The US Department of Agriculture (USDA) has formally entered federal regulatory proceedings surrounding the proposed decommissioning of the Potter Valley Project, a century-old hydropower and water diversion system in Northern California, escalating a debate with national implications for multipurpose hydropower assets.
On 19 December 2025, US Secretary of Agriculture Brooke L. Rollins filed a notice of intervention with the Federal Energy Regulatory Commission (FERC), asserting that the proposed surrender of the project’s operating license could cause “profoundly negative and irreversible impacts” on agricultural production, rural communities, and federal land management interests
The Potter Valley Project, owned and operated by Pacific Gas and Electric (PG&E), diverts water from the Eel River into the Russian River watershed while also generating renewable electricity. PG&E submitted its surrender application and decommissioning plan to FERC in July 2025 after determining that the aging hydropower facilities were no longer economical to operate under a renewed license.
In its filing, USDA argued that the project’s water diversions are critical to hundreds of farms and ranches across Mendocino, Lake, Sonoma, Humboldt, and Marin counties, an agricultural region generating more than US$1.4 bn annually in direct farm sales. The Department also highlighted risks to multiple USDA programs, including the National Forest System, Farm Service Agency, and Natural Resources Conservation Service.
Secretary Rollins urged FERC to reject PG&E’s surrender application unless major deficiencies are addressed, stating that the loss of reliable water supplies would increase vulnerability to drought and wildfire and undermine long-standing federal and private investments in the region.
The intervention grants USDA full standing in the proceeding, allowing it to submit evidence, participate in hearings, and challenge elements of the proposed decommissioning.
PG&E maintains that the surrender application represents the culmination of several years of analysis and stakeholder engagement. The company informed FERC in 2019 that it would not seek relicensing, citing high costs and limited economic returns from the hydropower facilities. Despite efforts to transfer ownership to another operator, no replacement license applicant emerged, prompting FERC to direct PG&E to prepare a formal decommissioning plan.
Under the proposal, PG&E would remove Cape Horn Dam and Scott Dam, reopening access to historic salmon and steelhead habitat in the Upper Eel River. To address ongoing water diversion needs, the plan includes a request for authorisation for the Eel-Russian Project Authority (ERPA) to construct a new diversion facility, known as the New Eel-Russian Facility, at the Cape Horn Dam site using portions of existing infrastructure.
PG&E executives have emphasised that the company will continue to operate the project in compliance with all FERC requirements until license termination and that dam removal would proceed alongside coordination with state agencies, tribes, water authorities, and environmental organisations.
