[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
                        CALFED BAY-DELTA PROGRAM

=======================================================================

                           OVERSIGHT HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                         COMMITTEE ON RESOURCES
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                                   on

THE FISCAL YEAR 1998 FEDERAL BUDGET REQUEST FOR THE CALFED PROGRAM AND 
                  ITS SOLUTIONS TO THE WATER PROBLEMS

                               __________

                     APRIL 17, 1997--WASHINGTON, DC

                               __________

                           Serial No. 105-17

                               __________

           Printed for the use of the Committee on Resources


                                


                      U.S. GOVERNMENT PRINTING OFFICE
 41-039cc                   WASHINGTON : 1997
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                         COMMITTEE ON RESOURCES

                      DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana       GEORGE MILLER, California
JAMES V. HANSEN, Utah                EDWARD J. MARKEY, Massachusetts
JIM SAXTON, New Jersey               NICK J. RAHALL II, West Virginia
ELTON GALLEGLY, California           BRUCE F. VENTO, Minnesota
JOHN J. DUNCAN, Jr., Tennessee       DALE E. KILDEE, Michigan
JOEL HEFLEY, Colorado                PETER A. DeFAZIO, Oregon
JOHN T. DOOLITTLE, California        ENI F.H. FALEOMAVAEGA, American 
WAYNE T. GILCHREST, Maryland             Samoa
KEN CALVERT, California              NEIL ABERCROMBIE, Hawaii
RICHARD W. POMBO, California         SOLOMON P. ORTIZ, Texas
BARBARA CUBIN, Wyoming               OWEN B. PICKETT, Virginia
HELEN CHENOWETH, Idaho               FRANK PALLONE, Jr., New Jersey
LINDA SMITH, Washington              CALVIN M. DOOLEY, California
GEORGE P. RADANOVICH, California     CARLOS A. ROMERO-BARCELO, Puerto 
WALTER B. JONES, Jr., North              Rico
    Carolina                         MAURICE D. HINCHEY, New York
WILLIAM M. (MAC) THORNBERRY, Texas   ROBERT A. UNDERWOOD, Guam
JOHN SHADEGG, Arizona                SAM FARR, California
JOHN E. ENSIGN, Nevada               PATRICK J. KENNEDY, Rhode Island
ROBERT F. SMITH, Oregon              ADAM SMITH, Washington
CHRIS CANNON, Utah                   WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas                   CHRIS JOHN, Louisiana
JOHN PETERSON, Pennsylvania          DONNA CHRISTIAN-GREEN, Virgin 
RICK HILL, Montana                       Islands
BOB SCHAFFER, Colorado               RON KIND, Wisconsin
JIM GIBBONS, Nevada                  LLOYD DOGGETT, Texas
MICHAEL D. CRAPO, Idaho

                     Lloyd A. Jones, Chief of Staff
                   Elizabeth Megginson, Chief Counsel
              Christine Kennedy, Chief Clerk/Administrator
                John Lawrence, Democratic Staff Director
                                 ------                                

               Subcommittee on Water and Power Resources

                JOHN T. DOOLITTLE, California, Chairman
KEN CALVERT, California              PETER A. DeFAZIO, Oregon
RICHARD W. POMBO, California         GEORGE MILLER, California
HELEN CHENOWETH, Idaho               OWEN B. PICKETT, Virginia
LINDA SMITH, Washington              CALVIN M. DOOLEY, California
GEORGE P. RADANOVICH, California     SAM FARR, California
WILLIAM M. (MAC) THORNBERRY, Texas   ADAM SMITH, Washington
JOHN B. SHADEGG, Arizona             RON KIND, Wisconsin
JOHN E. ENSIGN, Nevada               LLOYD DOGGETT, Texas
ROBERT F. SMITH, Oregon              ---------- ----------
CHRIS CANNON, Utah                   ---------- ----------
MICHAEL D. CRAPO, Idaho
                  Robert Faber, Staff Director/Counsel
                    Valerie West, Professional Staff
                Christopher Stearns, Democratic Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held April 17, 1997......................................     1

Statement of Members:
    Doolittle, Hon. John T., a U.S. Representative from 
      California; and Chairman, Subcommittee on Water and Power..     1
    Radanovich, Hon. George, a U.S. Representative from 
      California.................................................   103

Statement of Witnesses:
    California Bay-Delta Water Coalition (prepared statement)....    64
    Garamendi, John R., Deputy Secretary, Department of the 
      Interior...................................................     8
        Prepared statement.......................................    49
    Golb, Richard K., Executive Director, Northern California 
      Water Association..........................................    31
        Prepared statement.......................................    70
    Johnson, Leslie Friedman, Director of Agency Relations, 
      California Regional Office, The Nature Conservancy.........    28
        Prepared statement.......................................    61
    Kamei, Rosemary, Director, Santa Clara Valley Water District.    27
        Prepared statement.......................................    59
    McPeak, Sunne Wright, President and CEO, Bay Area Council....    30
        Prepared statement.......................................    68
    Payne, W. Ashley, owner, Ashley Payne Farms..................    33
        Prepared statement.......................................    71
    Perciasepe, Robert, Assistant Administrator for Water, 
      Environmental Protection Agency............................    11
        Prepared statement.......................................    54
    Snow, Lester, Executive Director, CALFED Bay-Delta Program...     3
        Prepared statement.......................................    46
    Wheeler, Douglas P., Secretary for Resources, State of 
      California.................................................    10
        Prepared statement.......................................    50

Additional material supplied:
    California's Bay-Delta--Restoring a National Treasure 
      (report)...................................................    82
    Category III 1995-1996 Restoration Projects..................    74

Communications submitted:
    California Delegation joint letter of February 25, 1997, to 
      Chairman Bob Livingston....................................    98
    McCollum, Michael: Letter of April 14, 1997, to Hon. John 
      Doolittle..................................................    75
    Wilson, Pete: Letter of March 31, 1997, to Hon. Joseph M. 
      McDade.....................................................    54


    FISCAL YEAR 1998 FEDERAL FUNDING REQUEST FOR THE CALFED PROGRAM

                              ----------                               



                        THURSDAY, APRIL 17, 1997

                  House of Representatives,
                   Subcommittee on Water and Power,
                                    Committee on Resources,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 12:34 p.m., in 
room 1324, Longworth House Office Building, Washington, DC, 
Hon. John Doolittle (Chairman of the Subcommittee) presiding.
    Mr. Doolittle. The Subcommittee on Water and Power will 
come to order. We have set today's meeting to hear testimony 
concerning the fiscal year 1998 Federal budget request for the 
CALFED program.
    I apologize to our witnesses. I don't think I have ever 
started a hearing more than five minutes late, and I guess if 
we were operating on Pacific Coast time, we would be more or 
less on that standard today, but unfortunately, it is Eastern 
time here.
    We had an extraordinary situation involving the address of 
the Speaker of the House to the full House of Representatives, 
which was not anticipated at the time this hearing was 
scheduled, so I apologize, and I realize that people have been 
inconvenienced and may need to adjust their schedules.

STATEMENT OF HON. JOHN T. DOOLITTLE, A U.S. REPRESENTATIVE FROM 
   CALIFORNIA; AND CHAIRMAN, SUBCOMMITTEE ON WATER AND POWER

    Mr. Doolittle. The CALFED program promises to be one of the 
most important issues considered by this Subcommittee in the 
105th Congress. It represents a major Federal and State 
commitment to solving California's water needs and sets the 
stage for future water management policies and facilities 
within California.
    It is critical that we use this opportunity to meet the 
needs of all of our constituents--agriculture and urban, 
landowner and conservationist, business owner and 
recreationists alike.
    Let us also be clear that the funding for the CALFED Bay-
Delta Program under consideration today is not limited to a 
funding request for this year alone, nor is it limited to the 
three years of the current authorization. It is a program 
likely to involve decades of Federal and State funding 
commitments.
    The current CALFED authorization, the Federal authorization 
as large as it is proposes implementation of only certain 
limited aspects of the program in this and the next two fiscal 
years, while postponing the authorization and funding request 
for most of the program into future years.
    All of the CALFED alternatives under consideration are 
estimated to range in cost from $4,000,000 to $8,000,000, an 
amount to be paid over 20 to 30 years. This is the time to hear 
a solid commitment from those most interested in the current 
CALFED program objectives, that they will be full participants 
and supporters of the latter phases of the project, when the 
relative funding for projects they now support is on the 
decline.
    Another issue of concern is the need to develop criteria to 
assess the successful implementation of the earlier portions of 
the program. When the object of an authorization is a dam or a 
water recycling plant, success is achieved when the facility is 
completed and becomes operational. Not only do we currently 
lack the specifics on the projects to be undertaken in this 
phase of CALFED, but there are no measuring sticks to determine 
that we have achieved a specified goal once the money has been 
spent. How do we know that there will not just be an endless 
flow of requests for new funding, based not on the need to 
achieve a new goal, but rather because we haven't defined 
success? If we do not define a measure of success, we will be 
asked to spend unlimited resources with no hope of closure.
    The CALFED program must incorporate milestones and 
objective measurements that define when specific goals have 
been met.
    Finally, this phase of the program represents a major 
public acquisition of private property rights. Much of the area 
viewed as potential habitat, meander belts, and ecosystem 
management zones is currently held by private interests. Their 
predecessors built hundreds of miles of levees and reclaimed 
tens of thousands of acres of land in the 1800's.
    This land is now used throughout the delta and along the 
Sacramento and San Joaquin Rivers to support a thriving rural 
economy dedicated to farms, small businesses, mineral 
extraction, recreation areas, and private residences.
    If these private landowners are going to be asked to return 
these lands and water rights to the public domain, a process 
should be set up which is fair, expeditious, and easy for them 
to use.
    The preferred alternative in this case is that any 
acquisition should be based on a willing seller and willing 
buyer transaction. If that is not the case, we do not want to 
endorse a program that acquires property through regulatory or 
programmatic takings or forces people to sell out of sheer 
frustration.
    I do not believe that these concerns present insurmountable 
obstacles. Rather, they represent reasonable, attainable goals 
which should reflect the way government conducts its business. 
The Federal California Bay Delta Environmental Enhancement Act 
coupled with California Proposition 204 advance a partnership 
with potential funding of nearly $1.5 billion.
    It has the potential to be used to enhance the water 
quality and environmental resources in the Bay-Delta, as well 
as for other water resource activities in California. Yet how 
it is administered will be a test of government's ability to 
transition to a smarter, more efficient, less coercive mode of 
operation. I look forward to hearing from the witnesses.
    Mr. Dooley, are you going to make an opening statement?
    Mr. Dooley. Mr. Chairman, I think that I will not give an 
opening statement, but rather thank all the participants who 
have been waiting for some time for their testimony. I really 
thank the leadership that has been shown by a number of the 
people that are going to be testifying for putting together a 
really diverse coalition which is committed, I think, to 
finding constructive and positive solutions to some of the 
water and environmental problems that have plagued California 
for decades. Thank you.
    Mr. Doolittle. Thank you. Now, if the Subcommittee members 
will indulge me, I would just like to observe that it has come 
to my attention, and frankly, has caused me great concern that 
there have been some last-minute delays and changes in the 1997 
water allocation announcement for the CVP contractors.
    I think that it is unfortunate that the Fish and Wildlife 
Service, one agency among the many CALFED agencies, can 
continually take action at the last minute that threaten, the 
efforts to build consensus among the various stakeholders. This 
is the second year in a row that there have been last minute 
blow-ups related to water allocations.
    All the other parties at the table are operating in good 
faith to provide as much water as possible for the environment 
with as little economic impact on water users as possible. I am 
very concerned that the Department of Interior does not have 
the desire or perhaps the clout to rein in what has become a 
rogue agency.
    This is a far cry from Secretary Babbitt's commitment when 
he was first appointed that his department would speak with one 
voice. With that, let me invite our first panel of witnesses to 
come forward, and if they would, to remain standing to take the 
oath. If you will please raise your right hands?
    Do you solemnly swear and affirm under penalty of perjury 
that the responses given and statements made will be the whole 
truth and nothing but the truth?
    Thank you. Let the record reflect that each answered in the 
affirmative.
    We welcome you here. I think you are all familiar with our 
five-minute rule of testimony. The lights are there as a guide. 
I would like to mention that we asked Mr. Snow to give a 
lengthier explanation, so he will have ten minutes for his 
statement.
    Let me introduce our distinguished panel. We have Mr. 
Lester Snow, Executive Director of the CALFED Bay-Delta 
Program. We have the Honorable John Garamendi, Deputy Secretary 
from the Department of Interior; the Honorable Douglas P. 
Wheeler, Secretary for Resources of the State of California; 
and Mr. Robert Perciasepe, Assistant Administrator for Water of 
the Environmental Protection Agency.
    Gentlemen, we are very pleased to have you here, and Mr. 
Snow, it is my understanding you will lead off this panel.

STATEMENT OF LESTER SNOW, EXECUTIVE DIRECTOR, CALFED BAY-DELTA 
                            PROGRAM

    Mr. Snow. Thank you, Mr. Chairman and members of the 
committee. My name is Lester Snow. I am executive director of 
the CALFED Bay-Delta Program.
    What I would like to cover today is to give you an overview 
of the program covering our basic approach and the status, but 
also to spend a fair amount of time on what we refer to as 
early implementation, how we begin improving the situation in 
the Delta, and specifically the importance of Federal fiscal 
year '98 funding commitment to that early implementation 
effort.
    First, I want to start with I guess what I would call my 
overall conclusion, and that is that we cannot and we will not 
fail in our efforts to bring a long-term solution to the Bay-
Delta system resource conflicts.
    In this case, the we that I refer to is the State, Federal, 
and local governments and perhaps more importantly, the 
stakeholder community including environmental, urban, business, 
and agricultural leaders coming together as a unit. In this 
case, the we has realized that we must move forward and solve 
this problem.
    The reason that we will not fail is not because the current 
crop of stakeholders or agency representatives who are smarter 
or more insightful than the past generation, but more simply 
that the consequences of failure have become so severe. 
Included in the category of failure is inaction or status quo.
    In the past, we have left things slide because there was 
flexibility left in the system. We could put off decisions or 
put off investments because there were no immediate 
consequences. Those days are gone forever.
    We see now the consequences of failure in terms of direct 
impacts, like levee failures during flooding. We see the 
decline of recreational and commercial fishing. We see risks to 
water quality in terms of drinking water supplies, overall 
reduction of water supply reliability, reduction of watershed 
productivity, and perhaps more alarming for the long run and 
perhaps less directly understood, a reduction in Pacific Rim 
competitiveness and jobs unless we deal with these issues.
    What we are facing are years of deferred investment and 
decisions to not make changes because it is costly or 
complicated or may result in conflict. We are seeing a slow but 
methodical reversal of this deferred investment, first with the 
creation of something called CALFED and the framework 
agreement, then the accord, then Proposition 204, and now the 
appropriation that we are seeing in the proposed fiscal year 
'98 budget.
    We must continue in this path and use Prop 204 and the 
appropriation to renew the necessary investments in this system 
so that we may succeed. I would like to switch now and try to 
provide a basic overview to the CALFED Bay-Delta Program, and 
to do that, I want to use a briefing book that I believe you 
have been supplied, commonly referred to as the Federal 
briefing packet, which I believe you have in front of you.
    I know that some of the other speakers will draw attention 
to this, and you will hear this a number of times, but I guess 
part of the unique aspect of what we are doing is the joint 
collaborative effort among State and Federal agencies. We have 
as a basic foundation of our program stakeholder and general 
public involvement. If we do not maintain stakeholder 
involvement and we do not maintain general public access to our 
program, we will fail, because that is how attempts in the past 
have failed to reach conclusions to these problems.
    We depend on a collaborative effort to find solutions. That 
collaboration extends beyond the agencies to individual 
landowners that must work with us to help us understand their 
issues and find solutions that work.
    If I could refer to pages four and five of the briefing 
book, it will give you a basic organizational structure of 
CALFED, organized under the Secretary of Interior and the 
governor of the State of California, with the CALFED agencies 
in fact forming a board of directors for the Bay-Delta program.
    We have laid out a process in three phases, moving from 
getting simple agreement on what the problem is to be solved in 
this system all the way through phase three, which is 
implementation of the solution. We have set up specific 
objectives to cover the problem areas which we have identified 
as water quality, ecosystem health, improved water supply 
reliability, and system integrity or levee stability.
    We have in phase one, which we completed last year, 
identified three alternatives for addressing those issues in a 
combined fashion. We are now in phase two which includes the 
environmental documentation under State and Federal law and a 
refinement of these alternatives so that we may reach a 
preferred, a draft preferred alternative in November of 1997, 
and a final preferred alternative in the fall of '98.
    If you can look at page seven of the briefing packet, you 
will see a very concise description of the nature of the 
alternatives that we are moving forward with.
    You will notice that each alternative is composed of what 
we refer to as common programs, consideration of additional 
storage, and finally modification of the way we convey water in 
and around the Bay Area system.
    Within the common program, we have water quality, system 
integrity, ecosystem restoration, and water use efficiency. 
What we are doing in phase two is refining these alternatives 
and developing environmental documentation to support them as 
we move forward.
    We are dependent on a lot of public input, with emphasis on 
actions and alternatives which address multiple objectives. We 
want to avoid people simply trying to address their problem 
that is separate from someone else's interests, and thus have 
developed alternatives that attempt to address as many 
objectives as possible.
    For example, when we look at storage, we look at it not 
just as it may be used for water supply, but also how storage 
can be operated to improve water quality, fish flows, and flood 
management, so we get as much benefit out of a single action as 
possible.
    All objectives must be addressed in an alternative. In 
California, we refer to it as no one gets out alive. We are all 
in this together. You don't get your problem solved unless 
everybody else's problems are solved.
    Given the common programs that I have mentioned at the 
bottom of that chart, it is clear that some actions, no matter 
what the final alternative, will be implemented, that is, if 
they are common to all of them. Certain actions must be taken 
to improve ecosystem health, water quality, system integrity, 
and water use efficiency. That is the basis for the concept of 
early implementation.
    What we have found with our extensive outreach to the 
public and to stakeholders is that they don't want to wait ten 
year for more plans to be prepared. They want to see a long-
term solution, but they want us to start fixing the problem 
now, and not put it off until we have dotted every I and 
crossed every T.
    We have the ability because of the common program to 
identify actions that allow us to begin reinvestment in the 
system, to identify actions which will have a beneficial 
impact, and/or will not prejudice the long-term outcome.
    It is important that we identify actions that we can 
actually start resolving some of the existing conflict in the 
system. If I could direct your attention to page 18 and the 
three charts that follow that, I will attempt to describe the 
basic process that we are utilizing to identify projects and 
begin the early implementation.
    A major concept in this restoration-coordination activity, 
as we refer to it, is to actually identify the priority 
projects and programs that can achieve a reduction in conflict 
of the system and contribute to the long-term.
    We are attempting to set up what could be called a funding 
matrix so that we can make the most efficient use of existing 
moneys that are available as well as new appropriations.
    We are doing this currently primarily looking at something 
called category three, a funding mechanism that came out of the 
accord. Monies have been made available in Prop 204.
    As we set up the different priorities of what needs to be 
done, diversions that may need to be screened, certain types of 
habitat that may need to be restored, for current conflict-
types of issues, such as anticipated spring run salmon is a 
problem. We are dealing with Delta smelt in the Delta that is a 
problem, and then we look at integrating other Prop 204 funds 
that may be able to make the project bigger or more efficient, 
and looking at other Federal funds.
    It is our desire to integrate the State and Federal 
decisions to come up with better, more efficient programs that 
address the problems in the system.
    On chart two, there is a very quick shorthand of the 
decisionmaking structure that we have put in place. As you know 
in identifying the amounts of money that may be necessary in 
fiscal year '98, we can identify them by categories, not by 
project. It is our firm belief to maintain allegiance to the 
stakeholders that have been involved and the public, that we 
must go through a methodical process of picking the best 
projects.
    We have identified categories of activities. We have done 
that in a very open process. There are four basic steps for us 
to come up with the individual projects, identify the 
priorities, develop actions which address those priorities, 
establish a request for proposals so we get the best projects 
in, and finally, recommend the projects.
    Since we are dealing with potential multiple funding 
sources, projects that we would want to use Prop 204 funds for, 
we would recommend to the Secretary of Resources for the State 
of California, and likewise, if the Federal appropriation goes 
through, we would submit those to the Secretary of Interior for 
final determination.
    We are utilizing an ecosystem roundtable which has been 
established as a Subcommittee of the Bay-Delta Advisory Council 
to look at these near-term implementation issues and help 
develop criteria and priorities by which we will select 
specific projects. The Bay-Delta Advisory Council will also 
review this as part of its task of looking to the long-term 
program.
    We have attempted to set up a project review process that 
maximizes public input and gives us the greatest probability of 
getting the best projects to address the issues that we have 
identified.
    The third chart--I really just put this in here to give you 
an indication of the kind of timeframe that we are on. To make 
a long story short, we have set up for three separate funding 
cycles between now and the end of Federal fiscal year '98. We 
are on path now to identify specific projects to begin 
receiving funding in August of this year. Obviously, those 
funding projects will be focused primarily on Prop 204, but we 
can immediately identify additional projects for funding in the 
February to March timeframe, and then a third funding cycle for 
August-September of next year.
    We have set up a process to get maximum input in terms of 
the kinds of projects that can address the problems that we 
have seen in the system.
    We have attempted to identify the kinds of activities, and 
that is categorized on page 23. In general, they follow the 
issues of habitat acquisition and restoration, including 
conservation easements, fish screening projects, monitoring to 
make sure that these projects are effective in meeting the 
objectives of the program.
    We are establishing indicators that will be used as a 
yardstick to make sure that we are making progress on the 
program. We are also looking at water quality measures, 
including watershed management. We are looking at integrating 
habitat into levee stabilization programs and you will also 
notice in our proposed activities conservation and reclamation 
activities.
    I see I am about out of time. If I could indulge you for 
two more minutes, please?
    Mr. Doolittle. Certainly. Go ahead and finish your 
statement.
    Mr. Snow. I guess at this point, instead of going through 
the more detailed list of the kinds of projects, what I would 
like to do is put the emphasis on our outreach and creative 
solution approach to this.
    We don't pretend that we know all of the best solutions to 
these problems. We do know what the problems are. We do know 
that we have problems with fish when it comes to diversions, 
and we need to screen them.
    We want to solicit creative proposals from people so that 
we have on the table in front of us the best thinking of 
everybody in the State of California. It is a collaborative 
effort. We need to work with the local landowners and local 
conservancies to make sure that we are designing the best 
approaches to these problems.
    We cannot pretend that we know in Washington or in 
Sacramento the best thing that works on Butte Creek. We need to 
work with the local folks to understand how these things can be 
accomplished.
    This is part of a long path. It took us 150 years to get 
the system to the condition it is in today. There is no one 
fix. We have to have a variety of actions and a significant 
period of time in order to recover the system.
    We have to actually test our approach to large-scale 
ecosystem restoration. Nothing of this magnitude has ever been 
implemented. We need to move cautiously but deliberately.
    Finally, I guess I would say that we cannot fail, as I 
started out. The risk of failure is too great. Part of this 
issue of not failing is clearly a strong Federal commitment, 
not only a policy commitment to make this happen but also a 
financial commitment to make sure we can proceed with the 
projects that are necessary.
    The less that we invest today, the more there will be 
conflict like arose yesterday with respect to CVPIA, and the 
longer it will take. We often think that we can save a penny 
today, and that will be a penny saved, and that is not the case 
when it comes to health of this water system.
    We need to make the investments today so that we can reduce 
the conflict for tomorrow. Thank you, Mr. Chairman.
    [Statement of Lester Snow may be found at end of hearing.]
    Mr. Doolittle. Thank you very much. Mr. Secretary, welcome.

STATEMENT OF THE HONORABLE JOHN R. GARAMENDI, DEPUTY SECRETARY, 
                   DEPARTMENT OF THE INTERIOR

    Mr. Garamendi. Mr. Chairman, here we are again. I want to 
thank you and the members of the Subcommittee for inviting me 
this morning to discuss our process and progress in developing 
the comprehensive long-term restoration of the California Bay-
Delta ecosystem.
    I am pleased, in fact delighted, that my colleagues from 
the Environmental Protection Agency and from the State of 
California are here with me. Our joint participation 
demonstrates mutual concern, shared cooperation, and long-term 
commitment to meeting the challenges of protecting our 
resources.
    I would like to depart a little from my prepared testimony 
and deal with the issue you raised in your opening statement, 
Mr. Chairman. The April water allocation which is just 
completed is the most recent example of the importance of the 
Bay-Delta program that we are here discussing today.
    This has been an extraordinary water year, the seventh such 
extraordinary year in the last eight. We cannot fix the 
weather, but we can surely fix the water system.
    The Bay-Delta program is the fix to the water system, and 
it is imperative that we undertake the projects identified in 
the Bay-Delta program. This is the only way that we can all 
work together in a coordinated fashion. This is the only way to 
protect fish and wildlife. This is the only way to protect 
agriculture and urban water users. This is the only way to 
avoid another fight next April over the allocations.
    The CALFED program itself comes from the 1994 December when 
Federal agencies, State agencies, representatives of 
agriculture, urban, and environmental organizations signed what 
is known as the Bay-Delta Accord.
    That accord described new ways to meet the requirements of 
laws, the Endangered Species Act, the Central Valley 
Improvement Act, the Clean Water Act, as well as certain State 
laws.
    We are working together in a comprehensive long-term 
strategy to restore the health of the Delta and the Bay. You 
have heard the goals from Mr. Lester Snow, and I will not 
repeat them here, but in order for us to develop the accord and 
carry out the long-term Bay-Delta program, the Federal and 
State agencies combined forces in what we call CALFED.
    Four Federal agencies, the U.S. Fish and Wildlife Service, 
Bureau of Reclamation, EPA, and the National Marine Fishers 
began the effort together with the State of California.
    We have added or are about to add six additional Federal 
agencies, USGS, the Bureau of Land Management, National 
Resource Conservation Service, the U.S. Forest Service, Western 
Area Power Administration, and the Army Corps of Engineers.
    These additional agencies provide a vast array of 
experience and programs critical to our long-term restoration 
efforts. Only through broad integration of policies and 
programs as well as new and creative ways of approaching 
problems can we realize the goals carried out or laid out in 
the Bay-Delta program. This year's tragic flooding is a prime 
example.
    In the past several months, State and Federal agencies have 
been responding to the January floods that wreaked havoc 
throughout much of the Central Valley and the Bay-Delta's many 
tributaries. The Army Corps of Engineers in collaboration with 
CALFED and other Federal and State agencies has undertaken 
major efforts to repair flood protection facilities throughout 
the system.
    With the organization of CALFED, we have a unique 
opportunity to implement the restoration goals that are part of 
the Bay-Delta program, as well as the Administration's 
complementary Federal flood plain management strategies.
    Reducing flood damages and threats to life and property 
through cost effective and where appropriate, nonstructural 
alternatives, can also restore the natural values inherent in 
the flood plain and adjacent lands as well as provide for water 
quality, quantity, and ecosystem benefits envisioned in the 
Bay-Delta program.
    A moment to speak about the funding. An overwhelming 
endorsement from California voters for Proposition 204 plus the 
bipartisan support here in Congress that resulted in the 
passage of authorizing legislation last fall and the 
unprecedented collaboration among historically feuding water 
interests in California, we have an incredible opportunity 
today to use the Bay-Delta funding provided for in the 
President's budget as a down payment on this major effort to 
restore the environment as well as to provide the necessary 
water and flood protection.
    The program we are undertaking is one of the most 
significant restoration programs ever undertaken in the world, 
and its implications go well beyond California.
    The committee has recognized the importance of the Central 
Valley to the health of California's economy and its diverse 
natural resource base. The CALFED program is an innovative and 
unique approach to resolving the complex resource issues that 
have burdened the State for decades.
    It is imperative that we have the funding from the Federal 
level. We ask that you and this committee give us your full 
assistance to achieving the goals of the CALFED program. Thank 
you, Mr. Chairman.
    [Statement of John Garamendi may be found at end of 
hearing.]
    Mr. Doolittle. Thank you. Secretary Wheeler, we are pleased 
to welcome you here. You are recognized for your testimony.

   STATEMENT OF HONORABLE DOUGLAS P. WHEELER, SECRETARY FOR 
                 RESOURCES, STATE OF CALIFORNIA

    Mr. Wheeler. Thank you, Mr. Chairman. I have a prepared 
statement that I will submit for the record and attempt very 
briefly to summarize my remarks which are directed at the 
State's participation in CALFED.
    In addition to my responsibilities as Secretary for 
Resources, I am also Chairman of the governor's Water Policy 
Council, and, I am pleased to say, co-chair of CALFED with my 
colleague to the left, Bob Perciasepe.
    The State's involvement with CALFED really began just five 
years ago this month, with the announcement of the governor's 
water policy framework, in which he identified a strategy to 
meet all of California's water needs for the coming decades.
    At that time and at several occasions since then, the 
governor has said that until we solve the issues of the Bay-
Delta, both the water supply issues and the environmental 
issues, we will not be able to develop a comprehensive water 
supply for the State which assures growing supply as California 
continues to flourish.
    In April of '92, he made that statement. In June of '94, he 
came to the conclusion that we could not achieve a 
comprehensive solution in the Bay-Delta or elsewhere unless 
first the State got its act together by coordinating a 
multiplicity of agencies and different authorities. Then having 
done that through the Water Policy Council, we challenged our 
colleagues in the Federal Government who exercise a variety of 
jurisdictions in the Bay-Delta to similarly come together.
    So we have first the Water Policy Council at the State 
level. We had next the organization of the Federal Ecosystem 
Directorate, FED, and then as a result of a framework agreement 
in June of '94, the emergence of CALFED, the coalition of 
interests which for the first time in California's history, and 
I believe in the country's history, brought together all the 
resource agencies and all of the interested parties to work 
together on a solution that is truly comprehensive.
    That led to the December, 1994, Bay-Delta Accord, which 
used the period of three years allotted by the ``no surprises'' 
policy of the Clinton Administration to find the ultimate final 
solution for the Bay-Delta, both in terms of ecosystem 
restoration and in terms of water supply.
    As you have heard from Lester Snow, we are well on our way 
toward this Delta fix. We are now in the second phase, in fact, 
of a three-phase program which has remained the highest 
priority for Governor Wilson in the achievement of his overall 
water policy framework.
    The program and the concept received a strong vote of 
endorsement first from the legislature of California with the 
passage of S.B. 900, and then ultimately, as you have also just 
heard, from the voters of California, who by a margin of 63 
percent in November elected to commit $995 million to a variety 
of different programs, five in all, for assuring a clean, safe, 
reliable water supply for California. Three of those five 
elements are directly attributable to the work of the Bay-Delta 
program and to the solutions of Bay-Delta issues. In 
furtherance of the initiative approved by the voters in 
November, the governor's budget for '96-'97, and his proposed 
budget for '97-'98 include commitment of $280 million all told 
in implementation of programs authorized by Proposition 204.
    This is a landmark for the State of California and more 
than demonstrable of the State's commitment to this 
partnership. We are very pleased, therefore, that the Congress 
elected to authorize in the fall of last year a Federal match 
to that State effort and are here to urge your approval of the 
first year's increment of that Federal funding in the amount of 
$143 million.
    The governor wrote to the House appropriations committee on 
the last day of March, just a couple of weeks ago, to say that 
for the State of California, there is no higher priority in the 
Federal budget than this match of the State's effort with 
respect to the CALFED Bay-Delta program, and that the State's 
expenditure in support of this program can only succeed if 
there is a commensurate resolve and effort on the part of the 
Federal Government.
    Let me conclude my remarks, Mr. Chairman, on this occasion 
by quoting from the governor, and he wrote in that letter of 
March 31, ``This $140 million appropriation is my highest 
priority for the energy and water development appropriations 
bill.''
    We have submitted a copy of that letter to you for the 
record, and I am pleased to have been able to underscore the 
governor's commitment and the State's commitment to being a 
full partner in this very innovative solution to Bay-Delta 
issues. Our partnership with the Federal Government represents 
real opportunity to demonstrate to the world in fact that 
California has once again led the way in devising innovative 
means in which to meet its resource and its economic 
objectives.
    [Statement of Douglas P. Wheeler may be found at end of 
hearing.]
    Mr. Doolittle. Thank you. Mr. Perciasepe, we are pleased to 
have you here, and you are recognized.

  STATEMENT OF ROBERT PERCIASEPE, ASSISTANT ADMINISTRATOR FOR 
             WATER, ENVIRONMENTAL PROTECTION AGENCY

    Mr. Perciasepe. Thank you, Mr. Chairman. It is an honor for 
me to be here. I, too, like my colleague, Secretary Wheeler, am 
wearing two hats today, first as an administrator of EPA but 
also as the co-chair with Secretary Wheeler of the CALFED 
process, so in that regard, it is an honor to be here and be 
invited to testify.
    Before I say something about the accord and add just a few 
more pieces to what you have already heard, I also want to make 
clear how important we view and recognize the economic and 
ecological significance of the water systems in California. The 
economy of the State of California is important to the entire 
economy of the United States, and the ecological resources and 
natural resources that we are working with here and that are 
involved with are also of national significance.
    I want to talk a little bit about what we have achieved 
under the accord and a little bit about the funding and what we 
hope to be able to do.
    First, the accord accomplishes a number of things that have 
been mentioned already. It defines a process to adopt water 
quality standards. It defined a process to coordinate water 
project management. It created a program to improve aquatic 
habitat. It established a long-term process which Lester has 
reviewed, and I think I agree with Secretary Wheeler that it 
provide a framework and an atmosphere and a time for us to 
achieve those things by having that period of certainty.
    The water quality standards were ultimately adopted by the 
State water resources control board in May of '95 and approved 
by EPA in September of '95. This is something that both the 
State of California and the Federal Government had been trying 
to achieve for quite some time, and we are all very proud that 
we were able to do that.
    We have set up a process to coordinate reviews of some of 
the achievements of the accord to date, a process to coordinate 
project management between the State and Federal Government. We 
have developed an atmosphere of more confidence in the 
financial markets in the State of California, in people like 
Standard and Poor's writing that the accord represents a major 
step in alleviating many of the credit concerns that were 
evolving from a municipal bond standpoint. Richard Rosenberg 
from the BankAmerica Corp saying that the accord is a critical 
first step toward a new era of water management in the State.
    These are all confidence-building and important statements 
in terms of the atmosphere and the process that we are trying 
to put forward.
    I think more importantly and probably significant is the 
involvement of all the different stakeholders. Mr. Chairman, 
you mentioned in your opening remarks the agricultural 
concerns, the urban and industrial needs, the ecological needs, 
and getting everybody to work together on those issues have 
been provided for in this process.
    The Federal funding request for fiscal '98 is really part 
of this larger process that Lester reviewed, and you have the 
information in front of you which I won't detail here in my 
comments about how we are anticipating these funds to be spent.
    I would like to make a couple of points that we have to 
have a continuing transition into the long-term plan that we 
are all working on, and part of what we are trying to do with 
our five-year funding plan here at fiscal '98, and the CALFED 
proposal, is to continue building that confidence by doing no-
regret projects, projects and programs that are components of 
all the different alternatives that are common to all of the 
alternatives and cover many of the areas that we are concerned 
about, not just ecological restoration but also water quality, 
levee vulnerability and the water supply. Some of those 
projects are laid out in front of you.
    We are also working on a cost-share agreement which we plan 
to have in place before September so that the Federal funds and 
the State funds under Prop 204 can be spent in a cooperative 
way under an agreement that both of us have to do, because 
statements both in the Federal law authorizing Federal funds 
and the State law require a cost-share agreement.
    We also have a new way of doing business in how we are 
going to be working on these projects. You have me from the 
Environmental Protection Agency here talking to you today about 
projects that are going to be done perhaps by the Army Corps of 
Engineers, or maybe by Secretary Wheeler's agency, or the 
Department of Interior--probably not by EPA--advocating this 
whole issue of projects that we are all working on together, 
and how these funds are going to work together in tandem, and 
how we are going to make those decisions.
    I will conclude, simply because much has already been said, 
by saying that the Bay-Delta process should be supported for a 
number of reasons. First, it is built on a core of partnership 
with the State, and I think, as a former State official, one of 
the most important things in this process is that we are 
working on this together with the State.
    Second, the coordination amongst the Federal agencies, 
again, as Secretary Wheeler mentioned in his statements, we 
have really worked very hard to keep the agencies working 
together on this, and this provides a really good opportunity 
for us to do it.
    Third is the fact that all the stakeholders are involved 
with this, and I think Lester may have used the term nobody 
gets out alive. I would prefer to say we are all going to be 
fed really well, and that the idea here is really that the 
house has to be built with all the struts strong and that is 
what we are trying to do, and that is what the process is 
designed to do.
    I will stop here, Mr. Chairman, and I will answer any 
questions.
    [Statement of Robert Perciasepe may be found at end of 
hearing.]
    Mr. Doolittle. Thank you very much. It is hard to know 
where to begin, but Mr. Garamendi, what is the status of this 
water allocation?
    Mr. Garamendi. The water allocations were made late 
yesterday. The announcements went out late yesterday afternoon.
    They are much the same; in fact, they are the same as was 
envisioned by the operation--CALFED operating group--last 
Friday. There was a modification made, a statement made as to 
the policy surrounding the B-2 water and how it can and under 
what circumstances it would be used in the Delta, also a policy 
statement made with regard to the no-net-loss provisions of the 
accord which will be in operation this year. That having been 
done, the policy--the allocation was made yesterday.
    It is, as I said in my opening statement, this is a symptom 
of the larger problem, and we will be plagued with April 
allocation problems every year in the future as we have been in 
the last several years in the past because the system is 
broken. It is the Bay-Delta program that allows us and gives us 
the framework and the resources, the guidelines and the 
mechanism to fix the system.
    It is simply imperative, we cannot survive long in 
California without the Bay-Delta program.
    Mr. Doolittle. I think we all agree the system clearly is 
broken. Hopefully, this process will lead to its satisfactory 
repair and answers. Are there outstanding issues still 
unresolved concerning the water allocation?
    I thought I read something in your press release that there 
are going to be further refinements.
    Mr. Garamendi. Yes. The work done by the operating, the ops 
group, last Friday spoke to the first half of the process. The 
second half was unresolved last Friday, and that second half is 
whether the specific criteria and mechanisms to be used in the 
makeup pumping that will occur in the fall. That has yet to be 
determined.
    We do have an extensive box of tools available to us to 
assist in the makeup pumping in the fall. We expect that all of 
those tools will be used. Some of them are cited in the CVPIA 
legislation, others have been suggested by water users 
throughout the State, and we will be using all available tools 
as appropriate and as needed to complete the makeup pumping in 
the fall.
    We have about a two to three-week period ahead of us in 
which these issues will be discussed and resolved and my 
statement speaks to that period of time.
    Mr. Doolittle. So you expect that at least within three 
weeks, these allocation issues would be resolved?
    Mr. Garamendi. That is correct. That is the intention, and 
the word I had last night, discussions with the people that 
will be doing the work is that they expect to be able to 
resolve the remaining issues which are principally around the 
issue of--which are around the issue of the makeup.
    Mr. Doolittle. Thank you for your efforts so far.
    Mr. Snow, is it important to the CALFED Bay-Delta Program 
that the appropriate agencies determine the accounting of the 
800,000 acre-feet of yield for the CVP rather than Fish and 
Wildlife?
    Mr. Snow. The short answer to that question would be yes, 
but we do need to understand how we are going to deal with what 
I would call environmental flows.
    We certainly feel as we compare our ecosystem component of 
the long-term plan, that should be addressed in the magnitude 
and timing with certain kinds of flows to provide ecosystem 
benefit.
    Obviously, that is what was intended with the 800,000 acre-
feet, so at some point in our process, we need to better 
understand the prescription for the 800,000 acre-feet to make 
sure it is integrated with the way we look at the long-term 
needs of the ecosystem.
    Mr. Doolittle. And how close are we, in your opinion, to 
reaching a long-term agreement on how that water will be 
counted?
    Mr. Snow. I cannot answer that. I am not involved in 
dealing with the CVPIA and the actual prescription. I can 
respond that we are quite close in terms of the CALFED program 
understanding a lot of the principles related to when you need 
ecosystem water for the fish restoration plan or other types of 
issues, so we are trying to work closely to integrate those, 
but I am not familiar with the schedule for making the 
determination of the 800,000.
    Mr. Doolittle. Let me ask our Deputy Interior Secretary. 
Mr. Garamendi, how would you answer that?
    Mr. Garamendi. I am trying desperately to recall what I 
told you a week and a half ago so as to honor the commitment I 
made when I raised my hand as to telling you the whole truth.
    As I recall, it is the end of this--it is in May. It is the 
end of May. I believe that was my testimony a week and a half 
ago, and I believe it is the end of May that we expect that to 
be completed.
    Mr. Doolittle. I know my time is up here, but Mr. Wheeler, 
are you in accord with this process, the 800,000 acre-feet, or 
is it your understanding, too, that representatives state that 
we will have closure of this by the end of May?
    Mr. Wheeler. We are so assured, Mr. Chairman. This is not a 
matter of direct interest of the State or a concern. I should 
say it is of interest to the State but not of direct 
responsibility, and we share the view of the CALFED project 
that we have to take into account the availability of this 
water as part of a larger plan, which plan is very much a 
concern of the State.
    Mr. Doolittle. If you don't know what this is, it is going 
to be difficult, isn't it, to proceed ahead?
    Mr. Wheeler. Absolutely, and I think that goes to the point 
of how much additional water and for what purpose will be 
required of the CALFED process. This is a building block 
situation.
    We are trying to integrate. One of the unique aspects of 
CALFED is the fact that we are trying to integrate a number of 
disparate statutory authorities and requirements, State, 
Federal, and local, into a comprehensive plan, and the 
comprehensive plan that CALFED is supposed to prepare, but you 
are absolutely correct that you can't do that unless you know 
what the component parts are.
    Mr. Doolittle. Thank you. Mr. Radanovich.
    Mr. Radanovich. Thank you very much, Mr. Chairman, actually 
for setting these hearings and for the attendance of everybody 
involved with the CALFED process.
    It is a remarkable process. I want to extend my complete 
endorsement of your endeavor and I want to reiterate how easy 
it was last year to promote the funding or at least the 
authorization for the spending of a portion of which you were 
seeking to get appropriated.
    It was very easy simply because it had broad-based support 
in California, and I look forward to continuing that as well.
    Mr. Snow, I wish to get an estimate from you or at least a 
breakdown of the current $143 million request. I will applaud 
the Administration for coming up to the plate for the full 
amount. We, however, have our task at hand to make sure that 
the appropriators indeed appropriate that much this year.
    So if you could, please, give me the breakdown, a general 
breakdown, of where that money will go and also which agencies 
it will be spent through. Is that a problem in making sure that 
all CALFED agencies were affected the same way?
    Mr. Snow. In the briefing book, it provided our current 
estimate on page 23 to go through both our--what we have done 
is given a total estimate of what we can accomplish in fiscal 
year '98 for the total program. That adds up to $260 million 
and covers all four problem areas.
    Then in turn, we have taken each of the areas, such as 
ecosystem quality, and broken it down into pieces such as 
habitat acquisition and restoration, fish screening and 
passage, and then in each of those cases, further broken it 
down.
    These end up being our target categories. For example, $47 
million of acquisition of key properties and habitat 
restoration in partnership with others for fish and wildlife 
purposes, and we have indicated in there just looking at 
existing programs that funding could be used by USDA in concert 
not only with their Natural Resource Conservation Service 
Activities, the Fish and Wildlife Service, but other entities.
    We have not made a determination at this point exactly how 
those moneys should flow, and the reason for that is while we 
have targeted areas and types of habitat, we have not selected 
projects, and that comes through this ecosystem roundtable 
process that I have described.
    So as we get an inventory of projects ready to go, each one 
may have a different funding combination and a different lead 
agency. We are looking to accomplish the kind of maximum 
ecosystem benefit for the least dollars by looking at these 
different combinations of projects.
    So this is our current working level of detail, these kinds 
of categories, and as we proceed with our public process 
through the ecosystem roundtable and the Bay-Delta Advisory 
Council, we will start filling in with specific projects.
    The first projects will be funded under Prop 204, because 
we intend to do that in this Federal fiscal year, August of 
this year, to begin allocating the moneys.
    Mr. Radanovich. So if I can assume the total of page 23 is 
not the total, but rather it goes on to include pages 24 and 
25?
    Mr. Snow. Yes, I am sorry. It is on page 26 that has the 
totals. It shows $143 million as a potential Federal funding, 
and $260 million as the total.
    Mr. Radanovich. Thank you very much. Mr. Chairman, I have a 
statement and a letter I would like to submit for the record.
    Mr. Doolittle. That will be accepted, without objection.
    [Statement of Hon. George Radanovich may be found at end of 
hearing.]
    Mr. Radanovich. Thank you very much. Also, Mr. Snow, how 
much is the programmatic EIS statement on the three long-term 
alternatives expected to cost, how will it be funded, and is 
late 1998 a realistic timeframe to expect completion of this 
EIS?
    Mr. Snow. Let me start with the last question, realistic 
time line.
    I think if you talk to people that are familiar with 
projects such as this, they would say no, that it cannot be 
done in that period of time. However, we have established that 
deadline, and we intend to stick to it.
    An important part of this whole effort is keeping everybody 
engaged, keeping the momentum, and I believe if we keep the 
stakeholder community engaged and the diversity of the State 
and the Federal agencies that we can meet our targets.
    These kinds of processes, if you slow down every time there 
is an issue, you can turn it into a ten-year planning process. 
That is not going to serve the resource system well if we do 
that, so we intend to stick to that deadline.
    In terms of the funding, as a result of the Bay-Delta 
Accord, there was a specific agreement developed between the 
State and Federal agencies to prepare a long-term plan. That 
agreement that has been executed between the State and Federal 
agencies provides for 50-50 cost share of developing the long-
term strategy, preparing environmental documentation, and 
establishes in that agreement a total cost of $20 million to be 
split evenly and provides for modifications as necessary as we 
proceed and covers a four-year period of time. That is what we 
are operating under currently.
    Mr. Radanovich. Thank you. Mr. Chairman, I would like 
another couple minutes because I have run out. I do have some 
more questions.
    I know this is a hard question to ask, but Mr. Perciasepe, 
is that how you say it?
    Mr. Perciasepe. That is fine.
    Mr. Radanovich. Would there be any difficulty in extending 
the existing three-year program to four if necessary until a 
long-term management plan is determined, if it is determined 
that it will have to go beyond 1998, and if so, can you give me 
an idea of how long we might expect it to go if you don't reach 
that 1998 deadline?
    Mr. Perciasepe. Thank you. The existing accord which was 
signed in December of '94 was a three-year horizon which would 
in theory then have it expiring in December of this year.
    We are all in agreement that this needs to be extended for 
some period of time. We are working with all the stakeholders, 
with the State and the other Federal agencies to frame how that 
will be extended.
    I think it is our feeling and our desire to extend the 
accord for the appropriate period of time to allow that work to 
be completed, and we think it has worked well within the 
framework for all the work that we have been doing.
    So the answer in simple terms is yes, we think it should be 
extended, and yes, we are working on it to get it long before 
the deadline or the expiration.
    Mr. Radanovich. Thank you very much. Mr. Deputy Secretary, 
thank you for being here. As you well know, I have had a long-
term desire for obtaining some legislative changes in the 
CVPIA, so to follow up on the Chairman's question, to what 
extent will the prescription be that the 800,000 acre-foot will 
require legislation in your opinion?
    Mr. Garamendi. I don't think any legislation is required 
with regard to the CVPIA. What is required is that we move 
beyond the CVPIA and get all of the water system in California 
into a repair process. The CALFED Bay-Delta puts us there where 
we can achieve the fixes, the kind of solutions necessary.
    As to the CVPIA, we do not believe legislation is required, 
and certainly, we spoke to that extensively last year.
    Mr. Radanovich. Thank you, Mr. Deputy Secretary. One more 
question, if I may. Will the department present water contracts 
as a draft new contract beginning with contract negotiations on 
those water contracts that expire later this year and then 
early in 1998?
    Mr. Garamendi. There are two issues that are outstanding 
with regard to the water contracts. The first is the issue of 
the Windstar impact on those contracts and whether the language 
needs to be changed. The solicitor for the Department of 
Interior, Mr. John Leshy, has determined that the current 
language in many of the contracts opens the Federal Government 
up to significant financial liability, and we are now in the 
process of discussing with the contractors different language 
that may resolve that problem. We hope for a speedy resolution 
of that, and if that is the case, we would hope to have that 
resolved in the next few months, perhaps sooner.
    The second has to do with renewal of contracts. The 
contracts that are up for renewal will be dealt with as they 
come up. Until the EIS is completed, those renewals will be 
additional short-term extensions.
    Mr. Radanovich. Thank you.
    Mr. Doolittle. Mr. Pombo is recognized.
    Mr. Pombo. Thank you, Mr. Chairman. Mr. Snow, in going 
through the briefing packet that you provided, I notice that 
there are a number of land acquisition portions of that, and 
that a lot of that money is contingent on land acquisitions.
    Do you intend on proceeding with that willing buyer-willing 
seller arrangement only?
    Mr. Snow. Yes, exclusively willing buyer-willing seller, 
and if I could add, in as many places as possible, we would 
like to work with a local entity of some sort, be it a 
conservancy or group of landowners that we try to work through.
    A lot of the historic problems have been associated with 
land acquisition for ecosystem purposes, and I think we know 
too well the good intentions of restoring wetlands only to 
create mosquito problems for the neighbors, and we have to go 
through those.
    If we do not commit to doing that, we are not going to have 
a lot of willing sellers, so we have to make a strong 
commitment to working with landowners and do it exclusively on 
a willing-seller basis.
    Mr. Pombo. So it will be exclusively on the willing-seller 
basis. Is that part of the authorizing document or is that just 
a commitment on your part?
    Mr. Snow. For what we are calling the early implementation 
program or the accelerated implementation, it is a policy 
statement. Basically, that is how we are going to proceed with 
this early implementation program.
    Mr. Pombo. Have you identified, and I know you have, but 
have you identified potential sites for acquisition and if so, 
how are you dealing with those property owners at this time?
    You brought them into the process and discussed with them 
that their properties are slated for potential acquisition?
    Mr. Snow. At this point, all we have identified is broad 
areas such as the Delta or Suisun Marsh or North Bay or San 
Pablo Bay. We have not targeted specific properties at this 
point.
    Mr. Pombo. I notice that in one part, it specifically 
points out the Stone Lakes Wildlife Refuge, the expansion of 
that existing refuge. In order to do that, you are expanding 
onto private property, and I have had constituents contact me 
with concern as to which direction and who is involved.
    Mr. Snow. We are aware of the conflicts and the 
controversies associated with Stone Lakes. We highlighted that 
area because that particular category that we proposed would 
deal with meander belts as well as the potential condition to 
existing refuges in the San Joaquin, Delta, and the Sacramento 
system.
    We have not targeted specific acquisitions in those areas, 
but I think that the point that you are making is certainly a 
critical issue to us, and that is that we have to work with the 
local parties that would be affected by such land acquisitions 
in order to have a long-term successful program.
    We do not view this as run in quickly and secure 100 acres 
and we are through. We have to have a long-term sustained 
relationship with the local property owners in order to 
maintain the kind of program that we are talking about.
    Mr. Pombo. At what point will the property owners be 
contacted and told that they are on the map, so to speak?
    Mr. Snow. Well, there are two separate tracks that we are 
on to do that.
    One is that we have already started holding regional 
meetings to discuss our long-term program, ecosystem 
restoration activities. The point of that is to talk about 
where we may be going in the long run, what could be local 
impacts, and to get better ideas.
    Separately, though, we will be holding local meetings to 
talk about these near-term activities, to have actual workshops 
before we solicit proposals from people to try to get 
additional input and let people know what is going on in their 
area.
    The other piece that fits that is that we are trying to 
have meetings with local entities in certain areas, such as in 
the Delta with the Delta Protection Commission, to get on their 
agenda and describe these activities and to work with some of 
the local landowners.
    Also, I guess I would stress that this is only a partial 
response to the issue that you raised. That is why we have 
established something called the ecosystem roundtable. This 
actually has members of people from different parts of the 
State with different interests, so they are bringing these 
concerns to the table as we even formulate our strategy for 
implementing these ecosystem restoration opportunities.
    It is probably not a perfect system that we have set up, 
but we think we have enough workshops and contact, enough 
organizations, that we are providing the opportunity to make 
sure we run these issues to the ground and that we do not make 
a mistake and get landowners upset at the front end of a 
program when we are depending on their cooperation for the long 
run.
    Mr. Pombo. Unfortunately, and I appreciate your trying to 
set up the roundtables and do as much of that as you can, but 
unfortunately, the property owners that are involved may be 
more likely to reach out if they went to a farm bureau meeting 
than an ecosystem restoration roundtable, and so you can have a 
lot of meetings like that.
    The Health Protection Agency is made up of a very diverse 
group, but the property owners that are involved for the most 
part, you can go all the way through your entire process and 
they can be oblivious that they are even being considered.
    I would like to strongly encourage you that early on in the 
process, when you are beginning to develop areas and maps as to 
where you are going to go that you begin to contact the 
property owners so that they know before they pick up their 
paper in the morning and see a map that they are potentially 
going to be on a map.
    I think that would avoid a great deal of the problems in 
the long-term.
    Mr. Chairman, I understand my time has expired. I did have 
a few more questions. Are we going to have another round of 
questions?
    Mr. Doolittle. Why don't you just go ahead and ask your 
questions?
    Mr. Pombo. Thank you. What restrictions--if you come up 
with a plan and you can use South San Joaquin, you can use the 
Stone Lakes area, both of which are identified as areas of 
potential acquisition, and you come up with a plan that the 
experts agree is the best thing to do, but you have unwilling 
sellers in those particular cases.
    What kind of restrictions would you place upon those 
sellers who happen to be within an area that is slated for 
acquisition on their activities, normal farming activities? 
What kind of restrictions would you place on them if they are 
unwilling sellers?
    Mr. Snow. Well, I guess there are a couple ways to try to 
answer that, but I think that perhaps the most germane way to 
answer it is that a proposal that would come in for this early 
implementation--that is what I am talking about right now 
exclusively, that had these types of local conflicts going on 
would be very unlikely to receive funding through our process, 
because it is incomplete as far as we are concerned.
    We are looking for projects that are ready to go and don't 
have these kinds of conflicts and controversies going on with 
that. So we are going to expect programs and projects to come 
in where people are already working with the local landowners 
to resolve those problems.
    So if we have a proposal for land acquisition where it is a 
patchwork quilt because they are saying they are going to have 
to condemn some of the parcels, it doesn't meet our criteria 
for this early funding effort.
    Mr. Pombo. But see, that is exactly the problem right 
there. It is just the way you described that, because it will 
be on the map as slated for acquisition, and there may be a 
problem with a few owners that are unwilling sellers or however 
it is, that there may be a problem with that particular 
acquisition.
    You won't slate money to purchase that because there is a 
problem with it, but it will remain on the map as slated for 
acquisition for habitat restoration or wetlands or whatever the 
overriding public use of that may be, and for ten years, twenty 
years, however long this process continues, every time a county 
planner picks up a map, they will see that is slated for 
acquisition by this process. Every time a potential buyer of 
that property for farming use comes along and begins to do his 
research into a particular piece of property, he will find out 
that that property is slated for future acquisition by Fish and 
Wildlife, Army Corps, or whoever it may be, and that tends to 
have the impact on the long-term viability of that particular 
parcel on the value of that parcel and will be seen over a 
number of years as--they potentially will become willing 
sellers because the government is the only buyer, and there is 
no one else out there.
    I am concerned about establishing this process that we are 
going through and not having some way of protecting those 
property owners who may not be willing sellers in this process. 
I understand there are willing sellers. I have talked with a 
number of them, but there are a number of them that have 
contacted me that are not willing sellers, and I am very 
concerned about where this takes us.
    Mr. Snow. You raise a good point that I don't have an 
equally good answer for. It is actually very germane when we 
look at the bypass or overflow areas on the San Joaquin where 
we can talk about dealing with a flood management issue at the 
same time we are talking about ecosystem restoration 
activities.
    If you have 100 landowners lined up that think it is a good 
idea to have a flood easement and conservation easement, but 
there is one in the middle that does not, do you build a levee 
around them?
    That is a fundamental question that is in our future, no 
question about that, and I don't have a good answer for 
resolving those kinds of conflicts. I do know that in the near-
term, to deal with this early implementation, we are going to 
steer away from projects that have that kind of--it is called 
implicit condemnation aspects to them and move to projects 
where we can get something done and get the benefits generated 
to reduce the conflict that is out there.
    But in the longer run, when we look at, again, an example 
of a bypass, agricultural preserve, habitat preserve, that is a 
more difficult issue, and we are going to spend a lot of time 
working on that.
    Mr. Pombo. I appreciate that, and I would really like to 
continue working with you on that, because it is a concern of 
mine.
    Mr. Perciasepe, along the same lines, the acquisition of 
these properties, what is the commitment of the Federal 
agencies in protecting the property rights of the individuals 
who appear on a map slated for acquisition even though--and we 
both understand that the way this works is you will sit down 
and figure out the best way to do this and come up with a map, 
and then you go out and try to purchase the property. That has 
a lot of times been when the problems start, but what happens, 
what are you going to do and what is the commitment going to be 
from the Federal agencies not to put further restrictions on 
those individuals who happen to not be willing sellers in this 
process?
    Mr. Perciasepe. I think first of all, I want to also 
reiterate what Lester said. I believe these issues of the 
impact of the Federal Government is an important aspect of this 
and probably will be handled in a sensitive way identifying 
what may or may not need to be done through any project that 
comes out of this process, not just ecosystem-type projects, 
but also facilities that may have to be built, a more 
traditional concept of government working with private property 
owners. I think both of those aspects are going to require a 
great deal of sensitivity.
    There is nothing in this program that changes the existing 
regulatory aspects of the different agencies. We have no new 
authorities granted to us by these funds or to any of the 
participating State or Federal agencies, so the existing, 
underlying laws would be the ones that would be enforced.
    Mr. Pombo. What concerns me is some of the things the 
Federal agencies have done in the past, and what I am searching 
for is, I guess, commitment in this entire process, that those 
kind of things aren't going to happen in the future, where you 
have an unwilling seller who can go through a number of years 
and eventually get to the point where the only buyer for their 
property is a Federal agency or conservation group, and that is 
the only direction they can go, and the property has been 
devalued because there is only one buyer, and we end up with a 
situation where they are contacting their elected 
representative to help them out, and it is way too late in the 
process.
    I think it is early in the process that we have to put this 
out on the table so that these kind of things don't happen.
    Mr. Perciasepe. I would agree, and I think we have the 
agreement of the Federal agencies that this entire process, 
when it comes to the use of private property for any public 
purposes, whether it be facilities or easements or whatever, 
has to be done in a way that reaches out to the individual 
property owners, and I would agree with that.
    You have my commitment that we will make sure that that 
happens.
    Mr. Pombo. And this question, I guess, would probably be 
more appropriately geared to Mr. Garamendi. Would the 
Administration oppose language that would say that just because 
they are on a map it would not put any added restrictions or in 
any way reduce the use of that property just because we put 
them on a map? Would that be possible?
    I know you don't have language in front of you or anything, 
but I mean, just that general idea, is that something that you 
think the Administration would oppose?
    Mr. Garamendi. I think such language would be unnecessary. 
In the instance we are discussing, which is the first $143 
million allocation, most of which will be spent as Mr. Snow 
suggested in what are called early implementation, we will not 
be in a position to do something that is not desired by the 
landowner.
    Now, the land that is likely to be affected or desired or 
acquired is land that is in unique status to begin with. It is 
along a river. It is a potential wetland or it may already be a 
wetland or an area in which--the Stone Lakes area which is 
subject to flooding today and there are restrictions having to 
do with the flooding that occurs there annually.
    I cannot envision specific language or even general 
language that would be of use in the context of this particular 
appropriation.
    Now, as we move into the future with the remaining other 
portions of CALFED, there are projects that are flood control 
projects. It is clearly envisioned that a flood control project 
is one that may very well require condemnation often because 
the landowner may desire a friendly condemnation. There are 
certain tax advantages to such an activity versus an outright 
sale of the land, so I don't think we want to preclude that.
    Certainly as you understand so well from your district, 
flood control project is a chain and a link missing is not a 
project at all, so we want to be very careful how we deal with 
that and not preclude that potential which may be beneficial to 
the landowner.
    Then the third part of this Bay-Delta program is water 
enhancements, meaning how do we get new water, additional 
water. Those are what I think Mr. Perciasepe said the 
traditional water projects, and again, I don't believe it is 
wise to preclude both because the landowner may desire a 
friendly condemnation, nor do you want--and it may be 
impossible to build a reservoir or a pipeline system or a pump 
without having that option available to you.
    I would suggest that the point you have made is one that is 
well understood. You have heard from three of us that we 
understand the point you are making, but I think that given the 
extent of this project across the vast reach of California, 
that language may very well be very, very detrimental to 
achieving the goals and not carry out the desire that you are 
seeking.
    Mr. Doolittle. Mr. Snow, since this is sort of free money 
that you are spending; in a sense, this isn't coming out of 
your pocket. What incentives are there for you to get the most 
bang for the buck?
    Mr. Snow. Having just filed my taxes, I am not convinced 
that it is not my money.
    Mr. Doolittle. Thank you.
    Mr. Snow. A taxpayer in your district, I might add, and 
that is a question that everyone has asked, whether the 
stakeholders are going to hear from our elected officials in 
California or back here, how do we get the bang for the buck on 
this.
    You will even notice in this proposed allocation of funds, 
that we have included a specific category for monitoring of 
ecosystem health. That has to be part of any effort that goes 
forward as improving the way that we monitor these projects as 
individual projects if in fact they are doing what we said they 
are going to do, is the riparian habitat coming back the way 
that it said, and are fish responding to it.
    In our program, we are developing something that we call 
ecosystem indicators, which are basic yardsticks to be used to 
see if we are going where we said we are going to go, but then 
also perhaps more relevant to these specific funds and the 
projects that would enable, we do envision a very specific 
monitoring program where we set up baseline conditions and then 
monitor as the actions are taken to see if we are getting the 
results.
    If a fish screen is being put in place, we want to monitor 
how that fish screen is working. This is particularly important 
were we may in fact be funding innovative approaches to fish 
screening, not just a cookie cutter approach that, here is the 
mandate for the fish screen, go do it everywhere.
    If we are allowing some creative approaches, then we need 
to have a monitoring program in place to make determinations 
about the least cost and most effective way to screen fish out 
of diversions.
    I can't follow up with additional information on the broad 
ecosystem indicators and our strategy, but the actual 
monitoring will be developed to fit the individual projects to 
make sure that the projects are being implemented properly.
    Mr. Doolittle. Well, you hit upon an area I was 
specifically interested in. Maybe Mr. Garamendi or one of the 
other gentlemen here will comment about it.
    There is one reclamation district that had a proposal to 
protect fish. It was not a fish screen. It was some sort of an 
acoustic device, much less expensive, I guess many times less 
expensive than a fish screen, and according to their experts it 
would have saved 80 to 90 percent of the fish, but the Fish and 
Wildlife Service has apparently set a standard that requires, I 
think it is 98 percent of the fish to be saved. I guess zero 
percent are being saved today.
    My question to one of you gentlemen is, react, please, to 
this situation where there was an innovative, non-fish screen 
approach and it was vetoed by one of the Federal agencies.
    Mr. Garamendi. Which one did that?
    Mr. Doolittle. Fish and Wildlife Service.
    Mr. Garamendi. Mr. Chairman, you asked for my reaction, and 
my reaction is that that is not the proper answer that was 
given by the Fish and Wildlife if you cite the facts totally 
and correctly.
    We must be creative and innovative, seeking methods that 
are new and in some cases untried. We have to use what we are 
calling an adaptive management approach, but frankly, the 
answers are not known on many of the wildlife issues today, and 
we need to try something, test it. If it doesn't work, then 
come back and make modifications. Only in that way will we make 
progress, and I am a very strong advocate of that, and I would 
certainly want to see the Fish and Wildlife Service be using 
that adaptive management process.
    I know that Mike Spear is an advocate of that. He is our 
regional manager on the West Coast, and I would think that we 
will see more of that. I would be interested in having the 
specific facts with regard to this one. It might prove to be a 
useful example for us all.
    Mr. Doolittle. I will forward to you the specific facts and 
would request that when you review them, that you make a 
response to the committee.
    I think a lot of good can come out of this if people are 
willing to be flexible and reasonable as to how these things 
are done, but to demand that--I mean, a fish screen is not 
necessarily a perfect answer. It is certainly a very expensive 
solution, if it really amounts to much of a solution, and I 
guess that is perhaps another question.
    Mr. Garamendi. I look forward to getting the specific 
information and I will respond to you. I have given you my 
general impression based on the information you have given me. 
The bottom line is, in order to deal with the Bay-Delta issues, 
the water issues of California, we must be creative and that 
means trying new things.
    Mr. Chairman, I am apologetic, but I have an airplane that 
I must leave for.
    Mr. Doolittle. I appreciate your staying. We started late. 
I would encourage those of you who are able to remain to do so, 
but I understand this is a very difficult situation.
    I think, Mr. Garamendi, you have answered my questions, and 
Mr. Pombo is satisfied, so why don't we ask the rest of you to 
remain, and we will excuse the Deputy Secretary to make his 
plane.
    Mr. Garamendi. Thank you very much.
    Mr. Doolittle. And I think that we are just about concluded 
with the questions for the rest of you. I hope at least Mr. 
Snow can stick around for the second panel, and as many of the 
rest of you as are able.
    When you hear the testimony of our final witness on the 
second panel, I would be interested in engaging you in a bit of 
further conversation. I think when you hear the testimony of 
Mr. Payne, you will see what I am driving at here. In fact, I 
truly regret that I was not aware of his testimony earlier. I 
would have asked the Corps of Engineers to be present for this 
to get their input, but it was too late to do that.
    Let me ask you this question now, Mr. Snow. In your 
interchange with Mr. Pombo, you certainly made it clear that 
you are pursing willing buyer-willing seller. I guess the 
question I would follow up with is, what conditions are 
necessary to foster the climate of a willing buyer-willing 
seller?
    In other words, it is certainly possible to make the 
pronouncement that you are going to do that, but then every 
time somebody turns around to do practically anything with land 
that is in one of these sensitive areas, you have to have some 
governmental agency's permission, and we all know that they 
communicate with each other, local, State and Federal. The 
State agencies will pick up the phone and call the Federal and 
vice versa, hey, we have a situation here, an interest in this, 
move slowly with your permit or whatever. I do believe that 
that occurs, and you will see in the testimony of Mr. Payne 
someone who has been frustrated for years over this.
    In fact, the Corps of Engineers is one of your 
participating agencies, right, in CALFED, and the real estate 
division apparently doesn't communicate with the CALFED aspect 
of the operation.
    What do you do about this when people become very 
frustrated and are deemed to be willing sellers because they 
finally don't know what else to do. Essentially, they give up.
    Are you sensitive to these problems and what are you going 
to be doing to take that into account?
    Mr. Snow. Yes, I am, and I am going to do something 
different than the Corps did in this case. This will be the 
short answer.
    I have some general familiarity with the issue that you are 
referring to with Mr. Payne's property, and it is a truly 
unique situation. I am not sure I have ever run across anything 
quite like that, and I will give you one kind of specific 
response as to how I think we want to do business, and I 
hesitate to do this, because I know that you have on your next 
panel someone from the Nature Conservancy.
    But I think in fact the Nature Conservancy provides a model 
that we want to work with, and that is that is not Federal or 
State agency acquisition of property. It is our enabling 
organizations such as the Nature Conservancy that has a track 
record of working with the local landowners to do this in a 
cooperative fashion to acquire property.
    I think that is what we want to see happen, is to be able 
to see conservancies and other organizations that have at their 
roots the local property owners and local interests 
participating in those kinds of decisionmaking processes.
    Where that doesn't work, then we will need to have a more 
traditional property acquisition, but we have to be mindful of 
these kinds of issues because of the sustained effort that we 
have to maintain. If the reputation is that the land 
acquisition that resulted from the CALFED program is going to 
cheat you out of the value of your property, then there is not 
going to be willing sellers out there, and there are going to 
be people back here testifying don't give them any more money.
    We have that in mind as we proceed forward with this. We 
have to deal fairly, and that is on both sides. I mean, if you 
give away too much money, then you have people saying that it 
is a gift of public funds, so you have to have a fair and open 
approach, and everybody knows what the rules are.
    I think that philosophically, that has to be the foundation 
of this program, because we are not in this for a flash in the 
pan where we are going to buy a couple hundred acres and we are 
through and we don't care what people think about is.
    We are in this for the long haul. The efforts that we are 
talking about you will see referred to in here, 20 to 25 years 
of implementation. To be able to sustain that, we have to have 
good relationships with the property owners and local 
government and local businesses.
    Mr. Doolittle. I am very encouraged to hear that response. 
I am encouraged that you are in charge of the program, and you 
have a great opportunity to actually accomplish something in an 
area where so little has been accomplished in the past.
    I hope, and as long as you are mindful of the fact that 
there are ways to get someone's property short of condemning 
it, and that you will work to resist allowing those conditions 
to exist, I think it will be a very, very positive thing.
    Let me thank all of the members and the ranking members of 
our panel for being here. We will have no doubt a few 
additional questions to submit to you in writing, and we would 
ask for your prompt reply, and we will hold the hearing record 
open for that purpose.
    With that, we thank you for being here. Those who can stay, 
please do, and we will understand if other things must take you 
away.
    Mr. Snow. Thank you, Mr. Chairman.
    Mr. Doolittle. I have something, because of this time 
change, that is pressing on me. I am going to declare a recess 
for five minutes, and then we will come back for the second 
panel.
    I will ask our second panel to come forward and remain 
standing for the oath for your testimony.
    Please raise your right hands. Do you solemnly swear or 
affirm under penalty of perjury that the responses given and 
the statements made will be the whole truth and nothing but the 
truth?
    Thank you. Let the record reflect that each answered in the 
affirmative. Ladies and gentlemen, we welcome you here to the 
Subcommittee hearing, and I apologize for the inconvenience of 
this delay.
    The lights there in front of you will indicate when your 
five minutes are up. It isn't life or death if you go over it, 
but please try to use it as a rough guide, anyway.
    Let me introduce the panel. We have Rosemary Kamei, 
Director of the Santa Clara Valley Water District; Ms. Leslie 
Friedman Johnson, Director of Agency Relations of the 
California Regional Office of the Nature Conservancy. We have 
Ms. Sunne Wright McPeak, President and CEO of the Bay Area 
Council; Mr. Richard K. Golb, Executive Director of the 
Northern California Water Association; and Mr. W. Ashley Payne, 
owner of the Ashley Payne Farms.
    We appreciate your being here, and we will recognize Ms. 
Kamei for her statement.

STATEMENT OF ROSEMARY KAMEI, DIRECTOR, SANTA CLARA VALLEY WATER 
                            DISTRICT

    Ms. Kamei. Thank you, Mr. Chairman and members of the 
Subcommittee. Thank you for providing me an opportunity to 
submit the statement on the CALFED Bay-Delta program on behalf 
of the Santa Clara Valley Water District, a member of the 
California Bay-Delta Water Coalition, and on behalf of the Bay-
Delta Advisory Council.
    California's economy is one of the strongest in the world, 
and that strength is dependent on sufficient and reliable 
supplies of water. The San Francisco Bay-Delta Estuary supplies 
20 million people and supports an $800 billion economy and job 
base. The Bay Area is the number one business location in the 
United States and second in the world.
    Santa Clara County, the Silicon Valley, is the single most 
important high-tech center in the United States, being home to 
over 4,000 high-tech companies. The Silicon Valley receives 
one-third or over $1 billion of the venture capital that is 
invested in the United States annually and employs 
approximately 230,000 people.
    These growing industries as well as our homeowners need a 
reliable source of high quality water coupled with an improving 
environment to produce the products that fuel the economic 
engine and to provide healthy surroundings to raise our 
children.
    Santa Clara County is home to 1.6 million people, and it 
constitutes 25 percent of the Bay Area's total population and 
economy. On an average year, half of the water supplied to 
Santa Clara County comes from the Bay-Delta region. A reliable 
and adequate supply of high quality water and environmental 
quality is important to the businesses and residents of the 
Silicon Valley.
    As a member of the Urban Water Users Community and an 
active participant in the CALFED Bay-Delta program, I am 
pleased with the progress of the program and the degree to 
which the program has promoted an open and consensus-building 
process in developing a long-term solution to the problems 
facing the Bay-Delta.
    The program has a very ambitious schedule, but I think that 
it is important for CALFED to continue with the momentum that 
it has generated. From the urban perspective, the CALFED 
process is on track to increase water supply reliability. This 
is absolutely critical to maintaining the quality of life, not 
just in my area but throughout the State.
    The Bay-Delta Advisory Council, also known as BDAC, is a 
federally chartered stakeholder group which provides policy 
guidance to CALFED in its development of the long-term Bay-
Delta solution. It is a 32-member council consisting of 
representatives from urban, agricultural, environmental, 
business, and fishing interests. It is the formal forum for 
stakeholders to discuss issues, understand the concerns from 
all of the interests that will be affected by the CALFED Bay-
Delta program, and to provide recommendations to CALFED in 
developing balanced alternatives for addressing water problems 
in the Bay-Delta.
    Although the CALFED program requires all parts of the long-
term solution to move forward together, the CALFED agencies and 
stakeholder interests have recognized an immediate need to 
begin implementation of the ecosystem restoration element. 
Because the ecosystem restoration element is designed to serve 
as the foundation for all of the other program elements, 
immediate restoration action is necessary to achieve the more 
long-term water supply reliability and water quality benefits.
    The California Bay-Delta Water Coalition, including the 
Santa Clara Valley Water District, strongly supports the 
Administration's budget request for funding the interim CALFED 
ecosystem restoration program. The coalition believes that it 
is critical that all parties in this process, Federal, State, 
local, and stakeholder interests, contribute financially to 
CALFED Bay-Delta.
    The project selection and funding prioritization process is 
being performed in a manner that fosters cooperative planning 
and implementation with all the Federal, State, and local 
agencies and the stakeholders. Prioritization is based on a 
rigorous evaluation of environment needs, biological benefits, 
technical feasibility, cost effectiveness, potential 
environmental and third-party impacts, and consistency with 
CALFED goals.
    I believe that this ecosystem roundtable process is the 
most effective method for coordinating overlapping agency 
programs and for bringing meaningful involvement and 
stakeholder buy-in.
    Thank you so much for this opportunity.
    [Statement of Rosemary Kamei may be found at end of 
hearing.]
    Mr. Doolittle. Thank you. Ms. Johnson, you are recognized.
    Ms. Johnson. Yes, I am sorry, I was just distracted.

   STATEMENT OF LESLIE FRIEDMAN JOHNSON, DIRECTOR OF AGENCY 
 RELATIONS, CALIFORNIA REGIONAL OFFICE, THE NATURE CONSERVANCY

    Ms. Johnson. My name is Leslie Friedman Johnson and thank 
you, Mr. Chairman, for the opportunity to testify here today.
    I would like to submit for the record a coalition statement 
on behalf of the California Bay-Delta Water Coalition. Several 
of the panelists here before you are part of that coalition, 
and we did prepare a joint statement which we would like to 
submit for the record.
    Mr. Doolittle. It will be submitted.
    Ms. Johnson. In addition to the coalition's statement, I 
have submitted a personal statement in which I tried to address 
the questions that you asked of me in my invitation letter, so 
I would like for that to become part of the record as well.
    Mr. Doolittle. Yes, it will be.
    Ms. Johnson. Again, my name is Leslie Friedman Johnson. I 
am director of agency relations for the Nature Conservancy in 
California. The Nature Conservancy is a membership 
organization. We have over 900,000 members nationwide. We are 
in the business of land and biodiversity conservation.
    In California, we have been active for more than 20 years 
in the Bay-Delta watershed doing ecosystem conservation and 
restoration projects, so I think that qualifies us to speak to 
some of the issues at hand today.
    We do share the CALFED objective of restoring ecosystem 
health in the Bay-Delta watershed, and for that reason, we have 
been participating in the CALFED process since virtually the 
day after the Bay-Delta Accord was signed.
    As I said, I have submitted a lot of information for the 
record in my written statement. I would like to focus on just a 
couple of elements of that statement and perhaps elaborate on 
them for our purposes here.
    I would like to begin with talking about why we need strong 
Federal support at this time. I am using that as a euphemism 
for lots of money, why we need that in the process. As my 
colleague here just mentioned, ecosystem restoration is the 
foundation for the CALFED solution that is being built.
    I would like to characterize it a little bit differently 
than you have heard it characterized today, maybe a little 
background first.
    Habitats and species in the valley, in the Bay-Delta 
watershed are in decline, have been in decline for a long time. 
We are down to a point where we are down to single-digit 
percentages of a lot of species and habitat types. It has 
gotten to the point where there is virtually no slack left in 
the system, to the point where every acre-foot of water, every 
acre of land becomes a potential battleground, a potential 
flashpoint for controversy.
    We believe that we will continue to have controversies 
until this situation is fixed, until we restore some of the 
slack or the flexibility to the system.
    We tend to talk about the CALFED elements, ecosystem 
restoration, water supply reliability, water quality, as though 
they are discrete, separate elements. I would just like to try 
to make the point that we believe they are intricately linked, 
and that in fact, restoring the ecosystem is in and of itself 
an activity that will help enhance water supply reliability. It 
is not a separate action. It is an action to help restore 
reliability.
    This is something we feel very strongly about. What the 
money would be for in the short-term, and I would like to spend 
a little bit of time talking about the urgency of the need for 
support. Everyone says that we need it, that it is a good 
thing, that we should do more of it.
    What I would like to really highlight is the urgency. There 
are urgent actions that need to be done. There are species that 
are on the brink. There are species that continue to be in 
decline. If they are allowed to continue to decline, water 
supply reliability will be impacted further than it has been 
already.
    In addition to emergency actions to deal with species at 
risk, there is also a lot of research and development, 
demonstration projects that need to be done for habitats for 
which restoration technology is not well developed. We know a 
lot about how to restore some, but virtually nothing about how 
to restore others.
    We also need to act immediately so as to preserve our 
options so that we can do the ecosystem restoration as we learn 
more about what needs to be done. By that, I mean we need to 
acquire land before it is converted to urban or high investment 
uses if we are to bring it back. We also need to have 
significant funding in order to encourage projects on the scale 
that we need to actually restore ecosystem health. Little 
piecemeal projects that deal with single issues or single 
species that are not done in a large scale, coordinated way are 
not going to get us to a place where we can actually say we 
have ecosystem health.
    I think that the request, the nature of the 
Administration's request this year, that it is for a lump sum. 
We support that very strongly. We know that there has been talk 
about perhaps dividing it up amongst the agencies. We fear that 
that would undermine CALFED's ability to use the funds in a 
coordinated fashion. We really think the lump sum is the right 
way to go.
    That concludes my statement. I would be happy to answer any 
questions, and again, I thank you for the opportunity to 
testify.
    [Statement of Leslie Friedman Johnson may be found at end 
of hearing.]
    Mr. Doolittle. Thank you very, very much. Ms. McPeak, you 
are recognized for your testimony.

 STATEMENT OF SUNNE WRIGHT McPEAK, PRESIDENT AND CEO, BAY AREA 
                            COUNCIL

    Ms. McPeak. Thank you, Mr. Chairman. As you introduced, I 
am here representing the Bay Area Council, a business-sponsored 
CEO-led public policy organization established more than 50 
years ago to promote the economic vitality and environmental 
quality of the nine counties that rim San Francisco Bay.
    I also want to share a viewpoint from the perspective of 
business throughout California and in addition, I am very 
honored to serve on the Bay-Delta Advisory Committee as vice 
Chairman.
    The Bay Area Council and business leaders throughout 
California strongly support the CALFED process and endorse this 
Federal investment in the continuation of the process in this 
fiscal year. Put quite simply, this is the only hope in 
California to reach an accord or sustain the accord reached in 
December of '94 and continue to address the challenges of 
securing a reliable quality water supply for the economy which 
also is dependent upon restoration of the environment in the 
Bay-Delta ecosystem.
    You most eloquently set forth the importance of the Bay-
Delta process and the challenges we face in order to achieve 
success in your opening comments. I couldn't State them any 
better.
    Let me just say in terms of are we in it for the long haul, 
the business leaders that head my organization and those that 
have been very involved in California got into this process to 
support the Bay-Delta Accord because it was quite clear that 
the political paralysis, the gridlock in policy in California, 
was seriously threatening the economic recovery and sustained 
economic prosperity for California and therefore, also for the 
nation.
    I am quite personally surprised that we have been able to 
get along this many years without a workable solution to assure 
a reliable water supply for the State.
    We don't have any more time. If we do not proceed with the 
CALFED process, we seriously threaten and endanger the economic 
engine known as California, the Bay Area, and therefore, the 
sustained economic growth of the nation.
    You can be very pleased and proud of leadership exerted 
here by your committee in this process. It is only because it 
is stakeholder-driven, Federal-staked, multi-agency, bipartisan 
that we have a chance to succeed.
    Economic prosperity and environment quality must go hand in 
hand and we know that quite dearly, particularly in the region 
that surrounds the Bay-Delta Estuary. What is proposed here for 
the Federal appropriation and the investment in CALFED is an 
approach to implement as we continue to address the challenges.
    I want to also share with you that my members have little 
tolerance for wasting time, but also an appreciation for what 
it means to have a sustained commitment to seeing a process 
through.
    The timetable we are working on with the EIS-EIR process is 
one that we want to see met. You heard the commitment from 
Lester. I can assure you that Chairman Mike Madigan and myself 
are also committed to meeting that timetable, because it is 
only with that intense, sustained focus do we make any 
progress.
    I believe that we can all be quite confident because there 
is such a sense of urgency in California, and therefore, both 
the Federal and State projects that we succeed with the CALFED 
process that we will succeed.
    I am happy to answer any questions.
    [Statement of Sunne Wright McPeak may be found at end of 
hearing.]
    Mr. Doolittle. Thank you. Mr. Golb, you are recognized.

  STATEMENT OF RICHARD K. GOLB, EXECUTIVE DIRECTOR, NORTHERN 
                  CALIFORNIA WATER ASSOCIATION

    Mr. Golb. Mr. Chairman, my name is Richard Golb. I am 
executive director of the Northern California Water 
Association. The NCWA is a nonprofit organization that 
represents both public and private water agencies throughout 
the Sacramento Valley.
    I really appreciate the opportunity to testify here today, 
and also appreciate your time commitment despite the 
distractions of earlier and your proceeding on with this 
hearing. It means a lot to all of us who travelled east from 
California to testify.
    California's agricultural interests are supportive of the 
CALFED process as well as the CALFED ecosystem goal, and the 
whole objective of the CALFED plan which is to restore water 
supplies for California's cities, businesses, and farms and to 
restore the ecosystem for all species and habitat of the 
species that depend on it.
    We view those two goals as interrelated, and we view them 
in such a way that they are not mutually exclusive, but 
mutually achievable, and in fact, this is in a similar vein to 
support that was echoed earlier for Governor Wilson's 1992 
water policy where he advanced the principle that all interests 
have to advance at the same time, and that any one interest 
shouldn't get ahead of the others.
    Our support for the CALFED process is consistent with the 
governor's 1992 water policy. Following on that theme, CALFED 
adopted a set of six solution principles earlier, and they are 
very important because what they do is they guide CALFED as it 
attempts to develop a preferred alternative.
    Now, several of the principles that CALFED adopted do the 
following. First, they ensure that the final solution is 
equitable to all interests, also that the preferred alternative 
doesn't result in any redirected impacts to other regions or 
other interests. Then one of the final principles is that it is 
a durable plan that will last, that has shelf life, so it 
addresses both California's economic needs and environment 
needs.
    We believe the success of the CALFED program is imperative 
for the success of California's economy and the long-term 
health of our environment.
    As Sunne indicated, the ecosystem roundtable is a 19-member 
subcommittee of the Bay-Delta Advisory Council. The ecosystem 
roundtable of which I am a member is a representative work 
group comprised of all major interest groups and all major 
stakeholders in California.
    The mission is to assist CALFED and the Bay-Delta Advisory 
Council to come up with recommendations for specific projects 
to resolve and identify priority needs throughout the whole 
Bay-Delta watershed. Our current goal is to go through this 
process and make an initial recommendation, hopefully by 
sometime this summer so that we can move forward with some of 
the projects that are available and ready to go now.
    Our view so far of the ecosystem roundtable is that it is 
an accountable and balanced process. There are always reasons 
to be skeptical, and there is always great interest when a 
group of people get together and attempt to allocate State and 
Federal dollars. That interest is healthy. The skepticism, to 
an extent, is probably healthy as well, but from our 
perspective, so far, it is working well and we view it as a 
process that we believe in. There are clearly established 
criteria for how projects will be selected, strong measures of 
good science for how the priorities will be established, and we 
view those steps which Lester Snow identified earlier today as 
balanced steps that will lead us to very good projects.
    Congressional support for the President's budget request 
for $143 million will allow CALFED and the ecosystem roundtable 
and the Bay-Delta Advisory Group to begin work on both 
immediate projects and long-term restoration projects that will 
provide significant water supply reliability benefits for 
agricultural needs and urban and municipal needs.
    The funding will also ensure that restoration projects that 
have a current local fund share as well as current State and 
Federal approval can move forward now.
    For example, State and Federal agencies have long advocated 
that agricultural water suppliers, the San Joaquin River and 
the Sacramento River and in the Delta, should screen their 
diversions, should place large, mechanical screens around their 
diversions to slow the water as it passes the diversion and 
prevent juvenile salmon from being trapped at the pumps.
    There are a number of agricultural water suppliers that 
have accepted the challenge and stepped forward to begin the 
process of installing these screens on the diversions. It is a 
very lengthy, expensive process.
    At this point now, we have a number of agencies that are 
ready to proceed and a number of water suppliers, public and 
private, that would like to install these diversions and are 
willing to do so. These funds that the President has requested 
will help CALFED finance those projects.
    In conclusion, I guess what I would like to say is that 
Federal support for the CALFED process is imperative, and that 
means the support of the agencies and the support of Congress.
    What we need to make sure that CALFED succeeds is a full 
commitment, a commitment of financing and a commitment to 
adhere to the accords, the agreements that we have reached in 
California such as the 1994 Bay-Delta Accord to make sure that 
we have the authorization, the authorities, the necessary 
financing and the agreements all together collectively to 
finance the initial projects that will lead to the long-term 
projects that CALFED is now developing.
    Again, Mr. Chairman, thank you for conducting this hearing, 
and I would be pleased to answer any questions at the 
conclusion of Mr. Payne's testimony.
    [Statement of Richard K. Golb may be found at end of 
hearing.]
    Mr. Doolittle. Thank you. Mr. Payne, you are recognized.

    STATEMENT OF W. ASHLEY PAYNE, OWNER, ASHLEY PAYNE FARMS

    Mr. Payne. Thank you. Mr. Chairman, members of the 
committee, my name is Ashley Payne. I am a rancher in Yolo 
County, California. I appreciate the opportunity to testify 
before you today and your Subcommittee, particularly from the 
perspective of a landowner who has property in the CALFED 
acquisition area.
    My involvement with the Federal land acquisition process 
has been with the U.S. Army Corps of Engineers, the Corps' 
effort to acquire the Little Holland tract, an island in the 
delta that my brother and I own. While my experience may be 
somewhat unique, it does provide some lessons from which the 
CALFED land acquisition program can benefit.
    Little Holland tract is a 1,630-acre delta island in 
southeastern Yolo County, with 450 acre-feet of appropriate 
water rights. In 1995, Congress passed legislation directing 
the Corps to acquire Little Holland tract, and funds were 
appropriated to carry out the acquisition. To date, it appears 
that we are still a long way from finalizing acquisition of the 
property.
    The Corps has appraised the property and offered us 
$735,000 for the island. This is far less than the fair market 
value of the property. In 1992, a private appraisal valued the 
property at $2,500,000. In 1995, Congress made up to $3,300,000 
available for the acquisition.
    There were several reasons for the low appraisal by the 
Corps that have emerged. First, Federal appraisal standards 
preclude the use of anything but private-to-private sales when 
selecting comparables to determine the fair market value of a 
parcel. Federal appraisal guidelines do not permit the use of 
transactions that involve a nonprofit or the State of 
California, both of which have made significant acquisitions in 
the Delta.
    Secondly, the Corps does not have a solid understanding of 
water rights and their value. During our recent discussion with 
the Corps, representatives of the agency acknowledged that the 
Corps had not assigned any value whatsoever to the appropriate 
water rights associated with the Little Holland Tract.
    Senior appropriate water rights similar to those associated 
with Little Holland tract have sold recently for $1,500 per 
acre-foot. That would place the value of the water rights alone 
at $2,200,000.
    Third, the Corps real estate commission seems to operate in 
somewhat of a policy vacuum. For example, the real estate 
division has never consulated with their Corps colleagues 
involved in CALFED to determine whether the Corps would have an 
interest in acquiring the water rights of Little Holland. We 
did, and the answer was an unqualified yes.
    Finally, the Corps has been unable to discriminate between 
the value and therefore, the price that should be paid for 
varying qualities of habitat. What I think is that the Corps 
appraised comparative value of all inundated land equally 
regardless of the quality of the habitat.
    To summarize, there are important key lessons out of Little 
Holland tract and experience that may be relevant to the 
committee.
    First and foremost, it is important which agencies are 
given responsibility for carrying out the land acquisition 
program. Certainly the Corps of Engineers should not have a 
role in this part of the CALFED program. They lack the 
expertise, and in particular, they lack the knowledge of water 
rights. In my view, the Bureau of Reclamation should have the 
lead in this process.
    Two, there should be clear lines of communication between 
the real estate division of various agencies that operate in 
the valley and the Delta, and the Federal officials involved in 
the CALFED process. It should be clear to all Federal officials 
involved in land acquisitions in the region that CALFED has set 
a high priority on acquiring prime habitat and water rights for 
environment purposes.
    Three, a concerted effort must be made to ensure that the 
Federal Government is able to quickly and efficiently determine 
the fair market value of prime habitat and at the same time, 
carry out the acquisition in a timely manner.
    Four, Federal appraisal standards should be modified to 
allow the use of sales involving nonprofit organizations and 
government agencies. The Delta and the islands within the Delta 
are very unique, and the primary sales of late involve either 
nonprofit organizations or government agencies. Automatic 
exclusion of these recent sales results in appraisals that do 
not reflect the current value of the land and water rights.
    In conclusion, as you can imagine, this has been a very 
frustrating experience. This is a prime piece of property with 
wetlands and wildlife. Congress has instructed the Corps to 
acquire the property including the water rights and the funds 
have been appropriated, yet 15 months after the Congress 
directed that the property be acquired, the sale has still not 
closed.
    Certainly, if this kind of experience is repeated, it will 
undermine the kind of willing seller requirement that will be 
needed for an aggressive CALFED land acquisition program to be 
successful.
    Mr. Chairman, while my situation might have been somewhat 
unique, I understand you have testimony before you that has 
been submitted from other landowners that reflect similar 
concerns. I am the landlord, I am the landowner who would like 
to be allowed by the Corps to fix my levees and farm the land 
or sell it at a fair market value, neither of which I can 
presently do.
    Thank you for this opportunity to testify.
    [Statement of W. Ashley Payne may be found at end of 
hearing.]
    Mr. Doolittle. Thank you. Ms. Johnson, Mr. Payne mentioned 
various recommendations about how land acquisitions should be 
handled in the Bay-Delta program. What is your perspective on 
these recommendations?
    Ms. Johnson. On these specific recommendations?
    Mr. Doolittle. Yes.
    Ms. Johnson. I think that if gestures are made, that if 
interest is shown by the government to acquire land, that they 
should follow through as expeditiously as possible.
    I think that the CALFED program provides an opportunity to 
see these things happen in a more coordinated fashion to 
identify the appropriate agency to take title.
    One of the situations that we have now is all of the 
different State and Federal agencies who have land acquisition 
authority or responsibilities have different priorities, 
different mandates, different processes for completing those.
     Some are more efficient than others; all have fairly 
lengthy bureaucratic needs that they need to move through.
    Mr. Snow, in his testimony earlier in answering a question, 
suggested that one way to go about this might be to have money 
granted to organizations that can do the kind of work in a more 
expeditious manner. I would support that.
    The other recommendation, and I am sorry, I didn't make a 
note of each of the recommendations he made. Perhaps if you 
have a specific question about one of his recommendations, you 
could refer me to it.
    Mr. Doolittle. Well, you have heard an outline of the 
problems that he experienced in trying to sell his property. 
Here you have a situation where the Corps has actually 
determined that it is in the nation's interest to get it. It 
has been authorized, money has been appropriated, and yet we 
still can't accomplish it and haven't accomplished it. 
Hopefully, it can happen.
    Ms. Johnson. I can say that we have extensive experience 
working with a variety of agencies on land acquisition.
    Mr. Doolittle. Does one stand out over the other in terms 
of being easier to deal with?
    Ms. Johnson. It is very highly variable. It depends on the 
deal, it depends on the time, it depends on whether the money 
is available before going in to try and do the deal or if they 
are trying to solicit it after the fact.
    On the whole, we have had very good experiences working 
with them. I know that landowners as a rule have expressed a 
preference for working with private entities over working 
especially with the Federal Government.
    Mr. Doolittle. So the Federal Government would rank last in 
the agencies to be dealt with?
    Ms. Johnson. As I said, it is highly variable, and it 
depends on the deal. I think that what CALFED is proposing is 
to come up with a mix of approaches that will accomplish what 
needs to be accomplished for its mission.
    Mr. Doolittle. The Corps isn't here to defend themselves, 
but I don't know--Mr. Payne, were these people in the real 
estate division, even though they were with the Corps?
    Did these people live in California or was this something 
that was done back in Washington, D.C.?
    Mr. Payne. No, this has been handled by the Sacramento 
department of the Corps.
    Mr. Doolittle. How could you live in California and not 
recognize the water rights issue? That sounds like it is an 
absolutely different proposal.
    Mr. Payne. We requested private counsel.
    Mr. Doolittle. Well, I guess no one is here to defend the 
Corps today in this group, and they are supposed to be one 
giving live testimony in committees, even in this one. Of the 
various Federal alternatives, they are thought to be one of the 
more reasonable Federal agencies to deal with, but they have 
their problems, too.
    Ms. Kamei, having once resided in the Bay Area for a number 
of years, I am intrigued that it is your assertion that this is 
the number one business location in the United States. Is that 
a point of view accepted by the whole or is that local pride in 
the Bay Area?
    Ms. Kamei. Having lived in the Bay Area 16 years, perhaps 
it sort of grows on you, but it is generally the case and it 
has attracted quite a number of firms, especially the high-tech 
firms, to our area, and I know there is always the element of 
going to other areas, but it seems to be one that draws people 
to the West Coast.
    Mr. Doolittle. And you said it is the second in the world. 
From that list you are using, what is the first in the world?
    Ms. Kamei. Singapore.
    Mr. Doolittle. Singapore is the first business location in 
the world?
    Ms. Kamei. And I did confirm it with my colleague who is 
representing business here today, Sunne, and she might have 
more information to add.
    Mr. Doolittle. OK.
    Ms. McPeak. Fortune magazine published in November of '94 
their list as they do annually of best locations for business 
within the United States and in the world, and that is the 
ranking that Rosemary is quoting.
    They change from year to year their ranking, Mr. Chairman.
    Mr. Doolittle. Is this a thing that takes into account the 
number of five-star hotels and things like that? Are there all 
those in the rankings?
    Ms. McPeak. Actually, no. In that particular year, Fortune 
hired a consulting firm who looked at knowledge-based 
industries and what the change was happening globally, and so 
that also helps explain the ranking internationally of 
Singapore, so it was more looking at what has been the trend in 
comparative advantage and the globalization.
    Mr. Doolittle. That is very interesting. Let me ask you, 
Ms. Kamei, how are the urban water users going to approach the 
water use efficiency program that is contained in all three of 
the long-term management alternatives?
    Ms. Kamei. One of the things that we are working very 
diligently with in the CALFED program is how conservation 
programs and other programs and what we call BMPs, best 
management practices, can be put in place for the short-term 
and long-term and making that commitment.
    We signed an MOU, a memorandum of understanding, among the 
water users to implement those BMPs.
    Mr. Doolittle. Ms. Johnson, can you give us some more 
details on the role that Nature Conservancy is playing in 
CALFED land acquisition efforts?
    Ms. Johnson. Well, to my knowledge, CALFED has no land 
acquisition efforts to speak of yet. It is not entirely clear 
how that is going to play out.
    What we are doing very aggressively now is trying to 
develop projects for working with others with landowners, with 
local conservancies, with a variety of agencies and interests 
to try and develop the projects, get them ready to go so that 
when the money is made available, it could be spent effectively 
and quickly.
    We are working in a number of areas that overlap not 
coincidentally with the CALFED maps that you have seen in your 
packet.
    Mr. Doolittle. Let me ask my colleagues if we could have 
one round of questioning. Would anybody object if we just each 
ask our questions?
    Mr. Pombo. No.
    Mr. Doolittle. I promise I won't take long. The 800,000 
acre-feet of water for environmental purposes, would anyone 
care to comment just as to the relative importance you assign 
to clarifying exactly what that means in order to be able to 
resolve so many of these issues that seem to depend upon that?
    Mr. Golb. I will try. The current situation now with the 
latest water allocation announcement which is at best 
unfortunate, and this is a classic example of the type of 
situation that led us to form CALFED and urge CALFED's 
formation in 1994.
    From time to time, we are going to see these problems 
arise, and I don't think we should try to skirt the issue. They 
can be extremely dangerous to this fragile coalition that we 
worked so hard to put together, but they also stress something 
very important, and that is that if CALFED isn't successful, we 
will face more situations like this every year.
    The future economic of California agriculture cannot 
withstand more of these types of situations where water 
supplies are uncertain or water supply cutbacks--that they will 
continue to face those. The business interests can't either, so 
I think that we look at it is, we have a difficult situation in 
front of us.
    I have heard the administrator of EPA, Mr. Perciasepe, and 
the Deputy Secretary, both indicate they were willing to try to 
work this out to the best of their ability. I take their word 
for it, and I think they will.
    We are going to have these things from time to time, and 
the coalition that is here before you today recognizes it is a 
problem for us, but in the long run, CALFED's success is 
imperative, and that means full funding is necessary as well as 
the full Federal support is necessary.
    It is a difficult situation, but hopefully, we will be able 
to get through it, but it shouldn't detract support from the 
CALFED program.
    Ms. McPeak. The 800,000 acre-feet issue from CVPIA and the 
controversy that continues today is illustrative of the major 
challenge faced by a project or a program such as CALFED which 
is to understand there has to be a resolution of the issues 
that treat all parties fairly.
    No effort to protect the environment or restore habitat 
that doesn't recognize the reality of meeting on a long-term 
basis a reliable, sustainable water supply for ag, for urban, 
for industry, is simply going to fail, and that is where we are 
at.
    The CALFED process represents that hope to look at how we 
satisfy all those needs. I want to assure you that the Bay Area 
business and Bay Area Council is very concerned about it. We 
have formed--Rosemary is one of four co-chairs representing 
four stakeholders, a Bay Area Water Policy Forum. It was 
launched by Dick Rosenberg, who is the past chair, retired 
chair and CEO of Bank of America.
    Next week, we will be discussing the 800,000 acre-feet 
issue to try to better understand it, but the fact of the 
matter is that in isolation trying to restore habitat without 
understanding it must go hand in hand with meeting water needs 
in the State, is simply not going to succeed ultimately.
    Mr. Doolittle. Let me follow up with you, Ms. McPeak, if I 
may. I believe you are really from the east Bay, but since you 
represent the Bay Area Council, may I ask you if you could give 
us details about what money or water, if any, the city of San 
Francisco, which gets its water from its system, has 
contributed to the Bay-Delta restoration efforts?
    Ms. McPeak. Actually, I should be even more forthcoming in 
disclosing that I am actually from the San Joaquin dairy and 
grew up on a dairy farm. You have to have done that to really 
understand what the perspective of farmers is in all of this.
    All of the water agencies within the Bay Area are committed 
to the Bay-Delta process and the urban water agencies within 
the State of California which the city and county of San 
Francisco is also one as is the Santa Clara Valley Water 
District involved in the CALFED process.
    They individually as water districts are investing sums of 
money to look at what is it going to take to reach a solution. 
They are collectively through the California Urban Water 
Association participating in the process. As you are probably 
very familiar with, many issues that San Francisco Department 
of Water and Power has specifically been involved in trying to 
resolve on their watershed, I would just to be progressive in 
looking at how they carry their fair-share responsibility in 
restoration of the habitat, even though they are not taking out 
of the Delta pool.
    Mr. Doolittle. If you had the information today or else 
later, maybe just tell us in a letter what they actually are 
doing to contribute to Bay-Delta restoration effort?
    Ms. McPeak. Mr. Chairman, if that is your request, we 
certainly will follow through and ask----
    Mr. Doolittle. Mr. Payne, I wanted to ask you, in the 
appraisal process, did the Corps itself predominate or does the 
real estate division have the upper hand?
     Mr. Payne. Well, I am going to reconsider for the CALFED 
part of it. What we would like to do, we have had informal 
discussions with the Bureau of Reclamation through the Interior 
Department in working with them.
    We also need to clarify the appraisal process that they 
have used, and I think this is going to be important for all 
future purposes, because if you use the value--if you can't use 
the value of sales to government which are the majority of the 
sales in this area--I mean, there are no other comps that are 
available.
    Mr. Doolittle. When you repaired those levees back in the 
early 1980's, I guess it was, were you shocked when the Corps 
took the position it did?
    Mr. Payne. Yes. We were repairing the levees in 1991.
    Mr. Doolittle. Oh, in '91.
    Mr. Payne. And some of the damage to the tract and the 
drought contributed to the water bank, which gave us some money 
to fix the levee. The Corps came after me due to the fact that 
I had not got a permit, but we had been fixing the levees for 
20 years under a blanket permit.
    Mr. Doolittle. And the permit was to do what?
    Mr. Payne. It was to build the levee. You were supposed to 
have a permit to build the levee.
    Mr. Doolittle. Right, because they were interested in that 
building on wetland?
    Mr. Payne. Yes, yes.
    Mr. Doolittle. So you had a permit to do that?
    Mr. Payne. Right, because where the ranch sits, it is in 
the old bypass and the State has always had rights over the 
ranch during the flood season, but after that, we were always 
able to go back and fix the levees and farm the ranch.
    Mr. Doolittle. And that permit number three is one of those 
nationwide permits they are phasing out now?
    Mr. Payne. Yes. That caught us by surprise, because even 
the State Department of Water Resources who we sold the water 
to, we were in contact with them. They were responsible for 
getting any necessary permits.
    Mr. Doolittle. When you are a landowner with some piece of 
unusual land like that, when you listen to these stories, what 
do you do, call your attorney to ask if you can do anything 
with it? Is that the first step you have to take?
    Mr. Payne. You mean before----
    Mr. Doolittle. Yes.
    Mr. Payne.--or do you mean after----
    Mr. Doolittle. When you have a levee to be repaired or some 
act you want to take on your land, I wouldn't think to call 
anybody, but----
    Mr. Payne. No. In the past we never had. We would just go 
and do the dredging and they sent their barge up and patched up 
the levees and our ranch was easy to drain. It has a flat feed 
and it is low so the water moves out, and when the tide comes 
in, it will fill, and then it goes down through this small 
drainfield by gravity.
    Mr. Doolittle. That would account for the situation where 
water that they hold back on the river bottom lands. They have 
to get a permit. They can't just let it go back into the river 
even, because that violates one of these standards.
    Mr. Snow, I know you have heard Mr. Payne's story, and 
since the Corps of Engineers is part of your CALFED process, do 
you think you might be able to unravel this situation and get 
it resolved?
    Mr. Snow. If I paraphrase, the question was is that I am 
going to straighten out the Corps?
    Mr. Doolittle. That would be a truly Herculean task, but do 
you think you might at least help one end of the Corps to 
understand the other end?
    Mr. Snow. Absolutely. I think one of the benefits, and 
Leslie already spoke of this, is that in CALFED, we are trying 
to get all the people at the table at the same time. So we are 
starting to speak with the same objectives, goals, and approach 
to dealing with these issues, and I think there are probably a 
lot of issues at play in Mr. Payne's situation, but clearly, 
there is no question that part of it is the issue of left hand/
right hand. Nobody knows what is going on, that it is not being 
coordinated, and that is one of the things that we have to 
accomplish in this.
    I would hope that in our situation that a valuable piece of 
habitat like that that we can lay out a logical strategy for 
acquisition of a situation where you have a willing seller and 
a location that has valuable habitat come to us, so that we can 
run that to ground instead of becoming a saga on how government 
doesn't work.
    Mr. Doolittle. Thank you, and I invite Mr. Pombo to ask his 
questions.
    Mr. Pombo. Thank you, Mr. Chairman. Mr. Payne, throughout 
this entire process and I had the opportunity to read your 
testimony previously, before your land flooded, were you in the 
position of being a willing seller of your property? Were you 
interested in selling your property to the Federal Government 
at that time?
    Mr. Payne. We had actually sold the property at one time in 
the early '80's to a Spanish company----
    Mr. Pombo. Yes.
    Mr. Payne. [continuing]--and they couldn't get the money, 
and at that time, we had to foreclose. At that time, no one was 
offering us anything, and if we were offered a reasonable 
price, yes, we probably would have been willing to sell to 
anyone.
    Mr. Pombo. Since all of this happened, since it flooded and 
you had the problems fixing it, is it farmable now? I mean, are 
you farming it currently?
    Mr. Payne. No. I can't get a permit to close the levees and 
the levees, what they do is they keep the tidal waters out in 
the summertime, and that is why we drained it every year when 
the levees broke, and then we would start farming it as soon as 
the ground was dry.
    Mr. Pombo. So you are unable to farm it, so it is no 
longer--can you still use it for crop management?
    Mr. Payne. Well, if you did, yes. If you did close the 
levee and drain the ranch, you could farm it.
    Mr. Pombo. But the government won't let you close it.
    Mr. Payne. Right, but we haven't farmed it, you see, for--
this will be the sixth year that it has been inundated, and we 
have got a large growth of weeds in there and willow trees have 
sort of taken over, which make it a beautiful wetland, but to 
clear it and reclaim it now, six years later, would be pretty 
expensive.
    Mr. Pombo. Is there anyone, any other person other than 
Federal agencies or a conservation group that would purchase 
your property? Is there any support other than preserving it as 
a habitat or a wetland?
    Mr. Payne. Well, yes. If you cleared it, you could go back 
to farming it.
    Mr. Pombo. But they are not going to let you fix the 
levees?
    Mr. Payne. That is true, so we are sort of--yes. The only 
thing now that we can do with it is sell it to a government 
agency who wants it.
    Mr. Pombo. So part of the problem with your appraisals is 
that it is in a different condition today than it was when you 
originally sold it or when it was appraised, because it is not 
farmland anymore, and they won't let you do anything with it, 
right?
    Mr. Payne. Yes.
    Mr. Pombo. This is the kind of thing that concerns me, and 
I know Ms. Johnson, your organization or group or whatever you 
call it is involved with the purchase of a lot of these 
properties like this, and one of the things that concerns me 
about this whole process that we are going into is exactly what 
happened with this case, and that there won't be anybody else 
to buy it because you can't do anything else with it.
    How do you step in and keep something like this from 
happening?
    Ms. Johnson. That is a complicated question. I don't think 
that the Nature Conservancy, for instance, could prevent 
something like this from happening, and we have no ability to 
influence regulatory action.
    I do think, however, that one of the problems that we see 
is that--I mean, the very fact that repairing a levee is a 
regulatory issue when it comes to wetlands or endangered 
species, is a symptom of the fact that we have so little 
habitat left.
    We are fighting our endangered species battles in 
irrigation ditches and on levees. It shouldn't be like that, 
and I am not saying that we shouldn't be fighting the battles 
to protect the species. What I am saying is that we should 
restore their habitat, not their habitat in ditches and on 
levees.
    If we have sufficient habitat to have a healthy ecosystem 
and healthy species populations, we wouldn't run into issues 
like that, so I think that maybe that is a very direct way of 
saying that is how we do these things, we can prevent 
situations like this.
    Mr. Pombo. In the CALFED process, what role do you see the 
Nature Conservancy playing? I have this map here that has a 
broad area outlined and that area that you see there is my 
district, and obviously, my constituents see that and I begin 
to get phone calls.
    How would you respond when you see a map like this, how 
does your organization respond to it?
    Ms. Johnson. I will answer that in a couple of ways. One 
is, when we do projects and we are doing increasingly large 
scale projects because we understand that to really accomplish 
the kinds of conservation and ecosystem conservation that we 
are trying to do, we need to do things that are big. You don't 
do just little postage-stamp sized preserves.
    We generally don't release our maps until we have spoken to 
all the landowners who are potentially going to be affected by 
any activity that we are contemplating.
    When we see these maps, I think a couple of things. One is, 
we are actively working currently in several places that are 
indicated on the maps, and as such, you asked the question 
earlier of Mr. Snow, when are you going to start reaching out 
to some of these landowners, letting them know what you are 
contemplating.
    We have already talked to a lot of those landowners, and 
actually we are approached by landowners on a fairly frequent 
basis saying that they would like to sell their land. Often, we 
find that--I forget who it was on the earlier panel who said 
that a lot of these lands are unique types of lands; they are 
riparian lands, flood-prone lands, places were in many cases a 
landowner might actually, and we have found actually does 
welcome the opportunity to perhaps sell their land or perhaps 
enter into something short of a real estate transaction.
    One of the things that we are trying to pursue in a lot of 
the areas we are working is a whole spectrum of activities. 
Sometimes, it is by conservation easement on existing park land 
that enables the farmer to continue farming, but also protects 
the value of that property. Also, a lot of agricultural land is 
good wetland habitat.
    We are working on wildlife-compatible farming practices, 
doing experiments and research in trying to develop more of 
them.
    I think that there are a lot of different types of activity 
that contribute to ecosystem restoration that aren't 
necessarily outright acquisition, and I know that we are very 
directly involved in working with CALFED on a development 
theory for an ecosystem restoration program, and they are 
contemplating only those types of activity.
    I think that today we have perhaps over-focused on the land 
acquisition element, and the areas that are indicated on the 
map are the areas that need to be restored, not necessarily the 
areas that need to be acquired.
    Mr. Pombo. I was agreeing with you until you said that last 
piece and then you kind of threw me for a minute.
    Ms. Johnson. Can I clarify?
    Mr. Pombo. Yes. You have the map in front of you, but if 
you take this broad area--this map is on page 45. If you take 
this broad area and say that this needs to be restored----
    Ms. Johnson. Well, in this case, the map----
    Mr. Pombo. You are talking about literally several billion 
dollars' worth of agricultural properties and the way that they 
are outlined here is watershed management for final projects, 
watershed management for habitat wildlife quality, and the 
impact that would have on my district to whether they were 
acquired or not, if they were restored to something that would 
fit into those broad categories, the economic impact on my part 
of California would be immense.
    Ms. Johnson. I must apologize. I was not--I didn't recall 
all the different maps that were in this briefing book. I was 
referring specifically to the maps that had to do with areas 
where they want to do land acquisition and restoration.
    As I understand it, the upper watershed management area is 
talking more about compatible--maybe putting in buffer strips 
along headwaters of streams or looking at best management 
practices for grazing management or timber management. It is a 
much more limited set of activities that is proposed for the 
upper watershed. It is not full restoration of the upper 
watershed, so I apologize for that confusion.
    Mr. Pombo. That is OK. That scared me.
    Ms. Johnson. I was thinking of a different map than you 
were looking at.
    Mr. Pombo. There are a number of different maps in here and 
I realize that.
    Mr. Golb, you participated in this process and I understand 
that you are on the ecosystem roundtable, and what happens in 
that process when you can't reach a consensus on an issue?
     Mr. Golb. We haven't had that. So far in the ecosystem 
roundtable process, we have been working with CALFED to 
identify different priorities in terms of what are the issues 
that need to be addressed with the watershed and the river 
system within an area; what are the types of actions that we 
might pursue.
    So far, those have been fairly objective scientific 
evaluations and issues that we have been looking at. I think 
the process that you are describing where there could be 
potential conflict will happen when you start looking at what 
are the specific actions that we might consider, and then what 
are the specific projects. Do we do this fish screen project or 
do we do that one; do we try to restore this wetland habitat or 
do we do that; do we try to acquire this tract of land or that 
piece of property.
    In that case, there will be disagreement and there will be 
disagreement based on a number of reasons, and a lot of factors 
will be involved.
    I think what we are going to have to try to do is just do 
our level best to adhere to criteria that we have already 
established in terms of the objectives. What are we really 
trying to accomplish, what is the best way if we can do this to 
protect or restore environmental values within the budget 
without jeopardizing private property interests or other local 
economic interests or community needs.
    I think we can do it, but there will be some disagreement. 
If we don't have a consensus, I think those projects probably 
will fold.
    Mr. Pombo. So you believe at this point that if there is 
not consensus that they will move on to another issue?
    Mr. Golb. I think the way Lester said it, and correct me if 
I misstate this, but I think what we are looking at is for 
example, one issue may be--we may be looking at two tracts of 
property for acquisition for example.
    For purposes of discussion, if one tract we don't have a 
willing seller, regardless of its potential for environmental 
value, I think that for this process, for this appropriation, I 
think that tract will not be pursued; whereas, if we have 
another tract maybe that has less environment value but we do 
have a willing seller, we do have community support, I think 
that tract would probably be proposed to the Bay-Delta Advisory 
Council for purchase.
    Mr. Pombo. In general, how do you feel that the landowners 
themselves have been included in this process?
    They talk about the stakeholders and a lot of people get 
put in a room and they talk about the stakeholders, but how 
would the individual property owners be included in this 
process?
    Mr. Golb. We need to do a better job in contacting the 
individual landowners, there is no doubt about that. On this 
panel, for example, Mr. Payne is the only direct landowner that 
is involved with the CALFED process.
    Unless a small, two-bedroom home in Sacramento, I think 
this would apply, but I would think the way that Lester talked 
about earlier is that what we are attempting to do is bring in 
the community interests and bring in the landowners so they can 
see this map.
    You are exactly right. When a lot of people see these maps, 
there is going to be great concern, and we talked about some of 
the skepticism earlier, but Lester has done a pretty good job 
so far, and the CALFED process has been pretty good about 
public outreach. A lot of that is going to fall to us, people 
that represent water districts, farmers, botany groups, county 
supervisors.
    We have been working with Lester to try to do that. We are 
going to have to do some more outreach so that some guy doesn't 
wake up one morning and get in the mail a document like this 
that shows his property, his livelihood, is targeted for 
acquisition, and I don't think that's what Lester intended with 
these documents.
    And as Leslie indicated, those documents don't 
necessarily--the maps don't target lands so much for 
acquisition as they do areas for restoration, and there are a 
lot of activities that Lester has proposed and the CALFED 
process has proposed for this $143 million appropriation that 
will be restoration not related to acquisition.
    Mr. Pombo. The appropriation includes a huge amount of 
money for acquisition, and when I look through this, I see maps 
and when you have tens of millions of dollars in here that are 
for acquisition and you have maps, one thing leads to another.
    As I said, I already have constituents that have contacted 
me and said I am within one of these squiggly lines or I am on 
one of these maps and I don't want to be, how do I get out, and 
I don't know what to tell them at this point how they get out.
    You are not going to drop this and have a blind spot in the 
middle of it, but that is one of my great concerns about the 
way these processes get put together is that the property 
owners are not included in this process to the point where they 
know what is going on, whether they are willing sellers, 
whether they are the kind of people that would call the Nature 
Conservancy and say come get my land, I am not making any 
money, the price is terrible.
    Whatever it is, that happens and I know it does, but there 
is a cattle rancher that entered into a long-term conservation 
easement with the Nature Conservancy on their entire ranch, and 
that was one of their ways of making it.
    I understand that happens, but if you don't include the 
property owners from the very beginning, it makes my life that 
much more difficult, because then they contact me.
    Mr. Gold. A couple of suggestions. The first is--let me 
give you Lester's home phone number to give to your 
constituents.
    The second is that there are certainly ample stories like 
Mr. Payne's. I have never had that happen to me, but there are 
certainly ample stories out there, and you have some in your 
own district where Federal agencies have purchased land or 
attempted to purchase land in a coercive or unfair or overly 
aggressive fashion, and we have lots of stories like that 
around.
    I think what we are trying to do in CALFED is we are 
attempting to restore the environment in such a way that we 
don't also damage economic interests and community interests, 
and earlier in my remarks, I talked about some of the solution 
principles that CALFED has adopted. There are six of them, and 
one of them is no redirected impacts to an individual interest, 
and we are going to hold CALFED accountable to that.
    I think what that means, the practical effect of that is, 
number one, we have to do a better job of notifying landowners 
that CALFED is interested in land acquisition or easements or 
some other type of arrangement in the area where they own 
property.
    Number two, I think one of the things we need to look at is 
possibly utilizing entities like the Nature Conservancy to 
bring them in. They have a wonderful track record with local 
and private landowners and using entities like that to work 
with local constituencies.
    The third thing, I think we need to pursue very carefully, 
very carefully, the last thing we want is the Federal 
Government agencies to be getting more tracts of land in the 
State of California, and I think that California tends to do 
these things.
    You can rest assured that on behalf of the farmers and 
landowners that I represent, that I will make sure I do my best 
that CALFED follows these principles, and that we achieve the 
restoration providing suitable alternatives that we are not 
impacting individual or community interests.
    You and I both know that in a community, particularly in an 
agricultural community, there is also an industry, an entire 
industry that is dependent on production of crops, trucking, 
fertilizer, marketing, merchandising, and we can't have those 
lands come off the county tax roll and impact the county 
government's tax receipts which has an ultimate effect on the 
entire community.
    We have a lot of work to do, and so far, I have been pretty 
confident and comfortable with the process that Lester has 
established. I am certain that Sunne, as the co-chair of the 
Bay-Delta Advisory Council, will also be watching this very 
carefully.
    Mr. Pombo. Thank you. I know that we have talked a lot 
about the private property owners in this process, and I am 
concerned about how this all works. The fact that we are 
dealing with endangered species the way that we are today, I 
don't think it is the way it should be done, but in that whole 
process of trying to restore the environment, trying to reach 
some common sense with some of these laws, I think we have to 
be careful that everybody is included at the table when those 
decisions are being made.
    On behalf of the Chairman who had another meeting and had 
to leave, I want to thank you for your testimony. There will be 
further questions that will be submitted in writing, and if you 
could answer those quickly on a routine basis, it would be 
appreciated by the committee, and on behalf of the Chairman and 
myself and the rest of the committee, I apologize to you for 
the length of this hearing. It was not a normal situation in 
which it came about and I apologize to you for that, but thank 
you very much for sticking around and for your testimony. It 
was greatly appreciated.
    [Whereupon, at 3:28 p.m., the Subcommittee was adjourned; 
and the following was submitted for the record:]

   Testimony of Lester A. Snow, Executive Director, CALFED Bay-Delta 
                                Program

    Mr. Chairman, members of the Subcommittee on Water and 
Power Resources, I am Lester A. Snow, Executive Director of the 
CALFED Bay-Delta Program. I appreciate the opportunity to 
appear before you today to provide a status report on the Bay-
Delta Program and to answer any questions you might have.

    Background

    Before I describe our Program, I would like to provide some 
context for you. The San Francisco Bay and Delta System is the 
largest estuary on the West Coast, supporting fisheries, 
wildlife and agriculture, while providing more than 20 million 
people with their water supply. It has been referred to as the 
crossroads of the State's economy and thriving ecosystem, yet 
it has fallen victim to competing interests, unplanned growth, 
and a declining ecosystem. It continues to deteriorate to the 
point where people are concerned that the very jobs and 
economic competitiveness of the State are at stake unless we 
can move forward and fix the problems in the system.
    The San Francisco Bay-Delta system has been used and abused 
for over 150 years. It has been the source of fresh water for 
agriculture and cities since this region was developed. It has 
also been the area where we have dumped mine tailings and toxic 
waste, and eliminated habitat over a long period of time. We 
know there is no quick fix, that we can go out and implement 
one thing and all of a sudden the system is healthy again. We 
recognize it has taken a long time to get to this point; our 
current situation is the culmination of a multitude of impacts. 
We know we must devise a strategy that addresses all of those 
impacts, and moves us forward in a logical, productive fashion. 
The CALFED Bay-Delta Program is a collaborative effort to 
address these issues.
    The CALFED Bay-Delta Program has been charged by the 
Governor of California and the Secretary of the Interior to 
develop a comprehensive plan to resolve environmental and water 
management problems associated with the Bay-Delta system. Our 
Program has the task of instituting, through an open process 
that includes participation by the stakeholder community, a 
long-term settlement that everyone can live with. At this time 
I am pleased to report that tremendous progress has been made 
and I am optimistic that it will continue.
    The CALFED Bay-Delta Program was established as a result of 
the Framework Agreement entered into between the State and 
Federal governments in mid-1994. That agreement set forth three 
areas in which it was agreed additional coordination and 
cooperation would be pursued to alleviate uncertainty and 
conflict within California's water management regime and the 
various overlapping jurisdictional disputes between Sacramento 
and Washington, D.C. Specifically, the Framework Agreement set 
forth a process to facilitate the following: formulation of 
state water quality standards pursuant to the Clean Water Act 
which could be certified by the Federal and State governments; 
and, improved operational coordination of the State Water 
Project and the federal Central Valley Project to more 
effectively and efficiently manage the state's water supplies 
to meet all beneficial uses, and a long-term planning process 
to comprehensively ``fix'' the Bay-Delta system.

    The Bay-Delta Program

    That long-term planning process is the CALFED Bay-Delta 
Program. We began our effort in the spring of 1995. In the two 
years since we started, we have made remarkable progress and 
enjoyed a period of great cooperation among all parties 
concerned with Bay-Delta issues. Considering the complexity and 
controversial nature of the issues involved, this is an 
important achievement and one that will serve California and 
the nation long into the future.
    The Program is divided into three phases. During Phase I, 
from June 1995 to September 1996, the Program developed a 
mission statement, identified problems, developed objectives 
and several guiding principles (the ``Solution Principles ''), 
and designed three alternative solutions to Bay-Delta related 
problems. In Phase II, from November 1996 to September 1998, 
the Program will conduct a broad-based environmental review of 
the three alternative solutions and will identify a final 
preferred solution. Phase II will also include technical 
analyses of the alternatives and development of an 
implementation plan. During Phase III, starting in late 1998 or 
early 1999 and lasting for many years, the preferred 
alternative will be implemented in stages.
    As the Program seeks to resolve issues, it is important to 
note that our mission is to do so in a manner that serves all 
beneficial uses of the system. Additionally, we are guided by 
six solution principles that will define acceptability of a 
solution. These principles are that the preferred alternative 
should: (1) reduce conflicts in the system; (2) be equitable; 
(3) be affordable; (4) be durable both as to project life and 
adaptability to unforseen changes in future needs; (5) be 
implementable; and, (6) perhaps most critically, have no 
redirected impacts. Our intention is not to propose a solution 
that solves problems for some at the expense of others, but to 
provide improvement for all beneficial uses.
    As I mentioned, the Program is addressing four major areas 
of concern: ecosystem restoration; water supply and water 
supply reliability; water quality; and, levee stability. We 
have developed three comprehensive solution alternatives, which 
include multiple actions focused on these problems, to carry 
forward through the environmental impact analysis. First, I 
will touch on the common aspects of all three alternatives, 
then briefly describe the distinguishing features of each.

    Alternatives Under Review

    Each of the three alternatives include implementation of 
what we call the ``common programs'' for each area of concern. 
These common programs are virtually identical in every 
alternative based on the understanding that significant 
baseline improvements must be made in all four areas. They are:
    The Water Use Efficiency Common Program takes two 
approaches: make more efficient use of water exported from the 
Delta, and reclaim water after use. It encourages urban water 
agencies to recycle water and to make greater use of previously 
developed Best Management Practices, which are commonly-
accepted standards for water conservation. Similarly, it urges 
agricultural water users to implement cost-effective measures 
such as the Efficient Water Management Practices, which are 
standards for conserving agricultural water.
    The Ecosystem Restoration Common Program seeks to restore 
Bay-Delta ecosystem functions by taking advantage of natural 
processes and restoring some of the system's natural resilience 
to stressors like drought. The common program gives preference 
to activities that benefit several species and improve other 
resource areas, including water quality, levee stability, and 
water supply reliability. Activities could include improving 
shallow water and riparian habitats, restoring riparian and San 
Joaquin River habitats, acquiring water to boost instream 
flows, and controlling non-native species.
    The Water Quality Common Program focuses on limiting the 
release of pollutants, particularly salinity, selenium, 
pesticide residues, and heavy metals, into the Bay-Delta system 
and its tributaries. Activities could include improving the 
management of urban stormwater runoff, cleaning up mine sites 
and limiting toxic drainage from them, providing incentives for 
urban water agencies to upgrade their filtration systems, 
managing agricultural drainage, developing watershed protection 
programs, and offering incentives to retire agricultural lands 
whose discharge most degrades San Joaquin River water quality.
    The Levee System Integrity Common Program addresses levee 
maintenance and stabilization, subsidence reduction, emergency 
management, beneficial reuse of dredged materials, and creation 
of habitat corridors as mitigation for negative impacts. Delta 
islands would be prioritized for work, a strategic plan 
devised, and stable funding sources identified with the goal of 
bringing as many levees as possible up to a higher standard of 
stability.
    In brief, the three alternatives under environmental review 
are distinguishable by their conveyance components and are: (1) 
continuing with essentially the current storage and conveyance 
system and complete reliance upon the common programs to 
achieve the project purposes; (2) a significantly modified 
through-Delta conveyance system that would reconfigure many of 
the sloughs and channels; and, (3) a dual conveyance option 
would add an isolated facility to the modified through-Delta 
alternative. In all cases, we will analyze ranges of 
appropriate storage options north of the Delta, south of the 
Delta and, perhaps, in the Delta. In addition to appropriate 
surface storage options (which could include upstream of the 
Delta--supplied by the Sacramento or San Joaquin Rivers or 
their tributaries, south of the Delta--supplied with water 
exported from the Delta, or in the Delta), groundwater storage 
and conjunctive use projects will be part of our Program, and 
we are working with local communities to gauge interest and to 
ensure local concerns are being satisfactorily addressed.
    While we have winnowed down to three alternative types, we 
began with hundreds, reduced that to 20 and then 10 before 
arriving at the three we have now. That process of developing 
and reducing the number of alternatives took approximately 
eighteen months. It was a process that was carried out with a 
high level of agency and public input.

    Public Input

    In addition to numerous public workshops and public 
meetings, we are fortunate to have the Bay-Delta Advisory 
Council (BDAC), a chartered Federal advisory committee, 
contribute to our effort. BDAC meets monthly or bimonthly to 
provide advice, comment and recommendations for improvement. In 
addition, BDAC has created fact finding Work Groups that are 
forums for in-depth discussion on policy questions that impact 
the Program, including: how will success of an ecosystem 
restoration program be defined?, how can water use efficiency 
be maximized in a realistic manner?, what assurances are needed 
to ensure that the program is implemented tomorrow as it's 
designed today?, and, what sort of financing arrangements make 
sense?
    BDAC, its work groups, and our public workshops all provide 
avenues for public participation, and are a continual check for 
us to judge how we are doing in meeting the needs of all 
Californians.
    The incredible cooperation among and between State and 
Federal agencies, as well as the comfort level and trust that 
the stakeholder community has for our Program, has led to an 
additional role for our Program in addition to development of 
the long-term comprehensive solution. That role is to act as a 
coordinating point for ecosystem restoration activities 
throughout the Bay-Delta system.
    Because there were, and are, ongoing restoration efforts in 
the system, there was a need to coordinate activities and 
ensure consistency with the long-term strategy CALFED was 
developing. The CALFED Ecosystem Restoration Coordination 
Program is developing a planning and project selection process 
to begin early implementation for ecosystem restoration 
activities using existing programs and commitments. This 
process focuses primarily on Category III funding decisions for 
1997 and 1998 and coordination with CVPIA, but also begins to 
integrate restoration efforts of other closely related 
restoration programs. (Category III projects are projects that 
do not cost water to implement that the stakeholders agreed to 
help fund as part of the 1994 Bay-Delta Accord.) Potential 
near-term projects include fish screens and ladders, riparian 
habitat restoration, wetlands development, ecosystem 
restorative watershed management actions, and other Bay-Delta 
ecosystem restoration actions.
    To provide a broad range of representative interests to 
this process, the Ecosystem Roundtable was established as a 
sub-committee of BDAC. The Roundtable is charged with 
developing criteria and recommending approval of ``early 
implementation'' projects. These are projects that are 
consistent with the long-term plan the CALFED Bay-Delta Program 
is developing, and for which there is broad support across 
constituencies.
    The Roundtable will make recommendations on funding 
projects to BDAC and through BDAC to CALFED. Final decisions 
will be made by the California Secretary for Resources and the 
Secretary of the Interior.
    As with the long-term Program, monitoring and evaluation of 
success of these early implementation efforts will be a major 
focus for us. We expect that over time, assessments and data 
will indicate that we will need to adaptively manage the 
system, (i.e., adjust specific projects or actions), both on a 
macro-scale, for example, water project operations, and on a 
more micro-scale, for example, a specific habitat enhancement 
project. The monitoring methodology will be developed on a 
project by project basis, but will probably include sampling, 
site inspections, and other data collection and trend analysis.
    As I stated at the outset, the Program has made incredible 
progress in a relatively short amount of time. I attribute that 
success to a number of factors. First and foremost we have a 
staff of dedicated professionals, detailed from both State and 
Federal agencies, that are literally transforming how 
government works. Second, the agencies themselves have 
committed to an unprecedented level of cooperation, and 
understanding what is at stake, have made the Program a high 
priority. Third, the intense involvement of the stakeholder 
community. The water community has come together to seek a 
satisfactory outcome. Working through BDAC and our workshops 
and work groups, the technical expertise and policy advice we 
receive from the stakeholder community is invaluable and 
indicative of the importance they place on our Program's 
success. Finally, the public's support for resolving 
California's water problems, as evidenced by the passage of 
Proposition 204, further illustrates the imperative we are all 
working under.
    The CALFED Bay-Delta Program faces the challenge and 
opportunity of a new approach in the methods of dealing with 
resource issues. The challenge of cooperatively devising and 
implementing a solution, while moving away from regulation and 
litigation provides a model which minimizes conflict and 
maximizes public and private support. I expect the Program to 
meet this challenge resulting in a reliable water supply and 
healthy environment. Future generations will bear the burdens 
or reap the benefits depending upon how we proceed with these 
problems today.

                                ------                                


Statement of Honorable John Garamendi, Deputy Secretary, Department of 
                              the Interior

    Mr. Chairman and members of the subcommittee, thank you for 
inviting me to be here this morning to discuss with you our 
progress in developing a comprehensive long-term restoration 
plan for California's Bay-Delta ecosystem. I am pleased that my 
colleagues from the Environmental Protection Agency and State 
of California are here with me. Our joint participation 
demonstrates mutual concern, shared cooperation, and long-term 
commitment to meeting the challenge to protect our resources.

    The CALFED Program

    In December 1994, Federal agencies, State agencies, and 
representatives of agricultural, urban and environmental 
organizations signed what is known as the Bay-Delta Accord. The 
Accord described new ways to meet the requirements of several 
statutes, including the Endangered Species Act (ESA), the 
Central Valley Project Improvement Act (CVPIA), and the Clean 
Water Act (CWA). It also called on State and Federal agencies 
to develop a comprehensive long-term strategy to restore the 
health of the Bay-Delta and simultaneously meet the water needs 
of California's economy.
    The CALFED Program identified the following major actions 
necessary for meeting our goals:
    (1) Ensure reliable water supplies for California's urban 
and agricultural economies;
    (2) restore the health of the Bay-Delta ecosystem;
    (3) improve water quality in the Bay-Delta and rivers 
flowing into it; and
    (4) enhance levee system stability.
    In order to develop the Accord and carry out the long-term 
Bay-Delta Program, Federal and State agencies combined forces 
and formed CALFED. Four Federal agencies--the US Fish and 
Wildlife Service, the Bureau of Reclamation, the Environmental 
Protection Agency, and the National Marine Fisheries Service--
began the effort. Six additional Federal agencies are about to 
join CALFED--US Geological Survey, Bureau of Land Management, 
Natural Resources Conservation Service, US Forest Service, 
Western Area Power Administration, and the Army Corps of 
Engineers. These additional agencies provide a vast array of 
expertise and programs critical to our long-term restoration 
efforts. Only through broad integration of policies and 
programs, as well as new and creative ways of approaching 
problems, can we realize the goals laid out in the Bay-Delta 
Program. This year's tragic flooding is a prime example.

    January 1997 Floods

    Over the past several months, Federal and State agencies 
have been responding to the January floods that wreaked havoc 
throughout much of the Central Valley and the Bay-Delta 
system's many tributaries. Army Corps of Engineers, in 
collaboration with the CALFED and other Federal and state 
agencies, has undertaken major efforts to repair flood 
protection capabilities throughout the system. With the 
organization of CALFED, we have a unique opportunity to 
implement the restoration goals of the Bay-Delta Program and 
the Administration's complementary floodplain management 
strategies. Reducing flood damages and threats to life and 
property through cost-effective, and where appropriate, non-
structural alternatives, can restore the natural values 
inherent to the floodplain and adjacent lands, and provide 
water quality, quantity, and ecosystem restoration benefits 
central to the long-term Bay-Delta Program.

    Bay-Delta Funding

    With an overwhelming endorsement from California voters for 
Proposition 204, bi-partisan support in the Congress that 
resulted in the passage of authorizing legislation last fall, 
and the unprecedented collaboration among the historically 
feuding water interests in California, we have an incredible 
opportunity to use the Bay-Delta funding provided for in the 
President's budget as a down payment on this major restoration 
effort.
    The Program we are undertaking is one of the most 
significant restoration programs in this country, and has 
implications well beyond California. The Bay-Delta is the 
largest estuary on the Pacific coast, and serves as a stop-over 
point for hundreds of migratory birds and water fowl. The 
estuary is also highly important for maintaining fish 
populations. In addition, this system provides the water supply 
necessary to support California's agricultural economy--an 
economy that produces 40% of the country's fruits and 
vegetables, as well as numerous other key crops that feed our 
nation. These are some of the most productive lands in the U.S.

    Conclusion

    This Committee has recognized the importance of the Central 
Valley to the health of California's economy and its diverse 
natural resource base. The CALFED Program is an innovative and 
unique approach to resolving complex resource issues that have 
burdened the State for decades. The Federal and State agencies 
are working together to develop solutions to these problems, 
along with the myriad of constituents who will be affected by 
this program--whether they are residents and landowners along 
the rivers, farmers or urbanites who receive water from the 
Central Valley, or fishermen who rely on healthy populations of 
fish. We have a great opportunity to develop and implement the 
most significant restoration program of our time. We can only 
accomplish this if we all work together--Federal and State 
agencies, Congress, local governments, and the myriad of 
private and non-government interests for whom we all work.
    This concludes my statement. I would be pleased to answer 
any questions you may have.

                                ------                                


  Testimony of Douglas P. Wheeler, Secretary for Resources, State of 
                               California

    Mr. Chairman and members of the Subcommittee, my name is 
Douglas P. Wheeler, Secretary for Resources in the 
Administration of California Governor Pete Wilson. Thank you 
for the opportunity to speak today on the role of the State of 
California in the CALFED Bay-Delta Program and to answer any 
questions that you have. This program and the improved 
management of the Sacramento-San Joaquin/San Francisco Bay 
Delta is one of Governor Wilson's top priorities, and we 
appreciate the subcommittee providing this opportunity for us 
to talk about the work we are doing.


                               background


    Beginning with Governor Wilson's call for a comprehensive 
solution to California's water management and ecosystem issues 
in his Water Policy of 1992, in which he stated that ``nowhere 
is there greater need for a comprehensive program than in the 
Delta,'' California has been working toward a long-term 
solution to the water-related problems of the State.
    In June 1994, the State of California, through its Water 
Policy Council (which I chair), and the United States, through 
the Federal Ecosystem Directorate, reached an agreement to 
cooperate in resolving water quality, water supply, and 
endangered species issues of the San Francisco Bay-Delta. This 
Framework Agreement formed CALFED and charged this entity with 
developing the long-term solution to the problems of the Bay-
Delta. Shortly thereafter, in December of 1994, CALFED, in 
cooperation with stakeholders and other interest groups, 
developed a plan (``the December 15th Accord '') that set Bay-
Delta water quality standards and established guidelines for 
coordinated state/federal operations of the State Water Project 
and Federal Central Valley Project for a three year interim 
period.
    The CALFED Bay-Delta Program was launched in June 1995 and 
began immediately to work with state and federal agencies and 
stakeholder groups to develop a comprehensive solution. This 
innovative, consensus-based approach has allowed CALFED to 
establish a level of trust and cooperation among stakeholders 
that is truly unprecedented in California.
    Through extensive public meetings and workshops, CALFED has 
made great progress toward developing the long-term plan. This 
plan is being developed through a three phased process. During 
Phase I, the CALFED Bay-Delta Program evaluated the range of 
issues, problems, and actions related to the Bay-Delta estuary 
through a series of public meetings and workshops. At the 
conclusion of Phase I, the range of alternatives was narrowed 
to three for the purpose of environmental review. The CALFED 
Program is currently in the midst of Phase II, during which a 
preferred alternative will be selected from among the three and 
certified by the appropriate public entities. Phase III, 
implementation, is expected to begin in Fall of 1998 and will 
occur over a 20 to 30 year period.


                    state role in the calfed process


    The State of California plays an important role in the 
CALFED process through the participation of its member 
agencies: the Resources Agency, which includes both the 
Department of Fish and Game and the Department of Water 
Resources, the California Environmental Protection Agency and 
its State Water Resources Control Board. Each of these agencies 
is charged with administering portions of Proposition 204 and 
are also members of the Governor's Water Policy Council.
    As members of CALFED, these state agencies attend the many 
workshops, meetings, and public hearings through which the 
long-term solution is being developed. More specifically, the 
agencies attend meetings of the Ecosystem Roundtable (as 
observers), CALFED Program Coordination Team, the CALFED 
Management Team, and the CALFED Policy Team (co-chaired by 
myself and Bob Perciasepe, Assistant Administrator of the U.S. 
Environmental Protection Agency). Many of the important issues 
related to the CALFED Program, including coordination of the 
various programs under Prop 204, are also discussed at meetings 
of the Governor's Water Policy Council.
    The California State Legislature also contribute toward 
reaching the comprehensive solution envisioned by the CALFED 
process. Many of our State Senators and Assembly Members 
participated in the crafting of Senate Bill 900, which placed 
Proposition 204 on the ballot in November of 1996. The 
California Legislature has continued to pay close attention to 
the progress of the CALFED Bay-Delta Program and has taken up 
some key issues during the current session, such as water 
transfers, in an effort to assist with the overall solution.
    The most important contribution toward achieving a solution 
to the problems of the San Francisco Bay-Delta, however, has 
come from the citizens of California. The participation of 
stakeholders lies at the heart of the CALFED Program. Ranging 
from the Sierra Nevada Mountains to the Imperial Valley 
bordering on Mexico to the Los Angeles region in the south and, 
of course, the Great Central Valley, these stakeholders all 
recognize that the CALFED Program is critical to our State's 
well-being. The water which flows through the Sacramento and 
San Joaquin Rivers through the San Francisco Bay-Delta reaches 
over twenty million people in the State, roughly 2 out of every 
3 citizens. This water flows to the farms of the Central 
Valley, to the high-tech factories of the Silicon Valley, and 
to the homes and businesses of Southern California. At the same 
time, the San Francisco Bay-Delta Estuary is critical to the 
ecological health of the State. Because of the ecological 
degradation that has occurred in the Delta since large-scale 
development began nearly one hundred fifty years ago, such 
prized fish as the Chinook Salmon and Steelhead Trout have been 
reduced to only a fraction of their former numbers. This level 
of degradation extends to many other species and habitats 
throughout the Bay-Delta system. Californians understand the 
importance of water to our economy and to the environment and 
the citizens of California acknowledged the importance of 
fixing the Delta to California's well-being when they passed 
Prop. 204 by a wide margin in November of 1996.


                            proposition 204


    Proposition 204 was approved by 63% of the voters of 
California. The objectives of Prop 204 are to provide a safe, 
clean, affordable, and sufficient water supply to meet the 
needs of California's residents, farms, and businesses; develop 
lasting water solutions that balance economic and environmental 
needs; restore ecological health for fish and wildlife; protect 
the integrity of the State's water supply system; protect 
drinking water quality; and, protect the quality of life in our 
communities. Clearly, the goals of Prop 204 are synonymous with 
those of the CALFED Program.
    Prop 204 provides $995 million towards a variety of 
ecosystem restoration and water management components in five 
categories. Some of the money provided by Prop 204 will serve 
to replenish existing programs, other funds will initiate new 
programs--all of the money will contribute, directly or 
indirectly, to achieving a solution to the problems of the Bay-
Delta. The following subaccounts of Prop 204 are expected to 
contribute directly to the solution reached by the CALFED Bay-
Delta Program (the italic heading indicates the Accounts in 
which the funding programs are listed):

    Delta Improvements Account ($193 million)

    Central Valley Project Improvement Act, ($93 million):
    The CVPIA portion of Prop 204 includes funding to 
contribute the required State match for restoration projects 
undertaken by the U.S. Fish and Wildlife Service and the Bureau 
of Reclamation. These funds are to be allocated through the 
California Departments of Fish and Game and Water Resources for 
expenditure on projects outlined in the CVPIA. The Resources 
Agency will be coordinating these efforts with the CALFED Bay-
Delta Program.

    Category III, ($60 million):
    The Category III Program was established as part of the 
December 15th Accord of 1994 for the purpose of carrying out 
ecosystem restoration for the Bay-Delta--in essence, a 
recognition that improvements to the Bay-Delta ecosystem should 
not be delayed until an overall plan is complete. To date, 
stakeholders have contributed approximately $22 million for 38 
ecosystem restoration projects and an additional $10 million is 
anticipated in Fall of 1997. The $60 million contributed by the 
State of California in Prop 204 for Category III will be 
expended through the CALFED Process, including review by the 
Ecosystem Roundtable and the Bay-Delta Advisory Council, and 
approval by the CALFED Agencies. For a more complete 
explanation of this process, please see the description in the 
materials provided by Lester Snow, Program Manager of CALFED.

    Delta Levees, ($25 million):
    The Delta Levees funding will serve to improve the 
integrity of the levee system of the Bay-Delta and to carry out 
associated ecosystem restoration projects which result in a net 
benefit to aquatic species. The levee system of the Delta 
serves an important role in protecting important agricultural 
lands and wildlife habitat and maintaining water quality. The 
expenditure of these funds will occur through the existing 
State Delta Flood Protection Program (SB 34) and will be 
coordinated with the CALFED Program. During California's 1996 
legislative session, several amendments were made to the Delta 
Flood Protection Program through Assembly Bill 360, including a 
requirement that the Program be implemented ``consistent with 
the delta ecosystem restoration strategy of the CALFED Bay-
Delta Program''.

    Delta Recreation Program, ($2 million):
    The Delta Recreation Program is for the purpose of 
implementing projects to increase public opportunities for 
recreation in the Delta. Examples of this would include 
acquisition of fee title, development rights, easements, or 
other interests in land located in the Delta for the purpose of 
public recreation. The provision of greater recreational 
opportunities is consistent with and promotes the CALFED 
Program objectives. The California Department of Parks and 
Recreation will administer these funds and has proposed to 
direct $1 million to grants to non-profits and other public 
agencies and $1 million to Department projects.

    CALFED Bay-Delta Program, ($3 million):
    These funds contribute to covering the administrative costs 
of the CALFED Bay-Delta Program.

    Water Supply Reliability Account ($117 million)

    Water Conservation and Recharge, (S30 million):
    The funds provided for water conservation and recharge will 
assist the CALFED process by contributing to the goals of the 
Water Use Efficiency Common Program (A strategy for addressing 
issues of water use efficiency will be included for all 3 
alternatives of the Programmatic EIR/EIS. The other common 
programs of the CALFED Program are Ecosystem Restoration Common 
Program, Water Quality Common Program, and Levee System 
Integrity Common Program).

    River Parkways Program, ($27 million):
    The River Parkway Program subaccount is the only section of 
Prop 204 which is subject to appropriation by the State 
Legislature. These funds are available for acquisition and 
restoration of riparian habitat, riverine aquatic habitat, and 
other lands in close proximity to rivers and streams and for 
associated river and stream trail projects. Although these 
funds are available for use throughout the State, in his '97-
'98 Budget Governor Wilson proposes expenditure of 
approximately $10 million on projects on the Napa, San Joaquin, 
and other rivers in the Bay-Delta system.

    Sacramento Valley Water Management and Habitat Protection, 
($25 million):
    The Sacramento Valley Water Management funds are provided 
for the purpose of assisting local entities with water 
management programs, such as conjunctive use programs, and to 
implement ecosystem restoration projects. The specific projects 
to be undertaken under this program have not yet been 
identified, but the Resources Agency, the State Water Resources 
Control Board, the Department of Water Resources, and the 
stakeholder community are working cooperatively with the CALFED 
Program to ensure that these efforts are consistent with the 
long-term solution currently being developed.

    Clean Water and Water Recycling Account, $235 million

    Clean Water Loans/State Revolving Fund, ($80 million):
    Small Community Grants, ($30 million):
    Water Recycling, ($60 million):
    Each of the above programs is administered by the State 
Water Resources Control Board for the purpose of assisting 
local governments with projects to improve local water quality, 
supply infrastructure, and recycling capabilities. The Board 
will utilize existing grant and loan programs to solicit and 
select loan and grant proposals. Although these funds will not 
be coordinated through the CALFED Program, each contributes to 
better management of California's water resources.

    Agricultural Drainage Treatment, ($30 million):
    The Agricultural Drainage Treatment Program will be 
implemented by the State Water Resources Control Board and will 
contribute toward implementation of the CALFED Water Quality 
Common Program.

    Delta Tributaries Watershed Program, ($15 million):
    The Delta Tributaries Watershed Program will contribute to 
several of CALFED's Common Programs, including the Ecosystem 
Common Program and the Water Quality Common Program. The State 
Water Resources Control Board will administer this program and 
has hosted several workshops in cooperation with CALFED and the 
Resources Agency to receive input from stakeholders on proposal 
selection criteria. The projects selected under this program 
will be for the purposes of ecosystem restoration projects, 
watershed management efforts, and fire management efforts and 
must be consistent with the efforts of the CALFED Program.

    CALFED Bay-Delta Ecosystem Restoration Program, ($390 
million) (This account is not broken into subprograms):

    The funds provided for this program will be available for 
implementing the Ecosystem Restoration Program Component of the 
CALFED Bay-Delta solution. The expenditure of these funds is 
contingent upon the certification of the Programmatic 
Environmental Impact Report and a Record of Decision for the 
Environmental Impact Statement (anticipated in Fall of 1998) 
and a cost-share agreement between the State of California and 
the United States for funding the CALFED solution to the 
problems of the Bay-Delta.

    Federal/State Cost-Share Agreement Requirement
    As mentioned above, the $390 million CALFED Bay-Delta 
Restoration Program funds must be accompanied by a cost-share 
agreement with the federal government before expenditure. The 
federal appropriations authorized in the California Bay-Delta 
Environmental Enhancement and Water Security Act also require a 
cost-share agreement. To this end, a working group consisting 
of three State and three federal representatives was formed and 
is currently in the process of developing this agreement. The 
agreement is expected to be completed within the next few 
months.

    Conclusion
    The State of California has a tremendous stake in the 
outcome of the CALFED process. Our future economic prosperity 
and the health of our environment hinge upon the development 
and implementation of a long-term solution that meets the needs 
of all stakeholders. In the short time since its formation, 
CALFED has made great progress toward this goal. At this point, 
funding to begin implementing Category III actions and to 
continue to develop the CALFED solution are critical. The State 
of California has demonstrated a commitment to provide the 
resources necessary to support the process through Proposition 
204. We urge our federal counterparts to match this commitment 
with the full appropriation of the authorized $143 million.
    Governor Wilson indicated the critical importance of this 
funding in his letter of March 31, 1997 to the House 
Appropriations Committee, stating, ``This $143 million 
appropriations is my highest priority for the energy and water 
development appropriations bill.'' I ask that a copy of the 
Governor's letter be made a part of today's hearing record.
    Thank you very much for the opportunity to speak today. I 
look forward to answering any questions the subcommittee may 
have.

                                ------                                

    March 31, 1997

    The Honorable Joseph M. McDade
    Chairman
    Subcommittee on Energy and Water Development
    Committee on Appropriations
    U.S. House of Representatives
    Washington, D.C. 20515

    Dear Mr. Chairman:
    I regret that our schedules did not permit us to get 
together when I was in Washington last month. The reason I 
wanted to meet with you was to urge your support for full 
funding of the $143.3 million requested in the President's 
budget as the initial federal contribution toward the 
restoration of the San Francisco Bay-Delta. As you may know, 
the funds included in the President's budget were authorized by 
the Congress last year to partially match a $1 billion state 
bond issue for water supply and environmental protection 
approved by California's voters in November.
    This $143.3 million appropriations is my highest priority 
for the energy and water development appropriations bill. With 
my active encouragement, the California Congressional 
delegation and the Republican leadership were instrumental in 
securing the authorization--now we need the appropriations. I 
can assure you of strong bipartisan support for Bay-Delta 
funding. The most important factor, however, is the breadth and 
strength of support from the stakeholders in California 
Environmentalists, farmers, and urban water users have all 
banded together in an unprecedented coalition to find a non-
litigious solution to the water disagreements that have long 
plagued our state. They are working together cooperatively, 
along with the numerous state and federal agencies.
    The federal authorization applies to the ecosystem spanning 
the Sacramento and San Joaquin River watersheds, an area that 
is the source of nearly half the nation's fruits and 
vegetables, as well as drinking water for 22 million 
Californians. Congress has funded work in other ecosystems, 
such as the Everglades and the Pacific Northwest forests. 
However, compared to these areas, the budget request for the 
Bay-Delta is very modest. This is true not only in absolute 
terms, but also on a per capita and per acre basis. The funding 
that I am asking you to provide contributes to accomplishing 
the environmental common elements of a range of comprehensive 
water supply and environmental alternatives that are being 
aggressively fleshed out by all parties concerned.
    The Bay-Delta model for environmental progress is one that 
I am confident you can feel proud to support, and, in your role 
as chairman of the relevant appropriations subcommittee, I 
invite you to become a partner in our efforts.
    I appreciate your consideration in this matter.

    Sincerely,
    PETE WILSON

    cc:The Honorable Vic Fazio, Ranking Minority Member
    California Congressional delegation

                                ------                                


 Testimony of Robert W. Perciasepe, Assistant Administrator for Water, 
                  U.S. Environmental Protection Agency

    BACKGROUND

    Good morning Mr. Chairman and members of the Subcommittee 
on Water and Power Resources. I am Robert Perciasepe, Assistant 
Administrator for Water in the U.S. Environmental Protection 
Agency (EPA). I have also been designated as the lead federal 
official in the joint federal-State CALFED Bay-Delta Program by 
the Secretary of the Interior and the Administrator of EPA, and 
am appearing here today on behalf of the federal Departments 
and Agencies that are members of what we have called 
``ClubFed,'' the coordinating group for federal participation 
in the CALFED process. I appreciate the opportunity to testify.
    As you may know, the CALFED program is a partnership 
between the State of California and the federal government, 
charged with developing a long-term comprehensive plan that 
will restore ecological health and improve water management for 
beneficial uses of the Bay-Delta system. The original CALFED 
federal members include EPA, the U.S. Fish and Wildlife 
Service, the Bureau of Reclamation, and the National Marine 
Fisheries Service. Collectively, these federal members are 
referred to as ``ClubFed.'' We are now making this partnership 
forum even more effective by bringing in additional federal 
agencies as members of ClubFed: the U.S. Army Corps of 
Engineers; the Natural Resources Conservation Service and the 
U.S. Forest Service in the Department of Agriculture; the 
Bureau of Land Management and the U.S. Geological Survey in the 
Department of the Interior; and, the Western Area Power 
Administration.
    The Bay-Delta, as the hub of California's water system and 
the largest and most productive estuary on the West coast, has 
for decades been the focus of competing interests--economic and 
environmental, urban and agricultural. Development activities 
such as hydraulic mining, dredging and channelization, flood 
control, unscreened water diversions, pollution, and large-
scale water supply projects have contributed to the degradation 
of the Bay-Delta's ecosystem. This degradation resulted in many 
problems, including declining water quality, decreasingly 
reliable water supplies, deteriorating fish and wildlife 
populations, and a fragile Delta levee system. Perhaps more 
importantly, it also resulted in gridlock among the competing 
stakeholder interests--environmental, agricultural, and urban 
water users.
    On December 15, 1994, federal Cabinet officials, key 
California officials, and leading stakeholders signed the 
momentous Bay-Delta Accord (``the Accord''). Though this Accord 
was indeed momentous in itself, its primary importance lay not 
so much in what it achieved at that time, as in the process it 
launched, and the promising future for the Bay-Delta it allowed 
all the interested parties to build.
    The Accord was most important because it represented a 
recognition that a consensus-oriented process was the only 
route to fix the problems of the Bay-Delta, and that the 
California water wars were ultimately futile and pointless for 
everyone involved. The contestants in those wars recognized 
that every major party, acting alone, could stop the 
initiatives of every other major party. But no major party 
could achieve its core objectives alone, without the agreement 
of the others. That recognition was clearly true when the 
Accord was signed. Almost two and a half years later, the 
futility of efforts by some participants to go around that 
process in various ways makes it clearer than ever--the 
consensus-oriented route is the only route that will work for 
anyone, because it has to work for everyone.
    Today, I would like to briefly discuss, from the standpoint 
of the federal ``ClubFed'' agencies, what we have achieved 
since the Accord was signed, and where we are going--both with 
respect to our involvement in the CALFED long-term process, and 
with respect to the funding authorization in the California 
Bay-Delta Enhancement and Water Security Act that the President 
signed last fall.


           achievements under calfed and the bay-delta accord


    The Accord defined water quality standards, set up 
coordinated water project management, created a program to 
improve aquatic habitat by non-flow actions, and established a 
long-term process for defining a plan of action to fix the 
problems of the Bay-Delta. The Accord also provided an 
atmosphere of greater near-term ``certainty'' in California 
water management for all stakeholders, that would enable the 
cooperative efforts to take root and grow. The Bay-Delta 
consensus process has produced much of this certainty, with 
benefits for water users, the environment, and the California 
economy. To sustain this progress, and get long-term solutions 
that provide lasting certainty, all CALFED agencies and 
stakeholders must continue to work within the consensus-
oriented process.
    State Water Quality Standards: The State Water 
Resources Control Board adopted in May, 1995 a water quality 
plan for standards that reflects the Accord. EPA Region 9 
approved the State standards on September 26, 1995. In 
contrast, efforts prior to the Accord to put water quality 
standards in place for the Bay-Delta had been unsuccessful. 
ClubFed members are working with stakeholders and the State to 
find ways to meet these standards that will also address the 
concerns of the agricultural and urban users of San Joaquin 
River water. We have made a great deal of progress in this 
effort and are hopeful of reaching an agreement that the State 
can finalize within the time frame specified in the Accord.
    More Reliable Water Allocations: Because of the 
Bay-Delta process, working through its joint federal-State 
Coordination Group, the Central Valley Project (CVP) water 
contractors have received more reliable allocations of the 
available water during the past two years. This demonstrates 
that, by working together, State and federal agencies can 
coordinate and more flexibly harmonize water allocations to 
habitat, farm and urban users of CVP water. Previously, user 
conflicts sometimes prevented contract allocations from being 
provided even when water was physically available. Recognizing 
that this is a greater challenge in drier years, the Interior 
Department is working to develop a protocol for making these 
allocations, to provide greater certainty about how the 
allocation process will work.
    This year's flooding experience also shows us the limits to 
any human problem-solving approaches dependent on the weather. 
When a single, huge rainstorm forces the massive release of 
stored water to prevent an immediate catastrophe, and is then 
followed directly by a prolonged, total, unseasonable drought, 
no human plumbing on earth can produce enough water for all 
purposes. We must note, in all humility, that we can only do 
the best we can with what nature gives us to work with.
    Support from the Financial Markets: Prior to the 
Accord, the financial markets sounded alarms about the effect 
that water policy uncertainty could have on California's 
municipal credit ratings. Standard & Poor's, among those 
previously concerned, found the Accord ``....represents a major 
step in alleviating many of S&P's credit concerns.'' (Credit 
Week Municipal, 2/27/95).
    Richard Rosenberg, Chairman and CEO of BankAmerica Corp., 
reaffirmed that a consensus process was essential to this 
progress, stating to the Water Education Foundation (of 
Sacramento, CA) on March 30, 1995 that the Accord is ``a 
critical first step towards a new era of water management in 
the State.... we must deal with California water issues in 
California and include all Californians.'' Similarly, the Bay 
Area Economic Forum wrote on June 20 to Senator Feinstein that 
major changes to the Accord ``would threaten to unravel the 
Bay-Delta Agreement and jeopardize the mutual trust that has 
developed among all of the different players.'' These initial 
reactions from the California financial community have proven 
to be both perceptive and prophetic about the most important 
benefits of the Accord. CALFED and its extensive stakeholder 
processes are the means by which we ``include all 
Californians'' in our Bay-Delta long-term planning and near-
term decision-making. This has also enabled us to keep all 
participants, governmental and private sector alike, in the 
CALFED processes and at the table negotiating their 
differences, instead of taking outside routes in futile 
attempts to get a one-sided answer.
    Category III: The Bay-Delta Accord included a 
commitment to undertake non-flow ecosystem restoration 
activities to improve the health of the Bay-Delta ecosystem. 
This effort is commonly referred to as ``Category III'', and 
the Bay-Delta Accord estimated the costs of the non-flow 
ecosystem restoration activities to be $180 million.
    Category III's central purpose was to get effective non-
flow measures for ecosystem restoration into place while the 
CALFED process worked out long-term solutions. In other words, 
the Accord recognized the need to fund and carry out measures, 
in the short term, to address the variety of non-flow related 
factors that have contributed to the historical decline of the 
Bay-Delta's ecological resources. To date, the water user 
community has contributed almost $22 million to fund Category 
III projects--including $20 million from Metropolitan Water 
District, and smaller contributions from several San Francisco 
Bay Area water districts. The $22 million in stakeholder 
funding has leveraged funds from other sources such as the 
Central Valley Project Improvement Act (CVPIA), State and 
federal agencies, and non-governmental entities, to support 
$61.5 million worth of projects.
    A working group of stakeholders and agency personnel 
identified Category III non-flow habitat improvement projects 
as appropriate for funding, and 38 have been or are being 
implemented to date. These projects, such as installation of 
new fish screens at critical water diversions and restoration 
of spawning habitat in important upstream tributaries, will 
substantially improve aquatic habitat. They will, as intended, 
be even more effective in conjunction with the CALFED ecosystem 
restoration activities.
    I would like to provide just a couple of examples of 
projects that have been undertaken with Category III funds. 
Category III funds, in conjunction with several other sources, 
enabled the acquisition of the 4,356-acre Valensin Ranch to 
greatly expand the Cosumnes River Preserve and provide 
necessary wetlands and upland habitat. These funds were also 
used to install five fish screens for water diversions located 
in the Suisun Marsh, one of the largest contiguous brackish 
marshes in the U.S. Finally, Category III funds were used to 
restore a segment of Butte Creek to natural conditions by 
removing four unscreened diversion dams, enabling the 
unrestricted passage of salmon.
    In designing the process to identify and move forward on 
Category III projects, the CALFED agencies were faced with the 
challenge of moving quickly to maximize near-term Category III 
progress before the start of long-term program, while working 
to build a consensus on difficult issues of Category III 
operation and financing. The CALFED agencies struck a pragmatic 
balance by establishing a formal mechanism (through the 
Ecosystem Roundtable) to provide direct stakeholder input on 
near-term restoration activities, including decisions on use of 
Category III funds.
    Now we have the potential for a dramatic new infusion of 
funding. When California voters approved Proposition 204 last 
November, they made available $60 million in State funds to add 
to the existing pot. New federal funds appropriated under the 
authorization of the California Bay-Delta Enhancement and Water 
Security Act, can be explicitly available for use in Category 
III projects. The ClubFed agencies hope Congress will look 
favorably on the President's FY 1998 budget request for full 
funding under the Bay-Delta Act, to enable the federal 
government to match California's support and commitment 
reflected in its Proposition 204 funds for Category III 
purposes in Fiscal Year 1998. These new State and federal 
contributions add to the impetus for a wide range of 
stakeholders to support Category III financially, as the Bay-
Delta Accord envisioned.
    ASolid Start on Building Long-Term Bay-Delta 
Solutions: As CALFED Executive Director Lester Snow's statement 
describes in more detail, we have created a joint State-federal 
CALFED Bay-Delta Program office, and staffed it using State and 
federal resources and personnel. A broad-based Bay-Delta 
Advisory Committee (BDAC) of stakeholders has been convened, 
and regularly counsels the State and federal agencies on 
aspects of the long-term solution. The CALFED Program has 
developed three major alternatives for the long-term solution 
addressing the Program's objectives--of water quality, water 
supply, ecosystem restoration, and levee stability. These 
alternatives are being evaluated in a Programmatic 
Environmental Impact Report and Statement (EIR/EIS). The 
expedited schedule calls for the CALFED agencies to identify a 
preferred alternative by September of this year and release the 
programmatic document for public review in November.


         calfed bay-delta funding request for fiscal year 1998


    Last Fall, Congress passed and President Clinton signed 
into law the California Bay-Delta Enhancement and Water 
Security Act. This new law authorizes funding of up to $143 
million per year for three years, which shall be ``in addition 
to baseline funding levels . . . for currently authorized 
projects and programs . . . for the purpose of Bay-Delta 
ecosystem protection and restoration.'' The Bay-Delta Act 
states that this funding is the ``initial federal share of the 
cost of developing and implementing'' the Category III program 
and the ``ecosystem restoration elements of the long-term 
CALFED Bay-Delta program.''
    The Bay-Delta Act also requires the Office of Management 
and Budget to submit, as part of the President's Fiscal 1998 
budget, ``an interagency budget crosscut'' for Fiscal Years 
1993 through 1998. This crosscut is to show levels of federal 
spending ``on ecosystem restoration and other purposes in the 
Bay-Delta region, separately showing funding provided or 
requested'' under both existing and this new Bay-Delta Act 
authority.
    In his Fiscal Year 1998 budget, the President requested the 
full $143.3 million in new funding for Bay-Delta ecosystem 
restoration and Category III purposes that was authorized by 
the 1996 Bay-Delta Act. In his FY 1998 budget request, the 
President also met the statutory requirement for a budget 
cross-cut. The Bay-Delta cross-cut includes an estimate for the 
baseline of federal spending for ``ecosystem restoration and 
other purposes'' in the Bay-Delta of $70 million, a 250 percent 
increase over the FY 1993 funding level of $20 million. Let me 
clarify that this amount reflects federal agencies' pre-
existing spending for Bay-Delta purposes. This baseline amount 
is in addition to the President's FY 1998 request for $143.3 
million in new funding. In other words, the President's FY 1998 
budget requests a total of $213.3 million for ecosystem 
restoration and other activities in the Bay-Delta.

    CALFED's FY 1998 Program

    Regarding the specific actions to be funded by the CALFED 
program, the Bay-Delta Act is not a great deal more explicit or 
detailed than that which is set forth in the brief quote cited 
above. We must therefore answer the question about the 
President's FY 1998 budget, ``funding for what functions to 
accomplish what goals?''
    The funding authorization in the Act itself refers to the 
ecosystem restoration elements of the long-term CALFED program. 
While that program is still under development, and the 
environmental review process on a preferred alternative is not 
scheduled to be completed until the latter half of 1998, CALFED 
has identified an FY 1998 program of activities that will be 
beneficial to each alternative being considered for the long-
term program. Investment in these ``no regrets'' early actions 
is important to maintain momentum in preparation for the 
decades of work ahead on the long-term program, and will build 
support and commitment for implementing the full alternative 
chosen. Federal funding authorized under the Bay-Delta Act will 
also provide the necessary match for the State's funding under 
Proposition 204.
    The CALFED FY 1998 program is part of a larger, five-year 
program of activities common to all three alternatives, drafted 
in consultation with stakeholders, with federal ClubFed agency 
staff closely involved in development and review at every 
stage. The program was framed to provide early implementation 
benefits and generate information valuable for adaptive 
management activities when the long-term Program is undertaken. 
While many early action projects are for ecosystem restoration, 
substantial activities are anticipated in each of the four 
long-term program elements, including water quality, levee 
vulnerability, and water supply.
    Projects pursued for early implementation must: (1) have 
appropriate environmental documentation; (2) have no 
significant adverse cumulative impacts; and, (3) not limit the 
choice of a reasonable range of alternative or affect the 
selection of a preferred alternative. Under the President's FY 
1998 proposal, the Secretary of the Interior will be required 
to approve plans outlining how funds appropriated under the 
Bay-Delta Act authorization will be spent.
    The federal and non-federal funding total currently 
projected for the FY 1998 CALFED program of common actions is 
$260 million, of which about $143 million is proposed by the 
President's FY 1998 Budget request under the Bay-Delta Act. The 
majority of the $260 million is for ecosystem restoration 
actions, and the remainder is for actions under the other three 
program elements.

    Cost-Share Agreement

    We recognize that the CALFED agencies need to have a cost-
sharing agreement in place by September, 1997. A high-level 
interagency group is developing an agreement which will meet 
the requirements of the Bay-Delta Act and Proposition 204. This 
agreement is intended to apply to interim activities (including 
those in the CALFED FY 1998 program) prior to the availability 
of a final programmatic environmental review document, as well 
as to the long-term program.
    The agreement will also include a framework of principles 
for cost-sharing on the overall CALFED program. Because the 
longer-term process is not yet defined and will be described in 
conceptual terms, later amendments to the initial agreement are 
contemplated that will be consistent with the framework of 
principles and will define the long-term process as decisions 
are made on it.

    Defining Projects and Actions--A New Way of Doing Business

    I am sure that the Subcommittee's members recognize that 
this discussion has not addressed what is ordinarily a central 
focus of significant funding requests--that is, a detailed 
description of projects and actions for which the funding will 
be used. Lester Snow's testimony addresses this question at 
length.
    I will simply summarize with a general description of how 
CALFED will proceed. The identification of projects and 
development of detailed project plans will involve the same 
processes of close interaction and consultation among Lester 
Snow's staff, CALFED agency staff, and stakeholders that have 
brought us where we are today on the CALFED FY 1998 Program and 
the CALFED long-term process. Final approval of projects will 
involve the same processes of discussion and agreement among 
all the CALFED agencies that have been successful to date and 
that have brought all of the panelists together to this table.
    We recognize that this is not ordinarily how federal 
project spending gets defined. In the language I quoted above, 
Congress also recognized that--in the way that the Bay-Delta 
Act defined the purposes for which the funding was authorized. 
Essentially, funding was authorized for actions to be named 
later by the consensus-oriented CALFED process. In other words, 
Congress recognized the necessity for a literally extraordinary 
legislative response to what is an equally extraordinary 
partnership--CALFED.
    We envision that the decisions on which agencies, or 
stakeholders, will undertake and pay for each activity will be 
made in the same process and on the same consensus terms that 
we have used to identify projects for the FY 1998 program. 
There is no allocation of funds among the federal agencies to 
be set before the fact. Rather, the allocations will follow the 
CALFED decisions on which department or agency has the most 
appropriate capability or experience to carry out a category of 
activities.
    The fact that, as an EPA official, I am advocating for 
funding to be channeled through the actions of another federal 
department says a great deal about the different way in which 
we are doing business here. These are not federal or State 
projects, Interior or EPA projects we envision from the common 
program, although federal or State agencies will carry out many 
of them. Rather, they will be products of the CALFED federal-
State partnership, which also includes stakeholders in a truly 
collaborative capacity.


                               conclusion


    Why Support The Bay-Delta Process? While we believe that 
this process for deciding on action projects is what Congress 
envisioned when it passed the Bay-Delta Act last Fall, we do 
not ask for your support solely on that basis, or solely from 
the confidence you can take from the record of the many CALFED 
achievements since the Accords were signed. It is fair for you 
also to ask, ``why do we believe the CALFED process will 
continue to work as we move into Fiscal Year 1998 and beyond?''
    Let me answer that question. First, the process is built on 
a strong, core partnership with the State. We, the federal and 
State signatories, jointly created that partnership in the 
Framework Agreement of June, 1994. We gave it substance and 
clear direction with the signing of the Accord. We continue to 
cement and augment it--by our contributions in staff, resources 
and work to Lester Snow's CALFED effort; by our steady and 
timely progress in assembling the long-term plan; and, by our 
continuing collaborative work on all the formal and informal 
Teams that make CALFED go. These efforts to date provide us 
with the trust and confidence that we can, and will, work 
through any problem in a cooperative, consensus-oriented way.
    Second, ClubFed has provided for a degree of coordination 
among federal agencies that may well be unprecedented in a 
natural resources program of this magnitude. I am not saying we 
head off any problem before it occurs--I doubt that it is 
humanly possible to do that in any large organization--but no 
ClubFed agency makes major Bay-Delta decisions without 
consultation with and accountability to the rest of the team. 
By providing a common forum for regular interaction on these 
issues, ClubFed has improved our communication and coordination 
with each other, the State, and stakeholders on Bay-Delta 
matters and on other, related issues beyond Bay-Delta--proving 
that success can be infectious. The strong interest of the six 
new members of ClubFed in joining the partnership is powerful 
testimony to the effectiveness of ClubFed and the importance of 
the CALFED long-term effort.
    Third, the strength of the CALFED process is rooted in the 
close and continuing involvement of all major stakeholder 
groups. Any government agency worth its salt, at any level of 
government, should have learned by now that you make the most 
durable and effective decisions by bringing in the people 
affected and finding out their needs, concerns, and thoughts 
about different ways of solving problems. Being listened to 
seriously, and being able to take a hand in guiding the overall 
effort, keeps all the players at the table, and compounds their 
investment in making the consensus-oriented process work. And 
as that investment by all of us keeps growing, the successes we 
achieve together--most recently in joining to support 
Proposition 204 and the Bay-Delta Act--bring us closer to the 
goal of a durable, long-term solution for the Bay-Delta.
    Thank you again for your invitation to testify, and for 
your consideration of support for this path-breaking 
initiative.

                                ------                                


  Statement Presented by Director Rosemary Kamei, Santa Clara Valley 
                             Water District

    Mr. Chairman and Members of the Subcommittee, thank you for 
providing me an opportunity to submit this statement on the 
CALFED Bay-Delta Program on behalf of the Santa Clara Valley 
Water District, a member of the California Bay-Delta Water 
Coalition, and on behalf of the Bay-Delta Advisory Council. The 
coalition represents a diverse alliance of conservation 
interests, urban water suppliers, agricultural water users and 
business leaders working together on water policy issues in 
California.


1. status of the calfed process from the urban water users' perspective


    California's economy is one of the strongest in the world, 
and that strength is dependent on sufficient and reliable 
supplies of water. The San Francisco Bay-Delta Estuary supplies 
water to 20 million people and supports an $800 billion economy 
and job base. The San Francisco Bay Area is the No. 1 business 
location in the United States, and second in the world.
    Santa Clara County, the Silicon Valley, is the single most 
important high-tech center in the U.S., being home to over 
4,000 high-tech companies. The Silicon Valley receives one-
third or over $1 billion of the venture capital invested in the 
United States annually, and employs over 230,000 people. The 
high-tech and manufacturing industries are the key to the 
future of the western region as America's gateway to the 
Pacific Rim. These growing industries need a reliable source of 
high quality water to produce the products that fuel the 
economic engine. Santa Clara County is home to 1.6 million 
people and it constitutes 25% of the Bay Area's total 
population and economy. In an average year, half of the water 
supply to Santa Clara County comes from the Bay-Delta. A 
reliable and adequate supply of high quality water is of the 
utmost importance to the businesses and residences of the 
Silicon Valley.
    The CALFED Bay-Delta Program is an unprecedented 
cooperative effort among federal, state and local agencies to 
restore the Bay-Delta. The Program is developing a long-term 
solution that equitably addresses water problems in four key 
and inter-related areas: water supply reliability, water 
quality, ecosystem health, and levee system vulnerability. As a 
member of the urban water users community and an active 
participant of the CALFED Bay-Delta Program, I am pleased with 
the progress of the Program and the degree to which the Program 
has promoted an open, consensus-building process in developing 
a long-term solution for the problems facing the Bay-Delta. The 
Program is on a very ambitious schedule but I think it is 
important for CALFED to continue with the momentum that has 
been generated. From the urban perspective, the CALFED process 
is on track to increase water supply reliability. This is 
absolutely critical to maintaining the quality of life not just 
in my area but throughout the state.


2. the role that the bdac is playing in the development of a long-term 
             plan for the management of bay-delta resources


    The Bay-Delta Advisory Council (BDAC) is a federally-
chartered stakeholder group which provides policy guidance to 
CALFED in its development of the long-term Bay-Delta solution. 
It is a 32-member council consisting of representatives from 
urban, agricultural, environmental, business, and fishing 
interests. It is the formal forum for stakeholders to discuss 
issues, understand the concerns from all of the interests that 
will be affected by the CALFED Bay-Delta Program, and provide 
recommendations to CALFED in developing balanced alternatives 
for addressing water problems in the Bay-Delta.
    Since its creation from May 1995, BDAC has been engaged in 
providing input on the elements of the CALFED solution 
including: water use efficiency, water quality, storage and 
conveyance, levee stability, and the nexus between ecosystem 
restoration and flood management. There are also four BDAC sub-
groups set up to address in more detail, policy issues related 
to program elements and other necessary and companion 
components of the CALFED package such as financing and 
assurances. These BDAC workgroups are also comprised of 
balanced representation from urban, agricultural, 
environmental, and business interests. In addition, BDAC has 
appointed a subcommittee, the Ecosystem Roundtable, to provide 
advice on near-term ecosystem restoration efforts.


  3. the need for the funding currently requested in the president's 
                                 budget


    Although the CALFED program requires all parts of the long-
term solution to move forward together, the CALFED agencies and 
stakeholder interests have recognized an immediate need to 
begin implementation of the ecosystem restoration element. 
Because the ecosystem restoration element is designed to serve 
as the foundation for all of the other program elements, 
immediate restoration action is necessary to achieve long-term 
water supply reliability and water quality benefits. There are 
ecosystem restoration projects and programs and water quality 
actions to improve ecosystem quality that can be undertaken now 
and will result in immediate ecological benefit. There are 
other projects that need to go forward now because of the 
considerable lead time necessary to produce species and habitat 
benefits.
    The California Bay-Delta Water Coalition, including Santa 
Clara Valley Water District, strongly supports the 
Administration's budget request for funding the interim CALFED 
ecosystem restoration program. The Coalition believes it is 
critical that all of the parties to this process--federal, 
state, local and stakeholder interests--contribute financially 
to the CALFED Bay-Delta Program, and that full funding in 
support of the Administration's ecosystem restoration funding 
request is a crucial step in this regard.


 4. our assessment regarding the process by which funds--both federal 
 and non-federal--will be allocated among competing potential projects


    In order to help prioritize and allocate federal and non-
federal funds among similar but competing needs, CALFED 
agencies have created a Restoration Coordination Program to 
receive stakeholder input such as those from the Ecosystem 
Roundtable. The Ecosystem Roundtable is an advisory group 
appointed under the Federal Advisory Committees Act (FACA) and 
is a sub-committee reporting to the Bay-Delta Advisory Council 
(BDAC). The Ecosystem Roundtable is a balanced group 
representing the various interests involved in Bay-Delta issues 
and its mission is to advise CALFED on near-term ecosystem 
restoration project selection and coordination with other 
ongoing programs such as the CVPIA.
    The project selection and funding prioritization process is 
being performed in a manner that fosters cooperative planning 
and implementation with all the federal, state, and local 
agencies and stakeholders. Prioritization is based on a 
rigorous evaluation of environmental needs, biological 
benefits, technical feasibility, cost effectiveness, potential 
environmental and third-party impacts, and consistency with 
CALFED goals for water quality, levee reliability, water use 
efficiency and water supply reliability. I believe that this 
Ecosystem Roundtable process is the most effective method for 
coordinating overlapping agency programs and for bringing in 
meaningful stakeholder involvement and buy-in.

                                ------                                


Statement of Leslie Friedman Johnson, Director of Agency Relations, The 
             Nature Conservancy, California Regional Office

    Mr. Chairman and Members of the Subcommittee, thank you for 
providing me an opportunity to submit this statement regarding 
the CALFED Bay-Delta Program on behalf of The Nature 
Conservancy (``Conservancy ''). The Conservancy is an 
international, non-profit land conservation organization 
dedicated to the long-term preservation of biological 
diversity. \1\ The premise that underlies our work is that in 
order to safeguard imperiled species, we must protect and often 
restore their habitats. The Conservancy has been actively 
implementing ecosystem conservation and restoration projects at 
sites throughout the Bay-Delta watershed for nearly 20 years. 
Because we share CALFED's goal of restoring Bay-Delta ecosystem 
health, the Conservancy has been actively participating in the 
CALFED process since the Bay-Delta Accord was signed. We are 
also an active participant in the California Bay-Delta Water 
Coalition, and have signed on to the Coalition testimony 
submitted to you today under separate cover. For my individual 
statement I will focus on the specific questions you have asked 
me to address.
---------------------------------------------------------------------------
    \1\ For more than 45 years The Nature Conservancy has implemented 
our mission by focusing on local, on-the-ground conservation, utilizing 
the best available science, market forces, and partnerships with people 
and groups across the political spectrum. We currently have 
conservation programs in all 50 states and 17 other nations. The 
Conservancy has more than 900,000 individual members and over 1,385 
corporate sponsors.
---------------------------------------------------------------------------


                                summary


    As authorized in October 1996 by P.L. 104-333, Title XI, 
the California Bay-Delta Environmental Enhancement and Water 
Security Act, the Administration has included $143.3 million 
for the CALFED Bay-Delta Program in the Bureau of Reclamation's 
FY'98 budget request. The Nature Conservancy strongly supports 
this funding level request.
    The San Francisco Bay-Delta and its watershed is a 500-
square-mile region supporting an immense diversity and richness 
of aquatic and terrestrial species and habitats as well as 
substantial commercial and sport fisheries, several of which 
are on the verge of extinction. In addition, the estuary and 
its watershed support considerable wetland habitat for 
waterfowl that provides a large recreational hunting base. 
Simultaneously, the Bay-Delta Estuary serves as the primary 
water supply conveyance system for a massive agricultural 
economy and two-thirds of California's population. The conflict 
between these competing uses has produced significant 
environmental problems, which in turn have stalled efforts to 
improve water supply reliability for all interested parties. 
Similarly, the future viability of commercial and sport fishing 
on the West Coast is dependent upon solving these complex 
ecological problems.
    The Bay-Delta ecosystem also has important implications for 
other Western states. For example, this region provides 
critical nesting and wintering habitat for migratory waterfowl 
whose seasonal migrations along the Pacific Flyway reach from 
northern Alaska to the tip of South America. Moreover, a 
restored salmon fishery in California could benefit fisheries 
along much of the Pacific Coast and decrease the likelihood of 
additional listings under the Endangered Species Act (ESA).


  status of the calfed process from the environmental organizations' 
                              perspective


    First, I must point out that there is no single 
environmental perspective. The environmental community is made 
up of a diversity of organizations spanning the spectrum from 
small, local grass-roots groups to large, international 
corporations. Each of these groups has a slightly different 
focus ranging from comprehensive ecosystem restoration to local 
watershed projects to water conservation to reduction of point-
source pollution. The CALFED-program, likewise, is actually 
multiple programs: interim, long-term, ecosystem restoration, 
water supply reliability, water quality and levee system 
vulnerability. As a result there exists an enormous range of 
perspectives depending on which group one polls regarding which 
specific program area.
    Environmental and conservation organizations have 
demonstrated unprecedented commitment to the CALFED process. In 
the ten years I have been working on conservation issues in 
California I have never before seen anything approaching the 
level of environmental and conservation group involvement 
witnessed in the CALFED arena. To the best of my knowledge, 
every CALFED forum--including public workshops, the Bay Delta 
Advisory Council (BDAC), the Ecosystem Roundtable, BDAC work 
groups on finance, assurances, water quality, water supply 
reliability, and ecosystem restoration--is attended by at least 
one and often multiple representatives of the environmental 
community. In addition, a broad diversity of conservation and 
environmental interests has come together as the Environmental 
Water Caucus (EWC), a forum for sharing information and 
coordinating input to the CALFED Bay-Delta program. EWC, in 
turn, has established multiple work groups to focus on various 
CALFED program elements. Collectively this is a remarkable 
response from a community that is chronically understaffed and 
under- or un-funded.
    Environmental and conservation groups are at the table 
because we believe it will take a comprehensive program on the 
scale of that undertaken by CALFED to effectively address the 
complex problems manifest in the Bay-Delta. The environmental 
community is clearly as fully engaged as any other interest 
group in developing a rational, consensus-based solution to 
Bay-Delta problems. It is also important to note that a 
commitment to the process does not imply a blanket endorsement 
of CALFED recommendations.


   need for the funding level in the administration's fy'98 budget: 
   immediate spending on ecosystem restoration is a priority for all 
                               california


    Although the CALFED program requires all parts of a long-
term solution to move forward together, agencies and 
stakeholder interests have recognized the need to begin 
implementation of ecosystem restoration immediately. We believe 
this is important for several reasons. First, the ecosystem 
restoration element of the CALFED program is the foundation for 
all of the other program elements. With so many species in 
decline or on the brink of extinction, restoration of ecosystem 
health is widely recognized to be necessary to achieve long-
term water supply reliability. Thus, while the CALFED agencies 
are developing several alternative long-term solutions, an 
aggressive ecosystem restoration program, by the agreement of 
all parties, will be common to all of the alternatives.
    Second, commitment of significant funding--on the order of 
the current federal funding request--is a necessary 
precondition to stimulate development of ecosystem restoration 
projects on a scale sufficient to achieve restoration of 
ecosystem health. Uncertainty about the availability of funding 
has had a stifling effect on development of large-scale 
restoration projects. In an era of decreasing funding, agencies 
and private organizations alike have been reluctant to invest 
the effort or resources necessary to develop large-scale 
projects because they have lacked confidence that funding would 
be available to carry them out.
    Federal funds will be used in conjunction with existing 
Proposition 204, Central Valley Project Improvement Act and 
other restoration program funds to support an array of urgently 
needed ecological improvements including, but not limited to:

    *Restoration of tidal, shallow water, riparian, instream, 
wetland, and other habitats;
    *Improved fish protection and management;
    *Protection and enhancement of existing habitat;
    *Expanded wetlands protection;
    *Improved ecosystem water quality to support aquatic 
resources;
    *Improved habitat management;
    *Improved management of introduced species;
    *Identification and addressing of other limiting factors 
that have impaired ecosystem recovery.
    I would like to elaborate a bit by describing a few types 
of activity for which funding is urgently needed:
    Emergency measures to prevent additional listings and/or 
extinction. A clear, and widely-supported priority for 
immediate funding is activity that immediately, directly and 
tangibly improves conditions for species approaching or on the 
brink of extinction. Activities that may meet this definition 
include screening unscreened water diversions, improving fish 
passage, and restoring habitat for listed and candidate 
species.
    Experimental and demonstration projects. There are several 
highly-degraded habitat types central to the CALFED Ecosystem 
Restoration Common Program for which restoration technologies 
are still relatively unproved (e.g. Delta wetlands). Immediate 
development of large-scale experimental and demonstration 
restoration projects is a necessary step in the direction of 
restored ecosystem health.
    Large-scale habitat restoration. Preliminary drafts of the 
CALFED Ecosystem Restoration Program plan have indicated a need 
to acquire, protect and/or restore large amounts of habitat. 
Again, dependability of funding is critical to development of a 
successful program. Without secure funding (or at least good 
prospects), agencies and private entities are much less likely 
to pursue such projects.
    The CALFED process has significantly advanced the 
collective vision of ecosystem restoration in the Bay-Delta 
watershed; the requested federal funding will provide the means 
to begin seriously implementing that vision.


 the calfed restoration coordination program: a systematic, consensus-
                   based approach to project funding


    As noted above, the Administration has included $143.3 
million for the CALFED Bay-Delta Program in the Bureau of 
Reclamation's FY'98 budget request. As implementation occurs, 
it is anticipated that funds will also be transferred to other 
federal agencies participating in the CALFED Bay-Delta Program. 
The Nature Conservancy strongly supports this ``one-stop'' 
federal line item as an efficient and streamlined approach to 
funding the interim CALFED ecosystem restoration program.
    I am going to leave it to the other panelists to describe 
the CALFED Restoration Coordination Program and the Ecosystem 
Roundtable, and will limit my comments to addressing how I 
believe this approach improves upon the status quo.
    As mentioned above, the Conservancy has been implementing 
conservation and restoration projects in the Bay-Delta 
watershed for nearly 20 years. Over that period, developments 
in the field of conservation biology have led us and others to 
recognize that conservation and restoration of ecosystems, 
including the natural processes that sustain them, is more 
effective and sustainable than species by species conservation 
efforts. Ecosystem restoration of the magnitude required to 
achieve ecosystem ``health'' needs to be conducted on a large 
scale, and in a highly-coordinated fashion.
    To date, there has been no coordinating framework to guide 
the actions of various state, federal, local and private 
interests. Due to limited resources, differing agendas and lack 
of coordination, these interests have historically pursued 
projects of relatively small scale in a manner that is 
fragmented, reactive, and often focused on narrow objectives 
(e.g. habitat acquisition for a single species without respect 
to ecosystem context or natural process function). While state, 
federal and local entities have indeed cooperated on many 
important and worthwhile projects, and are increasingly 
developing projects on an ecosystem scale, the various 
priorities, decision-making processes and institutional 
constraints unique to each agency or group often make 
cooperative efforts cumbersome.
    The CALFED Restoration Coordination Program promises to be 
a vast improvement over traditional ecosystem funding programs 
in that CALFED, with input from stakeholders on the Ecosystem 
Roundtable, has developed a process to coordinate not only the 
expenditure of the requested federal funds, but also CVPIA 
Restoration Fund, Proposition 204 and other funding sources. We 
strongly support CALFED's role in coordinating this effort. 
Fragmenting the federal appropriation among the various federal 
agencies or earmarking of specific projects would undermine the 
coordination already underway.


                               conclusion


    Thank you for the opportunity to appear before the 
Subcommittee to describe The Nature Conservancy's support of 
the CALFED Bay-Delta program and the Administration's FY'98 
funding request. As we have described in greater detail above, 
ecosystem restoration is a necessary foundation for other 
elements of the CALFED program, and is critical to the long-
term environmental and economic health of the West and the 
United States as a whole. The requested federal funding is 
urgently needed to move these ecosystem restoration efforts 
forward.

                                ------                                


           Statement of California Bay-Delta Water Coalition

    Mr. Chairman and Members of the Subcommittee, thank you for 
providing us an opportunity to submit this statement regarding 
the CALFED Bay-Delta Program on behalf of the California Bay-
Delta Water Coalition. The coalition represents a diverse 
alliance of conservation interests, urban water suppliers, 
agricultural water users and business leaders working together 
on water policy issues in California. (Exhibit A is a list of 
Coalition participants.) The Coalition is currently focused on 
obtaining sufficient funds to ensure the success of the CALFED 
Bay-Delta Program. It is these funding issues that are the 
focus of the Coalition's testimony today.


                                summary


    As authorized in October 1996 by P.L. 104-333, Title XI, 
the California Bay-Delta Environmental Enhancement and Water 
Security Act (``Bay-Delta Act''), the Administration has 
included $143.3 million in the Bureau of Reclamation's FY '98 
budget request for the CALFED Bay-Delta Program. The California 
Bay-Delta Water Coalition strongly supports this funding level 
request.
    California's economy is one of the strongest in the world, 
and that strength is dependent on sufficient and reliable 
supplies of water. Two-thirds of California's population is 
dependent on water from the San Francisco Bay-Delta Estuary, a 
500-square-mile region supporting an immense diversity and 
richness of aquatic and terrestrial species and habitats as 
well as substantial commercial and sport fisheries, several of 
which are on the verge of extinction. In addition, the estuary 
and its watershed support considerable acreage of managed 
wetland habitat for waterfowl that provides a large 
recreational hunting base. Simultaneously, the Bay-Delta 
Estuary serves as the primary water supply conveyance system 
for a massive agricultural economy and millions of municipal 
and industrial consumers. The conflict between these competing 
uses has produced significant environmental problems, which 
have in turn stalled efforts to improve water supply 
reliability for all interested parties. Thus, restoration of 
the ecological health of the Bay-Delta Estuary and its 
watershed is the foundation of all efforts to improve water 
quality and supply reliability. Similarly, the future viability 
of commercial and sport fishing on the West Coast is dependent 
upon solving these complex ecological problems.
    The Estuary and its watershed also have important 
implications for other Western states. For example, this region 
provides critical nesting and wintering habitat for migratory 
waterfowl whose seasonal migrations along the Pacific Flyway 
reach from northern Alaska to the tip of South America. 
Moreover, a restored salmon fishery in California could benefit 
fisheries along much of the Pacific Coast and decrease the 
likelihood of additional listings under the Endangered Species 
Act (ESA). It must also be recognized that water systems in the 
Western U.S. are highly inter-related. For example, because 
Bay-Delta ecosystem restoration will help bring long-term 
stability and security to California's statewide water system, 
the Administration's funding request is of substantial 
importance to other Colorado River Basin states and interests 
as well as the Republic of Mexico.


   the calfed bay delta program is the culmination of years of effort


    The problems facing the Bay-Delta Estuary and its watershed 
have proven intractable for many years, due not only to the 
conflicts in the system, but also to the vast array of 
overlapping and often conflicting mandates of various federal 
and state agencies. In an historic effort to end the impasse, 
the federal government and the state of California have entered 
into a joint venture to craft a long-term Bay-Delta solution 
that equitably addresses water problems in four key and inter-
related areas: water supply reliability, water quality, 
ecosystem health, and levee system vulnerability. This venture 
includes all of the necessary federal and state agencies 
operating under a framework agreement and is referred to as 
``the CALFED Bay-Delta Program.''
    A joint Bay-Delta program staff has been put into place and 
has been given responsibility for developing the programmatic 
solutions. This effort has been underway for approximately 18 
months. A central tenet of the program is the necessity for, 
and reliance upon, substantial and substantive input from 
stakeholders and other members of the general public. The Bay-
Delta Program staff have established an extensive system of 
workshops and technical teams for developing concepts and 
solutions with the aid of those who work most closely with the 
systems at issue. Conservation groups, fishermen, urban and 
agricultural water users, waterfowl associations, the business 
community and others are actively involved in the solutions 
process along with the CALFED agencies and the Bay-Delta 
Program staff.


   immediate spending on ecosystem restoration is a priority for all 
                               concerned


    Although the CALFED program requires all parts of the long-
term solution to move forward together, the CALFED agencies and 
stakeholder interests have recognized an immediate need to 
begin implementation of the ecosystem restoration element. The 
California Bay-Delta Water Coalition strongly endorses this 
policy for several reasons.
    First, the ecosystem restoration element of the CALFED 
program is designed to serve as the foundation for all of the 
other program elements, because immediate restoration of the 
ecosystem is necessary to achieve long-term water supply 
reliability and water quality benefits.
    Thus, while the CALFED agencies are developing several 
alternative long-term solutions, an aggressive ecosystem 
restoration program will be common to all of the alternatives.
    Second, the federal funds will be used to fund an array of 
projects and programs that can be undertaken now and will 
result in immediate ecological benefit. Other projects need to 
go forward now due to the considerable lead time necessary to 
produce species and habitat benefits. Given that the ecological 
systems are complex, an adaptive management approach--one that 
allows for modification over time in response to new 
information--is essential.
    Thus, there is a strong interest among all parties in 
providing early support for those restoration activities that 
are either (1) most likely to provide substantial ecological 
benefits or (2) will supply information that will guide future 
management and restoration activities. It is also widely 
accepted that restoration actions will in most cases require 
substantially greater time to result in either tangible 
benefits or meaningful new information than other elements of 
the CALFED program.


   california bay-delta water coalition: a key role for stakeholders


    In recognition of the urgent need to lay this all important 
foundation, the Coalition came together during the summer of 
1996 to develop and support an historic state bond measure, 
Proposition 204, the ``Safe, Clean, Reliable Water Supply Act 
of 1996.'' Proposition 204 is a $995 million general obligation 
water bond containing approximately $600 million for Bay-Delta 
ecosystem restoration efforts. Of this, $60 million is 
immediately available for ecosystem restoration activities as 
part of a program referred to as ``Category III,'' and $93 
million is immediately available to fund the state's share of 
Central Valley Project Improvement Act (CVPIA) implementation 
costs. (Several other sections of the measure also provide 
immediate funding for related restoration efforts.) Proposition 
204 also created a $390 million fund as the State's initial 
contribution to the final CALFED ecosystem restoration program. 
This fund will not be available until the entire CALFED program 
has been finalized, some time within the next two years. The 
measure passed with 63% voter approval, a clear indication of 
very high levels of state support for improvement of the Bay-
Delta Estuary and its watershed and improvements to the water 
supply system.
    The Coalition was also instrumental in building support for 
H.R. 4126, the California Bay-Delta Environmental Enhancement 
and Water Security Act (the ``Bay-Delta Act''), a new 
authorization of matching federal funds to support the initial 
ecosystem restoration elements of the CALFED Bay-Delta Program. 
H.R. 4126 was enacted as Title XI of P.L. 104-333, the Omnibus 
Parks and Public Lands Management Act. An unprecedented level 
of bipartisan support (48 members of the California delegation 
co-sponsored the measure), as well as the support of the 
Clinton and Wilson Administrations, led to quick action in the 
104th Congress. The Bay-Delta Act, drafted with Proposition 204 
in mind, authorizes the ``initial'' federal share of both 
immediate Category III funding and the more comprehensive Bay-
Delta ecosystem element. These federal funds will be used in 
conjunction with existing CVPIA and other restoration programs 
to support an array of urgently needed ecological improvements 
including, but not limited to:

    *Restoration of tidal, shallow water, riparian, instream, 
wetland, and other habitats;
    *Improved fish protection and management;
    *Protection and enhancement of existing habitat;
    *Expanded wetlands protection program;
    *Improved ecosystem water quality to support aquatic 
resources;
    *Improved habitat management;
    *Improved management of introduced species;
    *Identification and addressing of other limiting factors 
that have impaired ecosystem recovery.


         doi fy '98 budget request is appropriate and necessary


    Consistent with the Bay-Delta Act, the Administration 
included $143.3 million as the first installment of the federal 
funds for ecosystem restoration activities being developed by 
the CALFED agencies for FY 1998. In addition, the 
Administration has committed to funding the remaining amounts, 
$143.3 million in each of FY '99 and FY '00. The budget 
authority of $143.3 million is included within the Bureau of 
Reclamation budget. As implementation occurs, it is anticipated 
that funds will also be transferred to other federal agencies 
participating in the CALFED Bay-Delta Program. The Coalition 
strongly supports this ``one-stop'' federal line item as an 
efficient and streamlined approach to funding the interim 
CALFED ecosystem restoration program.
    The CALFED Bay-Delta program is unique. A major initiative 
to coordinate the legal mandates and spending of at least seven 
federal agencies, its decisions will affect a huge watershed 
and millions of water customers. It is also a partnership with 
a number of state agencies and coordinates closely with an 
independent stakeholder funding program. The Coalition strongly 
supports CALFED's role in such planning and spending efforts, 
as it is the only means to assure programmatic results that 
will satisfy all interests. Fragmenting the federal 
appropriation among the various federal agencies would 
undermine this critical goal and weaken the coordination 
already underway.


  the ecosystem roundtable process provides for critical stakeholder 
                                 input


    In order to establish near-term spending priorities for 
ecosystem activities and to coordinate state, federal, and 
associated expenditures, the CALFED agencies have created a 
Restoration Coordination Program which receives stakeholder 
input from the Ecosystem Roundtable. The Ecosystem Roundtable 
is a balanced group representing the various interests involved 
in Bay-Delta issues and its mission is to help CALFED with 
near-term project selection for Bay-Delta ecosystem restoration 
and coordination with other ongoing programs such as the CVPIA. 
The Roundtable was appointed under the Federal Advisory 
Committees Act (FACA) and the state equivalent to this statute.
    The CALFED agencies and the Ecosystem Roundtable are using 
an objective, scientifically-based process to identify near-
term priorities and fund actions to address those priorities. 
This process was developed based on the past experiences in 
administering the Category III program and the CVPIA 
Restoration Fund, and features extensive coordination with the 
CVPIA. It is a process that allows flexibility to respond to 
changing circumstances, to address local interests, and to 
learn from previous restoration actions.
    Both Proposition 204 and the Bay-Delta Act anticipate that 
the Ecosystem Roundtable structure will serve as the primary 
decision forum for funds made available under these 
authorities, until a more permanent entity is developed by 
CALFED to take on this role.
    The Coalition strongly supports the Ecosystem Roundtable 
process, not only as a rational and logical method of 
coordinating overlapping agency programs and spending, but as 
the most effective method for bringing meaningful stakeholder 
involvement--and buy-in--to a problem that has vexed California 
and many other western states for decades.


         state & local cost-sharing has already been committed


    The Coalition supports the use of matching funds for both 
interim and long-term ecosystem restoration efforts. As part of 
the 1994 Bay-Delta Accord, the stakeholders, together with the 
state and federal signatories, committed to funding a variety 
of restoration projects. Water users jump-started these efforts 
by providing an initial $22 million as seed money for immediate 
implementation of such projects (commonly called Category III). 
Another $10 million will he contributed this year. These funds 
have already been matched by approximately $7 million in local 
and private cost-share funds and are over and above user 
contributions to other on-going Bay-Delta restoration programs, 
including nearly $120 million contributed to the CVPIA 
Restoration Fund since 1992. In addition, as discussed in some 
detail above, the State of California is now committed to 
providing approximately $600 million through Proposition 204 
for Bay-Delta ecosystem restoration purposes. Of this amount, 
more than $200 million is available immediately--prior to the 
completion of CALFED's long-term plan--as are all associated 
local, user, and stakeholder-contributed funds.
    Consistent with these state and stakeholder commitments, 
Congress authorized, and the President has requested, funding 
to support the federal share of the Category III program and 
related restoration efforts in recognition of the significance 
of these immediate needs to the overall success of the CALFED 
Bay-Delta program. The Coalition believes it is critical that 
all of the parties to this process--federal, state, local and 
stakeholder interests--contribute financially to the CALFED 
Bay-Delta Program, and that full funding in support of the 
Administration's ecosystem restoration funding request is a 
crucial step in this regard.
    Substantial state and stakeholder funds are already 
committed for the federal 1998 fiscal year regardless of 
whether matching federal funds are appropriated for that 
period. Thus, a formal cost-sharing agreement is not necessary 
to ensure that any federal appropriation is matched in FY '98. 
Nevertheless, the Coalition recognizes the general policy of 
the federal agencies to provide funding pursuant to cost-
sharing agreements. Therefore, the Coalition supports the 
execution of an interim cost-sharing agreement for FY 1998 that 
facilitates the expenditure of all funds appropriated for the 
ecosystem restoration element of the CALFED Bay-Delta Program 
for the FY 1998 funding cycle.


                               conclusion


    The CALFED Bay-Delta Program is bringing state, federal, 
local and stakeholder interests together in an open and public 
process to make joint decisions about how to implement 
ecosystem restoration programs and monitor progress in order to 
ensure overall success. The CALFED Program has broad 
responsibility to plan and coordinate a comprehensive, long-
term solution to restore the estuary and improve the 
reliability and quality of Bay-Delta water supplies. It is 
vital that restoration activities begin now.
    Species throughout the Bay-Delta watershed continue to face 
a host of problems in some cases so severe that they remain 
candidates for listing under the ESA. Recovery efforts cannot 
begin without adequate funding. Many projects and programs have 
already been planned and are ready for implementation. Funding 
commitments are needed to move restoration activities forward.
    Restoring California's Bay-Delta ecosystem is critical to 
the long-term environmental and economic health of the West and 
the United States as a whole. Federal support to match 
California's commitment to restoring the Bay-Delta ecosystem 
will help safeguard this national treasure for future 
generations and serve as a model for other regions in the area 
of ecosystem protection and restoration.

                                ------                                


                               Exhibit A

    California Bay-Delta Water Coalition Participants:

    Alameda County Water District
    Association of California Water Agencies
    California Urban Water Agencies
    California Waterfowl Association
    Calleguas Municipal Water District
    Central Basin Municipal Water District
    Central Coast Water Authority
    Central Valley Project Water Association
    Coachella Valley Water District
    Contra Costa Water District
    East Bay Municipal Utilities District
    Environmental Defense Fund
    Friant Water Users Authority
    Kern County Water Agency
    Long Beach Water Department
    Los Angeles Department of Water and Power
    Metropolitan Water District of Southern California
    Modesto Irrigation District
    Municipal Water District of Orange County
    Natural Heritage Institute
    Northern California Water Association
    San Diego County Water Authority
    San Francisco City and County Water Department
    San Joaquin River Exchange Contractors Water 
Authority
    San Luis & Delta-Mendota Water Authority
    Santa Clara Valley Water District
    Stockton East Water District
    The Nature Conservancy
    Tulare Lake Basin Water Storage District
    Turlock Irrigation District
    West Basin Municipal Water District
    Westlands Water District

                                ------                                


 Testimony of Sunne Wright McPeak, President and CEO, Bay Area Council

    Mr. Chairman, members of the Subcommittee on Water and 
Power Resources, I am Sunne Wright McPeak, President and CEO of 
the Bay Area Council, a business-sponsored, CEO-led 
organization representing major employers throughout the nine-
county Bay Area region of Northern California. The Bay Area 
Council, established more than 50 years ago, works to develop 
progressive regional public policies that promotes economic 
prosperity and environmental quality. The Bay Area Council is 
rooted in the entrepreneurial spirit with great respect for 
public leadership, such as you provide for the nation on a 
daily basis. Additionally, I serve as Vice-Chair of the Bay 
Delta Advisory Council which provides on-going advice to the 
CALFED Bay Delta Program. I am pleased to appear before you 
today to provide input from the Bay Area business community as 
well as a statewide business perspective with regard to the 
CALFED process.
    Before I begin, I would like to provide one piece of 
historical context. In the late 1970's and early 1980's I 
chaired a group called the Committee for Water Policy 
Consensus, based in Contra Costa County, where I was then an 
elected Supervisor. One of the key concepts that I and my 
colleagues advocated was the notion that California should have 
``policy before plumbing.'' We strongly believed that before 
major projects were undertaken, comprehensive technical impact 
analyses should be carried out and policy debates undertaken, 
regarding the allocation or reallocation of our State's finite 
water resources in order to ensure the ultimate successful 
operation of the Federal and State water systems. At that time, 
the water community in general, and many of the constituencies 
involved, were concerned that such discussions would delay 
critically needed projects supported in various interest 
groups. However, in the absence of such comprehensive analyses 
and appropriate policies, agreements between parties on 
significant programs and projects were not forthcoming, 
resulting in political gridlock. Consequently, no major 
activities to either improve the ecosystem quality or improve 
water supply reliability were reached until the historic Bay 
Delta Accord of 1994.
    Thus, I and many others are heartened by the fact that the 
CALFED process does in fact represent an effort to put ``policy 
before plumbing.'' This is a major accomplishment, and one that 
is clearly bearing fruit.
    From a business perspective, the CALFED process represents 
a critical component of California's infrastructure development 
for the 21st century. Like the highway system, whether it be 
roads or information, and the power grid, California's water 
supply infrastructure contributes to our continuing prosperity 
and helps ensure that the 7th largest economy in the world will 
continue to make its substantial contribution to the overall 
health of our national economy. As we all know, water is 
largely taken for granted except during the time of drought or 
flood. But the ramifications of not guaranteeing that the Bay 
Delta system continues to function in the future as both 
ecosystem and water supply hub are severe for California and 
the United States as a whole.
    From the rugged Sierra foothills, to the fields of the 
Central Valley, to the Los Angels basin, to San Diego, and back 
to the Silicon Valley, a secure, reliable supply of high 
quality water cannot by overvalued. We in the business 
community regard the CALFED process as the only immediate 
opportunity to achieve a secure, reliable, and quality water 
supply for the jobs and the economy. We are committed to 
helping to resolve the water disputes that confront us, and we 
are committed to the CALFED effort as the venue to do so. Time 
is of the essence and we cannot let the CALFED process be 
derailed at the critical juncture.
    The business community has not always been centrally 
involved in the water debate. In the past few years, however, 
the business community has begun to play a much more key role 
in the water policy debates in the state and we will continue 
to do so. As Mr. Perciasepe mentioned in his remarks, corporate 
CEO's across the state, major financial institutions such as 
Standard & Poor's, and organizations such as the Bay Area 
Council care deeply about the fate of California's water 
resource and understand the need to resolve the policy debates 
now. It is also important to note that the ``business 
community'' is not only comprised of the board rooms and 
shareholders; it is, ultimately, the employees and their 
families as well. Indeed, it is the people of California.
    Future economic prosperity in California, which is an 
economic engine for the nation, and is dependent upon the water 
supply from the Delta. Contributing to that quality of life, 
and the ecological well being of the Bay-Delta system, must be 
restored in order to ensure stability in that supply. 
Environmental vitality, along with our economic vitality 
combine to make California unique and uniquely attractive to 
business and employees.
    If we lose either our water supply reliability or our 
environmental quality, businesses will be less likely to stay, 
expand or locate here. Failure to follow through on the CALFED 
process will impair economic progress for the nation as well as 
California.
    I am confident that the CALFED process will succeed in 
meeting these twin demands of water supply reliability for 
economic vitality and ecosystem restoration for environmental 
quality. And I am honored to serve as Vice-Chair of the Bay-
Delta Advisory Council, contributing to this important process.
    The role of the Bay-Delta Advisory Council is to provide 
advice to the CALFED Bay-Delta Program regarding its 
development of alternative comprehensive solutions to 
environmental and water management problems associated with the 
Bay-Delta system. We are also to provide policy advice on 
issues not necessarily included as a project in a solution 
alternative but that will need to be resolved before 
implementation can succeed, such as assurances that the program 
will be implemented tomorrow as it is designed today, and so 
on.
    The CALFED process has listened to the advice of the BDAC, 
has responded and incorporated appropriate suggestions for 
improvement appropriately and is successfully meeting an 
extremely tight time line. All to its great credit. I look 
forward to an even more pronounced BDAC role as the 
alternatives are refined further.
    With respect to the need for the funding currently 
requested in the President's budget, I cannot stress enough 
that the need is real, it is needed in FY '98, and it is 
imperative that it be forthcoming to evidence the federal 
government's acknowledgment that California's economic engine, 
if slowed or stopped, has an impact on the nation's economic 
well being. Furthermore, there is a federal responsibility to 
contribute to the ecosystem restoration effort both because the 
Delta is an ecological treasure of international significance 
and a wintering location for waterfowl along the Pacific 
Flyway, for which the United States has some treaty 
obligations.
    Finally, with regard to the Ecosystem Roundtable process 
for recommending disbursements of state and federal funds for 
ecosystem restoration to the CALFED agencies, I am very 
comfortable that it is a workable, fair and practical process. 
It is open, has stakeholder involvement, and agency 
participation. It is developing criteria for early 
implementation project selection and will recommend priorities 
for near-term ecosystem restoration actions to the CALFED 
agencies.
    Ultimately, the CALFED process has been and continues to be 
a success worthy of your Committee's support. It is an example 
of agency coordination, stakeholder participation and state and 
federal cooperation that is almost unprecedented. Finally, the 
most important fact to remember about CALFED is that it's 
working. In business, success speaks for itself.

                                ------                                


 Statement of Richard K. Golb, Executive Director, Northern California 
                           Water Association

    Mr. Chairman, members of the Subcommittee, my name is 
Richard Golb, I am the Executive Director of the Northern 
California Water Association (NCWA). NCWA is a non-profit 
organization that represents 51 agricultural water suppliers 
that collectively irrigate 750,000 acres of farmland in the 
Sacramento Valley.
    I appreciate the opportunity to testify on the status of 
the CALFED Bay-Delta Program from the perspective of 
California's agricultural water users, as well as on the role 
of the Ecosystem Roundtable, and the importance of the 
President's fiscal year 1998 budget request for the CALFED Bay-
Delta Program.
    California's agricultural water interests, including NCWA, 
have worked diligently to resolve the chronic water supply and 
environmental problems that have plagued the Sacramento-San 
Joaquin Delta and San Francisco Bay (Bay-Delta). NCWA 
participated in the development of the 1994 Bay-Delta Accord, 
the development of California ballot Proposition 204, and the 
CALFED Bay-Delta Program. NCWA's Chairman Tib Belza, and Vice-
Chairman Don Bransford, both serve on the Bay-Delta Advisory 
Council, along with environmental, urban, business and other 
agricultural interests from throughout California. I also serve 
on the CALFED Ecosystem Roundtable.


  the status of calfed bay-delta program--an agricultural perspective


    California's agricultural water interests support the 
CALFED Bay-Delta Program and its objective, which is to develop 
and implement a plan to restore water supplies for California's 
cities, businesses and farms, and to restore fish and wildlife 
habitat in the Bay-Delta ecosystem. We also support the 
California Bay-Delta Water Coalition, and the Coalition's 
statement in support for full fiscal year 1998 federal funds 
for CALFED's short-term and long-term goals. Our support for 
the CALFED Bay-Delta Program is consistent with Governor Pete 
Wilson's 1992 water policy that advanced the principle that all 
of California's interests must move forward together--and that 
individual interests can not move ahead of the others.
    Following this important theme, CALFED adopted a set of six 
solution principles that agricultural interests, like NCWA, 
strongly support. The principles are intended to guide CALFED's 
selection of a final solution to ensure it is equitable to all 
interests, that it does not result in redirected impacts to 
other regions or interests, and that it is a durable plan that 
will address California's economic and environmental needs. We 
believe the success of the CALFED Bay-Delta Program is 
imperative to ensure the long-term viability of California's 
agricultural economy.


                  the ecosystem restoration roundtable


    The Ecosystem Roundtable is a 19-member subcommittee of the 
Bay-Delta Advisory Council. The Roundtable, of which I am a 
member, is a representative work group comprised of 
California's environmental, agricultural, urban, fishing, 
conservation and power interests. Our mission is to assist 
CALFED staff in the evaluation of a proposed three to five year 
workplan that will identify environmental restoration needs and 
specific projects to address these needs. The Roundtable will 
review and recommend selected projects to the Bay-Delta 
Advisory Council for funding, and importantly, the Roundtable 
will also attempt to coordinate existing state and federal 
restoration programs in the Bay-Delta ecosystem. Our current 
goal is to provide recommendations on projects to the Bay-Delta 
Advisory Council this summer.
    The Ecosystem Roundtable, thus far, is an accountable and 
balanced process. Clearly established scientific criteria have 
been adopted to ensure the merit of restoration projects that 
may be eligible for funding consideration, and CALFED's 
Solution Principles ensure that affected landowners are 
involved in project development
    These restoration projects and programs will help CALFED 
meet two important goals. First, they will improve fish and 
wildlife habitat in the Bay-Delta's fragile ecosystem. Second, 
in fulfilling this goal, the program will provide long-term 
water supply certainty for California's agricultural and 
business communities.


            the president's fiscal year 1998 budget request


    Congress, in 1996, passed the California Bay-Delta 
Enhancement and Water Security Act, authorizing $430 million 
for environmental restoration activities in the Bay-Delta. 
Signed by President Clinton, and combined with California 
voters support for Proposition 204, this law authorized $143 
million for each of the fiscal years 1998, 1999 and 2000. The 
first installment, President Clinton's fiscal year 1998 budget 
request of $143 million, is included in the Department of 
Interior's budget for the Bureau of Reclamation. The 
President's budget documents commit to requesting the 
additional authorized $143 million installments in fiscal years 
1999 and 2000. The full appropriation of $430 million is 
critical to ensure that CALFED successfully addresses 
California's water supply and environmental problems.
    Congressional support for the President's request for $143 
million will allow CALFED to begin work on important long-term 
restoration projects that will provide significant water supply 
reliability benefits for California's agricultural and urban 
needs. The funding also will ensure that restoration projects 
that currently have state and federal approval, and a local 
cost-share, will not be delayed due to lack of federal support 
or funds. For example, state and federal agencies have recently 
encouraged water users on the San Joaquin and Sacramento 
rivers, and in the Delta, to protect juvenile salmon by 
installing fish screens on their diversions. Many agricultural 
water suppliers have initiated these projects and are now in 
the design stages with construction possible this summer and 
next year, provided federal funds are available through the 
CALFED Bay-Delta Program.
    Overall, these projects, as well as other fish passage 
projects on tributary streams, such as construction of fish 
ladders, will immediately benefit species of concern, including 
the federally listed winter-run Chinook salmon, as well as the 
spring-run Chinook salmon. At the same time, this funding 
ensures greater certainty for irrigation supplies to area 
farmers, and increases the opportunities, under appropriate 
circumstances, for water transfers.
    Thank you again for the opportunity to provide testimony 
before the Subcommittee. I would be pleased to answer any 
questions you may have at this time.

                                ------                                


          Testimony of Mr. W. Ashley Payne, Ashley Payne Farms

    Mr. Chairman, Members of the Committee, my name is Ashley 
Payne. I am a farmer and I reside in Yolo County, California. 
My family farms about 8,000 acres in Yolo and Sutter Counties, 
and we grow primarily rice, tomatoes, wheat, safflower, corn 
and alfalfa.
    Iappreciate the opportunity to testify today before your 
subcommittee, particularly from the perspective of a landowner 
who has property in the CALFED habitat acquisitions target 
area. I want to stress from the outset that my experience in 
dealing with the federal government on a major land acquisition 
in the Delta may be unique. My involvement with the federal 
land acquisition process has been with the U.S. Army Corps of 
Engineers, and the Corps' efforts to acquire Little Holland 
Tract, an island in the delta that my brother, William, and I 
own. This is not necessarily the experience that other 
landowners, who plan to participate in the CALFED land 
acquisition process, will have. But it does provide, I believe, 
some lessons from which the CALFED land acquisition program can 
benefit.
    First, a little background on the property in question. 
Little Holland Tract is a 1,630 acre island that borders the 
Sacramento Deepwater Ship Channel in southeastern Yolo County. 
The island forms part of the funnel through which water moves 
from the Yolo Bypass, a massive feature of the Sacramento River 
Flood Control Project, to the Sacramento-San Joaquin Delta and 
the San Francisco Bay. In essence, Little Holland Tract, along 
with Liberty Island to the west, serves as the cork at the end 
of the Yolo Bypass.
    In 1981, my brother and I sold the island to a Spanish 
farming operation. In December 1983, after a small portion of 
the levees that protected the island were breached and the 
Spanish firm was unable to secure financing to repair the 
levees, the property reverted back to my brother and I.
    In October of 1991, my brother and I entered into an 
agreement with the California Department of Water Resources 
(DWR) for the sale of water from Little Holland Tract. The 
property has senior appropriative water rights that permit the 
diversion of up to 1,450 acre feet of water per year. Part of 
the agreement with DWR included a payment from DWR of $75,950 
to pay for the cost of repairing the breached levees, de-
flooding the island and releasing the flood water from the 
island to the Delta, making it available for the 1991 Emergency 
Drought Water Bank.
    On February 12, 1992, the Corps of Engineers issued a 
``cease and desist'' letter to my brother and I, claiming that 
we had restored the levees without the necessary Section 404 
permits. The Corps rejected our position that repair of the 
levees was subject to Nationwide Permit 3. After months of 
unsuccessful negotiations, the Corps forced my brother and I to 
breach the repaired levees and inundate the island. The Corps 
subsequently denied our after-the-fact section 404 application 
and to date we have not been able to farm our property. Today, 
it remains partially flooded and subject to tidal influences.
    Given the position of the Corps, we sought and received the 
help of our Congressman, Vic Fazio, in an effort to win passage 
of legislation directing the Corps to acquire Little Holland 
Tract and providing the Corps with the necessary funds to carry 
out the acquisition. The first funds to acquire the property 
were appropriated in fiscal year 1995. In fiscal year 1996, 
Congress provided the balance of the funding as well as the 
statutory direction to acquire the property. The only condition 
that had to be met under the legislation was that the Assistant 
Secretary of the Army for Civil Works had to make a 
determination that the acquisition was in the federal interest. 
In January 1996, the Corps made that determination, citing the 
enormous environmental benefits of maintaining the property in 
a flooded state and directed that the island be acquired.
    Today, however, it appears that we are still a long way 
from final acquisition of the property by the Corps. The Corps 
has appraised the property and offered my brother and me, 
$735,000 for the island. This is far less than the fair market 
value of the property. In 1984, the island appraised at 
$1,800,000. In 1992, a private appraisal that I commissioned 
during some discussions with The Nature Conservancy, valued the 
property at $2,500,000. In 1995, the Congress made up to 
$3,300,000 available for the acquisition. And, in 1996, the 
Corps' reconnaissance study on the property valued the property 
at $2,900,000, if it were still farmable.
    A couple of reasons for the low appraisal have emerged. 
First, federal appraisal standards preclude the use of anything 
but private-to-private sales when selecting comparables to 
determine the fair market value of a parcel. Federal appraisal 
guidelines do not permit the use of transactions that involve a 
non-profit, like The Nature Conservancy or Trust for Public 
Lands, for example. Nor do they allow the use of real estate 
transactions that involved another level of government, such as 
the State of California, which has made significant 
acquisitions in the Delta.
    Second, the Corps is not very sophisticated in its 
understanding of the value of water rights. During our recent 
discussions with the Corps, representatives of the agency 
acknowledged that the Corps had not assigned any value 
whatsoever to the appropriative water rights associated with 
Little Holland Tract. It is a transferable water right. It is a 
senior water right. I have requested and been granted the right 
to move the point of diversion for that water right twice since 
my brother and I repossessed the property. Yet, the Corps 
assigned no value to the appropriative water right tied to the 
property.
    Senior appropriative water rights similar to those 
associated with Little Holland Tract have sold recently for 
$1,500 per acre foot. That would place the value of the water 
rights alone at $2,200,000. But the Corps, until just recently, 
has refused to investigate the value of the water rights or 
whether the Corps or any other federal agency would have any 
use for them. During a meeting two weeks ago, my attorney asked 
a representative of the Corps' real estate division if anyone 
from the Corps had bothered to talk to the Bureau of 
Reclamation about the value of the water rights. He also asked 
if the Corps had bothered to determine if the Bureau or any 
other agency within the Department of the Interior might have 
an interest in the acquisition of the water rights from Little 
Holland Tract. The answer he received from the Corps was, 
``No.''
    Third, the Corps' real estate division seems to operate in 
somewhat of a policy vacuum. For example, and, again, this 
focuses on the water rights issue, the Corps real estate 
division has maintained that the Corps does not want the water 
rights from the property, even if they have some value. We 
recently asked the Corps' representatives to the CALFED process 
if, from their perspective, the Corps would have an interest in 
acquiring the water rights from Little Holland. The answer was 
an unqualified, ``yes,'' but the real estate division of the 
same agency had never solicited the views of their colleagues, 
who reside just a few floors away in the same building.
    Finally, the Corps tends to be very cautious in the values 
it assigns to wetlands and the environmental resource benefits 
of the property. The environmental benefits of maintaining and 
enhancing wetlands at Little Holland Tract are well documented. 
The Corps has done an entire reconnaissance study on the value 
of the wetlands and wildlife habitat at Little Holland. 
According to the U.S. Fish and Wildlife Service, ``The property 
is clearly valuable wetland habitat.'' This is the same tidal 
marshland that has been nearly wiped out in the delta and that 
CALFED is trying to restore. Little Holland Tract supports 
migrant and resident waterfowl as well as shorebirds. In a 
flooded state, the island provides valuable habitat for the 
listed Delta smelt and winter-run chinook salmon. And, the 
island also provides habitat for the listed giant garter snake. 
Despite these high wetland and wildlife values, the appraisers 
that I have consulted suggest that the Corps has significantly 
underpriced the value of this habitat and has not adequately 
distinguished between wetland habitat of varying quality. 
Instead, the Corps appears to value all inundated land equally 
regardless of the quality of the habitat.
    As you can imagine this has been a very frustrating 
experience. Here we have a prime piece of property from a 
wetlands and wildlife perspective, the Congress has instructed 
the Corps to acquire the property, including the water rights, 
and the funds have been appropriated. Yet, fifteen months after 
the Corps confirmed that the acquisition was in the federal 
interest and directed that the property be acquired, the sale 
has still not closed.
    Land acquisitions, like Little Holland Tract, don't occur 
in a vacuum in the Valley. The landowners in the region know 
the tough time that we have had dealing with the Corps of 
Engineers. The fact that I am dealing with the Corps of 
Engineers and that land acquisitions under CALFED will probably 
occur through the Bureau of Reclamation or USFWS, is often lost 
on my neighbors. All they know is that the federal government 
has acted with a heavy hand in dealing with the acquisition of 
Little Holland Tract. They see delays and low appraisals. And, 
that is not the kind of environment that encourages the kind of 
willing buyer-willing seller market that will be needed for the 
CALFED land acquisition to be successful.
    Again, my situation may be unique. Part of the solution to 
my specific situation may be to work more closely with the 
Department of the Interior. We have had informal discussions 
with the Bureau of Reclamation's Mid-Pacific Region about 
working with the Corps of Engineers to facilitate the 
acquisition of Little Holland Tract. One proposal calls for the 
property to be deeded to the Department of the Interior. The 
Bureau of Reclamation would assume responsibility for the water 
right under California water law. It could dedicate the water 
to instream flows or some other need of the agency. The U.S. 
Fish and Wildlife Service, for its part, would take 
responsibility for managing the island as part of one of the 
wildlife refuges in the area. We are pursuing this option.
    To summarize, there are four key lessons out of the Little 
Holland Tract experience that may be relevant to the Committee:
    (1) First and foremost, it is important which agencies are 
given responsibility for carrying out the land acquisition 
program. Certainly, the Corps of Engineers should not have a 
role in this part of the CALFED program. They lack the 
expertise, and, in particular, they lack any knowledge of water 
rights, which is going to be a key component of the fair market 
value of any property acquired as part of the CALFED land 
acquisition program. In my view, the Bureau of Reclamation 
should have the lead in this process. They have a better 
understanding of the value of water rights and landowners are 
used to dealing with them.
    (2) There must be clear lines of communication between the 
real estate divisions of the various agencies that operate in 
the Valley and the Delta and the federal officials involved in 
the CALFED process. While it is clear that the CALFED process 
is still in its infancy, it should be clear by now to all 
federal officials involved in land acquisitions in the region 
that CALFED has set a high priority on acquiring prime wetlands 
and wildlife habitat and water rights for environmental 
purposes. It should not be the responsibility of the landowner 
to build these lines of communication or educate these federal 
officials.
    (3) A concerted effort must be made to ensure that the 
federal government is able to quickly and efficiently determine 
the fair market value of property, particularly those 
properties that have prime wetlands and wildlife values, and 
then complete the transaction in a timely manner. The capacity 
to act quickly will vastly improve the willing seller 
opportunities in CALFED's habitat acquisition program. Most 
landowners do not have the perseverance that I do to stay with 
a process like this. Most would never step forward to 
participate in a program of land acquisition unless they were 
convinced that they would be treated fairly. The near-term 
success of the CALFED land acquisition program hinges on 
shortening the learning curve and having some early, painless 
land acquisition successes.
    (4) Federal appraisal standards should be modified to allow 
the use of sales involving non-profit organizations and 
governmental agencies. The Delta and the islands within the 
Delta are very unique and the primary sales of late involve 
either non-profit organizations or governmental agencies. 
Automatic exclusion of these recent sales results in appraisals 
that do not reflect the current value of the land and water 
rights.
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