In 1989, Birch Creek Power Company owned by Idaho Falls, Idaho engineer Ted Sorenson and Preston, Idaho contractor Robert Fackrell, (S & F Company), proposed to build a dam at the mouth of the Oneida Narrows and subsequently submitted an application to operate a hydroelectric facility to the Federal Energy Regulatory Committee (FERC). The Birch Creek Power Company stated that the benefits of the project would control flooding, generate electricity and store water for downstream use. The project would also offer at least three permanent, full-time positions and thousands of dollars would flow into the community during the 12 to 18-month construction time period. Birch Creek Power Company estimated that the proposed dam would be approximately 100 feet high and would create a reservoir covering 360 acres (117 of those acres were owned by the Bureau of Land Management while the rest were privately owned), and it would approximately cost $112 million to construct. The Preston City Council offered support for the project because of the potential economic benefits it would offer the community. Area residents, however, were more concerned with how the proposed dam and reservoir would impact recreation and wildlife habitat, and in May of 1990, two hundred residents signed a petition opposing the project. In March of 1990, a group of individuals met at a Bureau of Land Management Scoping Hearing and decided to form a group in order to be able to officially present questions at the water rights hearings held by the Idaho Department of Water Resources. This group, the Friends of Bear River (FOBR), collectively represented groups such as The Region Five Wildlife Council, the Bridgerland Audubon Society, Idaho Rivers United, the Idaho Environmental Council, the Eastern Idaho Sierra Club, the Portneuf Valley Audubon Society, the Franklin County Fish and Game Club, and the Utah State University Canoe and Kayak Club. Two key figures in the Friends of Bear River were Currie Lockett who resided in Logan, Utah at the time, and Vicki Smith, who resided on a farm near the proposed site.

On September 28, 1990, Keith Higginson director of the Idaho Department of Water Resources denied Birch Creek Power Company's water right application for the proposed dam due to the overwhelming public opposition, the quantity of water that would be reduced, and the fact that S & F Company lacked sufficient financial resources. In October 1990, S & F Company filed a request for a rehearing for their project but on November 21, 1990, the Idaho Department of Water Resources denied the petition for rehearing due to S & F Company's inability to provide new information and to prove that a new hearing would somehow benefit the public. S & F Company had the option of requesting the district court to review Keith Higginson's decision but declined. However, their application to operate a hydroelectric facility was still pending with FERC and based on a 1990 U. S. Supreme Court ruling, the federal government, not the state, has final authority "to set stream flows at federally licensed dam". FERC thus had the final decision as to whether or not Birch Power Company would be allowed to construct their proposed dam. FERC scheduled two Scoping Meetings, one in Preston, Idaho and the other in Pocatello, Idaho for September 30, 1992 in order to gather public opinion on the project as well as to assess the environmental impacts. On January 20, 1993, it was announced that S & F had withdrawn their application with FERC due to mounting costs. Despite the withdrawal of the application, opponents of the dam continued their efforts. Currie Lockett of Friends of Bear River requested that the state of Idaho study the Bear River in order to designate it as a wild and scenic river in order to protect the area from other future developers. This status, however, was not granted and in 2006 the Twin Lakes Canal Company filed a notice of intent to file a license application with FERC to build a new hydropower facility.