The First Law of Thermodynamics holds that the amount of matter and energy in the universe is constant and that no new matter or energy can be created. The corollary Second Law is that when energy is put to use, unusable energy or entropy results. One lesson—other than to beware of lawyers purporting to lecture on physics—is that everything we do has a consequence.

The construction and operation of new power-generating facilities have consequences. Regardless of the technology and fuel, development and operation of any facility, whether fossil-fueled or renewable, involves environmental trade-offs. Environmental impacts require mitigation, and each state and federal agency has its own view of the type and extent of mitigation required before a permit is issued.

The rules regarding impacts to water and wetlands generally follow this pattern: If a wetland is disturbed, equal or more acreage of replacement wetlands must follow. If the facility results in warmer water temperatures or depleted dissolved oxygen, the project sponsor must take action to ensure standards are met.

Focus the Mitigation Effects

There is growing recognition that many of the mitigation procedures imposed do little to protect the environment. Why? Because the mitigation is directed at the point of impact—not where the highest watershed outcomes can be achieved.

For example, a water temperature standard can be met by installing a mechanical chiller, or through large-scale riparian revegetation programs. The former hits the target immediately, while the cooling effect from the latter may take years. But the chiller takes energy to operate and results in cooling in the immediate area of the discharge, while planting trees throughout the watershed results in much broader ecosystem benefits. One doesn’t need to be an ecologist to embrace this concept; it’s intuitive.

Agencies and the public understand and are beginning to employ new approaches to regulatory compliance. The Environmental Protection Agency (EPA) and state environmental regulatory agencies have incorporated water quality trading principles into their permit programs. For example, if nutrient loading is the concern, a compliance program may be structured whereby the permittee pays an upstream farm to capture runoff and apply it to land, for which the permittee gets credit. Some states, like Oregon, have enacted legislation to develop “ecosystem services markets” as state policy. The concept is that a permittee could pay for allowing riparian plantings or wetlands restoration on the landowner’s property, which would constitute compliance with permit conditions.

An interesting application of such ecomarkets solutions is presented in the context of Federal Energy Regulatory Commission (FERC) relicensing of Idaho Power Co.’s Hells Canyon Complex (HCC). The HCC is an almost 1,200-MW hydroelectric facility comprising three dams on the Snake River: Brownlee, Oxbow, and Hells Canyon Dams. As part of the relicensing effort, Clean Water Act (CWA) Section 401 requires certification from the affected state that water quality standards will be maintained. Because the Snake River is the border separating Idaho and Oregon, and because the HCC discharges from both sides of the river, certification is required from both states. The approach to addressing HCC water quality impacts includes a combination of water quality trading and water marketing.

Develop Ecomarket Solutions

The Snake River upstream of the HCC is heavily used, both for withdrawals to serve irrigated agriculture and for municipal and industrial wastewater discharge. The two most significant water quality issues concerning the HCC are dissolved oxygen and temperature. One solution to the environmental challenge posed by the dissolved oxygen would be to install a mechanical aeration device to pump oxygen into the largest reservoir’s transition zone. Another resolution would be to conduct a water quality trade with an upstream discharger. Although both alternatives would likely positively address regulatory requirements for the dissolved oxygen requirement, the trade would provide better outcomes both in the reservoir and in upstream river water quality. It would also eliminate ongoing operation and maintenance expenses, including the energy to operate the aerator.

Temperature presents a trickier challenge, but it is equally amenable to an ecomarket approach. In its CWA Section 401 application, Idaho Power has proposed a watershed approach to meet the HCC temperature responsibility. There are engineered solutions to meeting the applicable temperature standard, such as pulling cold water from the bottom of Brownlee reservoir. The result would be cooler temperatures immediately below the HCC, but nowhere else. Idaho Power and federal fishery agencies strongly believe that fishery habitat would not be significantly improved. At the request of the agencies, Idaho Power is investigating the risk of pulling up 50 years of accumulated contaminants from the bottom of the reservoir. The ecomarkets approach could put mitigation dollars where they could best accomplish habitat improvement through watershed restoration. The long-term environmental benefits could far exceed those resulting from the engineered approach.

The need to implement forward-thinking solutions is pressing as society confronts the trade-offs between growing energy demand and environmental impacts. Ecomarket approaches offer a promising opportunity to find cooperative, cost-effective solutions to these problems that may provide better protection for the resource. Ecomarkets do not supplant a vigorous regulatory scheme. Rather, they should be seen as an important adjunct focused on delivering the best environmental outcomes at the lowest cost.

Rick Glick ( is a partner in Davis Wright Tremaine’s Environmental Practice Group. Davis Wright Tremaine attorneys represent Idaho Power Co. in the FERC relicensing and CWA Section 401 proceedings for the Hells Canyon Complex. The views expressed herein are those of the author and are independent of the firm’s representation of its clients.