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Mr. DeFazio. Well, I was concerned with the exchange of letters 

 regarding a rather small amount of money, which is $5 milHon, for 

 full implementation of the Council's plan as they see it, during the 

 next budget cycle, that whether or not there was any flexibility in 

 the budget to fund a trust or Oregon programs during this upcom- 

 ing biennium. 



Mr. Hardy. I think there is considerable flexibility to fund a 

 trust because I can capitalize a trust, and hence the rate impacts 

 in 1994-1995 are de minimis. 



Mr. DeFazio. What is the bottom line in getting to a trust? My 

 understanding of the Idaho and Montana agreements is that in fact 

 there was some sort of hold-harmless or sufficiency clause. Is that 

 what you are requiring from Washington and Oregon? 



Mr. Hardy. That is what we would be seeking in a trust arrange- 

 ment. 



Mr. DeFazio. Okay, but Washington does not have a trust ar- 

 rangement. 



Mr. Hardy. That is right, they do not have a trust arrangement 

 and they 



Mr. DeFazio. So they got a $43 million allocation without a trust 

 arrangement? 



Mr. Hardy. We settled an interim agreement with them for 5 

 years. We tried for a year and a half to negotiate a trust agreement 

 with them, but simply could not get to yes. So rather than aban- 

 doning that, we settled on an interim agreement. I have not pre- 

 cluded that strategy in this case. We concluded that negotiation in 

 mid-December of last year. Had it been 2 months later, given our 

 financial conditions, I would not have signed that agreement. But, 

 I had made a commitment, and we do not back away from commit- 

 ments that we make. 



I am not anxious to pursue an interim wildlife agreement at this 

 stage, given both our financial condition and the fact I cannot cap- 

 italize it. I have got to expense it all, so it goes right into rates. 

 The State has indicated to me that they too are anxious to proceed 

 with a trust because that offers the State substantial advantages 

 in terms of funding flexibility. 



Mr. DeFazio. Now do you intend these hold-harmless clauses to 

 take into account anything and everything? What is the term of the 

 hold-harmless clause in the case of Montana and Idaho? 



Mr. Hardy. The term of the agreements I beheve is 50-60 years, 

 I think it is 60 years in the case of Montana and 50 years in the 

 case of the Dworshak. 



Mr. DeFazio. So it is a form of sufficiency that there will be no 

 further consideration to any fish and wildlife mitigation for resi- 

 dent populations in those States? 



Mr. Hardy. As they affected the reservoirs, that we are respon- 

 sible for, yes. The way we had to structure the clauses, particularly 

 in Idaho, was that you cannot have an ironclad hold-harmless 

 clause. But, we agreed with the State that if there were some 

 changed conditions further on down the line that would be the 

 cause to come back and say some additional mitigation is required, 

 and that the State would share in the financial responsibihty along 

 with Bonneville. We figured it would be sufficient to have that kind 



