[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
               CALIFORNIA CENTRAL VALLEY WATER MANAGEMENT

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                         COMMITTEE ON RESOURCES
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                      MAY 20, 1999, WASHINGTON, DC

                               __________

                           Serial No. 106-27

                               __________

           Printed for the use of the Committee on Resources



 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house
                                   or
           Committee address: http://www.house.gov/resources

                                 ______

                     U.S. GOVERNMENT PRINTING OFFICE
57-837                       WASHINGTON : 1999




                         COMMITTEE ON RESOURCES

                      DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana       GEORGE MILLER, California
JAMES V. HANSEN, Utah                NICK J. RAHALL II, West Virginia
JIM SAXTON, New Jersey               BRUCE F. VENTO, Minnesota
ELTON GALLEGLY, California           DALE E. KILDEE, Michigan
JOHN J. DUNCAN, Jr., Tennessee       PETER A. DeFAZIO, Oregon
JOEL HEFLEY, Colorado                ENI F.H. FALEOMAVAEGA, American 
JOHN T. DOOLITTLE, California            Samoa
WAYNE T. GILCHREST, Maryland         NEIL ABERCROMBIE, Hawaii
KEN CALVERT, California              SOLOMON P. ORTIZ, Texas
RICHARD W. POMBO, California         OWEN B. PICKETT, Virginia
BARBARA CUBIN, Wyoming               FRANK PALLONE, Jr., New Jersey
HELEN CHENOWETH, Idaho               CALVIN M. DOOLEY, California
GEORGE P. RADANOVICH, California     CARLOS A. ROMERO-BARCELO, Puerto 
WALTER B. JONES, Jr., North              Rico
    Carolina                         ROBERT A. UNDERWOOD, Guam
WILLIAM M. (MAC) THORNBERRY, Texas   PATRICK J. KENNEDY, Rhode Island
CHRIS CANNON, Utah                   ADAM SMITH, Washington
KEVIN BRADY, Texas                   WILLIAM D. DELAHUNT, Massachusetts
JOHN PETERSON, Pennsylvania          CHRIS JOHN, Louisiana
RICK HILL, Montana                   DONNA CHRISTIAN-CHRISTENSEN, 
BOB SCHAFFER, Colorado                   Virgin Islands
JIM GIBBONS, Nevada                  RON KIND, Wisconsin
MARK E. SOUDER, Indiana              JAY INSLEE, Washington
GREG WALDEN, Oregon                  GRACE F. NAPOLITANO, California
DON SHERWOOD, Pennsylvania           TOM UDALL, New Mexico
ROBIN HAYES, North Carolina          MARK UDALL, Colorado
MIKE SIMPSON, Idaho                  JOSEPH CROWLEY, New York
THOMAS G. TANCREDO, Colorado         RUSH D. HUNT, New Jersey

                     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              CALVIN M. DOOLEY, California
RICHARD W. POMBO, California         GEORGE MILLER, California
HELEN CHENOWETH, Idaho               PETER A. DeFAZIO, Oregon
GEORGE P. RADANOVICH, California     OWEN B. PICKETT, Virginia
WILLIAM M. (MAC) THORNBERRY, Texas   ADAM SMITH, Washington
GREG WALDEN, Oregon                  DONNA CHRISTIAN-CHRISTENSEN, 
MIKE SIMPSOM, Idaho                      Virgin Islands
                                     GRACE F. NAPOLITANO, California
                  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 20, 1999........................................     1

Statement of Members:
    Dooley, Hon. Calvin M., a Representative in Congress from the 
      State of California........................................     3
    Doolittle, Hon. John T., a Representative in Congress from 
      the State of California....................................     1
    Miller, Hon. George, a Representative in Congress from the 
      State of California........................................     4
        Prepared statement of....................................     4
    Radanovich, Hon. George, a Representative in Congress from 
      the State of California, prepared statement of.............   192

Statement of Witnesses:
    Babbitt, Hon. Bruce, Secretary, Department of Interior, 
      accompanied by Patricia Beneke, Assistant Secretary, 
      Department of Water and Science, Department of Interior....     5
        Prepared statement of....................................     9
    Gartrell, Gregory, Assistant General Manager, Contra Costa 
      Water District, Concord, California........................   133
        Prepared statement of....................................   136
    George, Hon. Merv, Jr., Chairman, Hoopa Tribe, Hoopa, 
      California.................................................   164
        Prepared statement of....................................   165
    Gleick, Peter, President, Pacific Institute, Oakland, 
      California.................................................    50
        Prepared statement of....................................    54
    Guy, David J., Executive Director, Northern California Water 
      Association, Sacramento, California........................    65
        Prepared statement of....................................    67
    Kaniewski, Donald J., Legislative Director, Laborer's 
      International Union of North America, LIUNA-AFLCIO, 
      Washington, DC.............................................    63
        Prepared statement of....................................    64
    King, Dennis, Senior Research Scientist, University of 
      Maryland, Center for Environmental Sciences, Solomons 
      Island, Maryland...........................................   103
        Prepared statement of....................................   106
    McCormick, Steve, Vice President, Western Division, The 
      Nature Conservancy, San Francisco, California..............    73
        Prepared statement of....................................    76
    Nelson, Barry, Senior Fellow, Save the San Francisco Bay 
      Association, San Francisco, California.....................   147
        Prepared statement of....................................   150
    Nelson, Dan, Executive Director, San Luis and Delta Mendota 
      Water Authority, Los Banos, California.....................   170
        Prepared statement of....................................   173
    Nichols, Mary D., Secretary for Resources, State of 
      California.................................................    25
        Prepared statement of....................................    27
    Sprague, Stan, General Manager, Orange County Municipal Water 
      District, Fountain Valley, California......................    47
        Prepared statement of....................................    48




         HEARING ON CALIFORNIA CENTRAL VALLEY WATER MANAGEMENT

                              ----------                              


                         THURSDAY, MAY 20, 1999

                  House of Representatives,
                   Subcommittee on Water and Power,
                                    Committee on Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 11:10 a.m. in 
Room 1324, Longworth House Office Building, Hon. John Doolittle 
[chairman of the Subcommittee] presiding.

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

    Mr. Doolittle. Subcommittee on Water and Power will come to 
order. We're meeting today to hear testimony on the California 
Central Valley Water Management. First session of the hearing 
will be devoted to issues regarding the California Bay-Delta 
program. And during the second half the hearing, we'll discuss 
the implementation of the Central Valley Improvement Act.
    This hearing concerns water management in the Central 
Valley of California, it involves some of the most important 
issues we will consider in this Congress. It represents a major 
Federal, State and local commitment to solving California's 
water needs and sets the stage for future water management 
policies and facilities in the State of California.
    I believe that the participation of Secretary Babbitt and 
Secretary Nichols indicates both the importance of this issue 
as well as an opportunity to discuss among some of the major 
policy leaders the steps we need to take to provide for 
California's water management future.
    While I recognize that there are other pressing issues we 
will discuss, it is encouraging to see that the stakeholders 
have agreed that $35 million of the CALFED funding for next 
year should be allocated for activities that address water 
quality and water supply issues. Although I don't believe that 
this sum goes far enough in addressing the needs for additional 
water supply, it does represent an important acknowledgment and 
commitment for augmenting California's future water supplies.
    Today I would like to address four areas of specific 
interest to the Subcommittee regarding water management and the 
Central Valley of California. These areas include ecosystem 
criteria, and performance standards, the development of a 
cross-cut budget, augmenting our current water supply and 
addressing where we are going with the CALFED program.
    We need to ensure that there are adequate criteria to 
evaluate the effectiveness of CALFED's restoration program. Not 
only do we currently lack many of the project descriptions to 
be undertaken by CALFED, but we have a shortage of measuring 
sticks to determine when we have achieved a specified goal once 
the money has been spent. The CALFED program must incorporate 
milestones and objective measurements that define the future 
essentials of success as well as when specific goals have been 
met.
    The Committee is concerned that the Federal agencies 
involved in the CALFED program are not coordinating the myriad 
of activities going on in the watersheds under restoration. I 
am currently discussing with the congressional support agencies 
a way to determine how fundings are currently being accounted 
for and how an effective cross-cut budget should be prepared. 
Last night we receive the long-awaited program-level cross-cut 
budget for the expenditures dedicated to the CALFED program. 
Today I seek Secretary Babbitt and Secretary Nichols' 
commitment to develop the more comprehensive project-level 
cross-cut budget, which identify all Federal and State 
expenditures being allocated to achieve the objectives being 
pursued by the CALFED program.
    Our existing water management systems can no longer provide 
a sufficient reliable water supply to meet the needs of the 
environment and our current water users. How are we going to 
develop the process to meet the future California urban, rural, 
agriculture, business, labor and environmental water needs if 
we can't even meet our current needs? Conservation, transfer 
and adaptive management are part of the solution, but they are 
not enough by themselves.
    Storage needs must be addressed immediately for two 
reasons. First, the demand for water in California currently 
exceeds the supply during normal years, and according to the 
California Department of Water Resources and CALFED's own 
documents, this shortage will grow to between 3 and 7 million 
acre-feet a year in the year 2020. If we do not immediately 
begin to address these needs, we will lose the valuable time 
necessary to prepare for this occasion.
    Twenty years ago computer programmers knew the phenomenon 
we now call the Y2K bug, and they knew that would have to be 
addressed, yet policymakers failed to act until very recently. 
The results are far greater costs and the risks of significant 
dislocations. Surely we have the wherewithal to avoid these 
mistakes in water.
    I do not believe that these concerns present insurmountable 
obstacles. Rather, they represent reasonable attainable goals 
which should reflect the way government conducts its business. 
The CALFED partnership represents potential funding in the 
billions of dollars. It has the potential to be used to enhance 
the water quality and environmental resources in the Bay-Delta 
as well as for other water resource activities in California. 
Yet how it is administered will be a test of government's 
ability to transition to a smarter, more efficient, less 
coercive mode of operation.
    Finally, I believe that we need to continue our scrutiny of 
the Central Valley Project Improvement Act. The implementation 
of this Act not only has a significant impact on the CALFED 
program, but it also is an indication of whether or not the 
government can approach these water problems in a constructive 
manner or will continue to do so with a heavy hand.
    In my conversation yesterday with Secretary Nichols I was 
encouraged with the spirit of cooperation that she extended. I 
look forward to hearing the testimony and discussing the future 
of California's water management with the witnesses and will 
now recognize our Ranking Member Mr. Dooley for his statement.
    [The information may be found at the end of the hearing.]

    STATEMENT OF HON. CALVIN M. DOOLEY, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Dooley. Thank you, Mr. Chairman. I want to thank you 
for holding this hearing today to review the status of the 
CALFED process and the implementation of the Central Valley 
Project Improvement Act. These two efforts are closely 
interwoven, and both will have a profound impact on the future 
of California.
    I would also like to thank all of our witnesses today for 
their participation. My constituents are greatly affected by 
the CVPIA and have been active participants in the CALFED 
process because they recognize that resolving the environmental 
problems associated with water project development is the key 
to restoring and ensuring an adequate and reliable water supply 
for the future.
    I continue to believe that a well-functioning, 
collaborative process such as CALFED remains the most effective 
approach to finding a long-term solution that addresses 
California's water supply and water quality needs while 
simultaneously protecting and restoring this State's unique 
ecosystems. From my perspective, a well-functioning process is 
a balanced one that produces tangible benefits for all 
participating stakeholders.
    It is clear to me, as I hope it is to all those involved, 
that this process will not succeed if major concerns of key 
stakeholders remain unaddressed. It is also important that we 
recognize that all policy decisions affecting California's 
water supply have an impact on our ability to devise a long-
term solution through the CALFED process. In that regard I have 
been impressed and encouraged by the cooperative spirit 
displayed by the stakeholders with respect to the 
appropriations request, and I have also greatly appreciated 
remarks by Secretary Babbitt in recent months which indicated a 
continued commitment to a balanced process that addresses water 
supply and quality concerns while we pursue ecosystem 
restoration. And I would just like to recognize that if it 
wasn't for the active and personal involvement of Secretary 
Babbitt, I think we might not have had the CALFED process 
maintain the momentum that it was able to achieve in the last 
year, and I am deeply gratified and indebted to your effort 
there.
    I'm also very pleased with the new State administration in 
California, who is represented here today by Secretary Nichols, 
who also in the first few months of their administration have 
been very constructively engaged, and I'm very confident about 
the leadership that you're going to provide in the upcoming 
years. I look forward to this leadership and being a partner in 
this effort and as we move towards a balanced, long-lasting and 
environmentally sound response to California's water supply and 
water quality needs.
    [The information may be found at the end of the hearing.]
    Mr. Doolittle. Mr. Miller.

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

    Mr. Miller. So I don't shock people, but I would like to 
associate myself with Mr. Dooley's remarks, and if I could 
include my opening statement in the record.
    Mr. Doolittle. Yes, without objection, so ordered. And that 
will certainly be the case for any of the other Members who 
wish to incorporate their statements into the record.
    [The prepared statement of Mr. Miller follows:]

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

    Mr. Chairman, I appreciate the participation of Interior 
Secretary Bruce Babbitt, Assistant Secretary Patricia Beneke, 
California Resources Secretary Mary Nichols, and all other 
witnesses who will participate in today's hearing. We have an 
ambitious schedule today, and my remarks will be very brief.
    The timing of this hearing is certainly interesting:

         A Federal judge in Fresno has just ordered the 
        Interior Department to comply with the Central Valley Project 
        Improvement Act.
         The United States Supreme Court just refused to 
        intervene in the case involving the Friant Unit contracts.
         The long-awaited Flow Study for the Trinity River will 
        be released, perhaps as early as next week.
         And CALFED will reach another milestone in a few weeks 
        when the revised draft EIS/EIR is released along with the draft 
        preferred program alternative.
    The convergence of these California water events is a 
reminder that California water issues are a reflection of the 
vibrant growth and energized nature of our State. Nowhere else 
in the West is water truly a statewide issue with direct 
impacts on the daily lives of tens of millions of people. We 
have a real opportunity in California to demonstrate our 
ingenuity and to devise the best and most creative ways to use 
our water resources responsibly. The CVPIA and CALFED are the 
tools we have at our disposal, and we have to make them work 
together.
    I continue to support the goals of the CALFED program, and 
I will work hard to secure the funding we have requested for 
the coming fiscal year. I hope we can get the entire California 
delegation to support us. The CALFED team has very effectively 
responded to the concerns raised during the last budget cycle.
    I also look forward to working with Chairman Doolittle, the 
California Delegation, and the CALFED stakeholder community, to 
promptly enact legislation to extend the spending authority for 
the CALFED Bay-Delta programs. We cannot put this critical 
program at risk by allowing the funding authority to expire.
    While there are many benefits associated with the CALFED 
process, we have to keep a close eye on where we are regarding 
implementation of the CVPIA. The CVPIA is designed to make 
basic changes in the priorities of Federal water policy in 
California, changes that inevitably impact traditional water 
uses and water users. Implementation of the law has been 
proceeding, but at a slower pace than many of us would prefer. 
I am working closely with Secretary Babbitt as we close the 
gaps on CVPIA implementation, and I am confident the 
fundamental precepts of this law are sound and that challenges 
to the implementation of the law will not prevail.
    There are too many issues, and not enough time. I 
appreciate the cooperation of everyone who participates in the 
development of CALFED and the constructive implementation of 
the CVPIA. I look forward to hearing the statements of our 
witnesses today.

    [The information may be found at the end of the hearing.]
    Mr. Doolittle. We have our distinguished first panel. I 
would like to ask them to please rise and take the oath, and 
then we'll begin.
    Will you raise your right hands, please.
    [Witnesses sworn.]
    Mr. Doolittle. Thank you.
    We welcome you both here today and appreciate your making 
yourselves available to address these important issues.
    Our first witness will be our Secretary of the Interior, 
the Honorable Bruce Babbitt, Secretary Babbitt.

   STATEMENT OF HON. BRUCE BABBITT, SECRETARY, DEPARTMENT OF 
INTERIOR, ACCOMPANIED BY PATRICIA BENEKE, ASSISTANT SECRETARY, 
    DEPARTMENT OF WATER AND SCIENCE, DEPARTMENT OF INTERIOR

    Secretary Babbitt. Mr. Chairman and Committee members, I 
come today grateful for the Committee's hearing and inquiry 
into the status of these related issues. I think it is very 
important and very timely, and I think I speak on behalf of all 
the CALFED participants in saying we welcome the increasing 
involvement of this Subcommittee and other portions of the 
United States Congress in this issue.
    The reason I emphasize that is because this is, in fact, a 
new type of water management and development. It is a--what is 
going on here represents a quite dramatic break from the 
tradition of water development, which occupied so much time of 
all the participants during the century past. Now, it's not 
surprising that California becomes, if you will, the lead ship 
in making this transition precisely because of the importance 
of water resources in the State of California.
    The process that gave rise to CALFED and which now drives 
this new kind of water project, in my judgment, is working 
very, very well. The stakeholders, for reasons that I will 
comment upon, are actively and deeply involved. It began in the 
Wilson administration with a strong commitment from the 
political leadership, the Governor and the legislature. We have 
made a remarkably effective and seamless transition with the 
coming office of the Davis administration, and I am 
particularly pleased with the Governor's choice of Mary Nichols 
as his resource Secretary. We have worked together on these 
issues for many, many years, and I'm confident that together we 
are going to make this process work and, with your help, bring 
in to being an entirely new way of meeting the needs of all of 
the stakeholders in a process which you have emphasized 
correctly, I think, that we need to see improvement on all 
fronts in terms of the needs of all the stakeholders.
    The reason, if I may elaborate briefly, that this process 
and this departure, if you will, this new chapter of water 
resource management opened in California is precisely because 
we had reached an absolute impasse in water future of the State 
through years of contention, of impasse, of litigation. 
Finally, all of the stakeholders came to one very basic 
conclusion, and that was simply that each one of the 
stakeholder groups has absolute power to frustrate any motion 
in any direction. Every stakeholder here today has demonstrated 
beyond a doubt its veto power over motion in any direction, and 
the stakeholders have finally discovered that that's not just a 
temporary phenomenon. That veto power that has been given to 
stakeholders by the people of California represents a cultural 
change which is here to stay. And out of that we have put 
together a process which recognizes that reality and says we 
are going to sit down in this most excruciating process and 
find consensus, which is in the manifest interest of each 
group. I elaborate on that because I think it's of 
extraordinary importance in the dynamic of this.
    Now, Mr. Chairman, I see a yellow light, and if I am held 
to that, I will simply stop right there.
    Mr. Doolittle. Mr. Secretary, let me say for this first 
panel with you and Secretary Nichols, we will be liberal in our 
application of those lights. So you can just continue and just 
whatever you want to say----
    Secretary Babbitt. That is the first time I have ever heard 
that word from your lips----
    Mr. Doolittle. And you won't hear it often.
    Secretary Babbitt. [continuing] with a positive 
connotation. Okay.
    Now, the progress that we're making in the CALFED process 
brings us back to the United States Congress with some very 
different sets of issues that I think very much are going to 
challenge our ability to keep this going, because it's going to 
require a different kind of process and response not only in 
the administration, but also in the Congress, because what we 
have moving forward now is a process of multiple parties which 
gives rise to some extraordinary budget issues, which you have 
very properly identified, which in turn call forth a lot of new 
motion on the concept of cost-sharing.
    The reason that I believe California is moving to the head 
of the line is because of--well, in part, I guess, nobody has 
overlooked the fact that there are 54 Members of Congress from 
California. Is that the current figure? Correct? But it's not a 
lot more than that. It's about a message from Sacramento, and 
the message is cost-sharing. And I believe that that fact is 
going to increasingly drive priorities in this Congress. And 
the State of California under the Wilson administration and the 
Davis administration has demonstrated extraordinary capacity, 
the bond issue of 1994, in the forthcoming bond debate and in 
the appropriation process, that it is committed to that 
partnership. Now, in the last 2 or 3 years, that commitment on 
both sides of this partnership, in the Congress and in 
Sacramento, has been made on the basis of continuing confidence 
in the progress that we can make with this consensus-driven 
process.
    You have already mentioned the concepts that are working on 
a daily basis in this process: efficiency, markets, systemic 
changes, the integrated supply study, which I'm sure you will 
want to talk about at some more length. And the fact is that 
you can see the progress that's being made out on the ground. 
It's happening right now. The increased flexibility of the 
Delta issues that have been dealt with in the south Delta in 
terms of improving the conveyance system are now under way. The 
fish screening process is working. Go up to Butte Creek, you'll 
see something really extraordinary. If I were to say to the 
press and to Californians, you want one specific example of 
what's happening, go to Butte Creek. It is a sight to behold. 
It is a statement that we can restore these fisheries 
consistent with stabilizing and guaranteeing agricultural water 
supplies and stabilizing and making more predictable the urban 
water supplies as well.
    Now, what I would like to do is leave CALFED, because your 
resource secretary will devote her remarks to some of the 
details that are unfolding in this very powerful and very 
unique state of Federal partnership. I would like to just say a 
word about two other components. One is the Central Valley 
Project Improvement Act, and the third is the Trinity River.
    The CVPIA is now unfolding at an accelerated rate. This has 
been a very tough issue. It's been at the top of my agenda for 
7--nearly 7 years. I find it hard to believe that I have been 
coming up here for 7 years, and I don't know whether to 
celebrate or lament the fact that I am now near the end of this 
process. But nonetheless, in the 7 years we have worked this 
stakeholder process to the point that the programmatic EIS 
framework for implementation of the Central Valley Improvement 
Project will be completed during this year for accelerated 
implementation in 2000 and beyond.
    As you look across the landscape, you will see the 
negotiations over water service contracts are now under way, 
and I believe taking shape nicely. That's a tough issue because 
it involves the water resource for 90 percent of the 
agricultural water delivered by the Central Valley Project. If 
you go out into Westlands, I think you will see a remarkable 
arrangement there that was worked out under the mandate of the 
land retirement issue out there, which was mandated by the 
CVPIA because of the drainage and salinity problems in that 
district. We have worked out a process in which land has been 
retired, support of the land owners and the district, and the 
water has been redeployed in a way that I believe is generous 
to the district and helpful to the stability of agricultural 
water supplies. So to put it more directly, we bought the land, 
and the district retains the water. It is, I believe, a 
thoughtful and useful way of going about this.
    There is now (b)(2) water flowing in the system in aid of 
fisheries. There are a variety of other issues. There is 
litigation over the exact extent of the so-called (b)(2) 
obligation. I don't think there's any reason to get too excited 
about that. There is always litigation. I guess my ultimate 
dream is the consensus would reach the point where we 
absolutely all of us foreswore hiring litigators or even going 
near the courts. We're not quite there, but the CVPIA is 
working. It can be made to work. The process is under way. And 
we are acutely aware of the need to interface the CVPIA with 
the CALFED process, because in the final analysis, they are 
both aimed in the same direction. And I would just repeat that 
one more time, that is that we can manage this system with not 
just a few tools; all the tools at our disposal, conservation, 
efficiency, reuse, transfers, and storage.
    Lastly, a word about the Trinity River. The hydrological 
studies of the Trinity River Basin will be released next week. 
Now, briefly a bit of history. The Trinity River studies have 
been under way for nearly 20 years. This is not a new issue. 
There was both legislation and administrative action taken 
clear back in 1980. The issue was simply this: The Trinity 
Diversion Project, which takes water from the Trinity River 
into the--into Trinity Lake and across to Whiskey Town and down 
the Sacramento River in some years was--was and is diverting as 
much as 90 percent of the flow of the Trinity River.
    That was a project which was authorized and completed under 
the rules of the century past, and what I mean by the rules of 
the century past is that project was authorized and completed 
with no consultation with the Yurok and Hupa tribes as to their 
entitlement under the Federal reserve rights doctrine. It was 
completed with no studies about the fisheries issues, and the 
fisheries have collapsed. The reduction in anadromous fish in 
the system, I think, is about the same as the water, about 90 
percent, and that's what gave rise to the studies. Now, the 
Central Valley Project Improvement Act mandated, didn't ask, it 
didn't encourage, it gave us an explicit mandate to restore the 
fisheries. That's what this study is about.
    Now, lastly, a word about the study. I predict that the 
California press, although it is among the most enlightened, 
progressive, insightful, studious of all media people in the 
entire world, is going to be sorely tempted to write a story 
saying X acre-feet of water are put back into the Trinity 
River, and that means the following reduction in supply to the 
Central Valley. Anybody want to take me on that, lay some odds? 
That's the headline next week. Now, that's not what this is 
about. This is about a study showing hydrographic models 
related to fisheries biology. That study will be translated 
into an environmental impact statement which will be done in 
the course of this year and will be the predicate for a 
decision.
    There will be a lot of issues between the boat and the dock 
in this case that relate to how you manage stream flows: The 
profile of the stream hydrograph, the amount of water that's 
necessary in dry years versus wet years, and the relationships 
between the storage capacity in the Trinity-Whiskey Town system 
and how that relates to annual flows. So what I am saying is 
before people pick up weapons and head into battle, remember 
it's not anything more than a study. It has lots of possible 
scenarios, and we are dedicated to trying to make this process 
work.
    Mr. Chairman, I have egregiously exceeded my time. I think 
even I know that there are limits to liberalism. So thank you 
very much.
    Mr. Doolittle. Thank you, Mr. Secretary. I haven't often 
heard that acknowledgment, but I'm pleased to note it.
    [The prepared statement of Secretary Babbitt follows:]



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    Mr. Doolittle. We are now pleased to have our Secretary of 
Resources of the State of California, the Honorable Mary 
Nichols testify.
    Madam Secretary.

STATEMENT OF MARY D. NICHOLS, SECRETARY FOR RESOURCES, STATE OF 
                           CALIFORNIA

    Ms. Nichols. Thank you very much, Mr. Chairman. Thank you 
for inviting me here today to testify in support of the CALFED 
Bay-Delta Program. I also want to thank you and the Committee 
for your continued support of the program, and I am looking 
forward to continuing to work with you to ensure its success.
    I, too, want to pay tribute to Secretary Babbitt's 
leadership in this process as well as to the good work that was 
done by my predecessors in the Wilson administration, including 
Secretary Wheeler, in paving the way for the seamless 
transition that Secretary Babbitt referred to; and particularly 
to thank my colleagues in the Federal Government, including 
Assistant Secretary Patty Beneke and all of the directors of 
the regional offices within the Interior Department for having 
helped to make the seamless transition, at least appear to be 
seamless.
    I think I could have done, though, without the Secretary's 
reference to the many years that we have been working together 
on these issues. I like to think of myself as brand new on the 
scene, but, of course, I have had a history of working on these 
issues in the past as well in other contexts.
    I would just like to quickly move to the status of the 
program now, and to try to address some of the comments that 
you have made and your earlier questions to us. In particular, 
in these several months since the Phase II report was issued 
last December, I think we've made some very significant 
progress in a number of program areas, and that based on the 
briefing materials that we have been able to provide to date as 
well as the reports that will be coming out in June, that you 
will see that we have been able to develop an integrated 
storage investigation program that breaks the gridlock over 
competition between how groundwater and surface storage 
projects will be evaluated and how we will proceed to move 
forward on addressing the storage issue.
    We've also developed a draft finance plan that lays out 
both the commitment that there will be a user-paid principle 
applied and some of the options for assuring adequate funding 
for this program. And we've developed a comprehensive set of 
environmental indicators in the design for the development of a 
comprehensive monitoring assessment and research program that 
will really enable us to measure the success of the program. We 
agree with you that if we can't define success in measurable 
terms, we can't say that we've achieved it.
    As I have indicated earlier we do intend to release the 
draft EIR/EIS in late June for public comment. It will have 
been developed with a very widespread stakeholder process, but 
the document as a whole, of course, needs widespread review. 
And there will be a series of workshops held around the State. 
The program will be further defined and developed, and then the 
final plan is due out in June of next year. And, of course, we 
have a period then of years afterwards in which we will be 
spinning off specific projects and specific EIR/EISs on those 
projects.
    I want to call special attention to the level of scientific 
review and the commitment to developing measures of success for 
this program. CALFED has relied on expert advice from some of 
the Nation's leading scientists and natural resource managers 
to critique and refine this program. The panel drew from 
expertise drawing on the Chesapeake Bay, the South Florida/
Everglades, Columbia River and other programs in developing 
specific recommendations as part of our strategic plan for 
implementing the Ecosystem Restoration Program. The plan 
contains a comprehensive set of restoration goals and 
objectives, measurable performance standards that define the 
success of the program, and similar efforts are under way to 
establish such measures for the water quality, water supply 
reliability and other elements of the CALFED program.
    We're also looking at ecological indicators that will 
measure the integrity of the Bay-Delta system itself. The 
restoration program includes three general types of indicators, 
indicators of ecological integrity or health, scientific and 
management-oriented indicators on the restoration program 
performance itself, and more public-oriented major indicators 
of progress on the program's goals. These are laid out in the 
draft EIR/EIS and will be available obviously for public 
comment in June. And assuming that we survive that process, we 
intend to use them throughout the remainder of the process in 
our communications with the public as well as with the 
stakeholders and the scientific community.
    I also want to highlight the emphasis that has been a 
hallmark of this process from the very beginning in 
partnerships with local interests and landowners to find 
projects that have multiple benefits. You'll be hearing more 
from the stakeholder groups represented here today. And, of 
course, the CALFED program itself has showcased some of the 
major projects that combined fisheries and habitat restoration, 
flood plain management, water quality, and water supply 
reliability.
    Secretary Babbitt referred to the Butte Creek Restoration 
Project as one of our signal success stories. Five point six 
million dollars has been approved there for fish screens, fish 
passage and small dam removal, watershed support, and general 
restoration activities on this tributary watershed. Last year 
more than 20,000 adult spring run salmon returned to the creek 
after a low of only 200 to 1,000 in recent years, a really 
extraordinary recovery for the fish.
    We could also point to the Consumnes River Project, 
Sacramento River Conservation area, San Joaquin National 
Wildlife Refuge and the Battle Creek Restoration Project as 
very specific examples where combined physical actions are 
working to improve water quality and water reliability and to 
improve the habitat for fish.
    And I think that it's important to again reference the fact 
that none of the individual agencies that are represented in 
the CALFED process would have had the financial resources or 
the expertise in-house to have addressed these projects and 
worked with the local communities as successfully as they have 
if it hadn't been for the umbrella of CALFED bringing them 
together.
    Finally I need to emphasize the importance of continued 
funding to maintain the momentum behind this program as well as 
to further support the projects that are vital to the economy 
and the environment of California. As you know, the fiscal year 
2000 appropriation will provide the third year of Federal 
funding under the Bay-Delta Act authorization of $430 million 
for this program. To date the program has approved $150 million 
out of the $160 million that have been appropriated for 
projects and programs that will have a lasting benefit for 
farms, families, and fisheries throughout the Bay-Delta 
watershed.
    The State's share of this program has been provided through 
passage of Proposition 204 in 1996, which allocated $60 million 
for ecosystem restoration and an additional $390 million upon 
completion of the final environmental documentation in fiscal 
year 2000. In addition, Governor Davis announced last Friday 
that he is asking for another $10 million in this year's budget 
to support the program's integrated storage investigation, 
including site-specific work on storage.
    The administration's fiscal year 2000 budget request, 
therefore, is essential to maintaining the Federal share and 
commitment to this program. As you also know, we've worked 
closely with stakeholder groups to develop a consensus in 
support of the administration's fiscal year 2000 budget year 
request for $25 million for support of the CALFED program. As a 
result of the discussions with the stakeholders, a broad-based 
coalition of these groups has developed a consensus in support 
of allocating $60 million for ecosystem restoration programs 
and $35 million for water quality, levee system integrity, and 
water supply reliability programs. I urge you to support this 
consensus recommendation.
    I recognize, as does Secretary Babbitt, the difficulty of 
funding this program solely through Energy and Water 
appropriations, and in response to this Committee's strong 
urging, we are working closely with the Department of Interior 
and other CALFED agencies to develop a meaningful project-level 
cross-cut budget to identify major expenditures that are 
directly related to the CALFED program.
    In conclusion, I just wish to repeat my thanks for your 
continued support of this program and for inviting me here 
today, and I'm pleased to answer any questions that you may 
have.
    Mr. Doolittle. Thank you very much.
    [The prepared statement of Ms. Nichols follows:]

    Statement of Mary D. Nichols, Secretary for Resources, State of 
                               California

Introduction

    Thank you for inviting me here today to testify in support 
of the CALFED Bay-Delta Program. I also want to thank you for 
your continued support of the Program, and I look forward to 
working with the Congress, Secretary Babbitt, and the 
stakeholder groups in California to ensure its success.
    Secretary Babbitt has outlined the key elements of the 
Program in his testimony, and the CALFED staff have prepared 
extensive briefing materials, so I will focus my comments on 
the areas of special concern to the State.

Importance to the Davis Administration

    First, I want to emphasize the importance of this effort to 
the Governor and his administration. In the area of environment 
and resources, there is no higher priority than moving this 
program forward. Certainly, the level of staffing and financial 
resources devoted to CALFED far exceeds that of any other 
environmental program in the state.
    The Governor demonstrated his strong interest in water 
policy and the CALFED Program early on by forming an 
Agricultural and Water Task Force from the leaders of the 
agricultural and conservation communities. I served on the task 
force together with CALEPA Secretary Winston Hickox and Bill 
Lyons, Secretary of the California Department of Food and 
Agriculture, before we were appointed by the Governor. I think 
it is a measure of the importance the Governor places on water 
policy that he drew three cabinet members from this task force. 
The Task Force developed a set of recommendations that formed 
the basis for many of the key elements of the Phase II Report 
issued by the CALFED Program last December.
    As the Secretary for Resources, I now co-chair the CALFED 
Policy Group, the principal decision-making body for the CALFED 
Program, together with Assistant Secretary Patty Beneke of the 
Department of Interior, and I have met several times with 
Secretary Babbitt to discuss the key issues surrounding the 
program. The other members of our leadership team include Tom 
Hannigan, the new Director of the Department of Water 
Resources, Linda Adams from the Governor's office, who as a 
consultant with the State Senate was a lead negotiator and the 
principal drafter of Proposition 204, the bond Act that has 
provided the State's share of funding for CALFED, and Patrick 
Wright, my Deputy Secretary for Policy Development, who 
formerly served as the Federal chair of the CALFED Management 
Team. In summary, we have a strong and growing management team 
at the State, and we are committed to provide the leadership 
necessary to effectively manage the program.

Commitment to Move Forward

    Second, I wish to emphasize our commitment to move 
aggressively forward with the key elements of the program. Just 
in the last several months since the Phase II Report was issued 
in December, we have made significant progress in several 
important program areas:

         We have developed a programmatic-level preferred 
        alternative that provides benefits for all interests in the 
        areas of water quality, water supply reliability, and 
        environmental restoration.
         We have developed a comprehensive plan to address 
        water quality, fisheries, and water supply reliability issues 
        in the South Delta, the key to the State's plumbing system;
         We have developed an integrated storage investigation 
        program to break the gridlock over how groundwater and/or 
        surface storage projects will be evaluated and constructed.
         We have developed a conservation strategy that will 
        provide regulatory certainty for all parties under the State 
        and Federal Endangered Species Acts as the program moves 
        forward;
         We have developed a draft finance plan to secure 
        adequate funding for the Program; and
         We have developed a comprehensive set of environmental 
        indicators and a design for the development of a Comprehensive 
        Monitoring Assessment and Research Program (CMARP) to measure 
        the success of the Program.
    In late June, we intend to release a draft EIR/EIS for public 
comment and hold a series of workshops throughout the state. We expect 
to further refine the program and release the final plan in June of 
next year.

Goals, Objectives, and Measures of Success

    Third, I want to call special attention to the level of scientific 
review and commitment to develop measures of success for the program. 
CALFED has relied on expert advice from some of the nation's most 
respected scientists and natural resource managers to critique and 
refine the program. The panel drew from their collective expertise in 
the Chesapeake Bay, South Florida/Everglades, Columbia River, and other 
programs in developing specific recommendations as part of a Strategic 
Plan for implementing the Ecosystem Restoration Program. The Plan 
contains a comprehensive set of restoration goals and objectives, the 
measurable performance standards that define the success of the 
program. Similar efforts are underway to establish clear measures of 
success for the water quality, water supply reliability, and other 
elements of the CALFED program.
    The Program is also developing a comprehensive set of ecological 
indicators to measure the ecological integrity of the Bay/Delta system. 
The Ecosystem Restoration Program will include three general types of 
indicators:

         indicators of ecological integrity or health;
         scientific and management oriented indicators of 
        ecosystem restoration program performance and success; and
         more public oriented major indicators of our progress 
        in meeting the program's goals
    These indicators will be fully described in the draft EIR/EIS to be 
released in late June. They will then be used to describe and present 
information to the public, stakeholders, and the scientific community 
on ecological trends and conditions, and to translate the program's 
goals and objectives into measurable benchmarks of success.

Partnerships with Local Communities

    The fourth major point I want to highlight is our continued 
emphasis on partnerships with local interests and landowners on 
projects that have multiple benefits. As you will hear from some of the 
stakeholder groups represented here today, the CALFED Program has been 
a showcase for projects that combine fisheries and habitat restoration, 
floodplain management, water quality and water supply reliability. Some 
of the most prominent examples include:

         The Consumnes River project, where more than 35,000 
        acres of riverside habitat along the lower floodplain of the 
        Consumnes have been protected within a rapidly urbanizing area. 
        The preserve is a multifaceted program combining land 
        acquisition, land use planning, compatible economic 
        development, agricultural preservation, and community outreach 
        and education.
         The Sacramento River Conservation Area, which 
        encompasses approximately 213,000 acres along 222 miles of the 
        main stem of the Sacramento River between Keswick Dam and 
        Verona. This voluntary program, which grew out of State 
        legislation calling for development of a management plan for 
        the river, seeks to balance existing land uses and needs with 
        preservation and restoration actions. CALFED has dedicated more 
        than $36 million towards preserving and protecting riparian 
        habitat, building fish screens, and conducting research within 
        the Conservation Area.
         Expansion of the San Joaquin National Wildlife Refuge 
        to reduce flooding, protect farmland, restore valuable wildlife 
        habitat, and provide other local benefits. CALFED has provided 
        more than $10.5 to widen the floodplain, increase storage of 
        flood water, recharge groundwater, and restore wildlife 
        habitat.
         The Butte Creek Restoration project. More than $5.6 
        million has been approved for fish screens, fish passage and 
        small dam removal, watershed support and general restoration 
        activities on this tributary watershed. Last year more than 
        20,000 adult spring run salmon returned to the Creek from a low 
        of 200-1,000 in recent years.
         The Battle Creek Restoration Project, which seeks to 
        improve fish passage for four races of steelhead and salmon in 
        the only Sacramento River tributary with exceptionally high 
        flows during the dry season and drought periods. The project 
        includes removal of five dams, screened diversions, increased 
        flows, and other actions to improve water quality and access to 
        42 miles of historical anadromous fish habitat. To date, CALFED 
        agencies have provided $28 million in funding for the project.
    These are just a few of the most prominent examples of projects 
developed and implemented by local agricultural and conservation groups 
to provide multiple benefits. These partnerships would not have been 
possible without coordinated technical and financial assistance from 
the CALFED program. None of the individual agencies would have had the 
resources or the expertise to work with local communities in putting 
together large scale projects with multiple purposes and funding 
sources.

CALFED Funding

    Finally, I want to emphasize the importance of continued funding to 
maintain the momentum behind the program, and to further support 
projects and programs vital to the economy and environment of 
California. As you know, the fiscal year 2000 appropriation will 
provide the third year of Federal funding under the Bay-Delta Act 
authorization of $430 million for the CALFED Program. To date, the 
Program has approved $150 million from the $160 million appropriated to 
date on projects and programs that will have lasting benefits for 
farms, families, and fisheries throughout the Bay-Delta watershed.
    The State's share has been provided through passage of Proposition 
204 in 1996, which allocated $60 million for ecosystem restoration, and 
an additional $390 million upon completion of the final environmental 
documentation in fiscal year 2000. In addition, the Governor announced 
last Friday that he is including $10 million in the State's fiscal year 
1999-2000 budget to support the Program's Integrated Storage 
Investigation. The Administration's fiscal year 2000 budget request, 
therefore, is essential to maintain the Federal share and commitment to 
the program.
    As you may know, we have worked closely with stakeholder groups to 
develop a consensus in support of the Administration's fiscal year 2000 
budget request for $95 million to support the CALFED Program. As a 
result of those discussions, a broad-based coalition of these groups 
has developed a consensus in support of allocating $60 million for 
ecosystem restoration programs and $35 million for water quality, levee 
system integrity, and water supply reliability programs. I urge you to 
support this consensus recommendation.
    I recognize, as does Secretary Babbitt, the difficulty of funding 
this program solely through Energy and Water appropriations. Therefore, 
in response to the Committee's request, we are working closely with the 
Department of Interior and other CALFED agencies to develop an 
interagency cross-cut budget to identify all major expenditures 
directly related to the CALFED Program.

Conclusion

    In closing, I wish to reiterate my thanks for your continued 
support of the CALFED Program, and for inviting me to appear before you 
today. I would be pleased to answer any questions you may have.

    Mr. Doolittle. There is so much to talk about, I'm sure 
we'll not be able to get it all accomplished in one round of 
questions. But, Mr. Secretary, I infer from your comments you 
believe that the matter of the Trinity River flow is going to 
have to be integrated into the CALFED and the whole the Bay-
Delta program; is that a fair statement?
    Secretary Babbitt. Mr. Chairman, the Trinity River mandate 
is a distinct, defined, specific mandate in law which says I 
must make a decision about water flows sufficient to restore 
the fishery. That's the baseline. Now, obviously, that decision 
has impacts in the Sacramento River Valley and indeed the 
entire system. And having made--having once made the decision 
about what's necessary for the flow regimes and the hydrograph, 
I think it is then possible and indeed imperative that we look 
at the management regimes in a way that is designed, to the 
extent possible, to minimize the impact in the Central Valley.
    Mr. Doolittle. Can you--could you indicate what steps you 
feel are likely to be taken to mitigate for the loss of water 
in the Sacramento River system?
    Secretary Babbitt. Well, Mr. Chairman, I think mitigation 
comes in two packages. The first one is, as I suggested, that 
is, how we manage the system and how it is the storage capacity 
in Trinity Lake and Whiskey Town Reservoir is used in a 
multiyear mode that buffers some of these impacts. The other 
thing I think we will need to examine very carefully is I can 
tell you, without being familiar with the report, just from our 
prior experience with these, the amount of water, the reduction 
in diversions in and through the Central Valley will be largest 
in times of large flow, and the impact will be smallest in 
times of drought. I think that's a very important fact because 
that does play into the operating flexibility of the system, of 
the CALFED system, and the storage capacity and flexibility. It 
isn't just about what kinds of relationships in a given year. 
It really does play into that. So that would be the second 
piece of it, sure.
    Mr. Doolittle. So you would contemplate, then, using stored 
water in those reservoirs to provide--to augment some of the 
flow presently that goes down to the Trinity so as to minimize 
or reduce the impacts on the Sacramento River system.
    Secretary Babbitt. What I'm saying is that is one of the 
operational flexibility issues that absolutely must be looked 
at.
    Mr. Doolittle. Okay.
    Secretary Nichols, tell us--I would like to hear what the 
Davis administration thinks about the need for additional water 
storage shed. It's my understanding that the administration 
indeed recognizes the need for that and supports it.
    Ms. Nichols. Yes, Mr. Chairman. The Governor has stated, I 
believe on a couple of occasions, that he believes that 
additional storage will be needed for California's present and 
future needs. He has not made any commitments to any particular 
sites or types of storage, but he certainly recognizes that as 
we manage the system better, one feature of that management is 
providing for storage.
    Mr. Doolittle. So I take it he has not ruled out on-stream 
storage as one of the possible solutions?
    Ms. Nichols. He has not specifically ruled out any 
particular type of storage, that's correct, although clearly 
both cost and environmental impacts will play a role in making 
a decision about what types of storage will be chosen.
    Mr. Doolittle. Can you--how about you, how do you feel 
about on-stream storage?
    Ms. Nichols. I think right now we're in a peculiar 
situation where we're looking at actually eliminating some dams 
that in the past were thought to be useful for various reasons. 
We have got a lot of other dams that are being looked at for 
reoperation.
    Probably the biggest single activity that's going on in the 
area of storage right now in California is the debate over the 
future of the PG&E system and what will be done with that. I 
think we need to take a look at that before we start talking 
about additional construction. But, again, as a matter of 
principle and in fairness to the debate, there have been no 
solutions that have been eliminated from potential 
consideration in this process.
    Mr. Doolittle. Mr. Secretary, you want to jump in on this?
    Secretary Babbitt. Mr. Chairman, if I might just elaborate 
by reference to the CALFED proposal for the integrated storage 
studies. The integrated storage studies have narrowed--they 
deal, obviously, with both groundwater and surface water.
    Now, with respect to surface water, the possibilities have 
been whittled down to about, I think, 14 sites--Lester, am I 
about right--for detailed feasibility studies. Now, there are 
no new on-stream storage sites in those 14. I think that's an 
important distinction. There are modifications to existing on-
stream sites, specifically raising Shasta Dam, and there are a 
goodly number of off-stream surface storage sites in that 14, 
essentially the balance of them.
    Mr. Doolittle. I might mention that the witness lights 
appears to be not working--we better get these lights going, or 
we'll be here forever. But I don't think I have gone much over 
my 5 minutes. Did you want to add something?
    Ms. Nichols. No. I think that was a helpful elaboration, 
because I certainly wouldn't want it to be thought that we were 
moving outside of the integrated storage investigation.
    Mr. Doolittle. Well, I'm well aware there are no new on-
site storage sites discussed in CALFED, a fact that I find 
disappointing. But in any event, there are--I have an interest 
in that, and I think some of our Committee members do.
    Let me just ask you in your experience do fish ladders 
generally accomplish their intended purpose or not?
    Secretary Babbitt. Mr. Chairman, there is no simple answer 
to that. We have been dealing with fish ladders now since 
really the 1920s and I would say that the extravagant 
expectations with which fish ladders were viewed as mitigation 
have really not been met, and there have been a goodly number 
of failures.
    That said, in some cases, within some constraints, fish 
ladders work pretty well. They never replicate 100 percent the 
predam conditions, but there are circumstances in which they 
are certainly worthy of consideration.
    Mr. Doolittle. I have been told that the Scandinavian fish 
ladders are built differently than ours. Typically they're much 
longer and the----
    Mr. Miller. Field trip.
    Mr. Doolittle. Yeah, field trip.
    But not only are they longer, but the dams are somewhat 
differently configured. But apparently they have a much higher 
success rate than our American fish ladders do. I just wanted 
to pose that question to you if you have ever looked into that 
or considered the possibility that maybe we could improve in 
this area.
    Secretary Babbitt. Mr. Chairman, the Fish and Wildlife 
Service has a fish ladder research facility, I believe, in West 
Hadley, Massachusetts. They will be absolutely elated after 
years of working in total obscurity to hear of your interest, 
and I am sure there will be a request for budget support in the 
mail tomorrow morning.
    But, seriously, Mr. Chairman, the design and technology of 
fish ladders is really a very sophisticated subject. And you're 
correct, this isn't just sort of a cookie-cutter kind of deal. 
It really involves a lot of physics and hydrodynamics and stuff 
like that, and we would be happy to have your support for the--
for that laboratory.
    Mr. Doolittle. Well, I only raise that matter because we're 
now hearing the proposal to tear down some of the dams and as a 
way of improving the fisheries, but I was not aware of the 
situation in Scandinavia apparently where that's one way 
they've addressed this problem, that it appears to be working. 
I would just like to ask you to look into that and perhaps get 
back to the Committee with what your findings are. Maybe this 
research laboratory already has those answers.
    With that, although I have other questions, I am going to 
recognize Mr. Dooley for his questions.
    Mr. Dooley. Thank you, Mr. Chairman. I guess the point I 
want to stress, I think that one of the greatest 
responsibilities that all of us have that have been following 
this process, as well as, I think, the Federal and the State 
administrations have, is to, you know, exercise our influence 
in keeping this CALFED process on track, because I do believe 
that regardless of, you know, what constituency that we might 
represent, this is the best alternative for us to resolve some 
of these long-standing problems we faced with California water 
issues.
    And my first question to both Secretaries is a very general 
one. Is that one of the critical issues, then, is to ensure 
that we can offer a process, whether you're in an environmental 
community or agricultural community or municipal community, is 
that this is a process that allows us all to perhaps get better 
together? And is this, you know, an accurate depiction, I 
guess, of what you think the CALFED process offers, Secretary 
Babbitt?
    Secretary Babbitt. I believe Secretary Nichols and I would 
give exactly the same answer, Congressman, and that is yes. 
These processes must proceed in parallel. Now, what I would 
emphasize is that doesn't mean there isn't a mathematical 
formula to determine that. And there--certainly I think it's 
misleading to think of it as some kind of equivalence in which 
the subvention grants are given a label of fisheries, 
agriculture, water quality, and judged by the relative level--
the relative amounts of funding are driven by the scheduling of 
events. Some have lead time, some have virtually no lead time, 
others have 5 or 10 years' worth of lead time.
    Congressman, if I might, I would just like to interject one 
more thing that I think relates to this. There is something, I 
think, quite new in water management and development that 
arises out of this, and that is that this Committee and the 
energy and water appropriation committees are now in the 
business of making block grants to the Interior Department, and 
most--and indeed virtually all of which is then awarded on a 
competitive, peer-review basis to an enormous variety of 
Federal and predominantly State organizations. The money that 
gets appropriated in turn is subvented out in this process.
    I'm very comfortable with that, because I think the day in 
which the Bureau of Reclamation sort of shows up in town and 
says, clear out of here while we do everything, are gone. But 
it is quite different, and I would respectfully suggest that it 
is working and acknowledge that it puts a very important burden 
on us to be reporting back and setting benchmarks so that you 
can judge the efficacy of this process.
    Ms. Nichols. Maybe I could just add a word or two. The 
phrase ``getting better together'' was part of what launched 
CALFED, and at the end of the day, unless the stakeholders who 
have given so much of their time to this process all feel that 
they've gotten something that has made them better as a result, 
I think we will not have succeeded.
    The thing that I'm most optimistic about is that the 
projects that have been funded to date through the mechanism 
that Secretary Babbitt alluded to are projects that really have 
multiple benefits. And one of the great accomplishments, I 
think, of the process and the learning that people have engaged 
in together is that people are seeing that projects that might 
have fallen into just one category in the past really will have 
benefits for other people's agendas as well, and that's what we 
need to be looking for in the future.
    Mr. Dooley. Great. And I guess--that's where I think many 
of us are very pleased in the message that the Governor is 
sending to the agricultural community and the municipal 
community in terms of the commitment in moving forward with the 
ISI as well as on specific sites, too. Certainly that is 
important in terms of the water supply and water quality.
    And, Secretary Babbitt, I appreciated your comments in the 
past on that issue, too, and that's important in terms of 
sending the message to users that this process still holds a 
lot of promise and opportunity to resolve some of their issues.
    I guess also moving to the CVPIA side, on a similar 
question is that part of the CVPIA in 3406, the (d)(5), dealing 
with the refuge water supplies, also had a provision in it that 
requested or required the Department to look for alternative 
supplies to those water amounts that were provided and taken 
from contractors to the refuges. And I guess what is in terms 
of the state of affairs and progress the Department has made in 
terms of identifying those alternative supplies?
    Secretary Babbitt. Congressman, the major innovation that 
has begun to emerge out of this intense negotiations and 
discussion is what CALFED is now calling an environmental water 
account, which is a way of looking at a variety of different 
water sources and sort of setting it up the way you would put, 
you know, capital in a bank, ready to be drawn down as a part 
of this process. It's still under way, and there is--and I'll 
be frank with you, there is an ongoing discussion which we 
should acknowledge about what we mean when we say ``acquiring 
water.'' Does it mean purchasing water? Does it mean the added 
increment of benefit from efficiencies that are driven by 
pricing structure or by that kind of thing? To what extent are 
water transfers involved? I think these are all legitimate 
issues.
    Mr. Dooley. Just one last question on that line. The recent 
court decision that was dealing with the (b)(2), does the 
Department--and part of the basis of that decision was a 
determination that there was some uncertainty in terms of how 
the Department was accounting for water and how they were 
making up for water. Do you see this as being--well, do you 
acknowledge that the Department needs to do a better job there, 
and do you also view, perhaps, this environmental water account 
as also being a component of that to provide greater 
transparency to both the environmental community as well as the 
water-user community in terms of, you know, what water is being 
utilized for what purposes and how is it being adjusted in 
terms of the contractor's interest, I guess?
    Secretary Babbitt. Congressman, it's not about whether or 
not the Department has done a good job. We have done our normal 
peerless, unparalleled effort. Seriously. It is about a 
continuing difference about the best way to deal with (b)(2) 
water and other water accounts.
    One school of thought, which I would call the bean-counting 
school, says you can go back and find a baseline and then start 
counting and showing precisely how all subsequent actions have 
added to or potentially subtracted from the--from this magical 
baseline.
    Now, with all due respect to Congressman Miller and Senator 
Bradley and the other fathers of this Act, it ain't possible.
    Mr. Miller. I thought you were going to say supporters.
    Secretary Babbitt. We are examining the court decision very 
carefully, and I will hasten to comply--add that we will comply 
with the court's mandate. But there is--I think what the 
Department tried to do in the (b)(2) thing was say, let's get 
beyond the bean counting and look at the maximum efficient 
deployment of all these resources, and we're not quite at 
closure on that, frankly.
    Mr. Doolittle. Mr. Calvert is recognized.
    Mr. Calvert. Thank you, Mr. Chairman.
    I'm from southern California, so I'm kind of interested in 
getting that water someday. And as you know, Mr. Secretary, 
we're having a problem down south. All our friends are moving 
to Arizona and Nevada, and they're wanting all the water from 
the Colorado River. And I'm kind of curious in that where our 
negotiations are, because this kind of all, as you know, 
relates to one another at one point in time, with the Imperial 
Irrigation District negotiation with the Cochelo Water District 
in San Diego on transfer of water to San Diego and how that's 
going to affect MWD for if we can get additional water.
    I say that because that may be needed, it seems, sooner 
rather than later if, in fact, this--the progress on the 
California Bay-Delta, which we hope will continue until 
delivery is in effect or made down south to make up for some of 
these supplies that are being lost, not only from the Colorado 
River, but, as you know, from restoring Owens Lake, Mono Lake, 
and other environmental priorities.
    And in that context, the President's fiscal year 2000 
budget requested funding, as we know, $75 million for ecosystem 
restoration efforts and $20 million for nonecosystem 
restoration such as water use efficiency, water quality and 
groundwater storage. But, in fact, the administration requested 
$65 million--or, excuse me, $75 million and $20 million, 
whereas the California Bay-Delta Water Coalition was a 65/35. 
Where did the administration come in with the number of $15 
million rather than the $20-?
    Secretary Babbitt. Congressman, let me, if I may--first say 
a word about your southern California concerns. The parties to 
this issue have at my request been sequestered in Arizona where 
they are currently meeting with Dave Hayes of my staff to see 
if we can kind of coax people to see the light. I'm actually 
optimistic that we are getting together. That is the central 
and crucial issue for southern California. And with all 
respect, I would urge all of the southern California people to 
say to their constituents it is imperative that we close on 
this Imperial Valley transfer issue, and there should be no 
escape for any of the parties. We got to get it done.
    Now, the legislature and the Governor have been very strong 
on this issue through both administrations. The legislature in 
Sacramento put up a couple hundred million dollars for the 
lining of the All-American Canal to help ease this transition. 
They put up $30 million to help the Met with feasibility 
studies for a conjunctive use site out in that area. And we 
need to squeeze the parties and say this is about the public 
good, and you got to emerge with an agreement.
    Now, with respect to the 65, 75, 35, 25, whatever it is, 
really goes back to my earlier comments. These are judgment 
calls. And the original numbers came in from CALFED. There was 
some subsequent churning around, and the numbers came out a 
little different. I think what the administration will say--I 
have not cleared this with the Office of Management and Budget, 
and therefore everything I say from hereon is subject to 
immediate retraction and disciplinary action--but it's not 
important if everybody has come to an agreement on a slightly 
different allocation, that's fine, we'll support it.
    Mr. Calvert. Obviously from--we understand the work that 
has to be done on ecosystem restoration as far as part of the 
negotiations to put this agreement together, but I guess from 
our perspective is we want to make sure that there's water 
storage for times in need and that the availability and the 
quality of the water is not compromised and can be delivered. 
That's one of the reasons why we have this interesting 
coalition working together to get this thing funded.
    Secretary Babbitt. I understand. And in that spirit we 
agree.
    Mr. Calvert. Thank you.
    Mr. Doolittle. Mr. Miller is recognized for his questions.
    Mr. Miller. Thank you, Mr. Chairman.
    And welcome, Mr. Secretary and Mary, to the Committee. Just 
quickly go back to the Trinity River decision. And I think 
that--I'm glad to hear we're getting to the point where--to 
make a decision there. I think the earlier that decision is 
made so that it can then be factored in to the rest of this 
process--I don't think it should be part of this process, and 
there's clearly no requirement, and the burden on you to make 
this decision is outside of this, outside of this process, but 
clearly it will have to be taken into account as we think about 
the resources available to us.
    Let me, if I could, just make sure I have some 
clarification of what you said. The decision is made for the 
purposes of restoring the fisheries in the river; is that 
correct?
    Secretary Babbitt. That's correct.
    Mr. Miller. That's the requirement and that's the burden?
    Secretary Babbitt. That's correct.
    Mr. Miller. There is no requirement to minimize--I mean, to 
play that off against what the impact is on the CVP?
    Secretary Babbitt. That's correct.
    Mr. Miller. I mean, I think it's rational that we would try 
to do that, but that is not a requirement of the law.
    Secretary Babbitt. That's correct.
    Mr. Miller. And there is no requirement that--of mitigation 
for this decision?
    Secretary Babbitt. That's correct.
    Mr. Miller. Okay. Because I think that's very important. 
You laid out how this water got into the system. It's not very 
pretty in terms of the political history, but just make sure 
that somehow we don't fall into the notion that there is some 
responsibility here to mitigate that or that this is a 
balancing act between the CVP and/or the fisheries.
    And on the question that was raised on (b)(2), Mr. 
Secretary, the problem that the court has is with the ambiguity 
in the accounting system, as I understand that; that the law 
requires you take--you take 800,000 acre-feet and no more, no 
less, no more. And an accurate accounting system is sort of 
what the court is now telling us we need. Is that correct?
    Secretary Babbitt. I'm tempted to refer that to counsel, 
but, yes, I think in simplified form that's correct.
    Mr. Miller. Essentially the court is affirming the law, but 
is saying you have got to be able to account for----
    Secretary Babbitt. Yeah. That's right. Sure.
    Mr. Miller. Okay. On the--you all mentioned in your opening 
statement that the process on contract renegotiations under 
CVPIA is under way. Can you elaborate where you are in that 
process and what your expectations are?
    Secretary Babbitt. Well, I think the important thing is 
that those negotiations, wrapping them up is explicitly tied to 
the completion of the PEIS. And I don't have the exact--I 
believe that we anticipate getting that wrapped up and going to 
a record of decision this fall, I think in the October-November 
time frame. Now, the negotiations obviously are going along in 
parallel, but we cannot close and make the final cuts until we 
have signed the record of decision.
    Mr. Miller. And your expectation would be what, then, after 
the record of decision, that we would start renegotiating and 
consummating new 25-year contracts?
    Secretary Babbitt. Absolutely.
    Mr. Miller. If that doesn't happen, where do we go?
    Secretary Babbitt. Well, I haven't thought about that. I 
mean, we intend to get it done.
    Mr. Miller. So your expectation at this point is that those 
negotiations will be for the long-term contracts, not one-year 
rollover contracts.
    Secretary Babbitt. Not at all. It's time to bring this to 
closure. And I believe that we can do that in late 1999 and 
then on into the early part of 2000.
    Mr. Miller. The other--I think one of the basic tenets is 
we have--we discussed it when we were all in Senator 
Feinstein's office. I assume we're still operating under the 
theory that much of what comes out, what finally comes out of 
CALFED in terms of construction and costs is on a beneficiary 
pay. Is that still holding in this process as you understand 
it?
    Secretary Babbitt. Yes. But, let me suggest, again, that 
that doesn't automatically translate into a bean-counting 
process, because the benefits of virtually every piece of this 
are distributed in--to multiple stakeholders, and there is also 
a factor here of the larger public benefits that accrue from 
all of this. So the documents, I think, in the CALFED process 
are quite clear; yes, beneficiary's pay is the guiding 
principle. There are going to be judgment calls on the margins 
of those decisions, and I absolutely think there should be.
    Mr. Miller. I assume there would be some delineation 
project by project or feature by feature as to what those 
beneficiaries and who those beneficiaries are. There would be--
not all projects in the system would be treated the same.
    Secretary Babbitt. Oh, yeah, I think, sure, it will go down 
to that level of analysis.
    Mr. Miller. Your first statement reminded me of a former 
Member of Congress from California on this Committee at one 
time--actually two of them who were actually very good at 
getting these resources, Mr. Sisk and Ms. Johnson. And when it 
came time that we were going to apportion out the costs for 
some of these expensive projects in California, they would put 
on their environmental hat and say, 89 percent of this project 
is for the environment, he says, and we--the fish don't have 
any mailboxes, there's nowhere to send the bill. We will have 
to send it to the public. We'll just write this off. And it 
worked, much to the chagrin of some of the taxpayers in some 
other parts of the country.
    But I think it's very important in recognizing what you 
said, there clearly will be a general benefit to the State of 
California if we can iron this all out. And there will be 
benefits that flow into more than one direction, if you will; 
the environment, the water users, municipal, agricultural, what 
have you. But I think it's also very important that we keep in 
mind that where we can, we do have cost-sharing arrangements, 
we have asked others to do that, and that we would work to try 
and delineate how those--how those costs are borne. I know that 
there's been a number of suggestions, one by some rather large 
water users, that they are in no way prepared to pay, nor can 
they pay, for some of the projects that they want.
    There has also been discussions in the State legislature--
and correct me if I'm wrong, Secretary Nichols--but in the 
State legislature that some of this would just be covered by a 
bond issue. And the State is certainly free to make that 
decision, but at some point in this process I think we have to 
demonstrate to the public what the costs are going to be and 
where the burdens of those costs lie, and when--we get down to 
the end here. I take it there's no disagreement here.
    Secretary Babbitt. Well, yes, I--I'm a little hesitant to 
subscribe to that eloquent monologue in every nuance. I think 
there might, in fact, be a--some space between us on how far 
you go in an attempt to count the beans. Now, let me just say 
that----
    Mr. Miller. These are very, very significant dollars, Mr. 
Secretary.
    Secretary Babbitt. Mr. Chairman, I certainly understand 
that. I have been through these exercises before, and I'm just 
cautious. I have seen these cost allocations misused in many 
ways, and I've seen them become highly artificial. And I 
believe that it is an important point of departure to attempt 
to identify costs and benefits, but I do not believe that that 
can be a mechanical process.
    And I believe that in the final analysis, that in this 
consensus process there will be judgments made as part of the 
consensus process. To the extent that you find that 
unsatisfactory, I hasten to remind you that I will be long gone 
from my job as Secretary of the Interior by the time this 
process starts. So my opinions----
    Mr. Miller. You're abandoning the Gore Administration? That 
can't be.
    The fact is that I agree with everything you just said, 
that very often, in fact, these allocations have been misused, 
inflated, speculated about and all the rest, and they've cut 
both ways. Sometimes it's hard on the taxpayer, sometimes it's 
hard on the user, and back and forth.
    All I'm saying is that we use that kind of judgment and we 
provide--we use some transparency in this process, because I 
don't think we want to simply go out and make this kind of 
commitment of money and believe that we're going to let the 
guidelines of the old 1902 Reclamation Act tell us how we're 
going to do this or something. That's all I'm saying. I think 
there's an obligation here, because at some point CALFED is 
going to add up, you know, to a very substantial amount of 
money, and I just think that that transparency has to be there, 
the delineation has to be there. And it's not about, you know, 
goring somebody's ox, it's about laying out where, in fact, 
these burdens lie, and let the people of the State decide 
whether or not that's a reasonable alternative or not.
    Secretary Babbitt. Well, I think----
    Mr. Miller. I agree with you, but you don't agree with me.
    Secretary Babbitt. I can come pretty close to that.
    Ms. Nichols. I just wanted to add with respect to the water 
bond discussions that are going on in California right now, I 
think it's a good illustration of the principle that the two of 
you are sort of honing from your respective chairs here in that 
as we work on developing a potential water bond to go on the 
ballot, it's clear that projects that will be included in such 
a bond are projects where multiple beneficiaries can be 
identified and where people will come together and agree on how 
the allocations of those benefits should be viewed.
    And I think that reflects the fact that while we do need to 
keep improving both the quantity and the quality of analysis 
that we're doing on costs and benefits, that there will be an 
element of political judgment that gets brought to bear in the 
end on whether anything actually gets done.
    Mr. Doolittle. Mr. Pombo.
    Mr. Pombo. Thank you.
    Mr. Babbitt, I would like to get back to the storage issue. 
We've talked a little bit about on-stream and off-stream 
storage and what the administration's position both at the 
State and Federal level is on that. One issue I am curious 
about is the groundwater recharge issue in terms of water 
storage and environmental restoration on some of the 
overdrafted areas. I know that in some of the planning 
documents for CALFED, they have talked about doing groundwater 
recharge projects. I would like you to address that in terms of 
the support of the administration for those kind of projects.
    Secretary Babbitt. Mr. Pombo, groundwater recharge is one 
of the most underutilized, most efficient and effective ways of 
managing water systems for all kinds of reasons, not the least 
of which is there is no evaporation losses. It has long-term 
flexibility. You are effectively refilling the lake.
    There are some really striking examples of the efficacy of 
groundwater recharge. Without waving the flag of localism, the 
best current example is in Arizona. The amounts of water that 
are being recharged into groundwater storage is now up in the 
hundreds of thousands of acre-feet per year.
    Now, my sense in California is that it's difficult because 
there is not a regulatory framework that defines a meaningful 
approach to the rights to groundwater, and it's going to be 
much more complicated in California, and we're going to have to 
work that. But I believe that it's a vastly underutilized tool, 
and we should support it to the limits of its efficacy and 
economic viability.
    Mr. Pombo. So we should expect support out of you and the 
administration on some of these groundwater recharge projects 
that have been discussed over the past several months?
    Secretary Babbitt. Would you be referring to Madera Ranch 
by any chance?
    Mr. Pombo. No. I'm waving the flag of locality as well. I 
have a couple in my district that I believe are very, very 
important for a number of reasons for the region.
    Secretary Babbitt. Okay. Well, the reason I asked about 
Madera Ranch is because I think it's a--it's a case study in 
what happens when we get ahead of the process and start a 
debate which is not centered on the facts and the comparative 
analysis.
    So the answer is yes, I support it. You should send your 
advocates to CALFED to make sure that this analytical process 
and the ISA process is looking carefully at your particular 
projects.
    Mr. Pombo. Mr. Snow and I have had a number of discussions 
on that, and I know that my local people have had a number of 
discussions with him on that. I would like to turn to a 
somewhat different issue and--involving the CALFED process. I 
have supported the CALFED process because I do believe that it 
is one of the only ways that we are going to have any kind of 
movement on water policy in California. But one issue that does 
concern me is the issue of land retirements. In my area it is a 
significant number of acres that would fit into the definition 
of CAL--within CALFED of lands to be retired, to the effect 
that the number of acres that would be retired would have a 
severe impact on agriculture in my area. I represent an area of 
California that is predominantly agriculture, that is its 
economy, whether you're looking at the city of Stockton or any 
of the neighboring communities is predominantly driven by 
agriculture.
    If we had the numbers of acres of land retired from 
agriculture and into ecosystem restoration, wetlands, whatever 
they would be retired into, there would be a severe impact not 
only on the economy of my area, but also a severe impact on 
local government as a result of that. How would you and the 
administration propose that you mitigate the impact on local 
government and on the surrounding communities of retiring what 
would literally be hundreds of thousands of acres of land?
    Secretary Babbitt. Well, I don't share that conclusion, and 
I would respectfully suggest that the hundreds of thousands of 
acres is nowhere to be found in the CALFED documents.
    Mr. Pombo. If I could interrupt you there. That is taken 
directly from testimony from a previous hearing that up to 
400,000 acres of land would be retired.
    Secretary Babbitt. Well, it's not in the CALFED documents. 
The CALFED documents do contain some estimates. Now, there may 
be some confusion here as a result of other issues. There's a 
separate provision in the CVPIA legislation, for example, with 
respect to land retirement in the Westlands District. But 
that's a separate issue and that's a----
    Mr. Pombo. That is a separate issue that has nothing to do 
with this particular issue.
    Secretary Babbitt. Good. Good.
    So we go back to CALFED. The CALFED documents and 
discussions and the reality, the estimates are that we may be 
talking in the ecosystem restoration piece about impacts on 
about 30,000 acres, and of that 30,000, about 26,000 would not 
be taken out of agricultural production.
    So the best estimates right now are that the ecosystem 
restoration issues would impact by taking out of production 
several thousand acres, 4 or 5,000 acres. The economic benefits 
that will flow from that will--to all the communities, I think, 
will overwhelm any conceivable argument that there's any 
detriment. I don't see it.
    Mr. Pombo. What you're testifying to today is in direct 
conflict to testimony we have received earlier in this 
Committee. It's in direct conflict to what a number of people 
have testified to in terms of what's included in the CALFED 
document. If we are talking about 4- to 6,000 acres of land 
that would be retired, I think that--although it would still 
concern me, I think it would be manageable in terms of an 
economic impact. But your numbers of 4- to 6,000 aren't even in 
the ballpark of what everyone else that has testified before 
this Committee has come up with. It's not even close.
    Secretary Babbitt. Well, Mr. Pombo, I think you will be 
happy and satisfied because those are the numbers. They appear 
on either page 6 or 7 of my testimony, and I would be happy to 
back them up. I think you're going to be quite pleased.
    Mr. Pombo. I would like you to do that. Because the--and I 
would provide to you--as a matter of courtesy, I would provide 
to you previous testimony that we have had before this 
Committee, and you can run it through your shop and----
    Secretary Babbitt. Sure.
    Mr. Pombo. [continuing] and try to see how you come up with 
so different figures.
    But just--I know my time is up. Just in conclusion of that, 
if the numbers are what has been estimated by everyone else to 
be substantially higher than to what you are testifying, I 
would just like to say that has a substantial impact on my 
area; and the Department of Interior, the Federal Government 
and the State government are going to have to be very aware of 
what kind of an impact that is going to have on my particular 
area of the State. So I do want, as a matter of the record, to 
have that noted, that if everybody else that testified is 
accurate, it would have a severe impact on our region.
    Secretary Babbitt. Mr. Pombo, it may be--the discrepancy 
may in part be--I just want to acknowledge that I am talking 
about lands which have been impacted by specific site-specific 
plans that have been approved in the process. Now, I concede 
that there may be a variety of estimates about what the future 
holds.
    Mr. Pombo. I'm talking about long term in the future. I'm 
not talking about what's been approved up to this point.
    Secretary Babbitt. Okay. I misunderstood you. And I guess 
what I would say is that the estimates about the future are 
pretty speculative. I understand your concerns and will be 
responsive to them.
    Ms. Nichols. Mr. Pombo, could I add a comment on behalf of 
the State?
    Mr. Pombo. Yes, please.
    Ms. Nichols. I met with Secretary Lyons of the California 
Department of Food and Agriculture this week actually, and Mr. 
Snow, to discuss this issue and how we're going to reconcile 
the State's commitment to preservation of prime agricultural 
land, which is a policy of this administration as it has been 
in the past, and indeed we have significant programs in my 
agency that are designed to encourage preservation and 
protection of agricultural land. And we certainly don't want to 
be in any way suggesting that we're encouraging people to 
convert that kind of land to noneconomic purposes where it's 
productive.
    I would just say that the environmental impact report is 
going to be spelling out how that--I believe the number that 
you gave is the extreme end of what I have heard as a worst-
case assessment that will be looked at under the EIR/EIS for 
purposes of evaluating what could be the worst environmental 
possible case, if every person who had agricultural land chose 
to sell the water away from that land and to fallow it for 
purposes of selling their water for, you know, a higher 
economic use if that was what they chose to do.
    I don't think anybody believes that that's a realistic 
scenario, but we need to clarify what our policies are in that 
respect. And I think it is clear that it's not something that 
CALFED is looking to--CALFED is not about the business of 
trying to encourage good agricultural land to be idled in 
California.
    Mr. Pombo. Well, and I realize you were not yet in office, 
but the testimony on the 400,000 acres was an official person 
who testified to that. The extreme end of that I believe was a 
million acres, was a different definition of what could be 
retired, that up to a million acres could be retired out of 
that.
    Most of this would be within my congressional district, 
within the area that I represent. I would only tell you that 
there are only approximately 650,000 acres of irrigated land 
within my congressional district, and they're looking at 
somewhere in the neighborhood of 400,000 acres that would fit 
into the definition of what could be retired under CALFED. When 
we receive that kind of testimony, it's obviously going to be a 
huge concern to the people that I represent because that would 
have a severe impact on my region of the country.
    Thank you, Mr. Chairman.
    Mr. Doolittle. Mrs. Christensen is recognized.
    Mrs. Christensen. Thank you, Mr. Chairman.
    As the only member here present who is not from California, 
unless you want to count my year of internship in San 
Francisco, I really don't have any questions. I just--I am here 
to listen. Because even in my small district that is surrounded 
by water, water supply and distribution is an important issue 
for us. And primarily I want to just welcome you, Secretary 
Nichols, and of course our Secretary of the Interior, Secretary 
Babbitt, good friend of my district and of all of our 
districts.
    Thank you, Mr. Chairman.
    Mr. Doolittle. Thank you.
    Mr. Secretary, the PEIS that was supposed to be released 
almost four years ago, is now scheduled to come out in 
September, correct?
    Secretary Babbitt. Yeah.
    Mr. Doolittle. So--and it's my understanding there have 
been some modeling problems----
    Secretary Babbitt. That's correct----
    Mr. Doolittle. [continuing] which may result in further 
delay. Do you contemplate that it may delay it beyond September 
as you go through the modeling problems and then once you come 
up with what you think is the answer, is this going to be 
recirculated again? And finally, what's likely to be the 
possible impact of delay on this?
    Secretary Babbitt. Mr. Chairman, I think the modeling issue 
has been resolved to the satisfaction of all of the 
participants. So that's already been factored in.
    Mr. Doolittle. Okay.
    Secretary Babbitt. I think we'll be okay.
    Mr. Doolittle. So are you quite confident, then, you would 
be able to get that done and get the timetable for these--
renewing the contracts under the long-term renewal would be--
was it December of this year you were saying?
    Secretary Babbitt. Well, my estimate in response to 
Congressman Miller's question was that I believe we move to a 
record of decision approximately November.
    Am I okay on that?
    Hearing no dissent, it's November.
    Mr. Doolittle. Okay.
    Secretary Babbitt. Now, what I would like to do is--what 
we're aiming at is to get those long-term contracts finished up 
before the beginning of the next water year, which means early 
on in the year 2000.
    Mr. Doolittle. Okay. Mr. Secretary, you won't be here for 
the third panel's testimony, but that is written testimony 
submitted, and it will be oral testimony when we get there. 
Could I just read you a paragraph from Daniel G. Nelson's 
testimony, who is the Executive Director of the San Luis and 
Delta-Mendota Water Authority? I would like to get your 
response to it, if I might. It's on page 5 of his testimony.
    It says, ``Now the most recent PEIS data suggests that even 
before full implementation of CVPIA, the CVP is so inflexible 
that water available to contractors will be decreased to zero 
in all water years that are less than normal years. The wide 
discrepancy between this data and earlier information contained 
in a draft PEIS threatens to derail the current work plan 
schedule. That is, the new PEIS data appears to indicate that 
the assumptions that have guided the PEIS give the fish and 
wildlife obligations of the CVP significant priority over 
contractual obligations, contrary to the CVPIA's purpose of 
achieving balance between project purposes.''
    Could you comment on that?
    Secretary Babbitt. Sure. I have great regard for Mr. Nelson 
and his advocacy and his judgments. But he is an advocate, and 
even Dan Nelson can get a little bit overheated from time to 
time. And, you know, the mandate of CVPIA is to put wildlife 
restoration on parity as a project purpose. And----
    Mr. Doolittle. But not superiority.
    Secretary Babbitt. No, parity. Now, that's what this 
process is all about. And we will in due course have a document 
out in the light of day for everyone to judge the quality of 
our efforts.
    Mr. Doolittle. Well, do you share Mr. Nelson's conclusion 
that the water available to contractors will be decreased to 
zero in all waters years that are less than normal years?
    Secretary Babbitt. Well, I would have to go back and look 
at it, but I'm a little skeptical of that sweeping a 
conclusion.
    Mr. Doolittle. Well, even if it weren't zero, it's likely 
to be substantially reduced, right?
    Secretary Babbitt. Well, implicit in CVPIA is some water 
reallocation. I mean, that's the whole premise of the exercise. 
And our job is to see if we can do that in a reasonable way, 
consistent with the statutory mandate.
    Mr. Doolittle. Mr. Dooley, are you ready to begin your 
questions?
    Mr. Dooley. Yeah. I just wanted to revisit this issue in 
terms of, you know, the CVPIA and the actions that are supposed 
to be undertaken to provide for offsetting the yield that might 
be lost for environmental purposes. And I guess I go back to 
the 3408-I where it basically states that in order to minimize 
adverse effects, if any, upon existing Central Valley Project 
contract water contractors resulting from water dedicated to 
fish and wildlife under this Title such and such, the Secretary 
shall, not later than 3 years after the date of enactment of 
this Title, develop and submit to Congress a least cost plan to 
increase within 15 years after the date of enactment of this 
Title the yield of the Central Valley project by the amount 
dedicated to fish and wildlife purposes under the Title, which 
would seem to be a pretty specific, you know, mandate that the 
Secretary and the Department determine, you know, how we do 
increase the yield offset allocations that might be lost to the 
environment.
    I guess, you know, what progress has the Department made in 
terms of identifying these, you know, opportunities for 
enhanced yield?
    Secretary Babbitt. Congressman, that really takes us back 
into the CALFED process inevitably it seems to me. Because 
that's the purpose of this exercise, is to find ways to 
reoperate the system, to store water, to find efficiencies, 
to--precisely this purpose for all users, including CVP users.
    Mr. Dooley. And I appreciate that. But the point I guess I 
want to clarify is that there is a mandate within the CVPIA for 
the Department in which you are now using the CALFED process as 
a way to achieve that outcome to identify ways in which we can 
increase yield to offset water that has been utilized for the 
environment. And you would agree with that.
    Secretary Babbitt. Congressman, I hear you. I agree. I 
think we owe you a response that is specific to the mandate of 
the statute, even if the major part of the response is a 
discussion of the CVPIA impacts.
    I am also advised by my loyal staff that that report was 
done 3 years ago and is now under consideration by CALFED. My 
previous answer is inoperative.
    Mr. Dooley. If we could move on. There's been some 
discussion in terms of the renewal, long-term renewal of the 
contracts; and I share those concerns because the PEIS has not 
been completed.
    You know, the first draft had some modeling assumptions in 
it which I think were determined by all parties to be flawed, 
and we put in place some new modeling that is going to be 
embodied in the PEIS. But I'm a little concerned that that is 
going to be released, and I have to believe it's going to be 
subject to some controversy and discussion. And yet we're 
expecting that we can get through that exercise and have a 
final rule on this thing accepted and then be able to get the 
long-term contracts renewed prior to the next water year. And 
as being involved in this, you know, in previous years, I'm 
very, very cautious about and not necessarily optimistic we can 
achieve that.
    And, in part, my concern on this is that I'm not convinced 
that we have given adequate consideration to some of the issues 
that are going to be a part of the long-term contract renewals. 
And with specific issues there is that, as I understand it, the 
Department of Interior is involved in a process to determine 
the basis of negotiations, which I think is appropriate, but 
what I'm concerned about is how can you make a determination 
what the basis of negotiation is for an issue such as tiered 
pricing when there hasn't necessarily been that dialogue and 
interchange between users and the Department that can really 
allow us to come to some level of consensus on tiered pricing.
    And what I would also say, that that has a direct impact in 
the earlier discussion we had on underground recharge, which 
you've acknowledged is one of the best alternatives for water 
storage. And yet if we're not careful to how we structure this 
tiered pricing, we are in fact putting one of the, you know, 
the greatest, you know, disincentives in place for water 
contractors to engage in conservation measures and storage 
measures that utilize the underground.
    And I'm a little concerned that the Department hasn't 
engaged in a process to allow us to address some of these 
critical policy issues prior to identifying a basis of 
negotiations that will have a significant impact on how the 
long-term contracts are negotiated and renewed.
    Secretary Babbitt. Congressman, I hear your concerns; and 
I'll do my best to factor them into this process. I do think 
that we are ready to proceed to conclusion on that time frame, 
and I will do my best to make sure we deal with these issues in 
a, you know, public or in a stakeholder communication process 
that gives everybody a chance to be heard.
    Mr. Dooley. I guess my specific concern again on this 
tiered pricing, though, is, if I understand the Department's 
process, if you do in fact determine a basis of negotiations as 
it relates to tiered pricing, you are setting the parameters 
there. And it's an arbitrary decision by the Department to set 
the parameters in negotiation as it deals with tiered pricing. 
I'm a little concerned that the Department makes a decision 
like that before--on a difficult policy issue such as this 
which has ramifications on water conservation as well as 
utilization that--before we really have had this dialogue. And 
I'm hopeful that the Department would have a process to allow 
us to engage in a discussion on this issue prior to that 
finalization of the basis of negotiation and prior to us 
entering into the negotiations on long-terms contracts.
    Secretary Babbitt. I will do my best to do just that.
    Mr. Doolittle. Mr. Secretary, I assume from your testimony 
and responses to questions you believe that CALFED's 
cooperative approach to problem solving is better than the 
traditional government command and control approach that's been 
used in the past to solve these problems.
    Secretary Babbitt. I do.
    Mr. Doolittle. Can you commit to having your department 
using its discretion to minimize the negative impacts on water 
users when attempting to reach the goals of water management in 
California?
    Secretary Babbitt. Mr. Chairman, I respectfully submit that 
this afternoon if you question the stakeholders as to my 
involvement in this issue, you will hear answers that reassure 
you on that score. Of course. Of course.
    Mr. Doolittle. There's so many things here, as you pointed 
out, about the Trinity River and so forth in your answers to 
Mr. Miller's questions. I mean, we've got so many laws involved 
in all of this that--in fact, that's the whole reason we had 
the Bay-Delta Accord and CALFED, is to resolve the apparent 
conflicts in managing for single purpose objectives and trying 
to coordinate the whole thing.
    But to a certain extent we still have this tension because 
of what happens in the Trinity River, as you and others have 
acknowledged, is going to impact what happens in the whole 
Central Valley. So while there may be no legal requirement, 
there may never not have been a legal requirement dealing with 
the Trinity, but at least it's reassuring I think to hear your 
commitment to try and minimize any adverse impacts to the 
extent that that's possible within the parameters.
    Secretary Babbitt. That is certainly my intention.
    Mr. Doolittle. Well, I think this has been a very useful 
hearing for us. I'm going to call on Mr. Dooley one more time 
if he would like to--okay. You're set.
    I am sure we may have further questions by way of follow-
up. I appreciate and express to our distinguished guests our 
appreciation for their appearance here, and the length of the 
questioning so forth has been useful to this Subcommittee as we 
seek to make progress in this most important issue of the 
Central Valley water management. So we will now excuse this 
panel, and thank you again for your appearance.
    Secretary Babbitt. Chairman, thank you very much. I do very 
much appreciate the spirit in which this hearing has been 
conducted. Thank you.
    Mr. Doolittle. Thank you.
    Ms. Nichols. Thank you for your support.
    Mr. Doolittle. We'll call up the second panel and ask them 
to assemble themselves at the table. And just to announce, just 
for everybody's information, there is supposed to be a vote in 
5 or 10 minutes. So at that point we will take a 15-minute 
recess. If that vote doesn't happen, I think at least by 1:30 
or so we'll take a recess anyway for that time. But I'm 
anticipating that everybody can get a break at the time the 
vote happens.
    So do we have everybody assembled up there? I think we do.
    Okay. Let me ask you gentlemen, please, who are forming 
Panel II, if you would rise and raise your right hands.
    [Witnesses sworn.]
    Mr. Doolittle. Let the record reflect each answered in the 
affirmative.
    Gentlemen, we welcome you as our second panel on this 
hearing today. And in the first go-around we were a little 
liberal in how we ran the lights. I think just because of the 
time of the afternoon and the size of the panel we'll try and 
adhere a little more strictly to it. But don't cut off in mid-
sentence if the light goes on and you're not finished. We want 
to hear your testimony. And appreciate your making yourselves 
available to the Committee.
    We'll begin this panel with the testimony of Mr. Stan 
Sprague, who is General Manager of the Orange County Municipal 
Water District from Fountain Valley, California. Mr. Sprague. 
Welcome.

   STATEMENT OF STAN SPRAGUE, GENERAL MANAGER, ORANGE COUNTY 
     MUNICIPAL WATER DISTRICT, FOUNTAIN VALLEY, CALIFORNIA

    Mr. Sprague. Thank you, Mr. Chairman, members of the 
Committee.
    As you already mentioned I am from the Municipal Water 
District of Orange County. I am here today as a representative 
of the Bay-Delta Urban Coalition, which consists of the 11 
major urban water supply agencies in California, providing over 
22 million people with their water supplies in California. I 
would also mention if I were just here representing the 
municipal water district solely from Orange County my comments 
would not be much different.
    The Coalition really represents a unified voice of both 
southern and northern California urban water agencies. In fact, 
we've moved to the concept that we are urban water agencies and 
we don't in our discussions even depict where we come from. 
Northern California now is in Redding for the purposes of our 
urban discussions.
    The basic urban message regarding the CALFED process is 
supportive and optimistic. We believe that CALFED continues to 
have the highest potential of any alternative for achieving a 
comprehensive plan for restoring the Delta and establishing a 
long-term management plan which balances all interests which 
depend on water from the Bay-Delta region.
    During the last part of last year the Federal agencies, 
under the leadership of Secretary Babbitt and under former 
Governor Wilson, moved forward with a significant effort of 
investing time in what was called the so-called Phase II 
report, which is essentially a draft preferred alternative for 
a long-term plan. A completion of the Phase II document should 
be considered as a significant accomplishment.
    Our positive views about CALFED programs, however, are not 
without qualification. One of the principal reasons it was 
possible to get closure on this document was that many of the 
toughest Bay-Delta issues simply were not decided. These 
include several issues which relate to the single most 
important objective to urban water suppliers and the 
improvement of drinking water quality. Urban agencies accepted 
this deferral of decision on the basis that these programs 
would be resolved shortly into the beginning of this year. We 
have not seen that significant closure on those particular 
issues at this time.
    Following the release of the report, however, promised 
action on water quality issues have not been forthcoming, as I 
mentioned. As a result, the urban agencies are deeply concerned 
that the draft EIS/EIR will not adequately address the process 
to solve water quality issues in the long term and will not 
initiate a substantive step, steps essential to improving 
drinking water quality.
    To assist the Committee in understanding our concern, let 
me remind you that as a drinking water source the Delta is a 
very poor quality compared to the national average. Poor 
quality source water increases public health risks and requires 
more costly treatment without the safeguards of source quality 
protection.
    In addition, natural components in the Delta when treated 
create products that are potential hazards in themselves. In 
plain terms, treatment has defined limitations both chemically 
and in terms of costs. We have no choice but to judge the 
success of CALFED program on its ability to resolve the water 
quality issues.
    To hold the continued support of the urban communities, 
CALFED agencies must begin making some of the key decisions on 
water quality. The key elements can simply be stated as 
follows:

          Increased commitment from EPA and other key agencies 
        to help urban agencies achieve drinking water quality 
        goals; timely achievement of a long-term target for 
        bromate or bromates for total organic compound and for 
        total dissolved solids through a combination of higher 
        source quality protection and new treatment technology; 
        the creation of a Delta Drinking Water Council, a Delta 
        Ecosystem Restoration Authority and an overall CALFED 
        management entity with fair and balanced stakeholder 
        representation on each; keeping the dual conveyance 
        option on the table for further study; completing 
        feasibility studies and beginning construction of a 
        North Delta diversion to mitigate environmental actions 
        detrimental to water quality.
    The urban agencies have made it clear in the CALFED process 
that these are the water quality issues that must be addressed. 
We remain helpful and optimistic this will be done.
    In closing, Mr. Chairman, let me say that I have also 
included in my written testimony an additional list of issues 
which relate to those elements of concern to urban California 
and that is water supply reliability. And I will only respond 
to those if you ask for additional comments.
    I would like to thank you and your Committee for the 
continued support for holding this hearing and to indicate the 
urban support for continued funding and the continued oversight 
of this CALFED activity. Thank you very much.
    Mr. Doolittle. Thank you.
    [The prepared statement of Mr. Sprague follows:]

   Statement of Stanley E. Sprague, General Manager, Municipal Water 
  District of Orange County on behalf of the Bay-Delta Urban Coalition

    Representatives of the Bay-Delta Urban Coalition\1\ have 
been active participants in the CALFED Bay-Delta Program to 
develop a long-term, broad-based consensus agreement for 
improving the California Bay-Delta Estuary. Our Coalition, 
consisting of 11 urban water agencies, collectively supplies 
water to over 22 million people in urban communities around the 
State of California; communities that form a cornerstone in the 
state's thriving economy.
---------------------------------------------------------------------------
    \1\ Bay-Delta Urban Coalition consists of 11 agencies representing 
over 22 million people in urban communities throughout California. 
Coalition agencies include Alameda County Water District, Central Coast 
Water Authority, City and County of San Francisco Public Utilities 
Commission, Coachella Valley Water District, East Bay Municipal Utility 
District, Metropolitan Water District of Southern California, Municipal 
Water District of Orange County, San Diego County Water Authority, 
Santa Clara Valley Water District, Solano County Water Agency and 
Central/West Basin Municipal Water District.
---------------------------------------------------------------------------
    The Urban Coalition remains supportive and optimistic about 
CALFED, and continues to believe that this process retains the 
highest potential for resolving the complex issues surrounding 
the Delta. We commend Secretary of the Interior Bruce Babbitt, 
former Governor Pete Wilson, and the Federal and state 
participants of CALFED for extraordinary efforts in 1998 to 
gain closure on the draft preferred alternative (outlined in 
the Revised Phase II Report released in December, 1998). We 
believe the draft reflects progress on a number of policy 
issues affecting the Delta and that CALFED remains committed to 
achieving continuous improvements in the four interrelated 
problem areas affecting the Delta (ecosystem restoration, water 
quality, water supply reliability and levee system integrity) 
and to measurable milestones to be used as indicators of this 
continuous improvement.
    Our positive view about the program, and the results thus 
far, however, are not without qualification. First, it should 
be recognized that one of the principal reasons it was possible 
to get closure on the Revised Phase II Report was that many of 
the toughest issues were not decided. Among those issues were 
several which relate to the one objective which urban water 
suppliers must achieve in the Delta if the CALFED Program is to 
be judged successful. That objective is the improvement of 
drinking water quality. Because of the burden placed on our 
public agencies to continue to provide a reliable supply of 
safe drinking water to the residents of California's most 
rapidly growing areas, we have no choice but to judge the 
success of the CALFED Program on its ability to resolve these 
issues, and help us meet the demands placed on our agencies. We 
believe the CALFED Program remains the best forum for solving 
problems of the Delta, but unless we and our constituents are 
convinced that it can and will solve water quality challenges, 
both drinking water and improved source water, we will not be 
able to continue to support CALFED.
    As previously stated, closure on the Revised Phase II 
Report required tempering and deferring a number of important 
issues, particularly those important to urban agencies. This 
result was accepted, however, on the basis of representations 
in the CALFED process that the bypassed issues would be 
expeditiously resolved in the period following the Revised 
Phase II Report. Following release of the Revised Phase II 
Report, however, there has been little or no progress on the 
water quality issues which are central to the urban 
communities' support of CALFED. The process has become passive 
as Federal and state agencies focus exclusively on the pending 
release of the Draft Environmental Impact Statement/
Environmental Impact Report (EIS/EIR) due this June.
    Now, we are deeply concerned that the revised Draft EIS/EIR 
will not adequately address the water quality issues most 
important to urban California. In fact, CALFED has stepped back 
from promises made to the urban community during the 
negotiations that led up to the Revised Phase II Report, both 
as to the process to address water quality issues and the 
substance of the issues themselves. In plain terms, EPA and 
other key agencies have yet to move forward on any of the key 
decisions regarding urban communities' drinking water quality 
issues.
    Let me be more specific as to some aspects of the water 
quality problem for urban water agencies, and why it is 
increasingly difficult for many of us to answer the tough 
question posed to us by our Boards--``what is in the CALFED 
Program for us?'' Generally, as a drinking water source, water 
diverted from within the Delta is of very poor quality compared 
to national averages. Poor quality source water increases 
public health risks and requires far more costly treatment that 
drives up water rates and affects the state's economy. In 
addition, natural components in Delta water, when treated, 
create byproducts that are potential health hazards.
    The 22 million people we serve expect and demand adequate 
supplies of healthy drinking water at an affordable cost. We 
have continually attempted to convince our communities that 
CALFED would deliver what they expect in balance with other 
legitimate Bay-Delta objectives. As public water managers, we 
have a duty to be honest and forthright in providing our 
customers with the facts concerning their water supplies. If 
CALFED is unsuccessful at addressing our water quality and 
supply concerns, we must not only communicate this to our 
public but reluctantly begin to look elsewhere for solutions, 
most of them more expensive alternatives. To hold the continued 
support of urban communities in California, Federal and state 
agencies and CALFED must renew their commitment to ensuring 
public health by making some of the tough decisions on water 
quality. For the most part, this does not mean making final 
decisions, but rather including in the preferred alternative, 
for further study and comment, those elements of a CALFED 
solution which are most important to achieving urban water 
quality objectives. These key elements include:

         Increasing commitments from EPA and other key agencies 
        to help urban agencies achieve water quality goals for human 
        consumption.
         Providing for the timely achievement of long-term 
        targets of 50 ug/l for bromide, 3 mg/l for total organic carbon 
        and 150 mg/l for total dissolved solids through a combination 
        of higher quality source water and new treatment technology. 
        Timely means prior to the time that EPA or CDHS require 
        additional treatment based on source quality which exceeds 
        these levels.
         Creating a Delta Drinking Water Council, Delta 
        Ecosystem Restoration Authority and overall CALFED management 
        entity with fair and balanced stakeholder representation on 
        each.
         Keeping the dual conveyance option on the table. Begin 
        planning and feasibility studies for the isolated facility 
        portion of the dual conveyance option in Stage 1 and define a 
        clear procedure for the decisions on construction.
         Completing feasibility studies and beginning 
        construction of a North Delta diversion to mitigate 
        environmental actions detrimental to water quality. Such 
        diversion must first be assessed and mitigations identified for 
        its impacts on the Mokelumne fishery.
    It is imperative urban water agencies see action in the 
CALFED Program in the near-term to address water quality 
issues. We must be able to demonstrate to our Boards and 
consumers that CALFED, state and Federal agencies are serious 
about public health protection as it relates to water quality. 
Continued support for the CALFED Program hinges on our ability 
to show CALFED action in this direction.

Other Priority Issues of Concern:

    Lack of progress on other promises made to urban water 
agencies during the negotiations that led up to the Revised 
Phase II Report, particularly those affecting water supply 
reliability, cause us concern about the potential success of 
the CALFED Program. This furthers our belief that the CALFED 
Program is unbalanced in its approach to resolving issues 
important to urban stakeholders. We believe restoring balance 
to the CALFED Program is essential to keeping all stakeholders 
at the table. Restoration of balance should include:

         Extending the Accord through Stage 1.
         Improving water supply reliability for exporters of 
        Bay-Delta water by creating an Environmental Water Account and 
        other mechanisms which provide regulatory insulation from the 
        Endangered Species Act.
         Assuring balanced, staged implementation of Stage 1 
        and its sub-stages such that progress must be made equally in 
        all areas or none at all.
         Continuing planning, site selection and environmental 
        documentation including Programmatic 404 finding under the 
        Clean Water Act of the need for surface storage and of the 
        conditions that will trigger the need for conveyance and other 
        program actions.
         Agreeing on South Delta improvements and flexible 
        operations to allow export pumps to operate at full capacity 
        during certain times.
         Construction of at least one new south of Delta 
        groundwater storage project.
         Creating a cost allocation and financing program that 
        reflects the proportional share from each party commensurate 
        with the benefits derived.
         Providing financing for water use efficiency measures 
        beyond those that are cost-effective at the local level.
         Creating a healthy water transfers market.
    The Bay-Delta Urban Coalition remains committed to a successful 
Bay-Delta solution that achieves a healthy environment and meets the 
needs of urban water users in California. To secure support from public 
agencies responsible for providing drinking water to the large urban 
areas in California, CALFED must move quickly to make critical 
decisions on commitments made last December in CALFED's Revised Phase 
II Report. In particular, these decisions must address actions required 
to protect public health as it relates to improved source water quality 
diverted from the Delta. We look forward to working with the CALFED 
agencies and stakeholders to put the CALFED Program on a track that 
will allow us to maintain our support.

    Mr. Doolittle. Our next witness is Dr. Peter Gleick, 
President of the Pacific Institute, from Oakland, California. 
Welcome, Dr. Gleick.

   STATEMENT OF PETER GLEICK, PRESIDENT, PACIFIC INSTITUTE, 
                      OAKLAND, CALIFORNIA

    Dr. Gleick. Thank you, Mr. Chairman, members of the 
Committee. Thank you for the opportunity to testify today.
    I am a scientist by training. I direct the policy research 
activities at the Pacific Institute for Studies in Development, 
Environment and Security in Oakland. I have served on a wide 
range of boards and committees, including the Public Advisory 
Forum of the American Water Works Association, the 
International Water Resources Association, scientific panels of 
the American Geophysical Union, and AAAS, although I represent 
today here the Pacific Institute.
    The Institute is an independent, nonpartisan research 
center looking at a wide range of national and international 
water issues. We have worked extensively on California water 
policy issues and provide analysis and policy recommendations 
about those problems.
    We have reviewed the Department of Water Resources Bulletin 
160 process. We have offered formal comments and 
recommendations. We were asked by the U.S. Department of the 
Interior and the Bureau of Reclamation to do a formal 
independent review of CALFED's water-use efficiency technical 
appendix. We recently published a new report called Sustainable 
Use of Water: California Success Stories. I provided executive 
summaries of that for the Committee, and the full report is 
here as well.
    This report presents 40 different detailed case studies of 
what works in California, the good news about smart activities 
already under way. These are the elements, the pieces of what 
needs to be done in California, although more broadly and more 
consistently than is already under way. Unintentionally, albeit 
somewhat fortuitously, these 40 case studies span the districts 
of every one of the California members of this Committee.
    Despite rhetoric to the contrary, there is no major water 
crisis in California. At least, there doesn't have to be. There 
is a wide range of innovative and successful projects and 
activities already under way showing how to address 
California's diverse water problems.
    The bad news is that there is a crisis in California water 
policy making. This are real problems at the upper levels of 
California water planning and management in the way we think 
about water policy. In particular, the official California 
water plan, the Bulletin 160 process, is failing to do what it 
should do.
    The CALFED process is doing much better. I fully support 
the CALFED process. But its forecasts of future water use and 
demand in California have unfortunately adopted some of the 
worst parts of the Bulletin 160 process.
    I would be happy to address these issues later if you wish, 
but what I would like to do is talk a little bit about the good 
news, what seems to be working in California and what I think 
it means.
    Out of the limelight, every single economic sector in 
California is working to resolve water problems and having some 
success. Water use is becoming more efficient in every sector. 
Smart collaborations are finding ways of restoring natural 
ecosystems while at the same time maintaining California's 
excellent agricultural productivity and protecting landowners.
    California's farmers are continuing to innovate and 
modernize, using less water while producing more food and fiber 
and profit. Urban water-use efficiency improvements are keeping 
ahead of population growth. In other words, even as population 
grows in California, the amount of water each person is using 
is dropping; and in some cases even total water use in 
California is dropping. The potential for even greater 
improvements in efficiency is enormous.
    This kind of good news means that the number of successful 
tools we have for solving California's water problems is 
growing, and let me offer a few specific examples.
    In the urban areas, cities are becoming much more 
efficient, breaking the link between population growth and 
water use. San Diego County is using less water, 13 percent 
less than it was using 10 years ago, even though its population 
has grown 10 percent. Los Angeles in 1970 used 590,000 acre 
feet of water. In 1998, they used about 590,000 acre feet of 
water and yet Los Angeles's population has grown 32 percent. 
Figure 1 in my written testimony shows this.
    Industrial, commercial, and institutional water use 
efficiency is rising dramatically. Between 1980 and 1990 in 
California industrial water use dropped 30 percent, while 
industrial revenue and income increased 30 percent; and that 
trend has continued in the 1990s.
    Despite the statements over the need for new surface 
storage--which I can address later if you wish--new storage in 
the form of massive groundwater banks is already being created. 
In the past 20 years at one facility alone near Bakersfield, 
nearly a million acre feet of water have been stored. The 
Semitropic Water District groundwater banking program has 
stored 500,000 acre feet of water in the past decade.
    In the agricultural area, with relatively little official 
policy or recognition, growers have been moving toward higher 
valued crops that use less water per acre and produce even more 
money. And figure 2 in my written testimony shows this trend, 
the drop in field crops and grain crops and the increase in 
California in vegetable crops and fruit crops.
    Growers are moving toward more efficient irrigation 
technologies, saving water, money, and energy and increasing 
yields. And yet much more potential exists. Figure 3 in my 
written testimony shows that, while we have moved toward drip 
irrigation and more efficient irrigation, there's considerable 
more potential there.
    The technological and communications revolution sweeping 
the country and the world is also having an effect on 
agriculture. And the more farmers learn about their water use 
the more efficient they become.
    In the environmental area, local landowners are working 
with environmentalists to improve water quality, restore 
waterfowl habitat, protect endangered species, and maintain 
food production.
    Now, there are many more examples. There are 40 detailed 
case studies, and I can't go into them all.
    There is also some bad news. As I mentioned, the 
California's water planning process is--I believe has some 
fundamental flaws. It uses methods and data and assumptions 
that are either wrong or outdated. And the previous Department 
of Water Resources has shown great reluctance to address these 
problems and to learn from these kinds of successes.
    Let me close with a couple of lessons learned.
    Existing technologies for improving water efficiency and 
improving water supply reliability have enormous untapped 
potential.
    Regulatory incentives and motivations can be effective 
tools. Smart regulation is better than no regulation.
    Economic innovation leads to cost-effective changes. The 
power of proper pricing of water has been underestimated.
    Ignorance is not bliss. The more water users know about 
their own water use and options and alternatives, the better 
decisions they make.
    Finally, the most successful water projects have 
individuals and groups with different agendas working together. 
CALFED is a very good example of this. But on the local level 
the examples are legion. Every successful example has local 
stakeholders working together to solve these problems.
    Thank you for the opportunity to address these issues, to 
appear before you, and I would be happy later to answer 
questions you might have.
    Mr. Doolittle. Thank you.
    [The prepared statement of Mr. Gleick follows:]
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    Mr. Doolittle. Well, ladies and gentlemen, I have some good 
news and some bad news. The good news is you're going to get to 
have an hour off for lunch. The bad news is it's an hour that 
we'll have to interrupt at this point. There are a series of 
votes. The first one is a 15-minute vote, then two 5-minute 
votes, a little discussion, and then another 15-minute vote, so 
it makes sense at this point to suspend operations.
    When we do come back there will be no more votes out on the 
floor, so we should be able to move fairly expeditiously 
through the remainder of the hearing.
    So, with that, we stand in recess until 2:15.
    [Whereupon, at 1:15 p.m., the Subcommittee recessed, to 
reconvene at 2:15 p.m., the same day.
    Mr. Doolittle. The Subcommittee will reconvene. We're going 
to begin.
    I don't see Mr. Guy here. We'll start with Mr. Don 
Kaniewski.

    STATEMENT OF DONALD J. KANIEWSKI, LEGISLATIVE DIRECTOR, 
 LABORER'S INTERNATIONAL UNION OF NORTH AMERICA, LIUNA-AFLCIO, 
                         WASHINGTON, DC

    Mr. Kaniewski. Thank you, Mr. Chairman and members of the 
Subcommittee, for inviting me to testify today.
    My name is Donald Kaniewski. I serve as Legislative and 
Political Director for the Laborers International Union of 
North America. Our California affiliate is an active 
participant in the Bay-Delta Funding Coalition and the CALFED 
process. We strongly support moving the Bay-Delta program 
forward in a balanced fashion to meet the environmental water 
supply and water quality needs of California. Our members, in 
addition to being beneficiaries of adequate and reliable water 
supplies, look forward to bringing their skills in building 
infrastructure as part of the implementation of the CALFED Bay-
Delta program.
    While this is an oversight hearing, we would like to draw 
your attention to our support for the President's request of 
$95 million in fiscal year 2000 and urge your support for the 
stakeholder recommendation of allocating $60 million for 
ecosystem restoration programs and $35 million for water 
quality levee system integrity and water supply reliability 
programs.
    In addition, we support Governor Davis' recent commitment 
to a balanced Bay-Delta program whose inclusion of $10 million 
in the State's fiscal year 1999-2000 budget to support the 
integrated storage and investigation segment of CALFED.
    Why is California's Bay-Delta so important? The San 
Francisco Bay/Sacramento-San Joaquin Delta is the hub of 
California's water system. It provides two-thirds of the 
State's drinking water, irrigates 7 million acres of the 
world's most productive farmland, is home to 130 species of 
fish, 225 species of birds, 52 types of mammals and 400 plant 
species. The Bay-Delta has fueled the trillion dollar economy 
of California farms and cities for the past half century. 
However, this vital estuary has been in decline as a water and 
environmental resource for many years.
    In 1994, the Bay-Delta Accord signed by State and Federal 
agencies and stakeholders brought a truce to decades of 
divisive conflict over use of Bay-Delta water. The Accord has 
been extended through the end of 1999. It established the 
CALFED Bay-Delta program to develop a long-term water solution 
for California and a new era of cooperation among stakeholder 
groups.
    Why is our union strongly supporting the CALFED process? 
Through our own recent experience with cooperative strategies, 
we value CALFED's emphasis on consensus and accomplishment. The 
Laborers International Union is a recognized leader and 
innovator in developing labor-management cooperation programs. 
These programs are designed to maximize our contractor's 
ability to be competitive in securing work and provide for the 
economic security, health and safety of our members. Through 
these programs, our members deliver the finest construction 
manpower product in the Nation.
    This emphasis on cooperation has manifested itself in other 
successful ways, including resolving complex interagency issues 
involving Superfund. We are proud of our record of bringing 
parties together to resolve issues in a non-bureaucratic way, 
and the CALFED program is a logical extension of this 
philosophy of cooperation. The CALFED process is bringing 
stakeholders together throughout California to craft water 
solutions for California.
    With helpful funding from Congress, CALFED is making 
progress within the ecosystem component of the program. 
Partnerships with local interests are resulting in projects 
that have multiple benefits. You will hear from other 
stakeholders today as to how the program is providing projects 
that combine water supply adequacy and reliability, water 
quality, and ecosystem restoration benefits.
    CALFED is also fulfilling its mission towards balanced and 
comprehensive long-term water plans. Developing solutions that 
will provide for the State's expected population growth is 
vital for California's and the Nation's future.
    My presence here today is to reaffirm our commitment to the 
CALFED process. CALFED is an important forum for us to balance 
our interests in order to provide water, secure jobs, and a 
brighter future for California.
    I want to thank you, Mr. Chairman and the members of the 
Committee, and ask that as part of the record I submit a 
document prepared by the California business labor and water 
leaders coalition on the Bay-Delta solution.
    With that, I thank you very much; and I'll entertain any 
questions at the appropriate time.
    Mr. Doolittle. Thank you. And the document, without 
objection, you submit will be entered into the record.
    [The prepared statement of Mr. Kaniewski follows:]

Statement of Donald J. Kaniewski, Laborers International Union of North 
                                America

    Thank you Mr. Chairman and members of the Subcommittee for 
inviting me to testify today. My name is Donald J. Kaniewski 
and I serve as Legislative and Political Director for the 
Laborers International Union of North America. Our California 
affiliate is an active participant in the Bay-Delta Funding 
Coalition and the CALFED process. We strongly support moving 
the Bay-Delta program forward in a balanced fashion to meet the 
environmental, water supply, and water quality needs of 
California. Our members, in addition to being beneficiaries of 
adequate and reliable water supplies, look forward to bringing 
their skills in building infrastructure as part of the 
implementation of the CALFED Bay-Delta program.
    While this is an oversight hearing, we would like to draw 
your attention to our support for the President's request of 
$95 million in Fiscal Year 2000 and urge your support for the 
stakeholder recommendation of allocating $60 million for 
ecosystem restoration programs and $35 million for water 
quality, levee system integrity, and water supply reliability 
programs. In addition, we support Governor Davis's recent 
commitment to a balanced Bay-Delta program through his 
inclusion of $10 million in the State's Fiscal Year 1999-2000 
budget to support the Integrated Storage Investigation (ISI) 
segment of CALFED.
    Why is California's Bay-Delta so important? The San 
Francisco Bay/Sacramento-San Joaquin Delta is the hub of 
California's water system. It provides two-thirds of the 
state's drinking water, irrigates 7 million acres of the 
world's most productive farmland, is home to 130 species of 
fish, 225 species of birds, 52 types of mammals, and 400 plant 
species. The Bay-Delta has fueled the trillion-dollar economy 
of California farms and cities for the past half-century. 
However, this vital estuary has been in decline as a water and 
environmental resource for many years.
    In 1994, the historic Bay-Delta Accord signed by state and 
Federal agencies and stakeholders brought a truce to decades of 
divisive conflict over use of Bay-Delta water. The Accord has 
been extended through the end of 1999. It established the 
CALFED Bay-Delta Program to develop a long-term water solution 
for California, and a new era of cooperation among stakeholder 
groups.
    Why is our union strongly supporting the CALFED process? 
Through our own recent experiences with cooperative strategies, 
we value CALFED's emphasis on consensus and accomplishment. The 
Laborers International Union of North America is a recognized 
leader and innovator in developing labor-management cooperation 
programs. These programs are designed to maximize our 
contractor's ability to be competitive in securing work and 
provide for the economic security, health, and safety of our 
members. Through these programs, our members deliver the finest 
construction manpower product in the nation.
    This emphasis on cooperation has manifested itself in other 
successful ways, including resolving complex inter-agency 
issues involving Superfund. We are proud of our record of 
bringing parties together to resolve issues in a non-
bureaucratic way. The CALFED program is a logical extension of 
this philosophy of cooperation.
    The CALFED process is bringing stakeholders together 
throughout California to craft water solutions for California.
    With helpful funding from Congress, CALFED is making 
progress within the ecosystem component of the program. 
Partnerships with local interests are resulting in projects 
that have multiple benefits. You will hear from other 
stakeholders today as to how the program is providing projects 
that combine water supply adequacy and reliability, water 
quality, and ecosystem restoration benefits.
    CALFED is also fulfilling its mission towards developing a 
balanced and comprehensive long-term water plan. Developing 
solutions that will provide for the state's expected population 
growth is vital for California's and the nation's future.
    My presence here today is to reaffirm our commitment to the 
CALFED process. CALFED is an important forum for us to balance 
our interests in order to provide water, secure jobs, and a 
brighter future for California.

    Mr. Doolittle. Our next witness, we'll go back and pick up 
Mr. David J. Guy. Mr. Guy.

    STATEMENT OF DAVID J. GUY, EXECUTIVE DIRECTOR, NORTHERN 
      CALIFORNIA WATER ASSOCIATION, SACRAMENTO, CALIFORNIA

    Mr. Guy. Thank you, Mr. Chairman and members of the 
Committee.
    My name is David Guy. I am the Executive Director for the 
Northern California Water Association. The Northern California 
Water Association represents 65 agricultural water suppliers in 
northern California as well as counties and local business 
leaders.
    I am today going to give you an agricultural perspective on 
the CALFED process and would like to start off by indicating 
that we are also part of this coalition that supports the 
fiscal year 2000 appropriation.
    One of the reasons that we support the fiscal year 2000 
appropriation is that we see a shift towards a more balanced 
program, as just indicated by the previous panelist; and we 
think that this is very significant and very important for the 
agricultural community.
    There are three pieces of this program that I would like to 
talk a little bit about that are particularly significant; and 
this will, I think, shed some light on both the successes and 
some of the potential shortfalls in the CALFED process as we 
see it.
    One of the most positive efforts we have seen in the State 
are the fish passage improvements that have been made 
throughout the State. Secretary Babbitt this morning mentioned 
Butte Creek and held that out as a great example, and he's 
right. In the Appendix A to our written testimony we list a 
sample of the water and the fish passage improvements that have 
been made in the Sacramento Valley; and these have been true 
win-win type solutions and are really, I think, the essence of 
what CALFED should be all about. It improves the ecosystem, and 
it improves water supply reliability. This has been real 
positive, and we need to build upon this part of the program.
    The second piece is the integrated storage investigation, 
and although we feel that in the past that not enough attention 
has been paid to storage within the CALFED process, we are very 
encouraged that we are starting to see some progress, and the 
integrated storage investigation is a good indication of that.
    The bottom line is that we need to augment the supplies in 
the State of California to meet not only current demands but 
also future demands in the State. This will require storage not 
only north of the Delta, but in the Delta, south of the Delta 
and in southern California, and that will be essential to 
maintain this balanced program as part of the CALFED program.
    Finally, the third point that I want to touch on is land 
acquisition. Land acquisition is, again, something that we have 
significant concern with, and there's a lot of concern in the 
rural communities in California about the land acquisition part 
of CALFED. Because what we would like to suggest is that we 
recognize that there is some land acquisition that will take 
place and needs to take place and that we make sure that we 
have responsible land acquisition.
    We have outlined in our testimony some steps that we 
believe are important to assure that we have, in fact, 
responsible land acquisition as part of CALFED. Some of these 
measures are under way and others will need to be pushed as we 
go forward in the CALFED process.
    The most important thing about the land acquisition is that 
we try to avoid the redirected impacts. And that's, of course, 
one of the solution principles in the CALFED process and is 
really essential to assure that rural communities are protected 
in California in the CALFED process.
    We're also encouraged that public lands are being looked at 
rather than private lands when that is possible and when it's 
conceivable.
    We're looking forward to the EIS/EIR that will be coming 
out, and we are hoping that this document will give adequate 
attention to the agricultural and rural resources in 
California. We think that this is very important, and it will 
send a strong message to rural California about how we are 
going to treat those resources.
    So, with that, I would just like to say that we are very 
positive about CALFED. We recognize that there are some serious 
shortfalls, but we feel positive that we can overcome that and 
that we will and that the fiscal year 2000 appropriation is a 
good starting place to begin that process. We'll have to keep 
moving forward to ensure that we have a balanced program that 
will, in fact, benefit not only agriculture but also all the 
other sectors of the California economy and the environment.
    Thank you.
    Mr. Doolittle. Thank you.
    [The prepared statement of Mr. Guy follows:]

  Statement of David J. Guy, Executive Director, Northern California 
                           Water Association

    Mr. Chairman and members of the Subcommittee, my name is 
David Guy. I am the Executive Director of the Northern 
California Water Association (NCWA). NCWA is a non-profit 
association representing sixty-five 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 appreciate the Subcommittee's inclusion of my 
written testimony in today's hearing record.
    We appreciate the opportunity to provide the Northern 
California 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, the Federal Bay-Delta Security 
Act (Pubic Law 104-333) and the CALFED Revised Phase II Report. 
Two representatives of NCWA's Board of Directors, Chairman Don 
Bransford and Director Tib Belza, currently serve on CALFED's 
Bay-Delta Advisory Council (BDAC). NCWA is also a member of the 
Ecosystem Roundtable--the entity chartered to allocate state 
and Federal ecosystem restoration funds.
    The Subcommittee's interest in water management in 
California's Central Valley and particularly the CALFED Bay-
Delta Program (CALFED) 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 
numerous ecosystem restoration and water management actions. 
Both the Department of Interior and the California Resources 
Agency's testimony today before this Subcommittee will be very 
useful for private interests participating in this process.
    NCWA has been invited today to discuss the status of the 
CALFED program from an agricultural perspective. It was a year 
ago (May 12, 1998) that we provided testimony to this 
Subcommittee on the CALFED program and particularly the 
allocation of Federal funds for ecosystem restoration. Since 
that time, there has been good progress in certain parts of the 
CALFED program and very little progress in others.
    Most notably, CALFED late last year issued its Revised 
Phase II Report. This report was significant for several 
reasons. First, it gave CALFED a needed boost to sustain the 
program. More importantly, the discussions leading up to the 
report revealed the need for CALFED to begin broadening its 
scope to show progress not only for the ecosystem, but also 
with respect to water management and the water supplies that 
will be necessary to satisfy the growing demands for water in 
California.
    Like many others, we will provide detailed comments to 
CALFED when it releases its draft Environmental Impact 
Statement (EIS)/Enviromnental Impact Report (EIR) and another 
revised Phase II report this summer. Our testimony cannot and 
will not cover every CALFED issue. Today, we will focus on the 
four general CALFED programs that most directly affect the 
farms, cities and the environment in Northern California: (1) 
fish passage improvements; (2) surface and groundwater storage; 
(3) rural land acquisition and (4) water acquisition.

1. Sacramento Valley Fish Passage Improvements

    A major success in Central Valley water management is the 
fish passage efforts in the Sacramento Valley to jointly 
improve the ecosystem and water supply reliability. These 
projects are the type of programs that CALFED was formed to 
develop and implement. These projects also embody 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, CALFED will 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 in the overall 
program is an improving environment, achieved in part by 
implementation of restoration projects that resolve known 
problems. A good example is the installation of fish screens on 
agricultural diversions to prevent the entrainment of fish 
species. Program success can be measured 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 of a fish screen 
or passage project to protect candidate, threatened and 
endangered fisheries. Rather than describe every project in 
detail, we have instead enclosed Appendix A--a sample of the 
fishery projects that have either been completed or are 
underway by NCWA members in the Sacramento Valley.
    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 
fisheries and protect landowners from burdensome regulations. 
Although many projects are either completed or underway, there 
are many more similar projects that can serve both the 
environment and water supply reliability. CALFED has been and 
can continue to be successful in promoting and encouraging 
these types of projects.

2. Integrated Storage Investigation

    One of the shortcomings in the CALFED program has been the 
lack of progress in providing more reliable water supplies for 
water users in California. In the early stages of the CALFED 
process, water users have committed to improve the ecosystem as 
evidenced by the Bay-Delta Accord, Proposition 204 and the Bay-
Delta Security Act. After several years improving and investing 
in the ecosystem, water users are now adamant that there must 
be an equivalent commitment by Congress, the California 
Legislature and the CALFED agencies to improve the state's 
water supplies for both existing and future water users.
    The CALFED Revised Phase II Report was significant in that 
it strongly recommended the study and ultimate development of 
new surface and groundwater storage projects in California. 
This led to the CALFED ``Integrated Storage Investigation'' 
which will look at surface and groundwater storage, as well as 
the opportunities for reoperating existing facilities to 
maximize water use in California. For CALFED to succeed in the 
next century, we believe that there must be significant 
progress in developing a range of water supply alternatives 
that will improve water supply reliability throughout the 
state. In Northern California, this should include continued 
studies and planning for Sites reservoir, raising the existing 
dam at Lake Shasta, locally driven pilot projects for the 
conjunctive management of surface and groundwater and water 
efficiency measures to maximize the local use of water 
resources.
    These water supply options must complement efforts now 
underway to study and then develop measures to protect citizens 
and property from the devastating floods that have historically 
ravaged California's Central Valley. While CALFED must work 
toward improved water management in the state, it is equally 
important that CALFED not be used to delay or otherwise stifle 
significant opportunities to improve water supply reliability 
on both the regional and local level.
3. Rural Land Acquisition

    CALFED plans 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. As an example, 
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. As a further example, CALFED's earlier draft 
environmental impact report and impact statement, released in 
March 1998, recommended 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.
    The proposed implementation of these particular actions 
raises legitimate concerns for upstream and downstream 
communities, landowners and water suppliers. In this regard, it 
is important that Congress and CALFED understand the 
groundswell of opposition and concern that is developing in 
agricultural and rural communities throughout California in 
response to the large-scale land acquisition program that is 
being undertaken as part of CALFED and several other programs 
in California. The Wall Street Journal article entitled ``U.S 
Land-Buying Program Leaves County in the Dark--and Furious'' 
provides a glimpse into this problem in Northern California. 
(See May 5, 1999, CAl.)
    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. NCWA recognizes, 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.
    As a first step, CALFED must 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
    Second, there is concern that the EIS/EIR has not 
adequately analyzed the potential impacts to the existing 
environment, which specifically includes agricultural resources 
under both the California Environmental Quality Act (CEQA) and 
National Environmental Policy Act (NEPA). CALFED actions have 
and will result in significant impacts to the agricultural 
resource base in California, including agricultural land, 
agricultural water supplies and water quality. In a nutshell, 
this is the existing environment as it is utilized for 
agriculture. These actions will have socioeconomic impacts to 
local communities, local jurisdictions and local economies. 
CALFED should develop a plan to either avoid or to adequately 
mitigate for agricultural impacts. A meaningful plan will be 
critical for CALFED to gain confidence in rural areas and to 
assure that long-term environmental goals are accomplished in 
CALFED. Completion of both CEQA and NEPA requirements should be 
initiated before the acquisition of private property.
    Third, CALFED's top-down approach to land-use planning 
where Federal and state agencies, by either purchasing land or 
by funding land acquisition, are dictating local land use 
policies with little local participation in this process. Put 
differently, there is a deep concern in local communities that 
CALFED and its member agencies are usurping the land use 
authority that has traditionally resided in local governments, 
including counties and cities. There has been progress made by 
CALFED to incorporate local governments in the funding process 
for ecosystem projects, but much more effort needs to be made 
in this regard. Establishment of a representative public 
process to ensure local involvement must be a cornerstone of 
any land acquisition program.
    Fourth, there has been little, if any, progress on 
developing assurances that water suppliers and landowners will 
not be adversely affected by CALFED or its member agencies 
acquiring adjacent or nearby lands for habitat purposes. NCWA 
in concert with water users in Northern California has 
developed an assurances package that we believe will protect 
and encourage cooperating landowners and local agencies that 
allow restoration projects on their lands or on nearby lands. 
We believe that this is a very constructive approach to advance 
the ecosystem goals in the CALFED process while providing 
reasonable and necessary assurances to landowners and local 
water suppliers. The bottom line is that 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. We look forward to working with CALFED and 
other interested parties on this proposal.
    Finally, in this regard, 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 with economic activities, including farming, water 
district operation and flood control protection.

4. Water Acquisition

    The CALFED Revised Phase II Report developed the so-called 
``Environmental Water Account'' (EWA). NCWA strongly supports 
this flexible management approach to address complex delta 
issues as opposed to the traditional regulatory approach. Like 
the other parts of CALFED, however, the EWA must be defined so 
that water users benefit in its implementation. From the 
Northern California perspective, we have concerns that this 
program relies too heavily on upstream flow contributions to 
the delta. The EWA seems to assume that upstream water will be 
available as an asset to meet EWA demands, which is not a sound 
assumption. This is particularly a concern when EWA water is in 
addition to flows required under the Central Valley Project 
Improvement Act (CVPIA) Anadromous Fish Restoration Program and 
other environmental programs.

5. Conclusion

    With respect to FY 2000 funding, NCWA has joined this year 
with a coalition of California business, labor, water users and 
the environment to request and support a $95 million Federal 
(FY 2000) appropriation consistent with the Federal Bay-Delta 
Security Act and other relevant authorizing legislation. This 
request includes $60 million for ecosystem purposes and fishery 
improvements and $35 million for water management, including 
the Integrated Storage Investigation (ISI). (See April 16, 1999 
coalition letter.)
    From the Northern California perspective, the CALFED 
process was intended to address problems in the Bay-Delta which 
are largely associated with water uses south of the delta. NCWA 
endorsed the CALFED process to address these problems, as long 
as CALFED, in seeking solutions, does not redirect impacts and 
problems northward. NCWA's support of CALFED is predicated upon 
CALFED and its member agencies fully recognizing the senior 
water rights held by entities and individuals within the areas 
of origin. Unfortunately, these fundamental water rights seem 
to get lost in the zeal to move forward with the CALFED 
program. Unless these rights are, in fact, recognized and 
honored by CALFED and its member agencies, NCWA's support for 
CALFED, including support for future funding, will not 
continue.
    If you have any questions or would like to discuss this 
further, please call me or Dan Keppen in our office.

Northern California Water Association
455 Capitol Mall, Suite 335
Sacramento, CA 95814

916.442.8333

                               Appendix A

NCWA: Local Fishery Projects in the Sacramento Valley

    The Sacramento Valley's initiative and effort to help 
protect salmon and other aquatic species is unprecedented and 
is now recognized as one of the most exciting and progressive 
voluntary salmon restoration efforts in the United States. 
Today, over a dozen NCWA members, representing over 500,000 
acres of irrigable land, are in various stages of developing 
screens to prevent fish entrainment at their diversions. As a 
result, nearly 75 percent of all agricultural water use from 
the Sacramento River will soon flow through new, state-of-the-
art fish screens. On Butte Creek, local water users have 
addressed--or will address--nearly every fishery impediment 
identified by regulatory agencies.
    Since 1994, many NCWA members have initiated far-reaching 
efforts to screen diversions, refurbish fish ladders, construct 
siphons, remove dams and implement other habitat improvement 
projects to enhance the environment. These projects include:

1. Browns Valley Irrigation District

    Browns Valley Irrigation District (BVID) has started 
construction on its Yuba River Diversion Fish Screen. The 
completion of this project, designed to protect salmon in the 
Yuba River, was delayed due to inclement weather. Browns Valley 
has secured complete funding for its project from various 
sources, including Yuba County Water Agency, Yuba River PG&E 
Mitigation Account, Category III, CV-PIA Restoration Fund, 
Tracy Pumps Mitigation Fund and BVID's own funds. BVID will 
independently build and install the fish screen project.

2. Glenn-Colusa Irrigation District

    Glenn-Colusa Irrigation District (GCID) broke ground on its 
Hamilton City Pumping Plant screening project in April of 1998. 
GCID diverts a maximum of 3,000 cubic feet per second (cfs) 
from the Sacramento River, with the peak demand occurring in a 
dry spring year at the same time as the peak out-migration of 
juvenile salmon. Key components of the project include a 600-
foot extension to the existing fish screen and a stabilizing 
gradient facility in the mainstern of the Sacramento River. 
Total construction cost of the screen and gradient facility is 
estimated at $50 million. This project will minimize losses of 
all fish in the vicinity of the pumping plant diversion, 
including endangered winter-run chinook salmon, and will 
maximize GCID's capability to divert the full quantity of water 
it is entitled to utilize to meet its water supply delivery 
obligations.

3. M & T Chico Ranch

    M & T Chico Ranch environmental restoration activities 
included relocating and screening the M & T Pumping Station 
from the mouth of Big Chico Creek to the Sacramento River, 
recently completed for a total cost of $5 million. This project 
will ensure a guaranteed water supply to over 8,000 acres of 
permanent wetlands and over 1,500 acres of seasonal wetlands. 
Additionally, it also protects habitat for migrating spring-run 
chinook salmon. One other important benefit of this project is 
M & T Ranch's agreement to provide fish flows in the amount of 
40 cubic feet per second to Butte Creek, one of the most 
important and last remaining spawning areas for the Spring-run.

4. Maxwell Irrigation District

    The Maxwell Irrigation District now operates a state-of-
the-art positive barrier fish screen, one of the first of its 
kind installed on the Sacramento River. Completed in 1994, the 
new pumping plant and screen facility divert approximately 80 
cfs at a completed cost of nearly $1.6 million. The screens are 
intended to protect all fish, but primarily steelhead and 
endangered winter-run chinook salmon. The State of California 
recently retroactively reimbursed Maxwell ID for much of their 
expenditures.

5. Natomas Central MWC

    Preliminary engineering studies have commenced to 
investigate the feasibility of screening the 700 cfs Natomas 
Central Mutual Water Company diversion on the Sacramento River. 
Natomas Central has already undertaken feasibility studies and 
will receive CVPIA Restoration Fund monies to help cover the 
estimated $10-$15 million capital costs associated with this 
project. The screened diversion is an integral component for 
future integrated water resources management in the American 
River basin.

6. Pelger Mutual Water Company

    In 1994, the Pelger Mutual Water Company completed 
construction of its new pumping station and positive barrier 
fish screen in the Sacramento River near Knight's Landing. This 
facility includes pumps with a discharge capacity of 60 cfs and 
was completed for a total cost of $350,000. While Pelger MWC 
financed the original project, the State of California recently 
reimbursed the water company for much of the original expense. 
Pelger MWC also recently received additional CALFED ecosystem 
funding to undertake an innovative evaluation of entrainment 
potential of unscreened small diversions.

7. Princeton-Codora-Glenn Irrigation District/Provident 
Irrigation District

    In August 1997, the Princeton-Codora-Glenn and Provident 
irrigation districts began construction of an $11 million fish 
screen and pump consolidation project on the Sacramento River. 
The new 605 cfs diversion will protect endangered winter-run 
chinook and spring-run chinook salmon. The new facility, which 
eliminates three unscreened diversions, was originally 
scheduled to be operational by spring 1998. Delays in 
construction, primarily resulting from the high water 
conditions in the Sacramento River last year, have pushed back 
project completion to later this year.

8. Reclamation District 108

    Reclamation District 108 began construction in 1997 of a 
new $10 million screen. The project, located at the district's 
Wilkins Slough diversion, will protect migrating endangered 
winter-run chinook salmon, as well as the spring-run chinook. 
The design for the new screen facility was chosen after several 
years were spent examining the performance of alternate screen 
technologies. The district will hold dedication ceremonies for 
the completed project this spring.

9. Reclamation District 1004

    Reclamation District 1004 began construction of its $7 
million screen last summer. Poor weather and adverse river 
conditions delayed the start of construction in 1997. The 
proposed project includes relocation of the Princeton Pumping 
Plant and necessary conveyance facilities to a more stable 
location along the Sacramento River, in addition to 
construction of a positive barrier fish screen. This project 
will eliminate significant adverse impacts to fish inhabiting 
the Sacramento River, including juvenile winter-run chinook 
salmon and steelhead.

10. Richter Brothers

    The Richter Brothers diversion on the Sacramento River near 
Knights Landing is located along a reach of the river that 
hosts several species of salmon, steelhead trout and the 
recently listed Sacramento splittail minnow. Richter Brothers 
have received CALFED funding for feasibility studies and 
preliminary design for an improved diversion that will provide 
an important protective role for fish in this critical stretch 
of the river.

11. Tehama-Colusa Canal Authority

    The water users that make up the Tehama-Colusa Canal 
Authority (Authority) and the U.S. Bureau of Reclamation have 
addressed fish passage problems at Red Bluff Diversion Dam 
since 1985 by modifying dam operations. The installation of 
rotary drum screens in 1990 and the $22 million research 
pumping plant in 1995 furthered these efforts. The CALFED Bay-
Delta Program is also exploring plans for improved fish ladders 
at Red Bluff or a new screened facility on the Sacramento 
River. Last year, the Authority obtained $340,000 in state and 
Federal funding through the Ecosystem Roundtable to investigate 
the feasibility of installing state-of-the-art screening and 
pumping at Red Bluff to replace the diversion dam gravity 
intake system.

12. Western Canal Water District

    The Central Valley Project Improvement Act and the 
Anadromous Fish Screen Program have identified several projects 
within the Butte Creek watershed that would improve fishery 
resource conditions, specifically spring-run chinook salmon and 
steelhead trout. A number of these projects at Durham-Mutual, 
Rancho Esquon (Adams Diversion Dam), and Gorrill Land Company 
(Gorrill Diversion Dam) are scheduled to be constructed during 
1998 and 1999. The Western Canal Water District $11 million 
siphon project completed last year features construction of a 
siphon under Butte Creek to transport irrigation water across 
the creek without impacting migrating salmon, including the 
spring-run chinook--a fish recently designated as a threatened 
species by the California Fish and Game Commission. As a direct 
result of this work, several existing barriers to migrating 
fish will be removed.

13. Lower Butte Creek Project--Sutter Basin Butte Sink Water 
Users Association, Reclamation District 1004, RD 70, Butte 
Slough Irrigation Company, RD 1500, Butte Sink Waterfowl 
Association, Western Canal, RD 1660.

    Lower Butte Creek, Butte Sink and Sutter Bypass: On the 
main migration corridor for Butte Creek spring-run salmon, The 
Nature Conservancy, California Waterfowl Association and NCWA 
are working with local water users and fishery agencies to 
determine the feasibility of reducing or eliminating fish 
passage and entrainment problems. The group has already 
completed the first phase of this project, and is moving into 
the second phase, which will include preliminary engineering 
and design that may lead to construction by the year 2000. 
CALFED will fund the second phase efforts up to $750,000.

14. Yuba County Water Agency

    The Yuba County Water Agency is working with the U.S. Fish 
and Wildlife Service and the U.S. Army Corps of Engineers to 
evaluate options to improve fish passage upstream and 
downstream of Daguerre Point Dam on the Yuba River. While the 
existing fish ladders appear to be working properly, a study 
will assess whether the facilities can be further improved. 
Yuba County Water Agency has also received CALFED and CVP 
Restoration funds to study the life history and stock 
composition of steelhead trout on the Yuba River.

    Mr. Doolittle. Our next witness is Mr. Steve McCormick.
    Mr. McCormick.

STATEMENT OF STEVE McCORMICK, VICE PRESIDENT, WESTERN DIVISION, 
       THE NATURE CONSERVANCY, SAN FRANCISCO, CALIFORNIA

    Mr. McCormick. Thank you, Mr. Chairman.
    I'm the Executive Director of the Nature Conservancy of 
California, and we are dedicated to preserving the best 
examples of the original natural landscape. We do that by 
working in local communities and cooperatively with private 
landowners. It has been our privilege to participate in shaping 
the ecosystem restoration program of CALFED and, I think more 
importantly, engaging in its implementation.
    While I will focus my remarks on that aspect of our 
participation in CALFED, I do want to say that one of the 
distinguishing features of the program is that it is a single 
integrated plan; and it's really an elegant vision in that 
respect to address exceedingly complex issues involving the 
most important resource in California, water. But it is 
important to regard every one of the components that--in 
context and as part of a whole. So my remarks on the ecosystem 
restoration program should be regarded as such.
    In that program, we have been delighted to see that it is 
truly an ecosystem program focusing on whole systems, entire 
watersheds, not just individual species or isolated and 
fragmented pieces of property. It has indeed elevated the 
vision of all participants and I think ennobled us to think big 
and systematically.
    What I would really like to concentrate on are the tangible 
results that are being accomplished that far exceeded anyone's 
original expectations. I have been working on preserving 
landscape for 20 years. I have never seen anything approaching 
the success of CALFED implementation.
    I'm going to give two examples, the Sacramento River and 
the Consumnes River, and they're really just illustrative I 
think of again almost unimaginable things that can be 
accomplished.
    The Sacramento River. We, along with public agency partners 
and, most significantly, with local landowners, have been 
working to create a meander zone that would not only re-
establish and reconnect some of the most fragmented and 
disrupted and reduced habitat in California which is uniquely 
California but would also provide benefits for landowners. This 
meander zone would allow flood waters to flow more harmlessly 
in areas that would not affect agriculture or residential 
development. It would also provide valuable recreation to an 
area that is experiencing increasing population growth.
    I do want to stress the involvement of local landowners. 
Candidly, when we began in this area prior to CALFED there was 
a great deal of opposition to increased land acquisition; and 
we made a commitment to working with that local community. 
You'll see from the supplemental materials that we have 
distributed with my testimony a sample letter from Chuck Crain, 
who was an outspoken opponent of CALFED and now is an 
enthusiastic supporter. He sees that this program is bringing 
in benefits in the form of real money that enables landowners 
willing to sell property to sell those portions of their lands 
that are not particularly productive, to put that money into 
better lands and better production, to lease back from those 
organizations and private institutions that are buying land 
agricultural properties that are still productive. And we have 
a very large leaseback program that is putting money back into 
the local community, and local farmers are being hired to do 
the restoration work of natural habitat.
    About a month ago, I was out turkey hunting with one of the 
landowners that we work with. And after we were finished in the 
morning we went to see his walnut facility. As we were having 
lunch, we walked on an area that he has undertaken as a 
restoration project. He said, you know, I actually get more 
pleasure out of watching these trees grow than my walnuts know. 
Because I know they're going to be there long after I die and 
that my kids will enjoy their shade and recreation, the hunting 
opportunities there, and they enhance the quality and value of 
my farm.
    And, again, that was really just one example of many that 
we're seeing on the Sacramento River, people really converting 
to the value, the multiple values derived from the ecosystem 
restoration program.
    On the tributaries of the Sacramento River, there are local 
land conservancies formed by local landowners that are coming 
up with watershed plans. We have already heard about the 
tremendous success of Butte Creek--1,000 salmon run, now almost 
as many as 20,000. Forests are being re-established, as I 
mentioned, which is providing habitat not only for listed 
species but species that could be listed in the future.
    On the Consumnes River we have also had great success with 
CALFED. We have engaged local farmers. In one case, as you'll 
see in the supplemental material, we joined with a local farmer 
to buy property with him which otherwise he wouldn't have been 
able to afford it. We stripped off the development rights but 
give him a permanent opportunity to farm that property. He 
couldn't have been more delighted.
    We have preserved almost 10,000 acres of additional 
productive farm land that's compatible with habitat there and 
demonstrating compatible uses as a blend with preservation of 
habitat. The concepts really are turning into reality.
    The final thing we have done to the Consumnes most recently 
is the completion of the final phase of a non-strucutural flood 
control operation which has opened up flood land not only for 
habitat but allowed otherwise dangerous flood waters to shunt 
harmlessly onto land that is used during summer months for 
agriculture but during winter months is fallowed.
    Some observations and recommendations on the program. I 
heard that the process is slow, but it is necessarily slow. It 
is collaborative and inclusive. That is an inherently slow 
process. It is inherently a better process because people come 
to consensus and final decisions. The process should continue 
to be integrated. As I mentioned, I think its great beauty and 
its elegance is the fact that it is integrated and should not 
be separated into its component parts. Every part is of a 
piece--ecosystem restoration, water storage, water quality, et 
cetera. Ideally, there would be a single implementation agency. 
We have seen some of the shortcomings of having the existing 
entities try to multi-manage the process, and that provides 
some difficulties.
    And, finally, funding is critical to maintain the momentum 
and the real traction that has been realized just in the last 
couple of years and is gaining every day. So we 
enthusiastically support the appropriations that are requested 
for this year. I think this is really one of the finest hours 
in California history addressing an issue which the chairman 
said earlier which is really one of the most significant facing 
Congress. I hope that future Californians will look back at 
this as a time when Californians of all different concerns, 
issues and backgrounds came together to solve what seems to be 
an intractable issue which I think, showing through CALFED, can 
be done.
    Thank you very much.
    Mr. Doolittle. Thank you.
    [The prepared statement of Mr. McCormick follows:]
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                            U.S. Water News

                              Water Supply

Farmers, conservationists forge new alliance to restore 
Sacramento River.
New approach to land management brings economic benefits to 
farmers.

RED BLUFF, Calif.--Bert Bundy has farmed land along this 
stretch of the Sacramento River all his life.
    Formerly the executive director of a local landowners 
association, he may seem an unlikely candidate to lead 
conservation efforts that depend on retiring agricultural land 
to recreate river meanders. Those efforts, in turn, will help 
reconnect the natural flood plain of the 200-mile stretch of 
the Sacramento River between the Bay-Delta and Shasta Dam.
    But that is what he is doing. Bundy has just been hired--
through a CALIFED grant--as a coordinator for the Sacramento 
River restoration project, an effort he has been involved in as 
a landowner for the past 12 years.
    ``I'm very sold on the program,'' he says of the 12-year 
public/private partnership that has recently gained the support 
of the CALFED program, which includes restoration of rivers and 
watersheds in the Central Valley.
    Twelve years ago, in 1987, Bundy was among 25 local 
stakeholders who formed the core of what is now called the S.B. 
1086 Group. In that year Senate Bill 1086 was passed to 
facilitate a consensus-based approach to restoration of the 
upper Sacramento fisheries, which is habitat for 4 races of 
chinook salmon.
    As a result of that process, he said, some 20 
recommendations for improving the operation of the river to 
benefit fish runs were implemented, but the riparian 
restoration called for in the plan languished until 1993, when 
it was revived by Doug Wheeler, who was then California 
Secretary of Resources.
    Out of this process came the goal of restoring ``limited 
meanders'' on this stretch of the Sacramento, wherever 
practically feasible.
    ``It's taken some time for all these stakeholders to agree 
to the limited meander concept, but people now realize its a 
win/win,'' said Sam Lawson, who is Sacramento River project 
director for The Nature Conservancy, the private non-profit 
organization that purchased land along the Sacramento 10 years 
ago as part of its on-going program to reestablish wetlands in 
the Central Valley. ``We've worked hard to find practical 
solutions that benefit everyone.''
    The Nature Conservancy became part of the process when it 
donated land it purchased here to the U.S. Fish and Wildlife 
Service for inclusion in a wildlife refuge on the river. The 
non-profit organization has long been a leader in the public/
private collaboration to reconnect the river to its flood 
plain, a concept recently endorsed by the CALFED program in its 
goal of sustainable resource management.
    Restoring meanders to selective stretches of the Sacramento 
will reconnect the flood plain, said Lawson, thus creating a 
healthier ecosystem and improving wildlife habitat. But the 
benefits don't stop there, he added. Meanders also provide 
flood control by both absorbing the river's energy and slowing 
down rushing water. And they offer superior in-stream storage 
in times of high water.
    This ``geologic'' approach to flood control, he said, is 
far superior to man-made structures like levees, because these 
natural features improve with time, due to the cumulative 
effect of natural processes, whereas levees must be 
continuously maintained, repaired, and replaced.
    The restoration requires the sacrifice of some farmland 
(mostly orchard acreage), but Lawson explained that the land 
taken out of production is ``marginal land'' that is no longer 
productive.
    Because the restored meanders and reconnected flood plain 
are limited to a corridor less than a mile wide--rather than 
the 10-15 mile width of the original flood plain--farmers are 
assured that the loss of farmland will be minimal. In addition, 
the orchards selected to be replanted as riparian habitat are 
already close to the end of their productive farming life.
    The Nature Conservancy purchases available land from the 
farmers, giving them the capital to reinvest in new orchard 
property, then leases the land it bought back to the same 
farmer, who continues to farm the best land of the acreage he 
previously owned. The Conservancy also pays the farmer to 
replant the acreage now designated as riparian habitat.
    ``It's a plan that makes sense--economic sense--for 
everyone,'' said Lawson. ``It would actually cost the farmers 
more to keep the levee system in place, or to deal with flood 
damage to these marginal lands.''
    Bundy agrees.
    ``Much of that land right next to the river shouldn't have 
been planted in the first place,'' he said, adding that ready 
access to river water, as well as the lure of fertile bottom-
land made sense in earlier times. But the continuing damages to 
natural resources and the ecosystem are clearly not worth the 
cost of such outdated farming practices, he said.
    ``We have yet to convince some landowners of this,'' he 
added. ``But after 12 years of working together, Sacramento 
farmers and conservationists are beginning to understand we 
have more in common than we once thought.''
    Both farmers and conservationists view urban and suburban 
sprawl as a common threat that can only be contained by 
unconventional alliances and practical mechanisms like those 
worked out in this public/private partnership, he said.
    Of the 20,000 acres of land authorized for a refuge on the 
Sacramento River, 10,000 acres have already been acquired, and 
of that, 1700 acres of marginal farmland have been restored to 
riparian habitat.
    ``We have just closed up a block between two creeks that 
will allow us to abandon about 3000 feet of levee,'' said 
Lawson. ``This year alone we will restore another 850 acres of 
riparian habitat.''
    Lawson points out that the total cost of reclaiming the 
ecosystem on this stretch of the Sacramento is approximately 
$100 million, including both land acquisition and restoration--
not a high price to pay considering the Sacramento is the major 
source of water for a large percentage of the state's 
population, as well as being the home to a number of endangered 
species, including winter run chinook, which are found no where 
else on Earth.
    ``When you take all that into consideration,'' he said. 
``It's a bargain--and an opportunity we can't afford to lose.''

    Mr. Doolittle. The final witness in this panel is Dr. 
Dennis King. Dr. King.

STATEMENT OF DENNIS KING, SENIOR RESEARCH SCIENTIST, UNIVERSITY 
   OF MARYLAND, CENTER FOR ENVIRONMENTAL SCIENCES, SOLOMONS 
                        ISLAND, MARYLAND

    Mr. King. Thank you. My name is Dennis King. I'm senior 
research scientist at the University of Maryland Center for 
Environmental Science, and direct that Center's Natural Capital 
Research Group. I am also managing owner of a consulting firm, 
King & Associates, where we specialize in natural resource 
accounting and environmental assessment and mitigation trade 
scoring.
    A great deal of my research, consulting and teaching 
involves the economic aspects of environmental restoration. I'm 
currently working on projects related to wetland mitigation, 
riparian buffer construction, prioritizing investments in 
noxious weed eradication and fishery habitat problems. I'm also 
writing a book for Columbia University Press entitled, 
Economics of Ecological Restoration.
    I currently live in Maryland, but until 10 years ago I was 
a California resident. I also have family out there, so I have 
some personal interest in the issue of California ecosysytem 
restoration.
    I'm here simply to encourage the use of clearly defined 
investment indicators to prioritize and manage CALFED 
ecological restoration investments and to recommend perhaps 
that CALFED be managed as an exercise in what Wall Street 
investors or businessmen would call integrated risk management.
    My written testimony has some details on the differences 
between investment indicators versus performance indicators. 
The basic difference is that investment indicators are leading 
indicators of success. The analogy on Wall Street would be the 
criteria used to pick stocks which include risks and expected 
financial returns, as opposed to the performance criteria, 
which would pretty clearly be defined as the rate of return in 
your investment.
    The concept of integrated risk management is described in 
more detail in my written testimony. It's really just a 
practical way to implement adaptive ecosystem management. It 
involves managing individual investments in ecosystem 
restoration as part of a portfolio, managing those risks that 
can be managed, carefully monitoring indicators of those risks 
that are uncontrollable and, mostly importantly and most 
difficult, responding quickly when risk factors change. This is 
particularly difficult in the case of ecosystem restoration 
which involves applications of technologies and science that 
are relatively new; and subject to lots of vagaries related to 
floods, droughts, fire, invasive species, water diversion and 
so on.
    I have arrived at this conclusion that using investment 
criteria is more important than using performance criteria 
based on three general experiences dealing with the failure of 
ecosystem restoration which I think were a result of an 
inability of restoration managers to lay out clear decision-
making criteria.
    The first is related to Prince William Sound and the 
aftermath of the Exxon Valdez spill. There were billions of 
dollars spent on restoration. It provided good public relations 
for Exxon and for some regulators. It transferred a lot of 
wealth to Alaska. It satisfied a public need to punish Exxon. 
It did a lot of other things. However, in terms of a public 
investment and restoration a lot of it was a waste and in some 
cases it did more harm than good.
    My second experience included 8 years on the Scientific 
Committee of the Pacific Fisheries Management Council. These 
regional fishery councils are composed of scientists and 
regional stakeholders. Over the last 20 years the scientists 
have studied fish, and the stakeholders have liquidated them. 
In that case, too, we in the process didn't provide good 
investment criteria; and we basically allowed an industry to 
liquidate a publicly owned asset and called it economic 
production, even though the scientists and stakeholders were in 
a regional organization and approved the decision. So that sort 
of made me think again that we really need more public 
investment criteria even though I completely understand the 
need for stakeholder consensus and limits of benefit cost 
analysis and so on.
    The third experience is one I'm involved in right now, 
which is scoring wetland mitigation trades and looking at the 
cost and success of wetland mitigation projects. Like most 
other environmental economists, I have been pushing for market-
based environmental solutions my entire career. But now what we 
find is that when you're dealing with environmental goods where 
the units of exchange and debit/credit criteria are vague, the 
risks associated with these environmental trades are enormous. 
So much so, that even scientists and people who have argued in 
this context that all wetlands are unique and special and 
wanted ad hoc negotiating criteria are beginning to beg for 
clear debit/credit criteria. There is so much money and 
political risk involved that in ad hoc negotiations scientists 
and resource managers tend to lose.
    Based on this experience, I have three recommendations for 
CALFED. First is that it be viewed as an exercise in integrated 
risk management. Again, that means considering the success of 
the overall program, not just individual projects, and 
providing incentives for project managers to take on the same 
consideration.
    To consider the sufficient conditions, not just necessary 
conditions. It's very common for managers of restoration 
projects to focus on creating the necessary condition that they 
are responsible for without monitoring whether the other 
necessary conditions are evolving. They should be encouraged to 
blow the whistle on their own projects if the likelihood to 
success gets so low that the money would be better diverted to 
somewhere else.
    It means rewarding people who manage those risks and 
rewarding those people for monitoring risks that cannot be 
managed and, most importantly, responding to those things. We 
found in our review of restoration projects it's very 
difficult.
    Second, CALFED should use investment indicators to select 
and manage projects. The stakeholder role, I know they're 
enormously important, need to be managed to put preferences on 
outcomes, not on investments. They're too complicated for 
stakeholders to select.
    Scientists can help define opportunities and constraints 
and the need for projects to generate new information. But, 
again, the management of these complex projects is too 
complicated for scientists and involves more decision-making 
under uncertainty than they prefer--Third, and perhaps most 
importantly, is these indicators provide some cover for the 
ecosystem restoration manager to manage for outcomes and to 
minimize waste. What I'm finding in wetland mitigation is that 
if there is a lot of squirm room in what success criteria are 
used, the people trying to manage these projects have very 
little justification or particular technical cover for stopping 
wasteful projects.
    And so I think, whether you call it adaptive ecosystem 
management or integrated risk management, investment indicators 
are needed to provide restoration managers with the ability to 
deal with two very substantial challenges. One is the fact that 
ecosystem restoration investments are enormously risky and 
involve unavoidable risks that science is not going to be able 
to reduce very much. Two, the fact that they result in benefits 
that are very difficult to measure in conventional dollar terms 
and may take many years to appear. We cannot demand the 
impossible. Even if we can't guarantee that an investment will 
suceed or has succeeded, we can certainly guarantee that we're 
using all the best criteria for allocating our investments and 
management risks.
    There are eleven exhibits attached to my written testimony 
which help clarify and expand some of these points, and I 
welcome any questions. [See attached Exhibits.]
    Mr. Doolittle. Thank you.
    [The prepared statement of Mr. King follows:]
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    Mr. Doolittle. Dr. King, as you look at the CALFED 
operation in the light of your experience, and I took note of 
how difficult you indicated it was in some cases to actually 
ascertain performance, but how do you think CALFED measures up, 
based on your knowledge of these issues?
    Dr. King. I have to say that I just this morning got a look 
at the indicator draft, and I thought it was very thorough and 
covered the conventional types of indicators. However, they're 
basically performance indicators.
    Occasionally, there will be an indicator listed there that 
will say, for instance, a life requisite for a salmon might be 
water quality, habitat and so on and so on. The difference 
there is that if you're managing investments the hard choices 
require you to say, we're improving this necessary condition 
but we can only--that can only reach any meaningful goal if 
these other necessary conditions exist. And if we have a 5-year 
program and in the beginning of year one, one of the other 
necessary conditions doesn't exist, the likelihood of success 
changes, and we need to change our investment strategy.
    Those are the kind of indicators, these risk indicators, 
leading indicators of success and failure, which I think build 
on what are in those indicators that represent primarily 
scientific definitions of performance.
    Mr. Doolittle. Thank you.
    Let me throw this question out to the members of the panel 
and see what your answer is. Many of you--all of you I think 
have supported CALFED and indicated that it's doing good 
things; and if you want to elaborate on that, I would invite 
that. But I guess, conversely, what is it about CALFED that 
isn't in your opinion going as it ought to go? Where could it--
where is it falling down or where does it need to improve? 
Anybody want to take a stab at that?
    Mr. Sprague. Mr. Chairman, I'll be bold and take a first 
shot.
    Mr. Doolittle. Okay. Mr. Sprague, for the record, is going 
to volunteer his opinion. Good.
    Mr. Sprague. You know, there is kind of a group of what 
I'll call inside baseball players that have been following this 
CALFED, and I would even include this Committee in that group. 
But then there's a whole another sundry of people that are 
outside, for example, my own board of directors that are 
locally elected that really make the decisions and the 
consumers that they supply with water. I don't think we have 
collectively and I think we have to collectively take part of 
that blame with CALFED. They have the wrong expectations of 
what CALFED is going to deliver at the end of the day. They're 
measuring the beef of the success in many instances in the 
wrong way, and I think we need to work with CALFED and try to 
get a broader understanding. For example----
    Mr. Doolittle. I didn't understand something you said. You 
said they're measuring the what for their success?
    Mr. Sprague. They're measuring kind of ``Where's the beef'' 
in the whole effort.
    Mr. Doolittle. Oh. That was Mondale's slogan, right? 
``Where's the beef?''
    Mr. Sprague. Yeah. I believe so. I learned it from a little 
old lady in Pasadena.
    Mr. Doolittle. Okay.
    Mr. Sprague. But I think one of the difficulties that we 
have right now is many of us are more used to EIRs and EISs 
that come out that are very project oriented. So you're going 
to put a pipeline in the ground, you're going to put a 
reservoir in place, you're going to put a treatment plant in 
place, you're going to put a bridge in place, so you're doing 
an EIR in that fashion.
    What we're really going to see coming out of this upcoming 
document really is a foundation that we use then to build on 
for the next 30 years. And my biggest fear is that, when this 
EIR is released, our public is not going to see the beef in 
that document and so, therefore, they're going to declare it a 
failure.
    And so I think somehow or other we collectively need to 
work together to help them understand what the process is. 
Let's get an EIR that gives us the foundation to do the 
necessary permitting. And then when we go to the individual 
projects that are necessary, those get dealt with in a separate 
EIR document. So it's more of a public outreach issue than it 
is a technical issue where they're bringing the stakeholders 
together.
    Mr. Doolittle. So you think they're falling down in not 
doing enough public outreach.
    Mr. Sprague. I think so.
    Mr. Doolittle. Okay. Anybody else want to volunteer an 
opinion?
    Mr. Guy. Well, I'll----
    Mr. Doolittle. Mr. Guy.
    Mr. Guy. [continuing] reaffirm--talked a little bit earlier 
about both I think the impatience that you're starting to see 
in the water user community that we're going to have some water 
supply reliability and some real water supply reliability. I 
just think that we need to make some things happen. And there 
needs to be a balanced package where the water users see some 
immediate benefit. Otherwise, I think people's patience is 
going to grow very thin.
    I also made some suggestions on the land acquisition side. 
I think that that so far--there's been some shortfalls in that, 
but I think we have seen some progress, and I think there's 
some ways to get around that. But I think we need to work a lot 
harder in that area.
    Mr. Doolittle. All right. Thank you.
    Mr. Dooley is recognized for his question.
    Mr. Dooley. I guess on this land acquisition, I'm 
struggling with this just a little bit. Mr. Guy, what problems 
are you talking about that have already occurred?
    Mr. Guy. Well, I think some of the--they come in a lot of 
forms. But I think there's been a real feeling that the 
counties particularly have not been involved in the process.
    Mr. Dooley. But isn't this a voluntary sale? I mean, a 
willing seller to a willing buyer? So if I'm a private 
landowner and I want to participate in this program, I just 
exercise my property rights and--I mean, is--are those being 
infringed upon in any way?
    Mr. Guy. Well, it is being well-premised on voluntary 
sales. But the county, of course, typically has some land use 
authority and has been granted that by the legislature. And 
they have revenue issues, of course, that when you convert land 
to habitat purposes there are some revenue losses that occur to 
the county. And there's been some problems with in-lieu taxes 
not being paid. I think those are legitimate concerns.
    Mr. Dooley. Is that the issue? Because, as a farmer myself 
and a property owner, if I choose to sell to this program, I 
don't want the county or anyone else saying, no, I can't do it. 
So I want to make sure we're defining the issues. Is the 
problem, then, a lack of tax revenue that you're most concerned 
with?
    Mr. Guy. That's one piece of it, yes. I think you hit it 
right on the head. I don't think anybody, at least that I'm 
hearing, wants to stand in the way of a transaction. That's 
not, I don't think, what anybody is saying.
    The second piece of this is if you take, for example, some 
riparian land and make it into setback levees or put trees in 
the flood plains, what does this mean for existing diversions 
for water supply? That can create some real problems whether 
the diversion may get washed out, it may get silted up. That 
poses some problems. And those issues really, I think, need to 
be worked out. And so far have--there's really not been a 
process to do that. I think there will be, though.
    Mr. Dooley. Those are very valid points, and I appreciate 
that.
    Dr. Gleick, I appreciated your testimony. I guess, though, 
a lot of the folks I represent which are south of the Delta are 
concerned about whether or not we do have adequate supplies of 
water. And where you're--your figures I do not contest. I think 
they're accurate. But some of the concerns are even with the 
upcoming PEIS is that there's some modeling that's been doing 
there that would show just even on almost normal years or 
slightly below normal years that there could be significant 
reductions, very significant reductions to agriculture 
contractors. I guess that's, you know, the concern that some of 
us have is, you know, how do we ensure that we do have an 
adequate supply of water that can maintain an agriculture base 
even when we have these critically dry years? I don't know if 
you have a comment on that.
    Dr. Gleick. Well, I have been critical in the past of the 
long-term water planning process in California, as many people 
in this room know, in particular the way we project future 
demand, the way we actually try and calculate what the demand 
for water is going to be in the different sectors. There are 
real problems there.
    Having said that, I think the way to think about this is 
not to separate out the different pieces but to think about it 
in an integrated way. Our goal is not new storage. Our goal is 
not individual pieces of this. Our goal is a safe and reliable 
water supply for our users with a healthy environment.
    And there are a whole series of tools that we have 
available to us to achieve those goals; and they can only be 
achieved, we think, in the way CALFED is trying to do it, by 
bringing together all of the parties and thinking about the 
alternatives.
    And the Trinity River came up this morning. And I realize 
no decision has been made about the Trinity River and 
reallocations of water, but it's an interesting issue. Because 
the assumption I think of some of the Committee members has 
been that it's a win-lose situation. You take water out of the 
Trinity--you put water back into the Trinity River and somebody 
downstream in the Sacramento River is going to lose.
    And I would like to suggest that, in fact, there might be 
another way to think about that. To give you an example, if you 
look at the Mono Lake situation, the decision was made, legally 
to return water to the ecosystem. That meant many people 
believed you lose water in Los Angeles. But the truth of it is 
that when you get together with the users in Los Angeles and 
you think about ways of meeting the ecosystem needs required by 
law, without losing water for users or without losing what the 
water provides, they were able to figure out ways of increasing 
the efficiency of water use and providing the same level of 
services.
    So it was not a win-lose situation; it was a win-win 
situation. And there are a lot of those. And I think in the 
agricultural area in particular there are lot of them. I think 
that's what we have to look for.
    Mr. Dooley. And I think you're right, and I think we're 
seeing some evidence of that to some extent. It's just--but 
just even like in a year such as this where we've had 120 
percent of rainfall in the--you know, the northern California 
and, you know, the Westlands water district that I represent is 
at 70 percent of allocation. Their concern and, I guess, 
willingness to accept that, you know, we--even with the Trinity 
decision and other decisions that take more water out of the 
system, you know, they don't have a whole lot of confidence 
that I guess that this thing can be, you know--that that can be 
replaced. But I think you're right about the process in terms 
of that's the best way to deal with it is in its totality.
    Dr. Gleick. I also don't dispute your point. In a very dry 
year, in which--I mean, California has dry years. It's a 
regular part of our system. Not every user is going to get all 
of the water they might demand. And that's always been true, 
and it's going to be true in the future. And the question is, 
how do you reallocate during dry years to meet the needs you 
really want? And there are economic ways of doing that, and 
there are regulatory ways of doing that, and it's got to be in 
a balanced, discussed approach.
    Mr. Doolittle. Mr. Miller is recognized.
    Mr. Miller. Thank you.
    Dr. Gleick, let me follow up on your first discussion on 
the Trinity River. Would you care to expand on why you think 
this might not be a win-lose situation?
    Dr. Gleick. I raise that only as an idea to think about. 
Obviously, no decision has been made about how much water might 
have to be reallocated into the Trinity or where that water is 
going to come from. But downstream in the Sacramento River 
there are many users, urban and agriculture users; and there is 
enormous potential, we believe, for improving the efficiency 
with which those users use their water. That may reduce their 
long-term demand. I think the potential is quite significant to 
reduce long-term demand and still meet the needs with less 
water.
    Now, if that's part of the decision, you decide how much 
water can be reallocated for ecosystem needs at the same time 
you're figuring out where that water is coming from, I think 
that's what you have to do. But I can't speak specifically to--
--
    Mr. Miller. I just--I didn't know if you had something 
particular in mind. I agree with you that there is a lot of 
alternatives to be explored in terms of whether or not people 
end up actually using, as you say, the purposes for which the 
water was delivered. There's other ways to do it.
    Let me take you back to your discussion some months ago on 
the question of Bulletin 160. What has been done to address 
some of the concerns that you raised with respect to this 
demand that would be driven by this bulletin and the 
assumptions that were made in the bulletin?
    Dr. Gleick. Umm----
    Mr. Miller. When I say what has been done, I'm asking about 
in the CALFED process.
    Dr. Gleick. Let me address two pieces. The comments we made 
and continue to make about Bulletin 160 to the Department of 
Water Resources addressed the assumptions and the methods and 
the data they used to project future demand in California. And 
our conclusion then and today was that their assumptions about 
future demand are very much wrong, that their methods are 
wrong, their data are wrong, their assumptions are wrong. The 
final Bulletin 160-98 did not adequately, in my opinion, 
address the errors in the draft.
    Now, CALFED in its first draft--we were asked by the Bureau 
of Reclamation to do an independent assessment of their water 
use efficiency numbers. In the first round, they pretty much 
assumed the same things Bulletin 160 assumed. They adopted the 
assumptions, they adopted the data. I would have to say even in 
their first draft they did somewhat of a better job than did 
the Department of Water Resources.
    And, in addition, after receiving our comments and other 
people's comments, I think the CALFED staff has made a very 
serious effort to understand the nature of the problems in 
Bulletin 160 and to try and correct them.
    My feeling, based on what I have seen of the latest 
version, is that they have still not adequately completely 
addressed this problem of projecting future demand, with the 
result being that I think they are still overestimating 2020 
demand in California. But they are technical issues that I find 
them open to discuss. I find them open to trying to resolve 
some of these issues.
    Mr. Miller. I raise that because in conversations after 
your initial criticisms and concerns with the Bulletin and its 
estimates of demand, with the number of people--because I think 
that it's absolutely crucial that this point get cleared up. 
I'm not suggesting how or what the conclusion is. But if at 
some point we envision ourselves going to the taxpayers and 
asking for very substantial amounts of money, and this is still 
an ambiguity or certainly the criticism remain credible, that 
we're sizing the system for demand that is not there. I think 
you are going to have a lot of difficulty in that measure if 
you then have opponents to that measure who can use that 
argument. Because usually those kinds of questions which are 
deeply imbedded with economic decisions don't do well when 
they're raised inside the debate on a bond issue or such an 
effort.
    So, you know, I don't know whether people want to hold on 
to these assumptions or you indicate that you think there's 
some honest review going on here, and I find that very 
encouraging. Because I think if that doesn't happen, this can 
be fatal to what some people envision will be part of this 
process, which is a substantial bond issue to fund these 
projects. But if the basis of which those decisions are made is 
flawed, I suspect you--it would not take a lot of effort to 
discourage voters from voting for that bond issue. So I'm glad 
to hear that you suggest that there is some correction and some 
ongoing discussion about these matters but apparently not yet 
completely resolved.
    Dr. Gleick. Ultimately, the California water plan is the 
Bulletin 160 process. And I think that process is broken, and I 
think it needs to be fixed.
    There was a meeting yesterday at the Department in 
Sacramento on Bulletin 160, and the next one which will be in 
2003. I don't think we can believe the current Bulletin 160-98 
demand productions. I think they're not useful for policy 
making. And I agree entirely with your point if we are planning 
for a demand that either isn't going to materialize or doesn't 
have to materialize with relatively inexpensive, relatively 
simple measures, we could be making very expensive mistakes.
    Mr. Miller. Well, I just notice that Mr. Gartrell's 
testimony in the next panel, you know he talks about the fact 
that in Contra Costa, in the congressional district I 
represent, the water district, their service area has declined 
almost 15 percent since 1990, despite a substantial population 
growth, is--currently is about 25,000 acre feet annually below 
the level it would have been if he had just taken 1990 and run 
it out. You know--and I don't know what's going on in other 
water districts or other users of any kind. But, again, you 
know, before you're able to go to the taxpayers and ask for 
hard dollars, I think you better have the justifications for 
that based upon solid and correct evidence.
    Dr. Gleick. That trend is not unique. In my testimony, I 
provide data for Los Angeles, for San Diego, the East Bay 
Municipal Utilities, every water district showing continued 
population growth and leveling off of total demand and a 
decline in per capita water use.
    Mr. Miller. I some time ago met with a group of bankers in 
San Francisco to talk about water in California and about the 
questions of long-term contracts, water marketing and pricing 
and all the rest of it. And after long, long discussions their 
conclusion was that if, you know, if you had a real water 
market in the State you'd probably have a substantial surplus 
of water and not terribly high-priced water, not the estimates 
that you see that are as wild as they suggested.
    I don't know if they're right or not, but their economic 
model suggested to them that there were a lot of ways to manage 
demand and deal with it. And the question of how far out they 
would be driven that aren't consistent with just this, you 
know, glide path that suggests that you're never really going 
to be able to catch up to it with supply was sort of the story 
we first heard about energy.
    When I first came on this Committee, if we didn't build a 
thousand nuclear power plants the country was going to go 
black. All the lights would be turned out. That went on here 
for almost a decade. Obviously, we find the story of 
electricity is entirely different than that.
    Thank you very much for your help.
    And, Mr. Kaniewski, let me say Max would be proud of you 
today. It was sterling testimony.
    Mr. Kaniewski. Thank you.
    Mr. Miller. You're welcome. Thank you.
    Mr. Doolittle. Thank you.
    Mr. McCormick, after I concluded it was pointed out to me 
that you were about to answer my question, I guess, which was 
where is CALFED falling down or where could it improve. Did you 
want to take a stab at that?
    Mr. McCormick. Yeah, thank you very much. Not so much 
falling down but some areas to pay attention to.
    Although a significant amount of money has been awarded for 
the ecosystem restoration program, the process for getting that 
money spent is cumbersome, and I think it hasn't caught up, 
really, with the demand, and it's a consequence of a number of 
agencies trying to manage the process. I think a single 
contracting entity would help enormously. I also----
    Mr. Doolittle. Let me just ask, so you're recommending a 
single contracting entity. How many contracting entities do we 
have now?
    Mr. McCormick. Well, there are the State contracts and 
Federal agencies' contracts and sort of borrowing staff, as it 
were, from those various agencies.
    Mr. Doolittle. Okay. Dr. Gleick, I find your testimony 
interesting and useful in the way you've laid out the 
remarkable strides made with conservation in those examples for 
LA water demand, but, in general, you make that point very 
effectively.
    One thing I have wondered about, we're going increasingly 
towards permanent crops now. Well, I think in the San Joaquin 
Valley--maybe that trend is in the Sacramento Valley. But, in 
any event, there is some trend toward that which I guess may 
use less water than field crops but which demand water every 
year without having the ability to not use it in a given year. 
How do--as you see meeting our water needs, how do you think we 
should address that situation?
    Dr. Gleick. You're right. There is that trend. Figure 2 in 
my written testimony shows that trend. I also agree that that 
trend means some of those crops are going to need water with a 
higher level of reliability.
    Now, I think that's an interesting issue. I think it hasn't 
adequately been addressed, and I think there's a real 
legitimate discussion that needs to happen about how to 
guarantee higher levels of reliability for certain kinds of 
crops. And I don't know whether that's an--economic measures 
are appropriate for that or some sort of regulatory measure, 
which I'm a little reluctant to recommend. I do think it's 
valid.
    California's cropping patterns are still--I mean, the vast 
majority of the acreage is still in grains and field crops, and 
that I think still has enormous potential for--all of the crops 
still have potential for improving the efficiency for which 
they use water. And that--I mean, there are different ways of 
doing that. One is, you reduce the amount of water to grow a 
certain amount of crops or you keep the amount of water 
constant and you grow more crops. The productivity of the farms 
goes up. Those are all relevant issues that need to be 
discussed.
    Mr. Doolittle. So are you of the opinion that the potential 
for further conservation in the urban areas is still 
substantial or do you feel maybe they've just about reached 
their potential to conserve?
    Dr. Gleick. I think they have nowhere near reached their 
potential to conserve. I think the potential in urban areas is 
still enormous. And that includes not just doing what we do 
more efficiently but there's also enormous potential for much 
more widespread use of reclaimed recycled water. There is even, 
in our case, studies, examples of reclaimed water being used 
for agricultural use. And that's a very reliable source of 
supply, that you will get that water in drought years as well 
as wet years. So that's--I think that's an interesting issue 
that is also--I mean, there are examples already under way. I 
think it needs to be more widely looked at.
    Mr. Doolittle. Examples of agricultural reuse?
    Dr. Gleick. Sure. Now, that water tends to be relatively 
more expensive. You want to use it--it's got to be relatively 
close to where it's been reclaimed because you can't move it 
very far. But there are already examples of farms in rural or 
areas near urban areas using reclaimed water.
    Mr. Doolittle. Would you just as a supplement to your 
testimony today, if you have this available, forward that to 
the Committee?
    Dr. Gleick. Sure. In the executive summary of the case 
studies we have, there are brief descriptions. I will leave 
with you the full report which has the detailed case studies as 
well.
    Mr. Doolittle. Great. Thank you.
    Mr. Sprague, did you want to comment?
    Mr. Sprague. Thank you, Mr. Chairman.
    One of the things that we have to keep in mind as we move 
forward with conservation particularly in urban areas, we can 
do much more, but one of the things that is very critical to us 
is water quality. As we get a poor quality water, once you move 
that water through the domestic cycle once, you may not be able 
to have the second use. So the better we can receive as far as 
a source water quality, this is going to give us second uses 
and even third uses of that reclaimed water. So water quality 
plays a very high role in long-term water use efficiency, 
particularly in the areas of conservation in the urban areas.
    Earlier this morning we were talking--the Secretary was 
talking about conjunctive use and groundwater efforts. There 
are a great number of opportunities for conjunctive use of 
groundwater basins. But just in Orange County, we are 
experiencing problems there. In effect, Colorado River water 
that's brought into southern California can't be discharged 
even onto crops, in theory, or onto land because it exceeds the 
basin plan.
    However, we have come up with strategies to overcome some 
of that. So salinity issue as an element of water quality is 
extremely important for success in the area of conservation, 
and I know it's an extreme importance to agriculture. So 
there's a clear partnership there, and I believe it has the 
same impacts on agriculture as it relates to conservation as 
well.
    Mr. Doolittle. Gentlemen, I thank you for your appearance 
before the Committee. The testimony has been very useful. We 
may have further questions. We'll keep the record open to 
receive your responses. And, with that, we'll excuse this 
panel.
    I would just like to announce that, contrary to what I had 
announced previously, apparently we are supposed to have one 
more vote. So I don't know when that is going to happen, but I 
guess we'll just roll on through until it does.
    We'll invite our third and final panel to come forward and 
begin the discussion of CVPIA.
    We welcome the members of our third panel. Let me ask you 
to rise and raise your right hands.
    [Witnesses sworn.]
    Mr. Doolittle. Let the record reflect that each answered in 
the affirmative. And I thank you very much for your patience 
and joining us today for this important hearing where we'll now 
focus more on the Central Valley Improvement Project Act.
    We will begin with our Secretary--oh, Miss Beneke is 
available to answer questions. So we'll begin with Mr. Gregory 
Gartrell. Mr. Gartrell, welcome.

   STATEMENT OF GREGORY GARTRELL, ASSISTANT GENERAL MANAGER, 
        CONTRA COSTA WATER DISTRICT, CONCORD, CALIFORNIA

    Mr. Gartrell. Thank you very much, Chairman Doolittle, 
members of the Committee. It's a pleasure to be here this 
afternoon.
    I'm going to briefly summarize the text that I submitted.
    I'm representing Contra Costa Water District. Contra Costa 
Water District has been a supporter the CVPIA and its goals 
from the beginning. In fact, the District was the first to 
renegotiate its own CVP contract under the CVPIA and has 
already incorporated many of the provisions within its 
contract.
    Contra Costa Water District represents and serves about 
400,000 customers in eastern and central Contra Costa County, 
including 10 major industries. About a third of our demand is 
industrial. We are the largest municipal and industrial CVP 
contractor. We're entirely dependent on the Delta for our water 
supplies and have a long history of a strong commitment to 
water quality and the environment in the Delta.
    I'm going to hit just a few of the issues in my summary. I 
would be happy to answer questions on any of them.
    The first one I would like to touch upon is the contract 
renewal issue. The Contra Costa Water District and other urban 
CVP contractors are very concerned at the moment about the 
shortage provisions that are being envisioned within the PEIS 
for the CVPIA. We are now looking at shortages up to 50 percent 
for urban areas.
    Previously, the maximum shortage level was down to a 75 
percent supply under the urban reliability paper of the 
Garamendi process. Our current contract calls for an 85 percent 
supply except under the most extreme droughts, 75 percent. The 
50 percent supply is simply well below the limits that are 
needed to sustain health and safety and would result in major 
economic disruption. For example, in our district, 30 percent 
of the supply--approximately 30 percent of our supply goes to 
industrial use, or, of our current demand of 120,000 acre feet, 
about almost 40,000 acre feet.
    A 50 percent cutback down to 60,000 acre feet would result 
in a choice of either cutting off the major industries--and 
these include refineries for Shell and Tosco and others, Dow 
Chemical, U.S. Steel-Posco, or putting the full burden on our 
other customers, the municipal customers, which would leave 
them, out of a normal demand of about 80,000 acre feet, down to 
about 20,000 acre feet, well below that needed for a simple 
toilet flushing and usual health and safety measures that are 
needed.
    So we are very concerned about this coming forward at this 
late time in the PEIS process. We think they are not going to 
leave that just with that. We believe there are solutions that 
need to be worked out with Reclamation, and the Department of 
the Interior.
    There are a number of assumptions going into these studies 
that are being made that have not been well examined. I think a 
number of those need reconsideration. But, most importantly, I 
think the process of the CVPIA needs to be tied closely to 
CALFED to address the impacts that are coming out. This is 
going to be a theme throughout my discussion, that it is, I 
think, very important for both the CVPIA and CALFED to be 
moving together towards a regional solution for the State.
    The second issue is related to (b)(2), as mentioned 
previously today. This is a very contentious and technically 
difficult issue. The 800,000 acre feet is now embroiled in a 
lawsuit. We are very concerned that this not get into a death 
spiral of lawsuits which could easily affect CALFED and other 
water issues.
    We suggest that the Federal Negotiated Rulemaking Act may 
be one solution to this, the 1990 Act which provides for a 
binding consensus building on which that rule is based. This 
would be an ideal situation, I think, in which to use that Act 
to get stakeholders in the room and work out a solution on the 
accounting for the 800,000 acre feet.
    Another item of concern is tiered pricing, also mentioned 
earlier today. This is one area where one size does not fit 
all. In particular, tiered pricing can be used, if not 
carefully put together, to penalize those who seek to take more 
water in the CVP in wet years, store it and then use that to 
reduce their burden on the CVP in dry years. If you're in a 
situation like ours where Contra Costa is well below our full-
contract amount, by taking more in a wet year and storing it 
you could be end up paying in the higher tiers and end up with 
an overall financial penalty.
    The other problem is the high fixed costs of the CVP. We're 
finding that the more we conserve the higher our rate goes, so 
that the financial benefits of conservation don't accrue at 100 
percent. This is the something that Reclamation and Interior 
are going to have to implement very carefully.
    Finally, with respect to the PEIS and the CVPIA, we all 
know the PEIS is very late. It has still a number of issues to 
resolve with respect to baseline ensuring that impacts are 
fully disclosed, and it is showing some serious impacts that 
are significant with respect to endangered species, in 
particular to winter run. We're very concerned about the 
studies that are showing Shasta levels at very, very low levels 
at the same time agricultural users are getting no water 
supply, urban areas are getting a 50 percent supply. It's not 
clear that that's an implementable solution with respect to 
winter run.
    Probably the single most important thing we have done for 
winter run in raising their numbers from a few hundred a couple 
of years ago into the thousands now has been having a good 
supply of cold water in Shasta. Lowering Shasta to very low 
levels will put that in jeopardy.
    Again, I think the solution here is an integration of these 
issues with CALFED. It was mentioned earlier by Secretary 
Babbitt that they're both moving down--both CALFED and the 
CVPIA are moving in the same direction. Our concern, I guess, 
is it is almost like two big trains moving on parallel tracks. 
You look down the line there, you're not quite sure whether 
those tracks intersect or not. If they do and they are not well 
timed and well coordinated, you're going to have a big 
collision. And we would like to ensure that those trains end up 
on the same track pulling each other along.
    Again, the--for a number of issues with respect to CALFED 
and the CVPIA, related to 404 permits, the ESA, the Anadromous 
Fish Restoration Program--and the general assurances may again 
lend themselves to a discussion and a resolution through the 
Negotiated Rulemaking Act. Other issues certainly will not. But 
I think the focus now should really be put on the Record of 
Decision where all of these issues have the opportunity to come 
together.
    And that concludes the summary of my statement.
    Mr. Doolittle. Thank you.
    [The prepared statement of Mr. Gartrell follows:]
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    Mr. Doolittle. Our next witness is Mr. Barry Nelson.

    STATEMENT OF BARRY NELSON, SENIOR FELLOW, SAVE THE SAN 
      FRANCISCO BAY ASSOCIATION, SAN FRANCISCO, CALIFORNIA

    Mr. Barry Nelson. Thank you, Mr. Chairman, members of the 
Subcommittee. My name is Barry Nelson, and I am a Senior Fellow 
with Save the Bay. I've been active in the CVPIA since its 
inception and also am very active in the CALFED process.
    I would like to summarize a few points in my written 
testimony and then pick up a few threads that we have heard 
earlier today that link CVPIA and CALFED. The CVPIA is a very 
ambitious piece of legislation, and it's certainly--and 
implementing such far-reaching pieces of legislation takes 
time. This Act, however, is taking more time certainly than we 
thought it would. But the CVPIA was passed because it would 
strengthen, we believe, the State's economy and environment. We 
think that's proving to be the case.
    We also think that the CVPIA--that the untold story of the 
CVPIA is that, in some areas, it's generating substantial 
benefits for multiple interests and that many of those benefits 
in particular are for the agricultural community.
    I would like to summarize briefly five points in my written 
testimony, then pick up another point.
    The first is that the CVPIA we believe laid the groundwork 
both for the Bay-Delta Accord and for the CALFED Bay-Delta 
Program. Without the CVPIA, frankly, we don't see how those two 
efforts would have come together, and that together those three 
very important processes really are succeeding in changing the 
way California addresses water and environmental issues and 
manages both of those problems. It's an extremely encouraging 
development.
    The second is that, despite a great deal of contention 
regarding particularly (b)(2) but some other members--some 
other provisions of the CALFED, the CVPIA program, a tremendous 
amount of progress is being made in the CALFED ecosystem, the 
CVPIA--I'm sorry, Ecosystem Restoration Program. And to give 
two examples of that, first, in implementing the CVPIA 
restoration fund we've seen some substantial contributions that 
some other members of earlier panels have discussed. But I 
would like to emphasize here that many of those expenditures 
have benefited far more than the environment. There have been 
substantial beneficiaries in the agricultural community and 
particularly in the power community. So there really have been 
multiple benefits from the CVPIA restoration funds.
    Progress, unfortunately, has been much slower on 
implementing (b)(2), 3406(b)(2), the 800,000 acre foot 
provision. We have finally a week ago started seeing some of 
the (b)(2) water implemented in the Delta for Delta measures. 
We think this is just a start. We think, frankly, that 
Interior's plans to date don't meet the requirements of the law 
or the requirements of the recent Federal court decision in 
Fresno. But we have at least begun implementation now of 
3406(b)(2).
    Third, there are some sections of the CVPIA that were 
originally seen as controversial and were being described as 
theoretical. And some of those areas are still controversial, 
areas such as land retirement and transfers, but what I think 
has changed in the last six and a half years is that many of 
those areas are now being adopted on the ground. There's still 
a policy debate going on, but if you look at what's happening 
on the ground we're seeing that the ideas in the CVPIA are 
being embraced on the ground today.
    Two examples of that: Water transfers. There's been a lot 
of concern from the agricultural community regarding the 
potential impacts of water transfers on agriculture. The flip 
side of that is that the lessons of the six and a half years 
have shown benefits to agriculture from transfers. The Bureau, 
since the CVPIA was passed, has approved 1.57 million acres of 
transfers; and the vast majority of those have been ag water 
districts to ag water districts. And within districts there 
have been many, many additional examples of those kinds of 
transfers.
    The other example is land retirement, where there's now an 
ambitious land retirement program within agriculture itself.
    I see that my yellow light is flashing. I'll move on to my 
fourth point, and that is the connection between the Trinity 
River and CALFED. What we're seeing there is that it's easy to 
promise environmental benefits from new water facilities, and 
that was done 40 years ago on the Trinity. It's very difficult 
to make those benefits real. We need to look at the lesson of 
the Trinity and make sure we don't make that same mistake again 
with regard to CALFED.
    My fifth point for my testimony is with regard to the role 
of Federal funding. The CVPIA provided water and funding, and a 
lot of that funding--not all of it--but a lot of that funding 
was user dollars, user fees for ecosystem restoration. 
Proposition 204 and Federal funding have brought substantial 
public resources into that debate, and they're critical to 
enable us to keep moving forward, not just for ecosystem 
restoration but water supply as well. And the next step in that 
is for CALFED to integrate those and bring in user fees for the 
non-CVP water users in the State who currently aren't 
contributing to the environmental solutions out there.
    Just very briefly to pick up a thread, Mr. Chairman, that 
some other panelists and you have discussed, and that is the 
questions regarding measures of success, performance 
objectives, specific goals, fiscal accountability in the 
ecosystem program. There's been a lot of discussion of that. I 
think it's an appropriate discussion.
    What I would like to suggest is that we need to have that 
same discussion with regard to CALFED's water supply 
reliability program and that the lessons of the ecosystem 
program are very applicable to water supply. And, frankly, when 
it comes to measurable objectives and so forth, the ecosystem 
program is ahead of water supply reliability. And we think what 
CALFED needs to move towards is not simply a gross measure of 
additional water developed--and I would agree with Peter 
Gleick's comments regarding that--but to measure cost 
effectiveness, real benefits to water users not just in acre 
foot terms but real benefits to water users and compatibility 
with an ecosystem restoration program. We think if we can get 
the same kind of scrutiny for the water supply reliability 
program that we have seen for the ecosystem program, we think 
CALFED can make a tremendous amount of progress.
    And I would like to close with just one general 
observation, and that is that the premise of the CVPIA was that 
the CVP has been in place for 50 years and that since 
California's water needs have changed dramatically during that 
time that the operating rules of the CVP needed to change.
    I think what we've seen in the last six and a half years, 
not just with CVPIA but Bay-Delta Accord and CALFED as well, is 
that that premise is absolutely true and we are changing the 
way we do business in California.
    Thank you, Mr. Chairman.
    Mr. Doolittle. Thank you.
    [The prepared statement of Mr. Nelson follows:]
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    Mr. Doolittle. Our next witness will be the Honorable Merv 
George, Jr.
    Mr. George.

  STATEMENT OF HON. MERV GEORGE, JR., CHAIRMAN, HOOPA TRIBE, 
                       HOOPA, CALIFORNIA

    Mr. George. Thank you, Mr. Chairman and members of the 
Subcommittee. On behalf of the entire Hoopa Valley Indian 
Reservation it's a pleasure to be here before you today.
    As it was stated, my name is Merv George, Jr.; and I am the 
tribal chairman of the Hoopa Valley Tribe; and I am prepared to 
testify on the Trinity River.
    The Hupa people have occupied the Hoopa Valley, the site of 
our reservation, since time immemorial. The Trinity River, 
which traverses the Hoopa Valley, is the lifeblood of our 
culture, religion and economy. Everything we are and do as a 
people is oriented to the Trinity River.
    My testimony today is intended also to give voice to our 
friends and neighboring communities who more often than not 
have not--or who have been overlooked in the great debates over 
California's priceless water resources.
    The Trinity River is the only source of imported water to 
the Central Valley. In 1955, Congress authorized construction 
of the Trinity River Division of the Central Valley Project. In 
order to protect the fish and wildlife of the Trinity River 
Basin, Congress specifically limited the Secretary's discretion 
to divert water to the Central Valley by requiring that in-
basin flows needed for the Trinity River take precedence over 
uses to be served in the Central Valley.
    Between 1964 and 1996, the Bureau of Reclamation diverted 
31,780,400 acre feet of Trinity water to the Central Valley 
with devastating effects on Trinity River fish and wildlife. 
The river we had known for thousands of years transformed 
itself in less than a decade following completion of the 
Trinity River Division. Gone were its broad, braided channel 
with well-washed gravels for spawning. Gone were its pools, 
shallows, and shade for juvenile rearing. Gone were the 
velocity, volume and frequency of flows essential to fish 
migration and to maintain the dynamic equilibrium of a living 
river and its riparian ecology. And, more importantly, gone 
also are the days when my people could fish as they always have 
without the threat of their harvest being reduced because of an 
endangered species listing.
    None of this was intended or foreseen by project planners. 
The politicians promised that not a bucket of water needed in 
the Trinity River basin would be exported to the Central 
Valley. Others testified of their expectation that construction 
of the Trinity River Division would actually improve the 
Trinity River fishery and that the hatchery built at the base 
of Lewiston Dam would fully mitigate the loss of upstream 
habitat.
    Today, most Trinity River fish populations are either 
listed, proposed for listing, or under status review for 
listing under the Endangered Species Act. For example, the 
Trinity River coho salmon was listed as a threatened species in 
May of 1997. The Trinity River steelhead is a candidate for 
listing, and the Trinity River chinook is under status for 
review. From my tribe's perspective, extinction of fish species 
or their mere recovery to some minimum population is not an 
option.
    The Hoopa Valley tribe has worked closely with the 
Department of the Interior on the Trinity River flow evaluation 
report and associated recommendations by co-authoring them with 
the Fish and Wildlife Service. Please note our appreciation for 
the cooperation and consultation of the California Department 
of Fish and Game, the geological survey, the Bureau of 
Reclamation and the National Marine Fisheries Service in the 
preparation of the report and recommendations.
    We are pleased that the report and recommendations have 
been completed as required by the CVPIA. We are informed that 
the report and recommendations will be published by the 
Department next week. The report and recommendations provide 
for an increase of releases to the Trinity River from the 
Trinity River Division. The increased releases would bring the 
diversions from the Trinity River to the Central Valley in line 
with the volumes of water originally contemplated for use in 
the Central Valley by the Bureau of Reclamation in its 1952 
ultimate plan report and by the committees of Congress when the 
project was authorized in 1955.
    It is important to note that the report and recommendations 
still provide for the lion's share of Trinity River to be 
diverted to the Central Valley. The law of the Trinity River is 
clear that the current condition of the Trinity River fishery 
was never intended to occur. The best available science we have 
incorporated into the report and recommendations demonstrates 
that the condition need not continue.
    Finally, we urge you to support appropriation of sufficient 
funding to meet the restoration goals as well as the Federal 
trust responsibilities to the Indian reserve rights in the 
Trinity River fishery.
    In conclusion, every Interior Secretary and every 
Congressman from the first district, irrespective of party 
affiliation, has recognized the need to fulfill the original 
promise of the Trinity River Division for the north coast. I 
ask that from this day forward the north coast no longer be 
considered the forgotten region of California but be remembered 
as the home of a just people who shared their river without 
sacrifice.
    Thank you. And I will answer any questions when the time is 
appropriate.
    Mr. Doolittle. Thank you.
    [The prepared statement of Mr. George follows:]

     Statement of Mervin George, Jr., Chairman, Hoopa Valley Tribe

    Chairman Doolittle and members of the Subcommittee, on 
behalf of the Hoopa Valley Tribe, thank you for inviting me to 
participate in today's hearing. You have asked that my 
testimony address the implementation of the Central Valley 
Project Improvement Act (Public Law 102-575 Title XXXIV 
(October 30, 1992) (CVPIA), particularly with regard to the 
Trinity River provision in subsection 3406(b)(23).
    The Trinity River rises in the Trinity Alps region of 
California's Coast Range and flows to its confluence with the 
Klamath River and then to the Pacific Ocean. For the last 60 
miles of their course to the sea, the waters of the Trinity 
River traverse the Hoopa Valley and Yurok Indian reservations. 
The Hupa people have occupied the Hoopa Valley, the site of our 
reservation, since time immemorial; scientists have been able 
to date our presence back as far as 10,000 years. The Trinity 
River is the life blood of our culture, religion and economy. 
Everything we are and do as a people is oriented to the Trinity 
River.
    In the last 150 years, California's population and economy 
have grown and expanded into the North Coast region. Today, the 
Trinity River remains not only essentially important to the 
Hoopa Valley, Yurok, and Karuk Indian Tribes, but also to the 
commercial and sport fishing industry, recreation and tourism 
businesses, and the towns and cities throughout Humboldt, 
Trinity and Del Norte Counties. So while I am here today 
officially on behalf of the Hoopa Valley Tribe, my testimony is 
intended also to give voice to our friends and neighboring 
communities who more often than not have been overlooked in the 
great debates over California's priceless water resources.
    The Trinity River is the only source of imported water to 
the Central Valley. In 1955 Congress authorized construction of 
the Trinity River Division of the Central Valley Project (CVP). 
In order to protect the fish and wildlife of the Trinity River 
basin, Congress specifically limited the Secretary's discretion 
to divert water to the Central Valley by requiring that in-
basin flows needed for the Trinity River take precedence over 
uses to be served in the Central Valley. This special ``area of 
origin'' protection for the Trinity River in Federal law is in 
addition to state county of origin restrictions on export of 
Trinity River water to the Central Valley.
    The Hoopa Valley and Yurok Tribes have reserved rights in 
the Trinity River fishery that have been affirmed by the 
Department of the Interior and the Department of Commerce, and 
upheld by the courts. In addition, the CVPIA Trinity River 
provision includes an express declaration of the Federal trust 
responsibilities to protect the fishery resources of the Hoopa 
Valley Tribe. It is a well-established principle of Federal 
Indian law that secretarial discretion is limited by trust 
responsibilities for Indian resources. The trust responsibility 
operates in this case to reinforce the Secretary's obligation 
to operate the Trinity River Division for the benefit of fish 
and wildlife in the Trinity River.
    Between 1964 and 1996 the Bureau of Reclamation diverted 
31,780,400 acre-feet of Trinity River water to the Central 
Valley with devastating effects on Trinity River fish and 
wildlife. The river we had known for thousands of years 
transformed itself in less than a decade following completion 
of the Trinity River Division. Gone were its broad, braided 
channel with well-washed gravels for spawning. Gone were its 
pools, shallows, and shade for juvenile rearing. Gone were the 
velocity, volume, and frequency of flows essential to fish 
migration and to maintain the dynamic equilibrium of a living 
river and its riparian ecology. Upstream of the project, the 
destruction was absolute: Fish passage to 109 river miles of 
prime fish habitat was barred forever.
    None of this was intended or foreseen by project planners. 
The politicians promised that not a bucket of water needed in 
the Trinity River basin would be exported to the Central 
Valley. Others testified of their expectation that construction 
of the Trinity River Division would actually improve the 
Trinity River fishery and that the hatchery built at the base 
of Lewiston Dam would fully mitigate the loss of upstream 
habitat.
    The construction and operation of the Trinity River 
Division have devastated the ecology of the Trinity River, as 
well as the customs, traditions, and culture of the Hoopa 
Valley, Yurok, and Karuk Tribes, and the economies of the North 
Coast communities. Most Trinity River fish populations are 
either listed, proposed for listing or under status review for 
listing under the Endangered Species Act. For example, the 
Trinity River coho salmon was listed as a threatened species in 
May, 1997; the Trinity River steelhead is a candidate for 
listing; and the Trinity River chinook is under status review. 
From my Tribe's perspective, extinction of fish species, or 
their mere recovery to some minimum population is not an 
option.
    By the end of the 1970s the adverse effects on the fishery 
were clear and Congress and the Secretary of the Interior took 
the first steps toward fulfilling the promise--and the legal 
mandate--that no harm would come to the Trinity River fish and 
wildlife from construction of the Trinity River Division:

        1979--The Interior Department Solicitor confirms the precedence 
        of water for Trinity River fish and wildlife over diversions to 
        the Central Valley under Federal law.
        1980--The Trinity River Stream Rectification Act is enacted to 
        address sediment accumulation in the absence of flushing flows. 
        Public Law 96-335.
        1981--Interior Department Secretary Andrus directs increased 
        releases to the Trinity River from the Trinity River Division 
        in the amount of 340,000 acre-feet annually in years of normal 
        water supply. (This amount, although an increase, represents 
        the third lowest volume on record for the Trinity River at 
        Lewiston which dates from 1912; in effect, the water available 
        under severe drought conditions). The Secretary also orders a 
        long term-study to assess the water requirements of the 
        fishery.
        1984--The Trinity River Restoration Act (Public Law 98-541) is 
        enacted which establishes restoration goals to ensure 
        preservation and propagation of fish and wildlife in order to 
        restore them to, and maintain them at, ``levels approximating 
        those which existed immediately before the start of 
        construction'' of the Trinity River Division.
        1991--Interior Secretary Lujan directs that not less than 
        340,000 acre-feet of water be released to the Trinity River for 
        fishery purposes in all water year types pending the conclusion 
        of the long-term study originally ordered by Secretary Andrus.
        1992--The CVPIA is enacted, including the Trinity River 
        provision (section 3406(b)(23)) which: confirms the 
        administrative decision to release not less than 340,000 acre-
        feet annually pending completion of the study; mandates the 
        completion of the study based on the best available scientific 
        information; requires development of recommendations for 
        permanent in stream fishery releases; if the Secretary and the 
        Hoopa Valley Tribe concur in the recommendations, requires that 
        they be implemented accordingly; and makes the costs of 
        implementation reimbursable as operation and maintenance 
        expenditures pursuant to existing law.
        1996--The Trinity River Restoration Act is amended and extended 
        (Public Law 104-143). The restoration goal is revised 
        explicitly to achieve ````mitigation of fish habitat loss above 
        Lewiston Dam while not impairing efforts to restore and 
        maintain naturally reproducing anadromous fish stocks within 
        the basin.'' The Act also adopts the goal of the ``resumption 
        of commercial, including ocean harvest, and recreational 
        fishing activities.'' In addition, funding requests are 
        authorized for the purpose of monitoring, evaluating and 
        maintaining program investments in fish and wildlife 
        populations.
    The Hoopa Valley Tribe has worked closely with the Department of 
the Interior on the Trinity River Flow Evaluation Report and associated 
recommendations by coauthoring them with the Fish and Wildlife Service. 
Please note our grateful appreciation for the cooperation and 
consultation of the California Department of Fish and Game, the 
Geological Survey, the Bureau of Reclamation, and the National Marine 
Fisheries Service in the preparation of the Report and recommendations. 
We are pleased that the Report and recommendations have been completed 
as required by the CVPIA. We are informed that the Report and 
recommendations will be published by the Department next week. 
Thereafter the Report and recommendations will be forwarded to the 
Resources Committee and the Senate Indian Affairs and Energy and 
Natural Resources Committees as required by the CVPIA.
    The Report and recommendations provide for an increase of releases 
to the Trinity River from the Trinity River Division. The increased 
releases would bring the diversions from the Trinity River to the 
Central Valley in line with the volumes of water originally 
contemplated for use in the Central Valley by the Bureau of Reclamation 
in its 1952 Ultimate Plan Report and by the Committees of Congress when 
the project was authorized in 1955. It is important to note that the 
Report and recommendations still provide for the lion's share of 
Trinity River water to be diverted to the Central Valley.
    The law is clear that the current condition of the Trinity River 
fishery was never intended to occur. The best available science we have 
incorporated into the Report and recommendations demonstrates that that 
condition need not persist.
    Finally, we are committed to ensuring that the Administration 
requests and the Congress appropriates sufficient funds to meet the 
mandates in existing law for restoration of the Trinity River, as well 
as for the future implementation of the recommendations in the Report. 
Sufficient funding is essential to meet the restoration goals, as well 
as the Federal trust responsibilities to the Indian reserved rights in 
the Trinity River fishery.
    In conclusion, every Interior Secretary and every congressman from 
the first district, irrespective of party affiliation, has recognized 
the need to fulfill the original promise of the Trinity River Division 
for the North Coast. I ask that from this day forward the North Coast 
no longer be considered the Forgotten Region of California but be 
remembered as the home of a just people who shared their river without 
sacrificing it.
    This concludes my testimony. I would be pleased to address any 
questions you Committee members may have for me.

    Mr. Doolittle. At this point, we're going to recess the 
Committee. We'll go vote and come back as quickly as possible. 
It's just one vote, so it shouldn't be more than 15 minutes. 
Maybe it will be less.
    Mr. Dooley is going to have to leave to catch a plane, so 
I'm going to let him ask his question now.
    Mr. Dooley. And this goes Miss Beneke as well as Mr. 
Nelson. Mr. Gartrell might want to comment.
    On the completion of the PEIS, which I think both of these 
individuals representing urban and agricultural districts have 
some concerns about and about its impact, and we have heard 
some of the modeling and some of the concerns about whether or 
not we have critically dry years or even just a little bit 
below normal dry years, what it does in terms of water 
deliveries, you know, are concerning--and also this issue of 
the tiered pricing, which I talked to the Secretary and you 
were there listening to that, in terms of this basis in 
negotiation, does the Department, in fact, you know, feel 
compelled to at least engage in a dialogue with some of the 
contractors prior to engaging in a negotiation process on some 
of these issues?
    Mrs. Beneke. Let me, first off, start by addressing the 
PEIS. We're on a track to have a supplemental draft document 
released, I believe, next month, or at least early this summer. 
There will be an opportunity for the public to review that 
document, and we are on a track to go final with the document 
this fall with the record of decision.
    I would like to remind the Subcommittee and the 
stakeholders, if I could, that this is a NEPA document and, as 
such, it displays a full range of alternatives, bookends, if 
you will, and does not necessarily mean that we're going to end 
up at one extreme and or the other. But, of course, under NEPA 
we do look at a full range of alternatives. And I would 
encourage people to keep that in mind as they're looking at our 
modeling numbers and the like.
    Mr. Dooley. Doesn't that in itself make it then more 
difficult to enter into the negotiations process if we haven't 
come to a consensus on that?
    Mrs. Beneke. Well, we are on the verge of completing the 
basis of negotiation for the long-term contracts. We have had a 
scoping process where there was public input as part of our 
NEPA process on this. And we also, as I understand it, have 
been engaged in informal discussions with members of the water 
user community and also stakeholders with respect to the basis 
of negotiation.
    Mr. Dooley. I guess I'm still a little bit, you know, a 
little bit--I don't quite get it yet. How can you even complete 
a basis of negotiation when the PEIS isn't completed, when 
there's going to be a range of alternatives in there that have 
markedly different impacts and you haven't come to a conclusion 
on which one of these--you know, where we're building some 
consensus on. This looks to me like a very--you know, a moving 
target here. Am I missing something?
    Mrs. Beneke. Well, we feel that we have adequate analysis 
available to be able to craft the basis of negotiation. Now 
there won't be any final determinations on the contracts until 
after the final PEIS is completed and until the record of 
decision is signed.
    Mr. Dooley. Mr. Nelson, you want to comment on that?
    Mr. Barry Nelson. Thank you. Yes, I would. A couple 
thoughts----
    Mr. Dooley. Excuse me. I meant the other Nelson.
    Mr. Barry Nelson. Mr. Dooley, your choice.
    Mr. Dan Nelson. Thank you, cousin Barry.
    The water contractors have a dilemma here. On the one hand, 
we want to get on with the long-term contacting process along 
with the Interior because it's only under long-term contracts 
that we have the certainty that we need and are able to do 
long-term planning and financing. So, on the one hand, we are 
with the Department of Interior to get moving on the long-term 
contract renewals.
    However, they are premised by doing a legitimate PEIS; and 
we are concerned with the PEIS and the drafts that are out 
right now. Just to refresh your memory on the process to date, 
a draft PEIS has been released after which it was acknowledged 
it was based on a fundamentally flawed model that those changes 
to the model have been done. So the question for us is, are 
those significant enough changes, which our sense is that they 
are, that we may want to recirculate that document for a round 
of comments prior to going out to final?
    Again, the dilemma that we have is that delays the long-
term contract renewal process that we would like to get started 
on as well. I guess, fundamentally, we're feeling somewhat 
jammed. We--and we need to make sure that the contract renewal 
process is done right. There's a lot at stake here for all of 
us, and they need to be done right, and they need to be done on 
a proper foundation. And we're not convinced that PEIS is the 
proper foundation yet.
    Mr. Dooley. Mr. Nelson, if you could briefly respond.
    Mr. Barry Nelson. I will briefly respond on the issue of 
projected shortfalls and deliveries and on the issue of tiered 
pricing.
    On the first issue, I would like to remind folks here that 
shortages began to be seen during the 1987 to 1992 drought 
before the CVPIA was passed. The CVP is an over-subscribed 
system, and coming to terms with that is a painful process. 
Yes, there has been some reallocation to the environment, but 
the overallocation problem is much bigger than that. That's why 
we think it makes sense to look beyond CVP contract deliveries 
solely as strategies to provide the water users with the water 
supply benefits that they need.
    The environmental community is taking that very seriously. 
We have prepared a blueprint regarding water supply reliability 
for urban and agriculture that I have provided to the 
Subcommittee staff. And I would like to emphasize here that we 
think the only way CALFED will deliver an ambitious ecosystem 
restoration program is if it can deliver improved water supply 
reliability for users.
    Finally, very briefly, with regard to tier pricing, we 
think that more realistic pricing sends the right signals to 
encourage conservation, encourage efficient water use. We're 
very supportive of conjunctive use programs that's endorsed in 
environmental community's blueprint. We don't see tiered 
pricing as a big obstacle to those programs, but we're very 
eager to sit down and spend more time rolling our sleeves up 
and making those programs work.
    Mr. Dooley. Thank you.
    Mr. Doolittle. Okay. The Committee will recess and be back 
shortly.
    [Recess.]
    Mr. Doolittle. The Subcommittee will reconvene. Mr. Nelson, 
last but certainly not least.

STATEMENT OF DAN NELSON, EXECUTIVE DIRECTOR, SAN LUIS AND DELTA 
         MENDOTA WATER AUTHORITY, LOS BANOS, CALIFORNIA

    Mr. Daniel Nelson. Thank you, Mr. Chairman, and members of 
the Committee for inviting me to appear before you today. I 
would let the record show that I am the first volunteer for the 
Scandinavian fish ladder study. I look forward to working with 
the Chairman on that.
    I am the executive director of the San Luis & Delta-Mendota 
Water Authority, a joint powers authority comprised of 32 
member agencies with CVP contracts. Our service on the west 
side of the San Joaquin Valley covers about 1.1 million acres 
of the world's most productive and efficiently operated 
farmland, approximately 200,000 acres of prime wetland habitat, 
and serves over 600,000 urban users including the high-tech 
industries of the Silicon Valley.
    As you know, we have many concerns with the CVPIA, not with 
its goals, but with some of the provisions and the way that 
they are being implemented. Interior's approach to carrying out 
the CVPIA is flawed in three ways. First, it seeks to solve the 
Central Valley's many environmental problems at the expense of 
one group of water users. Second, the Department is 
implementing the law in isolation from the larger CALFED 
program. And third, the Department ignores the flexibility 
built into CVPIA to allow the law's environmental goals to be 
met in a way that minimizes adverse impacts on water users.
    The effects of this approach can be seen in our water 
supply this year. We currently have a 70 percent allocation to 
our Agricultural Service contractors and this is in the fifth 
wet year in a row. In fact, it's the fifth year of the 5 
wettest years on record. The CVPIA focuses exclusively on a 
small group of CVP contractors mainly in our area who use only 
10 percent of the water diverted from the Bay-Delta. Let me say 
that again to emphasize the point. The Agricultural Service 
contractors in our area have contracts for about 1.8 million 
acre-feet. Those are the folks that are taking on the lion's 
share of the water supply of CVPIA. The total diversions of the 
San Joaquin Sacramento River System Bay-Delta are over 17 
million acre-feet. And so again, the lion's share of the 
impacts are born by 1.8 million acre-feet of those water users. 
These contractors have been reduced to an average supply of 
about 65 to 70 percent of our contractual entitlement. No other 
water user community has had to deal with a sustained cutback 
of this magnitude.
    I would like to describe some of the changes in our area 
over the last decade which have been more widespread and 
substantial than I think the authors of the CVPIA ever dreamed 
possible. Dramatic increases in water prices, widespread 
improvements in irrigation efficiency, crop shifts to higher 
value crops and perennials, substantial reductions in drainage 
discharges and land retirement. All of these changes advocated 
by the environmental community are well underway in our area. 
Water rates in our area have increased tenfold in the last 
decade. These increases, coupled with the chronic shortage of 
water in our area, produce significant shifts in irrigation 
practices and cropping patterns. Our farmers are making major 
capital investments in high-tech irrigation technology and 
perennial plantings.
    In Westlands, for example, investments in drip-and-trickle 
systems has grown eightfold between '85 and '97, and permanent 
plantings of tree and vine acreage have more than doubled. We 
have also made dramatic progress in drainage management over 
the last few years.
    In 1996 we formed the regional drainage entity to implement 
a drainage management plan called the Grassland Bypass Project. 
Through this project, drainage water has been removed from 93 
miles of wildlife refuge conveyance channels, selenium load 
discharges have been reduced by 44 percent below water year 
1996 levels, and average selenium concentrations and salt 
slough have been reduced from 16 parts per billion to water 
quality objective of 2 parts per billion in 28 out of the last 
29 months.
    All of these changes have helped our farmers cope with the 
restricted water supply and help meet the CVPIA's environmental 
goals. But the trend toward permanent crops, combined with the 
high capital and operating cost our farmers have incurred to 
use new irrigation technology actually increases their 
dependence on an adequate water supply.
    I'm afraid the danger of this dependence has been masked by 
the string of wet years we have experienced over the last 
decade. Even in these years we have only received a full supply 
in one year. That's over the last 5 years since we signed the 
accord. We were able to stretch our supplies during this wet 
period with some water purchases, but only at a cost of 50 to 
100 percent higher than our average costs, and these purchases 
are nonsustainable as demand increases.
    In conclusion, our farmers have stepped up to the 
challenges imposed by the higher prices and reduced supplies 
resulting from the CVPIA. But they are on the edge now and are 
at the limit of what they can do in response to these 
pressures. They will go over the edge as soon as we once again 
begin into normal weather patterns. We do not believe the 
situation was the intent of the CVPIA but it's how the law is 
currently being administered.
    There is, in fact, a great deal of discretion in how the 
CVPIA can be interpreted and administered. Rather than trying 
to maximize the environmental gains through the CVPIA alone, 
Interior should be working with CALFED to help accomplish the 
CVPIA's environmental goals in a manner that reduces the 
economic burdens it has placed on one relatively small group of 
water users. In the long run, this will provide a far stronger, 
more stable program of environmental protection.
    CALFED can build on CVPIA in three key areas:
          Number one, it can provide financial assistance for 
        on-farm and district-level water management strategies 
        to help mitigate and cope with the supply impacts of 
        the CVPIA.

          Number two, it can improve the flexibility of the 
        system through an environmental water account which can 
        provide increased protections and increased supplies 
        through operational change. This is as opposed to a 
        regulatory process that just simply reallocates this 
        water.
          Number three, it can develop new water, increase the 
        size of the pie through surface and groundwater 
        storage, premised on the sharing of water between 
        environmental and water needs.
    In closing, I would also like to add my support for the 
Federal funding. Again, as the dust settles on the 
implementation of CALFED and the integration of some of the 
CVPIA measures into CALFED, the funding is going to be very 
critical and we are in support of the current efforts for that 
funding.
    Thank you, Mr. Chairman and I'm available for questions.
    Mr. Doolittle. Thank you.
    [The prepared statement of Mr. Daniel Nelson follows:]
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    Mr. Doolittle. Mr. Gartrell, I don't think in the years I 
have been sitting here as chairman I have ever heard--I don't 
think that I have ever heard much criticism at all, especially 
from the urban water users, of the future for water in terms of 
the cutbacks. You have graphically portrayed that today. You do 
know, Mr. Dan Nelson, I assume, right?
    Mr. Gartrell. Yes.
    Mr. Doolittle. You two ought to get together. You both have 
sort of the two sides of the coin, it sounds like.
    Mr. Gartrell. We worked quite a bit together. We worked 
very hard on the Bay-Delta Accord, all three of us, the Nelson 
brothers and myself.
    Mr. Doolittle. Well, if even urban supplies are being faced 
with 50 percent cutbacks, then what is your position on 
storage?
    Mr. Gartrell. Our district believes that that is probably 
going to be an essential component coming out of the CALFED 
process. I don't think anybody is going to take a position now 
exactly which element is going to come out on top. But 
certainly there is, I think, going to be a necessity for 
storage, whether there is conjunctive use or new offstream 
storage. While we are doing a lot of conservation and will be 
continuing to be doing more conservation and more reclamation, 
that does not get you through a dry period. You need to do 
something with the water that you save. And for both the 
environment and for water supply reliability, I think storage 
is going to be important.
    Mr. Doolittle. Mr. Nelson, you indicated you had--well, Mr. 
Barry Nelson, that you had a plan for how to increase water 
reliability. Could you just summarize for me what your thoughts 
are in that regard?
    Mr. Barry Nelson. Briefly, I would be happy to. As I 
mentioned, we provided your staff with a copy of that 
blueprint, I think the most detailed water supply reliability 
comments CALFED has received from any of the stakeholder 
groups. We recommend a number of different tools. We don't give 
a simple prescription for any one of these tools because we 
think they all could be implemented in different ways. There is 
a laundry list of tools increasingly, we are realizing, that we 
need to select from to provide reliability. It's not just 
storage, although I will get to that at the end. It's also 
conservation programs, agriculture and urban water reclamation 
programs, water transfer programs.
    There has been a lot of conversation about and controversy 
about land fallowing, but permanent land retirement has a place 
that makes a lot of sense. We are also seeing land fallowing 
arrangements within agriculture that are happening voluntarily 
with no outside planning that we think represent sound planning 
that is happening right now from agriculture. There is a broad 
range of strategies.
    I would like to close, however, by emphasizing one of 
those; that is, the rule of improved groundwater management. We 
built the CVP in substantial part because we said it was going 
to solve our groundwater problems. It didn't. We then built a 
State water project to solve our groundwater problems. It 
didn't. We are still now in some parts of the State seeing 
significant groundwater concerns. We as a State have never 
wrestled with the question of groundwater regulation as most 
western States, almost all of the western States have. We are 
very skeptical of claims that we can either solve our 
groundwater problems through additional surface storage or that 
we can solve environmental problems with additional surface 
storage.
    We think that when we look at improved groundwater 
management, both conjunctive use and other kinds of improved 
groundwater management, that there is tremendous potential 
there. Yes, that is storage. We think it offers the potential 
both to be more compatible with an ecosystem restoration 
program and also to be dramatically more cost effective, which 
is going to be very important more when it is time to finance 
the final CALFED package.
    Mr. Doolittle. Mr. George, are there ways to meet the needs 
that you have for the Trinity River that would tend to temper 
the amount of water that must be redirected down the Trinity 
River?
    Mr. George. There absolutely is, Mr. Chairman, and I would 
like to sit down with you at some point and go over some of the 
contents within the flow study. There is some mechanical 
restoration efforts that are also included, aside from just the 
flow decisions that are in the flow study. I think that it 
would be helpful and insightful if we could go over those when 
they are published.
    Mr. Doolittle. Okay. I appreciate that. We will look for 
that opportunity. Well, there is a lot of hope being placed in 
CALFED and it certainly has a good potential. There has been 
real evidence of progress in some areas that have been drawn 
out today, improvements have been made, and things in the 
testimony that have been mentioned so far.
    Mr. Dan Nelson, you heard my exchange with the Secretary 
over your testimony. He is not here, but we can send him the 
record. Do you have any further elaboration on that that you 
want to offer?
    Mr. Daniel Nelson. Yes, I do. In referring to page 5 in the 
third line, I would like to insert the word ``below'' in front 
of ``normal years.'' In editing this, the sentence reads 
``years that are less than below normal years.'' My sense is 
what occurred is the ``less than below'' was looked at as a 
double negative and so the word ``below'' was taken out. But 
below normal years is a year type, and so, the word ``below.''
    However, that does not change the fundamental point, and 
that is that the PEIS and the new modeling that we have 
indicates that we have a broken project, that the Central 
Valley Project in many years cannot even meet its regular 
contractors as well it can't meet its historical water right 
contractors in many years as well. And so I think that the 
fundamental point is still valid. That is, that we need to give 
serious attention about the viability of the Central Valley 
Project as it exists. And we are going to have to figure out 
how it is that we can accomplish some of these environmental 
objectives in a way that is more reasonable to the Central 
Valley Project and in a way that is consistent with the CALFED 
approach.
    Mr. Doolittle. Okay. Mr. Radanovich is recognized for his 
questions.
    Mr. Radanovich. Thank you, Mr. Chairman. In the earlier 
conversation, I was pleased to hear the Secretary talk about 
some discussion, at some point in time, this CALFED process, of 
the consideration of CVPIA and even perhaps the ESA in some of 
the regulatory issues in those bills being merged into and 
discussed through the CALFED process. That's one thing that I 
am looking forward to, especially from the agriculture side of 
the implementation of those laws and how we can streamline 
those. One of those issues is tiered pricing.
    Mr. Nelson, I think that I would like you to comment on 
that. One, if you could elaborate on why CVPIA and tiered 
pricing just doesn't seem to be working.
    Mr. Daniel Nelson. On the first point of the relationship 
with CVPIA and the CALFED process, I was very encouraged by the 
Secretary's comments of trying to implement CVPIA in a 
comprehensive way and taking into consideration the impacts to 
water users.
    Meeting environmental objectives while minimizing impacts. 
That's very encouraging to hear from the Secretary of the 
Interior. Frankly, what we are seeing is a disconnect between 
that policy call from how the laws are actually being 
implemented out in the field. What we are experiencing out in 
the field isn't a collaborative, comprehensive-type approach 
that I think we all envisioned when we signed the accord. As 
you recall, we referred to the accord as a new way of doing 
business in California, a new way of addressing water resources 
in California. Comprehensive, collaborative. We are no longer 
experiencing what it is we envisioned. We are once again back 
to where we were in pre-accord, pre-accord days, and that is 
where individual agencies are implementing individual 
components of very specific statutes in a very narrow way, not 
taking into consideration how it fits into a comprehensive 
plan. My sense is that's the key fundamental problem with the 
implementation of CVPIA, is that each individual component has 
been implemented unilaterally from the other components; and 
then, in addition to that, to take it the next level, CVPIA has 
been implemented unilaterally from the more comprehensive 
discussions that we have had from CALFED. From our perspective, 
that's the key problem of what it is that has occurred and how 
it is that we have implemented CVPIA post-accord. And we can be 
more efficient in obtaining our environmental objectives, I 
think, if we were to take a broader and more comprehensive 
perspective in implementing this.
    The tiered pricing thing specifically. Tiered pricing, 
there is a lot of merit to the concept. In fact, most of our 
member agencies and most CVP agencies have a form of tiered 
pricing that they have implemented on a districtwide basis.
    There is three points for tiered pricing. Number one, if 
you are a contractor that your Federal contract doesn't meet 
your demands, and so you are continually using all of your CVP 
contract plus you are out looking for additional water, the 
tiered pricing really doesn't serve as an incentive for you to 
use less water. You are going to need to use all of your 
allocation anyway. So it only becomes punitive at that point.
    The second point, conjunctive use. We all recognize the 
importance of doing conjunctive use and expanding and 
optimizing conjunctive use in California. Essentially, tiered 
pricing could penalize those who want to use conjunctive use. I 
think that we need to take a very serious look at that.
    Then the third point which kind of umbrellas the other two, 
tiered pricing is not a one-size-fits-all concept. You have 
to--as I said earlier, there are some appropriate and 
legitimate uses for tiered pricing. Most districts have a form 
of tiered pricing, but it's almost impossible to come up with a 
one-size-fits-all that is equitable.
    Mr. Radanovich. Thank you. These are the issues that I hope 
that are brought up during the CALFED process. I want to 
applaud all of the stakeholders for keeping this together. I 
personally am relieved that we are now beginning to study 
issues that increase water storage as part of the CALFED 
process. I think as this issue moves forward, we need to have a 
policy and in some areas where CVPIA may be deficient in that, 
policies where agriculture has the opportunity by incentive to 
enhance the environment in their own area through the policy of 
CVPIA as it might be modified through this CALFED process, 
because right now the incentive is almost the opposite and it 
doesn't work for agriculture to be sensitive to the 
environmental needs in that area.
    If there is one complaint that I have about CVPIA it is 
that it doesn't allow for that, it's not really incentive 
based. I would like to see that happen as this thing develops 
and as we talk more as stake holders in the CALFED process to 
see some modifications in those laws. Thank you.
    [The prepared statement of Mr. Radanovich follows:]

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

    Mr. Chairman--Thank you for holding this hearing to provide 
the opportunity to discuss water issues in the Central Valley 
of California. I appreciate the ability to address the CALFED 
Bay-Delta program and the Central Valley Project Improvement 
Act (CVPIA).
    I represent a Central Valley district comprising the two 
largest agricultural producing counties in the nation. Water is 
the lifeblood of the economy in this agricultural region that 
grows over 250 of California's crops. With its fertile soil, 
temperate climate and water supply capabilities, the Central 
Valley produces eight percent of the agricultural output in the 
U.S. on less than one percent of the nation's total farmland. 
Valley farmers alone grow nearly half of the fresh fruits and 
vegetables grown in the entire nation.
    As a farmer, I am a conscientious steward of the land and a 
strong environmentalist. Agriculture and the environment truly 
go hand in hand. The very livelihoods of farmers are directly 
connected to the land and its future. The agricultural 
community recognizes water as a precious resource to be used 
wisely, and they know proper water management is essential and 
benefits all users.
    In order to meet the ecosystem, water supply and water 
quality needs in California, I worked, along with many 
individuals present here today, toward the enactment of the 
California Bay-Delta Ecosystem Enhancement Act in 1996. Since 
that time, Congress has continued its commitment to CALFED by 
funding this program to build consensus on decisions that 
effect the future of water in the state of California.
    I am encouraged by the recent agreement among stakeholders 
to support $95 million in FY 2000 for CALFED with $60 million 
for ecosystem and $35 million set aside for non-ecosystem 
purposes, such as water storage studies and water transfers. I 
support the $95 million in funding to bring balance to the 
CALFED process for agricultural, ecological and urban water 
users.
    My greatest concern, and that of my district's, is the 
impact CALFED has on agriculture. Water reliability is vital. 
The Central Valley economy is dependent upon water assurances. 
Therefore, scientifically sound and locally supported water 
conveyance and storage facilities are needed to address the 
supply void in California.
    As the CALFED process moves forward, the protection of 
private property is also a high priority of mine. Private 
property rights must be secured throughout the process. 
Additionally, CALFED representatives or other Federal and state 
officials must obtain written permission from landowners when 
conducting surveys or other biological work on private 
property. Any actions that violate landowners' rights are 
unacceptable.
    With respect to CVPIA, I believe the Central Valley region 
has invested a great deal of resources to make this law work. 
Conservation, land retirement and crop changes have all been 
implemented by the agricultural community in order to achieve 
the objectives of CVPIA. The economic security of the area is 
contingent upon water supply reliability. It is time solid 
assurances are made to provide for the region's water needs.
    To the detriment of both the environment and agriculture in 
the Central Valley, the CVPIA has significantly raised water 
prices in the area I represent. Tiered pricing under CVPIA, for 
example, has made it extremely expensive to operate conjunctive 
use systems. Growers pay enormous prices for the water to be 
stored, extracted and delivered. This creates a clear 
disincentive for groundwater storage. A more flexible approach 
to tiered pricing would encourage contractors to conserve and 
reduce costs. Such flexibility is necessary for CVPIA to be 
successful.
    The growing population of our state will continue to place 
an ever-increasing demand on the water supply. Also, over one 
million acre feet of water is provided for environmental 
purposes under CVPIA each year. The state has been blessed with 
five wet years, however, we have no guarantee these conditions 
will continue. The enormous pressure on California water 
allocations are predicted to result in a net agricultural water 
loss of 2.3 million acre-feet each year by 2020. This would 
severely disrupt agricultural production. Since water is 
directly tied to the economy, any disturbance in its supply 
will cause job losses and decreased agricultural production. 
For these reasons, an adequate water supply must be planned for 
and secured.
    In closing, I believe CALFED and CVPIA, along with other 
Federal agencies, must coordinate their water efforts to 
guarantee consistency in the implementation of projects and 
goals. Efforts to sustain productive farmland in the Central 
Valley region under the CVPIA and CALFED have made the farmers 
in my area some of the most innovative water conservationists 
in the world. Central Valley agriculture can continue to thrive 
as long a reliable, affordable source of water is available. I 
look forward to working with you, Mr. Chairman, and those 
present today to achieve this goal.

    Mr. Doolittle. Mr. Dan Nelson, wasn't it your testimony 
that you only received a full contract-wide delivery in 1 year 
out the last 5?
    Mr. Daniel Nelson. That is correct. I believe that was in 
1995-1996.
    Mr. Doolittle. With the exception of that year, the highest 
percentage that you received was what?
    Mr. Daniel Nelson. Well, to put things in perspective, the 
40 years that our member agencies have been taking water from 
the Central Valley Project, prior to--I believe it was in 1989 
they had 1 year in which they weren't allocated a 100 percent 
supply. I believe that was in 1977, the drought of '77. So in 
the 40 years we had 1 year of cutbacks. As a result of the '89 
through '94 drought and a couple of listings that went around 
salmon, Delta smelt, Bay-Delta Accord, CVPIA, et cetera, our 
supply is now at an average of around 65 to 70 percent. That 
doesn't include--that hasn't modeled in yet the impacts of 
Trinity River.
    Mr. Doolittle. Okay. So 70 percent would be the most that 
you feel you could hope for now; is that right?
    Mr. Daniel Nelson. No, 65 percent; that's the average 
supply.
    Mr. Doolittle. In a normal year?
    Mr. Daniel Nelson. Yes.
    Mr. Doolittle. And so when we enter the next dry period, 
which it seems likely that's on the verge of happening, then 
what do you anticipate receiving?
    Mr. Daniel Nelson. Well, the PEIS shows that there are 
years in which we will not receive any water. Then my 
recollection is that in about 35 to 40 percent of the years we 
will be allocated 50 percent or less. My recollection is also 
that in 15 to 20 percent of the years we can expect close to 
the 100 percent supply. So that is the range from zero all of 
the way to 100, but severe cutbacks is normal and especially 
when you get into dry years.
    Mr. Doolittle. Let's see, 35 to 40 percent of the years you 
would get less than 50 percent?
    Mr. Daniel Nelson. That's correct.
    Mr. Doolittle. And 15 to 20 percent of the years you would 
get 100 percent?
    Mr. Daniel Nelson. Yes. Then it's sort of tiered in 
between.
    Mr. Doolittle. Mr. Gartrell, your figures on when you would 
get cut down to 50 percent, what percent of the years would 
that 50 percent be?
    Mr. Gartrell. It's between 1 year in 10 and 1 year in 15. 
Around 10 percent between 7 and 15 percent of the years. It is 
a 25 percent cutback from 100 percent [75 percent allocation] 
in about 25 percent of the years.
    Mr. Doolittle. This is based on what you understand to be 
in that PEIS?
    Mr. Gartrell. Right.
    Mr. Doolittle. Do you think your customers are aware of 
this impending threat?
    Mr. Gartrell. No. We do have a substantial conservation 
program that we try to keep them informed. But even keeping 
them informed on that is difficult. When you have 5 rainy years 
in a row, people don't tend to think about what is coming 
around the corner in a dry period.
    Mr. Doolittle. But I assume the urban water districts, if 
they chose to, could include in their bills information about 
this, right, to their customers?
    Mr. Gartrell. Yes. And we do have our own plans for 
increasing reliability of our supplies through water transfers, 
increased conservation, and reclamation. Those take time to 
implement, but I am pretty confident that most people aren't 
thinking too hard about this right now.
    Mr. Doolittle. Mrs. Beneke, would you like to say anything?
    Mrs. Beneke. Mr. Chairman, I would very much appreciate an 
opportunity to comment on these issues. With respect to urban 
supply reliability, I am afraid there is perhaps a bit of a 
misunderstanding here. I am aware that our PEIS document does 
have a modeling scenario under which there are some 
possibilities of a cutback to 50 percent. But we believe that 
we provide very strong assurances of urban supply reliability 
under our program.
    In fact, the administrative paper that was an outcome of 
the Garamendi process a year or two ago assures urban water 
users of a 75 percent supply, at least unless there is a very 
extreme period of prolonged drought, in which case they could 
be cut back to public health and safety levels.
    Now, again as I explained previously, the PEIS itself is a 
NEPA document. And, as such, it displays a full range of 
alternatives, and in many instances it ``bookends,'' we like to 
say, extreme alternatives which would be extraordinarily 
unlikely to happen in the real world or to be selected. So I 
really would not want people here thinking that there is a good 
likelihood that urban water users will be cut back to a 50 
percent delivery. We think that is extraordinarily unlikely. 
Certainly before that happened, we would be working very 
closely with all of the urban water users, using every tool 
that we have to prevent that result. I would like to clarify 
that for the record from our position.
    Mr. Doolittle. Thank you. What will happen to all of these 
permanent crops if they get cut back to zero or something, say 
50 percent, even?
    Mrs. Beneke. Let me tell you; again, the zero figure would 
occur, as I understand it--well, it almost is not worth talking 
about because it is an extremely unlikely scenario. But let me 
say that it is precisely for this reason that we are so 
committed to the CALFED process. One of the fundamental 
elements of that program, of course, is to provide supply 
reliability to all of our customers. It is one of the reasons 
that I'm very motivated about participating in the process and 
trying to steer it to a good result. It is important to us that 
our customers have a reliable supply of water. Again, I think 
this zero percent number, I'm not personally familiar with it. 
I understand that south of Delta got a 95 percent supply in 
1996, and a 90 percent supply in 1997. I'm not entirely clear 
where all of the other numbers are coming from here.
    Mr. Doolittle. It's been my understanding that the 
Department would like to know what the alternative source of 
supply might be for their urban and ag users, but that 
information they have been reluctant to disclose to the 
Department. Is that a correct understanding?
    Mrs. Beneke. Are you directing that to me?
    Mr. Doolittle. I don't know who I am directing it to. Do 
you want to volunteer?
    Mr. Daniel Nelson. Could you repeat the question?
    Mr. Doolittle. I understood that the Department has been 
trying to inquire about what your alternative sources of supply 
might be in the case of a water-short year, and apparently 
you--I don't know if it's you, but somebody is not willing to 
cooperate amongst the urban and agricultural interest just in 
general, I think, it was represented. Is that true; and if so, 
tell us why, what your concerns are?
    Mr. Daniel Nelson. We would cooperate in any way we could 
for any water augmentation plan that we would see coming from 
the Bureau. I would like to comment briefly on that. There are 
a couple of places in CVPIA where they talk about water 
augmentation. One is an expansion of yield study. The second 
one is a fairly clear directive and authorization to the 
Secretary to find other sources than just reallocating existing 
supplies to meet refuge supply needs.
    One of the things that I was somewhat discouraged, or I 
thought was a little bit contradictory in earlier testimony was 
on the one hand we are going to look at this water supply 
augmentation to come through CALFED, and so we are going to 
look at those elements that increase our water supply to meet 
those components of CVPIA; and the water users, you are going 
to have to wait until CALFED helps you out with those issues 
even though they are very clear in CVPIA.
    However, CVPIA was a premise to CALFED, and so we need to 
go forward immediately with the environmental components of 
CVPIA. And, as you have heard from testimony, we have done 
that. We have implemented the environmental components of 
CVPIA, but my sense is there hasn't been the same ambitious 
efforts on the water augmentation plans, and we are now being 
told that we have to wait for CALFED on those augmentations.
    Mr. Doolittle. Anybody else want to comment?
    Mr. Gartrell. Yes. I'm not sure where exactly that--or who 
might have been unwilling to disclose. We have been trying to 
work very closely with the Department of Reclamation on that. I 
think one issue related to that is the concern of urban and ag 
users that if we acquired other supplies, that would be taken 
into account in our allocation from the CVP and we would face 
further cutbacks. That was under discussion during the 
Garamendi process, and I think we all came out pleased with the 
results of that, with the assurances that those would be taken 
into account, but in a way that did not hurt us further; if we 
go out and acquire supplies to meet the cutbacks that we don't 
end up in a zero sum game where we just get chopped more.
    Mr. Doolittle. So are you satisfied that should not be a 
concern, then?
    Mr. Gartrell. Right.
    Mr. Doolittle. Okay. Well, I thank you, ladies and 
gentlemen. It's been a long afternoon. Useful testimony. I 
appreciate it. There will be probably some further questions. 
We will hold the record open for your timely response. Have a 
good weekend. With that, the hearing is concluded.
    [Whereupon, at 4:42 p.m., the Subcommittee was adjourned.]
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