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

    OVERSIGHT HEARING ON THE FUTURE WATER NEEDS OF CALIFORNIA UNDER CALFED,
     CALFED FINANCING, THE MONITORING AND PERFORMANCE STANDARDS OF CALFED,
                        AND CALFED PUBLIC PARTICIPATION

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

                               OVERSIGHT HEARING

                                   before the

                        SUBCOMMITTEE ON WATER AND POWER

                                     of the

                             COMMITTEE ON RESOURCES
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED FIFTH CONGRESS

                                 SECOND SESSION

                                   __________

                          MAY 12, 1998, WASHINGTON, DC

                                   __________

                               Serial No. 105-83

                                   __________

               Printed for the use of the Committee on Resources

                                   -----------

                        U.S. GOVERNMENT PRINTING OFFICE
    48-751 cc                   WASHINGTON : 1998

                             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
                       Joshua Johnson, Professional Staff
                          Steve Lanich, Minority Staff

                                C O N T E N T S

                                  ----------
                                                                       Page

    Hearing held May 12, 1998........................................     1

    Statement of Members:
        Doolittle, Hon. John T., a Representative in Congress from
          the State of California....................................     1
        Herger, Hon. Wally, a Representative in Congress from the
          State of California, prepared statement of.................     4
        Miller, Hon. George, a Representative in Congress from the
          State of California........................................     3
        Radanovich, Hon. George P., a Representative in Congress from
          the State of California, prepared statement of.............     5

    Statement of Witnesses:
        Berliner, Tom, City Attorney Office, San Francisco,
          California.................................................     7
            Prepared statement of....................................    83
        Bobker, Gary, The Bay Institute..............................    59
            Prepared statement of....................................   119
            Letter to Lester Snow....................................   139
        Davis, Martha, Board Member, Mono Lake Committee Sierra
          Nevada Alliance............................................    10
            Prepared statement of....................................    84
        Dickerson, Dick, President, Regional Council of Rural
          Counties, Redding, California..............................    63
            Prepared statement of....................................    96
        Gaines, Bill, California Waterfowl Association...............    65
            Prepared statement of....................................    98
        Golb, Richard, Northern California Water Association.........    57
            Prepared statement of....................................    93
        Hall, Stephen, Association of California Water Agencies,
          Sacramento, California.....................................    12
            Prepared statement of....................................    87
        Moghissi, A. Alan, President, Institute for Regulatory
          Science, Columbia, Maryland................................    61
            Prepared statement of....................................   129
        Pauli, Bill, California Farm Bureau Federation, Sacramento,
          California.................................................     9
            Prepared statement of....................................    83
        Potter, Robert, Chief Deputy Director, Department of Water
          Resources, State of California.............................    39
            Prepared statement of....................................    89
        Quinn, Timothy, Deputy General Manager, Metropolitan Water
          District of Southern California............................    42
            Prepared statement of....................................    91
        Snow, Lester, Executive Director, CALFED Bay-Delta Program...    55
            Prepared statement of....................................   112
        Yardas, David, Senior Analyst, Environmental Defense Fund,
          California.................................................    40
            Prepared statement of....................................   102

    Additional material supplied:
        CALFED Bay-Delta Program, Briefing Packet, May 1998..........   144

    Communications submitted:
        Wilson, Pete, Governor, California, letter from..............    90

    OVERSIGHT HEARING ON THE FUTURE WATER NEEDS OF CALIFORNIA UNDER CALFED,
     CALFED FINANCING, THE MONITORING AND PERFORMANCE STANDARDS OF CALFED,
                        AND CALFED PUBLIC PARTICIPATION

                                  ----------

                             TUESDAY, MAY 12, 1998

            House of Representatives, Subcommittee on Water and
                Power Resources, Committee on Resources,
                Washington, DC.
        The Subcommittee met, pursuant to notice, at 2:30 p.m., in
    room 1334, Longworth House Office Building, Hon. John T.
    Doolittle (chairman of the Subcommittee) presiding.

       STATEMENT OF HON. JOHN T. DOOLITTLE, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Doolittle. The Subcommittee on Water and Power will
    come to order.
        The Subcommittee is meeting today to hear testimony on
    future water needs of California, CALFED Financing, CALFED
    public participation, and the monitoring and performance
    standards of CALFED.
        We are gathered here today to have further oversight over
    the CALFED Program. Last year, we held an oversight hearing
    concerning this program with emphasis on the fiscal year 1998
    Federal Funding Request. Since that hearing, the Subcommittee
    has been monitoring the program and seeking answers to
    questions raised at last year's hearing. Even though we are
    into yet another year of budget requests, the information we
    have requested has been slowly materializing. We hope this
    hearing will accelerate the receiving of those answers.
        Our questions are focused, today, on four central concepts
    associated with the CALFED Program: water supply, financing,
    evaluation of progress, and public participation. Witnesses at
    the hearing are expected to provide current information
    regarding these areas. To develop the issues more clearly,
    witnesses have been selected for our floor panels to address
    the following basic questions: one, has CALFED expanded or
    reduced the options available to meet future California water
    needs? Specifically, how are going to use the CALFED process to
    meet the future California urban, rural, agricultural, and
    environmental water needs? Has the CALFED prejudged or
    eliminated some water planning options? For example, on-stream
    storage, water reuse, water transfer, et cetera.
        These issues must be addressed, immediately, for two
    reasons, First, the demand for water in California already
    exceeds water supply during drought years, and second,
    according to CALFED own documents and the California Department
    of Water Resources, by the year 2020, California will have a 3-
    million up to a 7-million-acre-foot-per-year shortage. If the
    CALFED Program does not immediately begin to address these
    needs through quantifiable means including on-stream storage,
    we will lose the valuable time necessary to prepare for this
    need. I'm interested in each of the members first panel
    providing the Subcommittee with their level of commitment
    regarding expanded water supplies.
        Two, how does CALFED propose to pay for California's
    expanding water needs. Interim fundings for the common elements
    in the CALFED Program is being provided by Federal
    appropriations and California water bonds. Are the long-term
    solutions going to be funded by public interest groups,
    beneficiaries, or government financing? Also, are CALFED costs
    going to be borne by local communities through unintended
    program consequences?
        In addressing these questions, I would like the second
    panel to provide its opinion regarding benefit-based financing.
    Which benefits should be paid for by public money versus user
    money? Should some groups' contributions be reduced based on
    their members limited ability to pay? And should contributing
    stakeholders group be credited for payments they have already
    made to CALFED or to other ecosystem restoration programs
    operating within the region.
        Three, after spending hundreds of millions of dollars how
    does CALFED propose to determine if we are any closer to the
    environmental restoration which it asserts is the reason for
    asking for the initial funding? How do we evaluate the
    effectiveness of the funding we are providing? What clear and
    unambiguous performance standards are being adopted to
    determine if we are closed to success or have achieved success?
    Are we going to postpone any major program decision or
    alternative until we have the results of the early phases or
    are we going to agree on a basic blueprint and simply adjust it
    through adaptive management as we move along?
        A related issue, the definition of our starting point. It's
    my understanding that the Early Restoration Program has not
    defined the baseline for determining the goals and targets for
    restoration activities. While there maybe a wide spectrum of
    views on how to create baselines, we nevertheless, must develop
    both an operating baseline as well as a financial baseline if
    we are ever to determine if we are making progress for the,
    literally, billions of dollars we are being asked to spend.
        And four, are the affected parties of the public being
    given an ample opportunity to participate in the process? Have
    we institutionalized the process to assure that local
    landowners are fully appraised of potential program impacts?
    Have we institutionalized a process to assure that local
    landowners are protected from government manipulation of
    property values as part of a Habitat Rehabilitation Program.
        I do not believe that these concerns that present
    insurmountable obstacles of the CALFED Program rather they
    represent reasonable attainable goals which should reflect the
    way government conducts its business. As mentioned last year,
    the Federal California Bay-Delta Environmental Enhancement Act
    coupled with California Proposition 204 advanced a partnership
    with potential funds of nearly $1.5 billion. It has the
    potential to be used to expand the water quality, enhance water
    quality, and restore environmental resources in the Bay-Delta.
    Yet, how it is administered will be a test of government's
    stability to transition to a smarter, more efficient, less
    coercive mode of operation.
        I understand that the Governor and the Secretary of the
    Interior met yesterday and released a statement and will extend
    a comment period for a month while emphasizing the importance
    of selecting a preferred alternative. I understand it will,
    actually, be only a draft preferred alternative which means
    that it will spillover into next year, into the lapse of the
    new State administration. And I presume that means that it will
    drag on for much, if not most, of next year.
        I look forward to hearing from the witnesses and will
    recognize at this time the gentleman from California, Mr.
    Miller, for his statement.

     STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS
                      FROM THE STATE OF CALIFORNIA

        Mr. Miller. Thank you, Mr. Chairman, and thank you for
    convening this hearing. And I appreciate an opportunity to
    speak today and I welcome the witnesses and others involved in
    the CALFED process to the hearing. And certainly, in advance of
    their testimony and others who will not testify, I want to
    thank all of them for the monumental effort they have put into
    this effort.
        Obviously, this is a critical issue for every Californian.
    The most important resource to the future of our State is
    water, and the recommendations, and policies enunciated by
    CALFED will likely frame how we think about and how we use
    water in California for a generation or more. For all too long,
    California and the west, in general, has asked only whether a
    water development project could be built. Little regard was
    given to the financing of the project which, generally, was
    paid through enormous public subsidies. Even less concern was
    paid to the environmental consequences of the water diversion,
    massive development, and widespread irrigation that flowed from
    the water-policy decisions.
        Over the pass 15 years, Congress has enacted important
    reforms to water policy affecting California including the
    Reclamation Reform Act, the Coordinated Operating Agreements
    Act, and in 1992, the Central Valley Project Improvement Act.
    These laws directly address issues that are the official
    priorities of the CALFED process, environmental restoration,
    promoting voluntary transfers, reduction of subsidies and other
    incentives to an efficient use, and promoting the integration
    of project operations to serve mutual goals.
        Implementation of many of these components of laws has been
    obstructed for years by those who oppose water management,
    contracting flexibility, and subsidy reduction. There is,
    however, a growing and justified concern in California that
    CALFED is perilously close to repeating many of the mistakes of
    the past. Particularly, the top-heavy reliance and costly and
    controversial water project construction. CALFED's common
    program elements do not receive adequate consideration in the
    EIS and her proposed alternatives to maximize the market-
    oriented approaches to promote the most efficient use of water.
    Transfer conservation, waste water reuse, progressive pricing
    and groundwater management must be more aggressively
    implemented. With CVPIA and other statutes, we have learned
    that the implementing reforms on a timely basis is far more
    complicated than pouring concrete.
        CALFED must maximize water conservation, improve
    management, voluntary transfers to the maximum extent possible,
    and if costly new construction projects are necessary, then let
    us be assured that this time those who desire the projects are
    also the ones bearing the costs of paying for them. Let us
    remember that a good part of the goal of CALFED is to save the
    Bay-Delta Ecosystem which is in the state of collapse because
    of the decades of massive pumping and withdrawals by State and
    Federal projects.
        A CALFED plan that is, primarily, designed to provide even
    greater withdrawals to fuel the tremendous population growth in
    other arid regions of the State strikes me, and I have no
    doubt, most residents of Northern California is simply being
    unacceptable. More of the responsibility for managing and
    conserving water and the naturally arid portions of the State
    will have to come from residents in those areas rather than
    making more and more costly demands on taxpayers and residents
    in the northern areas of Oregon, which in themselves are
    growing and in need of secure water resources. The CALFED
    process is historic and all of California should be grateful to
    the extensive and difficult work already completed by the
    participants.
        I am confident that public comments and the draft DEIS will
    help the CALFED participants to develop a new set of
    alternatives that address the full range of efficient water
    management resources. Let's make sure that before anyone
    obligates Californians to decade of debt, we have implemented,
    and not just promised, the operational managerial efficiencies
    that we know are possible with modern-water policy.
        Thank you, Mr. Chairman.
        Mr. Doolittle. Thank you.
        The opening statements of other members will be included in
    the hearing record, without objection, and I do have,
    specifically, one from Mr. Herger, who is not a member of this
    Committee, but who has an opening statement, and that will be
    included in the record as well unless there be objection.
    Hearing none, that's so ordered.
        [The prepared statement of Mr. Herger follows:]

     Statement of Hon. Wally Herger, a Representative in Congress from the
                              State of California

        Mr. Chairman, members of the Subcommittee, I appreciate the
    opportunity to testify about CALFED and its impact on water
    within the state of California.
        According to projections by the Department of Water
    Resources, California can expect a population increase by the
    year 2020 equal to the populations of Arizona, Nevada, Oregon,
    Idaho, Wyoming, Colorado and Utah. As a result, California
    could experience a water deficit of at least 1.6 million acre
    feet during average water years, with the water shortfall
    possibly mushrooming to 7 million acre feet during drought
    years. To put this in perspective, Shasta Lake, one of the
    biggest reservoirs in northern California, holds only 4.6
    million acre feet.
        The CALFED Bay-Delta Program was created to addresss
    conflicts over water useage in California's Bay-Delta region.
    There is no question that this goal is essential and necessary
    to the future of California. However, a CALFED spokesman
    recently stated that CALFED was, quote, ``Tasked to fix the
    bottleneck in the Delta, not solve California's water
    deficit.'' end quote. While this may be technically true, such
    a narrow view is dangerously self-defeating. In reality, the
    problem is that the Delta does not have enough water. You
    cannot fix the Delta or preserve its unique environment without
    more water.
        Currently, California is home to approximately 33 million
    people and sustains the world's richest and most diverse
    agricultural industry. The state is also home to diverse
    populations of wildlife and native plants. None of this would
    be possible, however, if it were not for our ability to store
    water for use in the arid summer months. Of the past twelve
    years, seven have been droughts and the state suffered serious
    water shortages.
        California does not have unlimited options for producing
    new water resources. CALFED, however, focuses on proposals by
    extremists within the environmental community who suggest we
    take water away from existing uses through additional water
    conservation efforts. Again, water experts at the California
    Department of Water Resources have noted we are quickly
    reaching the limits of water conservation strategies and that
    we will soon be hard pressed to satisfy the needs of the
    state's growing population. Another proposal to increase the
    water supply is to sink deep wells and increase the water drawn
    from the underground aquifer. As a third generation rancher who
    grew up in northern California, I can say this is one of the
    most extreme and impractical proposals I have ever heard. There
    was a time when we relied principally on groundwater to meet
    our water needs, but when the aquifer began to dry up and we
    sank our wells deeper and deeper, we were forced to install
    above-ground reservoirs to ensure we had enough water for
    summer use. We still rely on groundwater, but can only do so by
    supplementing with additional surface water. It would be
    fruital to return to past practices and further deplete our
    limited aquifer.
        Clearly, the best solution for the Delta, and for
    California, is to place greater emphasis on upper watershed
    maintenance, and on off-stream water storage. In the past month
    CALFED has increased its commitment to improving the health of
    the upper watershed, and I commend CALFED for this action,
    however, none of the three potential alternatives included in
    CALFED's massive, 3,500 page draft environmental impact
    statement explicitly plans more water storage. Water storage is
    talked about in general terms, but you will look in vain for a
    map that points out where new dams and reservoirs will be
    built. What you will find, however, is a map that shows a
    peripheral canal. Not a structure to hold more water for usage,
    but an isolated channel designed to move northern California
    water south. Something is terribly wrong with this picture.
    This situation must be corrected and water storage, not the
    peripheral canal, should take precedence as the key element to
    fixing the Bay Delta.
        In closing Mr. Chairman, until CALFED gives increased water
    supply the serious attention it deserves, I fear that any of
    the three current alternatives is destined to fail.

        [The prepared statement of Mr. Radanovich follows:]

     Statement of Hon. George P. Radanovich, a Representative in Congress
                          from the State of California

        Thank you, Mr. Chairman, for the opportunity to convey my
    comments on CALFED today. The CALFED agreement, which comprises
    a unique multi-agency partnership that addresses ecological and
    water supply problems simultaneously, is of significant value
    to the state of California.
        I, along with many members of the California congressional
    delegation, have worked diligently to secure Federal funding
    for this project. Bay-Delta was funded at $85 million in fiscal
    year 1998, and I fully support the fiscal year 1999 budget
    request of $143 million.
        As a farmer in the Central Valley, and a representative of
    the two largest agricultural producing counties in the nation,
    I am extremely concerned with any action that CALFED takes with
    respect to the agriculture community. It is essential for our
    state to implement a CALFED package that includes a balanced
    approach, which meets water supply needs, water quality
    objectives, and ecosystem restoration in the Delta. As it has
    always been intended, CALFED must address the importance of a
    reliable water supply to sustain the agricultural economy in
    our region. Water-use efficiencies must be applied to all
    stockholders--agricultural, environmental and urban. Additional
    conveyance and storage facilities are key elements to the
    program and must be included in any final package.
        As alternatives are discussed, the protection of private
    property is also a high priority of mine. Private property
    rights must be secured throughout the process. Furthermore,
    CALFED representatives or other Federal and state bureaucrats
    must obtain written permission from landowners when conducting
    surveys or other biological work on private property. Any
    actions that violate landowners' rights are unacceptable.
        Consideration of the socioeconomic impacts of each of the
    alternatives is also necessary during this process. Taking
    agricultural land out of production will not solve California's
    water problems. Agriculture is a nearly $25 billion industry in
    California. The livelihoods of farmers and others in local
    communities who are dependent upon the production of farmland
    would be devastated in exchange for the minimal gains in
    environmental protection that this unwise course of action
    would accomplish.
        While I am still evaluating my position on the various
    alternatives presented in the CALFED Bay-Delta Programmatic
    EIS/EIR, any final solution that is adopted must be equipped to
    handle the necessary improvements in the operation of the CVP
    and the State Water Project for the long-term environmental,
    water quality, water-use efficiency and flood protection needs
    for the future of the State of California.
        Furthermore any final solution should include the
    utilization of an open-channel isolated facility. Such a
    facility would provide the greatest flexibility in terms of
    future Delta operations, without abandoning the ``common pool''
    concept of providing benefits to municipal and industrial and
    agricultural users alike.
        Also, CALFED decisions must be implemented in a timely
    manner. Certainly, concerns must be addressed, however, this is
    not an excuse for delays. I urge all stakeholders and
    government officials involved to forge ahead this year to
    accomplish the essential tasks necessary to complete the CALFED
    process.
        California's water needs are best met by maximizing an
    ``adaptive management'' strategy for ecosystem restoration and
    water quality and efficiency improvements. Adaptive management
    means having the ability to quickly and easily take water to
    and from different places in the Delta, at different times,
    using various amounts. The final solution must allow for this
    type of ``need based'' management of the resource, improve
    conveyance capabilities, and provide for the most effective
    water storage opportunities.
        In summary, the solution to California's water needs must
    include providing a reliable water supply and a healthy
    environment at the same time. Some in the environmental
    community think that CALFED is only about improving the
    environmental condition of the Delta and not addressing the
    issue of supply. That is simply not true. One cannot--and must
    not--be achieved without the other.
        I appreciate your time Mr. Chairman, and I look forward to
    continuing the work of providing long-term solutions to
    California's water needs, through the CALFED process.

        Mr. Doolittle. Today's hearing has a different format,
    somewhat, from the other hearings that we've conducted. We did
    this trying to look for, perhaps, a more useful format and one
    that would lend itself, particularly, to the nature of this
    hearing. The hearing today is organized into four panels with
    each panel addressing one program component of CALFED. Each
    panelist prior to the hearing was asked to address a specific
    question regarding CALFED, and we will ask the entire panel to
    give their statements, as we normally do, and then members will
    alternate questioning these witnesses. I'd like to ask the
    first panel of witnesses, if you'd pleased come forward and
    remain standing. Take the oath, and then we'll begin.
        Mr. Berlin, you are just going to remain where you are,
    but----
        [Witnesses sworn.]
        Mr. Doolittle. Thank you. Let the record reflect each
    answered in the affirmative. We are very happy to have you hear
    today.
        The first panel will address the following question: how
    are we going to use the CALFED process to meet the future
    California urban, rural, agriculture, and environmental water
    needs, and has the CALFED process prejudged or eliminated some
    water planning options, such as on-stream storage, water reuse,
    water transfers, et cetera?
        I think you're all familiar with those three lights there,
    but, basically, we urge you to try and keep within the 5
    minutes. At the beginning of the fifth minute, the yellow light
    will go on, and you don't have to stop in mid-sentence, but
    it's a guide when the red light comes.
        Our first witness today will be Mr. Tom Berliner from the
    City's Attorney's Office, city of San Francisco. Mr. Berliner
    you are recognized for your testimony.

    STATEMENT OF TOM BERLINER, CITY ATTORNEY OFFICE, SAN FRANCISCO,
                               CALIFORNIA

        Mr. Berliner. Good afternoon, Mr. Chairman and members of
    the Subcommittee. My name is Thomas M. Berliner. I'm general
    counsel for the San Francisco Public Utilities Commission.
    Thank you for providing me with the opportunity to appear
    before you to submit this statement concerning the water
    supplies benefits which are expected from the CALFED Bay-Delta
    Program.
        The San Francisco Public Utilities Commission is a retail
    and wholesale water supplier. We provide water to approximately
    2.4 million residents of the Bay Area in a service area which
    extends from San Francisco through the South Bay and Silicon
    Valley and up the eastern side of San Francisco Bay to the city
    of Hayward. Service areas which abut ours include the East Bay
    Municipal Utility District and the Santa Clara Valley Water
    District, with whom we share various customers in the Silicon
    Valley.
        I'm here today representing the Bay-Delta Urban Coalition,
    which is an unincorporated association of major urban
    California water agencies. The Coalition has been extremely
    active in the CALFED process, and San Francisco has been an
    active member of that effort as well.
        The Urban Coalition has put a great deal into the success
    of the CALFED process. Individually and collectively, we have
    been working for many years to achieve a long-term solution to
    the Bay-Delta problems. In our view, CALFED provides the best
    opportunity we have seen to achieve this long sought after
    success. Furthermore, the failure of CALFED leads us to an
    unacceptable return to the insecurity of years past.
        I would now like to respond to the questions you posed to
    this panel. As to how we are going to use the CALFED process to
    meet the future water needs of urban, rural, agricultural, and
    environmental California, four basic elements drive the CALFED
    process: water supply, water quality, ecosystem restoration;
    and system integrity. The latter focused mainly on levee
    stability.
        From the Urban Coalition's perspective, improved
    reliability of water supply is essential to the maintenance of
    our economy. This reliability will be achieved by improving
    water quality and quantity, as well as restoring the ecosystem
    so as to reduce the conflicts between supply and environmental
    needs. As to water supply, CALFED will provide us with the
    greatest assistance in terms of improving water quality.
        Urban water purveyors have made a strong commitment toward
    meeting their demands through a variety of sources. We are in
    the era of integrated resource planning efforts. Every major
    urban water supplier has invested substantial resources in
    these integrated resources plans. Components of this plan
    include improvements to water quality, conservation,
    reclamation, better use of local storage, including conjunctive
    use, and water transfers. Improved water quality is necessary
    if we are to achieve the potential of increased use of
    reclaimed water. Further, better quality water from the Delta
    will better enable water supply agencies to fully utilize lower
    quality water from the Colorado River or local sources.
        Finally, improvement of the water transfer market is a
    major component of the CALFED Program. By improving Delta water
    quality, and access to transfers, urban supplies can be made
    substantially more reliable.
        As to coordination with other California water planning
    activities, the urban water suppliers have been planning for
    their future for several years. As I stated previously, through
    integrated resource plans, urban agencies are seeking to
    balance their sources of supply. CALFED provides us with, yet,
    another opportunity to further augment these supplies. In
    addition to improving supply by virtue of improved water
    quality and increased yield, CALFED will also promote improved
    water management for the environment. For example, we are
    actively engaged in the effort to develop a sound Ecosystem
    Restoration Program Plan. An important component of the ERPP is
    adaptive management of fishery requirements. By improving the
    efficiency of water management for the environment, it will,
    hopefully, be less necessary to use water that otherwise could
    be used to meet consumptive needs.
        Water agencies will continue with their own local planning
    efforts, and not rely exclusively on the CALFED process to meet
    their long-term needs. CALFED was not designed to meet
    everybody's needs, and it should not be regarded as the answer
    to all water-supply problems.
        By coordinating local water supply efforts with the
    improvements expected to result from the CALFED process, we can
    decrease the tension between consumptive and in-stream storage
    uses of water. By reducing this tension, each sector will be
    freer to pursue those activities which are essential to its
    long-term security. The Urban Coalition is firmly committed to
    working with all interests to insure long-term supply
    reliability.
        As to whether CALFED has prejudged or eliminated some water
    planning options, in our view, the CALFED process has been a
    remarkably inclusive. CALFED has been open to suggestions of
    alternatives for meeting water supply, environmental and
    infrastructure needs. CALFED has reviewed over 100 options and
    narrowed them down to the most preferred elements. It is
    considered the role of the water conservation, water transfers,
    reclamation, and potential infrastructure changes including
    over 40 reservoirs sites and twelve ways to move water around
    the State. Each idea has received a fair share of comment and
    scrutiny. In the end, many ideas had to be eliminated and of
    the three alternatives which remained, ultimately, only one
    will survive. It may be that the one alternative chosen will
    comprise a combination of the others, but in the end, we can
    have only a single vision for the long-term solution to the
    Bay-Delta.
        I conclude my remarks here. Thank you.
        [The prepared statement of Tom Berliner may be found at end
    of hearing.]
        Mr. Doolittle. Thank you.
        Our next witness will be Mr. Bill Pauli, president of the
    California Farm Bureau Federation. Welcome, Mr. Pauli.

      STATEMENT OF BILL PAULI, CALIFORNIA FARM BUREAU FEDERATION,
                         SACRAMENTO, CALIFORNIA

        Mr. Pauli. Thank you, Mr. Chairman, and Members of the
    Committee.
        On behalf of the California Farm Bureau and our 75,000
    members, I'm pleased to have the opportunity to appear before
    you. I'm a farmer over in Mendocino County and grow wine grapes
    and Bartlett pears.
        We are committed to seeking solutions which will insure a
    reliable, affordable water supply for all of California.
    California population is projected to grow by 17 million people
    by the year 2020, and without prudent planning, our current
    water deficiencies will surely grow.
        California farms provide key supplies of food and fiber,
    $25 billion in revenue, $12 billion in exports, and important
    jobs, and coveted, open space throughout our great State. The
    CALFED process provides an unprecedented opportunity to craft a
    plan to meet our State's water needs for the next 30 years. I
    can't stress that enough. It's to look ahead for the future and
    the future growth of our State, and to plan for that.
    Unfortunately, the CALFED plan to date falls short of this
    goal. Current CALFED effort is based on redirecting
    agriculture's two most vital resources, land and water, to
    satisfy other uses rather than developing reliable, and
    affordable water supply.
        Nonetheless, we are optimistic the CALFED process can
    succeed. There's three critical issues for agriculture:
    increasing water storage; minimizing fallowing; and
    strengthening our water rights.
        Current total use of water in California is broken down
    into about 46 percent for the environment, 42 percent for
    agriculture, and 11 percent for urban usage. And additionally,
    millions of acre feet of water flows out to the ocean which is
    available for good uses year in and year out. Instead of
    redirecting water from productive agricultural and urban uses,
    we should concentrate on fully utilizing the water that now
    flows to the ocean. By conserving overflows, we can increase
    flood protection while saving water for dry years. We need to
    increase the capacity of existing reservoirs, such as Lake
    Shasta, Millerton, Los Vaqueros and, potentially, others as
    well so that that water can be used for agriculture, for
    urbanites, for our cities, and yes, for the ecosystem.
        CALFED proposes to fallow 250,000 acres of prime
    agricultural land which holds senior water rights. Overall,
    fallowing could approach 1 million acres. California
    agricultural land has significant, global impact. As a matter
    of good public and social policy, this land should not be
    converted and we strongly oppose such efforts. We recognize new
    conveyance system or reservoirs will require the retirement of
    some acreage, and in those cases the landowners should be
    compensated. And we clearly recognize the same land will be
    removed, but the fallowing of agricultural lands for levee
    setbacks, shallow water habitats and other environmental
    purposes should not be part of the CALFED process. The combined
    total, according to the EIR/EIS, could range from 396,000 acres
    and 914,000 acres removed. Protection of agriculture water
    rights is a key to the ultimate success of CALFED.
        Farmers and ranchers depend on established water rights to
    maintain their livelihood. CALFED must assure surface and
    groundwater rights. Areas of origin must be protected and
    strengthened. Impact in those areas could be monumental. CALFED
    should abandon the notion that groundwater can be used in areas
    feeding the Delta as a future source of water for urban and
    environmental uses under the guise of conjunctive use.
        We cannot support the continued investment of public money
    as long as farmers bear a disproportionate share of the burden
    in reaching the Delta solution. Farm Bureau supported
    Proposition 204 and previous Federal appropriations as a down
    payment to secure major improvements in the Delta water
    management. Unfortunately, both have been used to fallow
    agricultural land and set the stage to redirect agricultural
    water.
        We continue to support the need for a long-term Delta plan,
    but we are losing confidence that the solution will contain
    meaningful steps, primarily, water storage. Fallowing will
    seriously hurt California agriculture and the surrounding
    communities. I cannot stress the amount of impact that it will
    have in those local communities if that land is fallowed. We
    tend to forget about the people in the tire shops, the cafes,
    the newsstands, newspapers. We cannot underestimate the impact
    on those people. Therefore, it is impossible for us to support
    continued Federal funding until we see marked improvement in
    the proposal.
        We are discouraged, but we want to remain optimistic that
    CALFED will turn the corner and work toward meeting the State's
    long-term needs for the next 30 years, and we are confident
    that that can occur. The main concern for us at this point is
    the devil in the details which we do not understand and have
    not been able to get clear through.
        Thank you, Mr. Chairman, and members of the Committee.
        [The prepared statement of Mr. Pauli may be found at end of
    hearing.]
        Mr. Doolittle. Thank you.
        The next witness will be Ms. Martha Davis, Board Member of
    the Mono Lake Committee Sierra Nevada Alliance. Ms. Davis,
    you're recognized.

     STATEMENT OF MARTHA DAVIS, BOARD MEMBER, MONO LAKE COMMITTEE
                         SIERRA NEVADA ALLIANCE

        Ms. Davis. Thank you very much. Good afternoon Chairman
    Doolittle, and Members of the Subcommittee. Thank you for the
    invitation to speak before you today.
        My name is Martha Davis. I am speaking today on behalf of
    the Sierra Nevada Alliance and the Mono Lake Committee. Both of
    these citizen's groups work on water-policy issues in
    California. The primary focus of the Sierra Nevada Alliance in
    on watershed restoration in mountain counties. While the Mono
    Lake Committee works to promote conservation, recycling, and
    why-is-water-use programs in Southern California, I also serve
    as a member of the CALFED Bay-Delta Advisory Council, and on
    the CALFED Ecosystem Restoration Roundtable.
        In summarizing my testimony this afternoon, I want to make
    sure that I address the two questions posed by the
    Subcommittee. The first question is how are going to use the
    CALFED process to meet future-California urban, rural,
    agricultural, and environmental water needs?
        CALFED is addressing the State's future water needs in the
    context of fixing the San Francisco Bay-Delta. While it's not
    CALFED's goal to resolve all water issues in California, the
    water-use policy CALFED, ultimately, proposes to include in the
    final preferred alternative, especially the programs for
    increased conservation and water-recycling, will have a
    profound impact on how much water is available in the future to
    share between urban, rural, agricultural, and environmental
    water needs.
        The recent developments of conservation and water-recycling
    programs in Southern California has already made a tremendous
    contribution to meeting the State's current environmental,
    rural, and agricultural water needs. Let me give you two
    examples, the city of Los Angeles. As a primary result of
    conservation programs implemented since 1990 in Los Angeles,
    the city is currently using the same amount of water as it did
    in the mid-1970's only now we are serving almost 1 million more
    people. The success of these programs have made it possible for
    the city of Los Angeles to protect Mono Lake, a vital resource
    to the rural community of Mono County, without taking water
    away from Northern California or the Colorado River. And that
    is a clear benefit to the rest of the State. Further, the city
    of Los Angeles believes that it can meet all of its future
    water needs even with all the growth projected for the region
    through additional conservation and recycling projects.
        Second success story, the Metropolitan Water District of
    Southern California. At the peak of the drought of the calendar
    year 1990, MWD sold 2.6 million acre feet in imported water
    supplies. Since then, Metropolitan Water District has developed
    its Integrated Resources Plan, refocused its efforts on
    developing a more balanced mixture of local and imported water
    supplies, and helped the region to start to aggressively
    implement conservation, recycling, and groundwater management
    projects. The result, MWD has reduced its imported water sales
    down to about 1.8 million acre feet. Although this year has
    been wet, and I think they may go lower. Possibly as low as 1.6
    million acre feet. This dramatic reduction in MWD imported
    water needs means there's more water available to meet the
    State's other environmental, urban, rural, and agricultural
    needs.
        How much of a difference can future water-conservation and
    recycling make to meeting the State's needs? Let me answer with
    a question. How many in people in 1990 would have predicted the
    overwhelming success of conservation programs in Southern
    California. These programs have fundamentally reshaped our
    water demand, and there is still much more that we can, and
    should, be doing in Southern California. And what's been done
    in Southern California can be done elsewhere.
        The second question posed by the Subcommittee is whether
    the CALFED process has prejudged or eliminated some water-
    planning options from the discussion? The answer is no. I don't
    think so. CALFED is not yet completed its planning process nor
    yet made a decision on the preferred alternative. Addressing
    the Bay-Delta problem is a huge, if not heroic, undertaking and
    the work of CALFED is far from finished. But I do, briefly,
    want to raise concerns I have been hearing about some of the
    information CALFED is relying upon in its evaluation of the
    water-planning options. These are the assumptions used in the
    California Water Plan, known as Bulletin 160. Bluntly, the
    concern is that this document has greatly overstated the future
    urban-demand projections and, substantially, understated the
    potential for conservation and opportunities to recycle water.
    In other words, it's been making the problem with meeting the
    State's future needs a bigger problem than, perhaps, it needs
    to be.
        I reviewed Bulletin 160 with an eye toward Southern
    California, and I agree that the document raises some troubling
    issues. For example, why does Bulletin 160 assert that water
    demand in 1995 for the South Coast Region was in the vicinity
    of 4.3 million acre feet when the actual demand was in the
    vicinity of 3.5 million acre feet? The 800,000 acre-foot
    difference is more than the entire water needs of city of Los
    Angeles.
        Why does Bulletin 160 identify over 1 million acre feet and
    potential conservation and water recycling projects for the
    South Coast Region for 2020 that only count approximately
    300,000 acre feet of this water in the final water projection?
    And how is this information incorporated into the CALFED
    environmental analysis? I mean, perfectly honest, I find it
    troubling when I see charts that show a potential shortage of 6
    million acre feet for the year 1995, which was a year that we
    had ample water supplies. And I understand the need to
    normalize the data, but my question is what is the data that
    those projections have been based upon.
        I don't yet have the answers, but I am confident that we
    will find them in the context of the CALFED process.
        I'll end my testimony there. Thank you.
        [The prepared statement of Martha Davis may be found at end
    of hearing.]
        Mr. Doolittle. Thank you.
        Our next witness is Mr. Stephen Hall with the Association
    of California Water Agencies. Mr. Hall.

      STATEMENT OF STEPHEN HALL, ASSOCIATION OF CALIFORNIA WATER
                    AGENCIES, SACRAMENTO, CALIFORNIA

        Mr. Hall. Thank you, Mr. Chairman, and members. It's a
    pleasure to be here. Thanks for inviting us.
        The Association represents agricultural and urban water
    agencies around this State that collectively deliver somewhere
    between 90 percent and 95 percent of the delivered water in
    this State. We're the folks who, actually, deliver it to the
    users, the homes, farms, and businesses. As you said in your
    opening statement, Mr. Chairman, we're here to discuss the
    State's water needs and what role CALFED will, and should, play
    in meeting those needs, and in our minds, the two are
    inextricably linked.
        We need additional water in a growing State. A State that's
    going to continue to grow by all projections. And CALFED, in
    our view, is the best way to provide for the water for that
    growing State.
        There's a fair amount of debate still going on. You heard
    Martha Davis' testimony just now. There was perspective that
    says the water demands are overstated and the opportunities for
    the so-called ``soft-path methods'' are understated. I think
    that debate will continue, but one thing is clear and that is
    that no single option is going to get us where we need to go
    with respect to water supply for the State. We're not going to
    get it by simply building additional reservoirs, but we're also
    not going to get it through more conservation. I think it's
    going to take a mix, and that's why we're supporting CALFED
    because CALFED provides the sort of mix that we think we're
    going to need.
        At our present rate of growth, the most recent estimate are
    we're going to be somewhere 3 million and 7 million acre-feet
    short in the year 2020. Sounds a long way off. It's the
    planning horizon. By the time you plan it and build it,
    whatever it is, whether it's a new reclamation plant or new
    reservoir, you are going to need the water that you started
    planning now.
        There is some question about the estimates that are being
    proposed by Department of Water Resources Bulletin 160, but
    frankly, there's no more credible study available. And although
    there remains debate about how much can be developed through
    conservation versus additional development, those are all
    within a reasonable range and if you look at any of them, it
    clearly shows that no matter whether you take the low end or
    the high end of the range of estimates, you're still going to
    need that mix.
        Everybody understands in California who studied water that
    in decades past we met our needs through building additional
    reservoirs. In the last three decades, the 1970's, 1980's, and
    1990's we've met our needs through, what the environmental
    community calls, the ``soft path,'' conservation, reclamation,
    land conversion. We've got a remarkable record in that. In the
    urban setting in Southern California alone they've spent over
    $160 million, conserved nearly a million acre feet of water,
    enough to meet the needs of the city of Los Angeles, as Martha
    pointed out. In fact, I was glad she made my point for me.
    We've done quite a bit in the urban setting.
        In the agricultural setting, the record in some ways is
    even more impressive. Water use in the agricultural setting
    through land conversion and conservation has been reduced by 4
    million acre feet since 1980. Production in the meantime is
    increased by 50 percent. Projections are that agricultural-use
    will go down another 2 million acre feet over the next twenty,
    twenty-five years. And agricultural has invested over $2
    billion--$2 billion with a b, in drip systems alone.
        Urban and agricultural-water users have gone a long way in
    conserving. It's something we should have done and we're glad
    we did, but clearly, conservation alone is not the answer. It
    won't fix the system in the Delta which is badly broken. Today,
    we have conflicts between protecting fish and delivery water.
    It cannot be fixed with the existing system. We have drinking
    water quality problems that can't be fix with the existing
    system, and we're badly in need of additional flood control in
    this State. That's why we believe as a part of whatever
    develops, CALFED has to deliver more water for the State. We're
    glad that CALFED now has up to 6 million acre feet of
    additional storage in its plan, and we're going to stay engaged
    and supportive of CALFED and see that as a final plan it
    contains a significant amount of additional storage.
        We will also, though, continue to support the so-called
    ``soft-path methods.'' CALFED has as much as 4 acre feet of
    water through conservation for every 1 acre feet of additional
    yield in its projections. What that agricultural final mix
    looks like in terms of how much conservation and how much water
    supply is what CALFED will sort out over the next several
    months and, I think, everyone of the stakeholders here at this
    table, and in this room will stay engaged to try to help them
    get to that right mix. But the bottom line for all us--the
    thing that I think we all agree on though we disagree on some
    of the facts, is that CALFED is the best opportunity that we've
    had in a generation to solve the problems, reduce the
    conflicts, and meet our present and future water needs in this
    State.
        CALFED must succeed and the Water Community is committed to
    staying engaged to make sure that it does.
        Thank you.
        [The prepared statement of Mr. Hall may be found at end of
    hearing.]
        Mr. Doolittle. Thank you.
        For the benefit of the members, we'll probably will do a
    couple of rounds or so of questions here.
        Mr. Pauli, are your members of the Farm Bureau, actually,
    actively opposing the funding in this year for CALFED?
        Mr. Pauli. No. Our concern is that if we don't make
    progress in terms of the issue related to fallowing and make or
    have assurances related to additional storage, that it simply
    does not make sense to continue to fund the process because the
    process needs to include those two to be viable, and that's
    what we're saying. Not to cut funding, but in order to continue
    funding, it needs to be a well-rounded and complete program or
    we would not favor continuing the funding this next year.
        Mr. Doolittle. Are you expecting some assurances to be
    given at some point before final action is taken this year or
    are you waiting to see what happens next year in order to make
    that conclusion?
        Mr. Pauli. Well, hopefully, as we go forward with the
    discussions during the summer and fall we'll receive some
    adequate assurance and, there again, that part is quantified,
    but adequate assurances that those two issues will be addressed
    in a way in which we can continue to proceed with the process
    because we all recognize how important the overall outcome of
    the process is.
        Mr. Doolittle. It's my understanding we presently have, not
    in this year, but on the average we presently have in an
    average water year a water shortage right now. Is that--anybody
    disagree with that?
        Ms. Davis. I'm sorry. Do we have a shortage this year?
        Mr. Doolittle. Not this year, but that in an average year,
    we have a deficit already at least as I understand the
    California Department of Water Resources analysis of this.
    Apparently, they estimate that there's about a 1.6 million
    acre-foot shortage for an average water year.
        Mr. Hall. I will say that we cannot reliably meet the needs
    of all areas of this State in an average water year today, and
    that there is groundwater overdraft which is, in part,
    indicative of water shortages.
        Mr. Doolittle. OK. I think we're probably get to the
    quantification in one of the other panels, but--I mean, if no
    one--does anyone dispute the assertion that we are short on the
    average right now?
        Ms. Davis. I don't know how to answer the question because
    when I read Bulletin 160 and I try to put all the pieces
    together and understand how they put together their numbers, I
    don't know they got to the outcome they got to. I think that
    part of the point of the testimony I wanted to make today was
    the need for a good, quality answer to that question. What are
    the water needs of the State currently? How do we define for
    urban, for agriculture, for the environment the water needs so
    that we track through those numbers and then take a what the
    supplies look, and take a hard look at the match and whether
    there's a mismatch. I do believe there is a perception that
    there is a tremendous mismatch between supply and demand, but I
    don't think we've got the document that gives us the answer to
    the question.
        Mr. Doolittle. Well, we'll ask Mr. Potter when he comes on
    Panel Number 2.
        Mr. Hall. Mr. Chairman, may I just make one additional
    comment on that.
        Mr. Doolittle. Yes.
        Mr. Hall. Regardless of what any report says, when you have
    declining water tables and when you have water users who are
    chronically receiving 50, 60, 70 percent of what they've
    contracted for and are paying for, that to me strongly
    indicates the shortage. And that's in normal and above normal
    years.
        Mr. Doolittle. Well, that would, certainly, be an indicator
    of that to me as well, and I presume, CALFED believes there's a
    shortage or they wouldn't be proposing to fallow these hundreds
    of thousands of acres of prime agricultural land which, I
    think, is a real concern.
        I am interested in seeing our water supplies increase, and
    Ms. Davis testified she didn't think any of the options had
    been foreclosed which I guess means that even on-stream storage
    isn't foreclosed under CALFED. Is that--anybody here disagree?
    Do you believe it has been foreclosed by CALFED?
        OK. No disagreements so far. You all, or some of you
    alluded to it, but I wonder the discussion of the soft-path
    land is to increase conservation, and the conservation of the
    city of L.A. is remarkable. I think it shows what we can do
    with improving technology and understanding of our water
    systems.
        But it seems to me that it might be dangerous to rely upon
    conservation as the main solution to our water problems because
    I look upon that as kind of being the emergency solution, when
    we run out of water or have a crisis facing us. It seems like
    we're giving up our response capacity if we use conservation to
    be the main source for additional water development. I mean,
    obviously, where we can conserve without impacting
    significantly our lifestyles, that's one thing, and that
    apparently has gone on in the city of Los Angeles, and in other
    areas, and that's very encouraging.
        But there's always the option to impact our lifestyles,
    when necessary, in the event of a major drought or something. I
    would like to see our policy increase the amount of water
    available so that we don't have to--so that we no longer have
    the ability to respond in an emergency without experiencing
    grave, negative consequences.
        Did anybody want to comment on that?
        Mr. Pauli. Mr. Chairman, I think we need to focus to the
    future. You know, we've made tremendous strides in agriculture,
    tremendous strides in urban use, in terms of conservation, and
    being much more efficient with the water we have available. And
    yet, as we look forward over the next 20 to 30 years, I think
    Mr. Hall said, as you look forward, what are we going to do
    with the growth with the next 15 or 20 million people?
        We agree already that there is a shortage, the magnitude of
    which maybe we can't quantify, but clearly, a shortage. What
    are we going to do for the next 15, or 20, or 30 million people
    who come to our State? Can we provide water for all of their
    needs, including recreational environmental without additional
    surplus or additional supplies and storage? Can we continue to
    take all of the water that they're going to need from
    conservation? At some point, I think we can only conserve so
    much.
        Mr. Doolittle. Thank you. Mr. Miller is recognized for his
    questions.
        Mr. Miller. Thank you, Mr. Chairman, and thank you to all
    of you for your testimony. This panel alone probably has given
    us a week's worth of questions, but we'll see if we can get it
    done this afternoon.
        Well, let me just go to the point that's been raised here.
    Ms. Davis, in your testimony what you describe as
    discrepancies, or questions raised, I guess would be better, we
    don't know if they're discrepancies or not, but questions
    raised by Bulletin 160 of State Department Water Resources, I
    don't know how exhaustive your list is, at one point, the South
    Coast you refer to a number of times, but they're fairly
    substantial numbers. It looks to me like somewhere between
    conservation and overstatement of use. You're very close to 2
    million-acre feed of water. Is that correct?
        Ms. Davis. The first number that I refer to is for 1995,
    and the second was for the year 2020. So I was trying to cover
    both current and the future situation----
        Mr. Miller. OK, I see. I see.
        Ms. Davis. But, when you start, there are a very large
    number of comments that have been submitted to the State
    Department of Water Resources that raise similar questions, and
    a substantial amount water, both looking at 1995 and 2020.
        Mr. Miller. Well, my concern would be that if the fall to
    160 is as deeply integrated into the CALFED--others can respond
    to this later--as you suggest it is, if there are flaws there
    with respect to assumptions made about usage or about
    conservation or the future of usage and/or conservation, as you
    carry those into the CALFED process, it seems to me, we start a
    multiplier effect here, as we start extrapolating these things
    out to 2020, we hope that CALFED carries us more than a few
    years down the road.
        The impact on water decisions, the impact on taxpayers can
    be fairly dramatic. You can take a small area here and it can
    be rather large out there in the future.
        Ms. Davis. I agree. I think that everything that CALFED
    stands for is trying to get the best quality information pulled
    together so that we can make good decisions about California's
    water future. These questions need to be answered.
        Mr. Miller. You know, my concern is a couple of things. A
    little bit of this is deja vu. I sat in this hearing room for
    25 years, and I probably spent the first ten with people
    sitting at that table telling me that if we didn't build a
    thousand nuclear power plants, if we didn't bring on line X
    number of generations, year-after-year-after-year, this economy
    and this country wouldn't go. Later, we find out, that we
    should be growing economy and decrease your power consumption
    rather dramatically in this country, actually.
        And now, California taxpayers are looking at $28 billion in
    stranded costs, because a lot of decisions were made on bad
    underlying assumptions. It turned out just not to be the case.
    And here, we're looking at whether you generate a million-acre
    feet of water in conservation, non-structural ways are two
    million-acre feet, or whether you generate it behind a large
    structure is a big difference to the taxpayer--very substantial
    difference if you're going to ask for general obligation bonds.
        So, I don't know if you or Mr. Hall is quite correct here,
    about how you attribute this, but it seems to me that the test
    would be if this was the plan to build a motel, and you say, I
    believe my occupancy rate is 90 percent, loan me the money, but
    if the figures show that it's really 30 percent, you made a
    drastic mistake. And so the question is here, if we're going to
    go to the taxpayer at some point, because I think we're in
    agreement with what Mr. Doolittle said, that none of these
    options are off the table, and nobody believes they should be
    taken off at this point.
        But we've got to start in this common-period, and I guess
    in the next common-period that the Governor and the Secretary
    have agree to, we've got to harden this information. Because at
    some point, we're going to go to the market, or we're going to
    go to the taxpayers, at minimum, if we won't go to the market.
    It may not fly in the market, but with unfortunately, the
    taxpayers, it might.
        It's analogous to what goes on around here. We're arguing
    now over cuts, and spending, and tax-cuts. And what they're
    saying is they want to know you've made every effort to cut the
    spending, so they know what they have for tax-cuts, or before
    you raise taxes, you want to know that you've made every effort
    here.
        And so, a good chunk of the questions that the chairman's
    asked you and other panels to respond to, this discrepancy is
    absolutely vital. And we're going to go to the people for a big
    flood control bond. They're either going to double-back on
    water--they ought to know that we've rung every drop of water
    out of this system that we can at the lower cost if that's
    available. Otherwise, we're going to look like the utility
    industry. Well, we are the utility industry. We just haven't
    had our turn in the de-regulated atmosphere. But, we shouldn't
    repeat that history, or be within coming along and asking
    people in 2020 to keep coughing-up money for a bond issue, and
    the benefits have disappeared.
        That's my opening statement, Mr. Chairman.
        [Laughter.]
        Let me just say that I think this is absolutely
    fundamental. No matter how you think the end of this process
    comes out, if we cannot go to the public with hard figures, I
    think we're doing a real disservice to ourselves, in the
    interest of putting some stability into California's water
    system. But we're going to be doing a real disservice to the
    taxpayers who were going to be asked, apparently, under a
    couple of scenarios to foot most of the bill.
        Thank you, Mr. Chairman.
        Mr. Doolittle. Thank you. Mr. Pombo is recognized.
        Mr. Pombo. Thank you, Mr. Chairman.
        Ms. Davis, do you believe that water needs for the future
    of California can be met through conservation?
        Ms. Davis. I think the experience from Los Angeles is
    instructive. In 1990, when we were in the midst of litigation
    with the city over the protection of Mono Lake, the city
    insisted that it could not afford to share a single drop of
    water with Mono Lake. That the city's growth, water needs, and
    concerns about the growth of those water needs were so large,
    so monumental that it was not possible----
        Mr. Pombo. And we--they adopted low-flow toilets, shower
    heads, I mean, they did it--we did it throughout all of
    California. We did water rationing during the drought. We did a
    lot of different things. But the reality is they've done all of
    these things to this point. They've gone after the easy
    conservation, and I think that, that's true with all of
    California; it's true with agriculture. They've done everything
    they could, in terms of what they could realistically do at an
    economically viable place.
        Now, we're talking about adding 17 million--the projection-
    17 million people, additional land, it is going to be
    irrigated, all of these different factors; will conservation
    alone do that?
        Ms. Davis. Well again, going back to the Mono Lake example,
    as a result of the conservation that has been done to-date, the
    city has saved more water than the entire amount of water that
    they divert from the Mono Lake ecosystem. And the way this city
    has been looking at conservation, they've linked it with
    solving every problem that the city is facing.
        We have had problems with sewage. We have had problems with
    antiquated infrastructure in Watts area, South Central Los
    Angeles, and by investing in conservation, we're investing in
    our community. It's a combination of solving problems and
    drought-proofing our economy. So what's happened is, we've
    learned that conservation is not just a short-term emergency
    response to a drought, although there's that component of
    conservation, what we've learned is that if we don't conserve,
    if we're not building in water recycling projects, we're making
    ourselves economically vulnerable during droughts.
        And so, what the city-council has said, their plan is to
    meet future growth through conservation water recycling
    projects.
        Mr. Pombo. So their forays up into the valley to buy
    farmland, and transfer the water from the farmland in the
    valley into southern California is not real? They're not really
    doing that?
        Ms. Davis. I'm not aware of LADWP with proposals to
    transfer water from the Central Valley.
        Mr. Pombo. Well, we'll go on.
        Mr. Hall, do you believe that conservation of our water in
    California will meet the future needs of California over the
    next 20 or 30 years?
        Mr. Hall. No, I don't. As I said in my statement, I think
    conservation of water, and frankly, of other precious resources
    is a strongly indebted ethic in California, and that's a good
    thing, and that we can make additional progress. But, as I said
    in my statement, we have made remarkable progress in the area
    of conservation, and the downside to that is, that it does
    harden demand. The demand that remains is less flexible. And
    when--because it's not if, it's when--we have our next drought
    we will have less capacity to conserve. I think that's a risk
    worth running, but only if we also put together a mix of
    additional water supply options.
        I think, we're at a point in California water, where the
    cost of water, both in dollars, and politically, is such that
    you cannot develop additional supplies, unless they make a lot
    of sense. I think we're at the point now, where we can go
    forward with a mix of additional conservation-reclamation if we
    include additional water supplies, and we can make it work now,
    and in the year 2020.
        Mr. Pombo. Do you believe that any water plan for the
    future of California that does not realistically look at the
    development of new surface water resources is being realistic?
        Mr. Hall. I frankly don't. I think there are other options
    that are easier to do, and perhaps, more affordable,
    conjunctive-ousting--my favorite example. But there are some
    things conjunctive-use can't do; flood control is one of them.
    You don't get much flood control benefit out of conjunctive-use
    as you do out of surface storage, whether it's on-stream or
    off.
        Mr. Pombo. Mr. Pauli, agriculture has done a lot in terms
    of conservation over the past several years. Do you believe
    that there is a huge amount that they could do in the future to
    save water?
        Mr. Pauli. Well, we'll currently continue to try to
    conserve water, and I think we can continue to make progress in
    a number of areas. But, we will reach a point at which we can
    no longer conserve additional water. Where that is, I'm not
    sure because we continue to have technology that does allow us
    to conserve water, but there will be a limit.
        The other thing that's clearly occurring as part of the
    conservation effort, we're converting from one type of cropland
    to another type of cropland as though we've gotten some
    benefits there. But where the limit is, I'm not sure.
        Mr. Pombo. Thank you, Mr. Chairman.
        Mr. Doolittle. Thank you. Mr. Dooley, you're recognized.
        Mr. Dooley. Thank you, Mr. Chairman, and I guess first-off,
    I'd like to express just a little bit of frustration because
    some of the opening statements, and including that of Mr.
    Miller in that, we appear to be finding ourselves lapsing into
    some of the old rhetoric, and some of the old battles that got
    us into a position where we weren't able to find solutions. I
    think I, myself, was looking at this cow-fed-process as a best
    opportunity for us to move forward in a collaborative fashion
    with all the stakeholders at the table, in order to try to find
    some solutions.
        And while I had took some exceptions to Mr. Miller's
    remarks, Mr. Pauli, I would say, as a farm bureau member, I
    also take some exception to the California Farm Bureau
    basically coming out, and saying that they're not going to
    support public funding if these two conditions aren't met.
    Because I think that disrupts the opportunity, or impedes the
    opportunity, I guess it is, for us really to try to move
    forward.
        We're not all going to get everything we want; it's clear.
    And, I hope that there will be a little bit of softening of
    some of the rhetoric here as we move forward. Because I think,
    in some of the testimony, where Mr. Doolittle asked all of you
    to testify on whether or not the CALFED-process was prejudging.
    I mean, we heard in so many opening statements that it appeared
    that we were already making statements, in terms of prejudging,
    in terms, that we are looking at favoring concrete solutions
    over recycling and others, where we are looking over taking
    greater withdrawals out of the Delta over the others, and I
    guess, when I look at the various alternatives that you have
    been offering, that we're still in a process, I have trouble
    seeing how any of us can say that we are now at the point where
    we're prejudging anything, because we haven't determined what
    the drought process is.
        I also express a little frustration over this Bulletin-160.
    I think it's appropriate for us to really ascertain the
    accuracy of this document. And, I think, that's a legitimate
    issue that I would hope that during the remainder, and the
    balance of the CALFED process, that we will continue to look
    at, and make our determinations of what the final draft
    proposals should be. But again, I think that we have to be
    careful that we are going to be trying to justify whatever our
    personal pre-judged position should be based on whether or not
    that is valid or not.
        I guess one of the other issues that I was most concerned
    with, there was a statement made that there wasn't enough
    consideration given to market-oriented approaches, and in that
    reference, I think we were probably referring to transfers. I
    guess, Mr. Berliner, you made some reference to that. Has this
    issue from your perspective, been adequately addressed? Has it
    been taken off the table, or where are we at as we look at
    water transfers?
        Mr. Berliner. I don't think that water transfers have been
    taken off the table at all, in fact, quite the contrary. I
    think water transfers are one of the major issues in the CALFED
    process, and an area that the urban community is looking to,
    very favorably and quite strongly, as being available to meet
    some of our future needs. So, we intend to rely quite heavily
    on water transfers. I had ordered to move water in the areas
    that are water-short.
        I might comment about an earlier conversation that had
    taken place regarding conservation. Certainly, urban areas are
    not going to be able to meet their future needs strictly from
    conservation. Water transfers and additional yield from the
    system are going to be essential.
        We met last week with members of the business community.
    There was a letter signed by 28 chief executive officers,
    urging the President and Governor Wilson to proceed toward a
    preferred alternative by the end of this year, and in their
    view, water transfers was one of the key components of the
    CALFED program, and urged that review of water transfers
    continue. We support that. We believe that we do need to move
    toward preferred alternatives, and that water transfers are a
    very important component. We are glad that the business
    community is becoming engaged in this. After all, the
    California economy, the business community is what that's all
    about, and water is a key, in part, to the survival of our
    economy.
        So, water transfers are hugely important, but I would add a
    caution which is, that water is essential. It is not equivalent
    to buying a car, a totally free market in water is not
    possible. You cannot simply move water toward money. Water has
    to stay, in communities words, essential. And we cannot see
    wholesale transfer water, simply based on money alone. So, an
    entirely free market in water is something we would not
    support.
        Mr. Dooley. Ms. Davis, I understand you're a member of the
    Bedock process advisory group, would your statement in terms of
    questioning the need for water, a need for additional water
    developments--excuse me, and yield, I would point out, through
    means other than just conservation and soft-path approaches,
    then, do you object to, during the CALFED process, the
    consideration as I think, Mr. Berliner identified that they
    were looking at potential infrastructure changes, including
    over 40 reservoir sites, and 12 ways to move water around this
    State, do you think that it is inappropriate for that to be
    considered during the CALFED process?
        Ms. Davis. No, I do not.
        Mr. Dooley. So, then, when we're looking in terms of the
    potential way we can move the process forward, and you're
    certainly not saying that you're not open nor should we be open
    to looking for additional yield that might be actually new
    surface or whatever water infrastructure developments are in
    need to increase yield?
        Ms. Davis. I think the CALFED process has to look at all
    the options.
        Mr. Dooley. All right, thank you.
        Mr. Doolittle. I'm going to reserve my time for now, and
    recognize Mr. Miller for his questions?
        Mr. Miller. Thank you, Mr. Chairman.
        It would be a mistake if people suggested that these line
    of questioning is about whether or not an option will fill the
    needs of California. The whole CALFED process is to determine
    the range of options, and what mix of options make the most
    sense for the future of California. And that continues, I
    think, to be the mission.
        The question we get to now ask, and what I characterize as
    a mid-term review here, and I'm not sure Lester would be happy
    with that because that sounds like he's going to be doing this
    the rest of his life. But, it's at the mid-term review, you've
    got to start asking and narrowing tougher and tougher
    questions. And, I think, some of the questions raised about the
    basis, that Ms. Davis had raised, about the basis for 160, and
    then the use of 160 in this process are very legitimate
    questions because they have huge ramifications for how you
    measure different alternatives, the cost, and the efficacy of
    those alternatives.
        No one here is suggesting that all of our needs are going
    to be met with conservation. I guess maybe that could be a
    conclusion, but there's no evidence that that's the case so
    far. But, when you're picking choices you've got to start at
    some point, match them-up based upon the need. I have people in
    the financial community in the San Francisco Bay Area, from our
    leading banks that tell me if we had a free-market system,
    there would be a surplus of low-cost water available in our
    State; they just believe it. I've sat for hours, went through
    them--they were not exactly ideological travelers with me--and,
    when we got all done discussing this, and all the ramifications
    of the politics of water in California, they said, in a real-
    market system there would be a surplus of water available.
        Now, you made a decision, Mr. Berliner, the people you
    represent, that we have other values in California whether it's
    supply for San Francisco or whether it's the future of
    agriculture, or what-have-you, but those decisions also come at
    a cost. Because if you said you're going to take agricultural
    water and throw it out on the free-market, it be a dramatic
    change in the make-up of our State. I don't know if it would be
    winners or losers. Because I don't know if just trading in a
    row-crop for a three-bedroom-two-bathroom home necessarily
    makes it a better State.
        But, there are those who suggests, like natural gas, people
    like myself who fought those market forces all of those years,
    kept saying, just throw it out in the market, you'll have more
    natural gas than you know what to do with, and you'll have it
    at prices that people can afford. Well, for the last 10 or 12
    years, they've been proven correct. I don't know if that will
    be proved in the long-run or not, but these questions must be
    asked. Because we are now getting into a different process.
        We're getting into the process of selection. And so,
    whether or not there's a million-acre feed in conservation or
    two-million-acre feed, or the market can generate surpluses, or
    transfers can generate additional water, these are crucial
    questions at this stage. And, I just think that it's very
    important that they be asked.
        Let me, on another point, Mr. Pauli, welcome and thank you
    for your testimony. But, let me ask you a question because--and
    I only ask this because I'm not clear of the accuracy of it.
    Somewhere in your statement, on page two, you said that your
    concern was about Proposition 204, and you say, ``that Federal
    appropriations have been used in large part to follow
    agricultural land and set the stage to redirect agricultural
    water to other users.'' Is that accurate?
        Mr. Pauli. Yes, sir, I believe so.
        Mr. Miller. I thought we were using a lot of this for some
    restoration projects, and a lot of fish screens so irrigation
    districts could continue to take water, and some other things.
        Mr. Pauli. We're clearly using it for a wide range of
    products. I mean, there's not one simple answer to one thing
    that we're using it for. It's a wide range of things. Yes.
        Mr. Miller. OK, so, I guess, maybe Lester can clarify that
    or we can get that information for the Committee. The
    chairman's raise, and I think it's an important issue.
        Let me just say, Mr. Dooley referred to breaking down the
    comedy here, the suggestion that somehow, 204 was the
    environmentalist money, and now somebody else is entitled to a
    pot of money to build structures, there's a lot of that
    environmental money that is there, and the reason we're here in
    the CALFED process is to avoid the crash of the system, so that
    people think that they can get, as Mr. Hall pointed out,
    additional yields out of this system if we shore-up the
    environmental structures. So, the benefits flow a number of
    different ways. Just as when people go to build these dams,
    they're going to want to tell us what great environmental
    structure they are, so they won't have to reimburse for the
    cost. These will become the biggest environmental projects in
    the western United States by that time.
        So, I just want to make sure that we don't, ``that was your
    money, now it's my turn.'' Because there's an awful lot of
    money there that is going to benefit a whole lot of different
    purposes. As I understand, some of these projects that are done
    in terms of watershed restoration, the fish screens, and
    others. I don't know that money has actually been spent to
    fallow land.
        Mr. Pauli. Well, we clearly supported 204. Our primary
    concern is the fact that when you start talking about whether
    600,000 or a million acres, we know there's a range there, and
    we don't know the exact number that's going to come out of
    production agriculture. We're concerned.
        Mr. Miller. Yes, but we haven't spent money. I guess what
    I'm trying to clarify, we haven't spent money, to date, to do
    that.
        Mr. Pauli. No, but at some point, you'll get an opportunity
    to spend money for that. I mean, it says voluntary purchases or
    acquisitions, so you will get a chance if the program goes
    forward to spend that money. Somebody's going to have to pay
    for that land.
        Mr. Miller. All right. I'll live with that. Thank you.
        Mr. Doolittle. OK, Mr. Pombo.
        Mr. Pombo. Thank you, Mr. Chairman.
        Mr. Pauli, in terms of land that's going to be fallowed or
    retired from use, you stated that it would be somewhere between
    400,000 and 900,000 maybe as much as one million acres of land
    that could possibly be retired under this plan. We know that
    there is a proposal here to take about 250,000 acres of land,
    and retire that, mostly in my district.
        Just to put that in context. San Joaquin County has 467,000
    acres of irrigated land. If this were to be put into place, the
    250,000, about half of the irrigated land in San Joaquin County
    would be taken out of production. What impact would that have
    on the economy of San Joaquin County?
        Mr. Pauli. It would clearly have a major impact, and not
    just in terms of the land that's removed per production,
    because clearly, those people in theory, are going to be
    compensated for the sale of their land to the restoration
    projects, but the people who are put out of a job, the taxes
    that aren't paid to the school districts or the water districts
    for the other community services districts, the cannery and
    processing facilities are not going to receive that product.
        Now, I don't know what the mix would be of that 250,000
    acres, but probably, a quarter of it would be tomatoes. I mean,
    you're talking about an awful lot of tomatoes, and those are
    going to mean workers who aren't going to be working at those
    processing facilities. There are going to be banks that aren't
    going to be getting paid because of the mortgages on those
    processing facilities. The earthquake effect is going to be
    felt much broader than just those farmers who receive payments
    for their land. It's going to have a big impact on the
    communities across-the-board, in terms of things we haven't
    even contemplated yet.
        Mr. Pombo. Mr. Hall, along the same lines in talking about
    the retirement of land. One of the things that they go by on
    this report, and you mentioned six million acre-feet of water
    in response to a question, one of the basis that this report is
    going off of, is that, by retiring that land that they're going
    to create new water. And that water is going to be transferred
    either to other contractors or to environmental uses. The
    people that I've talked to will argue that letting those
    islands flood, creating the wetlands out of it, is going to use
    as much if not more water than irrigating it. So where is the
    additional water going to come from?
        Mr. Hall. I don't have a ready answer for the last part of
    your question, though it intuitively makes sense. That, if you
    keep the area flooded, and divert water to flood it, you're
    probably not going to save much, if any, water. I will say that
    my membership is not in support of retiring ag-land to
    reallocate the water.
        It is true that if we were to build a system today, we
    would probably set back levies, we would develop more riparian
    habitat in order to protect the fish, that use that system just
    like we do. Because the fact is today there are fish numbers
    declining, and because of that, they're becoming endangered,
    they're listed as endangered, and that, in turn, impacts on
    every diverter and user out of that system. It does seem clear
    that we're going to have to develop additional habitat along
    the Delta corridor, and along the Sacramento/San Joaquin
    corridors. I don't think we need to retire the amount of land
    that you all have used in your estimates, and we would not
    support that.
        Mr. Pombo. Unfortunately, it's not my estimate. I got it
    out of the CALFED. I mean, if it was my estimate it wouldn't be
    anywhere near that high.
        Mr. Hall. I understand. But the numbers that you all have
    discussed today, which come out of CALFED, I'll let Lester now
    talk about that, but we are going to need some land to develop
    habitat, so that, the water supplies for folks in your
    district, and the folks who use the system up-and-down, and as
    exporters, can continue to rely on that supply. Obviously,
    we're not interested in retiring any more land than is
    absolutely necessary. And, we would not support anything other
    than a willing seller sort-of basis.
        Mr. Pombo. But the land has to be identified.
        Mr. Hall. It does have to be identified, and we would, as I
    said before, would like to see the amount of active agriculture
    land that's now in production, see the amount of that
    converted, kept at a minimum.
        Mr. Pombo. Let me ask Mr. Pauli a followup question on
    that. Mr. Pauli, you're a farmer. If you were looking to expand
    your operation, and you looked at a ranch in San Joaquin
    County, and it was slated for possible purchase by the State or
    Federal Government or by someone else to be turned into
    habitat, would that be a parcel that you would continue to look
    at or would you look elsewhere?
        Mr. Pauli. No, I would not look. And the bigger problem
    would be is if you were interested in a piece of ground
    alongside of a farmer. He had two pieces. One, he said, I'm not
    going to commit to the program. I don't want to sell it. I want
    to see it stay in production agriculture. And I said, well, I'm
    interested in buying that. And the next day I learned that the
    2,000-acre piece of ground alongside of it has a willing
    seller, and he's going to convert. I would not then be
    interested in the first piece of ground because of the impact
    that it's going to have on me to farm that piece of ground
    alongside of land that's owned by the state or the Federal
    Government, and the consequences of doing that.
        So, we clearly do value the land, and my ability to sell
    it.
        Mr. Pombo. So, the result would be, even though the Federal
    or State government has purchased the land, not bought an
    easement on it, they've not bought it fee-title, all they've
    done is put it on a map or put it in a book, like this, and
    said, that we want to buy that land. So the end-result is we
    have devalued the property.
        Mr. Pauli. I believe so, yes.
        Mr. Pombo. For agricultural purposes, it has less value
    today than it did before it was put on a map as being possible
    habitat for something.
        Mr. Pauli. I believe it's already impacting land prices in
    that area, because everybody can see what's coming.
        Mr. Pombo. Mr. Chairman, are we going to have the----
        Mr. Miller. I just answered your question. It's absolutely
    a point in for me. How would you go about this process. I mean,
    we know that there's going to be some riparian restoration,
    there's going to be some landowners that have already indicated
    some willingness in some of these areas. How do you go about
    that process? You've got to do some planning. You've got to
    identify it so that it passes must-do. This is an improvement.
        Mr. Pombo. I've been arguing for the past couple years that
    they have to be very careful about the documents that they put
    together, because once you identify the lands that are suitable
    for purchase, you've impacted the value of those lands.
        Mr. Miller. Well, you know, we've had a hearing on that. I
    don't disagree with you that you don't be a landowner living
    under this kind of uncertainty. I just wonder, how do you then
    proceed?
        Mr. Pombo. Well, with their proposal, even if you take the
    lower figure of 250,000-acres, I don't think there's anybody in
    this room who can honestly stand up and say that they're going
    to have enough money to buy 250,000-acres of land, and yet,
    they've clouded the title on that 250,000-acres of land just by
    saying that we are going to go out and purchase it. And there's
    nobody in here, George. And you know as well as I do, that
    they're ever going to have that money.
        Mr. Miller. But you've got to pass environmental must-do,
    you've got to pass a whole series of riff, they can't put in a
    blank. Well, you can't say, well we're going to have blank-
    acres of land. So, at some point, it's what any city or country
    goes through with zoning or whatever. You've got to say, look,
    this is open for consideration, and then the process refines it
    down or something. Maybe it's in these processes that they
    decide that they should be talking about 100,000 or 200,000,
    whatever the figure is. But, I don't know what the option is
    for them. I appreciate your concern. I think it's real. I mean,
    in the real world, that's a problem, but I don't know what the
    better vehicle is.
        Mr. Pombo. Mr. Chairman, are we going to have an
    opportunity to have another round of questions with this panel?
        Mr. Doolittle. Well, I would remind our members, there's
    three more excellent panels to go. I think we ought to try and
    wrap-up. Well, let's just hurry.
        OK, Mr. Dooley. OK, Mr. Dooley is going to pass on his
    questions. I only have one or two myself. There's a lot we
    could talk about here, and I think that's obvious, from the way
    the hearing's been going on.
        We have three other hearings, Mr. Pauli. There are
    conversions going on in agricultural land, but we're moving in
    some areas, more toward permanent crops, and away from the
    annual plantings, and it's been pointed out that in the case of
    going to the permanent crop, you then lose your flexibility.
    You absolutely have to have the water then. You don't have the
    option of not planting that year, or something like that. And,
    of course, the permanent crops use water all year long. Would
    you care to characterize whether this is a trend? Can we
    generalize, and indicate that this is going on pretty much
    throughout the Central Valley, or is it just in isolated areas?
        Mr. Pauli. I think, I think, Mr. Chairman, there's a couple
    of points there. No. 1, generally, we are converting to the
    higher-value crops, permanent crops, and the trend there is
    because that's where there's still viable agriculture. It's
    where you can still make a profit, where some of the other
    crops, we haven't been able to. Certainly, that doesn't include
    some of the other major crops. We tended to move away from some
    of the livestock-type of operations, and more to the tree and
    vine crops. We haven't necessarily moved out of cotton or rice
    or some of those crops. So, we have moved to that.
        No. 2: clearly, as we look ahead, you don't have the same
    flexibility. I mean, you can't shut those trees or vines off
    for a year or for 2 years during the drought. Whereas, if you
    were in some of the other crops, even tomatoes, as an example,
    and there wasn't the water available, and you didn't plant for
    that year, you wouldn't necessarily have the same kind of
    losses that you would in a permanent crop.
        Mr. Doolittle. It's very difficult for farmers to know what
    amount of water you will have, isn't it?
        Mr. Pauli. Well, you know, that's why the question of
    assurances and reliability become so fundamental in this
    process. And, that's why we continue to stress that one of the
    things, I think for all water-users, whether you're an urban
    water district or whether you're a small, rural agricultural
    water district, assurances and reliability so that your
    customers, your members in making their commitments, whether
    it's to a sub-division in homes, or a school, or a hospital, or
    whether it's to a processing facility, or 100-acres of almonds,
    that you're going to have assurance and reliability of that
    water in order to make that investment. So assurance and
    reliability are absolutely fundamental in this whole process so
    that we know where we are, and what kind of commitments we'll
    have for water.
        Mr. Doolittle. Well, do you see CALFED moving in a positive
    direction with reference to assurance and reliability?
        Mr. Pauli. Well, I think that we're all hopeful. And I know
    that Mr. Dooley said that he was concerned about my comments. I
    reiterate the fact, that we have stayed at the table. We've
    continued to participate in the discussions. We're still
    optimistic that something can work out, but at some point the
    rubber meets the road, in terms of assurances and
    reliabilities, and not having the million acres of following.
    And if the plan ultimately comes out to be extensive volume,
    we're clearly going to oppose it.
        We want it to work. We hope it will work. We need
    assurances. We need reliability. We need a plan in California
    that deals not only now, but into the future for all
    Californians, and all water-users, and for the ecosystems for
    the fish, and for everything else. And that's what this process
    is about, a plan that works for everybody, that we all get
    better together with. We simply don't remove a million-acres of
    production from California agriculture as the solution. That,
    we will absolutely oppose.
        Mr. Doolittle. Thank you.
        Thank you to all the members of the panel for appearing for
    your testimony. There are further questions. I know Mr. Pombo
    has some. I'm sure probably all of us have further questions
    that we will submit in writing, and we'd urge you to respond
    expeditiously to those questions.
        With that, we'll excuse the first panel, and ask the second
    panel to come forward.
        Mr. Hall. Mr. Chairman, with your permission, the issue of
    water transfers came up earlier in the discussion, we have
    recently written a rather extensive letter on this subject. I'd
    like to attach it to my testimony for the record.
        Mr. Doolittle. Thank you, without objection, that will be
    entered in the record as well.
        [The information referred to follows:]
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        Mr. Doolittle. If members of our second panel will remain
    standing for the oath, the three members, panel No. 2. OK, if
    you gentlemen will please raise your right hands.
        [Witness sworn.]
        Let the record reflect that each answered in the
    affirmative.
        Thank you. Thank you for coming, and please take a seat.
    Let's see. Let's focus on our questions from earlier. The
    second panel, we've asked to address the following questions:
    one, how are the future needs of California identified through
    the CALFED process going to be financed; two, since interim
    funding for the common elements in the CALFED has been provided
    by Federal authorization, and the California water bonds, are
    the long-term solutions going to be funded by public-interest
    groups, by beneficiaries, or by government financing, and
    three, are CALFED costs going to be born by local communities
    through unintended program consequences?
        Our first witness, Mr. Robert Potter, chief deputy director
    of the Department of Water Resources, the State of California.
    Mr. Potter, you're recognized.

     STATEMENT OF ROBERT POTTER, CHIEF DEPUTY DIRECTOR, DEPARTMENT
                OF WATER RESOURCES, STATE OF CALIFORNIA

        Mr. Potter. Thank you, Chairman Doolittle, and members of
    the Subcommittee.
        My name is Robert Potter. I am the chief deputy director of
    Department of Water Resources. The department operates and
    maintains the State water project, and develops and updates the
    California Water Plan. In addition, I serve as the Department's
    representative on the CALFED policy group.
        It really is too soon to get too specific about how we
    finance the CALFED program, given that we have not arrived yet
    at a preferred alternative, nor agreed on a plan for
    implementation. However, it's an appropriate time to start
    thinking seriously about some of the things that ought to go
    into whatever the financing plan is. And there's some things
    that stand out in my mind.
        There is some background that I think we ought to consider
    when we decide how to fund this program. The CVPIA allocated
    800,000-acre feet of water away from the cities and farms in
    California to the environment. The 1994 Delta Accord allocated
    an additional million-acre feet of water away from cities and
    farms into the environment. And thus far, there's been
    essentially no recovery or compensation for those
    reallocations.
        Within the CALFED program itself, it's not clear yet, what
    quantity of water will be developed or how it will be
    allocated. Both issues are still on the table.
        In terms of principles for how to arrive at equity, most
    people involved in the discussions and debates have some
    support for the concept of user-pays. Most people support the
    concept that the beneficiary should pay. When you look at
    California, we basically all use water, and we all benefit from
    California's healthy economy which in major part, is there
    because of the strong Federal and State water development
    programs.
        Many, many years ago, the U.S. Senate developed a document
    that was commonly called the Green Book that presented a set of
    principles for identifying beneficiaries and allocating water
    development costs to beneficiaries. All of us spent a lot of
    time agonizing, maneuvering, discussing, and debating how to
    apply the Green Book and it served us well. But it was not a
    silver bullet. The CALFED package itself is certainly too
    complex for us to arrive at some simple formula as to how to
    allocate costs. The only real answer is to debate and negotiate
    and probably arrive at a mix of payment strategies tapping both
    beneficiaries and users. In the long run in most resource
    issues in this country, we try to arrive at equity and equity
    tends to drive the decision--not really economics.
        In closing, I'd like to assure the Subcommittee that the
    Wilson Administration is strongly committed to CALFED. Governor
    Wilson supported Proposition 204 which provided moneys to jump
    start some of the environmental content of this program.
    Yesterday, the Governor met--this was mentioned earlier I
    realize, but it's worth reminding ourselves--that the Governor
    met yesterday with Secretary Babbitt. They agreed to a strategy
    for moving ahead on CALFED this year. The Governor at the same
    time announced that because of the healthy state of the State's
    economy, in his May revisions, he was able to dedicate almost
    another $30 million of the State's budget to the CALFED
    process. He, at the same time, directed $170 million to the
    flood control subventions in California--an area where we've
    fallen behind in meeting the State's obligation.
        The Governor has proposed a 1998 water bond which would
    provide additional seed money to keep the CALFED process
    rolling. I would assume that eventually a larger bond or
    additional bonds will be required to implement the full $10
    billion program that is evolving in the CALFED process.
        In closing, I would like to submit for the record the
    Governor's letter to Chairman McDade and I'm not going to read
    the letter--I'd like to read two sentences from the letter.
    ``Dear Mr. Chairman, I would like to take this opportunity to
    share with you California's priorities among the programs
    funded through the Energy and Water Development Appropriations
    bill. My top priority continues to be full funding for the
    $143.3 million requested in the President's budget as the
    initial Federal contribution toward the restoration of San
    Francisco Bay Delta.'' The letter goes on and identifies other
    priorities of the Governor's, but I thought it was important
    that you hear his first priority. Thank you.
        [The information referred to may be found at end of
    hearing.]
        [The prepared statement of Mr. Potter may be found at end
    of hearing.]
        Mr. Doolittle. Thank you.
        Our next witness is Mr. David Yardas, senior analyst for
    the Environmental Defense Fund from Oak--from California. Mr.
    Yardas.

       STATEMENT OF DAVID YARDAS, SENIOR ANALYST, ENVIRONMENTAL
                        DEFENSE FUND, CALIFORNIA

        Mr. Yardas. Thank you, Mr. Chairman and members of the
    Subcommittee. I appreciate the opportunity to testify on the
    issue of CALFED financing. I did submit a fairly lengthy
    statement for the record, so I'll attempt to just touch briefly
    on a couple of points from that now in my oral comments and
    address specifically a couple of the issues that you identified
    up front.
        Just for perspective, I want to be clear that the
    Environmental Defense Fund, both on its own part and working
    through the Bay area-based Environmental Water Caucus is--takes
    CALFED very seriously and is very much committed to CALFED and
    the consensus that was--set CALFED in motion through the Bay-
    Delta Accord to which we were signatory. That doesn't mean that
    it's easy or that we always see eye-to-eye on some of these
    matters as you heard on the first panel and no doubt as we'll
    get into on this one and those that follow. That said, my
    organization, in particular, views the issue of finance--that
    is, who is going to pay for what out of CALFED as perhaps one
    of the most, if not the most, fundamental issues to be
    addressed.
        I have personally spent the--better part of the last 3
    years involved in the deliberations of the BDAC Finance Work
    Group or subcommittee attempting to wrestle with at least two
    of the issues that you asked: how will future needs be
    financed, and what about the mix of beneficiaries versus
    public. How will those issues be addressed? We have struggled
    in attempting to come up with a consensus on how to proceed on
    that front. I think it is correct to say that most folks agree
    that a beneficiaries pays principle-based approach makes a lot
    of sense. We have expressed some major concerns from the very
    outset, however, that the fundamental problem with the
    benefits-based approach taken literally is that it essentially
    assumes a level playing field from the outset. We are mindful
    of the criticisms that have been made that looking backward is
    nothing but divisive and unproductive. On the other hand, we
    feel that there is a need to take an honest look at how we got
    to the need for a Bay-Delta Accord and a CALFED process in the
    first place in order to meaningfully address the important
    issue of finance and what defines an equitable allocation of
    costs.
        The BDAC Finance Committee, and the CALFED Phase II draft
    to its credit, identifies an important question with regard to
    the benefits-based approach, and that is whether or not any
    adjustment for past impacts is appropriate prior to using the
    benefits-based approach. This is a matter of ongoing work in
    the Finance Committee discussions in particular and I know in
    CALFED's efforts as a whole. The Environmental Defense Fund
    certainly thinks that the answer is resoundingly yes--that any
    reasonable accounting for the prior investments and prior
    impacts of water development will and must acknowledge that the
    playing field is not level, that the important funds that have
    been provided or authorized to-date for ecosystem purposes are
    a good start but are nowhere near to the point where we've
    reached a quid pro quo kind of situation, as has been argued in
    the context of the Governor's water bond proposal, at least
    prior to yesterday's announcement. (I'm still trying to
    understand exactly what was announced yesterday and what it
    means for the pending water bond measure.)
        But in any case, where we come out at this point, what we
    would recommend as a way to move forward, and the position that
    we've taken in the BDAC discussions can roughly be summarized
    as follows: That partnership funding, public and user-based
    funding, ought to be available to fund the common programs of
    CALFED pretty much across the board. We would support that.
    That seems like a reasonable way to proceed. However, when it
    comes to the more controversial issues of new dams and
    conveyance--large conveyance facilities through the Delta--we
    feel quite strongly that those should be looked at as new water
    projects and that they should be paid for by the
    beneficiaries--the direct beneficiaries, the users--who will
    benefit from those projects which are made necessary by all of
    the water development primarily that we've done in the past.
        We recognize that not only water development--and
    particularly the State and Federal projects--can be assessed
    blame for the past. That's why we supported, joined with our
    urban, agricultural and business sector colleagues in a
    somewhat controversial--in our community--push for public funds
    to the exclusion of user mitigation funds under Proposition 204
    and the Bay Delta Act. But that said, we will continue to
    support partnership work and recommend that funding be provided
    in that way for common programs, but that--I guess what it
    comes down and what it reflects back on is the prior panel:
    Somehow price really matters when it comes to how we perceive
    moving forward in CALFED. CALFED's about a new way of doing
    business, and we think that making sure that true cost-price
    signals accompany newly developed water is a fundamental part
    of the equation. I'd be happy to go into that more in a
    question and answer, given that my time is up. So, thank you.
        [The prepared statement of Mr. Yardas may be found at end
    of hearing.]
        Mr. Doolittle. Thank you.
        Our next witness is Dr. Tim Quinn, Deputy General Manager
    of the Metropolitan Water District of Southern California.

          STATEMENT OF TIMOTHY QUINN, DEPUTY GENERAL MANAGER,
           METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA

        Dr. Quinn. Thank you, Mr. Chairman, members of the
    Committee. Like everyone else, I very much appreciate the
    opportunity to present some of my views here this afternoon.
        My name is Timothy Quinn. I'm Deputy General Manager of the
    Metropolitan Water District of Southern California. I would
    also point out I'm one of five panelists appearing before you
    today to sit on the Ecosystem Roundtable and have some
    responsibilities for providing advice about the expenditure of
    CALFED moneys.
        Primarily, I am here, as Tom Berliner was, as a
    representative of the Bay-Delta Urban Coalition and my
    testimony has been reviewed by a committee, North-South, so
    that it would reflect a broader spectrum of interests. I would
    like to try to be responsive to the questions that you posed to
    this panel by briefly describing four key principles that the
    Urban Coalition believes will be important in developing a
    successful financing plan. They're discussed in more detail in
    my written submitted testimony.
        The first principle is that the finance plan must be
    founded on a CALFED solution that generates widespread value.
    The concept is simple. First, create value so that you create
    willingness to pay amongst the people who are going to be asked
    to contribute financially. We believe that CALFED, for the
    first time in a generation, offers the opportunity to create
    value for the environment and for water users in California.
    For the environment, we're talking about moving into the 21st
    century and restoring health to the ecosystem through a
    historically unprecedented ecosystem restoration investment
    program. For urban California, substantial improvements are
    possible in the source quality of our drinking water. We see
    the possibility of creating a stable infrastructure upon which
    we will build economic prosperity in the future. For
    agriculture, we're talking about moving into a new era of
    natural resource management in the 21st century in a way that
    sustains and strengthens the largest agricultural economy in
    the Nation. Those are values that we think people are willing
    to pay for in California through one means or another. Just as
    the benefits are widespread, we are firmly convinced that the
    finance plan must have a diverse source of funds.
        The Urban Coalition has long taken a position in favor of
    user fees as a primary funding source for CALFED solutions, but
    we also recognize that many of the benefits of a CALFED-
    preferred alternative are going to be broadly spread and that
    justifies some participation by State and Federal taxpayers.
    Exactly how that mix comes together, we're going to have to
    tackle that question over the next 6 months as we define a
    preferred alternative consistent with the direction that we're
    receiving from the Governor and from the Secretary of Interior
    this week.
        I also would emphasize the importance of acting favorably
    on the appropriations request of the Clinton Administration for
    keeping the ecosystem restoration elements forward moving.
        The second principle is that CALFED must provide benefits
    at the lowest possible cost. It's not enough to just look at
    cost allocation. We think this Committee and all others
    involved in this process have to look hard at the overall price
    tag. Quite frankly, we believe the $9-$11 billion of estimated
    costs is too high and the urban community is committed to
    working with the CALFED agencies and others to find the lowest-
    cost package that achieves the benefits that can be obtained
    through the CALFED process.
        Principle three: We believe the costs should be shared
    consistent with the beneficiaries pays principle and that costs
    should be allocated in a mutually agreeable manner. The
    beneficiaries pays principle--it comes off the lips easily. We
    believe there's a lot of devil in the detail here. We are
    extremely concerned that an arbitrary or academic application
    of that principle could backfire and upset the whole process.
    For that reason, we're recommending that the beneficiaries pays
    principle be implemented to the maximum degree possible by
    coming up with mutually agreeable allocations of cost. We think
    that approach will give those who are expected to help pay a
    voice in defining whose benefiting and by how much. We think it
    will produce the best alignment of benefits and costs. In the
    end, it will underscore the importance of assurances to all the
    parties as we move forward to a preferred alternative.
        The final principle--somewhat in counterpoint to the point
    made by Dave Yardas--is that we believe the finance plan must
    be based on a prospective assessment of value and not on a
    retrospective assignment of blame.
        To be successful, CALFED has to look forward. We don't
    think it's possible to agree on who's responsible or who should
    be blamed for what problems are in the system today. More
    importantly, we think the debate itself is counterproductive.
    Blame does, we think, lead back to divisiveness and to the
    gridlock that CALFED gives us the opportunity to leave behind
    us. We would urge that financing decisions be made on the basis
    of prospective assessments of who's going to gain value from
    the implementation of a solution and who's going to help pay
    for that solution.
        Let me close on an optimistic note. We believe there's an
    enormous opportunity here for creating value for California,
    for agricultural and urban water users and for the environment.
    We think that there's a lot of work to be done, but that by the
    time we get to the end of this year, we will have an agreeable
    financial plan that backs up a preferred alternative that's
    going to benefit California as we move into the 21st century.
        [The prepared statement of Mr. Quinn may be found at end of
    hearing.]
        Mr. Doolittle. So, Dr. Quinn, you actually believe you'll
    have that by the end of this year?
        Dr. Quinn. I think we'll have principles that define a
    financial plan consistent with the direction we're getting from
    the Governor and the Secretary of Interior. That they would
    like to come to some agreement on a single preferred
    alternative by the end of the year. I would point out that I'm
    known in the water community as quite an optimist.
        [Laughter.]
        Mr. Doolittle. Thank you.
        Dr. Quinn. My optimism has proven justifiable on many
    occasions in the past, however.
        [Laughter.]
        Mr. Yardas. What we sometimes use is a slightly different
    term--but that amounts to the same thing.
        [Laughter.]
        Mr. Doolittle. Mr. Potter, what's the average shortage--in
    an average water year--what's our shortage, according to your
    department?
        Mr. Potter. I believe you quoted the number earlier--that
    about--I don't have 160 in front of me and I don't do a very
    good job with numbers, but I think that number is right.
        Mr. Doolittle. OK. I think the figure I quoted was 1.6
    approximately and in a drought year, it's 5.2 presently. So
    anyway----
        Mr. Potter. Those are consistent with my recollections. I
    don't--I didn't bring the bulletin with me.
        Mr. Doolittle. OK, could you check on that and verify it--
    --
        Mr. Potter. Certainly, certainly.
        Mr. Doolittle. [continuing] for the Committee?
        Mr. Potter. Could I comment just a little bit on the 160
    process itself?
        Mr. Doolittle. Yes, that's a good----
        Mr. Potter. You know, the State developed the California
    water plan in 1957, published it and it was adopted by our
    legislature. At the time it was agreed that it would be
    periodically updated. The Bulletin 160 series is the series in
    which we do those updates. If memory serves me correctly, the
    first update was in the 1960's--some 35 years ago or so. I
    think this is either the sixth or seventh update. It's easy to
    go back and take a look at whether or not our crystal ball has
    been any good. Sometimes we're high and sometimes we're low. In
    the final analysis, we're guessing the future--there's an old
    Arab proverb to the effect that he who foretells the future
    lies even if he's proven correct. I mean, it's a real problem
    to try to look ahead. Well, we did however, have a very
    comprehensive process. We had a 30-member citizen advisory
    committee. We had a public hearing process chaired by our
    California Water Commission. We feel comfortable that we've
    done the best job we can with the facts in front of us on
    foretelling the future on California's water.
        Mr. Doolittle. I guess this is getting to the third
    question, but does the Wilson Administration support the
    fallowing of land as you've heard it described in the CALFED? I
    mean the estimates were from roughly 400,000 up to nearly a
    million acres of land?
        Mr. Potter. I'm going to try to give you two different
    responses to that. First, certainly it's not department policy
    or State policy to fallow land to make water with some
    exceptions. I was one of the key administrators of the
    Governor's 1991, 1992 and 1994 water banks. In 1991, we did
    fallow extensive land to make water available in the drought
    emergency. We paid farmers not to farm. For the farmer and the
    water users, it turned out to be a good experience. For some of
    those people that experienced third-party impacts, it wasn't
    such a good experience. In 1992 and 1994, we did no fallowing.
    I'm not saying that we wouldn't come back and fallow again in a
    serious drought because we might well do that. But we are still
    taking a tremendous amount of criticism throughout the
    Sacramento Valley for some of the impacts of that first water
    bank. There is no State policy that supports the concept of
    fallowing to make water available. There is a Federal CVPIA
    program in which the Federal Government can fallow land to
    provide water.
        Mr. Doolittle. So the State would only support that then--
    if I understood what you said--is an extraordinary response to
    an emergency?
        Mr. Potter. In any specific point and time basis--not on a
    permanent fallowing program.
        Mr. Doolittle. Not on a permanent basis?
        Mr. Potter. That's correct.
        Mr. Doolittle. OK.
        Mr. Potter. I should say in fairness, I think that the
    CALFED program has taken a bum rap on the fallowing issue. In
    reacting and working with their advisory council, they did some
    exploratory analysis and evaluations of what might happen if
    you fallowed a bunch of land. But they do not have in the
    CALFED program fallowing to generate water per se. There's
    nothing in there to that effect. There's some land conversion
    to support their environmental restoration program and there's
    some land--some agricultural land conversion to support some of
    the levee setbacks in the Sacramento/San Joaquin Delta. But
    there is not an item in the CALFED package to fallow land to
    generate water.
        Mr. Doolittle. Have you been with the Department for a
    number of--when--how long have you been with the Water
    Resources Department?
        Mr. Potter. If you were closer to the pen, you'd see a 40
    on it----
        Mr. Doolittle. Forty.
        Mr. Potter. It will be 41 years in June.
        Mr. Doolittle. Well, do you--are you proud of what has been
    accomplished in those 40 years or do you feel guilt-ridden over
    what has happened?
        [Laughter.]
        Mr. Potter. I'm certainly proud of what the Department has
    accomplished over the 40 years. I'd like to avoid my personal
    record here, if we could.
        [Laughter.]
        Mr. Doolittle. Do you feel, Mr. Potter, that additional
    surface storage is going to be necessary in order to meet our
    present and long-term water needs in the State of California?
        Mr. Potter. Well, one of the things that I think is that
    the CALFED family--all 15 agencies have come to recognize as
    they've tried to arrive at resolving the Delta problem. That is
    their charge. Their charge is not to try to balance all of
    California's water needs in the foreseeable future, but rather
    to resolve the Delta problem. Just in that relatively narrow
    view, they have concluded that there is no escaping some
    additional storage if we're going to add to the water supply
    pie.
        Mr. Doolittle. OK, well my time is up. Mr. Miller, your
    turn.
        Mr. Miller. Thank you, Mr. Chairman. Mr. Potter, let me
    just say I appreciate your comments about the annual--the 5-
    year reviews under the process by which you--which people--the
    State arrived at 160. But I think on a previous panel, Ms.
    Davis raised some fairly concrete arithmetic questions here.
    That either the water usage in South coast was 4.3 or it was
    3.5. There's a world of difference between those two--
    especially if that's what you're building a base on, you know.
    As she pointed out, there are reasons we want to normalize some
    of these figures and the process you go through. And the
    question of whether in the South coast region, is there really
    a .5 million acre feet of conservation to be developed there or
    is it 90,000 acre feet? There's a world of difference between
    those two when we start apportioning out what this plan should
    contain, what it should look like and who pays.
        It seems to me there has to be some attempt at resolution
    of some of these issues. Just like, you know, sort of like
    people ask for good science. If there's a mistake, we ought to
    seek to correct it, or explain it or disavow it or whatever--
    however that turns out. Again, I'm not suggesting that this is
    all right and 160 is all wrong, but as we start to build on
    these determinations, I think it becomes very important as to
    where we stand with those.
        Mr. Potter. I certainly agree. I don't really have the
    information or the skills to get into detail here, but I had a
    couple of reactions as Martha was talking and will certainly
    talk more with her. But one of the things in 160 is we do two
    things. I mean, we do say what's possible and then we arrive at
    what's probable. It doesn't surprise me that there are
    situations where we have estimated a large potential water
    conservation piece and then ground into the program a smaller
    number because we thought that was what was going to happen.
        I believe in the 160 process, we have gotten plenty of
    criticism in both directions in terms of our water conservation
    program. Because of the controversy that has been stirred
    recently by the bulletin, I've talked to the staff about their
    public hearing process--which I was not personally involved in.
    But they have been basically criticized in both directions.
    ``You've got more water conservation in here than anyone can
    ever possibly accomplish, or hey you guys are ignoring water
    conservation.''
        If you go back to the Governor's water policy of 1992--when
    Governor Wilson came in, we were overwhelmed with drought. In
    terms of water--that's where his attention was focused for the
    first year. By 1992 he turned to a long-term water policy and
    if you look at that water policy, it is basically a policy that
    has a broad menu of both demand management and supply
    augmentation--concludes that we need to attack both menus. But
    says in effect that over the next few years, our focus ought to
    be on fixing the Delta. Fixing the Delta isn't just about
    meeting the State's future demands, it's also about protecting
    the estuary.
        Mr. Miller. Well, thank you and I just want to raise that
    because I think it's a point that has to be brought to some
    resolution--you know, in the next coming months.
        Mr. Yardas, let me go back to your testimony. On page eight
    you describe what this combination as a public end use base
    relationships between ecosystem restoration, new surface,
    storage, conveyance facilities and so forth. Where are we--I
    mean--I guess--you know, earlier last month, this Committee
    heard from some people who were beneficiaries who said they are
    paying about all they can pay for water in the agricultural
    community. I guess, in my district, they might think that too
    after they built Los Vacaros. City of San Francisco can say
    well we're not--we're supportive of all this, but we have our
    stream of supply for the time being. I mean, the description of
    beneficiaries is going to be as difficult as apportioning the
    cost--it seems to me. Because some people are going to say--
    gee, you know that doesn't impact us. In San Diego, we're
    paying all we can pay down here. This recharge up there--how do
    you get through this thicket. I mean, that's why some people
    say you just turn to general obligation bonds and everything is
    on the calm here.
        Mr. Yardas. Well, on this point, in some ways, Dr. Quinn
    and I may not be so far apart in that kind of what's come out
    of the deliberations of the Finance Work Group is that we're
    going to need to figure out some way to move forward
    recognizing that the question of bright lines between
    beneficiaries will be difficult. That you have some financial
    and a lot of nonmarket benefits that are difficult to compare.
    That looking backward can be problematic whether you stop at
    1992 or whether you go back a few years before that. So part of
    what we're trying to put forward in our recommendations and the
    ongoing discussions of the CALFED Work Group on finance is a
    forward-looking alternative. I described a current draft
    document at the bottom of page five and top of page six on my
    written statement that's currently in progress and will be the
    subject of review at the BDAC meeting--or at least discussion
    and briefing--on Thursday of this week.
        From our point of view, the bottom line is that in order to
    move forward, the cleanest way to do it is in a sense to view
    the common programs as a kind of mitigation and restoration
    program for the existing system. Then to the degree that new
    projects come online--OK, but those ought to be user-financed.
    They ought to include all of the environmental and nonmarket
    mitigations that have not been part of our conventional water
    development system, that have helped to understate prices,
    inflating demands, over building a system relative to what
    would be affordable if those who--if we were really pricing the
    next acre foot of water at what it costs broadly defined to
    develop it and provide it. So did that make sense? [Laughter.]
        Mr. Miller. Yes, in this room it probably makes sense.
        [Laughter.]
        I'll go back around when Mr. Doolittle's done.
        Mr. Doolittle. I'm going to recognize Mr. Pombo who I think
    is right outside the door there.
        Mr. Miller. OK. Well in the interlude I would just say
    that, you know, it's amazing when we started putting cost-
    sharing on efforts here. All of a sudden the local demand for
    some of these projects when the Federal Government was
    providing 100 percent of financing, they just somehow weren't
    as worthwhile the next year as they were when, you know, when
    they had 100 percent financing. I mean, there is some market
    test to some of this in terms of when you're windowing out--
    what's in and what's out.
        Mr. Yardas. Well, I think the point you made about the
    comments that were made at the hearing in Fresno relating to
    flood waters currently being too expensive because of the
    environmental fees that are attached to it-- I mean, that's
    water that's going to be available at a fraction of the cost of
    newly developed water that would presumably have to capture
    that same flood water. So, it kind of--those who are major
    proponents of those alternatives are inherently saying I think
    they're expecting someone else to pay for it--if in fact that's
    a viable alternative for them. In the north valley, already we
    have payment capacity waivers provided by the Bureau of
    Reclamation on the environmental fees because they're not
    affordable by the Bureau's calculations and policy. How do
    those--where does the beneficiary-based payment come into play
    there?
        Mr. Miller. Thank you.
        Mr. Doolittle. Pending Mr. Pombo's arrival. Mr. Yardas, do
    you recognize--it seems like we're almost talking about this
    system as if it never changes. But, I mean, it is an ecological
    system and those do change over time--don't they?
        Mr. Yardas. I think all healthy systems are dynamic. Yes.
        Mr. Doolittle. Well, if it is dynamic, can you tell us how
    could one mitigate impact caused by a dynamic system?
        Mr. Yardas. Mitigate impacts caused by a dynamic system?
        Mr. Doolittle. Well, or happening to a dynamic system.
        Mr. Yardas. I think that what we're trying to get at is
    some effort to ensure that--I mean, there are clearly costs
    associated with the use and development of water. There is
    habitat that's no longer accessible. There is water quality
    degradation due to pollutant runoff. There is depletion of the
    system itself and its implications for the mixing zone, and so
    on. I mean, there are lots of identifiable impacts associated
    with water development and use that have impacts and costs on
    the ecosystem.
        Mr. Doolittle. But those are positive, as well as negative,
    aren't they?
        Mr. Yardas. Which are the positives?
        Mr. Doolittle. Well, you'd have water available flowing
    down the stream that wouldn't ordinarily be there if it were
    just left up to nature.
        Mr. Yardas. Like the cold water releases at Shasta?
        Mr. Doolittle. Well, like having water available at say--to
    name an example close to our home in the lower American River.
        Mr. Yardas. Yes. I think any honest look at the indicators
    of the health of the ecosystem--whether it be the extent of
    habitat that remains, the amount of unfragmented habitat, the
    status of the populations of fish or waterfowl species--
    Waterfowl have improved substantially in recent years--thanks
    to the CVPIA, in particular--but any honest assessment would
    conclude that we've spiraled down pretty far, pretty quickly in
    the last 20 to 50 years or so. For--in large part because of
    the water development that's taken place. To say that the
    system would be exactly as it was 50 years ago--no, I wouldn't
    say that. But I think it would, absent water development, be
    substantially similar.
        Mr. Doolittle. But is there no positive benefit you
    recognize from the projects that have been built?
        Mr. Yardas. Oh, I think Central Valley agriculture is
    incredible. I think the California economy is amazing. There's
    absolutely--there are benefits associated with water
    development.
        Mr. Doolittle. So at least you'll acknowledge the human
    species is part of the environment.
        Mr. Yardas. Absolutely. I'm one of them and I enjoy those
    benefits. I don't condemn them. [Laughter.] I'm merely saying I
    think we ought to include the costs of our actions in the price
    that we pay so that we know that we're fully accounting for the
    impacts of our being here.
        Mr. Doolittle. I'm going to recognize Mr. Pombo.
        Mr. Pombo. Thank you, Mr. Chairman. Mr. Potter, I want to
    give you an opportunity to clarify the statement you made on
    land conversions or land retirements. You said that there were
    no water benefits associated with that. That it was the
    position of CALFED that you weren't retiring land to create
    water. Just clarify your answer.
        Mr. Potter. Well, let me clarify my position for a minute
    if I can. I represent one agency--15 of whom run CALFED and you
    really ought to put this question to Lester when you get him up
    here. But what happened--my understanding of what happened
    sitting on the policy group now and not necessarily grinding
    the mechanics of the process--but my understanding of what
    happened is that the BDAC forum, the CALFED staff was asked to
    generate how much water could be saved by retiring some
    agricultural land. They threw out some big numbers--500,000 to
    900,000 acres. There was sufficient reaction both within the
    committee itself and in the general public that that concept of
    retiring the land to make the water was withdrawn and is not a
    part of the CALFED program. There are land conversions in the
    program--in the environmental restoration program, and in the
    physical works--some of the delta levees are proposed to be
    straightening, some of it straightened, some of the channels
    widened. That sort of thing does have an adverse impact on
    agricultural land. Retire some agricultural land but not for
    the purpose of generating the water, but rather for the purpose
    of ecosystem restoration or having a more reliable levee.
        Mr. Pombo. The low number I've heard is 250,000 acres. The
    high number, as you've mentioned and has been testified to, was
    close to a million acres. According to the CALFED document, the
    land necessary for facilities ecosystem restoration and water
    quality could range from approximately 75,000 to 140,000 acres.
    So the difference--even if you take the low numbers--there's an
    additional 100,000 acres that would be taken out of production.
        Mr. Potter. This is a copout, but I'm going to ask you to
    either drag Lester up here now or save this for Lester.
        Mr. Pombo. Well, I'm going to ask him, too. I just--I mean,
    you testified----
        Mr. Potter. I'm not sufficiently informed--I'm not
    sufficiently familiar with the specific numbers to have this
    conversation. I'm not ducking. If I knew the answer, I'd
    provide it. I simply don't know the answer.
        Mr. Pombo. I appreciate that answer and I believe that
    that's an honest answer. It was just in response to the
    Chairman's question--you said that no land was being retired to
    generate water and I believe that is an inaccurate statement--
    even if you just read CALFED's documents only.
        Mr. Potter. Just a comment. I attended a public hearing for
    the CALFED program in Walnut Grove the other night. There is a
    tremendous amount of upset and concern in the farming community
    in the Delta. Because they feel that the ecosystem restoration
    program and the levee work to some degree has them paying a
    much larger portion of the hit on land conversion. It's
    something that we're all going to have to better understand if
    we're going to make it through the process. I don't think that
    we gave--well I know that we did not give them good answers
    that night because we simply didn't have them, but sooner or
    later those questions have got to be answered.
        Mr. Pombo. Well, that is a point that I will bring up with
    Mr. Snow later is the answers to the questions at Walnut Grove.
    I'm glad you had the opportunity to visit my district because
    all of those people make a habit of calling my office and
    visiting my office with their concerns about this process. To
    go back--and since we started on that point--I would like to go
    back just briefly and ask you about a development of new water
    sources. Just asking you simply would--do you believe that any
    plan that's looking at 20 or 30 years out in the future that
    does not realistically identify new water sources, new surface
    water availability is going to accurately deal with the water
    problems that we have in California currently and where we're
    going to be 20 to 30 years from now.
        Mr. Potter. I guess the short answer is no, I don't believe
    that. I do think though it is important to draw a distinction
    between meeting the overall statewide water balance. The
    charge--my understanding of the charge that Lester Snow has
    been given which is basically to arrive at sufficient knowledge
    and understanding to develop a program that will protect the
    Delta estuary. We didn't ask Lester to solve all of
    California's water problems. We asked him to see if he could
    lead us through the Delta dilemma.
        Mr. Pombo. Well, I understand that Mr. Potter. But I think
    any plan that does not look at developing new water--surface
    water resources for the future--is totally inadequate in
    protecting the Delta. Because every time someone needs water,
    they stick another straw in the Delta and they suck more water
    out of it. I grew up out in the Delta. I can tell you----
        Mr. Potter. Me, too.
        Mr. Pombo. [continuing] just as well as anybody here about
    the water quality problems that we have in the Delta today
    versus what we had 20 years ago. There's a big difference. A
    big part of that is that we keep sucking more and more and more
    water out of there and we're not developing any new water. One
    of my major concerns with this process is I believe that the
    development of new surface water resources has been given the
    short script in this development. We talk about all these
    wonderful things of retiring 1 million acres of land and
    creating these wetlands and doing all these things, but that's
    not going to be enough to deal with the future. That's not
    going to be enough to deal with the water quality problems that
    we have.
        Mr. Potter. I think CALFED has come to the same conclusion
    that you have. There is storage in all three of our major
    alternatives.
        Mr. Doolittle. Mr. Miller has an additional question, I
    understand. You're recognized for that purpose.
        Mr. Miller. Mr. Yardas, let me again--as I understand
    taking into account what the Governor and the Secretary--
    correct me, Mr. Potter, if I--they announced to extend the
    comment period and then come up with a draft proposal--a second
    draft, obviously windowing out a lot of things that you've
    heard here back and forth from across the State. Then there
    would be an additional comment period--is that correct?
        Mr. Potter. That's correct. That's correct. I wasn't there
    yesterday. I was on an airplane trying to get here.
        Mr. Miller. Yes. Apparently, none of us were, so we're
    trying to figure out what that was. But if that's correct, Mr.
    Yardas, let me ask you this. At some point, you decide some
    approach to one of these three alternatives or probably a
    hybrid of one of them given the comments and everything that's
    learned in this process. But is there a point where we start to
    attach when you think about the financing and the preliminary
    discussions--I'm going to ask all three of you actually. Is
    there a point where we start to attach beneficiaries to
    particular projects in this thing? Or are they seen as, you
    know, as part of the whole? If you look at the enlargement,
    Millerton or Montgomery, possible expansion of Los Vacaros, and
    what happens with the islands in the Delta, for what purposes--
    is that drinking water or is that agricultural water or what
    have you? Do we start to lock onto who the beneficiaries are
    here at some point? If you choose, beneficiaries pay or in
    combination with the public financing and then decide whether
    there's a go or no go--or do we just sort of attribute
    characteristics to these? Where's the apportionment? What's the
    financing committee thinking about this?
        Mr. Yardas. Well, again, it is difficult to draw bright
    lines between these various beneficiary groups. I mean, in some
    cases it's clear. If there's additional yield--I would say
    there is no new water to be had in the system but there may be
    additional yield to be developed--carried over from wet periods
    into dry periods. That will go someplace. That's pretty easy to
    track. On the other hand, water quality--a much more nebulous
    concept and much harder to figure out exactly what's going on.
    As you heard earlier, the ecosystem restoration program, there
    are water supply benefits very much involved in what's going on
    in implementation of that program right now. So, it's very
    difficult in most cases to define very clear lines.
        I think the focus of the Finance Work Group in recent
    months has been to try and get beyond both the assignment of
    blame and the strict definition or quantification of benefits
    into a kind of more proactive or forward-looking approach. The
    gist of that is that the common programs would receive
    partnership funding, but that storage and conveyance would be
    paid for by the users of those facilities. Now that would be
    the recommendation that we would have. I don't think the
    Finance Work Group is there yet, but that's the proposal that's
    kind of----
        Mr. Miller. But that's the process you sort of envision--is
    that close to the process that you envision how to----
        Dr. Quinn. Yes, that's why I'm pleased at how close it is
    to the process I'm envisioning. Some cost elements will be
    identifiable to a beneficiary. I don't think a lot of them
    will, but some of them will. Metropolitan recently financed an
    integrated resources plan where we're spending billions of
    dollars on a combination of investments, including reclamation,
    conservation, water marketing, and transportation and storage
    projects. What we found to be a successful approach--in some
    cases, there were clearly identifiable benefits which we just
    put right into our regular rate structure. You paid for it if
    you got the water delivered. In other cases, the way we
    approached it was to focus on what kind of a package will
    maximize the value for the region.
        In this case, we were thinking only of southern California.
    Here you're thinking of a much broader geographic area. Then we
    started going to our member agencies as constituents--pointing
    out the value that they would receive from increased
    reclamation in Central and West Basin. Part of the value is we
    could downsize our capital program. Everybody saved money if we
    could reduce expenditures on the capital program, and we
    eventually came up with the Local Resources Program where all
    the member agencies pay $250 an acre foot to those member
    agencies who are able to invest in local resources. In general,
    for much of the financing of the IPR, we did not attempt to
    draw lines from one specific piece to somebody that's going to
    benefit. Instead, we focused people on a package that would
    generate value, and then worked with them to make them
    understand they're getting value. And eventually, people would
    not want to argue so much over the pennies. They were willing
    to stand back and look at the broader picture, and we were able
    to get to a successful conclusion.
        I think something very much like that needs to happen
    here--to stand back and start focusing on a package that can
    create value for each of the interests throughout California.
    Where can you generate value and then start to generate
    interest and willingness to pay, which, of course, was the
    theme I tried to put in the Urban Coalition testimony I
    presented today.
        Mr. Miller. My time has run out, but there is a little bit
    of a difference in your answers there.
        Mr. Yardas. Well, I guess I would just say, though, where
    this will get difficult is in the notion that the environment
    needs new dams to get healthy, and we just don't agree with
    that. I don't know if that's part of what Tim was saying in
    code, or not. It's certainly part of the analysis that CALFED
    is doing, and we just don't believe that that's properly--that
    the environment needs it. Or, if there are so-called benefits
    ascribed to the environment, that those ought be financed by
    the public. Those are very much tied to water use and water
    development and ought to be properly financed by those who
    benefit directly from those facilities.
        Mr. Miller But under Tim's answer, you could have--you
    could ascribe those as benefits that the broader community
    leaves, it gets, and lay them off in that fashion.
        Dr. Quinn. Let me emphasize. I'm not trying to be opaque
    here. We believe, not only Metropolitan, but pretty broadly in
    the urban community, that the future lies in a combination of
    investments and new infrastructure, new system capacity,
    including both surface storage as well as ground water storage,
    as well as better allocation mechanisms through more effective
    water markets.
        We don't think the answer lies at either polar extreme. At
    one extreme, relying on zero percent storage and one hundred
    percent reallocation through the market. Or the other extreme,
    relying solely on new storage with no increased reliance on
    market forces. The urban coalition believes we need to start
    talking about what is the proper combination. Some of the
    storage that's on the table is off-stream storage that we
    believe could be very valuable to the environment as well as to
    the water users. It's not as cheap as the storage we were
    building 30 or 40 years ago, but it is relatively affordable. I
    mean, if somebody walked in my door and said I've got a deal
    for you--here's a block of several hundred thousand acre feet
    that's going to cost you $200 an acre foot for protection in
    dry years--I'm interested. And the fact is some of the storage
    that's on the table in the CALFED process meets those economic
    criteria. So, I stand back and I say, if you were designing the
    whole system yourself, what makes the most sense as an economic
    package? And I've changed my own views about storage. At one
    point, I was not interested in storage. I thought it would cost
    too much. The facts have changed my mind. It's very clear that
    storage has a legitimate place in this debate, and we think
    it's likely, in proper combination with the other elements, to
    make sense in an overall package.
        Mr. Miller. Thank you.
        Mr. Doolittle. So, Dr. Quinn, you would go for storage that
    produced water at $200 an acre foot?
        Dr. Quinn. I would certainly not throw somebody out who
    proposed a water supply at that cost.
        Mr. Doolittle. Well, there. That's what you just said. What
    are you hedging for?
        Dr. Quinn. Let me--let me--the answer----
        Mr. Doolittle. You just said you would go for storage. Are
    you standing by that statement or not?
        Dr. Quinn. The answer is yes.
        Mr. Miller. If you do, it's something he wants to sell you.
        [Laughter.]
        Mr. Doolittle. The problem is we don't have any to sell. We
    got to have it all for ourselves. But was it your testimony
    that you would go for a deal that offered you water at $200 an
    acre foot?
        Dr. Quinn. I believe that storage--environmentally sound
    storage that can make water available during dry times for $200
    an acre foot----
        Mr. Doolittle. Oh, no. I didn't hear all of that in that
    first statement. What do you mean environmentally sound
    storage?
        Dr. Quinn. Well, I mean storage----
        Mr. Doolittle. What's an example of environmentally unsound
    storage?
        Dr. Quinn. Well, can I turn that question around? An
    example of environmentally sound storage is storage that can
    survive the permitting process.
        Mr. Miller. Ah, you want to go through the dance?
        [Laughter.]
        Mr. Doolittle. Well, let's just leave it at that.
        [Laughter.]
        The figure of $200 an acre foot, you find, as did the
    Metropolitan Water District of Southern California, to be an
    attractive price. Is that right?
        Dr. Quinn. It's competitive.
        Mr. Miller. We ought not to--let's not make this a policy
    statement of the Met at this stage. But I think, if I might,
    Mr. Chairman, he was saying that if this--you say, yeah, you
    might be interested. There are people who would be interested
    in water at that rate if that could be done. You know. You show
    me that it's equal to----
        Dr. Quinn. Just for clarification, you can't throw storage
    out on purely economic grounds, because it costs too much. It
    does not. There may be other grounds for this project or that
    project, but it clearly can earn its way into a lease cost
    program from our perspective.
        Mr. Doolittle. OK.
        Mr. Pombo, would you like to ask some more questions. By
    the way, the first vote is at 5:30 p.m., and all votes are
    finished at 6 p.m. And we've got two more panels to go through.
    I'm just telling me that as well everybody else.
        Mr. Pombo. No further questions, Mr. Chairman.
        [Laughter.]
        Mr. Doolittle. You can ask one or two. That's all right.
        Mr. Miller. It's not that they weren't important.
        Mr. Doolittle. OK. Well, we will have those supplementary
    questions submit. I would like to thank the gentlemen on this
    panel, and we'll hold the record open for what we hope will be
    your prompt responses. And with that, we'll excuse you.
        I'm going to propose an ad hoc change here. We're going to
    ask panels two--three and four to come up together to form one
    panel of five people.
        OK, it's six people. In other words, all the members of
    panels three and four. Have we got them all there? OK, when you
    have got seats for everybody. All right. Sorry for that, but
    that will expedite your planes, for those who have them, and
    our needs here. Let me ask you. If you--let's see. We got
    everybody there? If you six gentlemen, there we go thank you.
    If you will raise right hands, please.
        [Witnesses sworn.]
        Thank you. Let the record reflect that each answered yes.
        We appreciate your coming, and for these two panels, I'll
    just review the questions and you can just answer the questions
    you are asked to answer. OK, here's for the third panel. How do
    you evaluate the effectiveness of the funding we are providing?
    One. Two, what clear and unambiguous performance standards are
    being adopted to determine if we are close to success or have
    achieved success? And three, are we going to postpone any major
    program decisions or alternatives until we have the results of
    the early phases, or are we going to agree on a basic blueprint
    and simply adjust it through adaptive management, as we move
    along? And then, the fourth panel had one question: Is the
    public given ample opportunity to participate in the CAL--
    excuse me, two questions--CALFED process? And two, how have we
    institutionalized a process to ensure that local landowners are
    fully appraised of potential program impacts? Have we
    institutionalized a process to assure that local landowners are
    protected from government manipulation of property values as
    part of the habitat rehabilitation program?
        With that, let's begin with Mr. Lester Snow, executive
    director of the CALFED Bay-Delta Program.

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

        Mr. Snow. Thank you, Mr. Chairman, members of the
    Committee.
        My name is Lester Snow, executive director of the CALFED
    Bay-Delta Program, and my excitement to testify has grown
    considerably over the last couple panels, so----
        [Laughter.]
        I actually would like to start off with a couple clarifying
    points before I get to answering the specific questions because
    I think they're important issues.
        One, I want to make it very clear that none of the
    proposals contained in the CALFED draft that is on the street
    contains ag land fallowing for the purposes of demand
    management or generating water supply. We have identified a
    number of actions that have, as a consequence, ag land
    conversion for the purposes of habitat restoration, water
    quality improvement, levy improvement, and certain water supply
    related facilities, but not as a demand management tool.
        As a means of disclosure in our environmental document, we
    have estimated a maximum footprint, or a maximum impact
    associated with these activities; and that is approximately
    380,000 acres. I do not know where a number of 1,000,000 acres
    of ag land impact in the CALFED Program has originated. It is
    not in our documentation.
        Even with that maximum footprint, we are working with the
    communities and affected parties to avoid impact, reduce impact
    where it's unavoidable, and develop mitigation measures where
    you must proceed with some impact. But I must make it clear: We
    do not have ag land retirement as a water supply development
    strategy or a demand management strategy.
        The second issue that I think is important to clarify is if
    we define the mission of CALFED as getting everyone to agree on
    20- and 30-year projections, we will fail for two main reasons:
    all projections are wrong. Some are just worse than others.
    Getting all the parties to agree on 30-year calculations about
    California water issues is a lifelong career. It will not get
    us where we need to go. And where we need to go is developing a
    strategy that will allow us to manage a complex natural
    resource system in the face of uncertainty. If the issue was
    one of selecting the perfect computer model to project where we
    are going, we would not be here today.
        Rather, the challenge is developing a package of actions
    that address the diverse issues and that are tied together so
    that you can't build a subsidized reservoir and abandon
    conservation and reclamation. Or you can't restore ecosystem
    and levies, and let water supply reliability continue to
    deteriorate.
        The challenge is in tying the package together and not
    focusing on the single issues that have torn us apart in the
    past.
        In terms of beginning that effort, we are now proceeding
    with ecosystem restoration, which is the critical issue before
    us. The issue has been raised, how you monitor and how you
    proceed to judge whether you are making progress, and how if--
    if you are making the right choices.
        The approach that we are taking in the CALFED Program is
    twofold, and I will make reference to the briefing document
    that we have provided you: the tab marked ``monitoring and
    performance standards'' and the last page which is a figure
    one, and shows the five levels of performance measures that
    we've identified in the program. We've divided those into
    project monitoring and ecosystem monitoring.
        In project monitoring, which is at the bottom of the page,
    there's basically two parts: implementation monitoring and
    effectiveness monitoring. As we begin spending money, we have
    implemented this stage of our monitoring program.
        Implementation monitoring is straightforward. Has the
    project done what it was supposed to do? If they were putting
    in a fish screen, did they actually do it on time and on
    budget?
        The second component of project monitoring is effectiveness
    monitoring? Did the fish screen allow the fish to pass? And in
    the example that we use move up Butte Creek to spawning in the
    number and at the time that's appropriate for salmon recovery?
        And then we move to the issue of ecosystem monitoring. How
    do each of these projects, whether it's coral dam or any
    habitat restoration project or other screening projects in the
    Sacramento system, how do they cumulatively affect the overall
    ecosystem? We are developing indicators of ecological health,
    and have developed some. They provide us perspective on
    performance standards for overall ecosystem which lead up to an
    overall goal. We have developed some specific indicators that
    tie into the specific projects, such as counting the number of
    returning spawning salmon, counting the number of out migrants
    that go back out to the ocean, and seeing how they relate to
    overall salmon population levels.
        Again, we have developed the project monitoring level that
    is being implemented on every single project that is awarded
    and moves out. We are developing the longer term program that
    will be able to provide us the assessment of the cumulative
    impact of each of these individuals projects in improving the
    overall health of the ecosystem.
        Thank you.
        [The prepared statement of Mr. Snow may be found at end of
    hearing.]
        Mr. Doolittle. Thank you.
        The next witness is Mr. Richard Golb, the executive
    director of the Northern California Water Association.
        Mr. Golb.

         STATEMENT OF RICHARD GOLB, NORTHERN CALIFORNIA WATER
                              ASSOCIATION

        Mr. Golb. Mr. Chairman, thank you. Members of the
    Subcommittee, I appreciate the opportunity to testify this
    afternoon.
        I am Richard Golb, the executive director of the Northern
    California Water Association. In the interest of time, I'll
    summarize my remarks as briefly as a I can. I would appreciate
    the inclusion of my written testimony into the hearing record
    today.
        Mr. Doolittle. This is a full statement. It will be
    included.
        Mr. Golb. Thank you, Mr. Chairman.
        At the outset, I think the simplest way to assess the
    question of how can we determine whether CALFED has been
    effective or not in allocating funds to the ecosystem is to
    just look at CALFED's statement of goals, objectives and
    principles. In terms of the definition of the program itself,
    the goal is to improve the environment and, at the same time,
    decrease regulatory mandates on water supply operations and the
    water projects. And from a broad level, I think if we
    accomplish those two goals, we have achieved a measure of
    success.
        Now, on a more specific level, as Lester indicated, I think
    we can look at specific projects. For example, we can identify
    clearly established problems in the system, such as water
    diversions that harm threatened and endangered fish. If we
    identify those diversions that are harming fish species and we
    install a fish screen on that diversion, we've solved a problem
    in the system. And we've basically been effective in at least
    resolving one clearly identified problem.
        At this point, there are nearly a dozen water suppliers,
    agricultural water districts in the Sacramento Valley, that are
    engaged in the study, design, or construction stages of
    developing a fish screen or fish passage project. Several of
    these projects are now complete. For example, as Lester
    indicated, on Butte Creek, there's the Gary N. Brown Butte
    Creek Siphon Project, which Western Canal Water District just
    recently completed--an amazing project. The district completed
    the construction of a siphon to carry water supplies underneath
    Butte Creek, which allows spring-run salmon, now listed by the
    State of California and proposed for Federal listing, unimpeded
    access of Butte Creek. Just stop for a second and think about
    it. You have farmers that voluntarily participated in a cost
    share to remove several small dams. That's not happening in a
    lot of areas of the country, and I think that case clearly
    illustrates the benefits of these restoration projects and the
    effectiveness, in that we did we achieve restoration at the
    same time local farmers and the local community benefited
    through a more dependable, reliable water supply, which is a
    really a mutually compatible goal.
        Now, in response to the performance standards that Lester
    is now developing, we haven't had a chance to fully assess
    them. When we do, we'll probably have additional comment. But I
    think, as you indicated Mr. Chairman, developing performance
    and monitoring criteria is extraordinarily difficult on a
    complex and dynamic ecosystem like the California's Bay Delta.
    It's continually changing. And, at the same time, because it's
    not a static process, because it's dynamic, there are factors
    in the entire watershed that create difficulties for us to
    assess. For example, wildfires in the Sierra or the Shasta
    watershed, drought, such as the 1986 to 1992 drought, or the
    1997 floods, which was the worst flood in California history;
    and a flood that swept millions of juvenile salmon prematurely
    out to the Pacific Ocean.
        Those kinds of natural effects make it extraordinarily
    difficult for us to determine the type of standards we should
    apply on whether or not the program itself has been successful.
        An additional difficulty is that CALFED has ambitiously
    defined some of its projects as an attempt to replicate natural
    processes. The river meander is one. This project although,
    from a theoretical perspective, has great value, there are
    number of questions that arise from allowing the river to
    meander. You know, rivers are beautiful until they meander
    through your living room. And one of the things that we have to
    be very careful about is that the river meander projects are
    constructed in such a way that they're consistent with flood
    control protection.
        In conclusion, I would say that I think we can accomplish
    some of these projects--ecosystem restoration projects--but
    they have to be done carefully. We've recently encouraged
    CALFED to focus its efforts on solving known environmental
    problems, like fish screens. And, at the same time, when it
    come to dealing with projects like the river meander to be very
    careful and to consider the implementation of pilot projects so
    that we deal with them in the right way. We complete NEPA and
    CEQA certification process. We have representative processes
    for landowners to participate, because this thing necessarily
    will require land acquisition along the river. And finally, I
    would say that the best way to look at this is, if CALFED
    focuses on known problems and moves the unknown solutions to a
    longer process of evaluation, what we'll implement ultimately
    is more dollars up front for restoration projects that will
    produce more quantifiable benefits, which I think is our goal.
        So, in conclusion, we support the appropriation and would
    urge you to continue your focus on CALFED. It's been helpful
    throughout the process for all the stakeholders, ourselves
    included.
        [The prepared statement of Mr. Golb may be found at end of
    hearing.]
        Mr. Doolittle. Thank you. Our next witness is Mr. Gary
    Bobker, senior analyst with the Bay Institute, San Rafael,
    California.

              STATEMENT OF GARY BOBKER, THE BAY INSTITUTE

        Mr. Bobker. Thank you, Mr. Chairman, members of the
    Committee.
        Like Rich, I'll try to summarize my statement and ask that
    the written statement be incorporated in the record.
        Although I'm representing the Bay Institute here today. I
    also want to mention that I'm the co-chair of the Ecosystem
    Roundtable, and the perspective that I want to cover reflects
    work that I've been doing over the last few years in the
    Roundtable and other stakeholder processes to try and build
    greater consensus around ecosystem restoration and the broader
    water management planning process. And I think that what's
    amazing is the amount of success we've had in the extremely
    difficult and often adversarial process. We have to look at the
    relative amount of success, and I think it's impressive.
        I think it's important to remember that in looking at the
    Bay Delta and California's water-related environmental problems
    that we have changed, altered, and assaulted the California Bay
    Delta and the water environment to a scale that has really has
    been seen in very few places in the world. And, as a result,
    the program that we are now contemplating through the CALFED
    process to correct those problems--restore the estuary, reduce
    the conflicts--is on a scale never before attempted. And there
    is no connect the dots, Cliff notes approach here. There is no
    easy answer to this, which is one of the reasons why it's a
    technically challenging, complex task. And we're going to learn
    as we go along. We are going to make mistakes as we implement
    this program. And what we have to make sure is that we learn
    from those mistakes, which is why elevating the issue of having
    monitoring--adequate monitoring regimes and performance
    standards is an extremely important issue. The only way we're
    going to learn from our mistakes is if we have a sense of where
    we're going. And in adaptive management, which is the sort of
    learning as you go approach, I think there are four key
    elements there. One is you've got to have sense of where you're
    going, define success in a measurable way with goals and
    objectives and indicators.
        Secondly, have an implementation plan. Design a blueprint
    that you think, based on what you know now, will get you there.
        Third, monitor how you do.
        And then fourth, go back and revise your blueprint to get
    you back on course toward your objectives.
        What I want to touch on is how is the CALFED process
    dealing with that kind of mid-course correction approach, both
    in the near-term spending that's going on with the money that
    Congress has provided, as well as in the longer-term planning
    process.
        In the near-term spending process, the Roundtable--the
    stakeholders and the agencies involved in that process--
    identified what we considered to be the most urgent priorities
    for near-term spending, and that was to protect those
    endangered species that are on the brink of extinction; to
    reduce the most volatile conflicts in the system; and to start
    learning from on the ground habitat restoration. And so we
    identified a list of high priority endangered species. We
    identified a list of those kinds of habitats that we think we
    want to start doing demonstration projects on, so we can learn
    from that on the ground implementation. And then we made sure
    that for each of the projects that we considered funding, there
    was a required monitoring process. And those monitoring regimes
    focus on the obvious things related to the priorities we set.
    How are endangered species populations fairing as a result of
    the projects that are being funded? How is on the ground
    restoration working? For instance, one of the projects that is
    to be funded this year is gravel replenishment on the Tuolumne
    and Stanislaus Rivers. The priority there was the need to
    increase spawning habitat for fall run Chinook salmon, which
    are in big trouble in the San Joaquin system. There's limited
    spawning opportunities, so we're going to put more gravel into
    the system. We're going to look at how it's spread out through
    the stream. We're going to look at how fish use those new
    gravel areas. We're going to have biologists splashing around
    in the streams, checking all this. And then we're going to go
    back and figure out how to improve the gravel replenishment
    program so that's more effective next year and the year after
    and the year after.
        We've also dramatically increased the funding available for
    a more comprehensive monitoring program, which is a cooperative
    effort of the Federal Government and the Interagency Ecological
    Program and the non-profit Estuary Institute.
        In the longer-term, an independent scientific review panel
    took a look at the CALFED process and said, ``you know, you
    could really stand to sharpen up some of these goals and
    objectives and indicators.'' As a result, most of the major
    stakeholders who are involved in the CALFED process have been
    working together over the last 6 to 8 months to try and
    identify a work plan for revising the ecosystem element,
    sharpening up these goals and objectives. And, in fact, I think
    we've made a lot of progress. We've also sponsored a number of
    technical workshops and conferences with the University of
    California to identify a comprehensive suite of ecological
    indicators--in other words, measures of success. I think there
    has been a lot of progress on that. There's a lot of work to be
    done, but I think we can say that we're well on the way toward
    a good set of indicators.
        Finally--the final point I want to make addresses the last
    question that you posed, Mr. Chairman, and that is about this
    sort of either or of--do you have a blueprint or you defer
    decisionmaking. What I want to say is I think that might be a
    false dichotomy--is that if you have a good blueprint, you make
    appropriate decisions now and you postpone inappropriate
    decisions. The example that I would give is that when it comes
    to restoring habitat, there's pretty much widespread scientific
    consensus that if you restore large blocks of habitat, that is
    going to really work better to conserve species than most other
    things. And so we need to go out and start doing it. We also
    know that exotic species really, really can damage the
    ecosystem, but we really don't have a very good idea of what to
    do about it. And so we're going to have to defer making
    decisions about how to deal with exotic species until we've
    done more research and monitoring.
        The one last point I want to make on that is that it's also
    important to defer making site-specific decisions about
    restoration. It's one thing to have a blueprint that sort of
    connects our plan from one county to another, from one
    watershed to another, but that plan is not the place to make
    decisions about your specific land acquisitions or fish
    management measures. That is something that is going to come in
    the more detailed planning process that's going to have to
    followup on CALFED.
        In conclusion, the opportunity that's represented here is
    an enormous one. It's an exciting one, and I think that we're
    all committed to trying to carry through the very complex task
    of rising to the occasion and fleshing out where we want to go.
    But we cannot defer implementing it until we have it all
    figured out. The only way we will figure it out is by learning
    as we go.
        Thank you.
        [The prepared statement of Mr. Bobker may be found at end
    of hearing.]
        Mr. Doolittle. Thank you.
        Our next witness is Dr. A. Alan Moghissi, president of the
    Institute for Regulatory Science, Columbia, Maryland.
        Dr. Moghissi.

        STATEMENT OF A. ALAN MOGHISSI, PRESIDENT, INSTITUTE FOR
                 REGULATORY SCIENCE, COLUMBIA, MARYLAND

        Dr. Moghissi. Thank you, Mr. Chairman.
        Thank you very much for inviting me to testify before this
    Committee.
        We in the scientific community are not used to be asked to
    express our voices. Normally, it's the politician or advocacy
    groups that appear before you. I certainly appreciate to give
    us a chance to speak on this very important subject.
        I'm Alan Moghissi, and I'm president, as you mentioned, of
    the Institute for Regulatory Science. We are dedicated to the
    idea that societal decisions must be based on best available
    scientific information. I was a little confused during this
    couple of hours about the word environment. I had been with the
    Environmental Protection Agency for 20 odd years and I have
    been a professor for some years. I was confused how the word
    environment is being used. The word environment, as we defined
    it, consist of people--humans--and other living things
    supported by the atmosphere, hydrosphere, and geosphere. So
    when somebody says this is for the environment, I wondered
    which part of the environment were they talking about.
        I've include my biographical summary to this statement, and
    I would appreciate if the entire statement would be made a part
    of the record.
        Mr. Doolittle. Yes, it will be.
        Dr. Moghissi. I am not an ecologist. My perspective is that
    of a research director who had to seek funds for ecological
    research; a funder who had to provide money for ecological
    research; and a scientific journal editor who has to accept or
    reject papers dealing with ecological activities.
        One of my most proudest time has been the sport of
    ecological risk assessment. The method that was developed as a
    result of funding that I provided at the time has become the
    standard method for ecological risk assessment.
        The CALFED program, and I'm going to use that word
    describing the entire project, can be separated into two parts:
    its goal--the societal objective; and the scientific part that
    supports that objective. So, there are three questions that
    need to be answered: How one knows the science is acceptable?
    What is ecological health and how is it defined? And what--how
    can ecological health be measured?
        The acceptability of scientific information is based on
    peer review. The information that was provided to me indicates
    that CALFED did not have a peer review program as its defined
    within the scientific community. Rather, it had a technical
    advise. Peer review implies that the person that in groups that
    are involved in the peer review that are having a stake in the
    project have no hand in the selection of reviewers and must
    formally respond to the recommendations of the reviewers.
        My statement includes a classification of the scientific
    information with decreasing level of acceptability, starting
    from confirmed science--the laws--all the way to pseudo-
    science. Some people call it junk science.
        Now there is a consensus within the scientific community,
    and I believe CALFED agrees with that too, that there is new
    metrics for measuring the health of the ecosystem. You cannot
    go and make some measurements, say this ecosystem is healthy,
    the other one isn't. Therefore, one has to use ecological
    indicators, and I guess they are using that too.
        I'm surprised that one of the most powerful tools in the
    ecology, namely ecological risk assessment, does not appear to
    be a part of this program. This would be one method by which
    one could identify benefits of action one takes. And this is
    normally expressed by probabilities. How good is the chance
    that this species will survive? How good is that the quality of
    water can be improved?
        Instead of answering the question that was raised, and I
    would be--my statement includes answers to those, let me make
    several recommendations.
        First, CALFED should provide clear and objective measures
    to demonstrate the status of its success. The success of the
    program should be measured in terms of quantitative goals
    achieved as compared to the funds expended. It's very important
    to relate the goals to amount of money that you all are
    providing and that in the name of taxpayers.
        The entire program should separate science from societal
    objectives. The scientific aspects of the project should
    clearly and unambiguously avoid advocacy or the participation
    of advocacy groups. If scientists from advocacy group
    participate in that effort, they should do so as scientists and
    not as representatives of advocacy organization. They must
    follow the rules of the science, particularly the peer review.
        CALFED should try to use science described as--in my
    classification--should use higher class sciences. And if they
    use lower class sciences, they should understand the
    ramifications.
        Finally, they should set up a project to independently peer
    review the program, which I believe would benefit.
        Thank you.
        [The prepared statement of Dr. Moghissi may be found at end
    of hearing.]
        Mr. Doolittle. Thank you.
        Our next witness will be Mr. Dick Dickerson, president of
    the Regional Council of Rural Counties in Redding, California.

      STATEMENT OF DICK DICKERSON, PRESIDENT, REGIONAL COUNCIL OF
                  RURAL COUNTIES, REDDING, CALIFORNIA

        Mr. Dickerson. Yes, thank you, Mr. Chairman. And thank you
    for the opportunity to testify before the Committee.
        I am the president of RCRC. That's an organization of 27
    rural California counties. Our membership encompasses a broad
    geographic area, stretching from the shores of Mono Lake to the
    shores of Clear Lake, from the valley floor of Yosemite to the
    top Mount Shasta, and from the farmlands of Sacramento to the
    San Joaquin Valley and to the Sierra forests.
        Our members are located within the San Joaquin, Sacramento,
    and Trinity watersheds. Collectively, our members are the
    source areas for the San Francisco Bay Delta. It is from our
    membership that over 80 percent of the water for the Delta
    comes.
        The forests from within our membership area include the
    most significant snow pack areas in California. The water
    storage in these snow packs dwarfs the capacity of all of the
    reservoirs in the State. Snow melt during the spring and summer
    months is what keeps the Delta ecosystem alive. The health of
    the watersheds in our membership areas are, to a great extent,
    the early indicators of the health of the Deco's ecosystem--or
    the Delta ecosystem, not by any law of man or a map in a
    Federal office, but by the laws of Nature. Any successful Bay-
    Delta solution will depend upon actions in our membership area
    to implement ecosystem restoration, watershed management, water
    transfers, new water storage, facilities, and existing storage
    re-operation.
        RCRC is represented in the CALFED process at three levels.
    Our water committee chairman, Mr. Meacher, from Plumas County,
    serves on the Bay-Delta Advisory Committee. Our water natural
    resource consultant, Mr. John Mills, serves on the Ecosystem
    Restoration Roundtable. Mr. Meachum, Mr. Mills and other RCRC
    elected officials and staff also participate in numerous BDAC
    work groups, such as ecosystem restoration, water transfers,
    assurances, and finance.
        The expectation of adequate public participation within
    CALFED is predicated on the ability of the public to understand
    the subject matter. To have the opportunity to meaningful their
    interests and concerns to those making decisions. And for those
    making the decisions to evaluate and to respond to public
    input. This is, when effective, an interactive and ongoing
    process.
        Mr. Chairman, the CALFED Bay-Delta Program, if completed,
    will be the most complex ecosystem restoration program ever
    carried out within the United States. It will affect the laws
    of tens of millions of Californians and the millions yet to
    come. It will cost billions of dollars and involve the use of
    significant portions of California land use area to achieve
    this success. This process should not only involve water
    managers and Federal State agency personnel, but also the
    general public, whose lives will be affected by the CALFED
    solution. The solution will be complex and should not--and
    should involve, to the greatest extent possible, as much public
    input as is practical. Notwithstanding the participation of
    RCRC that I have referenced, we believe that there are very--
    two very serious problems with the CALFED public participation
    program.
        Mr. Chairman, it is our experience that the CALFED schedule
    is too short. It fails to allow for most the affected parties
    to even become acquainted with the information being presented,
    let alone provided meaningful input. While it is true that the
    process has been underway for over two years, it is only the
    past 6 months that clear projected features and components of a
    solution have been assembled in any understandable manner. It
    is only in the last two months that a draft environmental
    impact statement has been released for public review and
    comment. Unfortunately, during this time period--or this same
    time period, the California Department of Water Resources
    released their water plan update with an April 15 deadline for
    comment. The Bureau of Reclamation set April 17 deadline for
    comments on its own 5,000-page programmatic environmental
    impact statement. Most local governments were simply
    overwhelmed with the paper load. For the general public faced
    with earning a living, the invitation to participate in this
    process on that schedule was quite impossible.
        In addition, providing meaningful comments was further
    frustrated by the significant portions of CALFED solution
    packages being incomplete at this time. For while we know now
    what various alternatives are for the conveyance, there are
    missing pieces to the puzzle. For example, there is no
    assurance package. For our members, the issues of protections
    and guarantees of performance is of paramount importance. There
    is no water transfers package. Water transfers, while an
    important component of any CALFED solution, pose the most
    direct threat to our economies if not properly designed and
    implemented. There is no complete watershed strategy. At best,
    CALFED has put together a strategy on how to do a watershed
    strategy. The watershed restoration and management component of
    CALFED's solution is critically important to our members. There
    is no clear direction on any new surface storage. Without new
    storage of surface water, the chance of producing a CALFED
    solution that could be--not be--not negatively affect our
    members--is very slim. Therefore, we feel that we are being
    forced to comment on a an incomplete CALFED package in an
    unrealistic timeframe. We are not optimistic that our comments
    would have any influence on the process, given the lack of time
    for CALFED staff to evaluate and incorporate changes. We must
    underscore that we do not feel meaningful public input can be
    accommodated in the CALFED process given it is to be completed
    in the next 7 months. That is a schedule that sets up
    confrontation, not consensus.
        I'll skip through some of the testimony to get to some
    specifics in getting the participation of the public.
        The CALFED ecosystem restoration plan, for example, was a
    multi-volume plan to restore the environment of the Delta and
    it was mailed out to only 550 recipients. And that's according
    to CALFED's own mailing list. CALFED's choice of who the
    documents went to was also of concern. In one of our State
    senate districts in the Sacramento Valley, only two farm
    bureaus one of those 250-550 copies. No copies were received by
    the Women in Agriculture, or by any Chamber of Commerce.
    However, more than 25 copies went out to environment groups,
    such as the Sierra Club, the Nature Conservancy, and Restoring
    the Earth. Also on the A list of recipients were universities,
    which received 20 copies, in places as far away as Riverside.
    Federal and State agencies obtained over 40 copies. Those who
    stood to be most affected by the plan, those whose lands might
    have been retired or whose water rights might be acquired, or
    those whose land might be converted to habitat were left in the
    dark.
        Public frustration expressed to us, the local elected
    officials, was significant. They have asked us, and were are
    asking you, to help expand and improve the public participation
    process in a meaningful way.
        The CALFED program has seemingly expected rural California
    to supply the land, the water, job sacrifices to fix the Delta,
    without question in the manner of traditional top-down agency
    mandates. We believe that this much change. CALFED has
    scheduled its own document releases and review periods in
    apparent ignorance or oblivion to the actions being taken by
    other CALFED agencies. We believe that this must change.
        CALFED expects all California to step forward to help fix
    the DELTA when it is convenient for CALFED, in a location
    convenient for CALFED, in a manner convenient for CALFED, and
    we believe that this much change.
        Mr. Chairman, one of CALFED's own brochures read,
    ``ultimately, it is the active participation of the entire
    public that will help fix the Bay Delta.'' And we believe that
    that should not change.
        Thank you.
        [The prepared statement of Mr. Dickerson may be found at
    end of hearing.]
        Mr. Doolittle. Thank you.
        Our final witness is Mr. Bill Gaines, director of
    governmental affairs for the California Waterfowl Association
    in Sacramento, California.
        Mr. Gaines.

       STATEMENT OF BILL GAINES, CALIFORNIA WATERFOWL ASSOCIATION

        Mr. Gaines. Good afternoon, Mr. Chairman and members of the
    Subcommittee. My name is Bill Gaines, and I am the Director of
    Government Affairs for the California Waterfowl Association.
        Thank you for the opportunity to come before you today to
    discuss the private sector's role in the CALFED Bay-Delta
    program.
        California has lost over 90 percent of its historical
    waterfowl habitat. Due to significant changes in our natural
    hydrology and the lack of true seasonal flows, the ability to
    provide high-quality wetland habitat today largely must be done
    through managed wetlands. In other words, wetlands which are
    artificially irrigated and intensely managed to create positive
    wetlands values and functions.
        The CALFED Bay-Delta program is a long-term effort to
    address ecosystem health, water quality, water supply
    reliability and levee system integrity in the Bay-Delta
    watershed. Because the restoration, enhancement, and
    maintenance of waterfowl habitat throughout much of this
    watershed also depends upon these areas of concern, properly
    implemented, the CALFED Bay-Delta Program represents a
    tremendous opportunity to address the needs of wintering and
    nesting waterfowl and other wetland dependent species.
        Today, I've been asked to provide our association's view
    regarding public participation in the CALFED Bay-Delta Program.
    As a 501(c)3 non-profit organization, representing nearly
    13,000 Bay-Delta stakeholders, the California Waterfowl
    Association also has a significant interest in the private
    sector's ability to contribute to the CALFED process.
        Let me begin to address this question with a statement
    that, although California's ``water wars'' and deteriorating
    ecosystem health are well chronicled, the CALFED Bay-Delta
    Program is far and away the most significant and positive
    multi-interest effort ever undertaken to address water and
    environmental concerns in California--or perhaps throughout the
    Nation.
        The sheer magnitude of this landscape effort results in
    unintended barriers and natural disincentives to public
    participation. At times, even those individuals or the
    representatives of agencies and organizations who are fortunate
    enough to be able to dedicate full-time to this sweeping
    effort, struggle to obtain a comprehensive grip on the program
    and its dynamic process. Clearly, providing for a program which
    offers ample public participation and opportunities, as well as
    real-time public awareness of its continual progress and
    potential impacts is, in itself, a tremendous challenge for the
    Bay-Delta program team. Irregardless of the stumbling blocks
    associated with assuring full stakeholder participation in such
    a mammoth program, the California Waterfowl Association
    believes the CALFED team has made every effort to design a
    process which facilitates and encourages important public
    input, as well as return real time information flow.
        Yes, our association, even as a member of the program's
    Ecosystem Restoration Roundtable and BDAC, has experienced
    times of serious frustration due to our inability to positively
    influence CALFED program decisions. But we don't contribute
    this frustration to a CALFED agency team set on implementing
    the program ``their way,'' but rather, to the tremendous
    difficulty associated with trying to address a myriad of Bay-
    Delta concerns in a fashion which is palatable to each of the
    many stakeholder interests which must be served.
        The ability of the private sector to be heard in this
    process ranges from high profile role of formal committees
    established to provide direct advisory input to CALFED
    agencies, to hands-on workshops in small rural towns throughout
    the watershed, to other public outreach efforts which are
    enough to choke even the hardiest of mailboxes.
        As each of you is probably aware, CALFED agencies have
    tried to facilitate formal public input and interaction by
    establishing the Bay-Delta Advisory Council, or BDAC, a
    committee which is chartered under the Federal Advisory
    Committee Act and comprised of a variety of stakeholder
    interests, including California Waterfowl Association.
        In addition to BDAC, formal stakeholder interaction is also
    provided by the CALFED Ecosystem Roundtable, which is a roughly
    20 member BDAC subcommittee. In addition to the BDAC, and BDAC
    subcommittee, there's also 13 technical panels. And, in
    addition, an umbrella integration panel, which provides an
    opportunity for specialists, if you will, in various areas of
    stressed species, stressed habitats or regions, to help design
    program priorities, as well as rank, if you will, and evaluate
    the program projects which are offered for funding.
        One of the main concerns that the California Waterfowl
    Association has, however, is that, regardless of our ability to
    dedicate a fair amount of time to the program and our seat on
    the Bay-Delta Advisory Council as well as on the Ecosystem
    Roundtable, we have been relatively limited in our ability to
    fully address each of our concerns.
        Our association fully appreciates and supports the goal of
    the CALFED program to address water supply reliability and the
    importance of addressing the habitat needs of listed fish
    species in achieving this objective. Our ``managed wetlands''
    will also benefit greatly from achieving this goal. Yet, if the
    program is to make a sincere effort to restore the integrity of
    the Bay-Delta ecosystem, it must also more fully consider the
    serious habitat needs of native wildlife. Most notably,
    wintering and nesting waterfowl, and other species which share
    their habitats.
        California's Central Valley, largely the same geographical
    area which is being addressed by the CALFED Ecosystem
    Restoration Program, is widely recognized as one of the most
    important waterfowl regions in North America. It provides
    wintering and nesting habitat for nearly a full \1/4\ of our
    continental waterfowl population. Yet, this area has suffered
    the significant loss of nearly 95 percent of its historical
    waterfowl habitat.
        In the mid 1980's, in response to serious reductions in
    North America waterfowl populations, the North American
    Waterfowl Management Plan was signed by the Federal Governments
    of Canada, the United States, and Mexico. This plan established
    broad waterfowl population goals and identified seven
    priorities areas on the North American continent in need of
    habitat restoration and enhancement. California's Central
    Valley was one of those initial seven priority areas.
        Two years later, in 1988, a habitat restoration program, in
    many ways like CALFED, was initiated to address North American
    Waterfowl Management Plan objectives in our Central Valley.
    This public-private conservation effort, known as the Central
    Valley Habitat Joint Venture, carefully established
    biologically based acreage objectives for the preservation,
    enhancement, restoration, and maintenance of waterfowl habitat
    throughout much of the CALFED project area. And, in your
    packet, I have provided you with a matrix of exactly what those
    habitat goals are.
        Recognizing the importance of private landowner support to
    the success of the joint venture to be able to obtain those
    goals, a serious effort was made to minimize the changes to
    existing land use necessary to meet waterfowl needs. As such,
    the quantity of acreage targeted for wetland restoration was
    somewhat limited, and heavy emphasis was placed upon leaving
    land in agricultural production and simply working with the
    landowner to increase it's wildlife values.
        The tremendous loss of Central Valley wetland habitat, as
    well as the critical importance of the region to migratory
    waterfowl, is well documented. Clearly, the CALFED program
    ecosystem restoration effort could, and should, play a
    significant role in this critical conservation effort. Yet,
    thus far, the best efforts of our association to elevate
    waterfowl and their habitats to a high priority of the CALFED
    program have been relatively unsuccessful.
        Congress has already recognized the importance of the
    migratory waterfowl resource through it's support of the North
    American Waterfowl Management Plan, and it's authorization and
    annual funding of the North American Wetlands Conservation
    Act--the North American Waterfowl Management's Plan Federal
    funding source.
        Today, I ask for your assistance in creating a CALFED
    program which not only helps to meet these waterfowl needs, but
    also facilitates greater landowner support by providing full
    Federal funding to the CALFED Ecosystem Restoration effort, and
    earmarking a reasonable portion of these dollars for projects
    which are entirely consistent with the accepted habitat
    objectives of the Central Valley Habitat Joint Venture.
        In conclusion, the California Waterfowl Association would
    like to state that it is highly committed to the CALFED program
    and it's process, and would like to applaud the CALFED team for
    what we believe is a more than reasonable effort to design a
    program which maximizes the role of the private sector in the
    decisionmaking process. We ask those who may disagree to
    consider the tremendous difficulty associated with obtaining
    complete public satisfaction with a program of this size and
    scope. We also ask Congress to help us fully realize the
    potential of the CALFED program to appropriately address the
    needs of our North American waterfowl population and other
    native plant and animal species who share their habitats.
        On behalf of the members of the California Waterfowl
    Association and waterfowl enthusiasts throughout the North
    American continent, I thank you for the opportunity to come
    before you today. Thank you.
        [The prepared statement of Mr. Gaines may be found at end
    of hearing.]
        Mr. Doolittle. Thank you. There's so much material here,
    it's hard to know where to begin. Mr. Snow, do you file your
    documents electronically?
        Mr. Snow. We have a web page, where I think we have most of
    our documents. I'm not familiar exactly which ones are on that
    web page, but a lot of our material can be downloaded from the
    web page.
        Mr. Doolittle. So would this--we happen to have this up
    here, and I was listening to Mr. Dickerson's testimony about
    coping with--reacting to all these multi-thousand page
    documents. And this is the--I guess--the one that's out right
    now for comment by CALFED. Would this be on a web site, do you
    think?
        Mr. Snow. That's what I don't know. There may be somebody
    here who knows for sure. I know we have the phase 2 report,
    which is a summary of everything that happened and is contained
    in that--that is definitely on our web site. It can be
    downloaded. I know we intended to get this on a web site. I
    can't verify without checking.
        Mr. Doolittle. OK. I just--we did that 2 or 3 years ago in
    the Congress. I think every document that is generated is
    generated electronically and it just seems like it would be so
    much easier, because as Mr. Dickerson observed, I'm sure you
    didn't want to print too many copies of these because of the
    volume of it. And yet, for the public to be able to
    participate, the Internet would offer a remarkable opportunity
    for people to gain access to it. And I guess--I think--you
    could have all your maps and everything included within that.
    Just a thought.
        Mr. Dickerson indicated that there's no clear direction on
    new surface storage, which is a criticism I share. And he
    indicates that without new storage of surface water, the
    chances of producing a CALFED solution that would not
    negatively affect our members is very slim. Could you comment
    on the surface storage component of CALFED.
        Mr. Snow. Certainly. As you know, we have developed three
    alternatives and we have evaluated each of the three
    alternatives with no additional storage and an additional 6
    million acre feet of storage. And, so we've evaluated each
    approach.
        It's no surprise that, in order to get additional yield
    water supply in the system, you must have additional storage.
    Modification and conveyance, making the ecosystem more
    resilient, while adding some certainty to operations, do not in
    fact generate additional water supply. So the only way you get
    additional water supply or additional yield in the system is by
    adding storage.
        And we have evaluated storage both north of the Delta, as
    well as south of the Delta. We believe from our analysis that
    an additional 6 million acre feet is just about the end of the
    spectrum in terms of reasonable investment, because of the
    yield curves, which are actually contained in the briefing
    document if you want to followup on this.
        Mr. Doolittle. So, you've done analyses of yields of
    different proposed projects?
        Mr. Snow. We've done it in a broad evaluation of adding
    storage within the system and how much water you can move into
    storage.
        Mr. Doolittle. How did the proposed Auburn Dam fare on your
    yield curve? Is it one that you considered?
        Mr. Snow. We evaluated Auburn Dam. I do not recall, off-
    hand, how it did on the yield curve. New additional on-stream
    reservoirs do not fare well at all in our analysis. And, you
    will see in our planning document much more emphasis on off-
    stream, groundwater banking, and consideration of expanding
    existing on-stream.
        Mr. Doolittle. Why don't they fare well?
        Mr. Snow. Well, it's because of the--we have identified
    four co-equal objectives in terms of the CALFED purpose. We
    have actually a fairly unusual purpose and needs statement.
    We've developed where we hold water supply reliability, water
    quality, levy stability, and ecosystem, as coequal objectives.
    And when we look at the sites that you have available for new
    on-stream, it does not pencil out as well as the opportunities
    that you create with on-stream--or, excuse me--with off-stream
    reservoir, groundwater storage, and raising existing
    reservoirs.
        Mr. Doolittle. So it's sort of by definition then, you
    adopt that on-stream storage is less desirable than other
    alternatives, because of the impact you feel it has on the
    ecosystem?
        Mr. Snow. It's not just ecosystem. It's also the issue of
    how you tie it into the system. What are the benefits you can
    get out of it, in terms of supplementing flows for fisheries
    purposes. I think it's important to draw a distinction here.
    From a technical standpoint, all potential reservoir sites, on-
    stream or off-stream, are still on the table, because we have
    not finished 404 analysis to exclude them.
        However, I think it's important for me to stress that from
    our planning purposes, the examples that we included in here
    are a much more realistic expectation of what may be buildable
    out there in the system that meets the four objectives of the
    program.
        Mr. Doolittle. Well, I just can't imagine that a facility
    such as Auburn wouldn't pass your test. You heard Dr. Quinn say
    they'd be interested in water at $200 an acre foot and this
    would produce water at a $100 an acre foot. Not that we're
    willing to sell any of it to Southern California, but in case
    we were, it would be there.
        Mr. Snow. Yes, certainly cost would not be a lone
    consideration for us in evaluating whether it fits into the
    CALFED mix or not. I think the difference from the way Auburn
    has been discussed more historically, in terms of some specific
    water supply benefits and certainly flood control benefits, is
    different than the way CALFED is looking at storage
    modifications to fit into the broader program. And it's in that
    context that that reservoir, in particular, and new on-stream
    reservoirs, in general, do not hold up well in our analysis.
        Mr. Doolittle. You may not be able to do it today, but
    could you refer me to that part of your analysis where that's
    described.
        Mr. Snow. Sure, I'll try to develop or send you
    information.
        Mr. Doolittle. OK, and then probably, based on that, I'll
    have some further questions.
        They have now called a series of votes, it looks like. In
    the mean time, let's go to Mr. Miller.
        Mr. Miller. Thank you. I'll just have one question, and it
    may that this question has to be resolved in writing. But,
    Gary, I just wanted--is there a big inconsistency between your
    statement of sort of how your proceeding in CALFED and
    Professor Moghissi--between your two testimonies here?
        Mr. Bobker. No, actually, I think they're quite consistent.
    Some of the things that Dr. Moghissi referred to, the need for
    independent scientific review or the need for quantitative
    objectives--and these are things that not only the
    environmental community, but agricultural and urban
    stakeholders--involved in the process have been calling for. It
    took a little while to get, I think, an adequate response from
    the CALFED program, but the good news has been

    that they have moved in the direction of bringing in scientific
    review and the initial stages of developing quantitative
    objectives.
        Mr. Miller. Let me ask you this. But the screen that you
    sort of describe about how you--when you look--at some of these
    ecosystem restoration programs--do we apply the same screen to
    facilities? Can we talk about--you talked about environmental
    risk assessment--it's kind of peer review?
        Mr. Bobker. Well, yes, I think it's fair to say that the
    level of quantitative analysis, of definition of success, and
    of independent scientific review, to which we've been holding
    the environmental restoration program accountable, has not been
    applied as rigorously to the other parts of the program.
        The Environmental Water Caucus has, in some of our
    communications with Mr. Snow and the program, identified that
    as a need. We really haven't--we're waiting to hear a little
    bit more about how it's going to be dealt with. But, there's
    clearly a need, I think, for independent scientific review of
    the water quality component, independent scientific review of
    some of the water efficiency elements. I could go on and on. I
    will provide the Committee with a longer list that we have
    supplied to them of some of those needs.
        Mr. Miller. Thank you. Our apologies that we're now coming
    up against these votes. But, Mr. Gaines, I want to thank you.
    You're description of being involved in this process probably
    should be mandated reading for all of us. But we hope that, as
    we move into this next phase, that we narrow some--so people
    aren't wearing so many hats and we can start to harden some of
    these consideration. But, it's great reading. Thank you.
        [Laughter.]
        I'm not sure it's a great experience.
        [Laughter.]
        Mr. Doolittle. I think at this point we're going to have to
    recess and come back after the vote. There are four votes. It
    will be half an hour before we make it back. I wish I had
    better news.
        Do any of you have to leave to make a plane?
        Mr. Bobker. Too late now.
        [Laughter.]
        Mr. Doolittle. All right. We'll get back as soon as we can.
        [Recess.]
        Mr. Doolittle. OK, thank you for your indulgence. I see it
    took even longer than I was expecting. Mr. Pombo is recognized
    for his questions.
        Mr. Pombo. Thank you, Mr. Chairman. I guess I'll start with
    Mr. Snow. Two different areas that I'd like to go in with you.
    We've discussed a lot of different things and you've heard all
    of the testimony so far.
        The first area I'd like to question you on is in terms of
    process. The concern has been raised about public participation
    in the process. The concern that I'm hearing from constituents
    and from others is that you have done an admirable job of
    pulling together what you consider the stakeholders and pulling
    those people in and trying to make them part of the process.
        I think that--and I understand you didn't attend the
    hearing in Walnut Grove--but, I think what that hearing
    represented was the general frustration, the lack of
    information that was available, the lack of information that
    has been distributed to those that are being impacted. I think
    it's fairly obvious that none of those people that attended
    that hearing, who live and work in the Delta, who's land and
    water will be directly impacted by whatever final decisions are
    made, are considered stakeholders in this process. At least,
    they feel that they have been excluded from this process.
        I think that's an old pattern that we have fallen into with
    CALFED, and, as I've told you before, I don't oppose the CALFED
    process. I think it's very important. But I think that one of
    the things that we've fallen into with this process is, that
    you look at the people who are on the panel that are considered
    stakeholders, and you don't have a lot of people who own
    property in the Delta or have water rights to the water that
    flows through the Delta that are included in the process.
        Would you like to respond to that?
        Mr. Snow. Sure. I think there's two points that everybody
    would agree with. And that is--and they seem contradictory, but
    I don't believe that they are--that the CALFED process has done
    more in terms of outreach than any other process has attempted.
    The number of meetings, the number of workshops, our outreach,
    has gone beyond that which has done for most projects like
    this.
        But at the same token though, I think there's agreement
    that we need to do more. Because of the magnitude of the
    potential impacts, we need to continue and even expand beyond
    the traditional stakeholders. And I think the Delta, in fact,
    is a good example of that, where we have, let's say, relied on
    the easier representatives--the traditional folks, an Alex
    Hildebrand or Pat McCarty, Jim and Sally Shanks, and Tom
    Zuckerman, and Dante Nomalini--those people that have provided
    us advice. We tried to reach out through the Delta Protection
    Commission and attend some of those meetings, and some of the
    rec board meetings.
        But, I think the point that you're making--as we move
    forward in this and start making clear decisions, we need to
    get down to the community level. To the level where people are
    actually impacted by land acquisition strategies. And I agree
    with that. And I think we're trying to, at this stage of a
    draft programmatic, to get clearer on where we're headed and
    what the issues are. We have to do more outreach, particularly
    in the communities that are to be impacted by these actions and
    the Delta is the best example of that.
        We've tried to listen to the different issues. I think
    they've been very articulate at a lot of meetings, including
    the Walnut Grove public hearing. There's a whole host of issues
    that they're concerned about. Land retirement is only one of
    them. They're concerned about isolated facilities. They're
    concerned about commitment to maintaining levies. They're
    concerned about getting ESA restrictions off their back, so
    they can maintain the levies. We're listening to those points
    and I think we need to do a better job of communicating that.
        Mr. Pombo. In terms of the Walnut Grove hearing, one of the
    most often shortcomings that I heard was that each person was
    allowed to make a statement for 3 minutes. Many of them were
    cutoff mid-sentence, when their 3 minutes were up. No questions
    were answered. Many people came there with questions and walked
    away with the same questions.
        I get the feeling that you're going through this process so
    that, at the end, we can say we had 17 hearings throughout
    California with the general public. And if all of the hearings
    are the same as this particular one was, you may end up with 17
    hearings with the general public, but you will end up with
    everyone who went to those 17 hearings walking away without one
    question being answered that they walked in with. And I think
    that something needs to change in the way you are conducting
    these hearings, so that people at least feel like they got some
    answers.
        Mr. Snow. There's two different--there's many different
    kinds of meetings, but there's basically two types that we're
    pursuing in CALFED. The one is the legal hearing process, which
    has very specific legal requirements on how we conduct
    ourselves. And the other is the open meeting with full exchange
    and dialog between the parties.
        We have even modified our hearings, so that we start a
    public meeting an hour before the formal hearing, that allows
    people who wish to come to actually meet with individuals in
    the program and discuss different issues and get answers to
    those questions. We also have been conducting--you know, in the
    past 2 years, over 350 community meetings and outreach efforts,
    whether it's a formal CALFED public meeting or a meeting
    cosponsored with a local reclamation district, where we have
    the full exchange.
        But we are conducting very formal public hearings to comply
    with law and case law to make sure that everybody has equal
    access and equal opportunity to provide comments into the
    official record.
        What I would propose in this case, is that if we need to
    hold a public meeting for the purpose of the dialogue, not the
    official hearing record, we'd be glad to do that. And we've
    done that.
        Mr. Pombo. I know, in my area, there's definitely a need
    for that. I don't know if in Riverside or some of the other
    areas where hearing's are proposed there is a need for that
    kind of hearing. But I do know that the people that I represent
    probably will be more impacted by whatever decision than
    anybody in the State in California, and they feel like they've
    been cut out of the process.
        Mr. Chairman, my time's expired. I have a number of other
    questions I would like to ask. But, I don't know exactly how
    you're going to handle the time.
        Mr. Doolittle. Well----
        Mr. Pombo. Mr. Miller said he would give me his time.
        [Laughter.]
        Mr. Doolittle. Go ahead. Proceed.
        Mr. Pombo. Second, in terms of process, and this takes off
    of something that Dr. Moghissi was talking about. I have a real
    concern about how we end up with a final product. I feel that
    there is definitely a lack of peer reviewed science that is
    being done at this point.
        And you may debate me on that, but from my perspective,
    there's a lack of honest science being done at this point in
    the process. I don't feel like you have gone to outside people
    who don't have a stake in this end product and said, is what we
    are doing accurate, scientifically. Does it hold up? I don't
    think that that's happening, one.
        Two, I have a list of proposed projects that I believe came
    from your office. These are not the projects that we are
    approving as part of the appropriations process. We're being
    asked for $143 million, and no congressional committee is
    having oversight hearings into approving these projects. To my
    knowledge, no committee and the State assembly or State senate
    is holding hearings into whether or not we should spend
    taxpayer money on these projects.
        What we are being asked to do is to approve a bulk amount
    of money to go to CALFED. Who is ultimately responsible if you
    waste money? Who is ultimately responsible if you put together
    something that is full of fraud and abuse, that benefits the
    people that are sitting on the board, who are participating in
    the process? Where is the taxpayer accountability for the end
    result? Who--and don't take this personally--but, who voted for
    you? Who put you in to make you king to decide where we spend
    taxpayer dollars?
        Mr. Snow. Let me start by saying that being king is grossly
    overrated, if that's what I am in this process.
        [Laughter.]
        Mr. Pombo. And I don't want your job. I'm just asking.
        Mr. Snow. Do you have any positions open?
        [Laughter.]
        That's an excellent question and let me start by saying we
    think we have put a process in place that guards against those
    types of abuses. We subject people on panels to conflict
    requirements, disclosure statements. We work our way through
    that, and certainly Gary Bobker and Rich can attest to what we
    require of even the advisory panel in terms of disclosure of
    interest and remote interest associated with any projects that
    may be coming forward.
        The answer your question--actually, in terms of where the
    responsibility lies--actually is in the same place as how did I
    get this job. And basically that is, I'm accountable to the
    secretary of Interior and to Governor Wilson through the
    secretary for resources for the State of California. And in
    terms of the two funding sources--two primary funding sources
    we are utilizing now in funding these projects--Proposition 204
    specifically puts the secretary for resources for the State of
    California as the fiduciary agent for those moneys. He must be
    responsible that they are expended in compliance with State law
    and all the provisions of conflict of interest, contract law,
    et cetera.
        On the Federal side, it is, of course, the secretary of
    Interior responsible for making sure that those moneys are
    expended in an efficient and effective fashion under Federal
    law. Now we have a very elaborate process set up to move
    projects forward through many levels of screening and review
    and peer review, before those lists move forward for their
    recommendations. But in terms of----
        Mr. Pombo. You say peer review, but you don't mean outside
    peer review.
        Mr. Snow. Well, I do mean----
        Mr. Pombo. It's within the group.
        Mr. Snow. [continuing] outside peer review in the sense
    it's not just agency folks reviewing it. When we have technical
    teams, for example, where they're evaluating the merits of
    screening projects to achieve the objectives on screening and
    fish passage problems, that includes technical experts from the
    agency, as well as stakeholder community. And so that is a
    broader based science review and it's not simply an agency
    deciding this is what we would like to do next year.
        Mr. Pombo. Dr. Moghissi, would you like to respond to that?
        Dr. Moghissi. I don't believe that qualifies for peer
    review. That is technical advise they are receiving. Peer
    review would imply that Mr. Snow or anybody else who is
    involved in it would have no hand in selection of the reviewers
    and he would have to respond formally to the recommendation of
    those.
        No--this problem has been around, particularly with the
    Federal Government, for a number of years and there is numerous
    reports from the General Accounting Office, from the National
    Research Council, which as you know, is the research arm of the
    National Academy of Sciences and National Academy of
    Engineering, and so on--there is a fairly broad--from American
    Association of Engineering Society, American Medical
    Association--there's a broad consensus of what constitutes peer
    review.
        That is a very worthy thing he's doing in which he
    basically determines the relevancy of the project, but this is
    not peer review.
        Mr. Pombo. Mr. Gaines, you and I have talked on innumerable
    occasions about waterfowl habitat protection throughout the
    Central Valley of California. One of the issues that you have
    brought up to me, in the past, was the value of farm land in
    providing waterfowl habitat. Would you like to share with the
    Committee the impact of the retirement of vast number of
    acreages in this particular area?
        Mr. Gaines. Sure. Let me reiterate a little bit of what was
    in my testimony earlier. The Central Valley Habitat Joint
    Venture, which, of course, is the public-private effort under
    the North American Waterfowl Management Plan, is implementing
    waterfowl conservation efforts in California--the Joint Venture
    is one of many, but that's one of the main bodies that's moving
    forward.
        When we pulled together our waterfowl population goals for
    California and the Pacific flyway, we started out with bird
    numbers, and we worked that down into what their energetic
    requirements would be, and then ultimately, what type of
    habitat changes we had to make on the ground. We knew that the
    best we could probably do would be to get possibly 300,000 to
    400,000 acres of true managed wetlands, or good wetlands, in
    the Central Valley. And somehow, some way, we were going to
    have to do something else, because even if that block of
    habitat--400,000-450,000--acres was managed to be the absolute
    best it could possibly be for waterfowl, it wasn't going to be
    enough.
        And so, what we did is we also established a goal that we
    call our agricultural enhancement goal, which is actually
    443,000 acres of ag land, Central Valley wide, that we want to
    see farmed, but farmed in a wildlife friendly manner.
        In the Delta, which is one of the areas where, of course,
    because of flood control projects and other changes in our
    natural hydrology, we've lost a whole bunch of naturally
    occurring wetland habitat, the corn fields, wheat fields, and
    other agricultural production that takes place in the Delta
    now, provides a real critical component, if you will, of that
    443,000 acre agricultural enhancement objective. Specifically
    in the Delta basin itself, the Central Valley Habitat Joint
    Venture has established a goal of annually enhancing about
    68,000 acres of farm land. And without that block of 68,000
    acres, whether it be winter corn or what have you, we'd be
    really in deep, deep trouble.
        One of the things that you hear about when you talk to
    folks about the CALFED Bay-Delta program is all these wonderful
    wetlands that are going to come about as a result of the
    program. Well, there's wetlands and there's wetlands. Tidal
    wetlands, for example, are what we would consider very marginal
    waterfowl habitat--great for fish, great for a lot of other
    species, not real good for ducks--but it depends upon the
    species of ducks, some species like them. But, by and large,
    the ones that are the most popular game bird, so to speak, in
    California, the mallard, pintail, teal, and so forth, tidal
    wetlands don't give them much, if anything.
        Seasonal flood plain, because we don't have the seasonal
    flows that we used to have anymore, we basically have seasonal
    flows only when we have no more carrying capacity in the dams
    and we've got to let some water go--provides very minimal
    waterfowl habitat as well.
        So, if we're going to get there--and we're going to get
    there in the Central Valley, and specifically in the Delta,
    because that really is ground zero for our waterfowl effort--we
    really need to maintain a serious block of agricultural land
    and we need to do the best we can to keep it as duck friendly
    and wildlife friendly as we can.
        Mr. Pombo. Mr. Snow, on the land that would be necessary to
    be retired under your plan, the amount--whatever that amount
    ends up being--do you intend on paying for it, or do you intend
    on just putting it on a map and leaving the restrictions on the
    use of that property?
        Mr. Snow. It's our intent that any land that's necessary is
    acquired in the marketplace.
        Mr. Pombo. Using your figures, it's somewhere between $1.5
    and $2 billion for the purchase of the land that you said was
    necessary. Do you--have you included that in the budget in the
    financing of this?
        Mr. Snow. I'm not sure how you're arriving at that number,
    but we would have those numbers accounted for in some fashion
    in our total cost estimates.
        Mr. Pombo. Do you think that the elected representatives
    that have a responsibility to the taxpayers should know that
    they are committing to a $1.5 to $2 billion land acquisition
    cost as part of this program?
        Mr. Snow. But I don't think that's the way to characterize
    this. When we show the cost----
        Mr. Pombo. You said you were going to pay for it.
        Mr. Snow. That's correct. But I guess the point I'm
    making--if you look at the numbers, you'll notice that we show
    as much as 35,000 acres of ag land conversion, primarily in the
    Delta region, as a product of stabilizing the levies. And we
    show those kinds of costs as part of the levy process.
        Mr. Pombo. But you would have to pay for that land.
        Mr. Snow. But it's part of the levy project. I guess that's
    my point. Some of the strategies of stabilizing levies is that
    you buildup on the interior side of the levy, and also to try
    to arrest subsidence. That strip of land around the levies that
    you're now having to manage in a different way to stabilize the
    levy has taken up some of the ag land, and----
        Mr. Pombo. You still have to pay for it.
        Mr. Snow. That's correct.
        Mr. Pombo. My point is--whether you take it for seasonal
    wetlands, or tidal wetlands, or you just leave it fallow, or
    whatever you decide to do with it--you still have to pay for
    it.
        Mr. Snow. Correct.
        Mr. Pombo. And, if it takes the 250,000 to 400,000 acres--
    and I believe your figure was 380,000, that you testified to
    here today--it's between $1.5 and $2 billion in current market
    value. And that's considering that it's all farm land; and that
    there's no speculative value on that land as well; and that
    you're not taking out permanent crops; that you're not taking
    out home sites; that's just on straight farm land.
        That is a considerable amount of money that I don't believe
    is going to be in the budget in the very near future. And, once
    you adopt this plan, and you've set aside that land, at least
    on the map, you've impacted the value of somewhere between
    250,000 and 400,000 acres, depending upon what the final plan
    is.
        And I don't--I've got to tell you that I don't believe
    there's anyone in Congress that's going to stand up and tell
    you, honestly, that you're going to get that money. I have a
    real problem with doing that. I have a real problem with us
    going into this knowing that we're going to devalue several
    hundred thousand acres of land, and knowing that we can't pay
    for it, at least not in the near term.
        The final issue that I would like to go over with you deals
    with the water storage component of this. I do not believe that
    the documents--the draft documents--that we have sitting in
    front of us right now, adequately address the need for surface
    water in the future. I don't believe that it addresses the need
    for surface water for California. I don't believe it addresses
    the need for surface water to take care of water quality issues
    in the Delta.
        I believe that, with what you've included in here, you are
    guaranteeing that we will have that train wreck. And that train
    wreck will be these guys that are demanding water quality as
    part of this, and those that are demanding reliability on their
    water sources. And you're going to have to take water away from
    someone, because you're not going to provide the amount of
    water that's necessary to provide the water quality goals and
    the reliability goals that you've outlined for yourself--with
    the surface water provisions that you have included in this.
        I believe they are wholly inadequate to take care of your
    stated goals. It may avoid a fight on your committee--it may
    avoid a fight within the so-called stakeholders that are
    participating in the process right now, but when reality hits,
    and you've told these people that we're guaranteeing certain
    water quality and you've told these people we're guaranteeing
    certain reliability, in exchange for getting them to sign off
    on the whole program, the reality is, you don't have enough
    water to do it.
        And you're going to be back looking at trying to develop
    surface water in order to meet those goals. And going into this
    process, I think you have completely short shirted that part of
    the document. There may be a reason for doing it, but I think
    that, in the long run, you're going to be sorry that we did--or
    that we all will be sorry that we did.
        Thank you, Mr. Chairman.
        Mr. Doolittle. Well, thank you. I must say, I join in Mr.
    Pombo's sentiments. And I got to tell you, I'm not happy about
    a process that this favors surface water, and especially on-
    stream surface water, especially like we've got--there's a
    possibility at Auburn. And I would be very interested in your
    material that you are going to send me on that point.
        You talked about levy stabilization, Mr. Snow. Is there any
    possibility that somehow the city and county of Sacramento or
    their flood control agency is going to qualify for CALFED
    moneys or prop 204 moneys to do it's levy enlarging project?
        Mr. Snow. The way we have defined the problem area and the
    way we have approached the levy program, or the component of
    CALFED, the levy program is focused on the legal Delta,
    continued out to Carcinas Straight. And that would not include
    the American River Levy.
        Mr. Doolittle. OK. Thank you. Ecological risk assessment
    was mentioned by Dr. Moghissi. Is that--and he indicated in his
    testimony that wasn't part of your analysis--do you concur in
    that?
        Mr. Snow. We have developed--well, maybe I should caveat
    this--maybe I'm not familiar with the precise definition of
    peer review as presented by the doctor here. However, we have
    initiated a process to bring in outsiders not associated with
    CALFED or it's members. We started it first with a science
    panel review of our program and one of their recommendations
    was to set up ongoing science review, which we have started
    working on with the stakeholders--to set up a long term process
    to ensure a science review.
        So, maybe I should use that term--that we have brought in
    independent science review, whether that fits the precise
    definition of peer review, as presented by Dr. Moghissi--I'm
    not familiar with that definition.
        Mr. Doolittle. But, I think the--and I was interested in
    the peer review too, but the ecological risk assessment, as I
    understood it, would enable you to, I guess, quantify what it's
    going to cost to achieve certain objectives and measure the
    biggest bang for the buck. Am I mis-characterizing it, Dr.
    Moghissi?
        Dr. Moghissi. Right.
        Mr. Doolittle. OK.
        Mr. Snow. So, I answered the wrong question, is that----
        Mr. Doolittle. Well, that's OK, because I was going to ask
    you that--that was my next one. So----
        Mr. Snow. That was the next one.
        Mr. Doolittle. That's all right.
        Mr. Snow. We have not done that type of analysis at this
    point in our programmatic evaluation. That type of risk
    assessment comes up in specific applications. The place where
    we are doing it now, is trying to get a risk assessment on the
    fish entrainment issue, which is a major issue in the Delta.
    The effect of the two large diversions in south Delta, and when
    you modify the pumping pattern and you modify the location of
    pumps, whether you add screens, we are attempting to get a
    handle on the percent benefit or probability of improving
    specifically, the endangered species in the Delta. And given
    different configurations and different patterns, what are the
    probability you can recover the species, which is the
    objective.
        So we're now introducing it on a specific issue like that.
    And I think the concept of being able to address the
    probabilities that actions will achieve the designed result, is
    something that comes along with our program as we get focused
    on a preferred alternative at a programmatic level and start
    moving to specific actions.
        Mr. Doolittle. I guess what I don't understand--I really
    don't mean to harp on this--but, it seems--I don't know how you
    could rank like you said, using your criteria, on-stream
    storage would not fare well. But I don't know--that seems odd
    to me--that ecological risk assessment wouldn't be part of that
    first tier. Because otherwise, things are going to fall off
    that may never get subjected to ecological risk assessment. And
    yet, that to me, is so fundamental, in terms of allocating
    scarce resources.
        Mr. Snow. Well, I can't answer that precise question in
    terms of risk assessment and how it applies to that. I mean, I
    think the issue that we've looked at with respect to storage is
    trying to overlap as many issues as we can.
        And so, for example, looking at the difference between on-
    stream storage on the American River and a popular off-stream
    site that's often discussed, Seitz Reservoir in the Sacramento
    Valley. When you look at a Seitz Reservoir, you can do a lot of
    things with that, including make a joint investment to clean up
    the red bluff diversion structure, which is a problem with
    fisheries and a problem for ag users in the Sac Valley. And in
    doing that, you fix current problems with the Tahama Calusa
    Canal Diversion.
        At the same time, you prepare a diversion structure for an
    off-stream reservoir. Also, it gives you flexibility to provide
    water to the backside of some of the irrigation districts,
    thereby reducing their take off the river and further reducing
    fish entrainment problems.
        So, we'd look at those types of linkages and start building
    and compounding the joint benefits that we can get. And that's
    why I make the comment, in a general sense, that off-stream
    reservoirs, particularly, moved away from the system and the
    other problems--on-stream reservoirs don't provide the benefits
    that we've seen with some of these classic off-stream
    reservoirs.
        Mr. Doolittle. I guess the thing that I find strange is
    that you're one governmental entity--you're made up of a
    consortium of governmental entities--and yet, members of that
    consortium, like the Corps of Engineers, in the State of
    California, Department of Water Resources, have clearly stated
    in testimony, the only solution for the grave flood threat to
    the city and county of Sacramento that protects them, is an
    Auburn Dam. I mean, the Corps of Engineers has spent millions
    of dollars recently, coming up with that conclusion, and
    they're a member of your CALFED--are they not?
        Mr. Snow. Yes, they are.
        Mr. Doolittle. And the State of California Department of
    Water Resources is another entity involved with that. They've
    both come to that conclusion, and yet, CALFED, which is getting
    hundreds of millions of dollars in funding--State and Federal--
    has developed criteria that puts blinders on itself. I mean,
    this just seems very, very strange to me--that something where
    we already have the need for flood control--I mean, why
    shouldn't that be, because of that other reality, shouldn't
    that be reflected in your consideration with reference to a
    project like Auburn?
        Mr. Snow. Well, I think it is a consideration and I can
    only surmise that if the CALFED objective was flood control,
    and was our No. 1 objective, and then we had incidental
    benefits from it, we might look at Auburn differently. I might
    also expect that if the Corps had the four coequal objectives
    that CALFED does, that they might look at Auburn differently. I
    do not know.
        Mr. Doolittle. But my point is--I understand that flood
    control isn't one of your objectives, but nevertheless, it's a
    key governmental purpose and yet you don't seem to add in that
    as part of your mix in the analysis. It's like it's just ruled
    out. And that seems--because since there is the flood control
    component, which moves toward an Auburn Dam, if you added to it
    your consideration of adding more high quality water to the
    system, those two could work synergistically. Instead, they're
    forced to remain in isolation from one another. That's the part
    that seems very strange to me.
        Mr. Snow. Well, we're not attempting to have them in
    isolation. And to make sure that I'm not misleading--we have
    not ruled out those options. I'm sure you're familiar with
    section 404 and the requirements you must go through and we
    must demonstrate that we have evaluated sites and screened
    sites properly, and they are all, as we speak, still on the
    table.
        Now, the point I'm making, so that I'm not misleading you
    or this Committee, is that in our planning efforts, as we try
    to put these pieces together, on-stream storage--new on-stream
    storage--does not stack up as well as putting this
    comprehensive package together, as some of the opportunities
    with off-stream storage does.
        Mr. Doolittle. OK. In the abstract, I can understand that.
    I may not agree with it, but I can understand it. But, I mean,
    this isn't the abstract. I guess that's my point. This is
    something that's a very real thing. There are efforts right now
    to figure out what to do about the problem in Sacramento. Could
    I at least ask of you that you will take a look at this and let
    me know what you think?
        Mr. Snow. Yes, I will.
        Mr. Doolittle. I can see it's different than if I were just
    asking you to build a dam in the American River, where flood
    control was not a great concern. But it is a great concern.
    It's a driving concern.
        Do you have further questions? Go ahead.
        Mr. Pombo. Just quickly, Mr. Chairman. Mr. Snow, are you
    coordinating the activity between the proposal under CALFED to
    buy land for retirement, the proposal under the Delta wetlands
    project, the proposal that BLM and Nature Conservancy have--
    have you, at any point, sat down and looked at a map and
    started putting all of those different things together and
    looked at the impact that would have?
        Mr. Snow. We have attempted to make sure that our numbers
    are the total accumulative numbers of these activities, to make
    sure that, when we are expressing what we believe may be
    necessary to restore Delta smelt and salmon species and the
    kinds of habitats that are necessary, that those numbers are
    not additive to another HCP effort or BLM effort. So we believe
    that we have put the marker down for the totals. And, I believe
    that we've included in that the Delta wetlands project.
        Mr. Pombo. So your number includes the Delta wetlands?
        Mr. Snow. That's my recollection. I will have to check on
    that and get back to you.
        Mr. Pombo. If you could answer that for the record for me,
    I would appreciate that.
        Mr. Golb. Mr. Pombo, if I might add one point. One thing
    that we've encountered with the land acquisition and the
    conservation program CALFED has undertaken is as you know, the
    State of California and the Federal Government owns nearly half
    the State. And State agencies, such Caltrans and others, own a
    tremendous amount of acreage, some of it in small tracks, some
    of it in large tracks. One thing that we've only briefly talked
    with Lester about is the concept of trying to utilize public
    lands first, before we acquire private land. It just seems to
    make sense from a cost perspective.
        Mr. Pombo. Forty-nine percent is owned by the Federal
    Government; if you include State and local governments, you're
    up to about 56 percent.
        Mr. Golb. Well, it's a lot of land. Now some of it may not
    have the same ecological characteristics.
        Mr. Pombo. Five hundred sixty million acres.
        Mr. Golb. OK. They may not have the same characteristics
    that CALFED is considering. But from an efficiency standpoint,
    it may be worth looking at.
        Mr. Pombo. I would agree with you and that's something that
    this Committee has looked at in great detail--is the impact of
    the lands that are already owned by the public and this effort
    to take what--you know, less than half of California that's
    privately owned and make that public land as well. It has an
    impact on our cities, our counties, a huge impact on the
    economy of California. And I think everybody should realize
    just what an impact that would have.
        Mr. Doolittle. I did send you a letter, Mr. Snow, on the
    26th of March, asking for certain information. And you wrote
    back and indicated that CALFED anticipates that significant
    changes will occur to the hydraulic capacity, physical
    features, water quality, and ecosystems at Bay-Delta.
        What I was trying to get at--I mean, you recognize that you
    have some anticipation--I would like to know what are those
    significant changes and how will they be monitored? I mean, do
    you know what those are now, or is this something you simply
    believe there will be changes, but you don't know what they
    are?
        Mr. Snow. I don't recall the specific context that the
    sentence is in, but I think perhaps the context is simply in
    terms of the proposals--the three basic alternatives that we
    have--that would change the way the system functions. In terms
    of monitoring, there's two things.
        One, there is a fairly extensive monitoring system that has
    been in place for nearly 20 years, collecting data. And it's
    the data base that has served to indicate that there are
    endangered species and water quality trends. We are building on
    that data base with the work that has been referenced here
    today, in terms of developing additional indicators so that we
    have a better yardstick to measure the changes and the progress
    on overall ecosystem restoration.
        Mr. Doolittle. Well, let me do this. Let me just send you
    and give you a chance to clarify this in writing, if I may.
    I'll give you the background, the letter, and everything. But
    I'd like to get a more specific answer, if I can.
        Mr. Snow. OK.
        Mr. Doolittle. I'd like to thank all of you for appearing
    today. It's been a long day for you and you've been patient for
    us to vote here at the end. I think we've developed a lot of
    very interesting information at this hearing. We will, I'm
    sure, have further questions--we'll tender in writing and ask
    you to please respond expeditiously.
        With that, the hearing will be adjourned.
        [Whereupon, at 7:27 p.m., the Subcommittee adjourned
    subject to the call of the Chair.]
        [Additional material submitted for the record follows.]
     Response of Thomas M. Berliner, General Counsel, San Francisco Public
      Utilities Commission to the ``Disclosure Requirements'' required by
                           House Rule XI, Clause 2(g)

        1. Name: Thomas M. Berliner
        2. Business Address: City Attorney's Office, 1390 Market
    Street, Suite 250, San Francisco, CA 94102
        3. Business Phone: (415) 554-295
        4. Organization you are representing:
          The ``Bay-Delta Urban Coalition'' and the San Francisco
    Public Utilities Commission.
        5. Any training or educational certificates, diplomas or
    degrees which add to your qualifications to testify on our
    knowledge of the subject matter of the hearing:
          Doctor of Jurisprudence
        6. Any professional licenses or certification held which
    add to your qualification to testify on our knowledge of the
    subject matter of the hearing:
          Member, State Bar of California, District of Columbia
    Circuit, Ninth Circuit, United States Supreme Court.
        7. Any employment, occupation, ownership in a firm or
    business, or work related experience which relates to your
    qualifications to testify on or knowledge of the subject matter
    of the hearing:
             Nineteen years of legal practice on behalf of the City
            and County of San Francisco, most of which has focused on
            water, energy, natural resources.
             Represented the San Francisco Public Utilities
            Commission before the State Water Resources Control Board,
            Federal Energy Regulatory Commission, Department of the
            Interior, and other regulatory agencies and legislative bodies
            concerning water and energy matter.
             Active member of the Bay-Delta Urban Coalition, the
            California Urban Water Agencies, and other industry
            organizations.
        8. N/A
        9. N/A
        10. N/A
        11. N/A
                                     ______

        Statement of Bill Pauli, President, The California Farm Bureau
                                   Federation

        The California Farm Bureau Federation appreciates the
    opportunity to provide comments on the future water needs of
    California and the Cal-Fed process for a long-term Delta
    solution. On behalf of its more than 75,000 member families
    throughout California, Farm Bureau is committed to solutions
    that will assure a reliable and affordable water supply for all
    Californians.
        The California Department of Finance has projected that
    California's population will increase from the present 33
    million people to nearly 50 million people by the year 2020.
    These additional 17 million people will not only need new water
    supplies, but they will also need a safe and reliable food and
    fiber supply. And, with more people, California will
    increasingly appreciate the open space provided by the farms
    and ranches that grace California which account for more than
    $25 billion in direct revenues and generate $12 billion in
    exports.
        The Cal-Fed process provides an important opportunity for
    California to craft a collaborative plan that will satisfy a
    significant portion of the state's expected water demands for
    the next 30 years. Unfortunately, the Cal-Fed plan to date has
    fallen short of this goal. Most notably, Cal-Fed has been based
    largely on redirecting agriculture's two most fundamental
    resources--water and land--to satisfy other uses, rather than
    efforts to assure reliable and affordable supplies for farms,
    cities and fish. Even so, we remain cautiously optimistic that
    Cal-Fed can turn the corner and forge a plan that will benefit
    all of California, including its farmers and ranchers. To do
    this, we believe additional attention must be given to several
    key issues that will be critical to California in the 21st
    century, including increased surface water storage, minimizing
    the fallowing of agricultural land, and strengthening water
    rights.

    Surface Water Storage

        The California Department of Water Resources estimates that
    of California's total water use in 1995, 46 percent was
    dedicated to the environment, 42 percent to agriculture, and 11
    percent to urban use. Additionally, millions of acre-feet of
    water flow out to the ocean above and beyond this water
    dedicated to the environment, farms and cities. Rather than
    redirect water from productive urban and agricultural uses,
    California must fully utilize and conserve water that now flows
    through streams to the ocean. By focusing on conserving
    outflow, California can minimize the risk of flooding, and save
    this water for other times, particularly for dry year use when
    cities, farms and fish need the water. The most effective way
    to conserve outflow is to to increase surface water storage in
    an environmentally sensitive manner. Increasing the capacity of
    existing reservoirs, such as Lake Shasta, Millerton Lakes, and
    Los Vaqueros are good examples of programs that can be used for
    the benefit of farms, cities and fish.

    Agricultural Land Fallowing

        Cal-Fed and other governmental programs have proposed to
    fallow more than 250,000 acres of prime agricultural land
    holding senior water rights. The overall fallowed acreage could
    easily approach one million acres. Agricultural land in
    California is a resource of global significance that, as a
    matter of good public and social policy, should not be
    converted to any other use. We recognize that new conveyance
    systems and reservoirs will require a certain amount of
    agricultural land to be taken out of production. In these
    cases, landowners must be justly paid and given adequate notice
    and opportunity to assure that their property rights are fully
    protected. The fallowing of agricultural lands for levee
    setbacks, shallow water habitats and other environmental
    purposes should be a limited part of the Cal-Fed solution, due
    to the effects on local communities and government revenue.
    Instead, non-agricultural lands should be used for this
    purpose.

    Water Rights

        Assurances and particularly the protection of agricultural
    water rights are the key to the ultimate Cal-Fed solution. In
    many cases, old promises must be fulfilled before new promises
    to protect rural areas will have any credence. California's
    farmers and ranchers depend upon well-established water rights
    to maintain their livelihoods and way of life. Cal-Fed must
    assure farmers and ranchers that both their surface and
    groundwater rights will not only be protected, but will in fact
    be enhanced and strengthened by the Cal-Fed process. Most
    notably, Cal-Fed and the individual agencies should abandon
    plans to use groundwater in areas feeding the Delta as the
    future source of urban and environmental supplies under the
    guise of a conjunctive use program. Area of origin rights must
    also be fully recognized and strengthened by Cal-Fed.

    Federal Appropriations

        We cannot support the continued investment of public money
    in the Cal-Fed process as long as California's farmers and
    ranchers bear a disproportionate burden of a long-term Delta
    solution. Farm Bureau supported Proposition 204 as a down
    payment to secure major improvements in water management in the
    Sacramanto-San Joaquin Delta. Unfortunately, to date, both
    Proposition 204 and Federal appropriations have been used in
    large part to fallow agricultural land and set the stage to
    redirect agricultural water to other uses. This means that
    California agriculture is moving backward, not forward, as we
    have all been promised in the Cal-Fed process.
        We continue to support the need for a long term Delta plan,
    but we are losing confidence that the ultimate Cal-Fed solution
    will contain meaningful components, such as water storage, that
    will benefit farmers and ranchers in all parts of the state. We
    are also very concerned about Cal-Fed's proposal for large-
    scale fallowing of our state's valuable farmland and the
    associated effects on rural communities. It is therefore
    impossible for us at this time to support a continuing Federal
    appropriation for Cal-Fed until we see marked improvements in
    the program to benefit California's farmers and ranchers.
        In closing, the California Farm Bureau Federation will
    submit detailed and constructive comments to the Programmatic
    EIS/EIR for the Cal-Fed program as well as the associated
    documents. We are optimistic that the Cal-Fed process will turn
    the corner and begin to focus on efforts that will benefit
    California's farmers and ranchers and will make significant
    strides toward satisfying California's water demand for the
    next 30 years. We look forward to working with you in this
    process.
                                    ------

     Statement of Martha Davis, Board Member, Mono Lake Committee and the
                             Sierra Nevada Alliance

        Good afternoon, Chairman Doolittle, and Subcommittee on
    Water and Power Resources. Thank you for your invitation to
    speak before you today.
        My name is Martha Davis. I have worked for over fourteen
    years on California water issues. For thirteen of those years,
    I was the executive director of the Mono Lake Committee, a
    17,000 member citizen's group dedicated to the protection of
    Mono Lake in the eastern Sierra. A major component of the
    Committee's work focused on helping the City of Los Angeles to
    develop local conservation and water recycling programs so that
    saving Mono Lake would not impact the San Francisco Bay Delta
    or the Colorado River. As a result of this experience, I have a
    working familiarity with the urban water needs of California
    and, in particular, those of Southern California.
        I stepped down from this position last year, but have
    continued to work on California water issues in various
    capacities. I currently serve as a member of the CALFED
    program's Bay Delta Advisory Committee (also known as BDAC) at
    the recommendation of Governor Wilson. In addition, I serve on
    the board of directors for the Mono Lake Committee, the Sierra
    Nevada Alliance and the Bay Institute of San Francisco.
        I strongly support the CALFED process for seeking a
    solution to California's complex water issues. It is a process
    that is profoundly reshaping the way in which the State is
    thinking about its water future.
        CALFED's task of laying out a blueprint for that future is
    far from complete. The draft CALFED program elements and
    environmental assessment documents have just recently been
    released for public comment. We are all sifting through
    thousands of pages of text and charts, trying to decipher if
    the assumptions and technical evaluations performed by CALFED
    are valid and whether the program elements contained in each
    alternative are adequate to ensure the best water future for
    California.
        My State is not the only potential beneficiary of the
    CALFED program. States from the Pacific Coast to the rocky
    mountains, along with Canada, Alaska and Mexico, will benefit
    from improved fisheries, enhancement of the habitats within the
    Pacific Flyway, and increased water availability which will
    come from better management of the California's water supplies.
        One of the major and potentially most troubling technical
    ``gaps'' in the CALFED analysis is the assumptions it uses
    about ``how much'' water California used in 1995 and ``how much
    more'' California will need by the year 2020 to meet the
    State's future urban and agricultural water needs. CALFED
    embeds these core assumptions into the ``no action'' scenario.
    And it is this scenario which serves as the baseline in the
    environmental analysis against which both the impacts and the
    benefits of the proposed Bay-Delta programs and alternatives
    are measured.
        To estimate the 1995 and 2020 water needs, CALFED relied
    heavily upon the urban and agricultural water demand
    projections presented in the draft California Water Plan.
    Usually referred to as Bulletin 160-98, this document is
    prepared and updated by the State Department of Water Resources
    every five years.
        The most recent version of Bulletin 160 was only released
    for public review four months ago, and now the accuracy of the
    DWR projections are being questioned by many people in
    California. Pages upon pages of comments and concerns have been
    sent to DWR seeking clarification and correction of Bulletin
    160-98. Some have even called for an independent evaluation by
    outside experts. I have attached to my testimony examples of
    comments provided by several organizations.
        Bluntly, the concern is that DWR has greatly overstated the
    State's urban and agricultural demand projections and
    substantially underestimated the potential for urban and
    agricultural water conservation and opportunities to recycle
    water. If this is true and the assumptions are not corrected in
    the CALFED analysis, then facilities may be proposed for
    construction that may not be needed in the next two to three
    decades--if ever. Further, if the proposals proceed as drafted,
    taxpayers could be facing costs as high as $8 to $14 billion
    dollars--and it is assumed that the CALFED program can not go
    forward without significant new Federal funding.
        I have reviewed DWR's Bulletin 160-98 urban water demand
    projections and they do raise some troubling issues. Let me
    focus on the South Coast region as an example:

             B160-98 estimates that urban water usage in the South
            Coast region was approximately 4.3 million acre-feet in 1995.
            Yet the actual urban water usage for this region in 1995 was
            about 3.5 million acre-feet. This means that for 1995--the
            baseline year for the CALFED analysis--DWR overestimates urban
            demand by almost one million acre feet--and this is for just
            one of ten regions included in Bulletin 160-98. Inexplicably,
            DWR chose to use estimates of water demand for 1995 rather than
            the real data from 1995 that should have been readily available
            at the time of the analysis.
             B160-98 assumes that few additional urban conservation
            measures, above what is being done now, will be implemented in
            the South Coast region by 2020. DWR's explanation for is that
            the South Coast region has already ``achieved'' the goals set
            by DWR for conservation and so more does not need to be done.
            This assumption flatly contradicts the positions of the Los
            Angeles Department of Water and Power and other water agencies
            in the South Coast who are committed to continued
            implementation of urban demand management programs. As a
            result, B160-98 effectively overstates future water needs in
            the South Coast region.
             B160-98 drops from the final water accounting a
            substantial amount of water from its own estimates of the
            potential savings that could be achieved through through these
            measures. For example, DWR identifies over 500,000 acre-feet of
            potential conservation for the South Coast region, but only
            includes 90,000 acre-feet of this water in its final 2020
            demand projections. Similarly, DWR identifies the potential to
            develop over 800,000 acre-feet of new water supplies from
            recycling and desalinization projects, but only ``counts''
            200,000 acre-feet in the final water balance. As a result,
            demand management programs for the South Coast region appear to
            be underestimated by at least one million acre feet for the
            year 2020.
             B160-98 includes the assumption that the CALFED
            program will be fully implemented by the year 2020, but then
            uses this assumption to limit the potential contribution of
            conservation and recycling measures in meeting California's
            2020 water needs. Inexplicably, DWR incorporates into the
            analysis its own idea of what the CALFED Bay Delta preferred
            alternative is likely to be, (even though one has yet to be
            selected) but fails to provide a description of what this
            alternative is. Further, DWR assumes that the CALFED program,
            along with other options, will provide more water to the South
            Coast at less cost than many conservation and recycling
            projects.
             Finally, B160-98 assumes that there will be no
            technological improvements in water efficiency programs in the
            South Coast region over the next twenty years. This is
            assumption is inconsistent with our experience over just the
            last five years where major improvements in urban conservation
            technology have been coming on line every year. To underscore
            the point, it is hard to believe that just ten years ago, the
            Las Virgenes Municipal Water District in the South Coast region
            had to import low flow toilets from Sweden for its conservation
            program because none were produced in the United States. Today,
            low flow toilets are federally required and manufactured by all
            major plumbing suppliers in the country.
        These are examples of some of the problems with B160-98. But the
    concerns that have been expressed by others go far beyond these points,
    and include criticism of the economic assumptions incorporated in B160-
    98, its planning methodology, and DWR's use of outdated technical
    assumptions in evaluating water efficiency programs.
        The bottom line is that B160-98 appears to present in part a
    distorted and inaccurate picture of both current and future California
    urbanwater needs. It does this by artificially inflating urban demand
    figures for 1995 and 2020 and, paradoxically, minimizing the water
    efficiency measures that could help to meet projected State water
    needs.
        Prior to 1990, many people were not familiar with water efficiency
    programs and were understandably skeptical about how reliably these
    programs could meet growing population needs. But the world has changed
    substantially since 1990, and most regions of the State have gone
    beyond talking about water efficiency programs and started implementing
    them.
        The results are impressive. Let me give you three quick examples of
    success stories:

              1. The City of Los Angeles. In the 1970's, Los Angeles used
            approximately the same amount of water as it is using today--
            only we are now serving almost 1 million more people. How did
            we do it? As recently as 1990, LA declared that it needed every
            drop of water from Mono Lake to meet the city's growing water
            needs. Since then, with support from title 16 Federal funds and
            AB 444 State monies, Los Angeles has invested millions of
            dollars in the distribution of hundreds of thousands of ultra
            low flow toilets and the development of other water efficiency
            programs. In addition, Los Angeles agreed to dramatically
            reduce its diversions from the eastern Sierra, and plans to
            meet its future growth through local conservation and recycling
            programs.
              2. The Metropolitan Water District of Southern California.
            MWD and its member agencies have experienced similar success
            with their conservation programs. At the peak of the drought,
            MWD sold 2.6 million acre feet in imported water supplies
            (calendar year 1990). Since then, MWD developed its integrated
            resources plan, refocused its efforts on developing a more
            balanced mixture of local and imported water supplies, and
            helped the region to start to aggressively implement
            conservation, recycling and groundwater management projects.
            The result: MWD has reduced its imported water sales down--
            somewhat to its dismay--to 1.8 million acre-feet. This year is
            wet and MWD's imported water sales are likely to be even
            lower--possibly below 1.6 million acre feet. This dramatic
            reduction in MWD imported water sales means that Southern
            California using currently using only about 25 percent of its 2
            million acre-feet contractural State Water Project supplies.
              The South Coast region, through MWD and its member agencies,
            has taken a leadership role in the State on urban conservation.
            It is a model for other parts of California to follow. Now, the
            primary challenge facing MWD is to stay on this successful
            path. There are already signs that MWD is beginning to pull
            back on its current conservation commitments, paradoxically
            because the water is not seen as now being needed.
              3. Panoche Water District. Urban water agencies are not only
            ones that are making substantial investments in improved water
            management. I recently visited Panoche Water District, which is
            located on the west side of the San Joaquin Valley and is part
            of the San Luis Unit of the Central Valley Project, to see the
            fine work they are doing in their drainage reduction program.
            In less than two years, the district has eliminated tail water
            flows, installed water efficiency irrigation systems and
            substantially modified its water management practices. The
            result: the district has reduced its drainage by 50 percent
            from dry year flows and is saving applied water. The program is
            impressive, demonstrating how valuable water efficiency
            measures can be to the agricultural community.
        In closing, I want to underscore the obvious point: we all need to
    have good quality information about California's current and future
    water needs if we are to make the right decisions for California's
    water future. B160-98 does not appear to meet this test.
        Too much is at stake, here in California and throughout the West,
    to accept less than an accurate, well documented presentation of the
    State's water demands. We, in California, need this quality information
    in order to assess and identify the right combination of measures to
    include in the proposed CALFED program. The mountain counties need it,
    Southern California needs it, Northern California needs it, the farmers
    in the Sacramento River Valley need it, the commercial and sport
    fisherman need it, the farmers on the east and west side of the San
    Joaquin Valley need it, the environmental community needs it, the
    business community needs it, the delta farmers need it, and the
    affected land owners need it.
        Congress, too, needs this information in order to decide what level
    of Federal funding for future CALFED programs may be appropriate.
        The potential implications for the CALFED program are profound. The
    assumptions of B160-98 are embedded in the analytical framework of the
    environmental documents. B160-98 must be critically evaluated so that,
    if needed, the CALFED technical evaluations can be redone. Only then
    will we be able to draw a conclusion about what is the best water
    alternative for California's future.
                                     ______

       Statement of Stephen K. Hall, Executive Director, Association of
                        California Water Agencies (ACWA)

        Mr. Chairman and Members of the Subcommittee, thank you for
    providing me an opportunity to appear before you today and
    submit this statement regarding CalFed's progress. I am the
    Executive Director of the Association of California Water
    Agencies (ACWA). As you likely know, ACWA is a statewide, non-
    profit association which represents more than 440 public water
    agencies who collectively manage and deliver 90 percent of
    California's urban and agricultural water.
        California's water resources are finite, while its
    population and economy continue to grow. At last week's ACWA
    Spring Conference, Governor Pete Wilson announced that
    California grew by an additional 580,000 people last year;
    putting our population at 33,250,000. The State is projected to
    continue this growth spurt, which is why the Department of
    Water Resources recently projected a 3 to 7 million acre-foot
    annual shortfall in water supply by 2020.
        No single demand side management or water supply
    development option can be implemented to address that pending
    shortfall and the attendant reliability concerns facing all
    stakeholders. Water conservation alone cannot address the
    shortfall, water reuse alone cannot, new dams and reservoirs
    cannot, water transfers cannot. Parties can quibble about the
    details, but the bottom line is that in the very near future we
    are going to have too many demands on a system already
    stretched to the limit, and it will take a package of measures
    to fix the problem. That is why ACWA is participating in and
    strongly supports CalFed and its approach, which calls for a
    balanced package of additional storage, improved Delta
    conveyance, water conservation, reclamation transfers,
    environmental restoration and other measures. Clearly though,
    additional storage has to be among the elements that has high
    priority.
        Our current system includes key projects like the Federal
    Central Valley Project (CVP) and California's State Water
    Project (SWP). The CVP has a storage capacity of 11 million
    acre-feet and delivers about 7 million acre-feet of water to
    agricultural and urban uses. The SWP delivers about 2 million
    acre-feet annually to farms and cities. The single most
    important aspect of California's complicated water system is
    the Sacramento-San Joaquin River Delta. Its channels through
    the state and Federal projects provide drinking water for two-
    thirds of the state, in addition to irrigation water for more
    than 4.5 million acres of the nation's most productive
    farmland.
        This is an impressive system, but it is far less than what
    we see on other river systems. According to the California
    Department of Water Resources, total storage on the Sacramento
    River system with average annual runoff of 22 million acre-feet
    is less than one-year, or 16 million acre-feet. In comparison,
    the Colorado River system, with an average annual runoff of
    only 15 million acre feet, boasts a storage capacity of 60
    million acre-feet, or enough for a four-year supply.
        The lack of storage capacity has led to the tension between
    operating the system for flood control, the protection of life
    and property, and operating the system for water supply to meet
    the needs of the nation's largest economy. And the problem is
    growing worse. Since the last major element of our water
    management system was added in the early 1970s, the state's
    population has essentially doubled. Local water managers have
    done a good job in balancing this tension. Urban water managers
    have managed to meet the needs of the rapidly growing
    population through conservation, reclamation, and innovative
    water transfers and exchanges. Meanwhile, California
    agriculture is today producing 50 percent more in food and
    fiber with the same amount of water that it was using 20 years
    ago. We are also doing a better job of protecting lives and
    property. The floods that have occurred in recent years could
    have been far more devastating had it not been for strong
    efforts to coordinate the local, state, and Federal flood
    control operations. This remarkable record is testimony to the
    strides California's water professionals have made in managing
    the state's most important resource.
        We can do more in the way of water management, and we will;
    however, the experience of 1997 has shown the deficiencies in
    our system that not even innovative management can overcome.
    The devastating floods of January 1997, followed by water
    delivery cutbacks later in the year, point out that our
    existing system must be improved and expanded in order to
    protect California from floods while maintaining a healthy
    environment and a strong economy.
        That is why the California water community is strongly
    supporting a major water bond issue supported by Governor
    Wilson and carried by the two chairmen of the water committees
    in the state legislature. The bond issue will provide badly
    needed funds to study specific storage proposals, focusing on
    conjunctive use and off-stream storage. It will also provide
    funds that are way overdue for additional flood control. It
    will provide funds for investments in safer drinking water,
    source water protection, and water conservation. In summary,
    this bond issue promises to give us a running start on some of
    the most important elements of the CalFed program.
        Some may say it is premature to discuss storage at this
    point in the process because specific storage projects have not
    yet been selected by CalFed. However, those same people argued
    strongly two years ago that ecosystem improvements needed
    immediate funding, even though there were no specific ecosystem
    proposals at the time. Nevertheless, that funding was made
    available through a statewide bond issue and matching federally
    authorized funds. Now, it is time to move forward on water
    supply and water quality measures, which are equal in
    importance to ecosystem restoration.
        Another issue raised by critics of this bond measure is
    that a general bond measure that pays even for studying storage
    constitutes a subsidy to water users. The argument has already
    been addressed, since the bond issue provides that the
    beneficiaries will pay the full cost of any water supply that
    is ultimately generated. It should be noted that storage has
    public benefits and therefore should be--in part--paid with
    public funds.
        The conclusion we have drawn is that we must move forward
    soon on improvements in water supply and water quality, and
    that this bond measure provides an excellent opportunity to
    begin that forward movement. If we fail to act now, it will be
    two years before we can bring another bond measure before the
    voters, and that will put us two years farther behind in
    meeting our needs. We believe Californians should have the
    opportunity now to tell water managers and policy makers
    whether they support public investment in promoting improved
    water supply and quality.
        Virtually all parties agree that CalFed is an historic
    opportunity to address critical water problems in the state,
    both for the environment and our quality of life. In order for
    CalFed to deliver on that promise, it has to produce a balanced
    plan that truly provides for California's present and future
    needs. That will mean the plan has to contain all of the
    elements listed in the opening paragraphs of this testimony.
    Every credible projection of California's water demands and
    supply show this to be the case.
        In decades past, California met its water needs by simply
    adding more storage or conveyance. For the past three decades,
    we have focused on managing demand to stretch existing
    supplies. Now, maybe we can strike a balance between the two,
    and address them in tandem rather than to the exclusion of one
    or the other. CalFed is the vehicle to strike this balance. The
    current water bond issue is an excellent way to fuel that
    vehicle. We support both and we are urging others to do the
    same.
                                    ------

      Statement of Robert G. Potter, Chief Deputy Director, Department of
                                Water Resources
    INTRODUCTION

        Mr. Chairman and members of the Subcommittee, thank you for
    providing me an opportunity to submit this statement regarding
    financing the CALFED Bay-Delta Program. My name is Bob Potter. I am the
    Chief Deputy Director for the California Department of Water Resources.
    The Department of Water Resources operates and maintains the State
    Water Project and prepares and updates the California Water Plan. I
    represent the Department on the CALFED Policy Group.
        It's too soon to get too specific about financing the CALFED
    program given that we haven't yet identified a preferred alternative,
    much less gained agreement to proceed on implementation. Nevertheless,
    there are a number of factors and principles that should be considered
    as we prepare for implementation.

    BACKGROUND FACTORS

             The Central Valley Improvement Act of 1992 took
            800,000 af of CVP yield away from CVP farms and cities and
            allocated it to the environment.
             The Delta Accord of 1994 took 1,000,000 af of combined
            CVP/SWP yield away from California cities and farms and farmers
            and allocated it to the environment.
             Thus far, there has been no compensation provided to
            ag and urban water users for these reallocations.
             At this point in time there is no clear picture of how
            much water supply will be provided by the CALFED program or how
            those supplies will be allocated.

    SOME PRINCIPLES

             There is support for the concept of user pays. There
            is also support for the concept of beneficiary pays. Generally
            in California we all use water and we all benefit from our
            states healthy economy which is supported in no small part by
            reliable water supplies provided by State and Federal water
            development programs.
             Many years ago when I was just beginning my career in
            water the U.S. Senate published its famous ``greenbook'' which
            provided detailed procedures for allocating costs in
            recognition of beneficiaries gains. Water planners struggled
            mightily over the years to implement these procedures. Given
            the complexity of the CALFED package sorting out the
            beneficiaries will prove to be a real challenge.
             Generally speaking on public policy we return to
            equity not economics in arriving at who pays.

    CLOSING

        The State of California has been and remains committed to the
    CALFED process. The Governor supported Proposition 204 which provided
    nearly $400 million for CALFED environmental programs. The Governor has
    proposed an additional water Bond measure for this fall. This Bond
    measure would provide additional ``seed money'' to finance the first
    phase interim CALFED programs. It would appear that there will
    eventually need to be a larger Bond measure to finance some or all of
    the roughly $10 billion CALFED package.

               Letter from Hon. Pete Wilson, Governor, California
                                                            May 4, 1998
    The Honorable Joseph M. McDade,
    Chairman, Subcommittee on Energy and Water Development,
    Committee on Appropriations,
    U.S. House of Representatives,
    Washington, DC 20515
        Dear Mr. Chairman:
        I would like to take this opportunity to share with you
    California's priorities among the programs funded through the energy
    and water development appropriations bill.
        My top priority continues to be 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 I appreciate the
    $85 million provided for this program by Congress in fiscal year 1998.
    We will spend that money wisely and expeditiously. The watershed
    feeding the Bay-Delta is the source of nearly half the nation's fruits
    and vegetables, as well as drinking water for 22 million Californians.
    Environmentalists, farmers, and urban water users have all banded
    together with numerous state and Federal agencies in an unprecedented
    coalition to find a non-litigious solution to the water disagreements
    that have long plagued our state.
        I have a number of other priorities funded through your bill that I
    encourage you to support:

            Corps of Engineers

             a $49 million increase to the $11 million budget
            request for the Los Angeles County Drainage Area Project. This
            authorized project is exceedingly well justified from an
            economic perspective, and is vital to protect lives in this
            burgeoning area of the country. The small amount requested in
            the budget would significantly delay completion of the project
            and pose unacceptable risks to public safety. Non-Federal
            sources will contribute 25 percent of the cost of the project.
             a $56 million increase to the $20 million requested
            for the Santa Ana River Mainstem project, for continued
            construction at Seven Oaks dam, work on the Santa Ana River,
            and beginning construction of Prado Dam. Three million people
            live in the area that will be protected by this project, where
            a major flood could cause $15 billion in damages and threaten
            countless lives. Non-Federal sources will contribute 35 percent
            of the cost of the project.
             a $4 million increase to the budget request for the
            Corps of Engineers, under section 206 of the Water Resources
            Development Act of 1996, as the Federal half of the costs of
            completing the environmental restoration at the abandoned Penn
            Mine in Calaveras County, California.
             a $500,000 increase to the budget request for the
            Corps of Engineers as a Federal contribution to cooperative
            efforts with California local governments to control the
            invasive non-native plant arundo. Arundo is a giant reed that
            is established in the San Gabriel River watershed and is
            rapidly invading the Santa Ana River watershed. It destroys
            native fish and wildlife habitat, consumes great quantities of
            water, and clogs water channels to the point where flood damage
            is greatly increased. Arundo is among the increasing number of
            invasive species posing significant economic and ecological
            problems in California and around the country. The increase
            would be divided between the intergovernmental Team Arundo that
            operates in the Santa Ana watershed ($100,000), and its
            counterpart Team Arundo Angeles that would use $400,000 to
            eradicate arundo from the Whittier Narrows area of the San
            Gabriel River watershed.

            Bureau of Reclamation

             an increase of $5.2 million in Bureau of Reclamation
            construction funding for continuing work on a permanent pumping
            plant to increase water supply reliability for the Placer
            County Water Agency and reduce Federal costs over the long
            term. This funding would be in lieu of the up to $1 million
            that has been annually spent for more than thirty years by the
            Bureau to install a temporary pump to fulfill its contractual
            obligation.
             an increase of $5.2 million above the Bureau of
            Reclamation's $12.3 million budget request for the Colorado
            River Salinity Control Program, funded through the Water and
            Related Resources account. This increase, coupled with the non-
            Federal cost share, would begin to work down the backlog of
            worthy proposals needing funding.
             a $3.1 million increase to the $1 million request for
            environmental and engineering studies, and flood easements in
            the area of Arroyo Pasajero. This work is necessary to protect
            the vitally important California Aqueduct against flood damage,
            and to protect lives in the communities in the immediate
            vicinity of Arroyo Pasajero.
             an increase of $600,000 to the budget request for the
            Bureau of Reclamation's Regional Wetland Development Program,
            to be highly leveraged by state and local matching funds, for
            wetland restoration and floodplain management at Trout Creek
            near South Lake Tahoe, California. Although the Clinton
            Administration generated much press activity with respect to
            Lake Tahoe last summer, the budget request for programs to
            actually restore the lake is disappointing. My state budget for
            the coming fiscal year contains $11.5 million in new funding,
            contingent on new matching Federal funding.
             an increase of $3.7 million to the disappointing and
            token $250,000 budget request to continue work on fish screens
            at Rock Slough for the Contra Costa Canal. These screens are
            required by the Central Valley Project Restoration Act, and
            will address endangered species issues facing Contra Costa
            County. Interior has never requested the necessary funds for
            the project, although non-Federal funds are available to cover
            the 25 percent match. Thank you for providing $1.5 million for
            this project in fiscal year 1998. I urge you to provide $4
            million in fiscal year 1999 so the project can stay on
            schedule.
             a $400,000 increase to continue the Sacramento River
            Winter-Run Chinook salmon captive broodstock program, which is
            in its seventh year and has demonstrated biological and
            technological successes that will contribute to salmon
            conservation in other regions.
        I also urge you to support the $49.5 million requested in the
    Bureau of Reclamation's budget for the Central Valley Project
    Restoration Fund. These monies are for environmental restoration in the
    area affected by the Federal Central Valley Project, and are actually
    funded by payments from water and energy users.
        Finally, I urge you to significantly increase funding for the Corps
    of Engineers for navigation, port, and harbor projects, including
    navigation studies, engineering and design work, construction, and
    operations and maintenance. The large cut in the President's budget for
    the Corps of Engineers is economically unjustifiable, and if enacted,
    would severely hamper America's competitiveness in international trade.
        Thank you very much for your consideration of California's
    priorities.
                Sincerely,
                                                   Pete Wilson,
                                                              Governor.
                                     ______

    Statement of Dr. Timothy H. Quinn, Deputy General Manager, Metropolitan
    Water District of Southern California on behalf of The Bay-Delta Urban
                                   Coalition

    Introduction

        Mr. Chairman and members of the Subcommittee, thank you for
    providing me an opportunity to submit this statement regarding
    financing the CALFED Bay-Delta Program. My name is Timothy
    Quinn. I am a Deputy General Manager for the Metropolitan Water
    District of Southern California, although I am appearing today
    on behalf of the Bay-Delta Urban Coalition. The Bay-Delta Urban
    Coalition (Urban Coalition) represents urban water agencies
    from northern and southern California that supply drinking
    water to over 20 million Californians.\1\
    ---------------------------------------------------------------------------
        \1\ Representatives of the Bay-Delta Urban Coalition include the
    Alameda County Water District, Coachella Valley Water District, Central
    & West Basin Waters, Central Coast Water Authority, East Bay Municipal
    Utility District, Metropolitan Water District of Southern California,
    Municipal Water District of Orange County, San Diego County Water
    Authority, San Francisco Public Utilities Commission, Santa Clara
    Valley Water District, and Solano County Water Agency.
    ---------------------------------------------------------------------------
        The members of the Urban Coalition have been active
    participants in the CALFED Bay Delta process since its
    inception and are committed to working though CALFED to hammer
    out the best solution package. The next six months will be a
    critical decision-making period for the CALFED agencies and all
    the interested stakeholder groups. The challenge will be to
    craft a solution that provides broad benefits throughout
    California--for the environment and for urban and agricultural
    water users.
        This brief statement is intended to answer the questions
    raised in the letter of invitation to this panel by enunciating
    several key principles which the urban community believes will
    be central to the development of a viable financing package for
    a preferred CALFED alternative.

    1. The finance plan must be founded on a CALFED solution that
    produces widespread value.

        With California expected to grow in population to nearly 49
    million people by the year 2020, one of the major challenges we
    face is how to provide a sufficient, safe, reliable water
    supply to meet the needs of households, industries, farms, and
    the environment. Although still a work in progress, the CALFED
    process has made more progress and has a greater chance of
    ultimate success than any of the previous efforts to tackle
    this problem during the last three decades. After years of
    conflict and a shrinking water resources pie, for the first
    time in a generation, California has the opportunity this year
    to make major decisions that will create value for a wide range
    of interests. Any successful financial plan must, first and
    foremost, have the foundation of a preferred alternative that
    generates value for those who will be asked to pay a portion of
    the costs, whether through increased water rates or higher
    taxes.
        For the environment, the CALFED ecosystem restoration
    program will be historically unprecedented anywhere in the
    nation. Already underway with state and Federal funds provided
    by California Proposition 204 and the 1996 California Bay-Delta
    Environmental Enhancement Act, the habitat improvements of the
    CALFED ecosystem restoration program will fortify our efforts
    to achieve the restoration goals of the Central Valley Project
    Improvement Act. For urban California, an effective CALFED
    solution has the potential to substantially improve source
    drinking water quality and provide a stable transportation and
    storage infrastructure that will be required to meet the needs
    of a growing economy. (In a 1996 public opinion poll, 9 out of
    10 Californians stated we need a sufficient, reliable and
    affordable water supply to maintain a strong economy. For
    agricultural interests, the CALFED program can provide
    assurances that we will sustain the largest agricultural
    economy in the nation while transitioning to a new regime of
    natural resources management that will meet the environmental
    and economic needs of the twenty-first century.
        Beyond California, improvements in the Bay-Delta estuary
    will favorably impact aquatic and avian ecosystems in other
    western states. The Bay-Delta system provides the largest
    wetland habitat and estuary in the West. It supports 750 plant
    and animal species, some found nowhere else in the nation. It
    is a critical part of the Pacific Flyway over which hundreds of
    migrating birds travel each year from Mexico to the Canadian
    border.
        Just as the CALFED program must generate widespread
    benefits, funding must be made available from diverse sources.
    Members of the Urban Coalition have long supported user fees
    paid by those in urban and agricultural areas who use water as
    a primary source of funds to pay for a CALFED solution. The
    benefits to water users from improved water quality and
    reliability will be substantial and, accordingly, they should
    be willing to pay an appropriate share of program costs.
    Similarly, many of the benefits of a CALFED solution will be
    broadly enjoyed by the public at large, and state and Federal
    financial resources should be available to pay a portion of
    program costs. Of course, no specific allocation of costs can
    be identified until the CALFED preferred alternative is
    selected later this year.

    2. CALFED Must Aggressively Pursue Cost Containment While
    Maintaining Benefits.

        A second fundamental principle is that the CALFED program
    must provide benefits at the lowest possible cost. Current
    estimates of the overall costs of the CALFED program range from
    approximately $9 to $11 billion. Quite frankly, we believe
    these cost estimates are considerably inflated and the
    potential value of a CALFED solution can be obtained at a
    substantially lower cost. The Urban Coalition is committed to
    work with the CALFED agencies and other stakeholder interests
    to aggressively pursue cost containment strategies which will
    assure any preferred alternative is implemented at the lowest
    possible overall costs.

    3. Costs Should Be Shared Consistent With the Beneficiaries
    Pays Principle and Allocated in a Mutually Agreeable Manner.

        The Urban Coalition is committed to the principle that
    beneficiaries must pay for the value received from a CALFED
    solution. At the same time, we are concerned if this principle
    is implemented in an arbitrary manner it could result in
    imposed costs on some water users which are not matched in
    their view by commensurate benefits. For this reason, we
    believe that as part of the broad negotiations required to
    define and implement the CALFED Bay-Delta program, costs should
    be allocated on a mutually agreeable basis. This approach would
    provide all parties who have a significant financial stake with
    a voice in the determination of who benefits and how they are
    expected to pay. This principle should be applied equally to
    water agencies and to taxpayers, and be implemented through
    appropriate regulatory and legislative procedures and/or a vote
    of the citizens.
        The purpose of this third fundamental principle is to
    assure all interests which provide major financial support can
    determine for themselves that they expect to receive benefits
    which justify their costs. This principle also creates a strong
    linkage between cost allocation and the CALFED assurances
    package. No interest group will be inclined to pay a portion of
    the costs of the CALFED program unless they believe the
    assurance package guarantees a flow of benefits commensurate
    with their cost allocation.

    4. The Financial Plan Should be Based on a Prospective
    Assessment of Value and Not a Retrospective Assignment of
    Blame.

        The goal of the CALFED program is to realize both early-
    start and long-term benefits to the environment and economy of
    California. To be successful, the CALFED process must be
    forward looking. For this reason, the Urban Coalition believes
    that basing financial decisions on perceptions of past
    responsibilities for mitigation or damage payments is counter
    productive. Human activities and social policies have affected
    the Delta ecosystem for over 100 years, beginning with
    hydraulic mining processes and reclamation in the 1800's, as
    well as many other natural processes. While water diversions
    from the watershed have undoubtedly affected the ecosystem,
    many other human activities have also affected the Delta. We
    believe that it is impossible to prove the level of damage
    attributable to individual factors to the satisfaction of all
    parties. Focusing on blame for past acts will not lead to
    solutions; it will only lead us back into divisiveness and the
    regulatory and political gridlock that CALFED has allowed us to
    escape.

    Conclusion

        Ultimately, CALFED financing decisions must be based on a
    prospective assessment of anticipated value from the proposed
    solution and a willingness to pay as expressed by all the
    financial participants. Although program costs will be
    substantial, so too will be the value for California and the
    nation of a successful CALFED program. We in the urban
    community are dedicated to working with you, Mr. Chairman,
    members of the Subcommittee, and all others in the process to
    identify a feasible financial plan which will allow us to
    implement an affordable CALFED plan that generates enduring
    value for the environment and for the urban and agricultural
    economies of California.
                                    ------

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

        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
    association representing sixty-six private and public
    agricultural water suppliers and farmers that rely upon the
    waters of the Sacramento, Feather and Yuba rivers, smaller
    tributaries, and groundwater to irrigate over 850,000 acres of
    farmland in California's Sacramento Valley. Many of our members
    also provide water supplies to state and Federal wildlife
    refuges, and much of this land serves as important seasonal
    wetlands for migrating waterfowl, shorebirds and other
    wildlife. I would appreciate the Subcommittee's inclusion of my
    written testimony in today's hearing record.
        The Subcommittee's interest in the CALFED Bay-Delta Program
    (CALFED) and specifically the allocation of Federal funds for
    ecosystem restoration is appropriate given the importance of a
    successful resolution to the environmental and water supply
    problems in the Sacramento-San Joaquin River Delta and San
    Francisco Bay (Bay-Delta). The Bay-Delta is a tremendous
    economic and environmental resource to California and the
    Nation, and there is much at stake in how CALFED implements its
    ecosystem restoration actions. CALFED's response to the
    Subcommittee's questions will also be useful for private
    interests participating in this process.
        I appreciate the opportunity to provide NCWA's perspective
    on CALFED. NCWA has actively participated in the CALFED
    process, as a signatory to the 1994 Bay-Delta Accord and a
    participant in the development of California's Proposition 204
    and the Federal Bay-Delta Security Act (Public Law 104-333).
    Two representatives of NCWA's Board of Directors, Chairman Tib
    Belza and Director Don Bransford, serve on CALFED's Bay-Delta
    Advisory Council, and I am a member of the Ecosystem
    Roundtable--the entity chartered to allocate state and Federal
    ecosystem restoration funds.
        The specific questions the Subcommittee has posed focus
    directly upon evaluating the effectiveness of Federal funds
    appropriated to partially finance CALFED's ecosystem
    restoration programs and projects, some of which are years
    away, and some of which are now underway. The Subcommittee has
    also requested our perspective on whether CALFED should
    implement its plan as designed or amend it based upon the
    principle of adaptive management. Similar questions have been
    raised by California's Legislature, local governments, by
    CALFED's Ecosystem Roundtable and by public and private
    interests with an immediate stake in efficiently achieving
    environmental restoration with limited resources.

    1. How do we evaluate the effectiveness of the funding we are
    providing?

        CALFED's draft Ecosystem Restoration Program establishes
    specific objectives, targets and programmatic actions designed
    to accomplish CALFED's overall mission ``. . . to develop a
    long term comprehensive plan that will restore the ecosystem
    health and improve water management for beneficial uses of the
    Bay-Delta ecosystem.'' If successful, the plan should
    rehabilitate native fish and wildlife species and their habitat
    in the Bay-Delta system, and increase water supplies and
    reliability for California's cities, businesses and farms. One
    measure of success of the overall program is an improving
    environment, achieved in part by implementation of restoration
    projects that resolve known problems. For example, the
    installation of fish screens on agricultural diversions to
    prevent the entrainment of fish species. Program success will
    also be indicated by decreasing regulatory disruption of water
    project operations, and reduced regulations on individual
    agricultural water suppliers and farmers.
        Many of the private interests following CALFED, such as
    Sacramento Valley agricultural water suppliers and farmers, are
    financially participating in cost-share arrangements with
    CALFED agencies on specific restoration projects. Nearly a
    dozen water suppliers throughout the Sacramento Valley are
    engaged in the study, design or construction a fish screen or
    passage project to protect candidate, threatened and endangered
    fish. Some of these projects are now complete, such as Western
    Canal Water District's Gary N. Brown Butte Creek Siphon
    Project. This unique project resulted in the installation of a
    concrete siphon to convey agricultural water supplies under
    Butte Creek, allowing the removal of several small dams that
    historically hindered spring-run salmon migration to spawning
    habitat. Completion of this project illustrates the
    effectiveness of restoration actions in providing immediate
    benefits to the environment--in this case for spring-run
    salmon, presently listed as a threatened species under
    California law and proposed for Federal listing--and for the
    local community and area farmers who benefit through
    development of a more reliable water supply.
        As with Western Canal's farmers, other agricultural water
    users in the Sacramento Valley have a vested interest in
    ensuring state and Federal funds are effectively managed to
    ultimately improve the fishery, and alleviate regulatory
    mandates. Their participation is based on the belief the
    projects will succeed, and are an effective way to restore
    salmon species and protect landowners from burdensome
    regulations. Their financial stake in these projects means they
    will actively oversee the government agencies carrying out the
    projects.

    2. What clear and unambiguous performance standards are being
    adopted to determine if we are close to success or have
    achieved success?

        As this Subcommittee is well aware, it is difficult to
    establish performance and monitoring standards on complex and
    dynamic ecosystems, such as California's Bay-Delta. State and
    Federal resource agencies, and private interests, have
    encountered similar difficulties in assessing the effectiveness
    of restoration in the Pacific Northwest and the Florida
    Everglades. Moreover, CALFED will attempt to apply its yet to
    be developed standards on specific projects, and the entire
    program, in an ecosystem that has sustained natural and human
    damage; which continues to change. Complicating this task is
    task is a lack of full biological information of the effects
    these continuing natural and artificial processes have on fish
    and wildlife, and their habitat. Additionally, natural events
    can overwhelm our best efforts and mask success. Wildfires in
    the Shasta or Sierra watersheds, drought, or damaging winter
    storms--such as the 1997 storms that produced the worst flood
    in California history which swept millions of young salmon
    prematurely to the Pacific Ocean--can devastate fish and
    wildlife and their habitat.
        An additional difficulty in assessing this program's
    success, and its individual actions, is CALFED's plan to
    implement projects that will replicate natural processes
    associated with instream flows, stream channels, watersheds and
    floodplains. CALFED proposes to accomplish this objective
    primarily by the acquisition of farmland and water supplies to
    create river meander corridors, riparian forests, and increased
    instream flows. The proposed implementation of these particular
    actions raises legitimate concerns for upstream and downstream
    communities, landowners and water suppliers.
        CALFED's Ecosystem Restoration Program recommends the
    implementation of nearly 700 actions over a thirty year period,
    however, work has already begun on several of the program's
    main elements. For example, CALFED's draft environmental impact
    report and impact statement, released in March, recommends the
    acquisition of roughly 200,000 acres of Central Valley farmland
    (30,000 acres in the Sacramento Valley) to meet certain goals
    outlined in the Ecosystem Restoration Program. CALFED proposes
    to allocate $14 million in fiscal year 1998 Federal funds to
    acquire private property in order to create meander corridors
    along the Sacramento, San Joaquin and other Central Valley
    rivers.
        CALFED's staff acknowledges the scientific uncertainty
    underlying the potential benefit to fish and wildlife from
    these actions. River meander and riparian forest projects
    necessarily require the acquisition of land along a river or
    stream in order, for example, to allow the river to inundate
    land during high flow periods. There are numerous consequences
    that may arise as a result of these projects, including river
    level and flow fluctuations and increased sediment and debris
    loading, which threaten existing water diversions and fish
    screens. Due to the unpredictable nature of these projects, and
    the risks they present, NCWA encourages CALFED to initially
    focus on restoration actions that fix known fish and wildlife
    problems. We recognize, however, a limited number of actions
    that attempt to replicate natural processes may be necessary to
    restore habitat for at-risk species.
        There are several specific steps CALFED should consider
    before embarking on a large-scale river meander plan in order
    to avoid adverse social, economic or environmental affects to
    local communities, landowners, and water suppliers. This is
    consistent with CALFED's stated principle of implementing
    actions and a long-term plan that does not result in the
    redirection of adverse impacts.
        NCWA has encouraged CALFED to consider adoption of a pilot
    program that may serve as a model for its future projects
    involving land acquisition. Although the specific principles of
    our recommendation are still under development, our goal is to
    accomplish restoration actions compatible vith economic
    activities, including farming, water district operation and
    flood control protection.
        A first step is to attempt to utilize public lands with
    similar ecological characteristics prior to acquiring private
    property to achieve restoration measures. If public lands are
    unavailable, conservation easements, rather than outright fee
    title acquisition, should be a priority, and all acquisitions
    must be voluntary. Completion of California Environmental
    Quality Act and National Environmental Policy Act requirements
    should be initiated before the acquisition of private property.
    In cases where California Environmental Quality Act compliance
    is not required, such as the acquisition of rights to allow an
    existing levee to degrade and fail, a representative public
    process should be developed to determine the selection and
    implementation of specific actions. Establishment of a
    representative public process to ensure local involvement must
    be a cornerstone of any land acquisition program. Finally,
    CALFED must adopt clear assurances, or legal guarantees, that
    address issues of liability for future damage resulting from
    project implementation, as well as local tax and assessment
    responsibility.

    3. Are we going to postpone any major program decisions or
    alternatives until we have the results of the early phases? Or
    are we going to agree on a basic blueprint and simply adjust it
    through adaptive management as we move along?

        It is our understanding CALFED intends to utilize adaptive
    management in its implementation of the overall plan, including
    the staging of various program elements such as new storage
    projects--which will provide additional instream flows. Certain
    features of CALFED's Ecosystem Restoration Plan should be
    implemented now, especially projects that will resolve known
    problems and provide immediate environmental and economic
    benefits.
        California's recent response to the declining spring-run
    salmon population is a good example of the benefit of
    implementing broad based restoration actions before the species
    is listed under Federal law, and the ensuing regulatory
    gauntlet hampers all voluntary recovery efforts. The United
    States' recent listing of the steelhead as threatened, and the
    proposed listing of the fall-run, late-fall run and spring-run
    salmon are further incentive to initiate restoration actions
    now that will hopefully alleviate punitive Federal regulations
    later. Adaptive management is a useful tool to guide project
    selection and implementation given dynamic natural conditions,
    such as drought and floods. Projects that require additional
    analysis to determine their merit should be delayed, or
    implemented on a pilot project basis, until CALFED has
    established a better biological baseline, and expectation, of
    their potential benefit.
        In conclusion, NCWA supports additional Federal funding for
    the CALFED program consistent with the Federal Bay-Delta
    Security Act, and we offer our continued assistance to Congress
    and the Subcommittee on Water and Power to respond to these
    issues in the future.
                                    ------

       Statement of Dick Dickerson, President, Regional Council of Rural
                                    Counties

    MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITEE:
        I want to thank you for the opportunity to provide
    testimony on behalf of the Regional Council of Rural Counties
    (RCRC) to the Subcommittee with regards to the CALFED Bay-Delta
    Program's, public participation program.
        I am the President of the RCRC, and organization of twenty-
    seven rural California Counties. Our membership encompasses a
    broad geographic area stretching from the shores of Mono Lake
    to the shores of Clear Lake, from the valley floor of Yosemite
    to the top of Mount Shasta, from the rich farmlands of the
    Sacramento and San Joaquin Valley to the dense Sierra forests.
    Our members are located within San Joaquin, Sacramento and
    Trinity Watersheds. Collectively, our members are the
    ``source'' areas for the San Francisco Bay-Delta. It is from
    our membership that over eighty percent of the water for the
    Delta comes. Our twenty-seven member counties number nearly
    half of all of California's fifty-eight counties.
        The forests from within our membership area include the
    most significant snow pack areas in California. The water
    storage in those snow packs dwarfs the capacity of all of the
    reservoirs in the state. Snow melt during the spring and summer
    months is what keeps the Delta ecosystem alive. The health of
    the watersheds in our membership areas are, to the great
    extent, the early indicators of the health of the Delta's
    ecosystem not by any law of man, or map in a Federal office,
    but by the laws of nature. Any successful Bay-Delta solution
    will depend upon actions in our membership area, to implement
    ecosystem restoration, watershed management, water transfers,
    new water storage facilities and existing storage re-operation.
        The Congressionally ordered Sierra Nevada Ecosystem Project
    Report, completed in 1996, concluded that the most valuable
    resource in that mountain range was water. Water accounted for
    sixty cents of every dollar of all natural resources values
    including timber, mining, recreation and grazing. Water is not
    only the lifeblood of the Delta ecosystem it is also the liquid
    gold of California's economy.
        RCRC has participated in the CALFED Bay-Delta program since
    early 1996. Through the past two years we have actively
    supported a CALFED solution and willingly worked to achieve a
    balanced solution. We have worked very hard to assure that
    there would be a watershed restoration component in the CALFED
    Common Program Elements. We strove to develop an Ecosystem
    Restoration Program Plan, which would be grounded in reality
    and site specific--taking advantage of local expertise. We have
    advocated an open public process not only in the current CALFED
    program, but also in actual implementation actions and
    governance.
        RCRC is represented in the CALFED process at three levels.
    Our Water Committee Chairman (Robert Meacher, Plumas County),
    serves on the Bay-Delta Advisory Committee (BDAC). Our water
    and natural resources consultant John S. Mills, services the
    Ecosystem Restoration Roundtable. Mr. Meacher, Mr. Mills and
    other RCRC elected officials and staff also participate in
    numerous BDAC work groups such as; ecosystem restoration, water
    transfers, assurances, and finance.
        The expectation for adequate public participation within
    CALFED is predicated on the ability of the public to understand
    the subject matter. To have the opportunity to meaningfully
    express their interests and concerns to those making decisions
    and for those making the decisions to evaluate and respond to
    public input. This is, when effective, an interactive and
    ongoing process.
        The CALFED Bay-Delta Program, if completed, will be the
    most complex ecosystem restoration program ever carried out
    within the United States. It will affect the lives of tens of
    millions of Californians now and hundreds of millions yet to
    come in the future.
        It will cost billions of dollars and involve the use of
    significant portions of California's land area to achieve
    success. This process should involve not only water managers
    and Federal and state agency personnel, but also the general
    public whose lives will be affected by a CALFED solution. The
    solution will be complex and should involve, to the greatest
    extent possible, as much of the public as is practical.
        Notwithstanding the participation of RCRC I have
    referenced, we believe that there are two very serious problems
    with the CALFED public participation program and that they are
    inextricably linked.
        It is our experience that the CALFED schedule is too short.
    It fails to allow time for most of the affected parties to even
    become acquainted with the information being presented let
    alone provide meaningful input. While it is true that the
    process has been underway for over two years, it is only the
    past six months that clear project features and components of a
    solution have been assembled in any understandable manner. It
    is only in the past two months that a Draft Environmental
    Impact Statement has been released for public review and
    comment. Unfortunately, during this same time period the
    California Department of Water Resources released their Water
    Plan Update (Bulletin 160-98) with an April 15 deadline for
    comment.
        The Bureau of Reclamation set an April 17 deadline for
    comments on their own 5,000 page Programmatic Environmental
    Impact Statement. To comply with CVPIA. Most local governments
    were simply overwhelmed with the paper load. For the general
    public, faced with earning a living, the invitation to
    ``participate'' in these processes on that schedule was quite
    impossible.
        In addition, providing meaningful comments was further
    frustrated by significant portions of a CALFED solution package
    being incomplete at this time. For while we now know what the
    various alternatives for conveyance are, there are missing
    pieces to the puzzle. For example:

             There is no Assurance package. For our membership the
            issue of protections and guarantees of performance is of
            paramount importance.
             There is no Water Transfers package. Water transfers,
            while an important component of any CALFED solution, pose the
            most direct threat to our source areas economies if not
            properly designed and implemented.
             There is no complete Watershed Strategy. At best
            CALFED has put together a strategy of how to do a watershed
            strategy. The watershed restoration and management component of
            a CALFED solution is critically important to our members.
             There is no clear direction on new surface storage.
            Without new storage of surface water, the chances of producing
            a CALFED solution that would not negatively affect our members,
            is very slim.
        Therefore we feel that we are being forced to comment on an
    incomplete CALFED package in an unrealistic time frame. We are not
    optimistic that our comments would have any influence on the process
    given the lack of time for CALFED staff to evaluate and incorporate
    changes. We must underscore that we do not feel meaningful public input
    can be accommodated in the CALFED process given it is to be completed
    in the next seven months. That is a schedule for confrontation not
    consensus.
        We believe that the public involvement in the CALFED process has
    been structured in such a manner as to make it very difficult for
    meaningful participation. For example, Mr. Meacher, our BDAC
    representative has at times received his meeting agenda packet less
    than 24 hours before a BDAC meeting. He cannot be expected to read,
    assimilate and provide meaningful suggestions on a two-inch thick
    document in such a short period of time.
        Most CALFED meetings take place in Sacramento. While this is
    convenient for the agency personnel, most of the interested public are
    located elsewhere. CALFED's recent regional meetings throughout the
    state for the Draft Environmental Impact Statement are an improvement.
    However, they are too little too late.
        Regular CALFED regional workshops, on specific subjects, should
    have been held throughout the solution area, not just in Sacramento.
    This latter problem has resulted in increasing landowner concerns in
    our member counties regarding just what it is CALFED is doing and how
    it will affect their way of life.
        The CALFED Ecosystem Restoration Program Plan, a multi-volume plan
    to restore the environment of the Delta, was mailed out to only 550
    recipients--according to CALFED's own mailing list. CALFED's choice of
    who the document went to was also of concern. In one State Senate
    District in the Sacramento Valley, only two farm bureaus received
    copies. No copies were received by Women in Agriculture or by any
    Chamber of Commerce. However, more than twenty-five copies went out to
    environmental groups such as the Sierra Club, the Nature Conservancy
    and Restoring the Earth. Also on the ``A'' list of recipients were
    universities which received twenty copies in places as far away as U.C.
    Riverside and Berkeley. Federal and state agencies obtained over forty
    copies. Those who stood to be most affected by the plan, those who's
    land might have been ``retired'' or those whose water rights might be
    acquired, or those whose land might be converted to habitat, were left
    in the dark. Public frustration, expressed to us, the local elected
    officials, was significant. They have asked us, and we are asking you,
    to help expand and improve the public participation process in a
    meaningful way.
        The CALFED program has only rarely been able to take the time to
    address specific concerns of local landowners and examine ways to
    mitigate specific changes to their program. We believe that this must
    change.
        The CALFED program has only rarely been able to hold ``field''
    meetings with local conservancies, landowners and local government to
    find innovative ways to restore the environment without new regulations
    and takings. We believe that this must change.
        The CALFED program has seemingly expected rural California to
    supply the land, water and job sacrifices to fix the Delta without
    question in the manner of traditional top down agency mandates. We
    believe that this must change.
        CALFED has scheduled its own document releases and review periods
    in apparent ignorance or oblivion of the actions being taken by other
    CALFED agencies. We believe that this must change.
        CALFED expects all California to step forward to help fix the Delta
    when it is convenient for CALFED, in a location convenient for CALFED
    in a manner convenient for CALFED. We believe that this must change.
        One of CALFED's own brochures read, ``Ultimately, it is the active
    participations of the entire public that will help fix the Bay-Delta.''
    That Mr. Chairman, and members of the Committee, we believe will not
    change.
                                    ------

      Statement of Bill Gaines, Director, Government Affairs, California
                             Waterfowl Association

        Good afternoon. Mr. Chairman and members of the Committee,
    my name is Bill Gaines, and I am the Director of Government
    Affairs for the California Waterfowl Association. Thank you for
    the opportunity to come before you today to discuss the private
    sector's role in the CALFED Bay/Delta Program.
        Historically, the Bay/Delta watershed provided over 4
    million acres of naturally occurring wetland habitat for
    Pacific Flyway waterfowl and other wetland-dependent species.
    Over the course of the last century, largely due to
    agricultural conversion, urban expansion, and flood control
    projects, nearly 95 percent of this once vast wetland base has
    been lost. Yet, our little remaining habitat must still provide
    critically important nesting and wintering habitat for nearly
    25 percent of our continental waterfowl population, as well as
    an estimated 50 percent of California's threatened and
    endangered species.
        Recognizing this serious threat to our natural resources,
    the California Waterfowl Association was established in 1945
    with the mission of conserving California's waterfowl,
    wetlands, and sporting heritage. Over the course of the last
    half-century, our Association has worked cooperatively with
    Legislators, State and Federal agencies, other organizations
    and private landowners to actively seek water supplies for
    wetlands, and to develop, influence, fund, and implement
    wetland programs which facilitate the preservation,
    enhancement, and restoration of California's waterfowl habitat.
    Today, fifty-three years later, the California Waterfowl
    Association is largely recognized as the leader in California's
    wetland and waterfowl conservation effort. As Federal and State
    agencies, private organizations, landowners, and individuals
    move forward with the implementation of the CALFED Bay/Delta
    Program, the California Waterfowl Association has, once again,
    assumed the role of lead voice for public and private wetland
    and waterfowl interests.
        Due to significant changes in California's natural
    hydrology, much of our remaining interior wetlands must now be
    ``managed''--artificially irrigated and intensively managed to
    create marsh conditions. As a result of this very unique
    condition, the quantity and quality of waterfowl habitat
    available in California in any given year is largely dependent
    upon the availability of wetland water supplies. For many
    years, the lack of a firm water supplies for California's
    managed Central Valley wetland areas resulted in limited
    habitat of minimum quality in all but the absolute wettest of
    water years. In the fall of 1992, a significant positive step
    was taken toward addressing these critical annual wetland water
    needs when the Central Valley Project Improvement Act (CVPIA)
    was passed by Congress and signed into law. By guaranteeing
    firm annual water supplies to Central Valley public refuges and
    private wetlands within the Grassland Resource Conservation
    District, this landmark legislation marked a critical positive
    milestone in the California waterfowl conservation effort. But,
    with still less than 10 percent of our historical habitat
    remaining, much remains to be done.
        The CALFED Bay/Delta Program is a long-term effort to
    address ecosystem health, water quality, water supply
    reliability, and levee system integrity in the Bay/Delta
    watershed. Because the restoration, enhancement, and
    maintenance of waterfowl habitat throughout much of this
    watershed also depends upon these areas of concern, properly
    implemented, the CALFED Bay/Delta Program represents a
    tremendous opportunity to address the needs of migratory and
    nesting waterfowl, and the other wetland-dependent species.
        Today, I have been asked to provide our Association's view
    regarding public participation in the CALFED Bay/Delta Program.
    As a 501(c)3 nonprofit organization representing nearly 13,000
    Bay/Delta stakeholders statewide, the California Waterfowl
    Association also has a significant interest in the private
    sector's ability to contribute to the CALFED process.
        Let me begin to address this question with the statement
    that, although California's ``water wars'' and deteriorating
    ecosystem health are well chronicled, the CALFED Bay/Delta
    Program is, far and away, the most significant and positive
    multi-interest effort ever undertaken to address water and
    environmental concerns in California, or perhaps throughout the
    nation. The sheer magnitude of this landscape effort results in
    unintended barriers and natural disincentives to public
    participation. At times, even those individuals or the
    representatives of agencies or organizations who are fortunate
    enough to be able to dedicate ``full-time'' to this much needed
    effort struggle to obtain a comprehensive grip on this sweeping
    Program and its dynamic process. Clearly, providing for a
    Program which offers ample public participation opportunities,
    as well as real-time public awareness of its continual progress
    and potential impacts, is, in itself, a tremendous challenge
    for the Bay/Delta Program team.
        Irregardless of the stumbling blocks associated with
    assuring full stakeholder participation in such a mammoth
    program, the California Waterfowl Association believes the
    CALFED team has made every effort to design a process which
    facilitates and encourages important public input and returns
    real-time information flow. Yes, our Association--even as a
    member of the Program's Ecosystem Restoration Roundtable--has
    experienced times of serious frustration due to our inability
    to positively influence CALFED Program decisions. But, our
    Association does not contribute this frustration to a CALFED
    agency team set on implementing the Program ``their way,'' but
    rather to the tremendous difficulty associated with trying to
    address a myriad of Bay/Delta concerns in a fashion which is
    palatable to each of the many stakeholder interests which must
    be served.
        In trying to achieve this difficult goal, the California
    Waterfowl Association believes that CALFED agencies have made
    every reasonable effort to design a Program which allows Bay/
    Delta stakeholders to contribute to the Program's
    implementation, as well as its problem-solving/decision-making
    process. The ability of the private sector to be heard in this
    process ranges from the high profile role of formal committees
    established to provide direct advisory input to CALFED
    agencies, to hands-on workshops in small rural towns throughout
    the watershed, to other public outreach efforts which are
    enough to choke even the hardiest of mailboxes.
        As each of you is probably aware, CALFED agencies have
    tried to facilitate formal public input and interaction by
    establishing the Bay/Delta Advisory Council, or BDAC. This
    body, which is chartered by the Federal Advisory Committee Act,
    is comprised of a variety of stakeholder interests--including
    the California Waterfowl Association, water districts and
    utilities, environmental and fishing organizations, the
    California Farm Bureau, and others. Combined, this regularly
    meeting group of more than thirty diverse private interests
    provides an on-going medium for direct top-level public
    participation in the Program's decision-making process.
        In addition to BDAC; formal stakeholder interaction is also
    provided by the CALFED Ecosystem Restoration Roundtable--a
    roughly 20 member BDAC subcommittee. Similar to BDAC, this
    multi-interest team meets regularly in a public setting to
    discuss the concerns of individual interest groups, to ensure
    the coordination of CALFED Program activities with other
    restoration programs in the Bay/Delta watershed, and to help
    define priorities for on-the-ground CALFED projects.
        In addition to our seat on BDAC, the California Waterfowl
    Association is also active on the CALFED Ecosystem Restoration
    Roundtable, and I fill this role. As a direct result of our
    involvement at the Roundtable level, we have been able to
    positively influence a small, but important, selection of
    Program decisions--most notably the addition of waterfowl and
    their habitats as a secondary priority of the Program.
        In addition to the ability of the private sector to
    influence CALFED policy decisions via BDAC and the Ecosystem
    Roundtable, the public is also offered an opportunity to direct
    the Program's biological priorities, and the actual selection
    of restoration projects. Thirteen species, habitat, and/or
    region specific technical panels, as well as an umbrella
    Integration panel, have been created by CALFED agencies. These
    technical teams--which consist of a mixture of agency,
    academic, and stakeholder specialists--not only provide input
    on the types of restoration actions needed to address targeted
    Program concerns, but also play a lead role on the review and
    selection of proposals submitted for CALFED funding.
        The formal opportunities for private sector input that I
    have outlined are supplemented by the sometimes seemingly
    overzealous effort of CALFED agencies to reach out to those
    organizations, landowners, and individuals who have shown an
    interest in the Program. In our opinion, a tremendous amount of
    time, expense and effort has been put forth by the CALFED team
    to arrange, announce, and attend regional workshops, scoping
    meetings, and other public outreach efforts, as well as to
    continually bombard those on the massive mailing list with
    Program updates and other information. I can assure you that,
    as one of those on CALFED's ever growing mailing list, delivery
    of the daily mail can be, at times, a depressing event.
        It is important to note that, in addition to the care taken
    to facilitate private sector participation in CALFED decision-
    making, other important precautions are included in the
    proposal selection process to protect against unintended
    negative impacts to any individual landowner or interest-group.
    First, and perhaps most importantly, restoration projects are
    only done on a willing landowner basis.
        Clearly, certain specific parcels may, for whatever reason,
    be identified as critical for a certain habitat type or
    species. But, no project will be initiated without full,
    willing landowner participation. Second, efforts are being made
    to leave land in private ownership by giving preference to
    permanent conservation easements over fee title acquisition.
    Finally, the latest Request for Proposal (RFP) includes local-
    public involvement as part of the formal proposal evaluation
    criteria.
        Nevertheless, regardless of the sweeping efforts to address
    public concerns in the CALFED Program, the role of the private
    sector will be forever limited by several unavoidable factors.
    First, as I mentioned before, due to the staggering sheer size
    of the effort, few private organizations--much less
    individuals--have the time or aptitude to become sufficiently
    knowledgeable on the Program and its process, to know when,
    where, and how to ``weigh-in'' to best serve their concerns.
    Perhaps most frustrating, even those who are fortunate enough
    to understand the process are limited by the Program's charter
    to address so many differing concerns while avoiding unwanted
    impacts to the many diverse stakeholder interests.
        I believe the California Waterfowl Association is a good
    example of a private interest who has a relatively thorough
    knowledge of the Program, yet has been limited in its ability
    to fully address each of its concerns. Today, I am here to ask
    for your help.
        Our Association fully appreciates and supports the goal of
    the CALFED Program to address water supply reliability, and the
    importance of addressing the habitat needs of listed fish
    species in achieving this objective. Our ``managed'' wetlands
    will also benefit greatly from achieving this goal. Yet, if the
    Program is to make a sincere effort to restore the integrity of
    the Bay/Delta ecosystem, it must also more fully consider the
    serious habitat needs of native wildlife--most notably
    wintering and nesting waterfowl, and other species which share
    their habitats.
        California's Central Valley--largely the same geographical
    area being addressed by the CALFED ecosystem restoration
    program--is widely recognized as one of the most important
    waterfowl regions in North America. Yet, as I mentioned
    earlier, this area has suffered the significant loss of over 90
    percent of its historical waterfowl habitat--the greatest
    percentage decline on the continent.
        In the mid 1980's, in response to serious reductions in
    North American waterfowl populations, the North American
    Waterfowl Management Plan (NAWMP) was signed by the Federal
    Governments of Canada, the United States, and Mexico. This Plan
    established broad waterfowl population goals and identified
    seven priority areas on the North American continent in need of
    habitat restoration and enhancement. California's Central
    Valley was one of these identified priority areas.
        Two years later, in 1988, a habitat restoration program--in
    many ways like CALFED--was initiated to address NAWMP
    objectives in our Central Valley. This public/private
    conservation effort--known as the Central Valley Habitat Joint
    Venture--carefully established biologically based acreage
    objectives for the preservation, enhancement, restoration, and
    maintenance of waterfowl habitat throughout much of the CALFED
    project area. Recognizing the importance of private landowner
    support to the success of the Joint Venture, a serious effort
    was made to minimize the changes to existing land use necessary
    to meet waterfowl needs. As such, the quantity of acreage
    targeted for wetland restoration was somewhat limited, and
    heavy emphasis was placed upon leaving land in agricultural
    production and simply working with the landowner to increase
    its wildlife values.
        The tremendous loss of Central Valley habitat, as well as
    the critical importance of the region to migratory waterfowl is
    well documented. Clearly, the CALFED Program's ecosystem
    restoration effort could, and should, play a significant role
    in this critical conservation effort. Yet, thus far, the best
    efforts of our Association to elevate waterfowl and their
    habitats to a high priority of the CALFED Program have been
    relatively unsuccessful.
        Congress has already recognized the importance of the
    migratory waterfowl resource through its support of the NAWMP,
    and its authorization and annual funding of the North American
    Wetland Conservation Act (NAWCA)--the Plan's Federal funding
    source. Today, I ask for your assistance in creating a CALFED
    Program which not only helps to meet these needs, but also
    facilitates greater landowner support by providing full Federal
    funding to the CALFED ecosystem restoration effort, and
    earmarking a reasonable portion of those dollars for projects
    which are entirely consistent with the expected habitat
    objectives of the Central Valley Habitat Joint Venture.
        In conclusion, the California Waterfowl Association would
    like to applaud the CALFED team for what, we believe, is a more
    than reasonable effort to design a Program which maximizes the
    role of the private sector in the decision-making process. We
    ask those who may disagree to consider the tremendous
    difficulty associated with obtaining complete public
    satisfaction with a program of this size and scope. We also ask
    Congress to help us fully realize the potential of the CALFED
    Program to appropriately address the needs of our North
    American waterfowl populations and other native plant and
    animal species who share their habitats.
        On behalf of the members of the California Waterfowl
    Association, and waterfowl enthusiasts throughout the North
    American continent, I thank you for the opportunity to come
    before you today, and I would be happy to answer any questions
    you may have at this time.
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