all parties wanted the commission to issue a license that contained all of the terms and agreements of the settlement offer intact. [23] On May 24, 1995, the energy commission, however, issued the license without reconsidering these pleas. Elizabeth Moler, commission chair, notified Seattle Mayor Norman Rice that the "Commission approved all provisions of the settlement." But there were minor stipulations with major significance to City Light and others. As Moler noted, the license would include

all provisions of the settlement that involve matters within the Commission's jurisdiction. The order accepting the settlement agreement also recognizes that certain aspects of the settlement are beyond the Commission's jurisdiction. The order supports the settlement and explicitly recognizes that the licensee may proceed under these provisions as private agreements among the parties. [24]

In June, the City of Seattle appealed the license order and requested a rehearing before the commission to resolve "numerous 'technical' problems and omissions in both the license and environmental assessment," and to have the commission provide an adequate explanation of "why certain parts of each of the settlement agreements were included as license conditions and others were not." This latter aspect of the city's complaint was especially baffling to the parties. The most detailed explanation they received, for example, was when the commission excluded elk habitat from the wildlife mitigation plan. The commission chair stated tersely that FERC was not "in the business of managing elk habitat." [25]

The energy commission granted the rehearing, and the following year, on June 26, 1996, the commission issued an order for the Skagit River Project's new license, which included "the measures at issue in the license, together with the terms needed to enable the Commission to enforce such measures." The commission maintained that the parties criticized it for not incorporating, word for word, "the language of every element of every Agreement, suggesting that failure to do so threatens the entire Agreement." This argument focused primarily on off-site mitigation, FERC noted, and tended to overshadow the commission's general "acceptance and implementation of the Settlement." In addition, the commission maintained, even with a settlement agreement, that it was part of its responsibility under the Federal Power Act to "frame license articles in the manner we deem sufficiently clear and concise to allow for effective oversight and enforcement." Nevertheless FERC decided to reconsider its position in order to settle the major issues surrounding wildlife and recreation agreements. These were namely

• provisions for the licensee to obtain and manage off-site elk habitat and six off-site recreation areas;
• fund the Park Service's long-term environmental monitoring within the Ross Lake National Recreation Area, the North Cascades National Park, and Lake Chelan Recreation Area;
• fund the Forest Service's inventory and planning of bald eagle and other wildlife habitat in the Skagit National Recreation River Corridor and the Sauk, Suiattle, and Cascade National Scenic River Corridors.

There were also a number of other issues surrounding fisheries agreements as well as miscellaneous articles, which the commission agreed to correct; many of these related to programs to be carried out in the park complex and involved clarifications and revisions to correct inadvertently omitted language. Throughout this process, the energy commission went on record stating that many of "the measures will constitute enhancement beyond that which we determine is required by the comprehensive development standard," and that the settlement agreements were binding between the parties even if they did not appear in the license itself. Nevertheless, for all intents and purposes, the commission restored the license to its original form as presented by City Light in 1991. [26] The relicensing process, furthermore, contributed to FERC's development of its alternative relicensing process.

With the relicensing of the Skagit Project, a new era was launched in the management of Ross Lake NRA. As Superintendent William Paleck noted earlier, he anticipated the settlement agreement to present the park with "a great challenge," for it would bring it into a closer working relationship with City Light, the Forest Service, North Cascades Conservation Council, and other intervenors. [27]

Part of that challenge also lay in carrying out the projects. How this would unfold remained to be seen. The Park Service had essentially contracted with City Light to undertake many of the projects since they would take place within the park complex. But it was no simple matter, for they would require staffing and organization. Jon Jarvis had argued for the Park Service's role in these projects, and attempted to have every project proposal developed with an overhead figure of some 10 to 15 percent, a figure lower than City Light would have had to pay a consulting firm. Moreover, the overhead should have been enough to hire a staff to do the projects -- or at the very least cover the costs of existing park staff. Yet in January 1995, the park complex reported a $200,000 shortfall to cover "additional new NPS operating/consultation responsibilities called for under the settlement agreements." [28]

At the same time, the agreement did not commit the agency to finish each project at a certain time but within a range of years. If the service then failed to complete the construction of a dock, for example, City Light could then let a contract. More important to remember, Jarvis recalled, was that the projects had to be specific in order to be approved, and that they were earmarked to further resource management and recreation in Ross Lake NRA. In this way, one could argue that they helped foster these programs for the recreation area specifically and the park complex generally. Already, North Cascades had gained the services of an archaeologist and a geologist as part of the relicensing investigations [29]; their work, as well as that of other professionals, would expand our understanding of the area's natural and cultural values and thus better enable managers to protect them. [30]

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Newhalem Project. The National Park Service was involved in the relicensing of one more City Light hydroelectric project in the 1990s. The Newhalem Creek Hydroelectric Project (FERC No. 2705), part of the city's early development of the Skagit Project, is a run-of-the-river plant with maximum power production of 2.3 megawatts. The city constructed the Newhalem Project in 1921 to supply electricity to the town of Newhalem during the construction of the Gorge and Diablo hydroelectric facilities; afterwards, the project's power was tied into the Skagit system. The Newhalem Creek Project's original powerhouse was destroyed by fire in 1966 and reconstructed in 1969. Afterwards, Seattle applied to the Federal Power Commission for the project's first license; the power commission issued the license in January 1975, but made it effective January 1, 1970. [31]

The Newhalem Project's license expired at the end of 1994, and North Cascades managers became actively involved in the relicensing process. The Park Service believed that the project, located within Ross Lake NRA, had "considerable cumulative impacts...in the past" and would continue to harm the "aquatic resources of Newhalem Creek without additional protection or mitigation for the aquatic resources of Ross Lake National Recreation, especially anadromous fish habitat. Seattle City Light's current flow regime of 5 cfs would render much of the chinook and pink salmon spawning habitat unavailable, would adversely affect the habitat of juvenile chinook and steelhead, and would further increase the impacts to fry standings." The Department of the Interior expressed a "strong interest" in the project's relicensing, primarily to protect "fishery resources and their habitat and mitigation of the continuing project impacts to those resources, including the effect on the federal reservation of Ross Lake National Recreation Area and the treaty-reserved fishery interests." [32]

The Department of the Interior concluded that Ross Lake NRA constituted a "reservation" for the purposes of the Federal Power Act. Therefore, the Secretary of the Interior had the authority under Section 4(e) of the power act to impose mandatory "conditions for the [adequate] protection and utilization of the Ross Lake National Recreation Area" as part of the project's relicensing. [33] (The department's use of Section 4(e), it seems, may have been the first time it was used in a park area.) In the summer of 1995, the Park Service, in concert with the U.S. Fish and Wildlife Service and Bureau of Indian Affairs, developed preliminary conditions for the proposed relicensing, and the Secretary of the Interior filed these conditions with the Federal Energy Regulatory Commission. A year later, the secretary submitted a revised list of conditions to the commission. There were six conditions. City Light would

• maintain seasonally adjusted minimum instream flows, or the natural flow, which ever is less in the Newhalem Creek bypassed reach;
• install a tailrace barrier to prevent anadromous fish from entering the tailrace;
• implement sequential start-up ramping rates;
• move accumulated gravel from behind the diversion downstream to provide a spawning channel;
• place woody debris, which has accumulated in the diversion or intake structure, into the Newhalem Creek bypassed reach, and not change woody debris movement procedures without Park Service approval;
• implement the Newhalem Creek Hydroelectric Project Final Erosion and Drainage Control Plan, and remove any unnatural debris that has fallen or falls in the future into Newhalem Creek from the diversion access road. [34]

In addition to these imposed conditions, City Light agreed to other measures as part of its license. The city proposed to develop a historic resources mitigation and management plan to protect the historic integrity of the project's facilities, which were part of the Skagit River and Newhalem Creek Hydroelectric Projects Historic District, and to undertake recreational improvements. The city proposed to construct a trail parallel to the powerhouse road and to renovate the powerhouse viewing platform and the Trail of the Cedars to improve accessibility for people with disabilities, if necessary. Besides these enhancement proposals, the city agreed to continue several existing measures. These included the operation and maintenance of its fish rearing facility, its powerhouse interpretive display, and the maintenance of the Trail of the Cedars interpretive trail. [35]

On February 7, 1997, FERC issued the new license for the Newhalem Creek Project, the operation of which reflected the interests of the Park Service and Interior Department in the protection of the recreation area's aquatic resources. [36]

***

In the midst of relicensing the Skagit and Newhalem projects, the Park Service faced another potential threat to Ross Lake NRA in the form of small hydroelectric projects. Small scale hydropower projects (small hydro) were mostly "run-of-the-river projects," so named because they used the fall of water rather than the volume of a reservoir to generate power. They became popular in the late 1970s and early 1980s. This was, after all, an era of environmental awakening and a perceived energy shortage. Small hydro projects were deemed less destructive than large-scale hydroelectric projects and far less hazardous than nuclear power plants. (In fact, a nuclear power plant was proposed by the Puget Sound Power and Light Company near Sedro Woolley on the Skagit River in the late 1970s.) Moreover, several federal laws -- the Public Utilities Regulatory Policies Act of 1978, the Energy Securities Act of 1980, and the Crude Oil Windfall Profit Tax Act of 1980 -- provided the tax and regulatory incentives for private industry and investors to pursue these projects. Especially attractive was an incentive under the Energy Securities Act that authorized FERC to grant exemptions from licensing to certain small hydro projects based on the agency's discretion. These measures set off a small hydro rush, many of them in the vicinity of the nation's parks. Among these areas, Ross Lake NRA stood out because so many projects were proposed within and near the area in the early 1980s (more than fifty) that agency managers were concerned about their cumulative impacts on the Skagit River watershed. Ironically, this flood of proposals came at a time when the projections for energy shortages in the 1970s had been revised to energy surpluses in the 1980s. Nevertheless, the schemes went forward leaving park officials wondering, as they had during the High Ross and Skagit Project relicensing, how they could protect the recreation area's values while not infringing on FERC's jurisdiction. [37]

Park managers had reason to be concerned. At least nine of the proposed projects lay within the boundaries of Ross Lake NRA: Damnation Creek, Sky Creek, Thornton Creek, Thunder Creek (three sites), Birch Creek, Ruby Creek, and Panther Creek. In addition, seven applications were filed for projects east of Ross Lake NRA on Granite, Canyon, and Ruby creeks. All of these proposed projects would have adversely affected the recreation area over time by altering stream flows, fish and wildlife habitat, and the area's aesthetics with the installation of generating facilities and more transmission lines, to name a few things. [38]

In 1981, the park sought legal advice from the solicitor's office about its authority over such projects. What managers learned was largely what they already knew. The Park Service's ability to regulate dams and hydroelectric projects in and near national park areas was hardly absolute, and in many respects it was uncertain. In general terms, the Federal Power Act's 1921 amendments excluded parks and monuments, thus prohibiting FERC from licensing any hydroelectric projects in these areas. But there was disagreement over whose authority governed projects in other types of national parklands, such as recreation areas (since they were not specifically mentioned in the act). Naturally, the Park Service believed that the FPA's exclusion of parks and monuments should apply to all areas within the park system. On the other hand, FERC believed otherwise and issued licenses for hydro projects in national recreation areas, the more renowned being one in Glen Canyon National Recreation Area. [39]

Further complicating matters in Ross Lake NRA was Section 505 of the North Cascades Act, the section that prohibited the Park Service from interfering with FERC's jurisdiction over hydroelectric projects. In an effort to prevent small hydropower projects from damaging the park's ecosystems, managers sought the advice of the solicitor's office as to whether this section applied to projects other than City Light's. On July 30, 1981, David Watts, assistant solicitor, gave his opinion that the park act and its legislative history did in fact grant FERC authority over all projects, not just those existing or anticipated in 1968. [40]

By early 1982, FERC granted exemptions from licensing for the proposed Thornton, Damnation, Sky, and Birch creek projects in accordance with the Energy Securities Act. Park managers countered that while FERC could grant exemptions, these did not include a right to use of the land. In other words, the project applicants would need to apply to the land management agency, in this case the Park Service, for a special use or right-of-way permit for the hydro project's features. These included waterlines, penstocks, powerhouses, and transmission lines, as well as access roads for construction and operation of the projects. The agency's approval of the permit seemed to present the agency with some means to at least stall the small hydro proposals; however, the solicitor noted that because of Section 505, the Park Service could not deny a special use permit to a FERC permittee. As Superintendent Keith Miller noted, the entire process seemed academic. [41]

Nevertheless, park officials sought a finer ruling on what options were available to them, specifically whether or not they could deny the permit should the hydro project unduly impair the recreation area's values. In this regard, Richard Winters, associate regional director for recreation resources and professional services, reminded Superintendent Miller of the solicitor's 1981 opinion -- that any restrictions on the project should be "reasonable." According to the solicitor, an unreasonable restriction was anything that "would absolutely defeat the economic feasibility of the project." On the other hand, it was reasonable to impose restrictions that would limit the project's economic potential in order to protect the values of the recreation area for the enjoyment of the public. [42]

This perspective was put to the test in 1983 when the proponent of the Damnation and Thornton creeks projects applied to the Park Service for rights-of-way permits for access roads to their sites. The critical point at this juncture in the proceedings was whether the agency had the authority to grant these permits to the hydropower developers. Once more the solicitor's opinion was sought. In May, the solicitor informed the Park Service that the applications were "legally sufficient to support the granting of rights-of-way," provided that they were neither "incompatible with the public interest...nor inconsistent with the values which the recreation area is intended to protect." Put another way, the solicitor suggested that while the Park Service could not deny a permittee access, it could impose "conditions calculated to maintain the identified values of the area." [43]

With this ruling in mind, the park proceeded with the permit process by conducting an environmental assessment to evaluate the federal action. This process seemed to place the Park Service in a position to request a full-scale environmental impact statement, thereby stalling the projects and possibly leading to their demise. But as Daniel Allen, the park complex's natural resource specialist, noted "We were specifically advised that the subject of the assessments was NOT whether to construct the projects since that was not the proposed NPS action." Evidently, Superintendent Miller's sense that all of this was an exercise in paper work contributed to the production of a "ineffective" draft environmental assessment, according to Solicitor C. Richard Neely. The preliminary version of the document, he noted, fell far short of the intent of NEPA; it was too general and did not consider the cumulative impacts of the projects. When it was released on July 13, 1983, for public review, the environmental assessment had been revised to reflect most of Neely's comments. For the most part, conservation organizations, federal and state agencies, and others who commented on the assessment opposed the projects or found serious shortcomings in its consideration of the impacts on the cultural and natural resources of the recreation area. In particular, lawyers for the North Cascades Conservation Council submitted a lengthy brief indicating that the Park Service had the authority over these small hydroelectric projects and did not have to grant them permits at all. [44] And the council would file a lawsuit against the proposals if the agency did not act.

Park Service officials were intrigued by the council's ideas, namely its legal interpretation of the park complex's legislation, its view of the Park Service's power through NEPA, and its view that the agency had the power to oppose such projects because of its primary mission of protecting the recreation area's values. In fact, they were so intrigued that in August 1983 the regional director requested that the solicitor review the council's comments and if possible use this to revisit his 1981 opinion. Several months later, David Watts rejected the council's main argument that FERC's jurisdiction was "limited to site-specific projects" and did not "extend to the issuance of exemptions from licensing." In general, Watt stood behind his original opinion, stating that Ross Lake NRA was not like most units of the park system because it was subject to FERC's "general jurisdiction to authorize projects" here. Section 505 of the North Cascades Act supported this conclusion, and moreover, it did not "impose site-specific limitations." Furthermore, the exemption process was a "procedural component" of the energy commission's jurisdiction under the FPA" which it could exercise in the recreation area under Section 505. However, the solicitor seemed to take a firmer stand on the Park Service's options. Not only could the bureau impose conditions in the permit to protect the recreation area's values and purposes, but it could also "deny permission to use NRA lands...after appropriate environmental and administrative review." [45]

Although Watts' comments seemed to leave an opening for the Park Service to deny the rights-of-way permits, the solicitor pointed out that there were significant reasons for not challenging FERC's authority. First, in his view, should the agency successfully deny the permits (and by association deny FERC's use of exemptions), the applicants would then seek licenses for their projects. Second, N3C's threat to file a lawsuit contesting the use of exemptions might have the opposite effect the group intended by placing parks -- instead of recreation areas -- within the jurisdiction of hydropower exemptions. This would set a precedent that greatly concerned the solicitor, for it could undermine the protection of the nation's parks. [46]

The solicitor's opinion apparently satisfied Park Service managers, and by early 1984, they had issued a finding of no significant impact, essentially completing the environmental assessment. The official reasons for this stemmed from the fact that the proposed actions did not constitute a major federal action and would not affect the quality of human or natural environments within the recreation area. Altogether the projects consisted of sixty acres and generated four megawatts each. More importantly, rights-of-way permits normally did not require an environmental impact statement because they tended to be confined to a small area. The affected environment covered a fraction of the total land base within the recreation area and had previously been logged. [47]

Consequently, on January 20, 1984, the Park Service approved the permits for the Damnation Creek and Birch Creek projects. It was still reviewing the Thornton Creek permit project and delayed its approval indefinitely when the energy commission encountered legal problems that would, it seemed, bolster the Park Service's case for denying the small hydro projects. Two judicial decisions handed down in 1984 promised to have "a significant impact on the licensing process under the FPA and the issuance of exemptions by FERC. Both cases," the solicitor wrote, "will strengthen NPS ability to deal with water power projects of all types within NPS areas where such projects have been authorized." In the first case, The Tulalip Tribes of Washington et al. v. FERC, the United States Court of Appeals for the Ninth Circuit Court ruled that FERC "is not authorized to issue case-specific exemptions for any project that involves new dams or the impoundment of water such as a diversionary dam." In its ruling the court held that the Energy Security Act of 1980 authorized FERC "to exempt only those projects that utilized natural water features for the generation of electricity. FERC's rule that allowed structures not exceeding 10 feet in height and impounding no more than two acre-feet of water as eligible for exemptions was struck down by the court as being contrary to the law and thus invalid." In the second case, Escondido Mutual Water Co. et al. v. La Jolla Band of Mission Indians, et al., the court ruled that FERC "must accept without modification conditions that the Secretary of the Interior deems necessary for the adequate protection and utilization of the reservation in accordance with the purpose for which the reservation was established." [48]

As anticipated by the solicitor, the Ninth Circuit ruling invalidated many, if not all, of the small hydro exemptions in the North Cascades, including two of the three projects (Damnation and Thornton creeks) within Ross Lake NRA; these were new projects, calling for the installation of dams and/or water impoundments, whereas the Birch Creek project called for renovation an existing project. [49] By no means, however, did this terminate the small hydro proposals. It meant that the applicant had to request a license from FERC for a minor project. In October 1984, William L. Divine, who operated the WLD Glacier Energy Company, submitted license applications to FERC for the Damnation Creek Project (FERC No. 4412-001) and the Thornton Creek Project (FERC No. 4435-001). Like the relicensing of the Skagit Project, these applications contained materials covering an overview of the project, its environmental impacts, and its general design. As part of the application, Divine also submitted a State Environmental Protection Act checklist to the Washington Department of Ecology. [50

In 1985, a number of organizations filed motions to intervene in the licensing process. Groups like the North Cascades Conservation Council, the Seattle chapter of the Audubon Society and the Seattle Mountaineers were among them, and protested the projects in order to protect the recreation area's values. As intervenors in the licensing, they argued that FERC did not have the jurisdiction to license these projects in a national park area, presumably contesting the agency's interpretation of the FPA. They also contended that, contrary to the Park Service's legal opinion, Congress' intent was to limit FERC's authority to those City Light projects existing and planned when the North Cascades legislation was enacted. However good the intentions, these views seem to have gone unrecognized. [51]

The larger issue, it seems, was the role the National Park Service would assume as the federal land management agency empowered by recent judicial rulings. The North Cascades Conservation Council interpreted the Park Service's apparently passive position on the small hydro issue as typical of the agency's faults when it came to preserving nature. Despite these views, the Park Service displayed a great interest in blocking the projects. In October and November 1985, the National Park Service, through the Department of the Interior, made its formal review of the Damnation and Thornton creeks hydropower applications to FERC. Essentially, the Park Service expressed its concern over the lack of measures to mitigate damage to the recreation area's natural as well as outdoor recreational values. Therefore, it recommended that FERC place special conditions for mitigation in the licenses before any construction or operation of the projects began. At bottom, the Park Service suggested that FERC must assess all of the cumulative impacts of these two projects and their mitigation measures. The sense here was that it was entirely possible that mitigation would not adequately repair the damage to the recreation area's values, and thus the agency would have a strong case for terminating the projects. [52]

To reinforce its position, the Park Service, again through the Interior Department, filed to intervene in the proceeding for licenses to construct and operate the hydropower projects on Thornton and Damnation creeks. By September 1986, FERC had granted the department status and the Park Service began to establish the conditions it believed should be part of the applications. The department had the option of negotiating these conditions with the applicant or having FERC impose these conditions under Section 4(e) of the Federal Power Act. [53] Just what role the agency could take in the negotiations still seemed unclear to park managers. In January 1987, Superintendent John Reynolds requested the solicitor's opinion "concerning the appropriateness of the National Park Service intervening in the licensing process to challenge FERC's jurisdiction within Ross Lake National Recreation Area." The superintendent once more asked the solicitor to revisit his 1981 opinion, to which Richard Neely replied that nothing in his legal interpretation had changed. In addition, the superintendent wanted clarification about his agency's ability to ensure that the projects complied with environmental laws, such as NEPA. The solicitor assured the superintendent that the park, as with any other agency or member of the public, was within its legal rights to comment on "the potential impacts from, or alternatives to, the development of small hydroelectric projects" within Ross Lake NRA. Finally, the solicitor reminded the superintendent that Section 505 of the North Cascades Act still applied, yet because of recent litigation the Park Service stood a greater chance now of controlling the development and operation small hydro projects through the licensing process. [54]

At this juncture, the Park Service's position to challenge but not oppose the projects outright had improved. The agency took advantage of these changes in the summer of 1987. During that year, the projects edged closer to approval when the Department of Ecology found that they would have no significant environmental impact. All that remained was FERC's approval, pending its environmental review, which was at least two years away. [55] FERC's review, however, was part of a larger study of the cumulative impacts that might result from small hydroelectric projects proposed on the Nooksack and Skagit rivers. Thus, as part of this process, the Park Service requested that the commission "fully consider the potential cumulative impacts of the proposed Thornton and Damnation Creek projects on the Skagit River system." The request conceded that FERC had jurisdiction over such projects in the recreation area, but urged the commission to "fully consider the purpose of the recreation area as required by the Federal Power Act." The Park Service also urged the commission to remember that it could issue a license within a reservation only after finding that "the license will not interfere or be inconsistent with the purpose for which such reservation was created or acquired." [56]

Park staff, working with FERC in this process, had every reason to believe that the commission would consider this request. FERC's study of the cumulative impacts of proposed small hydropower projects led to the withdrawal of many applications, primarily because of the time and money required of the applicants to satisfy the compliance with environmental regulations. Moreover, it appeared likely that the two proposed projects in Ross Lake NRA might be canceled. In June 1988, the commission dismissed the license applications for both the Thornton and Damnation projects for a lack of progress. The applicant, William Devine, had not produced the necessary studies and investigations agreed to in his application. But then things seemed to turn against the Park Service. In March and April 1989, the commission granted Devine's appeal and reinstated his license applications, giving him an extension to the end of the year to file the requested information. [57]

In the meantime, however, one of the most significant events in the administration of the park complex took place with the passage of the federal Washington Park Wilderness Act of 1988. Passed on November 16, 1988, the act gave formal protection to the park complex's proposed wilderness under the Wilderness Act of 1964. Moreover, the law amended the North Cascades Act in several ways, one of which was to clearly state the role of FERC in the park complex. This amendment, written by Jon Jarvis with the blessing of Superintendent Reynolds, responded to something Interior Department solicitors had been suggesting for years: that until Section 505 was changed FERC would have authority over hydroelectric projects in Ross Lake and Lake Chelan national recreation areas. Section 202 of the wilderness legislation limited the number of hydroelectric projects in the complex, and thus the commission's authority to those projects already in existence or proposed at the time of the area's establishment. According to the legislation, FERC's responsibilities were not "in the recreation areas," but in the

lands and waters within the Skagit River Hydroelectric Project...including the proposed Copper Creek, High Ross, and Thunder Creek elements of the Project, and the Newhalem Project...within the Ross Lake National Recreation Area; lands and waters within the Lake Chelan Project...[and] the Company Creek small hydroelectric project at Stehekin within the Lake Chelan National Recreation Area; and existing hydrologic monitoring stations necessary for the proper operation of the hydroelectric projects listed herein. [58]

In addition to these revisions, the act placed the wilderness boundary downstream from the proposed projects on Thornton and Damnation creeks.

With these changes, the small hydro issue ended quickly in the North Cascades complex. In 1989, the Park Service informed FERC that the intakes for both the Damnation and Thornton projects lay within a wilderness area, and that FERC's licensing authority over the projects had been withdrawn by the Washington Parks Wilderness Act. Although these changes meant an obvious loss of power for the energy commission, it abided by the new legislation, finding it sound, and subsequently dismissed the license applications on July 29, 1989. Upset that nearly a decade's worth of work had ended abruptly, William Devine appealed FERC's decision on August 21, 1989; however, FERC denied his appeal on January 26, 1990, stating that the law clearly prohibited the commission from licensing the Damnation Creek and Thornton Creek projects. [59]

***

Compared to the issues surrounding Seattle City Light's operations on the Skagit and the flurry of small hydropower proposals in Ross Lake NRA, Lake Chelan NRA's issues regarding power production were less controversial. In the Stehekin Valley, for instance, the Chelan County PUD operated the Company Creek Hydroelectric Project, a small plant generating less than 2,000 horsepower for the community of Stehekin, under a special use permit. [60] More important was the Lake Chelan Hydroelectric Project. Its relicensing was less controversial than the Skagit Project's, but it was not without important meaning for park managers. First licensed in 1926, the Lake Chelan project, operated by the Public Utility District No. 1 of Chelan County (Chelan PUD), was up for relicensing in the early 1970s. The High Ross issue on the Skagit River and later the relicensing of the Skagit project itself tended to overshadow the Lake Chelan project. To be sure, City Light's operations had a far greater presence in, and thus greater impact on, Ross Lake NRA than the Chelan project did on Lake Chelan NRA. Nevertheless, the hydro project at the foot of Lake Chelan, some fifty-five miles from Stehekin, raised the lake's level by twenty-one feet to 1,100 feet. The effects of this could be seen at the head of the lake. Fluctuating lake levels, though not as dramatic as on Ross Lake, created problems with shoreline erosion. During periods of maximum drawdowns, some 140 acres of mud flats were exposed at the lake's northern end, near the outlet of the Stehekin River. Blowing silt was an intermittent problem. In April and May, the flats dried out and strong spring winds blew silt to the Stehekin Landing, obscuring the view of the valley and causing silt to accumulate in houses and vehicles and on vegetation. Blowing silt caused discomfort in most people and possibly respiratory ailments in others. Changes in the lake's level also caused wear and tear on the docks at the main landing at Stehekin.

In the early 1970s, as the Park Service became immersed in the High Ross dealings, officials applied similar tactics in addressing the Lake Chelan project. That is, as a condition of Chelan PUD's license, the Park Service could require recreational developments, among other measures, as mitigation for the project's impacts on the lands under its management. Similar to its negotiations with City Light, the Park Service focused primarily on Exhibit R. In 1974, the year in which the Chelan project's license expired, Superintendent Lowell White proposed a number of items for recreation, such as the construction of new boat docks, campground expansions, and channelizing the lake bed near the Stehekin Landing for the barge. White also thought that the utility could improve recreational opportunities at the head of the lake by expanding its lake cleanup, similar to a service performed by City Light on Ross Lake. Moreover, White believed that the most important project for the PUD would be to assist the Park Service and Forest Service in the development of Field's Point. In this way, there would be an opportunity to run the tour boat between Field's Point and Stehekin twice a day, rather than the daily trip from Chelan, thereby reducing the pressure on Stehekin's services. [61]

After learning that this was a simple relicensing action, and therefore no new sources of revenue for substantial recreational improvements would be available, Superintendent White emphasized the Field's Point development as his agency's primary objective in relicensing. In early 1977, when Chelan PUD released its recreation plan for Lake Chelan in order to satisfy its requirements for Exhibit R, the Park Service's objective was missing from the plan. The utility's study, prepared with the assistance of its consultants and the Bureau of Outdoor Recreation (BOR), considered the whole lake but focused primarily on the lower end. The reasoning behind this decision was a simple one. Investing some $2.6 million in recreation here would satisfy the "greatest need." The BOR supported this decision, stating that the utility's money should go towards enhancing recreational opportunities in an area that was predominately privately owned. These lands held great recreational potential and were closer to the residents who could benefit from it. The Park Service and the Forest Service, however, objected to this reasoning. They believed that the "licensee should aid in the development of Field's Point." Their main point for involving the utility in the Field's Point project was that fluctuating lake levels had an impact on uplake recreational opportunities. Moreover, the two agencies stated that with financial assistance from the utility in the project they could make a better case to receive federal appropriations to complete it. The BOR viewed this proposal as "inequitable." Federal agencies should fund federal projects, just as private agencies funded their own projects. If Field's Point was to be such an important ingress and egress point for Lake Chelan NRA and Forest Service lands uplake, then the responsibility lay not with the utility but with the government. To do otherwise would be "at the expense of recreation development" currently proposed in the utility's plan. [62]

In their meetings with the BOR, the Park Service and Forest Service continued to press for some assistance from the utility in the development of Field's Point. While the two agencies reluctantly agreed with BOR that the utility should not have to share costs for Field's Point, they seemed intent on having the Chelan PUD provide the boat dock at the new facility. (How this would be justified was not clear.) This, in the minds of agency managers, was a compromise because they had earlier wanted the utility to provide not only the dock but also the access road, parking, and day-use facilities there. [63] Evidently, the two agencies were not able to negotiate with the utility, and by the mid-1980s had constructed the facility with federal funds. On another front, the Forest Service and Park Service voiced concern over a lack of attention to environmental factors. They contended that the application "does not adequately address the alternative of a stabilized lake elevation for recreation, does not mention shoreline stabilization, and does not address dust problems at Stehekin." [64] In this regard, the agencies were more successful. When FERC issued the new operating license for the hydroelectric project on May 12, 1981, the license directed the PUD to "attend to soil erosion adjacent to streams and other waters, water pollution and air pollution on federal land's caused by the District's operation or maintenance of its Lake Chelan Project works." In 1982, this led to an agreement between the utility and the two agencies to undertake a pilot project to study methods of erosion control on Lake Chelan's shoreline owned by the federal government; it was the first stage in a shoreline stabilization plan. [65]

Certainly, the Lake Chelan Hydroelectric Project was not as controversial as the Skagit Project from a management perspective. Nevertheless, by the late 1990s, the Lake Chelan project's thirty year license was nearly up for renewal (2004), and Park Service officials anticipated that they would approach the process differently. If their participation in the relicensing of the Skagit Project was any indication, they would press hard not only for mitigation and enhancement measures for recreation but for preservation of resources as well. Chelan County PUD saw the collaborative approach taken by City Light in the Skagit Project relicensing favorably, too, and in May 1998 filed a request with FERC to use an alternative approach in relicensing the Lake Chelan project. [66]