C05_08_Att__4_to_PWS_Construction_Access_Agreement_25APR25.pdf

EXECUTION VERSION

CONSTRUCTION AND ACCESS AGREEMENT

BETWEEN

PACIFIC GAS AND ELECTRIC COMPANY

AND

THE UNITED STATES BUREAU OF RECLAMATION

FOR

PHASE 2 OF THE BATTLE CREEK SALMON AND

STEELHEAD RESTORATION PROJECT

CONSTRUCTION AND ACCESS AGREEMENT BETWEEN

PACIFIC GAS AND ELECTRIC COMPANY AND

THE UNITED STATES BUREAU OF RECLAMATION FOR PHASE 2 OF THE

BATTLE CREEK SALMON AND STEELHEAD RESTORATION PROJECT

TABLE OF CONTENTS

Page

Recitals

Terms and Conditions

1. MOU Remains in Effect

2. Term of Agreement

3. Relationship of Parties

4. Phase 2 Construction Contracts

5. Conditions Precedent to Reclamation Access to PG&E Lands and Interests in Lands

6. Compliance with Laws and Regulations

7. Reclamation Contractor Requirements

8. Insurance and Indemnity Requirements

9. Generation or Discovery of Hazardous Materials or Hazardous Waste on Site

10. No Other Authority or Obligations Between the Parties

11. Termination

12. Dispute Resolution Between the Parties

13. General Miscellaneous Provisions

CONSTRUCTION AND ACCESS AGREEMENT BETWEEN

PACIFIC GAS AND ELECTRIC COMPANY AND

THE UNITED STATES BUREAU OF RECLAMATION FOR PHASE 2 OF THE

BATTLE CREEK RESTORATION PROJECT

This Construction and Access Agreement (“Agreement”) is entered into on this ____day of

, 2024 (“Effective Date”) by and between Pacific Gas and Electric Company

(“PG&E”), a California Corporation which is a public utility company doing business in

California, and the United States Bureau of Reclamation (“Reclamation”). PG&E and

Reclamation are sometimes referred to collectively in this Agreement as “the Parties” or individually as a “Party”.

Recitals

1. PG&E owns land, water conveyance systems, water diversion structures, and hydroelectric power generating facilities in the Battle Creek watershed in Tehama and Shasta counties, California, and is the licensee from the Federal Energy Regulatory Commission (“FERC”) for the Battle Creek Hydroelectric Project (FERC Project No. 1121).

2. In 1999 the Parties, U.S. Fish and Wildlife Service, National Marine Fisheries Service and the

California Department of Fish and Game (now California Department of Fish and Wildlife) entered into a Memorandum of Understanding To Memorialize The Agreement Regarding the

Proposed Battle Creek Chinook Salmon and Steelhead Restoration Project Located in the Battle

Creek Watershed in Tehama and Shasta Counties (“MOU”). The MOU is attached and incorporated by reference as Exhibit 1.

3. The MOU describes in general the plan agreed to by the parties to the MOU, including the

Parties to this Agreement, to make changes in the physical structures of FERC Project No. 1121 to facilitate the restoration of salmon and steelhead runs in the Battle Creek watershed

(“Restoration Project”) while preserving hydroelectric generation.

4. Under the terms of the MOU, Reclamation receives funds for, if appropriated, implementation of the Federal Cost Sharing activities under Section 10.2 of the MOU. The Federal Cost Sharing activities under Section 10.2 of the MOU have been categorized into Phase 1 (A and B) and

Phase 2 activities. Phase 1 A and B activities are covered under separate agreements. This

Agreement covers Phase 2, as defined in Section 1.2.3 below.

5. Under Article 16 of PG&E’s existing license for FERC Project No. 1121, whenever the

United States shall desire, in connection with the project, to construct fish and wildlife facilities or to improve the existing fish and wildlife facilities at its own expense, the Licensee shall permit the United States or its designated agency to use, free of cost, such of the Licensee's lands and interests in lands, reservoirs, waterways and project works as may be reasonably required to complete such facilities or such improvements thereof.

6. This Agreement is intended to provide greater detail regarding the rights, obligations and responsibilities of the Parties with respect to the implementation of Phase 2 activities and to define the conditions under which PG&E will provide Reclamation and its contractors access to

PG&E’s lands and interests in lands, reservoirs, waterways and project works for Reclamation’s construction of Phase 2.

Terms and Conditions

1. MOU Remains in Effect

1.1. The Parties agree and acknowledge that the MOU remains in full force and effect. If any conflicts arise between the MOU and this Agreement, the MOU controls.

1.2. Definitions

1.2.1. The Parties specifically incorporate by reference the Definitions stated in Section

2.0 of the MOU. Additional definitions for this Agreement are as follows:

1.2.2. "Each contractor" or "contractor" refers to all individuals and/or entities and all subcontractors to such individuals and/or entities under contract by Reclamation for any portion of Phase 2.

1.2.3. “Phase 2” means modification of facilities at four Hydroelectric Project diversion dam sites located on the South Fork Battle Creek, Ripley Creek, and Soap Creek which will be achieved by removing Coleman Diversion Dam, Lower Ripley

Creek Diversion Dam, Soap Creek Diversion Dam, and South Diversion Dam, and closing off the Coleman Canal intake completed in accordance with the terms and conditions of the MOU, and other applicable agreements and law. The modifications include:

a. Construction of the Coleman Canal intake closure.

b. Removal of Lower Ripley Creek Diversion Dam.

c. Removal of Coleman Diversion Dam.

d. Removal of South Diversion Dam and South Canal.

e. Removal of Soap Creek Diversion Dam.

1.2.4. “Phase 2 Activities” shall include, but are not limited to, all tasks associated with:

(1) Planning and Engineering; (2) Construction Contracts; (3) Construction

Management; (4) Environmental Compliance, Environmental Mitigation, Monitoring and Maintenance (during construction in accordance with environmental commitment plans); and (5) all plans, procedures and documents required pursuant to this Agreement.

2. Term of Agreement

The term of this Agreement shall be the Effective Date through completion of all construction for items in 1.2.3.a through 1.2.3.e, unless terminated under Section 10 of this Agreement.

3. Relationship of Parties

3.1. Consistent with Article 16 of PG&E’s existing FERC license (FERC Project No.

1121) and the terms of the MOU, PG&E shall permit Reclamation and it contractors to use, free of cost, such of PG&E’s lands and interests in lands, reservoirs, waterways and project works as may be reasonably required to complete Phase 2 and

Phase 2 Activities. Such access shall be subject to terms and conditions of PG&E’s

FERC license, PG&E’s existing easements and rights of way, as well as the terms and conditions of this Agreement.

3.1.1. Except as provided for in Section 5.3, PG&E makes no warranty or representation, and assumes no responsibility or liability, regarding the legal adequacy of PG&E’s existing lands and interests in lands, reservoirs, waterways and project works to complete Phase 2.

3.1.2. PG&E assumes no responsibility for the existing or future condition or maintenance of any existing roads or structures that Reclamation or its contractors use to perform the work for Phase 2 or to travel to and from PG&E's facilities or

FERC Project No. 1121.

3.1.3. Nothing in this Agreement obligates PG&E to incur additional construction or operational expenses beyond that to which PG&E has already agreed in the MOU.

3.2. Reclamation will maintain environmental compliance, mitigation, monitoring and reporting during construction, in accordance with the MOU. Upon completion of each construction contract, environmental compliance responsibilities will revert to PG&E who will comply with all post-construction environmental requirements at its own expense. The Parties shall fully cooperate in all reasonable respects with each other in connection with the performance of the MOU, this Agreement, and during Phase 2 and Phase 2 Activities.

4. Phase 2 Construction Contracts

4.1. The Parties understand that Reclamation plans to award two construction contracts to complete Phase 2, generally in accordance with the following:

4.1.1.1. South Dam and Canal Removal Contract: Removal of South Diversion

Dam, South Canal, Soap Creek Feeder Diversion Dam, and Lower Ripley

Creek Feeder Diversion Dam.

4.1.1.2. Coleman Dam Removal Contract: Removal of Coleman Dam and

Construction of Coleman Canal Intake Closure.

4.2. This Agreement only covers Phase 2. The construction contracts that relate to Phase

2 may be modified by Reclamation. If a modification requires FERC approval, the change will only be made upon the mutual written agreement of the Parties and shall be submitted by PG&E to FERC for its approval. Upon FERC’s approval, the change will go into effect.

5. Conditions Precedent to Reclamation Access to PG&E Lands and Interests in Lands

PG&E shall permit Reclamation and its contractors to access PG&E’s lands and interests in lands, reservoirs, waterways and physical structures for the purpose of Phase 2 and Phase 2

Activities, provided that each of the following conditions is met:

5.1. PG&E has received a final Order from FERC, which is no longer subject to challenge or appeal, to amend its license for FERC Project No. 1121 and allow Phase 2 and

Phase 2 Activities to proceed.

5.2. Reclamation and PG&E have agreed upon a Phase 2 Construction Plan and

Construction Schedule, which shall be consistent with the FERC order approving the implementation of Phase 2 and Reclamation, has prepared Quality Control and

Inspection Plans (“QCIPs”) that meet FERC requirements. Exhibit 2 to this

Agreement provides information regarding FERC’s requirements for the content and timing of reports that must be generated consistent with each QCIP.

5.3. PG&E has all the necessary land, land rights, easements and rights of way necessary to complete the portion of Phase 2 for which access is necessary.

5.4. Reclamation has prepared a detailed set of construction specifications and drawings for the portion of Phase 2 for which access is necessary and PG&E has participated in the development of, and has concurred with, the specifications and drawings for the affected work to be undertaken, in accordance with Section 6.1 I of the MOU. Those construction specifications and drawings have been reviewed by the PMT and approved by FERC.

5.5. PG&E has received authorization from the FERC Regional Engineer to start construction.

5.6. Except for the certification under Section 401 of the Clean Water Act to operate

FERC project No. 1121, and obtaining FERC approvals for Phase 2 (which are activities that will be the responsibility of PG&E), Reclamation and/or its contractors have received all applicable local, state and federal approvals (including the Clean

Water Act Section 401 certification for any demolition or construction for Phase 2

Activities) and permits for the construction specifications and drawings for that portion of Phase 2 for which access is necessary, and is authorized by these approvals and permits to proceed with that portion of Phase 2 by those governmental entities and Reclamation has provided copies of such permits to PG&E for its records and for

PG&E’s submission to FERC.

5.7. Reclamation agrees by its signature to this Agreement and consistent with Section 8.4

D of the MOU, to comply with

5.7.1. “Entry Procedures for Visitors to Hydro Facilities”, attached to this Agreement as

Exhibit 3, and PG&E standard PG-1404P-01 “Power Generation Clearance and

Tagging Procedures – Lockout Tagout”, attached as Exhibit 4. If PG&E updates these procedures, PG&E shall provide Reclamation with such updates, in writing, to replace those currently found as exhibits to this agreement.

5.7.2. “Clearance, Switching Log and Tagging Procedures”, attached to this Agreement as Exhibit 4, that apply to 1) work that will impact generation, or require the shut-down of generation or transmission facilities (referred to as “outages”), and

2) work that will require implementation of safety measures to control hazardous energies in the work zone (referred to as “clearances”) at FERC Project No. 1121.

Reclamation has prepared procedures (and any applicable updates) that enable

PG&E to comply with such requirements, which will include, but not be limited to:

5.7.2.1. Provisions for giving adequate notice to PG&E of the need for generation or transmission outages so that PG&E can comply with the California

Independent System Operator (“CAISO”) scheduling tariffs and procedures without incurring costs or penalties and preserve (through both the timing and duration of future outages) maximum opportunities for power generation at

FERC Project No. 1121. Reclamation shall be responsible for ensuring its notice is sufficient to meet any future CAISO tariff or procedures. A copy of the current version of the CAISO Business Practice Manual for Outage

Management (Version 27), which sets forth procedures for planned and forced outages, is attached as Exhibit 5.

5.7.2.2. Provisions for providing adequate information to PG&E of the need for a safety clearance, including detailed scope of work and discussion regarding clearance limits, in order for PG&E to safely isolate the work zone from hazardous energies (as per Exhibit 4).

5.7.3. PG&E has provided Reclamation with any notification requirements for Project

Access/Entry, Water Delivery Clearances, Electrical Service Clearances, Permit

Violations, Incident Response and Personal Injury and Reclamation has prepared procedures (and any applicable updates) that enable compliance with such requirements.

5.8. Reclamation is in compliance with this Agreement, which is mutually agreeable to

Reclamation and PG&E.

5.9. Concurrence for Completion of Conditions Precedent. Prior to Reclamation accessing any PG&E lands and interests in lands, reservoirs, waterways and physical structures for the purpose of Phase 2 or Phase 2 Activities, PG&E shall provide to Reclamation a written concurrence that all of the conditions precedent listed in Paragraph 5 of this

Agreement have been met. In addition, should, at any time, PG&E believe that any of the conditions precedent have not been complied with, PG&E shall provide written notice to Reclamation as soon as practicable.

6. Compliance with Laws and Regulations.

6.1. The Parties shall cooperate with each other in all reasonable respects in connection with obtaining the authorizations and permissions referenced in this Section.

6.2. The Parties agree that all activities implementing Phase 2 are subject to the applicable terms, conditions, regulations and orders from FERC.

6.3. PG&E shall at all times have access to project lands under construction to ensure compliance with all applicable terms, conditions, regulations, and orders from FERC.

6.4. PG&E and Reclamation have the authority to stop work on Phase 2 at any time as they deem necessary for imminent safety or environmental compliance issues. If either PG&E or Reclamation believes it is necessary to stop work pursuant to this section, they will take reasonable measures to contact the other party first and work cooperatively to resolve the concern as quickly as possible.

7. Reclamation Contractor Requirements

Reclamation shall ensure that each construction contract it awards provides, among other things, that:

7.1. Each contractor awarded a contract for work on Phase 2 is a fully licensed contractor in the State of California.

7.2. Each contractor shall complete Phase 2 construction activities according to the construction specifications and drawings;

7.3. Each contractor shall comply with the terms of this Agreement and all applicable permits, plans and procedures developed pursuant to this Agreement.

7.4. Each contractor shall have an Equal Opportunity Employment Program and a Drug and Alcohol Abuse Policy and Prevention Program in force for its employees that comply with the Federal Acquisition Regulations (FAR). In addition, each contractor shall agree to comply with PG&E’s policies regarding drug and alcohol testing

(including submitting to PG&E’s reasonable authority to remove contractors who are suspected of being under the influence of drugs or alcohol or are otherwise engaged in conduct that is erratic or unsafe) as set forth in Exhibit 6.

7.5. Each contractor shall be responsible for the repair of any and all damage caused by such contractor during construction activities to property owned by PG&E or third parties.

7.6. Each contractor shall comply with the dispute resolution provisions set forth in

Section 12 of this Agreement and, except where otherwise provided, agrees to comply with those dispute resolution provisions with regard to any and all disputes that may arise between the contractor and PG&E.

7.7. Each contractor shall agree not to seek from PG&E any incidental, special, or consequential damages, including, but not limited to, loss of profits.

7.8. Each contractor shall comply with the insurance and indemnity requirements set forth in Section 8 and Exhibit 7 of this Agreement.

7.9. Each contractor shall comply with all applicable federal and state laws and regulations (including those relating to hazardous materials and hazardous waste) and shall comply with the requirements set forth in Section 9 of this Agreement.

7.10. Reclamation shall comply and shall require all of its contractors to comply with any and all requirements, including confidentiality, for Critical Energy Infrastructure

Information relating to FERC Project No. 1121 as determined by FERC or PG&E (see http://www.ferc.gov/legal/ceii-foia/ceii/consultant-nda.pdf.

http://www.ferc.gov/legal/ceii-foia/ceii/consultant-nda.pdf

8. Insurance and Indemnity Requirements

8.1. Consistent with the requirements set forth in Exhibit 7 to this Agreement, Reclamation shall ensure that all of its contractors, and to the extent permitted by law, Reclamation itself, indemnify, defend and hold harmless PG&E, except for PG&E’s own negligence or willful malfeasance, any and all personal injury, property damage, or other losses or damage claimed by third parties from actions in connection with or arising out of the obligations of this Agreement. With regard to any dispute with which Reclamation’s contractor asserts that Reclamation is at fault for the damages or liability described in this section, the contractor must indemnify, defend and hold harmless PG&E as set forth in this Agreement. Nothing in this section prohibits Reclamation’s contractor from prosecuting its claims against Reclamation, as otherwise permitted by law.

8.2. Consistent with the requirements set forth in Exhibit 7 to this Agreement, Reclamation’s contractors, as a requirement of construction contracts for Phase 2, shall maintain insurance policies and/or bonds (with PG&E named as “Additional Insured”) that, at no cost to PG&E, are adequate to pay for all losses or damages or repairs to PG&E's existing facilities as well as any damage to the environment caused by the contractor during construction. Reclamation shall also require that each of its contractors shall have in force adequate workers compensation and third party injury and property damage liability insurance, and each contractor shall name PG&E as an “Additional

Insured” under such policies. All insurance policies referenced in this Section 10 shall be in force from the time of implementation of construction through completion of construction.

8.2.1. Unless Reclamation and PG&E otherwise agree in writing, in no event shall the contractor’s overall insurance liability limit be less than $5,000,000 per occurrence. Coverage shall be at least as broad as the Insurance Services Office

Commercial General Liability Coverage “occurrence” form, including blasting.

Work that involves blasting shall not be covered by an insurance policy that contains an explosion, collapse, blasting or underground exclusion or any other exclusion that may otherwise negate the insurance coverage for this activity.

Other minimal terms and conditions of insurance and indemnity to be provided by contractors performing work on Phase 2 to protect PG&E are included in Exhibit

7 to this Agreement.

8.3. With regard to any disputes between Reclamation’s contractors and PG&E regarding the insurance or indemnity obligations set forth in this Section 8 and Exhibit 7 to this

Agreement, Reclamation shall require that each contractor first comply with the dispute resolution procedure set forth in Section 12 of this Agreement, and if such dispute is not resolved with PG&E that the contractor shall agree to use binding arbitration to resolve all such claims including the award of attorneys’ fees and costs to the prevailing party in such an arbitration.

9. Generation or Discovery of Hazardous Materials or Hazardous Waste on Site

9.1. Responsibility and liability for hazardous materials and hazardous waste discovered on site shall be handled in accordance with Section 12 of the MOU.

10. No Other Authority or Obligations Between the Parties

10.1. Reclamation shall not have any jurisdiction or authority over PG&E as a result of, in connection with, or arising from Phase 2 Activities.

10.2. Except as specifically provided in the MOU, this Agreement, or other written agreements between the Parties, there are no financial or other rights or obligations between Parties for Phase 2 Activities.

11. Termination

11.1. This Agreement shall terminate upon the occurrence of any of the following events:

11.1.1. Written termination of the MOU as set forth in Section 16 of the MOU.

11.1.2. Completion of Phase 2 construction activities.

11.2. If no work is conducted on Phase 2 for 6 consecutive months due to lack of funding, PG&E may elect to terminate this Agreement. If PG&E makes such an election, PG&E retains all of its rights, including the right to recover costs and/or the right to seek performance of this Agreement at a later date.

11.3. This Agreement may be terminated for any other reason upon written agreement of the

Parties.

11.4. General Order No. 69-C. Pursuant to General Order No. 69-C of the California Public

Utilities Commission, PG&E may terminate this Agreement, at any time, upon 90 days written notice to Reclamation if PG&E, in its sole discretion, should determine that the

Agreement or the construction of the Phase 2 facilities are inconsistent with PG&E’s operational needs or interferes with PG&E’s use of its facilities. Nothing in this

Section is intended to change the terms of the MOU or the current terms of PG&E’s license for the Project.

12. Dispute Resolution Between the Parties

All disputes between the Parties arising out of, in connection with, or related to this

Agreement shall be resolved through the Dispute Resolution process described in MOU

Section 14.0 unless the Parties agree, in writing, to an alternative dispute resolution procedure.

13. General Miscellaneous Provisions

13.1. PG&E’s Rights to all Phase 2 documents. The Parties agree that PG&E shall have the right to copies of all documents that are created, used or otherwise relate to Phase 2, including, but not limited to, reports, photographs, charts, etc.

13.2. Choice of Law. This Agreement shall be governed, interpreted and construed under and according to the laws of the State of California and any applicable Federal law.

13.3. Health Warnings. The California Health and Safety Code requires businesses to provide warnings prior to exposing individuals to materials listed by the Governor as chemicals “…known to the State of California to cause cancer, birth defects or reproductive harm.” PG&E uses chemicals on the Governor’s list at many of its facilities. In addition, many of these chemicals are present at non-PG&E-owned facilities and locations. Accordingly, in performing Phase 2 and Phase 2 Activities under this Agreement, Reclamation and each contractor, its employees, agents, and subcontractors may be exposed to chemicals on the Governor’s list. Reclamation and each contractor is responsible for notifying its employees, agents, and subcontractors that work performed hereunder may result in exposures to chemicals on the Governor’s list. Reclamation shall include a provision substantially similar to this section in each contract it awards for work on Phase 2.

13.4. Non-Waiver. The waiver by either Party of any breach of any term, covenant, or condition contained in this Agreement, or any default in the performance of any obligations under this Agreement, shall not be deemed to be a waiver of any other breach or default of the same or any other term, covenant, condition, or obligation. Nor shall any waiver of any incident of breach or default constitute a continuing waiver of the same.

13.5. Enforceability. If any of the provisions, or the application of any of the provisions, of this Agreement are held to be illegal or invalid by a court of competent jurisdiction, it shall not affect the legality or enforceability of the remaining provisions or application of any of the provisions of the Agreement, and PG&E and Reclamation shall renegotiate with the goal of finding a legal, equitable alternative that effectuates the purpose of this Agreement.

13.6. Integration of Agreement and Amendments in Writing. This writing contains the entire understanding between the Parties as to the contents of the Agreement. Neither party has been induced by representations, statements, nor commitments other than those expressed in this Agreement.

13.7. Binding Effect. This Agreement and the covenants and agreements herein contained shall be binding on, and inure to the benefit of, the Parties hereto and their respective heirs, successors and assigns, subject to the limitations on assignment set forth in this

Agreement.

13.8. Headings. Section headings set forth in this Agreement are for convenience only and shall not be used to construe the meaning of the provisions of this Agreement.

13.9. No Third Party Beneficiaries. The provisions of this Agreement are intended for the sole benefit of PG&E and Reclamation and there are no third party beneficiaries contemplated by this Agreement.

13.10. No member of or delegate to the United States Congress or the California Legislature, or officials or employees of PG&E or the Federal government may share any part of this Agreement or any benefit to arise from it.

EXHIBIT 1

MEMORANDUM OF UNDERSTANDING TO MEMORIALIZE THE AGREEMENT

REGARDING THE PROPOSED BATTLE CREEK CHINOOK SALMON AND

STEELHEAD RESTORATION PROJECT LOCATED IN THE BATTLE CREEK

WATERSHED IN TEHAMA AND SHASTA COUNTIES, CALIFORNIA

MEMORANDUM OF UNDERSTANDING

by and among

NATIONAL MARINE FISHERIES SERVICE

U.S. BUREAU OF RECLAMATION

U.S. FISH AND WILDLIFE SERVICE

CALIFORNIA DEPARTMENT OF FISH AND GAME and

PACIFIC GAS AND ELECTRIC COMPANY

TO MEMORIALIZE THE AGREEMENT REGARDING THE PROPOSED BATTLE

CREEK CHINOOK SALMON AND STEELHEAD RESTORATION PROJECT,

LOCATED IN THE BATTLE CREEK WATERSHED IN TEHAMA AND SHASTA

COUNTIES, CALIFORNIA.

This Memorandum of Understanding (MOU), by and among the NATIONAL MARINE

FISHERIES SERVICE (NMFS), UNITED STATES BUREAU OF RECLAMATION (USBR),

UNITED STATES FISH AND WILDLIFE SERVICE (USFWS), CALIFORNIA

DEPARTMENT OF FISH AND GAME (CDFG), and PACIFIC GAS AND ELECTRIC COMPANY (PG&E), hereinafter collectively called the “Parties,” defines the Parties’ roles and responsibilities regarding actions that will be undertaken as part of the proposed Battle Creek Chinook Salmon and Steelhead Restoration Project (Restoration Project) and commitments regarding costs for and implementation of the Restoration Project.

TABLE OF CONTENTS

1.0 RECITALS

2.0 DEFINITIONS

3.0 PURPOSES

4.0 PROPOSED BATTLE CREEK CHINOOK SALMON AND STEELHEAD

RESTORATION PROJECT

5.0 CONTINGENCIES AND LIMITATIONS

6.0 ROLES AND RESPONSIBILITIES

7.0 MONITORING AND REPORTING

8.0 PLANNING, PERMITTING, AND CONSTRUCTION ACTIVITIES

9.0 ADAPTIVE MANAGEMENT

10.0 FUNDING

11.0 LEASES OR SALE OF FERC PROJECT NO. 1121

12.0 ENVIRONMENTAL LIABILITIES

13.0 AMENDMENT PROCESS

14.0 DISPUTE RESOLUTION

15.0 TERM

16.0 TERMINATION

17.0 SIGNATURES

1.0 RECITALS

This MOU is entered into with the following understandings:

1.1 Battle Creek is a tributary of the Sacramento River located in Tehama and Shasta Counties. This cold, spring-fed stream has exceptionally high flows during the dry season, making it important habitat for anadromous fish. Battle Creek may be the only remaining stream other than the main stem of the Sacramento River that can successfully sustain breeding populations of steelhead and all four runs of chinook salmon. Battle Creek is also unique and biologically important because it provides habitat opportunities during drought years for winter-run chinook salmon.

1.2 PG&E owns and operates several diversion facilities on the North and

South Forks of Battle Creek, including Coleman Diversion Dam, Inskip Diversion Dam, South Diversion Dam, Wildcat Diversion Dam, Eagle Canyon Diversion Dam, and North Battle Creek Feeder Diversion Dam, and dams on Ripley Creek, Soap Creek and Baldwin Creek, and controls the majority of the flows in the anadromous fish reaches of the Battle Creek watershed.

1.3 In 1997, in response to opportunities to apply for federal and state fish and wildlife resource restoration funds, the Battle Creek Working Group (BCWG), made up of representatives from the state and federal resource agencies and fishery, environmental, local, agricultural, power, and urban stakeholder communities, was formed to accelerate chinook salmon and steelhead restoration in the Battle Creek watershed. The BCWG provided technical advice for a plan developed under a CALFED Category III grant.

1.4 By participating in a cooperative process to restore Battle Creek, which avoids the conventional, adversarial, regulatory process, the Parties expect to realize the following benefits:

A. Restoration of self-sustaining populations of chinook salmon and steelhead and their habitat in the Battle Creek watershed through a voluntary partnership with state and federal agencies, a third party donor(s), and PG&E;

B. Up-front certainty regarding specific restoration components, including Resource Agency prescribed instream flow releases, selected decommissioning of dams at key locations in the watershed, dedication of water diversion rights for instream purposes at decommissioned sites, construction of tailrace connectors, and installation of Fail-Safe Fish Screens and Fish Ladders;

C. Timely implementation and completion of restoration activities;

and

D. Joint development and implementation of a long-term Adaptive

Management Plan with dedicated funding sources to ensure the continued success of restoration efforts under this partnership.

1.5 A negotiating team comprised of management representatives from

CDFG, NMFS, PG&E, USBR, and USFWS, met in the fall of 1998 and in early 1999 to pursue an agreement regarding a proposal for Battle Creek restoration actions. An Agreement in Principle among the Parties was entered into in February, 1999 (see Attachment 1).

1.6 Other actions to restore and enhance fish habitat are being implemented in the Battle Creek watershed that are not directly related to hydroelectric project operations (e.g., Coleman National Fish Hatchery actions and meadow restoration upstream of the natural barrier falls which preclude anadromous passage). These actions are outside the scope of the Restoration Project, but are considered important to the overall success of restoring anadromous fishery resources in the Battle Creek watershed.

1.7 Implementation of the Restoration Project will be consistent with the following restoration directives and programs:

• Central Valley Project Improvement Act (Public Law 102-575 Section 3401 et seq. (CVPIA)) Anadromous Fish Restoration Program;

• State Salmon, Steelhead Trout, and Anadromous Fisheries Program Act (State Senate Bill 2261, 1990) Central Valley Salmon and Steelhead Restoration and Enhancement Plan;

• National Marine Fisheries Service Recovery Plan for Sacramento River Winter-run Chinook Salmon;

• CALFED Ecosystem Restoration Program;

• Upper Sacramento River Fisheries and Riparian Habitat Management Plan (State Senate Bill 1086, 1989);

• Restoring Central Valley Streams – A Plan for Action (1993);

and

• Steelhead Restoration and Management Plan for California (1996).

One specific goal of both the CVPIA and State Senate Bill 2261 is doubling natural production of anadromous fish. Battle Creek has been identified as one of the Sacramento River tributaries where restoration activities have the potential to contribute materially to these goals.

1.8 The Parties are proposing a series of measures, described in this MOU as the Restoration Project, to establish a restoration program for chinook salmon and steelhead habitat in the reaches of Battle Creek below the natural water falls on the forks of Battle Creek that act as absolute barriers to fish passage (see Section 2.19). The Total Project Cost of the Restoration Project is estimated to be $50,709,000. Individual restoration actions under the Restoration Project will be based upon the best scientific and commercial information available. The Parties intend to implement the Restoration Project in the most efficient and cost effective manner consistent with achieving the benefits and goals articulated in Sections 1.4 and 1.7.

1.9 The Parties recognize the unique characteristics of Battle Creek regarding its importance in the restoration of chinook salmon and steelhead in the Sacramento River watershed. The Parties also acknowledge the current availability of public funding for anadromous fish restoration projects in the Central Valley, which funding has not been readily available in the past and may not be in the future. Based on this unique set of circumstances, the Parties recognize that all actions cooperatively pursued under the Restoration Project, including dam removal and public funding, will not set a precedent for future restoration actions in other watersheds.

1.10 USFWS is participating in the Restoration Project pursuant to the CVPIA, the Endangered Species Act (16 U.S.C. Sections 1531-1544, as amended (ESA)), Fish and Wildlife Coordination Act, Federal Power Act and the Fishery Conservation and Management Act (16 U.S.C. Sections 1801- 1882).

1.11 NMFS is participating in the Restoration Project pursuant to the ESA.

1.12 USBR is participating in the Restoration Project pursuant to the CVPIA and the California Bay-Delta Environmental Enhancement Act (P.L. 104- 333).

1.13 CDFG is participating in the Restoration Project based on its responsibilities as trustee agency for the fish and wildlife resources of California (Fish and Game Code Section 711.7(a)) and its jurisdiction over the conservation, protection, and management of fish, wildlife, native plants, and habitat necessary for biologically sustainable populations of those species (Fish and Game Code Section 1802), and other applicable state and federal laws.

1.14 PG&E is participating in the Restoration Project as owner and operator of the Battle Creek Hydroelectric Project (Federal Energy Regulatory Commission (FERC) Project No. 1121).

THEREFORE, the Parties hereby understand and agree as follows:

2.0 DEFINITIONS

The terms “CDFG”, “CVPIA”, “ESA”, “MOU”, “NMFS”, “Parties”, “Restoration Project”, “USBR”, and “USFWS” have the meanings set forth above.

For the purposes of this MOU, the following terms have the meanings set forth below:

2.1 "Adaptive Management" means an approach, as more specifically described in Section 9.0, that allows for changes to the Restoration Project that may be necessary in light of new scientific information regarding the biological effectiveness of the restoration measures.

2.2 "Adaptive Management Fund" means the Fund described in Section 9.2 B.

2.3 “Agencies” means CDFG, NMFS, USBR, and USFWS.

2.4 "Battle Creek Hydroelectric Project, FERC Project No. 1121" or "FERC Project No. 1121" means the hydroelectric development as described in the license issued by FERC on August 13, 1976 and as subsequently amended.

2.5 “CALFED” means the entity formed in 1995 by the cooperative effort among state and federal agencies and California’s environmental, urban, and agricultural communities to address environmental and water management problems associated with an intricate web of waterways created at the junction of the San Francisco Bay and the Sacramento and San Joaquin rivers and the watersheds that feed them and comprise CALFED’s solution area for the Bay-Delta system.

2.6 “CAMP” means the Comprehensive Assessment and Monitoring Program which has been established pursuant to Section 3406(b)(16) of the CVPIA.

2.7 “Consensus” means the unanimous agreement among the Parties.

2.8 "CPUC" means the California Public Utilities Commission.

2.9 "Decommission" means to fully remove all applicable facilities and return a site to an approximation of pre-existing conditions, subject to FERC approval. Decommissioning activities include, but are not limited to, developing a decommissioning plan, performing pre- and post-removal environmental studies, facility removal, environmental mitigation and restoration, erosion control, re-vegetation, environmental monitoring, and reporting.

2.10 “Fail-Safe Fish Ladder” means features inherent in the design of the ladder that ensure the structure will continue to operate to facilitate the safe passage of fish under the same performance criteria as designed under anticipated possible sources of failure.

2.11 “Fail-Safe Fish Screen” means a fish screen that is designed to automatically shut off the water diversion whenever the fish screen fails to meet design or performance criteria until the fish screen is functioning again.

2.12 “FERC” means the Federal Energy Regulatory Commission, the entity charged with implementing the Federal Power Act (16 U.S.C. 791 (a) et seq.) and the licensing of non-federal hydropower projects in jurisdictional waters of the United States.

2.13 “Final FERC Order” means a final order issued by FERC pursuant to an application filed by PG&E to amend the license for FERC Project No.

1121 to implement the applicable measures of this Restoration Project, after exhaustion of any administrative or judicial remedy.

2.14 “PG&E” means the Pacific Gas and Electric Company, and any lessee or successor owner of the Battle Creek Hydroelectric Project (FERC Project No. 1121).

2.15 “Purchased Water Cost” means the identified financial value of the prescribed instream flow releases provided by the Restoration Project in excess of the required flows stated in the license for FERC Project No.

1121 as of March 1, 1999.

2.16 "Ramping Rates" means moderating the rate of change of stream stage decrease in Battle Creek resulting from the operation of FERC Project No.

1121.

2.17 “Resource Agencies” means CDFG, NMFS, and USFWS.

2.18 "Restoration Project" means all measures set forth in the underlying Agreement in Principle (Attachment 1) as further developed in this MOU and having the purpose of restoring chinook salmon and steelhead habitat associated with FERC Project No. 1121, within the Restoration Project Area.

2.19 “Restoration Project Area” means the areas in and around the following

PG&E facilities: Coleman Diversion Dam, Inskip Diversion Dam, South Diversion Dam, Wildcat Diversion Dam, Eagle Canyon Diversion Dam, North Battle Creek Feeder Diversion Dam, and Asbury Pump Diversion Dam; Battle Creek, North Fork Battle Creek and South Fork Battle Creek, up to the natural barriers at 14 miles and 19 miles above the confluence, respectively; and Eagle Canyon Springs, Soap Creek (and Bluff Springs), Baldwin Creek, and Lower Ripley Creek and each of their adjacent water bodies.

2.20 "Total Project Cost" means all costs necessary to implement the

Restoration Project, including but not limited to: planning; permitting;

performing environmental and decommissioning studies; preparing a FERC license amendment application; designing, constructing, operating, maintaining and making periodic replacements for various facility additions (i.e., fish screens, fish ladders, connectors and appurtenant facilities) to FERC Project No. 1121; facility decommissioning, removal, and environmental restoration; facility and biological and environmental monitoring and reporting; Purchased Water Cost; and Adaptive Management planning, monitoring, and implementation costs.

2.21 "Water Acquisition Fund" means the Fund described in Section 9.2 A.

3.0 PURPOSES

The purposes of this MOU are:

3.1 To identify the series of measures comprising the proposed Restoration Project to be addressed in the NEPA/CEQA/ESA and other applicable environmental compliance and permitting processes;

3.2 To identify the roles and responsibilities of each of the Parties;

3.3 To identify contingencies and limitations of the Parties; and

3.4 To identify the scope of proposed FERC license terms and conditions for preparation of a separate license amendment application to be subsequently submitted to FERC to implement the proposed Restoration Project.

4.0 PROPOSED BATTLE CREEK CHINOOK SALMON AND STEELHEAD

RESTORATION PROJECT

The Parties understand and agree that all engineering and design work for facility modifications described in Section 4.1 below, including installation of fish screens and fish ladders, decommissioning dams and associated facilities, and installation of any connections between powerhouses and water conveyance facilities on the South Fork of Battle Creek, shall meet applicable CDFG, FERC, NMFS, PG&E, USBR, and USFWS standards.

The proposed Restoration Project includes the following:

4.1 Facility Modifications

A. Coleman Diversion Dam:

• Install a tailrace connector from Inskip Powerhouse to Coleman Canal and a water bypass facility around Inskip Powerhouse to Coleman Canal. The Inskip Powerhouse bypass facility will be the most economical alternative that still provides the functional equivalent of the existing Inskip Powerhouse bypass system and will deliver that system’s design flow of water to the Coleman Canal.

• Decommission the dam and appurtenant facilities.

B. Inskip Diversion Dam:

• Install a NMFS/CDFG approved Fail-Safe Fish Screen.

• Install a NMFS/CDFG approved Fail-Safe Fish Ladder.

• Install a tailrace connector from South Powerhouse to Inskip Canal concurrent with, or prior to, the Inskip Diversion Dam fish screen.

C. South Diversion Dam:

• Decommission the dam, related water conveyance and appurtenant facilities.

D. Wildcat Diversion Dam:

E. Eagle Canyon Diversion Dam:

• Install a NMFS/CDFG approved Fail-Safe Fish Ladder.

• Decommission spring collection facilities as identified in Table 1 of Attachment 1.

F. North Battle Creek Feeder Diversion Dam:

• Retrofit the existing fish ladder or install a new ladder, either which meet NMFS/CDFG approved design for Fail-Safe operation.

G. Soap Creek:

H. Lower Ripley Creek:

I. Baldwin Creek:

• Provide a means for releasing a maximum instream flow of 5 cfs from Asbury Pump Diversion.

J. Various Locations:

• Install/modify gauges at appropriate locations required to monitor implementation of the Restoration Project.

While the above list of facilities to be decommissioned shall not be reduced, the Parties may reach Consensus on less than full removal of any specific facility or appurtenant feature in order to reduce overall Restoration Project costs, where objectives of the Restoration Project, including unimpeded fish passage, will be met while at the same time minimizing PG&E liability.

4.2 Prescribed Instream Flow Releases

The Parties agree that another component of the Restoration Project is an increase of prescribed instream flow releases which will benefit fish and wildlife resources. PG&E will provide the prescribed instream flow releases specified in Tables 1 and 2 of Attachment 1 or the natural flow, whichever is less, and the Ramping Rates specified in Attachment 2. For those dams that are being decommissioned, PG&E will transfer the associated water diversion rights to CDFG, as more fully described in Section 6.1 E.

At the discretion of the Resource Agencies, the prescribed instream flow releases will be initiated and maintained commencing January 1, 2001, or upon issuance of the Final FERC Order, whichever occurs later. Should any such prescribed instream flow releases not commence on January 1, 2001, the associated foregone power generation payment specified in Section 10.2 shall be reduced in proportion to the time at which power generation is actually foregone.

4.3 Water Acquisition Fund

This component of the proposed Restoration Project is described in

Section 9.2 A.

4.4 Adaptive Management Plan

This component of the proposed Restoration Project is described in

Section 9.1.

4.5 Adaptive Management Fund

This component of the proposed Restoration Project is described in Section 9.2 B.

5.0 CONTINGENCIES AND LIMITATIONS

This MOU does not commit the Parties to activities beyond the scope of their respective missions, funding and authorities. Except for the federal portion of the Restoration Project funding provided for in Section 10.1, it is recognized that any federal funding needed to carry out any federal agency responsibilities under this MOU shall be subject to the availability of appropriated funds pursuant to the Anti-Deficiency Act (31 U.S.C. Section 1341). A lack of funding to meet the Agencies’ respective responsibilities shall not result in the transfer of such responsibilities or funding obligations to PG&E. In recognition that final designs and detailed cost estimates will be further refined through the process described in Section 8.0, the Parties agree that if sufficient funding is not available to accommodate the final estimates, they will jointly pursue additional funding.

5.1 The Agencies recognize that USBR will be the Agency that will receive the federal funding for the construction component of the Restoration Project. Thus, USBR, and not the Resource Agencies, will be responsible for any construction and decommissioning cost overruns, as provided in Section 10.2.

5.2 This MOU is of no force and effect until signed by all Parties. Any work initiated prior to the approval date is done at each Party’s own risk.

5.3 The Parties understand and agree that the implementation of any and all activities by CDFG, NMFS, USBR, and USFWS, pursuant to this MOU, with the exception of initial consultations and planning activities, are contingent upon compliance with NEPA and CEQA. The Parties anticipate that activities described in this MOU will be identified in any NEPA/CEQA document as an alternative, but also acknowledge that other alternatives will be considered in the NEPA/CEQA process prior to the time that a final decision or an irreversible commitment of resources or funds is made toward any one alternative.

5.4 The Parties understand and agree that certain undertakings of PG&E pursuant to this MOU are subject to approval by FERC and CPUC. In the event that the Final FERC Order amending the license for FERC Project No. 1121 and/or any necessary CPUC approval is materially different from the terms and conditions of the license amendment application, then this MOU may be amended as provided in Section 13.0 or terminated as provided in Section 16.0.

5.5 The Parties understand and agree that no permanent changes to facilities or operations are required pursuant to this MOU prior to issuance of a Final FERC Order, as defined in Section 2.13 above. The Parties also understand and agree that certain preliminary tasks must be performed to support the proposed license amendment application to FERC prior to the Final FERC Order, in order to assist in accomplishing the Restoration Project. Within sixty (60) days of the effective date of this MOU, PG&E and CDFG will begin consultations and develop a process with the State Water Resources Control Board (SWRCB) with respect to the petition specified in Section 6.1 E. CDFG and PG&E will work diligently with the Resource Agencies and SWRCB to finalize the dedication process after issuance of the Final FERC Order.

5.6 Nothing in this MOU, whether or not incorporated into the terms of the license for FERC Project No. 1121, is intended or shall be construed as a precedent or other basis for any argument that the Parties have waived or compromised any rights which may be available under state or federal law. In addition, nothing in this MOU shall establish a precedent regarding hydroelectric jurisdictional issues.

5.7 The Resource Agencies assert that the current and proposed facilities of FERC Project No. 1121, including those outlined in this MOU, are operating, and will continue to operate, in habitat occupied by Sacramento River winter-run chinook salmon, spring-run chinook salmon, Central Valley steelhead and other species listed under the ESA and the California Endangered Species Act. Nothing in this MOU is intended to bind or prejudice the Resource Agencies, or otherwise limit their respective authorities, in the performance of their responsibilities under these Acts and other applicable federal and state laws.

5.8 If there is any dispute regarding provisions of this MOU and the

Agreement in Principle included as Attachment 1, the provisions of this MOU shall govern.

6.0 ROLES AND RESPONSIBILITIES

6.1 PG&E

A. As more fully described below, PG&E has agreed to a number of physical and operational changes and additions to FERC Project No. 1121, as well as the assumption of a number of future costs, which cumulatively are estimated to have a value of approximately $20,550,900 of the Total Project Cost during the term of this MOU. PG&E, however, recognizes that these costs may exceed those estimates and agrees it is responsible for all cost overruns for Restoration Project components which are identified as funded by PG&E in Table 3 of Attachment 1. This amount includes PG&E’s participation in a portion of the biological and environmental monitoring more fully described in Section 7.3.