[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
OPERATIONS OF THE WATER DELIVERY SYSTEM: THE CALFED RECORD OF DECISION 
               AND ANTICIPATED WATER DELIVERIES FOR 2002
=======================================================================


                           OVERSIGHT HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                           February 14, 2002

                               __________

                           Serial No. 107-87

                               __________

           Printed for the use of the Committee on Resources



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                         COMMITTEE ON RESOURCES

                    JAMES V. HANSEN, Utah, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska,                   George Miller, California
  Vice Chairman                       Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana     Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Peter A. DeFazio, Oregon
Elton Gallegly, California           Eni F.H. Faleomavaega, American 
John J. Duncan, Jr., Tennessee           Samoa
Joel Hefley, Colorado                Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado              Calvin M. Dooley, California
Richard W. Pombo, California         Robert A. Underwood, Guam
Barbara Cubin, Wyoming               Adam Smith, Washington
George Radanovich, California        Donna M. Christensen, Virgin 
Walter B. Jones, Jr., North              Islands
    Carolina                         Ron Kind, Wisconsin
Mac Thornberry, Texas                Jay Inslee, Washington
Chris Cannon, Utah                   Grace F. Napolitano, California
John E. Peterson, Pennsylvania       Tom Udall, New Mexico
Bob Schaffer, Colorado               Mark Udall, Colorado
Jim Gibbons, Nevada                  Rush D. Holt, New Jersey
Mark E. Souder, Indiana              James P. McGovern, Massachusetts
Greg Walden, Oregon                  Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho            Hilda L. Solis, California
Thomas G. Tancredo, Colorado         Brad Carson, Oklahoma
J.D. Hayworth, Arizona               Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana

                      Tim Stewart, Chief of Staff
           Lisa Pittman, Chief Counsel/Deputy Chief of Staff
                Steven T. Petersen, Deputy Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel
                                 ------                                

                    SUBCOMMITTEE ON WATER AND POWER

                   KEN CALVERT, California, Chairman
            ADAM SMITH, Washington, Ranking Democrat Member

 Richard W. Pombo, California        George Miller, California
George Radanovich, California        Peter A. DeFazio, Oregon
Greg Walden, Oregon,                 Calvin M. Dooley, California
  Vice Chairman                      Grace F. Napolitano, California
Michael K. Simpson, Idaho            James P. McGovern, Massachusetts
J.D. Hayworth, Arizona               Hilda L. Solis, California
C.L. ``Butch'' Otter, Idaho          Brad Carson, Oklahoma
Tom Osborne, Nebraska
Jeff Flake, Arizona


                                ------                                

















                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on February 14, 2002................................     1

Statement of Members:
    Calvert, Hon. Ken, a Representative in Congress from the 
      State of California........................................     1
        Prepared statement of....................................     2

Statement of Witnesses:
    Bishop, Walter J., General Manager, Contra Costa Water 
      District, Concord, California..............................    51
        Prepared statement of....................................    53
    Osann, Edward R., Consultant representing the National 
      Resources Defense Council..................................    57
        Prepared statement of....................................    58
    Macaulay, Steve, Chief Deputy Director, California Department 
      of Water Resources.........................................    11
        Prepared statement of....................................    13
    Nelson, Daniel, Executive Director, San Luis & Delta-Mendota 
      Water Authority............................................    44
        Prepared statement of....................................    45
    Quinn, Timothy, Vice President, State Water Project 
      Resources, Metropolitan Water District.....................    71
        Prepared statement of....................................    73
    Raley, Bennett W., Assistant Secretary, Water and Science, 
      U.S. Department of the Interior............................     6
        Prepared statement of....................................     8
    Stovall, John F., General Counsel, Kern County Water Agency..    66
        Prepared statement of....................................    67
    Wright, Patrick, Director, CALFED Bay-Delta Program..........    30
        Prepared statement of....................................    32

Additional materials supplied:
    Guy, David J., Executive Director, Northern California Water 
      Association, Statement submitted for the record............     3
    Nelson, Barry, Senior Policy Analyst, Natural Resources 
      Defense Council, Response to Chairman Calvert's request for 
      NRDC's position, Letter submitted for the record...........    93









 OVERSIGHT HEARING ON THE OPERATIONS OF THE WATER DELIVERY SYSTEM: THE 
  CALFED RECORD OF DECISION AND ANTICIPATED WATER DELIVERIES FOR 2002

                              ----------                              


                      Thursday, February 14, 2002

                     U.S. House of Representatives

                    Subcommittee on Water and Power

                         Committee on Resources

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to other business, at 10:25 
a.m., in room 1334, Longworth House Office Building, Hon. Ken 
Calvert [Chairman of the Subcommittee] presiding.

STATEMENT OF THE HON. KEN CALVERT, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Calvert. Now the Subcommittee on Water and Power will 
come to order for a hearing. The Subcommittee is meeting today 
to hear testimony on the operations of the California water 
delivery system: the CALFED Record of Decision and anticipated 
water deliveries for 2002.
    Under Rule 4(b) of the Committee rules, any oral opening 
statements at hearings are limited to the Chairman and the 
ranking minority member. This will allow us to hear from our 
witnesses sooner and help members to keep to their schedules. 
If other members have statements today, they can be included in 
the hearing record under unanimous consent. And obviously Mr. 
Dooley will be giving the opening statement for the minority.
    The hearing today will focus on the operations of the 
Central Valley Project, CVP, and the State water project 
delivery systems and how they interrelate to the CALFED Record 
of Decision. People often say that timing is everything, and in 
this particular case I couldn't agree more. It is pure 
coincidence this hearing comes at this time, in light of three 
major happenings in the world of water:
    One, the recent Federal court decision regarding the 
appropriate accounting of water for environmental purposes; 
two, an independent study released by the National Academy of 
Sciences, indicating no substantial scientific justification to 
maintain higher water levels in the Klamath Basin; and, three, 
projected water deliveries by the Bureau of Reclamation of less 
than 50 percent in certain cases.
    I would like to address these three issues prior to 
receiving testimony from our witnesses. To begin with, on 
January 25, 2002, the Bureau of Reclamation released its 
initial water supply outlook for 2002 that estimated CVP 
agricultural water deliveries south of the delta will be 45 
percent of the contracted amount.
    The CALFED Framework for Action indicated that in a normal 
water year, agricultural water service contractors could 
anticipate at least 65 to 70 percent of their contracted 
amount. To date, this allocation has not been achieved. I look 
forward to hearing from each witness today as to what are the 
statutory, legal, and regulatory requirements shaping the 
current water supply forecast and/or what can be done to meet 
the identified goal.
    Second, the National Academy of Science interim report on 
the Klamath Basin maintains there is no substantial scientific 
justification to maintain higher water levels in the Klamath 
Basin for fish. Several members see a potential correlation 
between the data interpretation by the fishery agencies and the 
Klamath Project to the way data has been utilized in developing 
biological opinions for the Central Valley Project. Members of 
the Subcommittee have expressed interest in a similar study 
being conducted within the Central Valley Project.
    And, last, February 5, 2002, United States District Judge 
Oliver W. Wanger issued a summary judgment motion on offset/
reset, how the 800,000 acre-feet of water is being dedicated. 
Specifically, the judge said the Interior Department was 
wrongly credited the amount of water used for environmental 
purposes. Proponents of the decision have indicated this could 
mean boosts of water deliveries by 5 to 20 percent annually for 
west side farmers. I would be interested to know how this may 
affect the environmental baseline built into the CALFED Record 
of Decision.
    I believe the current administration has the obligation to 
provide to Congress how it plans to use its afforded discretion 
pursuant to the Federal and State law to implement the CVPIA 
and ESA in a more balanced manner. We have already had a 
previous administration that I believe abused its discretionary 
power to implement Federal statutes by relying on inadequate 
science that led to junk decisions. It is time for the Federal 
Government to choose to implement these laws in a less punitive 
manner, without imposing enormous costs with little or no 
scientific benefit for the environment.
    I look forward to hearing from today's witnesses, but 
before that, I would like to recognize Mr. Dooley for his 
opening statement.
    [The prepared statement of Mr. Calvert follows:]

 Statement of The Honorable Ken Calvert, a Representative in Congress 
                      from the State of California

    The hearing today will focus on the Operations of the Central 
Valley Project (CVP) and the State Water Project (SWP) delivery systems 
and how they interrelate to the CALFED Record of Decision.
    People often say that timing is everything and in this particular 
case I couldn't agree more. It is by pure coincidence this hearing 
comes at this time, in light of three major happenings in the world of 
water;
     Lthe recent Federal court decision regarding the 
appropriate accounting of water for environmental purposes,
     Lan independent study released by the National Academy of 
Sciences indicating no substantial scientific justification to maintain 
higher water levels in the Klamath Basin, and
     Lprojected water deliveries by the Bureau of Reclamation 
of less than 50% in certain cases.
    I would like to address these three issues prior to receiving 
testimony from our witnesses.
    To begin with, on January 25th, 2002, the Bureau of Reclamation 
released its initial water supply outlook for 2002 that estimated CVP 
agricultural water deliveries south-of-the-delta will be 45% of the 
contracted amount. The CALFED Framework for Action indicated that in a 
normal water year, agricultural water service contractors could 
anticipate at least 65 to70% of their contracted amount. To date, this 
allocation has not been achieved. I look forward to hearing from each 
witness today to what the statutory, legal, and regulatory requirements 
shaping the current water supply forecast are and what can be done to 
meet the identified goal.
    Secondly, the National Academy of Science (NAS) Interim Report on 
the Klamath Basin maintains there is no substantial scientific 
justification to maintain higher water levels in the Klamath Basin for 
fish. Several members see a potential correlation between the data 
interpretation by the fishery agencies in the Klamath Project to the 
way data has been utilized in developing biological opinions for the 
Central Valley Project. Members of the Subcommittee have expressed 
interest in a similar study being conducted within the Central Valley 
Project.
    And Lastly, on February 5, 2002, United States District Judge 
Oliver W. Wanger issued a Summary Judgement Motion on Offset/Reset [how 
the 800,000 acre-feet of water is to be dedicated]. Specifically, the 
judge said the Interior Department has wrongly credited the amount used 
for environmental purposes. Proponents of the decision have indicated 
that this could mean boosts of water deliveries by 5% to 20% annually 
for west side farmers. I would be interested to know how this may 
affect the environmental baseline built into the CALFED Record of 
Decision.
    I believe the current Administration has the obligation to provide 
to Congress how it plans to use its afforded discretion, pursuant to 
Federal and state law, to implement the CVPIA and ESA in a more 
balanced manner. We've already had a previous administration that has 
abused its discretionary power to implement Federal statutes by relying 
on inadequate science that led to junk decisions. It is time for the 
Federal Government to choose to implement these laws in a less punitive 
manner, without imposing enormous costs with little or no scientific 
benefit for the environment.
    I look forward to hearing from today's witnesses.
                                 ______
                                 
    Mr. Dooley. Thank you, Mr. Chairman, and I will not have an 
opening statement at this time. I just appreciate you calling 
this hearing, and also appreciate all of the witnesses that 
will testify for their taking time and putting their energies 
into providing some insight into these issues.
    Mr. Calvert. Thank you.
    I would like to submit for the record the written testimony 
of David Guy, Executive Director of the Northern California 
Water Association, regarding the operations of the California 
water delivery system. If there is no objection, so ordered.
    [The 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 geographically diverse organization, 
extending from California's Coast Range to the Sierra Nevada foothills, 
and nearly 180 miles from Redding to Sacramento. Our members are 
located within the area of origin for significant part of the state's 
water where they rely on the waters of the Sacramento, Feather, Yuba 
and American Rivers, smaller tributaries and groundwater to irrigate 
nearly 870,000 acres that produce every type of food and fiber grown in 
the region. Many of our members in Northern California have water right 
settlement contracts or water service contracts with the Bureau of 
Reclamation as the operator of the Federal Central Valley Project 
(CVP); many others have water rights settlement contracts with the 
Department of Water Resources (DWR) as the operator of the State Water 
Project (SWP). 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.
    We welcome the opportunity to provide the Sacramento Valley 
perspective on the administrative and operational efforts that are 
necessary to meet the water supply and environmental goals in the 
CALFED Record of Decision (ROD). We recognize that the primary purpose 
of the hearing is to focus on the efforts necessary to improve water 
supply reliability for the CVP and SWP in the export service areas, 
including the Environmental Water Account (EWA), increased deliveries 
(15%) to south of Delta CVP agricultural water service contractors and 
increased SWP operational flexibility at the Banks pumping plant. 
Rather than focus on the export provisions in the ROD, our testimony 
today will instead concentrate on the efforts that are necessary to 
meet the water supply and environmental goals in the Sacramento Valley 
upstream of the Bay-Delta. If we are successful in meeting our water 
supply and environmental goals in the Sacramento Valley, we in turn can 
be more constructive in assisting the export interests address their 
water supply needs and environmental goals.
    For many years, the Sacramento Valley (the northern part of the 
Great Central Valley) has been targeted as the primary source of water 
to meet California's burgeoning demands. The cornerstones for both the 
Federal Central Valley Project (CVP) and the State Water Project (SWP), 
Lakes Shasta and Oroville, are located in Northern California and 
provide water to the Bay-Delta and millions of Californians.
    Water users and landowners in the Sacramento Valley have also faced 
restrictions under the Endangered Species Act (ESA), the Central Valley 
Project Improvement Act (CVPIA) and other environmental legislation and 
regulations. These actions have posed many challenges for Sacramento 
Valley water users and their ability to provide reliable and affordable 
water supplies for the farms, cities and wildlife refuges in the 
Sacramento Valley. For example, the Glenn-Colusa Irrigation District in 
the early 1990's was ordered to cease diversions through a faulty fish 
screen on the Sacramento River. CVP water service contractors in the 
Sacramento Valley, despite receiving 100% supplies this year, have 
received as little as 25% of their contract supplies in 1991 and 1992 
and only 60% last year.
    Rather than dwell on how we have dealt with and continue to deal 
with these challenges, we believe it is more constructive to focus on 
the exciting solutions to a variety of problems that are currently 
being advanced by those within the Sacramento Valley. These solutions, 
including the integrated water management program described below, can 
help the Department of Interior (DOI) and other CALFED agencies meet 
the water supply goals in the CALFED ROD. However, this can only occur 
if: (1) there are no redirected impacts to areas upstream of the Bay-
Delta in the Sacramento Valley, (2) the DOI and other CALFED agencies 
exercise their full administrative authority to help local agencies 
implement the integrated water management program for the Sacramento 
Valley, including commitments in the ROD for Northern California such 
as Sites reservoir; and (3) the CALFED regulatory process is 
streamlined and reformed.
NO REDIRECTED IMPACTS TO NORTHERN CALIFORNIA
    A fundamental tenet of the CALFED program is that there will be no 
redirected impacts to areas upstream of the Bay-Delta. Sacramento 
Valley interests recognize the importance to California's future of 
restoring the environmental health of the Bay-Delta and providing high 
quality and reliable water supplies for all beneficial uses. We 
generally support the CALFED program objectives and we have been 
willing to play a constructive role in implementing a successful CALFED 
program.
    It is essential, however, for the CALFED agencies to deal with the 
Sacramento Valley interests as full partners, honoring the commitments 
that were and are the essence of the area of origin protection laws 
and, in that regard, refrain from imposing on the Sacramento Valley any 
burden for mitigating impacts to the Bay-Delta that result from the 
operation of the CVP, SWP, EWA or any other CALFED program.
    Future partnership and cooperation between the Sacramento Valley 
and CALFED is possible and, indeed, desirable. However, it must advance 
based upon a framework where CALFED agency actions are undertaken in a 
manner that insures that solutions implemented to resolve problems 
within the Bay-Delta would not redirect negative impacts to the 
Sacramento Valley (ROD, page 9.) Additionally, CALFED must provide 
acceptable assurances that Sacramento Valley water rights and 
entitlements will not be sacrificed in favor of other CALFED 
objectives. CALFED agencies must work with, not against, Sacramento 
Valley water users in meeting their mutual water supply needs. The 
bottom line is that CALFED agencies, including the Department of 
Interior, must not use their regulatory authority to reallocate area of 
origin water supplies for export or to meet Delta water quality 
standards and other environmental objectives in the Bay-Delta system.
AN INTEGRATED WATER MANAGEMENT PROGRAM FOR THE SACRAMENTO VALLEY WILL 
        IMPROVE WATER SUPPLY, QUALITY AND RELIABILITY
    Sacramento Valley water users have committed to help improve water 
supply reliability, water quality and environmental benefits. 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, more than twenty NCWA members, 
representing over 500,000 acres of irrigable land, have either 
completed or are in various stages of developing fish screens to 
prevent fish entrainment at their diversions. Many NCWA members have 
also initiated far-reaching efforts to refurbish fish ladders, 
construct siphons, remove dams, create habitat conservation plans and 
implement other habitat improvement projects to enhance the 
environment, while at the same time improving water supply reliability.
    Additionally, NCWA and the Sacramento Valley water users have 
embarked on an integrated water management program that has broad 
support from water suppliers and local governments throughout the 
Sacramento Valley. This integrated program includes:
     Lfish passage improvements (fish screens, siphons and 
habitat improvements, ROD, page 35);
     Lgroundwater management (ROD, page 46);
     Ljoining local partners in evaluating the Sites off-stream 
reservoir (ROD, page 45);
     Lwater use efficiency programs (ROD, page 59);
     Lpotential expanded storage in Lake Shasta (ROD, page 44);
     Lintra-regional water transfers and exchanges within the 
Sacramento Valley (ROD, page 71); and
     Lflood protection (ROD, page 74);
     Lwatershed management (ROD page 39).
    During the past year this integrated program led to an 
unprecedented water rights settlement among water users throughout 
California. This settlement, now known as the Sacramento Valley Water 
Management Agreement, and the ensuing integrated water management 
program, avoided the extremely contentious Phase 8 Bay-Delta water 
rights proceedings before the State Water Resources Control Board. The 
parties to the initial agreement include NCWA, the Bureau of 
Reclamation (BOR), the Department of Water Resources (DWR), the Federal 
contractors in the San Luis and Delta-Mendota Water Authority, the 
State Water Contractors, and the Contra Costa Water District. We are 
also working closely with the U.S. Fish and Wildlife Service and the 
California Department of Fish and Game. The Phase 8 proceeding would 
have pitted these parties from throughout the state against each other. 
This integrated program will now serve as the heart of a regional 
strategy for the Sacramento Valley.
    The Sacramento Valley Water Management Program and the integrated 
water management program focus on meeting 100% of the water supply 
demands within the Sacramento Valley during all year types, both now 
and into the future. Sacramento Valley water users believe that, once 
the full demands within the Sacramento Valley are met, this integrated 
program will help make water supplies available for use in and beyond 
the Bay-Delta to meet water quality standards, and provide for export 
water users in the San Joaquin Valley, Southern California, the Central 
Coast, and as assets for the Environmental Water Account (EWA) and 
other environmental programs.
    The parties to the agreement are currently developing a short-term 
agreement that is scheduled to be completed by March 15, 2002. This 
agreement, if successful, will not only dismiss the Phase proceedings, 
it will facilitate the implementation of this integrated water 
management program for the Sacramento Valley.
THE REGULATORY PROCESS MUST BE STREAMLINED AND REFORMED
    With nearly 18 Federal and state agencies under the respective 
executive branches that dictate California water policy, it is critical 
to coordinate and ultimately streamline the plethora of agencies with 
jurisdiction over water resources in California.
    The framework to create CALFED in June 1994 called for cooperation 
and collaboration between the Federal and state agencies that oversee 
water in California. It is essential that these agencies continue to 
work together in this manner. Over the past 7 years, CALFED has evolved 
from a concept to streamline agency efforts to a massive bureaucratic 
program. For CALFED to be successful as it transitions from a planning 
program to an implementation agency, it must move from a top-down 
bureaucratic organization to an organization that facilitates and 
fosters a series of regional strategies with local control and 
governance. Most notably, it must streamline the regulatory process to 
assure that these programs will be implemented. Specific examples 
include the facilitation of intra-regional water transfers and 
exchanges and expedited permitting by the U.S. Army Corps of Engineers 
and Environmental Protection Agency.
    Significantly, this means that CALFED and its member agencies will 
serve in a more limited, albeit more effective, role to advance water 
and environmental policy in the state. It is also means that CALFED 
will serve a critical role to coordinate regional strategies to ensure 
that they fit together in a manner that provides statewide benefits, 
and also provide a broad-based governance strategy and oversight 
capability to ensure appropriate, balanced and efficient implementation 
of all CALFED program elements.
    Much work was done by CALFED during the last seven years in terms 
of intensive environmental and engineering evaluation and in 
preparation of the ROD. That progress should not be lost. As a 
consequence, CALFED and its agencies should clarify that the project 
alternative screening process provided for in the ROD will be adhered 
to and that one CALFED program element will not be treated as an 
alternative to another CALFED program element. Again, among other 
things, this will allow the full integration of all water supply 
alternatives, maximizing the full utilization of the water resources 
available within the Sacramento Valley.
    In conclusion, thank you for the opportunity to provide our 
perspective on the operational and administrative efforts that are 
necessary to meet the water supply and environmental goals in the ROD. 
If you have any questions, please call me at 916.442.8333.
                                 ______
                                 
    Mr. Calvert. Before I introduce our first panel, or while I 
introduce the first panel, why don't we have them come on up. 
Mr. Bennett Raley, the Assistant Secretary of Water and 
Science, Department of Interior; and Mr. Steve Macaulay, the 
Chief Deputy Director, California Department of Water 
Resources.
    It seems that every year, and it doesn't matter which 
administration, but I am disappointed and concerned that we 
have not had the opportunity to review the administration's 
testimony in a timely manner. Being provided testimony within 
an hour of the hearing is unacceptable.
    Under the rules of the Committee, and in a letter addressed 
to the Secretary, we asked specifically that written testimony 
must be filed at least two working days before the appearance. 
Failure to comply with this requirement may result in the 
exclusion of the written testimony from the original hearing 
record, or the barring of the oral presentation of the 
testimony.
    I will accept the testimony, allow the administration to 
provide testimony. However, I want to reiterate that we expect 
all witnesses to adhere to the rules of the Committee, and I 
would hope in the future that we don't have this reoccurrence.
    And with that, I would be happy to recognize Mr. Raley for 
his opening statement.

 STATEMENT OF BENNETT W. RALEY, ASSISTANT SECRETARY FOR WATER 
          AND SCIENCE, U.S. DEPARTMENT OF THE INTERIOR

    Mr. Raley. Mr. Chairman, members of the Committee, thank 
you for inviting me here. And, Mr. Chairman, I personally take 
responsibility for the late delivery of the testimony. It is 
unacceptable, and I offer no defense and simply take 
responsibility for that.
    Today we are here to talk about an issue that is of vital 
importance to the Secretary and the department, as well as 
other agencies within the administration, the State of 
California and our constituents there. Mr. Chairman, with your 
permission I would ask that my written testimony, albeit late, 
be submitted for the record so that I can confine my oral 
comments to a summary.
    Mr. Calvert. Without objection, so ordered.
    Mr. Raley. Thank you, sir.
    We all face decisions, the need to make decisions that will 
improve water supplies and the environment in the Central 
Valley and generate the positive results that we expect from 
the CALFED process.
    I would like to take the Subcommittee back to what 
Secretary Norton said in July 2001 in her appearance before the 
Senate Energy and Natural Resources Committee. She called the 
CALFED process ``a new approach to reaching a common vision of 
actions needed for progress.'' The Secretary also pledged that 
the Department would ``continue to work through the CALFED 
process to improve the environment and increase the system's 
water management flexibility.''
    Let me reiterate that sentiment, that commitment, today. 
The department is committed to making CALFED work for the long 
term. The fundamental tenet of balanced progress which guides 
and underlies the CALFED program can be achieved by undertaking 
actions that simultaneously improve project operations while 
accomplishing our environmental objectives. Much work is needed 
to meet the long-term challenges that both the Department of 
Interior and the citizens of California and the State of 
California face in satisfying the growing demands for water and 
other benefits created by the water management infrastructure 
in California.
    As you are aware, increasing demand and hydrologic 
conditions, as well as implementation of the Central Valley 
Project Improvement Act, Endangered Species Act, Clean Water 
Act, and other legal requirements have impacted the ability of 
the project to meet its contractual obligations. Long-term 
operations of the project, as displayed in the CVPIA 
Programmatic Environmental Impact Assessment and described in 
the related Record of Decision, will result in shortages across 
all service areas and all types of water service provided by 
this project.
    Mr. Chairman, you have started out with appropriately a 
reminder of the statement in the ROD about expectations for 
south-of-the-delta delivery obligations in normal to wet years, 
so I won't repeat that. We are intensely aware of that and all 
aspects of the commitment in the ROD.
    The Mid-Pacific Region of the Bureau of Reclamation, in its 
preliminary analysis, determined that in a median precipitation 
year the south-of-delta agricultural contractors should only 
expect a 45 percent water supply, which is less than was the 
target that was identified in the CALFED ROD for a normal year.
    Concern with this analysis prompted Reclamation to launch 
an intensive effort to match deliveries in 2002 with those 
targeted in the ROD. Additional staff have been put on this 
issue. There have been extensive discussions within the Federal 
family and with constituents that care about this issue, and 
there will be tomorrow a formal announcement by the Bureau of 
Reclamation of the delivery expectations for the coming year.
    I offer some hope today that it will be more favorable than 
the preliminary projection of 45 percent. The bureau is working 
very hard right now with the other agencies involved, Federal 
and State, to take into account recent hydrologic information 
as the water year has progressed, as well as to assimilate and 
implement as appropriate the court's decisions in the past few 
months with respect to Section (b)(2) of CVPIA and the 
accounting structure.
    In short, the department will comply with the judge's 
decision in its implementation of operations plans for the CVP 
in 2002, but we are not satisfied with the current situation in 
the Central Valley Project. We know that much work needs to be 
done.
    We know that the past methodology--and I offer this with no 
criticism--has simply been a function of the complexity of all 
of the legal and physical factors associated with this 
enormously complex project; that the solutions to the annual 
debate at this time of year, in February, about whether or not 
there would be an appropriate level of delivery south of the 
delta, in the past those answers have been provided by Mother 
Nature in the form of precipitation. We believe that waiting 
and relying on the vagaries of late season snow and rainfall is 
not an acceptable management path, and are working to correct 
that.
    We have to do that in a cooperative manner. We know that 
regardless of how close we may come to the targeted deliveries 
for 2002 for south of the delta, much work needs to be done. 
And therefore Mary Nichols, the California Secretary of 
Resources, and I will be convening a multiday meeting of the 
CALFED leadership to complete the operating plan for 2002 by 
mid-March. We intend to resolve issues, make decisions, and 
move this progress forward. We will keep this Committee 
informed of our progress.
    I want to reiterate that this administration is committed 
to the concepts of the ROD. There is much, much value in 
preserving the hard work by everyone involved in fashioning 
this solution to these complex needs, and those who have 
speculated that this administration wishes to move from the 
concept of the ROD are simply inaccurate.
    Mr. Chairman, I would like to conclude my oral remarks and 
make myself available for questions from the Committee. Thank 
you.
    [The prepared statement of Mr. Raley follows:]

Statement of Bennett Raley, Assistant Secretary for Water and Science, 
                    U.S. Department of the Interior

    Chairman Calvert, members of the Subcommittee, I appreciate the 
opportunity to appear before you to discuss the operation of the 
Central Valley Project (CVP) in 2002. Mr. Chairman, my testimony will 
focus on the challenge we all face of making decisions that will 
improve water supplies and the environment, and generate the positive 
results that we expect from the CALFED program. I look forward to 
working with this Committee and all our fellow CALFED agencies to 
achieve our goals.
    Before I discuss these challenges, I would like to remind the 
Subcommittee what Secretary Norton said in a July, 2001 appearance 
before the Senate Energy and Natural Resources Committee. She called 
the CALFED process ``a new approach to reaching a common vision of 
actions needed for progress.'' The Secretary also pledged that the 
Department would ``continue to work through the CALFED process to 
improve the environment and increase the system's water management 
flexibility.'' Let me reiterate that sentiment today and clarify that 
the Department is committed to making CALFED work for the long term. 
The fundamental tenet of Balanced Progress which guides the CALFED 
program can be achieved by undertaking actions that can improve project 
operations while accomplishing our environmental objectives 
simultaneously. Much work is needed to meet the long-term challenges 
that both the Department of the Interior and the citizens of California 
face in satisfying the growing demands for water and other benefits 
created by the water management infrastructure in California.
Background
    CVP operations have been altered dramatically in the last decade. 
Considerable new demands were placed on the system and significant 
adverse consequences occurred in a major portion of the project. The 
challenges we face are clear. As you are aware, increasing demand and 
hydrologic conditions, as well as implementation of the Central Valley 
Project Improvement Act (CVPIA), the Endangered Species Act (ESA), and 
the Clean Water Act, impact the ability of the project to meet its 
contractual obligations. Long-term operations of the project, as 
displayed in the CVPIA Programmatic Environmental Impact Statement and 
described in the related Record of Decision (ROD), will result in 
shortages across all service areas and all types of water service 
provided by this project.
The CALFED Objective
    The CALFED Record of Decision states in part:
        ``It is also anticipated that implementation of Joint Point of 
        Diversion, operational flexibility, interagency cooperation, 
        EWA implementation, and other cooperative water management 
        actions......will result in normal years in an increase to CVP 
        south-of-delta agricultural water service contractors of 15 
        percent (or greater) of existing contract totals to 65 to 70 
        percent.''
    Fundamentally, the CALFED Framework Agreement and ROD recognized 
the disproportionate impacts of the current operating regime on south 
of Delta contractors and established operational goals for the CALFED 
agencies, the State water project, and the CVP, in particular, to meet. 
We are now tasked with implementing these goals, and I believe their 
implementation has the potential to be as challenging as the 
development of these goals. The special challenges that we face today 
in meeting the needs of the Californians who rely on the CVP in the 
delta export service area will be the focus of my comments.
Current Forecast
    The Mid-Pacific Region of the Bureau of Reclamation, in its 
preliminary analysis determined that in a median precipitation year, 
the south-of-delta agricultural contractors should expect only a 45 
percent water supply--which is 15-20 percent less than was the target 
which was identified in the CALFED ROD for a ``normal'' year.
    Concern with the results of this analysis prompted Reclamation to 
launch an intensive effort to match deliveries in 2002 with those 
targeted in the ROD. Additional staff have been committed to assist the 
Central Valley Operations Office in analyzing the preliminary 
operations plan and to develop actions which may increase the water 
supply south of the Delta. In addition, extensive discussions are 
ongoing in California between the Bureau and the other key CALFED 
agencies (USFWS, NMFS, DWR and CA Fish and Game).
    Reclamation has assessed possible actions to address the situation:
     LActions for which Interior could exercise discretion
     LState or other entity actions that may facilitate 
improved CVP operations (State and CALFED actions)
     LActions available at significant cost (actions that have 
a higher cost associated with them)
    Reclamation is looking at all the possible actions, but is 
concentrating on those that have the greatest promise for 2002. For 
example, Reclamation staff are working with the contractors to better 
forecast demands and delivery scheduling and to better forecast storage 
in San Luis Reservoir at the low point.
    Reclamation has also been meeting with the San Luis and Delta 
Mendota Water Authority to investigate installing a temporary intertie 
between the Delta Mendota Canal and the State Aqueduct to increase 
export capability at the Tracy Pumping Plant to its permitted capacity. 
In investigating the intertie, the parties identified and are pursuing 
an alternative of raising the lining of a 2,500 foot reach of the Delta 
Mendota Canal to recover freeboard and capacity in the canal at a 
fraction of the cost of constructing the intertie. Other actions 
involving water acquisition, demand source shifting by third parties, 
and use of non-project storage that are not being pursued at this time 
because of the high cost.
    The Department is developing its approach to implementing the 
recent ruling of the Federal Court on the Department's responsibilities 
under the CVPIA and will adhere to the Court's decision in developing 
operational plans for 2002.
    When Reclamation can assign certainty to the actions and include 
them in the 2002 operations plan, the resulting water supply 
improvements will be reflected in the CVP allocations. Although much 
more work remains to be done, even if we are successful in implementing 
all of the actions identified above, the best it appears we will be 
able to do is achieve water delivery increases 10 or 15 percent more 
south of the Delta. We are not satisfied with the current situation in 
the CVP. We know the customers are frustrated with the shortages and 
uncertainty over how the project will be operated. We are hopeful that 
the measures taken to improve the ecosystem ($390 million CVPIA and 
CALFED restoration funds spent to date) and the significant redirection 
of water to improve fish and wildlife will in fact work. Although, the 
results we are all looking for may take years if not decades to attain.
    Tomorrow, February 15, 2002, Reclamation will announce the initial 
allocations of CVP water supply to its contractors for the 2002 
contract year. I understand that CVP contractors north of the Delta 
will receive a full supply and that CVP contractors south of the Delta 
will experience shortages due to legal and technical restrictions on 
the operation of the export pumps. This problem must be solved. And it 
must be done in a cooperative effort by all Federal and State agencies 
involved in the CALFED Program as well as through working with the 
contractors and other stakeholders whose cooperation was so 
instrumental in getting agreement on the ROD and other progress to 
date. Interior will continue to work through the CALFED process to 
increase the system's water management flexibility while we work to 
improve the environment. We will also pursue actions on our own and 
with our contractors, to the extent practicable, to achieve CALFED 
goals.
Next Steps: Operations Decisions
    Mr. Chairman, the situation we face today is nearly identical to 
that which we have faced in every mid-February for the past five or 
more years. However, in most years, it was mother nature that provided 
the solution in the form of wet conditions. That may or may not happen 
this year. We recognize that waiting for adequate rainfall is not an 
acceptable management approach.
    Therefore, Mary Nichols, the California Secretary of Resources and 
I will be convening a multi-day meeting of the CALFED leadership to 
complete the operating plan for 2002 by mid March. We intend to resolve 
issues, make decisions and move this process forward. We will keep this 
committee informed of our progress.
    In my few months on the job, I have encountered a number of 
inconsistent or conflicting views on what this language means. Some of 
the views I have heard include:
     L``The Federal Government made a commitment to reach the 
65-70 percent delivery levels.''
     L``There is no way these levels can be met because the 
objective was based on modeling and real world conditions are not 
conducive to optimized models.''
     L``The modeling assumed the aggressive exercise of 
discretion to reach the delivery levels.''
     L``Supply objectives can not be realized without 
significant changes to the CALFED environmental baseline, particularly 
changes in how the 800,000 acre feet of CVPIA (B2) water for the 
environment are managed.''
     L``If changes are made in the CALFED environmental 
baseline, reconsultation will be required on the Biological Opinions.''
     L``We were told the supply objective could be met without 
altering the B2 accounting methodology.''
     L``Interior must use its administrative discretion to meet 
the ROD objective.''
    Based on what I have heard and read to date, here are my 
conclusions:
     LThe Bureau of Reclamation and the CALFED agencies must 
strive to meet the south-of-delta supply objectives in the ROD.
     LIt may not be possible to achieve the supply objectives 
south of the Delta with the existing operating restrictions.
     LFailure to achieve this goal could have widespread 
adverse consequences on the future of the CALFED Program.
     LThe long term certainty that communities and customers 
had hoped for has yet to be realized and short term water supply needs 
have not been fully satisfied. Simply put, there is no certainty that 
either the reliability or productivity of the water infrastructure has 
increased.
     LWhen both reservoir storage and snowpack levels are above 
average, and the initial forecast projects a 55% shortage for more than 
1 million acres of farmland, the commonly heard refrain that 
California's water system is broken appears accurate.
    Mr. Chairman, the challenges that confront us in the immediate 
issue of 2002 project operations are similar in nature to the broader 
set of issues we face as we evolve the CALFED program from one of 
planning to one of implementation. We have the Implementation 
Memorandum of Understanding in place that will guide our actions. By 
working together, we are putting work programs into action that I 
believe will lead to the realization of the long term benefits and 
expectations of the CALFED program.
Long-Range Planning
    Mr. Chairman, we continue to believe the long-term answers to the 
challenges of adequate water supplies and effective environmental 
improvement can best be found through the CALFED Program. Everyone's 
interest is served by the success of CALFED. At the same time, we 
realize that a significant amount of work, work that is fully 
compatible with CALFED, needs to be accomplished. The most significant 
opportunities for yield increases are associated with storage and 
conveyance projects identified in the CALFED ROD.
    On a parallel track to identifying and implementing tools to 
improve 2002 allocations, Reclamation is also supplementing the 
analysis in the CVP Least-Cost Yield Increase Plan which focuses on 
opportunities to increase the yield of the CVP that was dedicated to 
fish and wildlife purposes under the CVPIA. Reclamation is also working 
directly with CVP south-of-Delta contractors on an Integrated Resources 
Plan, which looks at locally implementable water supply and 
conservation projects, socio-economic analyses associated with water 
supply, and the impacts of proposed water supply projects on drainage 
in the region. Finally, we are reinitiating our work to consider the 
possibility of a large scale land retirement program that could yield 
water supply, reliability and improved water quality along with 
environmental benefits throughout the San Joaquin Valley.
    That concludes my testimony. I would be pleased to answer any 
questions you may have.
                                 ______
                                 
    Mr. Calvert. I appreciate your testimony.
    Next, Mr. Steve Macaulay, Chief Deputy Director, California 
Department of Water Resources. Sir, you are recognized for your 
opening statement.

STATEMENT OF STEVE MACAULAY, CHIEF DEPUTY DIRECTOR, DEPARTMENT 
            OF WATER RESOURCES, STATE OF CALIFORNIA

    Mr. Macaulay. Thank you very much. I appreciate the 
opportunity to be here today on behalf of California Resources 
Secretary Mary Nichols and my director, Tom Hannigan. I 
provided copies of my more detailed testimony, which also 
addresses State water project water allocations for the current 
year. I ask that you accept my written testimony, which I will 
quickly summarize.
    The Subcommittee has invited testimony on the two points 
that the Chair has indicated. These are topics that are being 
addressed both by the CALFED Bay-Delta Program and the 
Department of Water Resources. I wanted to make a clear 
statement that Governor Davis stands strongly for a successful 
CALFED implementation in all of its components.
    On the first issue, the Department of Water Resources 
updates the California Water Plan every 5 years. This is a road 
map about how to address future water needs. We are on track to 
produce the next update next year. We have undertaken a 
fundamentally new approach to updating the California Water 
Plan which is indicated in an attachment to my written 
testimony. The update is being prepared with an unprecedented 
level of input from stakeholders.
    Meeting future water needs, and in fact meeting present 
water needs in dry years, requires a full range of efforts. 
While CALFED programs are at the center of much of what is 
being done in California to meet water needs, other activities 
are underway as well.
    Certainly there has been a great deal of focus by members 
of the Committee on the Colorado River Water Use Plan, which 
requires California to reduce its water use, historical water 
use, by some 800,000 acre-feet of water, and we are clearly 
aware that the interim surplus criteria are directly linked to 
implementation of the plan. The components certainly include 
transfer of conserved ag water and lining of canals, and to 
that end, California voters have provided $235 million to help 
in that effort, as well as development of Metropolitan's 
Hayfield groundwater storage project.
    Another aspect of meeting future demands is regional 
leadership in project development. We no longer have quite the 
top-down system we had back in the '50's and '60's. Local and 
regional water agencies are working aggressively to diversify 
their water supplies and use them far more efficiently. This is 
a clear long-term trend, and I would like to mention a couple 
of examples.
    First, and you will hear this from Tim Quinn and others, 
Metropolitan Water District's Diamond Valley Reservoir and 
Inland Feeder projects, multiple billions of dollar 
investments; and local pursuit of reclaimed water, much more 
aggressive conservation. Much of this is being funded, 
certainly the latter, the smaller projects, are being funded by 
money provided by California voters in the passage of both 
Proposition 204 and Proposition 13.
    The Subcommittee's second issue deals with the CALFED ROD 
water supply reliability. To that end, our actions include 
Joint Point of Diversion, which I will touch on; the south 
delta improvements program; temporary barriers program; and a 
range of other actions on which we are working with the bureau, 
which is detailed in Interior Assistant Secretary Bennett 
Raley's written testimony.
    I will also address four related issues: the CALFED Science 
Program; the Environmental Water Account; certainly passage of 
Federal legislation to authorize CALFED; and responses to court 
decisions in a manner consistent with the CALFED program.
    On Joint Point, I think most of the Committee members are 
aware that this is essentially the use of State Water Project 
pumping and conveyance facilities to help out the CVP and other 
water users. We have significant actions underway to implement 
Joint Point this year which are detailed in my written 
testimony. And again, that is something that has to be approved 
by a regulatory agency, in California the Water Resources 
Control Board. The written testimony again includes specific 
actions we are taking.
    One point I wanted to make, and that is that we have used 
Joint Point for more than the last 20 years to help out the 
CVP. Over the last 20 years we have pumped some 5 million acre-
feet for the Federal water project. This amounts to annual 
average pumping of about a quarter of a million acre-feet, with 
a high ranging as high as a half a million acre-feet a year for 
the CVP, and we certainly intend to continue and expand this as 
our pumping abilities expand over time.
    More permanent South Delta water management facilities 
include facilities in the channels in the Delta, as well as an 
increased fish screening capability and investment in a great 
deal of permanent infrastructure, including some South Delta 
specific ecosystem restoration components. Part of what we are 
doing in the near term is constructing those barriers on an 
interim basis to protect south delta farmers, while allowing us 
to pump additional water for the CVP and the Environmental 
Water Account, and water users who need a dry-year supply when 
we implement a drought water bank or something similar.
    On the CALFED Science Program there are three points I 
would like to make. First, we are making huge investments in 
ecosystem restoration, new fish screen technology, and 
operational changes.
    The second point is, the science needs to address what is 
needed to help endangered species populations and get away from 
the historical principal focus on so-called take limits at the 
export pumps.
    And third is what we need more of, and I think CALFED has 
already gotten us underway, is science in action, science 
oriented toward the management actions that need to be taken 
nearly immediately, in real time, to more efficiently use the 
operation of our existing facilities.
    I have written comments on the Environmental Water Account 
which I will not summarize. I certainly wanted to thank the 
Chairman and Senator Feinstein for the leadership they continue 
to show in moving forward with CALFED authorizing legislation.
    I wanted to make a quick comment about response to court 
decisions. This doesn't have to be a zero sum game. We 
recognize that Judge Wanger's decision last week moves us a 
long way forward toward the 65 to 70 percent goal, and the 
judge's decisions, very clear decisions on reset and offset, 
and the prior decision on the 450 cap.
    That could spawn another fight. Again, we would like to 
view this as not a zero sum game. We need to use CALFED's--it 
is a trite term, but it has relevance here, and that is 
adaptive management. We don't want to have this successful 
conclusion to this fight spawn another fight over ESA 
assurances, for example, for water project operations in 2002. 
This is something we are pledged to work with Secretary Nichols 
and Assistant Secretary Bennett Raley on over the next month.
    So with that, I will conclude my testimony and be available 
for questions. Thank you.
    [The prepared statement of Mr. Macaulay follows:]

    Statement of Steve Macaulay, Chief Deputy Director, California 
                     Department of Water Resources

    The Subcommittee has invited testimony on two related points: 
meeting California's urban, agricultural, and environmental water needs 
in the 21st Century, and the administrative, operational, and 
legislative changes that would help meet the goals of water supply and 
reliability set forth in the CALFED Record of Decision. These are 
topics that are being addressed by the CALFED Program and the 
Department of Water Resources. Governor Davis stands strongly for a 
successful CALFED implementation in all its components.
    Issue 1: Given that present and future demands of urban, 
agricultural, and environmental needs exceed the capacity of the 
project, where do we find solutions to reliably meet these needs in the 
21st Century?
    The first issue identified by the Subcommittee mentions limitations 
of ``the project.'' My responses address the issue in the context of 
the entire State, with of course significant implications to the future 
of the Federal Central Valley Project (CVP) and the California State 
Water Project (SWP).
    The Department of Water Resources (DWR) has the statutory 
requirement to update the California Water Plan every five years. Our 
last update was in 1998, and we are on track to produce the next update 
in 2003. DWR has embarked on a fundamentally new approach, scope, and 
process for preparing the California Water Plan Update 2003 (Bulletin 
160-03). The update will be California's plan to meet the State's 
future water needs, a useful reference for water planners and decision-
makers, and a living document that integrates statewide and local 
planning initiatives. The update is being prepared with an 
unprecedented level of input from stakeholders. Attached to our 
testimony is a short status report on this effort.
    As indicated in CALFED Executive Director Patrick Wright's 
testimony, meeting future water needs--and in fact meeting present 
water needs in dry years--will require a wide range of efforts in 
addition to developing new water supplies. While CALFED programs are at 
the center of much being done in California to meet future needs, other 
activities are underway as well. One of these addresses Colorado River 
issues. California's draft Colorado River Water Use Plan is intended to 
demonstrate how California will reduce its use of river water over time 
to the State's basic apportionment, in response to the increased 
reliance upon the Colorado by its neighboring Lower Basin states. The 
availability of water formerly unused by Nevada and Arizona, as well as 
hydrologic surplus conditions, has historically allowed California to 
use some 800 thousand acre-feet annually in excess of its basic 
apportionment.
    The U. S. Bureau of Reclamation (USBR) Interim Surplus Criteria for 
river operation are designed to reduce the risk of shortages to 
California's urban water users while initial elements of the draft Plan 
are being implemented. These elements include transfers of conserved 
agricultural water to urban areas (such as the existing transfer 
between the Imperial Irrigation District and the Metropolitan Water 
District of Southern California, and the proposed IID-San Diego 
transfer), canal lining programs to conserve water now lost to seepage, 
and groundwater storage programs. The State of California has executed 
agreements providing $235 million in financial assistance to local 
water users for lining the remaining unlined portions of the Coachella 
and All American Canal, and for MWD's Hayfield groundwater storage 
project.
    In addition there are initiatives being undertaken at the local 
level to develop more regional self-sufficiency and more local control. 
For example, MWD has developed the multi-billion dollar Diamond Valley 
Reservoir and Inland Feeder projects which allow them to much more 
efficiently use their water supplies from both the Delta and the 
Colorado River. We and local agencies are also aggressively pursuing 
water conservation and reclamation to use existing water supplies much 
more efficiently. The funding, leadership and public focus provided 
through the CALFED Bay-Delta Program has greatly advanced efforts in 
the area of water use efficiency. California voters have provided very 
strong monetary support.
    Issue 2: In your opinion what administrative or operational 
changes, consistent with existing law, or legislative changes can be 
made to meet the goals of water supply and reliability set forth in the 
CALFED Record of Decision?
    There are many elements of the CALFED long-term plan that will 
increase water supply reliability, including new or expanded water 
storage and a strong water use efficiency program. There are also near-
term actions related to facilities and operations that the State of 
California is taking to improve water supply reliability, including 
benefits for the Central Valley Project. I will describe these 
operational tools as well as some longer-term actions that are not 
directly related to water project operations, but which are essential 
to maintaining and improving water supply reliability in California.
    Some of the near-term actions relate to an arrangement between the 
State Water Project and the Central Valley Project called ``Joint Point 
of Diversion'' (JPOD, or ``Joint Point''). Under California water 
rights law, each water project is permitted to draw water from the 
Delta at its own pumping facility. There are times when it is 
advantageous for one project to draw water from the Delta using the 
pumping plant of the other project. This is physically possible because 
the projects' distribution systems are joined ``downstream'' from the 
two pumping plants. In fact, we share the capacity of the San Luis 
Reservoir south of the Delta, where Delta water is pumped into storage 
for later delivery to water users in the San Joaquin Valley and 
southern California. Joint Point is an institutional arrangement, 
permitted by the California State Water Resources Control Board, that 
allows the projects to use the two separate pumping plants as if they 
were jointly-held facilities. However, this arrangement comes with 
conditions requiring that actions be taken to prevent the use of Joint 
Point from incrementally affecting the water supply capabilities of 
water users in the south Delta or fish and wildlife. We have developed 
the response plans for the use of Joint Point. Once these plans have 
been approved by the SWRCB, the use of Joint Point for this year will 
be in place.
    In theory, either project may pump water for the other. In 
practice, it is the State Water Project that more often pumps water for 
the Central Valley Project since our project has greater pumping and 
conveyance capacity than the CVP. The two projects have used Joint 
Point for many years to increase water deliveries for CVP customers and 
to facilitate other water transfers across the Delta. Over the past 20 
years, the SWP has pumped more than 4.9 million acre-feet for the CVP. 
This is water that would otherwise not have been available to CVP 
contractors and other users south of the Delta. During this 20-year 
period, annual pumping at SWP facilities for the CVP has averaged 
nearly 250 thousand acre-feet, and ranged up to a high of 499 thousand 
acre-feet.
NEAR-TERM ACTIONS RELATED TO FACILITIES AND OPERATIONS
    Clearly, use of Joint Point is very beneficial to the CVP. The 
benefits are likely to increase over time, because the SWP is working 
on projects in the Delta that will provide increasing water supply 
benefits throughout the first stage of CALFED implementation by 
increasing our pumping capabilities. These include the South Delta 
Improvements Program and the Temporary Barriers Program.
The South Delta Improvements Program
    The South Delta Improvements Program (SDIP) proposes 1) facilities 
in the channels of the south Delta to improve local farmers' ability to 
divert water, and 2) improvements to the State Water Project which will 
increase the reliability and quantity of water supply pumped from the 
Delta. It is the first CALFED project implemented to increase water 
supply exported from the Delta.
    The first action under the SDIP will be taken next year and will 
increase the Delta export limit of the SWP to 8500 cfs, an increase of 
almost 30% at some times of the year. The SWP will not be the only 
beneficiary of this action. There will be increased opportunity for the 
CVP and CALFED's Environmental Water Account (EWA) to use the SWP 
facilities either to transfer water from upstream storage or capture 
excess water in the system. Preliminary studies of the potential water 
supply benefit indicate the CVP will receive an annual average benefit 
of 35,000 acre-feet. This is about 20% of the total preliminary benefit 
estimate. The opportunity for private parties to transfer water across 
the Delta will also increase. Finally, increasing the export limit 
improves the ability to protect fish by providing more opportunities to 
recover pumping reductions conducted for fish protection. Of course 
this is in addition to the additional fish protective measures that 
will be developed as part of our work in the Delta.
    The next step of the SDIP to increase Delta water supply is to 
raise the export limit to the maximum amount the SWP can convey: 10,300 
cubic feet per second. This will match our pumping capabilities with 
the capacity of the California Aqueduct. This increase would begin as 
new, screened export facilities become operational, possibly as early 
as 2006. Once again, the CVP will benefit from the increase due to the 
improved opportunity to transfer water from upstream storage or capture 
excess water in the system. Opportunities for the EWA (or an equivalent 
type of account), flexing operations to protect fish, and private-party 
water transfers are also expected to increase.
The Temporary Barriers Program
    The SWP has and continues to help the CVP delivery reliability by 
improving conditions for local diverters in the south Delta. SWP and 
CVP exports contribute to low water levels in south Delta channels, 
reducing or preventing agricultural diversions from the channels. Due 
to the restricted ability of the CVP to adjust the export rate at its 
pumping plant, the CVP has a much greater impact upon water levels than 
the SWP.
    Low water levels can prevent the use of Joint Point. DWR is the 
principal agency taking action to improve these conditions. The actions 
include extensive dredging of channels surrounding the CVP export 
facility in the south Delta to improve recreational navigation 
completed in 2000 and site specific improvements to local diversions 
taken in 2001 at a total cost of $3.7 million. DWR has committed 
$400,000 per year to continue site-specific diversion improvements. The 
USBR has no such program, although they provided land for dredge 
disposal last year.
Water Allocations for 2002
    As water managers, we strive to meet our customers' needs every 
year, but weather and hydrology do not always allow us to deliver the 
full amount that our customers request. The last water year was a 
challenging one for the SWP. Due to water storage conditions, SWP 
percentage allocations last year were even less than the CVP.
    For water year 2002, the initial allocations we made in December 
2001 were significantly lower than the past few years, primarily due to 
preceding dry conditions. Runoff in 2001 was significantly below normal 
for the first time in the past seven years. Last month we were able to 
increase the SWP allocations from 20% to 45% due to the above average 
rain and snow during December. Since then, we have had dry conditions. 
Our ability to deliver any more than 45% to our contractors this year 
will depend largely on the weather in the next two months.
    As water managers, we realize that our ability to meet our 
customers' needs is based partly on our water supply infrastructure, 
partly on our ability to operate our facilities in creative and 
collaborative ways, and partly on what nature gives us.
Additional Actions
    CALFED provides a forum for State and Federal agencies to work 
together collaboratively to find ways to meet our various objectives. 
We are working with the USBR to identify and implement actions that 
will help meet water supply goals in the ROD, consistent with other 
aspects of the CALFED program.
LONGER-TERM ACTIONS ESSENTIAL TO WATER SUPPLY RELIABILITY
    Finally, I would like to describe a few elements of the CALFED 
program that are not part of the bricks-and-mortar water supply 
infrastructure, but are nevertheless essential to improved water supply 
reliability in California. These are CALFED elements that will improve 
our ability to operate our facilities in creative and collaborative 
ways. They include:
     Lthe CALFED Science Program which will allow us to learn 
more about the system and rapidly apply what we learn,
     Lthe Environmental Water Account that is identified in the 
ROD as an essential component of meeting the water supply goals 
expressed in that document,
     Lpassage of Federal authorizing legislation and secure 
funding for the CALFED program, and
     Lresponse to court decisions in a manner consistent with 
the CALFED program and its approach.
    I will address each separately.
The CALFED Science Program
    The CALFED Science Program is integrating objective science and 
unbiased peer review into every aspect of the CALFED program, 
developing the best scientific information possible to guide decisions 
and evaluate actions. DWR is committed to rapidly integrate into real-
time operations the better science we are getting through CALFED. At a 
basic level, this means conducting exhaustive real-time monitoring of 
Delta channels for fish species of concern, particularly during the 
spring months when the potential for conflict between water operations 
and fish protection is the greatest. When fish will be harmed by our 
operations, we can use some of the new tools that CALFED provides, such 
as the Environmental Water Account, to protect fish and water users.
    Water supply reliability in the Delta is directly linked to our 
knowledge of endangered species population dynamics. The so-called 
``take limits'' are based in some cases on generalized understandings 
or theories on how fish losses at the export pumps affect species 
populations. The SWP and CVP are doing their part to develop the best 
possible screens and fish handling facilities. There is a Federal test 
facility under development at Tracy and plans to apply the knowledge we 
gain from that facility to the design and construction of screens that 
are subsequently installed as part of the South Delta Improvements 
Program. With better fish screens also needs to come refinement in our 
understanding of the effect that our facilities have on Delta fish 
species at the population level. The bottom line is we all need to work 
together to achieve the CALFED goal of recovery of at-risk species 
dependent on the Delta, and we need to have better ways of prioritizing 
actions and measuring success.
The Environmental Water Account
    The Environmental Water Account is included in the CALFED ROD as a 
four-year experiment. We need to continually ask ourselves how well the 
EWA is doing its job, so that at the end of four years we can make an 
informed science-based decision on whether the EWA should be a long-
term part of the CALFED Program. To help assess the success of the EWA, 
CALFED has pledged to convene an independent science panel each year 
during the four-year experiment. The panel has reviewed the first year 
of EWA operations and offered positive findings and constructive 
suggestions for improvement.
    The CALFED ROD correctly observed that there would be almost no 
``bricks and mortar'' improvements in our water supply infrastructure 
during the first few years of the program, so implementation of the EWA 
is essential to improve water supply. To that end, California has 
provided over $87 million for the first two years of EWA operation, 
about 80% of the total EWA funding.
    Under the CALFED ROD the combined actions taken under Central 
Valley Project Improvement Act (CVPIA) Section 3406 (b)(2) and the EWA 
together secure commitments from the State and Federal fishery 
agencies. These commitments are that additional measures to protect 
fish at the expense of the water supplies of both the CVP and SWP will 
not be taken under the State or Federal endangered species acts unless 
truly unforeseeable events occur. (A third tier of protection involving 
actions needed to prevent immediate jeopardy to the continued existence 
the species could be invoked in such circumstances.) Neither b2 nor EWA 
alone is sufficient to secure the CALFED ROD commitments to water 
supply reliability of the CVP and SWP. Without EWA the water supplies 
of both the CVP and SWP will be affected. The EWA deserves strong 
support from the Congress, since it ties directly to the water supply 
reliability focus of this oversight hearing.
Authorizing Legislation and Secure Funding
    During CALFED's planning stage it was possible for the program to 
function effectively as an informal, cooperative interagency effort. As 
we begin to implement the long-term plan, various State or Federal 
agencies have taken the lead on various CALFED programs and projects. 
As we do so, we run the risk of narrowing our focus too much on 
specific actions or objectives of the CALFED Program. I remember 
history very well, and we do not want to repeat it: CALFED exists 
because State and Federal agencies all wore institutional blinders back 
in the early 1990's, and that single-focus mentality caused us all to 
fail in meeting our objectives.
    That is why we need CALFED as a permanent entity to draw us 
together and balance the range of objectives that we individually 
strive to achieve. In order to play that role, and keep us on the road 
to success, CALFED needs to be a real entity with a secure funding 
stream. These are areas where Congressional action is essential.
Responding to Court Decisions
    As always, the courts play a role in water issues. The Federal 
District Court in Fresno has played a role the past few years regarding 
litigation over implementation of Section 3406(b)(2) of the CVPIA. On 
February 5 Judge Wanger ruled on several issues which will have 
significant implications on CVP water operations beginning this year, 
likely firming up water supply reliability which has been a major issue 
confronted by the Subcommittee.
    Arguments in court, as we understand them, pit water supply 
reliability against fish protection. This does not have to be a ``zero 
sum game'' as some will represent. To provide both water supply 
reliability and fisheries protection, it will be critical to employ the 
``adaptive management'' tool in the CALFED arsenal. While the issue is 
not yet settled, a first challenge will be how to deal with Endangered 
Species Act ``assurances'' for water project operations during 2002.
    Whenever there is court ruling that affects our ability to meet 
water needs, or there is a dry year, or a conflict between water 
delivery and fish protection, we will be at a crossroads where our 
previous approaches may no longer serve us well. At these times we need 
to adapt our actions in ways that allow us to meet all the CALFED 
objectives. Failing in any of the objectives just invites further 
litigation by one side or another.
    To summarize, California is moving vigorously to expand our ability 
to use Joint Point to benefit the CVP, the Environmental Water Account 
as well as overall water transfers. Our efforts include short-term 
actions that maintain our ability to use Joint Point, and improvements 
that would allow us to pump more water using this tool. We must do this 
responsibly and in compliance with specific provisions of State law. We 
are ready to work collaboratively with our peers at USBR to help 
implement other short-term actions that will improve water supply 
consistent with the CALFED Program. In the longer term, water supply 
reliability depends not only on new facilities and improved efficiency, 
but on the application of sound science to the process, new tools such 
as the Environmental Water Account with the assets needed to do its 
job, a permanent CALFED entity with secure funding, and an unwavering 
commitment to the balanced implementation of the entire CALFED 
program--especially in the face of the inevitable litigation.
    I would be glad to answer questions from the Subcommittee.
                                 ______
                                 
    [An attachment to Mr. Macaulay's statement follows:]
                   California Water Plan--Update 2003
                           2001 Status Report
(submitted to the house subcommittee on water and power, february 2002)
    The Department of Water Resources (DWR) is updating the California 
Water Plan for release in 2003. Our goal is for Update 2003 to meet 
Water Code requirements, receive broad support among those 
participating in California's water planning, and be a useful document 
for the public, water planners throughout the state, legislators and 
other decision-makers. The goal and new approach are articulated in the 
California Water Code.
    DWR has fundamentally reformulated and expanded the process and 
content of Update 2003 in response to new requirements of State law, 
and significant public comment. We are developing Update 2003 using an 
open and collaborative process with a 65-member public Advisory 
Committee, a 260-person Extended Review Forum, and an outside 
facilitation team.
    During the preparation of Update 2003, DWR will fairly evaluate a 
reasonable range of options advanced by the Advisory Committee. And 
while we don't know now what will ultimately emerge from this 
collaboration, we are hopeful that the committee will reach significant 
consensus that we can reflect in Update 2003. In addition, by viewing 
the Water Plan Update as an ongoing strategic planning process, DWR and 
stakeholders can continue working on ideas and options that cannot be 
sufficiently explored in Update 2003 because of resource and time 
limitations.
    Since January 2001, we have worked with the Advisory Committee to 
shape the new framework and strategic planning process for this update 
of the Water Plan. As a result of nine full-day meetings and over two-
dozen work group meetings, Advisory Committee members have concurred on 
the following key features of Update 2003:
     LCreate detailed state and regional ``water portfolios'' 
to more comprehensively describe water supplies, water uses, and water 
management decisions, while identifying underutilized opportunities and 
unmet challenges for all beneficial uses;
     LDescribe current conditions of water supply, use and 
management with actual data and detailed narratives for three recent 
years having varying amounts of precipitation, namely 1998 (wet), 2000 
(above normal), and 2001 (dry). In past updates we had used averaged 
and ``normalized'' data to represent a typical average and a typical 
dry year;
     LIdentify multiple ranges for key factors affecting water 
supply and use, as well as for water management options, that can be 
combined in different ways as ``building blocks'' to produce different 
versions of the state's water future or ``Study Plans'';
     LAssemble multiple ``Study Plans'' to consider alternative 
futures and a variety of management options for the state and its 
individual regions;
     LConsider, as project resources and time permit, multiple 
hydrologies and planning horizons when forecasting alternative futures, 
such as 2010, 2020, 2030, and 2050;
    In addition, the Advisory Committee has identified global climate 
change as one of the factors we should consider in Update 2003. The 
California Water Plan will include a comprehensive discussion on the 
potential impacts and implications of global climate change on 
California's water system infrastructure and future water supply, 
quality, and management, including short and long term recommendations.
    The key features listed above are the outcome of our work with the 
Advisory Committee. DWR encourages additional review and suggestions. 
Early in 2002, we will hold several workshops across the State to 
receive comments from the Extended Review Forum and other members of 
the public on these draft assumptions and estimates. In addition, we 
will continue to work with the Advisory Committee to refine the 
assumptions and estimates. DWR will maintain and update the Assumptions 
& Estimates website (www.waterplan.water.ca.gov/AandE/) as a ``living 
document'' throughout the preparation of Update 2003. The information 
on this website will ultimately become the Water Plan's technical 
reference guide.
    DWR and the Advisory Committee are just beginning to address 
several other key elements of Update 2003. These include: (1) 
addressing how regional water management efforts for improving water 
supplies and minimizing imports from other regions will be incorporated 
into Update 2003 pursuant to Senate Bill 672 (Machado), (2) developing 
goals and management options (``where we want to be''), (3) discussing 
how to select, evaluate, and compare Study Plans (using modeling tools 
and evaluation criteria), and (4) identifying indicators and ongoing 
efforts to monitor and track progress toward implementing the 
recommendations of Update 2003. As these elements are better defined 
with the input of the Advisory Committee, we will periodically update 
the Assumptions & Estimates website.
                                 ______
                                 
    Mr. Calvert. I thank the gentleman for his testimony.
    Mr. Raley, I am going to ask a series of questions, some of 
which you have already addressed in your testimony, but just to 
reassure the record for various reasons.
    What is your evaluation of the Federal court actions 
relative to the 800,000 acre-feet litigation?
    Mr. Raley. Mr. Chairman, certainly it is relevant. We have 
asked attorneys and staff for the primary agencies to provide a 
report to us on exactly what the legal ramifications of that 
decision are with respect to CALFED in general and the '02 
operations plan in particular. We are also coordinating with 
the State of California to make sure that we understand what it 
believes the implications of those decisions are on the 
parallel California laws that the project operates under. I 
have asked for a report on that as quickly as possible, and 
know that it is essential that we all have some answers so that 
we can figure out how we are going to proceed with the 
operating plan for 2002.
    Mr. Calvert. So you would believe, based upon hopefully the 
examination of that record and that court decision, that (b)(2) 
policy by the previous administration is in need of revision?
    Mr. Raley. I believe that it is accurate to say that the 
court found that at least three aspects of the (b)(2) 
accounting, as defined in the August '99 definition, are not 
within the authority of the Secretary, and so as a consequence 
there has to be some consideration of that reality. We can no 
longer operate under those assumptions.
    Mr. Calvert. Do you believe that if there is normal 
rainfall for the remainder of the water year, that the CVP will 
be able to deliver 65 to 70 percent called for in the Record of 
Decision to south-of-the-delta water users?
    Mr. Raley. Mr. Chairman, I am disappointed to say that I 
have not been yet provided with a basis to conclude that in a 
normal year the delivery south of the delta will be in the 65 
to 70 percent range.
    Mr. Calvert. The environmental baseline built in in the 
Record of Decision may have to be reevaluated, as you 
mentioned. In the light of Judge Wanger's recent decision, will 
that require reconsultation with the biological opinions?
    Mr. Raley. That is the very question that we have asked the 
responsible agencies to provide us with their position on.
    Mr. Calvert. Where has the department identified 
opportunities for more flexible operation of the CVP so that 
water supplies can be increased and made more reliable, while 
still providing appropriate ecological protection and 
improvement?
    And more specific, with the Klamath biological as a model, 
will the department draft new and revised biological 
assessments to reflect these opportunities and reinitiate 
consultation with Fish and Wildlife Service and other 
appropriate agencies?
    Mr. Raley. If I may take your, what I perceive to be the 
second part of your question first, with regard to the role of 
science and the implication of the NAS study in the Klamath 
Basin, going back to the Secretary's first statements on these 
issues in general and her testimony before Congress last summer 
on CVP and CALFED, she has been and remains committed to full 
utilization of science in the process.
    In the context of CALFED, it is a different situation than 
existed in the Klamath Basin. CALFED has a Science Committee. 
There has been a greater attempt to have a more disciplined 
approach to studies, to integration of science in the 
decisionmaking process, as a result of having that structure.
    I have also suggested at the December CALFED meeting that 
it seemed appropriate, given everyone's commitment to science, 
that there be three components of that question that are 
considered in the future, the first component being, I have 
heard repeatedly that certain assumptions underlying CALFED, 
scientific assumptions, are ``off the table'' and not subject 
to being considered. I am certain that those statements were 
not made by scientists because the very nature of science is 
the need to continually reassess the validity of prior 
assumptions, and that is also the nature of adaptive 
management.
    So I am hopeful that CALFED will move forward, and we have 
some preliminary thoughts on how to do that, with an 
examination of those assumptions to make sure that they are 
still supported. And then the second part is to make adaptive 
management work, so that as we continually learn, we get 
better, smarter. And then finally we need to find a way to 
embed that science process into the entire CALFED fabric in a 
way that it is not a ministerial or a routine act satisfied by 
checking some boxes. it needs to be an active engagement in a 
structured way.
    We have not made a decision with respect to a request for a 
formal National Academy of Sciences review. That has been one 
of the options, but we have not made a decision on that.
    Mr. Calvert. Thank you.
    Mr. Dooley?
    Mr. Dooley. Thank you, Mr. Chairman.
    I thank both of you for your testimony and also for what I 
know is your very sincere efforts to try to find a way that we 
can provide greater certainty in water deliveries as well as 
maintaining our commitment to providing for environmental 
enhancements.
    I just want to clarify, Mr. Raley. Did you say that the 
department is going to be reconsidering the allocations of 
water in the 2002 year in a manner that is consistent with 
Judge Wanger's recent rulings?
    Mr. Raley. The department will respect and implement the 
judge's ruling with respect to (b)(2) accounting. However, I 
need to point out that that legal proceeding is not completed 
and there are various alternative paths that we don't have 
control over, that may affect how the department complies with 
the court's order.
    Mr. Dooley. I am not quite sure. Are you alluding to the 
fact that there might be an appeal filed, or I am not quite 
sure what--
    Mr. Raley. There may be an appeal. There may be a request 
for stay. Those options are there as a matter of law, and we 
just want to recognize that there are potentially yet 
additional chapters to be played out in the decision regarding 
(b)(2).
    Mr. Dooley. But today we have a court ruling that, you 
know, has some pretty clear decisions that are embodied in it. 
Has there been a directive to the bureau to comply with those 
rulings?
    Mr. Raley. There has, yes, orally.
    Mr. Dooley. OK. Thank you. There has been a lot of 
attention given in terms of the legislation that Mr. Calvert 
and I and others have introduced, and we passed through the 
Interior Committee, on how we can best assure that we will be 
able to see to the greatest extent practical compliance with 
what was provided in the Record of Decision, in particular to 
contractors south of the delta.
    This is an issue that obviously has some controversy, 
because there are water users that are concerned about this 
having an adverse impact by our efforts to meet the 65 to 75 
percent target. Now, that is something that I recognize and Mr. 
Calvert recognized, and we made efforts to try to give the 
Secretary the flexibility that they would need to meet these 
targets, and also provided direction to the Secretary that in 
their efforts to meet these targets, that they would not harm 
other water users.
    And I don't know if you have had a chance to review the 
legislation, but I just want to go over it a little bit with 
you, in terms of this would be the discretionary authority, so 
it wouldn't be mandatory, where we state the Secretary shall 
use the discretion of the Secretary to the maximum extent 
practical to accomplish the goal, during a normal water year, 
of making available to south-of-the-delta Central Valley 
Project agricultural water service contractors at least 70 
percent of their water supplies.
    Now, would you interpret that language, when we used the 
words ``use the discretion...to the maximum extent practical'' 
as not a mandate or a requirement that you meet this, but a 
direction to whatever is practical to hit these targets?
    Mr. Raley. Congressman, what I need to do is go back to 
Secretary Norton's testimony of last summer, because that is 
the only official administration position on legislative 
language on the assurances, and that was that the Department 
was not comfortable with that form of assurances language. We 
look forward to working with you and all concerned to resolve 
that issue.
    Mr. Dooley. I would just state, you know, that this is not 
the same language that Secretary Norton testified. And what I 
will then ask is that the department review this new language 
that has been in place since we had the markup and give us, you 
know, what their current assessment would be, because we are 
not talking about the same language obviously at that time, 
because at that time the language said ``direct the Secretary'' 
and this language, I think we would all agree, is much 
different.
    In terms of the language that deals with trying to hold 
other water users or trying to assure that we are holding them 
harmless from meeting this target, we say ``shall be 
accomplished in a manner consistent with California water 
laws,'' to ensure that we are respecting State water rights. 
Obviously we would also have to comply with all existing State 
and Federal environmental laws, and then we also further go on 
to state that it provides that the restoration of water 
supplies for south-of-the-delta Central Valley Project 
agricultural water service contractors shall be accomplished 
without reducing deliveries, increasing the cost of, or 
otherwise adversely affecting other water suppliers and water 
users that rely on water diverted from watercourses, 
tributaries to the delta and in the delta.
    With that specific language, is that not clear enough or 
provide direction to you that in meeting the 65 to 70 percent 
target, that you could not harm any other contractor, or do we 
need to have even more language in there that would be 
specific?
    Mr. Raley. Congressman, let me take both of your requests 
back to the department, and we will discuss them further and be 
back to you.
    Mr. Dooley. OK. Thank you. I have a chart that I would like 
to--is it going up? This, you know, this year quite frankly a 
lot of the people I represent are very frustrated because of 
the initial allocations that only got us to the 45 percent, 
which we contend is clearly inconsistent with the Record of 
Decision. And to my knowledge these figures are accurate, that 
we, our 45 percent gives us the 900,000 acre-feet of our 
deliveries.
    And this is in a year where the Bureau of Reclamation said 
on October 1 we were going to have capacity or water storage in 
Shasta of 3.5 million acre-feet on October 1. This is 300,000 
acre-feet above the maximum carryover that is allowed for flood 
control purposes. So you are going, with your numbers that you 
provide us, you are going to have to release 300,000 acre-feet 
after the water year in order to even get in compliance with 
your flood control mandates.
    And what many of us are concerned with is, it appears that 
there should have been the ability to have the discretion, if 
nothing else, to allocate this 300,000 acre-feet, which would 
have provided for another 15 percent of our deliveries to get 
us up closer to this 65 to 70 percent. And, furthermore, we 
point out that 3.2 million acre-feet is the maximum amount that 
you can carry over.
    You know, the biological opinion in 1992 on salmon requires 
only a minimum carryover of 1.9 million acre-feet, and I have a 
hard time understanding why there couldn't have been the 
discretion used that we thought was embodied in the Record of 
Decision, that could have allowed only 10 percent of that 
amount, between the 1.9 and the 3.2, to be provided, which 
could have got us to the 65 or 70 percent.
    And I guess it is based on this history and, you know, 
these examples that doesn't give me a lot of confidence that 
unless we have some type of language in here that provides 
greater encouragement to the Secretary to exercise their 
discretion, in what is an above-average rainfall year, to get 
our numbers up to above 45 percent. And, you know, what is your 
response to that?
    Mr. Raley. Well, first, Congressman, both on behalf of the 
department and personally, we are frustrated as well at the 
inability so far to meet the dual goals of achieving the 
environmental benefits and meeting the targets for water 
deliveries. There are a specific, as I am understanding this, 
suite of issues. Various parts of them, there are specific 
positions or factors that have prevented something that happens 
north of the delta from translating into additional deliveries 
south of the delta, for example, restrictions on pumping 
operations and others.
    And the bureau has been aggressively going back through all 
of these issues and sitting down with its sister agencies and 
the State to relook at prior interpretations and assumptions, 
to see if progress can be made on these very sort of issues 
that the Congressman is right to be perplexed and frustrated 
by.
    Mr. Calvert. Mr. Radanovich?
    Mr. Radanovich. Thank you, Mr. Chairman, and good morning, 
Mr. Raley. Welcome. Good to see you again, and thank you for 
your work on California water, a real simple subject and very 
easy to come to agreement on many things.
    I just have a couple of questions for you, and need to get 
something into the record, if I may. Do you know at this time 
what the water supply allocations would be in percentages for 
the Friant Water Users Authority, as pertains to Class 1 and 
Class 2, and the supply for the Cross Valley Canal? I 
understand that may be announced in a couple of days, but do 
you know that now?
    Mr. Raley. I understand what it is supposed to be by 
tomorrow, but as with any Federal decision, there are factors 
being considered up to the last minute, and I do not want to 
create expectations that are not met, in part because recent 
events have caused the bureau to have to go back and reassess 
many aspects of CVP operation. I would very much like to be 
able to give you those numbers, but I would like to defer until 
tomorrow.
    Mr. Radanovich. OK. If you can send them to me as soon as 
you are able to do so, I would appreciate it.
    Mr. Raley. If you would like, Congressman, I will call you.
    Mr. Radanovich. Terrific. I appreciate it.
    A couple of other questions. When there is the discussion 
regarding assurance, especially for the west side farmers, can 
you tell me whether or not that you will be able to meet the 
assurances that they are requesting without this being, that 
requirement being put into law at this time?
    Mr. Raley. What I can tell you is, the experience to date 
and the information that I have available to me now is that, as 
I believe I said earlier, I am disappointed to say that I do 
not foresee in a normal year reaching 65 to 70 percent.
    Mr. Radanovich. Even with the recent court decision on the 
(b)(2) allocation, if that hold up through the appeal process?
    Mr. Raley. That is correct.
    Mr. Radanovich. That is correct? Are you aware--you know, I 
have never hear of an MOA before. I have always heard of MOUs, 
memorandums of understanding. I guess what we are hearing about 
is a memorandum of acceptance between Westlands and Friant 
Water Districts regarding the issues that keep that area in 
conflict, a withdrawal of the permit, meeting of land 
retirement in Westlands, attaining, you know, the assurance 
requirements, those types of things. You are aware that there 
is a memorandum of understanding out there right now?
    Mr. Raley. Congressman, the department, like Members of 
this body, strongly prefer when their constituents work out 
their differences between themselves, and I am aware that there 
are efforts moving forward to have those discussions. I am not 
aware that they are at a level where there is a document that 
has been agreed to or finalized.
    Mr. Radanovich. OK. To my knowledge, and I have met with 
Westlands and the assurance was given to me, and we should 
probably have the document today, that there is a memorandum of 
I think acknowledgement or acceptance or something that they 
are proposing for Friant to sign as a means of resolving the 
conflicts between the two water regions.
    To my knowledge, and I haven't met with Friant yet, and I 
am not sure that Friant is in the room and I know that they are 
not on the panel to testify, but if there is such a memorandum 
of acceptance, I would like to know, if it is at Friant's 
doorstep, whether Friant has considered it yet and, if so, what 
is their answer to that memorandum, but also whether or not 
they have even received it. And I don't know if there is a way 
to ask somebody from Friant. I mean, I am not even sure that 
anybody from Friant is here, but I do know that they are not 
scheduled to testify, but I would like to get the answer to 
that information.
    Mr. Calvert. Well, we can certainly keep the record open 
and have them put in a written response to that question.
    Mr. Radanovich. OK, because I would like to know the answer 
to that. My desire is to resolve that conflict before this 
legislation gets passed, as you know.
    Mr. Raley. Ours, too, Congressman, and so we are very 
excited about discussions, and we believe that in some cases 
the best thing for the Federal Government to do is stay out of 
the way of productive work by the people on the ground.
    Mr. Radanovich. If there is an agreement or a possibility 
of agreement out there in some type of form or document, I 
would request that you become familiar with it, if you don't 
mind, and also contact both Friant and Westlands just to see 
what their intentions are regarding that.
    Mr. Raley. I will anxiously do so, because I hope it will 
allow us to move forward on some of the complex issues that you 
know better than I, but that I have become familiar with in the 
preceding 8 months.
    Mr. Radanovich. OK. Thank you. I do have one other 
question. It may be premature, but I am wondering if the 
administration has a viewpoint established between the two 
versions of bills, the one in the House and the one in the 
Senate, with regard to their position on water storage.
    To my knowledge, the Senate version would set actually a 
water project further off into the future by requiring more 
studies before there is implementation of the project. This 
bill is a little more aggressive in getting those sites 
established. And knowing the difference between the two, does 
the administration have a viewpoint as to which one that they 
would prefer to see at their desk?
    Mr. Raley. The administration's position on this issue in 
general is limited to that articulated by the Secretary last 
summer, but I can also say that we are committed to the 
principle of balance, as I alluded to in my opening remarks, 
balance amongst the many goals, including storage and 
environmental restoration.
    Mr. Radanovich. I would request the administration to side 
in favor of a bill that is more aggressive in water storage. I 
think the administration is going to have to weigh in on this 
because California has proven itself, on both electricity and 
water, to stick its head in the sand and ignore reality until 
we have emergencies. And it is my desire to get a bill that is 
very aggressive on getting water storage in as soon as 
possible, and I wish--I would like to see the administration 
weigh in on that and be an influence in making sure that we end 
up with a bill like that.
    Mr. Raley. I will take that personally to the Secretary.
    Mr. Radanovich. Thank you, sir. Thank you.
    Mr. Calvert. I thank the gentleman.
    Ms. Solis?
    Ms. Solis. Thank you, Mr. Chairman. I have two questions.
    Mr. Raley--what are the implications of the recent (b)(2) 
court decision for the State water project and for the urban 
Southern California Water Project, and will that in effect 
result in some major revisions, if you could elaborate?
    Mr. Raley. Congresswoman, I am not trying to evade your 
question, but given that your focus is its effect on the State 
side of it, I prefer to defer to my colleague from the State of 
California, because I can address the efforts we are proceeding 
with to address that issue to the Federal agencies, but the 
State agencies have a separate role and I don't want to impinge 
on their prerogatives. If that is--maybe I misunderstood your 
question.
    Ms. Solis. That is fine, but I also want to touch on the 
fact that you do have a responsibility for implementation in 
urban areas, so it isn't just specifically to Southern 
California, but can you shed any light on that?
    Mr. Raley. Well, I apologize for misunderstanding the 
question. We very acutely understand that responsibility, and 
that is the very reason that we had a meeting, and with the 
responsible agencies, to ensure that they report to us on what 
their position is on this critical issue of the impacts, if 
any, of the court's (b)(2) decisions on the operations of State 
and Federal components of the water supply for the Central 
Valley.
    Ms. Solis. I want to go back and also ask, for my own 
clarification here, if the administration will be appealing the 
court ruling and taking steps to uphold the decision.
    Mr. Raley. The administration has not made a decision on 
any aspect of future legal proceedings or options for the 
court's ruling. However, it is my understanding that it is a 
final court order and that absent additional steps, we need to 
comply with it.
    Ms. Solis. And will your department collaborate with the 
Assistant Secretary for Indian Affairs to ensure that Native 
American rights and interests are also protected?
    Mr. Raley. We have had specific discussions, I have 
personally had discussions with Assistant Secretary McCaleb and 
his staff about CALFED in general and specific issues that have 
arisen as time has progressed, and we will continue to do so.
    Ms. Solis. One of my concerns deals more with the 
restoration aspect and how we are still going to continue to 
meet the intent of the law and environmental issues and 
Endangered Species Act requirements. How we are going to 
continue to meet the intent of the law, the 800,000 requirement 
that we still have to abide by.
    Mr. Raley. My understanding is, and I may not be aware of 
something, but Section (b)(2) of CVPIA and the remainder of 
CVPIA remain in full force and effect. What the court has done 
is concluded that the implementation and the accounting system 
for certain aspects of that wasn't within the scope of the law, 
but the 800,000 acre-foot component of CVP, I am not aware of 
any basis for concluding that that does not remain to be one of 
the many legal requirements applicable to the Central Valley 
Project.
    Ms. Solis. So you will continue to move down that path, see 
that we do stay on course and meet the parameters of the law?
    Mr. Raley. Yes, ma'am.
    Ms. Solis. Thank you.
    Mr. Calvert. I thank the gentlelady.
    Mr. Walden?
    Mr. Walden. Mr. Chairman, I have no questions for the 
witness. I just hope that you resolve the CALFED situation so 
that Mr. Raley can solve the Klamath Basin situation.
    [Laughter.]
    He has been most helpful in that endeavor. Thank you.
    Mr. Calvert. Thank you.
    Mrs. Napolitano?
    Mrs. Napolitano. Thank you, Mr. Chair.
    There are several questions that I had that have already 
been addressed, but one of the major areas of concern is, how 
is Judge Wanger's decision going to affect Southern 
California's ability to meet the 4.4 plan, which was a 
requirement of the Department of the Interior agreement with 
the State?
    Mr. Raley. Congresswoman, I am not aware that any aspect of 
the court's decision will adversely affect the State of 
California's ability and need to comply with the deadlines and 
components of that suite of agreements, but then the 
decisions--
    Mrs. Napolitano. I am not speaking of the agreements. I am 
speaking of the water supply to Southern California.
    Mr. Raley. I am not aware of any negative impacts, but then 
we are still studying and trying to understand the implications 
of the judge's decision. We are going to follow it. We just, 
with something as complex as CVP, it takes some time to 
understand how that translates into deliveries and other 
operational decisions on the ground.
    Mrs. Napolitano. I certainly would want to make sure that 
that is not forgotten when you are doing the review and the 
translation of what it actually will affect.
    Mr. Raley. I can assure you that both issues are at the 
forefront of our list of priorities.
    Mrs. Napolitano. And then to what extent is the 
administration prepared to commit to solving this issue, and 
what timeframe do you have in mind?
    Mr. Raley. I am sorry, Congresswoman, which issue? The 
California 4.4 issue or the--
    Mrs. Napolitano. No, no, no. The (b)(2) decision of the 
judge.
    Mr. Raley. We have engaged multiple agencies that have 
responsibility with respect to (b)(2) accounting, and as well 
as the entire CALFED ROD, to develop an administration position 
on what the implications of that decision are. We have 
communicated with the State of California. In fact, the very 
evening that I heard about the decision, I talked to 
representatives from the State to commit to working through 
this with them, and we are just simply going to proceed and not 
allow anything to take us from the course of staying with the 
concepts of the ROD.
    Mrs. Napolitano. That is great, and given the fact that we 
are going to be facing time constraints in the State of 
California in regards to water, what timeframe do you have in 
mind? What can you guesstimate, if you will, even if it is--is 
it several months? Is it a year? Is it--
    Mr. Raley. Well, there are two operative dates. The first 
is, tomorrow the bureau will announce its decision with respect 
to allocations, which obviously has implications, some 
implications for the State and the State project.
    Second, Secretary Nichols and I are working to clear our 
calendars and find a time so that we can have a multiday 
working session in California to make some decisions and move 
on.
    Mrs. Napolitano. So, in other words, it is immediate. It is 
pending. It will be in a mode of moving forward immediately.
    Mr. Raley. Yes, ma'am.
    Mrs. Napolitano. OK. Thank you. Thank you, Mr. Chair.
    Mr. Calvert. I thank the gentlelady.
    Mr. Macaulay, I have a couple of questions and then we can 
move on.
    What is the State of California willing to do to help the 
Central Valley Project meet its obligations for water supply 
south of the delta to CVP water users?
    Mr. Macaulay. Mr. Chairman, we are working with the bureau 
on a number of ventures. First is the Joint Point of Diversion, 
which I detailed in my written and oral testimony, which is 
simply getting permission from a regulatory agency in 
California for our project to pump water for the Federal 
project. We are also moving forward aggressively to help South 
Delta farmers continue to divert from South Delta channels, so 
that the lower water levels which are caused by the additional 
pumping won't hurt them.
    The second thing we are doing is certainly supporting the 
bureau in a number of separate efforts they are working on, 
which are detailed in Mr. Raley's testimony, such as 
surcharging San Luis Reservoir this year, an idea the San Luis 
and Delta-Mendota Water Authority has come up with to raise the 
lining in the Delta-Mendota Canal for about a half a mile, and 
a number of other specific issues.
    Mr. Calvert. Please explain how the State identified 
opportunities for a more flexible operation of the State Water 
Project, so that water supplies can be increased and made more 
reliable while still providing appropriate ecological 
protection and improvement. And do you believe the methods 
could have application to the CVP? And maybe follow up on some 
of the comments that Mr. Raley made in relation to that.
    Mr. Macaulay. Well, I would say two points. Near term, we 
are continuing to work on Joint Point. And again, as I 
indicated in my testimony, we have pumped more than 5 million 
acre-feet for the bureau, averaging a quarter of a million 
acre-feet a year. We are going to continue to do that, and as 
much as we possibly can beyond that.
    Second thing, long term, is we are making large 
investments, hundreds of millions of dollars of investments in 
new facilities in the southern delta, to be able to more 
efficiently use our own pumping plant, which allow us to pump 
more water for our customers and to pump more water for bureau 
customers.
    Congressman Dooley's chart I think really does make the 
case for why these South Delta long-term facilities are needed. 
That 300,000 acre-feet in Shasta could move south of the Delta 
in the fall, later on this year, if we had the capability of 
pumping that water through the Delta. That requires better fish 
screens, permanent operable barriers to protect South Delta 
farmers as a result of the impacts of pumping more water, and 
some separate on-the-ground ecosystem restoration measures in 
and around the pumping plant.
    Mr. Calvert. Thank you.
    Mr. Dooley, you have any follow-up questions?
    Mr. Dooley. Yes, I do.
    Mr. Macaulay, when you--in your oral statement I thought I 
understood you to say that you were hoping that we could 
initiate some scientific investigation that could aid us in our 
operation enhancements. Is that basically what you said, 
something of that nature?
    Mr. Macaulay. Yes, but if I may add to that, science has 
been an underpinning of the CALFED program since its inception, 
and perhaps Executive Director Patrick Wright will speak to 
that. So it is nothing new. I mean, that aspect of science, 
aggressive science, is new to us in California only in the last 
year and a half since the ROD. We need stronger support for 
that science program, and again, real world science where you 
have a better understanding of what makes fish populations 
react. It is not just, as we all have heard for many years, 
``take at the pumps.''
    Mr. Dooley. And that leads to, I guess, my next question, 
where you were talking about we could have utilized perhaps 
some of that water if we could increase the capacity at the 
pumps.
    And I guess, Mr. Raley, what I am concerned is, we have--
the most recent 50 percent forecast shows that in June exports 
will be reduced to approximately 36,000 acre-feet, and this 
rate of exports is nearly 200,000 acre-feet below the 
permissible level. And has Interior done an analysis of the 
benefit to the fishery resulting from this export reduction? I 
mean, it is really on--I mean, if I hear Mr. Macaulay right, we 
don't have some of this information that is allowing us to make 
some of these decisions as well as we would like.
    Mr. Raley. I think I would prefer to characterize it as 
that we believe that we may now have better information that 
existed at the time those decisions were made, and that is the 
reason why I had suggested to CALFED that we consider a review 
of those assumptions and an implementation of not only the term 
but the practice of adaptive management, so we can make better 
decisions and learn from the science we have developed in the 
interim. So we are going to be pursuing that effort to make 
sure that we are using the right science.
    Mr. Dooley. And I guess, you know, and, you know, I have 
requested the Secretary request NAS to do a study, similar to 
what they did in Klamath, because what we found in Klamath is 
that when they had researched and assessed some of the 
decisions that were being made there in terms of water 
allocation in order to protect fish, they found out that they 
weren't based on really sound science.
    And that is my concern here, is that if we would increase 
the pumping capacity just in June, that would provide another 
10 to 15 percent of water allocation south of the delta. And, 
again, this, you know, is what some of us think, you know, 
where we can get into the discretionary authority.
    And I guess one other point I want to make, just to clarify 
where the administration's position is on the assurances 
language--and you might not be able to answer this point--but I 
met recently with some people that were representing a Friant 
irrigation district, that said that there were bureau officials 
who stated that they could not--or they implemented the 
assurances language in the CVP, that Friant would lose water to 
Westlands. Is that a department position?
    Mr. Raley. It is not.
    Mr. Dooley. Thank you. One other issue is, in terms of--on 
the Record of Decision, there was a lot of attention given to 
the Environmental Water Account and how this could be coupled 
with (b)(2) to be used to meet the 65 to 70 percent water 
delivery south of the delta. And my question is, is the 
Interior--do they anticipate using the EWA account to increase 
allocations south of the delta to ag contractors?
    Mr. Raley. We want to use all the tools available to reach 
the target of 65 to 70, including the Environmental Water 
Account and some of the other issues that you pointed out and 
others have pointed out to us in the preceding months.
    Mr. Dooley. So at this point the bureau has not--I mean, 
the bureau does not--does the bureau intend to provide, to 
utilize EWA to meet this 65 to 70 percent? I mean, you made an 
allocation, you know, just recently that was at 45 percent. I 
mean, we have, you know, CALFED participating in an EWA. I 
mean, is there--you know, is it not department policy to 
provide that, you know, to use some of that water to meet that 
65 to 70 percent?
    Mr. Raley. From the department's perspective, we want that 
Environmental Water Account used most efficiently, but in terms 
of it being--this is one of those issues that the department 
does not have the final or the only say on the management of 
the Environmental Water Account. That is managed through the 
structure of CALFED, and so we don't have the ability, 
Congressman, to simply say, ``This is how the Environmental 
Water Account will be used.'' We have to work with our 
partners.
    Mr. Dooley. To your knowledge, last year was any EWA used 
to get up to, to try to get to the 65 to 70 percent for south-
of-delta ag contractors?
    Mr. Raley. There were certainly attempts. I have had 
incomplete--just simply they have not had the opportunity to 
complete the analysis of the actual benefits to south-of-the-
delta deliveries resulting from the operation of the EWA, and 
that is an issue that was brought to my attention several 
months ago, and it is one that we are pursuing.
    Mr. Dooley. I guess, you know, and this is just a closing 
statement, that, you know, I mean, we sat through numerous 
hearings on the Record of Decision and how that was going to 
provide greater assurances and certainly water deliveries. We 
were told that the department is going to have the regulatory 
discretion at the 65 to 70 percent. They were promoting the 
Environmental Water Account as another tool that was going to 
provide water south of the delta.
    Now, the record to date is, is that we haven't seen the 
discretion to get to the 65 to 70 percent. The record to date 
also doesn't demonstrate there has been any EWA water that has 
been provided south-of-delta to ag contractors. And so, you 
know, it is--you know, this is creating, you know, just an 
environment of distrust among a lot of my constituents on 
whether or not there is a real commitment, you know, to 
implement this Record of Decision in a manner that does, you 
know, provide greater certainty to a lot of the folks that I 
represent in the San Joaquin Valley.
    Mr. Calvert. I thank the gentleman.
    If there are no further questions for this panel, we will 
have a list of questions that will be submitted to you, and if 
you could answer those in writing, I would like to get to the 
second panel in the interests of time.
    Mr. Raley. Mr. Chairman, I would be happy to do so, and 
will try to do so in a timely fashion.
    Mr. Calvert. We thank both of you for your time, and look 
forward to working with you in the future.
    Next we have our next panel: Mr. Patrick Wright, the 
Director of the CALFED Bay-Delta Program; Mr. Dan Nelson, the 
Executive Director of the San Luis and Delta-Mendota Water 
Authority; Mr. Walter J. Bishop, the General Manager of the 
Contra Costa Water District; Mr. Edward R. Osann, consultant 
representing the National Resources Defense Council; and Mr. 
John Stovall, General Counsel, Kern County Water Agency; and 
Timothy Quinn, Vice President, State Water Project Resources, 
Metropolitan Water District.
    If everybody is situated, we will start off with Mr. 
Wright. You can begin your testimony when you are able. Thank 
you.

STATEMENT OF PATRICK WRIGHT, DIRECTOR, CALFED BAY-DELTA PROGRAM

    Mr. Wright. Thank you, Chairman Calvert, and thank you all 
for inviting me to testify here today with my State and Federal 
colleagues and stakeholders on the CALFED Bay-Delta Program, 
and more specifically on water project operations in 
California. I have included in my written testimony a summary 
of the Bay-Delta Program's approach to meeting the State's 
long-term water needs, and you have heard a great deal of 
testimony already from my State and Federal colleagues with 
respect to their specific plans on water project operations 
this year.
    As you know, the CALFED Bay-Delta Program has launched the 
largest and most comprehensive water management plan in the 
Nation. The framework for California's water future we believe 
is a balanced and integrated approach to reducing conflicts 
over our limited supplies and to address the State's long-term 
water needs.
    The key to its success, as you will hear today, is we need 
the leadership of the State and Federal agencies. We need 
Federal, State and local funds. And, most importantly, we need 
to continue to meet the ambitious deadlines and commitments 
that are in the plan.
    As the plan was being put together, the greatest challenge 
in retrospect was not developing the long-term plan, as 
contentious as that was. We concluded early on that the key to 
meeting the State's long-term water needs was to develop a 
diversified set of water sources, as many of the local agencies 
in California are doing: everything from surface storage to 
ground water storage to recycling to water conservation, every 
tool that we have at our disposal.
    The biggest challenge was dealing with conflicts over our 
existing supplies until those investments begin to pay off. In 
each of the 2 years, actually several years before the CALFED 
plan was adopted, we had major crises annually over water 
project operations: A Delta smelt crisis 1 year, a Delta Cross 
Channel crisis with salmon the next year. We simply do not have 
the flexibility in our current system to meet all the competing 
needs.
    And so, again, we are confident that in the long term we 
can meet those needs, but we recognize increasingly that if we 
can't meet the immediate commitments in the plan, we are not 
going to have the credibility of the stakeholders and the 
Congress and the legislature to develop those long-term 
solutions.
    So the CALFED plan included several short-term commitments 
to try to deal with that problem, first by investing heavily in 
infrastructure improvements. We invested, in each of the last 2 
years, over $300 million for water quality, water supply 
projects. We developed a drought contingency plan and 
facilitated the transfer of over 300,000 acre-feet last year to 
areas in need. We developed an innovative Environmental Water 
Account that for the first time ever provided assurances to all 
south-of-delta water users that their supplies would not be 
further reduced because of Endangered Species Act requirements.
    And, finally, and what I hope will be most important is, by 
hiring elite scientists and developing an independent science 
program, we are going to make sure that we have independent 
science attached to all elements of the program. We have 
already conducted independent reviews of workshops on Delta 
smelt, on salmon, on splittail; a 3-day workshop on the 
Environmental Water Account and how the agencies are allocating 
that water.
    These and several other workshops underway are leading to 
fairly fundamental changes in how the system is likely to be 
operated. And as Secretary or Assistant Secretary Raley 
described, we are planning a series of workshops in April to 
specifically focus on water project operations and the science 
that underlies them.
    The key, as he said, is to integrate science into our 
regulatory programs, not have panels come in later and second 
guess decisions after they are made. That process is well 
underway, and hopefully it will be accelerated.
    We have not been successful, however, in meeting the goal 
of increasing supplies to south-of-delta CVP contractors. We 
understand that this target is going to be difficult to reach. 
In the last several weeks and months we have had a number of 
discussions with the agencies and the stakeholders on how to do 
that.
    I think, to sum it up, the general consensus is, everyone 
supports meeting the goal but no one wants to share the risk, 
from the Santa Clara Water District that is worried about its 
quality and supply, to the State water contractors that are 
concerned about the impacts on having them provide too much 
flexibility, to the south-of-delta farmers who are worried 
about increasing pumping and the impacts it is going to have on 
them, and all round the table folks are concerned about the 
risk that is out there.
    It is clear to me, then, as you heard from Secretary Raley, 
that we need to pull together the leadership of the agencies 
fast and put together and operations plan, a new plan that puts 
us back on track toward meeting the commitments that are in the 
plan while minimizing impacts to the other users.
    Our goal should be to meet three objectives: One, we have 
got to protect fish. Two, we have got to meet the 65 to 70 
target. And, three, we have got to maintain water supply 
reliability assurances for the rest of the contractors south of 
the delta. Unless we achieve all three goals, we are simply 
trading instability in one area for instability in another.
    I am confident that we have got the tools and we have got 
the energy and the resources to do it. We simply need to get 
the leadership together to put together a plan that gets us 
there. To put it simply, the credibility of the program, and 
certainly the reauthorization and our other funding requests 
depend upon us showing that we are serious about meeting the 
commitments that are in the plan.
    Thank you again for hearing my testimony.
    [The prepared statement of Mr. Wright follows:]

    Statement of Patrick Wright, Director, CALFED Bay-Delta Program

    Thank you for inviting me to testify on the CALFED Bay-Delta 
Program and water project operations in California. I have attached to 
my testimony a summary of the CALFED Bay-Delta Program's approach to 
meeting the state's long-term water needs, and will defer to the 
testimony of my state and Federal colleagues to provide you with more 
detail on water project operations this year.
    In summary, the CALFED Bay-Delta Program has launched the largest 
and most comprehensive water management plan in the nation. The 
Framework for California's Water Future is a balanced and integrated 
approach to reduce conflicts over our limited supplies and to address 
the state's long-term water needs.
    It calls for the most aggressive water conservation program in the 
nation, together with specific timetables for developing over six 
million acre feet of new water storage projects the biggest investment 
in the state's water infrastructure in 40 years.
    The key to its success will be maintaining and strengthening the 
leadership of the agencies and stakeholders; securing Federal, state, 
and local funds; and meeting the ambitious deadlines and commitments in 
the plan.
    Our greatest challenge in putting the plan together came in 
developing short-term strategies to increase the reliability of 
supplies while the long-term infrastructure investments are being made. 
In each of the years preceding adoption of the CALFED plan, we had 
major crises over water project operations that undermined public 
confidence in the Program.
    The CALFED Program addressed this challenge in several ways:
     LBy investing in short-term improvements in water supply 
reliability and water quality. Last year, we allocated over $300 
million to water districts throughout the state.
     LBy developing a drought contingency plan, and 
facilitating the transfer of over 300,000 acre feet.
     LBy developing an innovative Environmental Water Account 
to set aside water for fish without reducing allocations to other 
users. Last year, for the first time ever, south-of-Delta contractors 
received commitments that their supplies would not be reduced during 
the spring and summer because of additional regulatory restrictions.
     LAnd by hiring a lead scientist and launching a science 
program to provide independent reviews of all aspects of the program. 
This past year, the science program conducted independent reviews of 
the science surrounding both our listed species--Delta smelt and 
salmon, and a candidate species--Sacramento splittail, and conducted a 
thorough, 3-day review of the science underlying use of the 
Environmental Water Account for listed species. These and several other 
workshops, including a series of studies on the operations of the Delta 
Cross Channel, are leading to fundamental changes in our thinking about 
how the Delta functions. We are now planning a 2-day workshop in April 
to consider the recommendations from these independent evaluations, and 
to further review the science surrounding water project operations and 
the Delta.
    We have not been successful, however, in meeting our goal of 
increasing supplies to south-of-Delta CVP contractors. The CALFED Plan 
anticipated that a series of operational measures and cooperative water 
management actions would increase allocations by 15% to these 
contractors, which would increase their allocations to 65-70% of 
contract totals.
    We understand that this target is going to be difficult to reach. 
In fact, during the last several weeks and months, virtually every 
interest group has expressed concern about one or more of the measures 
under consideration to meet this target from the Santa Clara Valley 
Water District, which is concerned about the potential risk to the 
quality and reliability of its supplies; to the farmers in the South 
Delta, who are concerned about the potential impacts to water levels in 
the Delta from increased pumping; to environmental groups, who are 
concerned about the potential risk to Delta fisheries. Each of these 
groups supports the goal, but no one wants their supplies to be at 
risk.
    It is clear, therefore, that we are going to need the leadership of 
the agencies to sort through the alternatives under consideration and 
develop an operations plan that puts us back on track towards meeting 
the commitments in the plan, while minimizing impacts to other users. 
That's why I strongly endorse Assistant Secretary Raley's call for the 
agencies to develop a new plan as soon as possible. To put it simply, 
the credibility of the Program depends on it.
    Thank you again for hearing my testimony.
                                 ______
                                 
    [An attachment to Mr. Wright's statement follows:]
                              Attachment 1
 summary of calfed bay-delta program's approach for meeting long-term 
                              water needs
    The Subcommittee's recognition that water needs in California 
exceed the reliable supply of the State is indicative of the importance 
of this issue. The CALFED Bay-Delta Program concluded its five-year 
planning phase last year and has started implementation of a program 
that may take several decades to complete.
    As a brief background, California's water managers must deal with 
highly variable conditions. Most of the natural runoff originates from 
rain and snow during the winter in the northern part of the state while 
the largest population centers are in the southern part of the State. 
The natural runoff changes widely from season to season and from year 
to year, requiring water storage and conveyance facilities to 
redistribute water to the drier periods and locations. Water needs 
continue to grow with increasing population and evolving environmental 
flow requirements while some water supplies, such as those from the 
Owens Valley and the Colorado River, have actually decreased. To make 
management of these conditions even more difficult, there has been only 
limited expansion of California's water supply system during the past 
three decades.
    However, finding solutions to water reliability problems in the 
21st Century requires looking beyond simply adding new facilities. 
While facilities are needed, CALFED's approach is to consider the 
system as a whole, with all its interrelated parts. This includes 
better operation and management of the existing system, better use of 
existing water supplies, and simplifying the procedures and safeguards 
so water users can willingly transfer water to other users. The CALFED 
approach also requires a change in how we define water needs and water 
supply reliability.
Overview of California Water Needs
    Traditionally, many people have viewed water supply reliability by 
looking at the size of the ``gap'' between estimated water needs and 
the amount of water the system can provide each year. In this context, 
a large gap means the system has low water supply reliability. The 
latest California Water Plan Update (1998) estimates that by year 2020, 
the need for water could be 2-6 MAN larger than what the system can 
supply. While some might dispute the magnitude of this gap, most agree 
that in at least some regions of the state, the economy, environment, 
and lifestyles will change significantly for the worse if appropriate 
measures and actions are not taken. Other considerations are needed to 
convey a comprehensive picture of water management issues facing 
California:
     LFirst, the water system must be considered as a whole. At 
CALFED, we are often asked how much additional water supply a new 
reservoir might add. Due to the complexity of the system, there is not 
a single answer and it greatly depends on how the project is integrated 
into the system. For example, Southern California may not benefit from 
water supply created from a new Sites Reservoir in Northern California 
unless South Delta Improvements are implemented and Delta export 
capacity is increased. However, operation of Sites Reservoir for local 
agricultural supply and to--improve operational flexibility for the 
Environmental Water Account would give a different answer for water 
supply reliability.
     LSecond, California water management goals go beyond 
trying to balance projected water needs and supply. Simply looking at 
the size of the gap does not acknowledge that water supply reliability 
includes other goals. For example, improved water quality, the need to 
preserve flood control and power generation values, and the need to 
improve flexibility so project operations can be changed as needed to 
better response to unforeseen conditions are all important parts of a 
reliable system. In addition, the cost of new water supplies can affect 
the size of the gap.
     LThird, there are other tools (beyond new storage and 
conveyance facilities) that must be used to help meet California's 
water management goals. Examples include:
      * LImproving the integration of operations of the State and 
Federal water projects with regional projects. For example, the new 
regional groundwater projects developed by local districts could be 
coordinated with S.P. and CVP operations to improve system-wide 
operations.
      * LFacilitating transfers between willing parties to reduce the 
economic consequences of critical water shortages.
      * LWater conservation and reuse to make better use of existing 
supplies.
      * LImprove environmental conditions to limit the need for further 
environmental water requirements.
Approach to Providing for Water Needs
    Our approach to providing for water needs includes broad planning 
for the California Water Plan Update and more specific implementation 
by a cooperative effort of CALFED agencies and local and regional water 
districts.
    California Water Plan Update--The State is continually working on 
5-year updates to the California Water Plan Update to provide a broad 
overview of Statewide water use, existing supply facilities and 
programs, and options for improving water supply reliability. More 
specific planning, such as the ongoing Colorado Water Use Plan, will be 
included in the next revision to the California Water Plan Update in 
2003.
    Colorado Water Use Plan (formerly the Colorado River 4.4 Plan)--For 
many years, southern California has used 5.2 million acre-feet of 
Colorado river water annually to supply urban and agricultural users, 
far exceeding its allocated share of 4.4 million acre-feet. The 
Colorado Water Use Plan provides ``its Colorado River water users with 
a framework by which programs, projects and other activities will be 
coordinated and cooperatively implemented allowing California to most 
effectively satisfy its annual water supply needs within its annual 
apportionment of Colorado River water.''
    CALFED Plan--The CALFED Program's commitment to a balanced and 
integrated approach is what sets this effort apart from any other 
large-scale water management program in the nation. Attachment 2 
provides a map and list of water supply reliability highlights 
accomplished during our first year (2000-2001) since the CALFED Record 
of Decision. The Program has made significant progress to improve 
California's water supply reliability by providing grants and loans 
totaling about $200 million. The map demonstrates that we have been 
able to make progress throughout the CALFED solution area extending the 
length of the State. During Stage 1 (first 7 years following the ROD), 
the CALFED Program will continue to make significant progress on:
     LOperational improvements of the existing system such as 
the Environmental Water Account and Joint Point of Diversion.
     LConveyance improvements to allow more efficient and 
timely movement of water to areas of need.
     LGroundwater storage projects in cooperation with local 
water districts to expand dry year water supply and conjunctive use 
groundwater with surface water supplies.
     LNew and expanded surface water storage to benefit all 
water users, including the environment. Attachment 4 includes a summary 
of how CALFED is proceeding with the five surface storage projects 
identified in the ROD.
     LFacilitate water transfers between willing parties.
     LWater quality improvements to make water available for 
more uses and reuses
     LWatershed projects to improve runoff conditions.
     LProjects to improve environmental health of the system 
and reduce the conflict between environmental and agricultural/urban 
uses of water.
     LRegional implementation strategies that include incentive 
funding for local groups to develop collaborative, multiple purpose 
projects to meet their needs. Examples include the Sacramento Valley 
Water Management Agreement and the Bay Area Blending and Exchange 
Project.
    We have made projections in potential improvements in water supply 
reliability that are likely by year 2010 from the Program assuming 
continued funding. Attachment 3 includes a chart showing potential 
improvements of approximately 3 million acre-feet annually by 2010. The 
chart is accompanied by a ballpark indication of the magnitude of 
contribution to the water supply reliability from a variety of water 
management actions.
    Local and Regional Planning--Beyond CALFED, there are other locally 
and regionally focused planning processes that help improve 
California's water supply reliability. A number of recent projects have 
been designed to provide important additional storage for regional and 
local water systems. The recently completed Diamond Valley Lake 
provides 800,000 acre-feet of additional storage for Metropolitan Water 
District. Projects like this can significantly enhance the reliability, 
particularly when combined with improved operations of the State and 
Federal projects.
                                 ______
                                 
    [Attachments 2, 3, and 4 follow:]



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    Mr. Calvert. I thank the gentleman.
    Mr. Nelson, you may begin your testimony.

 STATEMENT OF DANIEL NELSON, EXECUTIVE DIRECTOR, SAN LUIS AND 
                 DELTA-MENDOTA WATER AUTHORITY

    Mr. Nelson. Mr. Chairman, members of the Committee, good 
morning. I am Dan Nelson. I am the Executive Director of the 
San Luis and Delta-Mendota Water Authority, and I appreciate 
the opportunity to appear before you today.
    And, Mr. Chairman, I would like to take this opportunity to 
congratulate and to thank you on a job well done in the 
development and introduction of H.R. 3208. Your thoroughness, 
leadership, and objectivity are admired and appreciated. 
Californians are truly fortunate to have you in this leadership 
position. We sincerely thank you for that.
    As brief background, the San Luis and Delta-Mendota Water 
Authority is a joint powers authority of 32 member-agencies. 
The bond between all of these districts is, they comprise all 
of the CVP districts that take their waters through the Federal 
Tracy pumping plant south of the delta. It is on behalf of the 
24 ag service districts that my oral testimony is primarily 
focused on.
    There are three points that I would like to leave with you 
today. First of all, that the disproportionate impacts that we 
talk so freely about are real. They affect real people, they 
affect real jobs, and they affect real rural communities.
    The second point is that the short-term CALFED supply 
crisis has been entirely avoidable; that we do have discretion 
and operational flexibility, and have had for several years, to 
be able to meet easily the water supply objectives that are 
pointed out in the Record of Decision.
    And, last but not least, the third point that I would like 
to leave you with is, as a result of what we have experienced 
over the last several years and more importantly this year, 
that legislative assurances are indeed necessary to ensure that 
CALFED moves forward in a balanced way.
    It is to this third point that I would like to focus on in 
a little more detail. About 7 years ago, California water 
resource managers were presented with some major challenges in 
the form of the Endangered Species Act, the Central Valley 
Project Improvement Act, and the Clean Water Act. It changed 
fundamentally the way that we operated both the Central Valley 
Project and the State water project, and we came together with 
other agricultural and urban agencies, as well as the State and 
Federal agencies, to try to come up with a balanced operations 
plan which balanced the fishery needs, water quality needs, and 
water supply needs for a temporary basis.
    We were actually successful in doing that. We entered into 
the Bay-Delta Accord, which again accomplished, at least 
temporarily--it was held as revolutionary, it was held as a 
truce to the water wars, etcetera. At that time the ag service 
contractors in our area had a 75 percent supply. We gave up 
500,000 acre-feet as part of the Bay-Delta Accord for this 
stability of a 75 percent supply, and the expectations that 
through the CALFED process, that our supplies would improve.
    The theme for the last several years has been promises 
made, promises broken, and a classic example of that is in 
reference to past Secretary of Interior Bruce Babbitt, his 
quote after signing the accord: ``A deal is a deal. We have 
made a deal, and if it turns out that there are additional 
requirements of any kind, it will be up to the United States 
and the Federal agencies to come up with water.''
    In addition to that, in working through the CALFED process, 
there were several principles that were developed and 
dismissed, principles such as ``no net loss,'' ``we all get 
better together,'' and last but not least, when we were 
continuing to have these conflicts in the implementation of the 
accord, we were assured that all of these issues could be 
worked out administratively. Hence, the process debacle.
    Again, when we signed the accord, we had a 75 percent 
supply and expectations to get better. Here I sit before you 
several years later, $50 million of CALFED planning, in the 
second year of CALFED implementation, with a 45 percent supply. 
That is 600,000 acre-feet, a good size reservoir, 600,000 acre-
feet less water today than when we signed the Bay-Delta Accord.
    And here we are at the crossroads once again of moving 
forward to the next benchmark of CALFED, the next phase of 
CALFED, authorizing CALFED legislatively, and we are being 
asked once again, ``Trust us. This time we really do mean it. 
We are really sincere about getting you this 
administratively.'' Well, Mr. Chairman and Committee members, 
we are having a really tough time with that, and we are 
struggling very much with the notion that this is going to be 
different than it has been over the last several years.
    In closing and in summary, we look forward to working with 
the Department of Interior and other CALFED agencies on a 2000 
ops plan that works for everybody and meets the water supply 
goals and meets our environmental objectives. And, in addition 
to that, to support the passage of H.R. 3208.
    Thank you very much for this opportunity.
    [The prepared statement of Mr. Nelson follows:]

   Statement of Daniel Nelson, Executive Director, San Luis & Delta-
                        Mendota Water Authority

    Mr. Chairman, members of the Committee: Good morning. I am Daniel 
Nelson, Executive Director of the San Luis & Delta-Mendota Water 
Authority, and I appreciate the opportunity to appear before you today 
to discuss an issue of vital importance to the State of California, 
indeed, the nation.
    At the outset Mr. Chairman, I would like to extend our appreciation 
for your efforts to ensure that the CALFED Program is implemented in a 
balanced and innovative manner that links progress on environmental 
restoration and enhancement with progress on water supply and water 
quality improvements. Farmers on the westside of the San Joaquin Valley 
are particularly appreciative of your efforts to ensure a 70% 
allocation to south-of-Delta Central Valley Project agricultural 
service contractors in normal years. Inclusion of section 103(a)(4) in 
H.R. 3208 which provides this supply will help sustain agriculture in 
the San Joaquin Valley, an industry that provides significant benefit 
to the state and the nation, during the first four years of Stage 1 of 
the CALFED Program. From this floor, we expect that the CALFED Program 
will restore our water supplies to a level adequate to meet the needs 
of our region. For the reasons that I will describe in my testimony, 
without the inclusion of section 103(a)(4) in H.R. 3208, there would be 
little hope that the water supply improvements promised in the 
Framework for Action and the CALFED Record of Decision will ever be 
realized.
The San Luis & Delta-Mendota Water Authority
    The San Luis & Delta-Mendota Water Authority is a joint powers 
authority organized under California Law. Its 32 member agencies are 
water and irrigation districts that contract with the Bureau of 
Reclamation for the receipt of water from the Central Valley Project. 
These member agencies provide water for irrigation to approximately 
1,200,000 acres of land within the western San Joaquin Valley, San 
Benito County, and Santa Clara County and water for municipal and 
industrial use throughout the same area. The area served by the 
Authority's member agencies is among the most fertile, productive and 
diversified in the nation. Rich soil, a good climate, and innovative 
farming techniques have helped to place the area served by these 
agencies among the most productive farming regions in the nation. 
Farmers in this region produce over 50 different commercial fiber and 
food crops sold for the fresh, dry, canned or frozen food markets; 
domestic and export. With an adequate water supply they could produce 
crops worth more than $2 billion dollars. One of the Authority's member 
agencies, Santa Clara Valley Water District, is responsible for 
providing water to 1.8 million people and to the vital high-tech 
computer industry known as ``Silicon Valley''. This multi-billion 
dollar industry is critical to the economic health of California and 
the nation.
    Both agriculture and the computer chip manufacturing industry 
depend on adequate, reliable supplies of water. These water supplies, 
and consequently the agriculture and industry they support, are at 
risk. It was our hope that the CALFED Program would restore the 
adequacy and reliability of the water supply necessary to sustain 
agriculture and industry within the service areas of our member 
agencies, but we were wrong. The CALFED Program has failed to meet its 
water supply objectives for south-of-Delta Central Valley agricultural 
water service contractors, and unless the Department of the Interior 
modifies the manner in which it is implementing the Central Valley 
Project Improvement Act, there is little chance the Program will ever 
achieve those objectives. Like every other region of the arid west, the 
ability of our farmers to produce crops and generate this economic 
activity depends on the availability of an adequate, reliable source of 
water.
Historical Reliability and Adequacy
    To put this discussion in historical perspective, it is necessary 
to point out that until 1991, deliveries to the Authority's member 
agencies were highly reliable. For a period of nearly forty years, from 
the early 1950s to 1991, water supplies for south-of-Delta CVP ag 
service contractors were reduced only two times, in 1977 and 1978. 
These reductions were a result of the extraordinary drought conditions 
in 1977, the driest year on record in California. However, in 1991 a 
new era of Project operations began.
Reductions in Supply Due to Regulatory Constraints
    In 1991, the winter-Chinook salmon was listed as a threatened 
species under the Federal Endangered Species Act. Because of this 
listing, new restrictions were imposed on the Project. In 1992, the 
Delta smelt was listed as a threatened species under the Federal 
Endangered Species Act, and additional restrictions were imposed on the 
Project. Also in 1992, the Central Valley Project Improvement Act was 
passed by Congress and signed into law by former President George Bush.
    The purposes of this Act were:
    (a) Lto protect, restore, and enhance fish, wildlife, and 
associated habitats in the Central Valley and Trinity River basins of 
California;
    (b) Lto address impacts of the Central Valley Project on fish, 
wildlife and associated habitats;
    (c) Lto improve the operational flexibility of the Central Valley 
Project;
    (d) Lto increase water-related benefits provided by the Central 
Valley Project to the State of California through expanded use of 
voluntary water transfers and improved water conservation;
    (e) Lto contribute to the State of California's interim and long-
term efforts to protect the San Francisco Bay/Sacramento-San Joaquin 
Delta Estuary;
    (f) Lto achieve a reasonable balance among competing demands for 
use of Central Valley Project water, including the requirements of fish 
and wildlife, agricultural, municipal and industrial and power 
contractors.
Bay-Delta Accord
    California water users were faced with several over-lapping 
regulations and an unorganized array of Federal and state agencies 
trying to implement them. Simply stated, there was chaos. The Authority 
teamed with the Metropolitan Water District of Southern California to 
initiate discussions with other ag/urban stakeholders, 
environmentalists, and state and Federal agencies. These discussions 
resulted in the 1994 Bay Delta Accord of which the Authority is one of 
the signatories. At the time, the Accord was hailed as a revolutionary 
agreement that would provide for the immediate protection and 
restoration of the Bay-Delta ecosystem and water supply reliability for 
water agencies that relied on exports from the Delta. As part of the 
Accord, south-of-Delta CVP ag service contractors voluntarily committed 
up to 500,000 acre-feet of water for restoration of the Bay-Delta 
ecosystem pending the outcome of water right hearings to determine the 
responsibility of other water agencies to provide water for this 
purpose. Under the Accord standards, they could expect that on average 
they would receive 75-80 percent of their existing contract amounts. 
However, their voluntary commitment to provide 500,000 acre-feet for 
restoration of the Bay-Delta was made in reliance upon former Secretary 
of the Interior Bruce Babbitt's promise, ``Basically, what we're saying 
is a deal is a deal. We've made a deal, and if it turns there are 
additional requirements of any kind, it will be up to the United States 
and the Federal agencies to come up with the water.'' (Emphasis added.)
Breach of the Accord
    Unfortunately, Secretary Babbitt's commitment was soon forgotten. 
In November 1997, Interior released a final administrative plan for the 
implementation of CVPIA section 3406(b)(2) that would have taken 
additional water away from south-of-Delta CVP contractors. Because the 
Authority concluded this plan was inconsistent with the law, it 
challenged the plan in court and prevailed. In response to the U.S. 
District Court's judgment that the 1997 plan was inconsistent with the 
law, in October 1999, Interior released another final decision on the 
implementation of CVPIA section 3406(b)(2). Under the October 1999 
plan, which has been implemented pending the outcome of another 
Authority legal challenge, water supplies for south-of-Delta CVP ag 
contractors will average 45 to 50 percent of their existing contract 
amounts. In general, the CVPIA has been implemented by Interior in a 
manner that has reallocated more than 1,000,000 acre-feet of CVP water 
away from farms, ranches and rural communities that relied upon this 
water for decades. Moreover, virtually all of the water supply 
reductions that have resulted from implementation of the Act have been 
imposed on south-of-Delta Central Valley Project agricultural water 
service contractors.
    Most of my comments today will focus on water shortages and CALFED 
assurances to these ag service contractors, since they have suffered 
the greatest impacts. But it should be recognized that implementation 
of CVPIA has also resulted in chronic shortages for south-of-Delta 
municipal and industrial contractors, poorer water quality in San Luis 
Reservoir for drinking water treatment, and even the threat of 
interruptions in supply to Silicon Valley during the summer months.
Disproportionate Impacts
    The disproportionate impact of these regulatory requirements on the 
water supplies of west side farmers was recognized by Governor Gray 
Davis and former Secretary of the Interior Babbitt in June 2000, when 
they signed the CALFED document entitled ``California's Water Future, A 
Framework for Action.'' The framework correctly noted that south-of-
Delta CVP ag contractors have been ``disproportionately affected by 
recent regulatory actions.'' A key commitment in the Framework was a 
provision stating that during the first four years of Stage 1 of the 
CALFED Program, south-of-Delta CVP ag contractors would receive in 
normal years 65 to 70 percent of their contractual water supplies. In 
other water year types there would be comparable improvements. The 
Authority and its member agencies supported the framework based on this 
commitment. But somehow between the signing of the framework agreement 
and the issuing of the formal Record of Decision and the allocation to 
south-of-Delta CVP ag contractors in the first year of Stage 1, the 
commitment to restore that portion of our water supplies was forgotten.
    In the first year of Stage 1 of the CALFED Program, notwithstanding 
near normal water supply conditions, south-of-Delta CVP ag contractors 
received an initial allocation of 45 percent, which was subsequently 
raised to 49 percent. We are now approaching the second year of Stage 1 
of the CALFED Program, and on January 25, 2002, Reclamation projected a 
45 percent allocation for south-of-Delta CVP ag contractors and a 75 
percent allocation for M&I contractors despite a forecast that this 
water year will be an above-normal year. Meanwhile, b(2) was allocated 
100%. This announcement is a clear indication that absent clear 
direction from Congress, the Fish & Wildlife Service, which is 
responsible for prescribing fish and wildlife actions under CVPIA, will 
not allow the Bureau of Reclamation to take the discretionary actions 
required to accomplish the water supply objectives established by the 
Framework for Action and the CALFED ROD.
    This conclusion is based on the negotiations among Federal and 
state agencies that led to the Framework for Action and the technical 
analyses on which Interior based its conclusion that it could provide 
an additional 15 percent allocation to south-of-Delta CVP ag 
contractors in normal water years with comparable improvements in other 
year types.
    On March 8, 2000, during discussions that preceded execution of the 
Framework for Action the Regional Director of the Bureau of Reclamation 
made a presentation concerning the manner in which Interior was 
implementing CVPIA. His conclusions were as follows:
    It is important to ensure Interior's b(2) policy is implemented in 
a balanced manner that encourages sound water management practices and 
eliminates uncertainties for other CVP water users. The existing 
policy:
    (a) Lfocuses the majority of the water supply impacts to a small 
amount of CVP contractors;
    (b) Lresults in greater impacts to CVP delivery capability in 
wetter periods, thereby limiting ability to implement sound water 
management practices (e.g., groundwater banking, surface water storage, 
etc. which are critical for allowing water users to maintain stable 
water supplies during drought periods);
    (c) Lincorporates real-time decision-making and reset accounting 
measures that create water supply uncertainties for farmers during the 
onset of the irrigation season;
    (d) Lprovides preferential treatment for b(2) water which may be 
inconsistent with the CVPIA's intent;
    (e) Lallows b(2) water to be rescheduled without considering 
potential impacts to other CVP water users; and
    (f) Lresults in the State of California's ability to capture b(2) 
water.
    Changes to the existing b(2) policy should be considered to ensure 
that Interior is implementing b(2) in a balanced manner that encourages 
sound water management practices and reduces uncertainties for other 
CVP water users.
    A copy of Regional Director Snow's presentation is attached hereto 
as Appendix 1, and I request that it be made part of the record.
Improved Water Supplies Resulting from the Exercise of Discretion
    To determine whether a more balanced implementation of the CVPIA 
could be achieved, the CALFED agencies conducted technical analyses. 
These analyses established that by exercising existing discretion, 
water supplies for south-of-Delta CVP contractors could be increased in 
normal water years by 15 percent, to 65 to 70 percent, with comparable 
improvements in other water year types. Further, these increases could 
be achieved in a manner consistent with existing law, including the 
CVPIA, the Endangered Species Act, and the Clean Water Act, and without 
doing any harm to environmental resources or reducing water supplies to 
other CVP contractors. However, in actual CVP operations, the Fish & 
Wildlife Service has refused to allow Reclamation to take the 
discretionary actions required to accomplish the water supply 
improvements that were achieved in the technical analyses. It is 
principally for this reason that in the first year of Stage 1 of the 
CALFED Program south-of-Delta CVP ag contractors receive only a 49 
percent allocation and in the second year of Stage 1 of the CALFED 
Program Reclamation projects that it will be able to allocate only 45 
percent to these contractors. In other words, CVPIA is still being 
implemented in the manner that led the Regional Director to conclusions 
expressed on March 8, 2000.
    For the 2002 water year, Reclamation and south-of-Delta CVP ag 
contractors have identified numerous discretionary actions that would 
improve water supplies for these contractors. These actions, which 
include use of (b)(2) water with the Environmental Water Account and 
reducing the quantity of (b)(2) water used this year under section 
3406(b)(2)(C) and 3406(b)(2)(D), when combined with the changes to 
Interior's (b)(2) accounting decision ordered by the District Court, 
could increase our water supplies by as much as 30 percent.
Objective Science Review
    The recent release of the National Academy of Science review of the 
science supporting Klamath fishery actions has stirred ongoing concerns 
in California that many of the fishery actions and regulations are 
without a scientific foundation. For years stakeholders have been 
requesting a thorough review of the science underlying environmental 
requirements that are reducing water supplies by over a million acre 
feet. For example:
     LWater users have waited for the State Water Resource 
Control Board to conduct its triennial review of its 1996 Delta 
requirements whose underlying relationships have been significantly 
altered since the arrival of the Asian clam.
     LWater users have requested a review of the underlying 
science of Delta water project requirements in the Garamendi Process 
Fish Group in mid-1997 and were told by the Federal agencies that that 
would not be a function of the group.
     LWater users requested an evaluation of population level 
effects in CALFED's 1999 Water Management Development Team process and 
were told by the Federal agencies that it could not and would not be 
done.
     LWater users have requested a revision of the 1995 Native 
Fishes Recovery Plan, many of whose underlying premises have changed, 
but the Federal agencies refuse to conduct such a review.
     LWater users assumed that a portion of the $50 million 
dollars spent during the five-year development stage of the CALFED 
program would be spent reviewing the science underlying water project 
requirements, but no such review was conducted.
     LAgriculture and Urban Water Users (ag/urban) through the 
Association of California Water Users (ACWA) produced a briefing book 
showing how to compare the fish benefit/cost ratio of Delta water 
project requirements to other fish measures. We presented data showing 
benefit/cost ratios for selected non-water-related actions that were 10 
to 100 times more than those that affected water supplies. We hoped for 
some interest from the Federal and state fish agencies. Instead, they 
were initially defensive and ultimately dismissive.
     LAlthough the CALFED Science Program has made positive 
contributions in some areas it has not initiated, nor has it indicated 
that it will initiate a review of the science underlying the CALFED ROD 
Regulatory Baseline, despite ongoing requests from water users.
    We firmly believe that the Klamath situation is just the tip of the 
iceberg and agree with Congressman Cal Dooley that a National Academy 
of Sciences type review is long overdue.
CALFED Package
    I must also point out that without the restored water supplies 
promised by the Framework for Action, the CALFED Program will be of 
little benefit to south-of-Delta CVP ag service contractors. In fact, 
the projects identified by the CALFED ROD that involve increasing 
storage and exchanges in the upper San Joaquin River would further 
reduce water supplies for south-of-Delta CVP ag contractors. It is 
ironic that agencies opposing the enactment of section 103(a)(4) 
because they contend that it might result in reduced supplies for them 
enthusiastically support the development of projects that will without 
question reduce water supplies for south-of-Delta CVP ag service 
contractors. South-of-Delta CVP ag service contractors have been 
willing to acquiesce to these projects because of the commitment that 
during the first four years of Stage 1 their water supplies would be 
restored to 65--70 percent in normal water years, with comparable 
improvements in other year types. It would be from this supply 
reliability floor that our water supplies would improve.
    The CALFED Program has the potential to solve California's greatest 
water problems. To succeed, each element of the Program must be 
implemented with equal vigor. This is critically important because, 
notwithstanding the potential benefits to all Californians that could 
result from the CALFED Program, if it is implemented in a way that 
gives priority to any one of its many purposes, the Program will fail. 
To date, the south-of-Delta CVP ag service contractor water supply 
reliability element of the CALFED Program seems to have been ignored. 
The performance of the Fish & Wildlife Service demonstrates that it has 
continued to give priority to environmental uses of water without 
regard to the impact of these uses on achieving the restoration of 
supplies described by the Framework for Action and the CALFED ROD. It 
has become painfully apparent that a clear expression of congressional 
direction is required to compel the Fish & Wildlife Service to 
implement the delicate balance struck by CALFED's Framework for Action
    Thank you.
                              ATTACHMENT 1
                           b(2) presentation
                              lester snow
                         bureau of reclamation
                    u.s. department of the interior
             DISCUSSION OF SECTION 3446 (B)(2) OF THE CVPIA
                              Introduction
It is important to ensure Interior's b(2) Policy is implemented in a 
manner that is consistent with the foundational purposes of the CVPIA. 
Section 3402 of the CVPIA states:

``The purposes of this title shall be:

    (a) Lto protect, restore, and enhance fish, wildlife, and 
associated habitats in the Central Valley and Trinity River basins of 
California;
    (b) Lto address impacts of the Central Valley Project on fish, 
wildlife and associated habitats;
    (c) Lto improve the operational flexibility of the Central Valley 
Project;
    (d) Lto increase water-related benefits provided by the Central 
Valley Project to the State of California through expanded use of 
voluntary water transfers and improved water conservation;
    (e) Lto contribute to the State of California's interim and long 
term efforts to protect the San Francisco Bay/Sacramento-San Joaquin 
Delta Estuary;
    (f) Lto achieve a reasonable balance among competing demands for 
use of Central Valley Project water, including the requirements of fish 
and wildlife, agricultural, municipal and industrial and power 
contractors.''

Changes to the existing b(2) policy should be considered to ensure that 
Interior is implementing b(2) in a manner that is more consistent with 
subsections 3402(c) and 3402(f) of the CVPIA.
                                 ______
                                 
                     Key Water Management Concerns
It is important to ensure Interior's b(2) policy is implemented in a 
balanced manner that encourages sound water management practices and 
eliminates uncertainties for other CVP water users. The existing b(2) 
policy:

    (a) Lfocuses the majority of the water supply impacts to a small 
amount of CVP water contractors;
    (b) Lresults in greater impacts to CVP delivery capability in 
wetter periods, thereby limiting ability to implement sound water 
management practices (e.g., groundwater banking, surface water storage, 
etc. which are critical for allowing water users to maintain stable 
water supplies during drought periods);
    (c) Lincorporates real-time decision-making and reset accounting 
measures that creates water supply uncertainties for farmers during the 
onset of the irrigation season;
    (d) Lprovides preferential treatment for b(2) water which may be 
inconsistent with the CVPIA's intent;
    (e) Lallows b(2) water to be rescheduled without considering 
potential impacts to other CVP water users; and
    (f) Lresults in the State of California's ability to capture b(2) 
water.

Changes to the existing b(2) policy should be considered to ensure that 
Interior is implementing b(2) in a balanced manner that encourages 
sound water management practices and reduces uncertainties for other 
CV? water users.
                                 ______
                                 
    Mr. Calvert. I thank the gentleman.
    Mr. Bishop, you may begin your testimony.

 STATEMENT OF WALTER J. BISHOP, GENERAL MANAGER, CONTRA COSTA 
                         WATER DISTRICT

    Mr. Bishop. Thank you, Mr. Chairman, members of the 
Committee. My name is Walter Bishop. I am the General Manager 
of the Contra Costa Water District, and as background I would 
like to tell you the Contra Costa Water District is the largest 
urban contractor of the CVP. We have total reliance on the 
delta for our water supply, so water quality for us in the 
delta is a key focus. The quality of our drinking water is 
directly related to the operation of the State and Federal 
projects.
    My testimony today is going to be broken into two parts. 
The first part of my testimony, I would like to offer to the 
Committee six very specific areas that I believe the Secretary 
has discretion which, if enacted upon, can improve water 
supplies without hurting the environment. And, second, I would 
like to look at three areas that I believe are in the long-term 
focus of the CALFED ROD, which I believe can help us improve 
water supplies in the 21st century.
    Let me start with the areas of discretion. The Secretary of 
the Interior has considerable discretion in how she approaches 
things relative to the 800,000 (b)(2) water accounting. Judge 
Wanger's decision as it related to the offset/reset I will talk 
about in a minute.
    But with respect to the 800,000 accounting, it is upon the 
Secretary to ensure that areas where water is used, on the 
American River, for example, for flow requirements, and other 
CVP issues related to water quality standards, that if there is 
a double benefit for that water with respect to fisheries, we 
believe it should be counted against the 800,000.
    Second, the Secretary can now exercise her discretion to 
revise the current policy related to the 800,000 with respect 
to offset and reset. The timing was particularly fortunate for 
this hearing with the recent decision, but we believe offset 
and reset have been ripe and on the table for at least 2 years.
    A question was asked earlier as to whether or not this 
affects State and Federal pumping. The answer is, of course it 
does, with respect to the assurances given in the ROD. The 
biological opinion that has been at least suggested may have to 
be reopened because of this decision.
    We would encourage the Secretary, before making that 
decision, to look at the tools that she has now that weren't in 
place when these biological opinions were issued. Hundreds of 
millions of dollars have been spent on habitat restoration and 
millions of acre-feet of water have been released, and we need 
to look at the flexibility that the system has today that it 
did not have when our total reliance was on water primarily for 
fish restoration.
    Third, the Secretary, in conjunction with Federal and State 
agencies, has discretion with respect to operation of the 
Environmental Water Account. Questions were asked earlier about 
that. I think at least the Federal administration has a 
responsibility to request and ensure that full funding of the 
Environmental Water Account is included in the budgetary 
request.
    Fourth, the Secretary has the discretion to implement 
methods to improve the accuracy of forecasting of deliveries. 
In recent years the actual point, low point in San Luis 
Reservoir, could have been more accurately predicted, and in 
one case over 200,000 acre-feet of additional supplies made 
available to contractors if that forecast was more accurate. 
And I think you saw some of that with respect to recent 
decisions on the Klamath, when very late in the season 70,000 
acre-feet was made available as a result of reforecasting the 
reservoir levels.
    Fifth, the Secretary has discretion authority under CVPIA 
to construct and acquire non-Federal entities, such as water 
conveyance, conveyance capacity, and wells necessary to provide 
water for refuges. I believe this is an area in which 
additional supplies could be made available for refuges and 
then water supplies from storage could be made available for 
contractors.
    Sixth, and finally, the Federal project can also help meet 
the water needs of its contractors by expediting water requests 
for water transfers and providing project power for those 
transfers when they are made by Federal contractors, when they 
have been restricted from the deliveries. Now, I know CVP staff 
is working hard on transfers, but they need to dedicate a 
consistent level of resources toward this and they need to work 
hard on streamlining environmental protection permitting 
processes.
    I would like to move now to the three areas where I believe 
we can have some long-term benefit. First is the role of good 
science, peer review, and advancements in technology in our 
decisionmaking. CALFED agencies and stakeholders have 
consistently called for decisionmaking related to water needs 
for the ecosystem to be based on strong science.
    I think the recent National Academy of Science decision is 
where we think all decisions need to be made in this way, an 
outside peer review, and I know CALFED has organized outside 
panels to review decisions made on allocating water for the 
Environmental Water Account going to the environment. I would 
encourage this Committee to request and get some of the 
information that was provided on that with respect to tracking 
of the science, with the decisions being made on decisions for 
water and the fish in the CALFED process.
    We believe improvements with respect to monitoring--we are 
still using nets thrown from either banks or behind boats to 
talk about where the fish are. Satellite monitoring, acoustic 
monitoring, advancements in technologies can greatly improve 
that and help some of our decisions.
    Another area where I think we can improve the long-term 
supply is increased cooperation between State, Federal and 
local agencies. We heard earlier today that the State has 
worked through Joint Point in pumping additional supplies.
    But one of the key beneficiaries from the CVPIA was the 
State, with respect to when the CVP releases water and their 
pumps are at maximum capacity, that water is technically 
abandoned and can be picked up by the State. Now, there has 
been some cooperation, but I believe there are still some areas 
in which some cooperation can improve, and some of the 
allocated water which could be made available in the south 
delta can go to the Feds.
    Finally, I would like to talk about the key component of 
CALFED, which is the balanced program. We have all talked about 
CALFED needs to go forward as balancing. I think there is a 
misconception that CALFED has storage for future demand. That 
is not the case. CALFED looked at meeting future demand through 
conservation, reclamation, and water transfers. Storage, 
primarily in the CALFED program, is to increase reliability. I 
want to also mention water quality is one of the tenets, and it 
was also to do environmental restoration.
    The storage that is in the first phase of CALFED is not 
about meeting future demand in California. And I know Tim Quinn 
is going to talk later about the strong reclamation/
conservation program. The urban agencies are committed to that, 
but CALFED still needs to be just as aggressive in moving 
forward with the planning and permitting for storage. It is a 
key component of how we are going to meet future water quality 
and reliability and ecosystem restoration. In fact, the 
Environmental Water Account is a key component to some of the 
storage going forward.
    Mr. Chairman, I realize that some of these suggestions that 
I made today cannot be implemented immediately. However, I 
believe it is essential that the administrative agencies become 
more energetic in the use of their discretion to actively 
manage the water supplies for the maximum benefit of all the 
State's needs.
    Thank you.
    [The prepared statement of Mr. Bishop follows:]

  Statement of Walter J. Bishop, General Manager, Contra Costa Water 
                     District, Concord, California

    Chairman Calvert, members of the subcommittee, my name is Walter J. 
Bishop. I am the General Manager and chief executive officer for the 
Contra Costa Water District in Concord, California. The Contra Costa 
Water District serves 450,000 people and is the largest urban 
contractor for the Bureau of Reclamation's Central Valley Project. The 
District was the first contractor to receive water from the Central 
Valley Project. The Contra Costa Water District is located within the 
Sacramento-San Joaquin Delta and is totally reliant on the Delta for 
its water supply. The quality of our drinking water is directly 
affected by the operations of the Federal and State water projects, 
more so than any other urban agency in California. Our District has 
been intensively and constructively involved with other urban and 
agricultural water agencies, with Federal and state regulatory agencies 
and environmental organizations in many of the planning and operational 
efforts to reach solutions on Bay-Delta issues. The District has played 
key roles in helping the Federal and State agencies, water users and 
environmental organizations in reaching consensus in a variety of areas 
including the 1994 Bay-Delta Accord and the joint Federal-State CALFED 
Bay-Delta Program.
    My testimony today will focus on possible solutions for reliably 
meeting the present and future water needs of urban and agricultural 
water users and the environment in California. The competition for this 
finite water supply and increased regulation of the Sacramento-San 
Joaquin system have resulted in reductions in supplies in some sectors, 
in particular, the Central Valley Project (CVP) deliveries of water 
from the Delta to its contractors. At the same time, the ecosystem 
restoration actions taken since the early 1990s, both flow and non-flow 
actions, have resulted in significant improvements to fisheries, 
including listed species such as Delta smelt and winter run salmon. In 
fact, the increases in Delta smelt population since the Bay-Delta 
Accord suggest that the Delta smelt may be on the brink of recovery.
    My testimony will first consider administrative and operational 
changes that can be made to meet present water supply and reliability 
needs. I will then address the question of finding additional solutions 
to reliably meet future needs in the 21st Century.
    Achieving and maintaining a balance of fisheries protection and 
water supply for existing municipal and industrial and agricultural 
needs has not been easy. We can improve on what has already been 
accomplished by:
     Lusing water more effectively through discretionary 
actions already available to the Secretary of Interior;
     Lusing good science and requiring peer review in decision 
making while investing in high tech fish monitoring techniques to 
ensure that measures to protect fish are effective and water is not 
wasted;
     Lincreasing the cooperation between Federal, State and 
local projects to maximize the use of available water supply tools;
     Limplementing the CALFED Bay-Delta Program in a balanced 
way.
    I will address each of these actions in turn.
1. Existing discretion available to the Secretary of Interior to 
        increase flexibility of CVP operations
    The Secretary of Interior has considerable discretion to provide 
increased water supplies through improved operational efficiency 
without impacting fish species. The Secretary has discretion, 
consistent with Judge Oliver Wanger's October 2001 decision in the U.S. 
District Court (Eastern District of California) lawsuit regarding 
implementation of the 800,000 acre-feet of dedicated CVP yield under 
the 1992 P.L. 102-575, commonly known as the Central Valley Project 
Improvement Act (CVPIA), Section 3406(b)(2), to ensure that the 
accounting for use of the 800,000 acre-feet for fisheries purposes does 
not ignore the considerable amount of water being used to meet American 
River flow requirements and the full amount of CVP yield being used to 
help meet the State of California's Bay-Delta water quality standards. 
The increased fish flows on the American and increased Delta flows 
required to meet the Bay-Delta standards provide benefits to fish that 
were not in place prior to CVPIA and should be taken into account. 
Accurately accounting for use of the 800,000 acre-feet of dedicated 
yield will free up limited water supplies for other CVP purposes.
    The Secretary will also has the discretion to revise the current 
policy related to resetting the 800,000 acre-feet accounting for 
upstream reservoir storage releases in the fall and early winter if 
that storage is replaced later in the year (``reset''). The current 
Department of Interior accounting policy allows releases from upstream 
reservoirs during the period, October through January, to increase 
river flows to benefit fish but does not allow that water to be 
rediverted in the Delta to meet urban and agricultural needs. If the 
upstream reservoirs refill by the end of January, then, even though the 
fish have benefitted from the releases, they do not count toward the 
800,000 acre-feet. This method of accounting compels additional fish 
releases or export reductions later, and results in further reductions 
in agricultural and urban water supplies. This reset policy gives the 
fish a second or third bite at the apple while increasing the harm to 
water users. If this same faulty accounting policy were applied to CVP 
water service contracts, then contractors would not have to pay for 
delivered water if the reservoirs later refilled.
    The current Interior policy of offsetting upstream reservoir 
releases made earlier in the year for fishery purposes against 
reductions in releases later in the year when exports are cut back to 
protect fish (``offset'') is similarly unfair and unreasonable. This 
offset policy assumes that even though the water users south of the 
Delta are directly hurt by reduced deliveries during the irrigation 
season, and fish have presumably benefitted by the export cuts, even 
more fish actions can be made because water is still available in the 
reservoirs north of the Delta. Water in upstream reservoirs, which may 
or may not be able to be delivered late in the irrigation season or 
after, is not equivalent to water actually delivered to the farms when 
it is needed. The loss in water supply reliability resulting from the 
``offset'' policy has been estimated to be between 100 and 200,000 
acre-feet annually. The Secretary has the discretion to fairly 
implement these requirements such that CVP water supplies are not 
unreasonably impacted.
    A Federal Court decision that appears to agree with our concerns 
regarding ``reset'' and ``offset'' was released on February 5 after 
this testimony had been prepared. District Court Judge Wanger found 
that Interior's ``reset'' and ``offset'' policies both allow more than 
800,000 acre-feet to be dedicated to fisheries purposes and found these 
policies to be arbitrary and capricious. The Secretary needs to revise 
the 800,000 acre-feet accounting policy to ensure that water supplies 
to CVP contractors are not unlawfully impacted.
    The Secretary in conjunction with other Federal and State agencies 
also has the discretion to operate the Federal project in coordination 
with the CALFED Environmental Water Account to maximize the benefits to 
fish and water users. However, the assets of the Environmental Water 
Account consist of both water and money to buy water, and consistent 
Federal funding is needed to make this innovative approach to water 
management work.
    The Secretary in coordination with other Federal and State agencies 
also has the discretion to implement methods to improve the accuracy of 
forecasting Federal and State contractor demands from San Luis 
Reservoir to maximize the use of available storage. In recent years the 
actual low point in San Luis Reservoir has been significantly higher 
than forecasted. Had the contractor demands been more accurately 
predicted by Interior up to 200,000 acre-feet more water could have 
been made available to Federal contractors.
    The Secretary also has discretion under the CVPIA Section 
3406(b)(2)(D) to make the dedicated water that is not needed for 
fisheries purposes, based on a finding by the Secretary, available for 
other project purposes. The benefits of the CALFED Bay-Delta Program 
ecosystem restoration program and other habitat restoration processes 
implemented since the CVPIA are beginning to restore fish populations 
within the Sacramento-San Joaquin Bay-Delta system. As these 
populations continue to recover there will be opportunities for the 
Secretary to use this water to restore the water supply reliability for 
CVP contractors. The water needs for fisheries purposes must take into 
account the other habitat restoration tools that have been and are 
being implemented since 1992.
    The Secretary has discretion and authority under Section 3406(d)(5) 
of the CVPIA to construct or acquire from non-Federal entities such 
water conveyance facilities, conveyance capacity, and wells as are 
necessary to provide water to refuges. Finding alternative sources of 
water for refuges will make water available for other project purposes.
    The Federal project can also help meet the water needs of its 
contractors by expediting requests for water transfers and providing 
project power, generated using CVP facilities, to wheel transfer water 
through the State pumping facilities. CVP staff is already working hard 
to minimize delays in processing water transfers but lack the resources 
and procedures to meet the increased demand for transfers. 
Consideration also needs to be given to streamlining the environmental 
permitting for transfers of Federal water.
    The Federal project can also assist by providing the ability for 
CVP contractors to carry over water in CVP or non-project reservoirs 
for use in the next contract year. Contra Costa Water District was 
unable to carryover water this year because carryover and rescheduling 
is not specifically provided for in our CVP contract. CCWD often uses 
its existing Los Vaqueros Reservoir to make releases to meet the 
District's water quality goals when the Federal and State projects are 
making releases from upstream reservoirs to meet Delta water quality 
and fish objectives. CCWD could assist the Federal and State projects 
meet those Delta ecosystem and water quality goals by reducing its 
diversions from the Delta during these periods if it could be 
guaranteed that CCWD could replace that water during times of excess 
flow in the Delta. This is consistent with Section 3408(d) of the 1992 
CVPIA which authorizes the Secretary to enter into agreements to allow 
project contracting entities, such as CCWD, to use project facilities, 
in this case Shasta Reservoir, for supplying carry-over storage.
    The Secretary should also incorporate these concepts of carryover 
and rescheduling into the current process of long-term renewal of CVP 
contracts (required under Section 3404(c) of the CVPIA) to improve 
operational flexibility of the CVP. Interior is currently reviewing the 
bases for negotiation of these long-term renewal contracts.
2. Implementation of good science and peer review in decision making 
        while employing improved technologies for project operations.
    CALFED agencies and stakeholders have consistently called for 
decision making related to the water needs for the ecosystem to be 
based on a strong scientific program. Which employs state of the art 
technology and independent peer review. Recently, the National Academy 
of Sciences was asked to peer review the science used in decisions made 
regarding the Klamath. This type of review should be routine when 
moving forward with resource decisions on the Bay Delta. Additionally, 
CALFED has developed a long-term program to monitor the health of the 
ecosystem and will make decisions based on its findings. Federal 
agencies involved in this effort such as the U.S. Fish and Wildlife 
Service and National Marine Fisheries Service need to ensure that they 
are applying sufficient resources to these efforts.
    Adaptive management will not work without the underpinning of a 
good scientifically sound database. The current technologies used to 
monitor the location of fish species within the Bay-Delta system are 
based in large part on outdated technologies such as nets deployed from 
river banks or towed behind boats. These provide limited insight on 
where the fish are, in what numbers or where they are heading. High 
tech methods such as that used in satellite remote sensing, acoustic 
sensing and other imaging techniques need to be implemented to better 
understand how to protect and enhance fisheries while restoring water 
supply reliability. Techniques used in other fields and the 
resourcefulness of the government laboratories and universities in the 
San Francisco Bay Area and high tech areas like Silicon Valley should 
be brought to bear on this problem.
    Better knowledge of fish population response to flows, water 
quality, ocean harvest and other factors will enable the development of 
better science that can be use to assess the bases for fisheries 
actions, the results of such actions, and allow real-time adaptive 
management changes to those fish actions which may not always depend on 
more water releases.
    While high tech fish monitoring may not be able to be deployed in 
time to directly improve water supply reliability in 2002, research and 
development needs to get underway now to be able to provide benefits in 
future years. Additional funding now will ensure better science for 
guiding and maximizing the efficiency of future project operations to 
meet all project purposes.
3. Increased cooperation between the Federal, State and local projects.
    The ability of the Federal CVP to meet its contractors' water 
supply needs could be greatly increased if the CVP were able to make 
more use of the available State storage and conveyance facilities. The 
State of California already cooperates with the CVP in this regard but 
Congress should encourage and help facilitate an even greater level of 
cooperation.
    The Federal pumping facility at Tracy in the South Delta is 
regularly at its maximum capacity. There are times when the Central 
Valley Project is making releases of previously stored CVP water 
released from upstream reservoirs to meet fisheries habitat goals, such 
as maintaining cold temperatures for spawning fish, and is unable to 
recapture or reuse that Federal water to meet other project needs. This 
water has to be abandoned by the CVP where upon it is captured instead 
by the State Water Project using its excess capacity at the State 
pumping facility 1. With better cooperation between the 
State and Federal agencies regulating and managing the water projects, 
a major share of that water could be pumped for the CVP at the State 
pumping facility, stored in available CVP, State or local storage 
facilities, and remain available for CVP project purposes.
---------------------------------------------------------------------------
    \1\ Note that the requirement for releases from Shasta Dam for cold 
water habitat predate the 1992 Central Valley Project Improvement Act 
and are not part of the 800,000 acre-feet of CVP yield that is 
dedicated for restoring anadromous fish. Releases of water to meet the 
800,000 acre-feet provisions of CVPIA may or may not fall under the 
definition of abandoned water, depending on the final outcome of the 
ongoing 800,000 acre-feet litigation in Federal Court.
---------------------------------------------------------------------------
    The State already provides some wheeling of CVP water through the 
State facilities and allows temporary use of the State's share of 
storage in San Luis Reservoir for the benefit of the CVP. However, this 
joint use of facilities needs to be expanded to enable the Federal 
project to retain control over its water supplies.
    This existing cooperation between the State and the Federal 
projects is not always one way--in June 2001, for example, the CVP 
pumped State Water Project water at Tracy to provide water to SWP 
contractors while the lining of the upper California Aqueduct, a State 
facility, was being repaired. A similar intertie from the State 
aqueduct to the Federal canal should be implemented this year to 
increase the ability of the CVP to deliver water to its contractors. 
This will allow the CVP to pump water to its full allocated and 
permitted level rather than being restricted by the reduced downstream 
canal capacity.
    The CALFED Bay-Delta Program calls for increasing the permitted 
capacity of the State pumping facility in the South Delta to 8,500 
cubic feet per second (cfs) initially and eventually to 10,300 cfs. 
This should only go forward if all impacts on other water users are 
mitigated; in particular the potential water quality impacts at CCWD's 
drinking water intakes. However, if the proposed expansions can be 
implemented without redirecting impacts to others, the Federal agencies 
should seek to formalize a share of that increased capacity to avoid 
further exacerbating the current windfall provided to the State project 
from actions by the Federal project to improve fisheries and the Bay-
Delta ecosystem.
    One example where Federal-State cooperation would be appear to be 
straightforward and could help improve a water agency's situation is in 
the case of Santa Clara Valley Water District, a San Francisco Bay Area 
urban agency, which is both a State Water Contractor and CVP 
contractor. Moving some CVP water to Santa Clara and the Silicon Valley 
via the South Bay Aqueduct rather than through San Luis Reservoir and 
the San Felipe Project would free up CVP capacity for other contractors 
while reducing an additional constraint on CVP deliveries, namely water 
quality issues for Santa Clara related to the low point in San Luis 
Reservoir storage. This would require agreements with the State and 
agreements with and between local agencies in the Bay Area. This 
proposal is currently being studied as part of the CALFED Bay-Area 
Blending/Exchange Project and the San Luis low point study, and could 
produce significant water quality and water supply reliability 
benefits.
    As I mentioned earlier, CCWD unsuccessfully sought to carryover 
some of its CVP allocation in Shasta Reservoir this year. This was 
water that the CVP did not have to release to meet Delta flow and 
fisheries requirements because CCWD was taking water directly from Los 
Vaqueros Reservoir and reducing it diversions from the Delta during 
balanced conditions. This is an example where Federal project should 
cooperate with a local agency to meet Federal project goals.
4. Implement all aspects of CALFED Bay-Delta Program in a balanced 
        manner
    California's population is expected to increase by more than 8 
million within the next 15 years, according to the California 
Department of Finance. Many of the administrative and operational 
actions I have already discussed will also help increase the water 
supply reliability needs in the near term future. Most of the future 
increases in water demand were identified by CALFED as being addressed 
by implementing water conservation and reclamation and transfers. 
However, new groundwater and surface storage projects, in particular 
those described in the CALFED Record of Decision, are needed to ensure 
the needed water quality for drinking water and the environment, and to 
meet the CALFED Environmental Water Account needs. These new storage 
facilities will allow more efficient use of capacity in existing 
reservoirs and improve water supply reliability.
    New storage can lead to a win-win-win situation. For example, 
increased storage adjacent to urban areas can be used to capture good 
quality water during times of high flows when fish needs are being met. 
During times of low flow in the Delta when the source water from the 
Delta is typically more salty and fish are more susceptible, urban 
agencies can rely on the previously stored water to maintain an 
acceptable water supply for their customers and reduce their diversions 
from the Delta to the benefit of fish and water supply reliability.
    I encourage Congress to put its full support behind ensuring that 
CALFED is implemented in a balanced way. The new groundwater and 
surface storage projects outlined in the CALFED Record of Decision are 
critical components of a balanced CALFED program and a necessary 
component for ensuring water quality and supply reliability to not only 
meet California's existing food production, manufacturing, and 
industrial and municipal needs but also the increased needs as 
California's population grows during the 21st Century.
Conclusion
    Mr. Chairman, I realize that some of the suggestions made in this 
testimony cannot all be implemented immediately. However, I believe it 
is essential that the administrative agencies become much more 
energetic in using their existing powers to intelligently and actively 
manage their water supplies for the maximum benefit of all the state's 
needs. It is no longer acceptable to manage water supplies for just a 
single purpose, ignoring at the same time the opportunities they have 
to serve additional needs. We must make full use of the powerful tools 
of flexibility, innovation, cooperation and consensus to meet this 
challenge and build a better future. Thank you for the opportunity to 
appear before you today.
                                 ______
                                 
    Mr. Calvert. I thank the gentleman.
    Our next witness is Mr. Osann, representing the Natural 
Resources Defense Council.

   STATEMENT OF EDWARD R. OSANN, CONSULTANT REPRESENTING THE 
               NATURAL RESOURCES DEFENSE COUNCIL

    Mr. Osann. Thank you, Mr. Chairman. My name is Ed Osann. I 
am here on behalf of NRDC, the Natural Resources Defense 
Council. I have a prepared statement. I would like to leave 
that for the record, Mr. Chairman, and summarize simply a few 
key points.
    Mr. Calvert. Without objection, so ordered.
    Mr. Osann. First of all, let me start by saying that NRDC 
strongly supports the CALFED ROD and its balanced 
implementation. The ROD was the culmination of a 10-year effort 
of a great number of stakeholders. As you might imagine, we are 
enthusiastic about some portions of it and skeptical about 
other portions, but CALFED is the road map for California's 
water future, and without it we would be looking at a 
considerably more chaotic situation.
    I also agree with the remarks of Mr. Bishop that the bureau 
forecast, the bureau's early season forecasts on potential 
water deliveries, have been excessively conservative, and 
unhelpful in that regard. And to the extent that these can 
reliably be improved in the future, that would be beneficial 
both to water users and natural resource managers.
    Mr. Chairman, you alluded to last week's decision, and of 
course it has been the understandable focus of a great deal of 
discussion here today. We believe that this is potentially very 
destabilizing. We think that this decision really takes us to 
the precipice. Where are we, when the key element of the 
environmental baseline for the ROD, for the ROD of the 
Secretary, has been yanked out from underneath? Where are we if 
we don't have a valid biological opinion? Where are we if we 
don't have a valid NEPA final environmental impact statement?
    So we think it is really incumbent upon the Secretary to 
appeal the decision and to protect the 1999 (b)(2) formulation. 
Attached to my testimony is a letter to the Secretary in 
support of the 1999 formulation, signed by virtually all of the 
principal environmental groups in the State.
    The most important thing that Congress can do is enact 
legislation that will authorize the balanced implementation of 
CALFED consistent with the ROD. We believe the Senate bill does 
that. We believe the House bill does not. There are several 
issues and concerns we have about the House bill.
    Notable among them is the assurances language. In objecting 
to the assurances language, we are not alone. Attached to my 
statement is a letter to you, Mr. Chairman, signed by the 
Natural Resources Defense Council, Friant Water Users, 
Metropolitan Water District, United Farm Workers, and 
California Trout, all objecting to this singling out of this 
particular group of beneficiaries for assurances language.
    We would urge the Congress to move this year to enact 
legislation to authorize CALFED in a balanced manner consistent 
with the ROD. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Osann follows:]

 Statement of Edward R. Osann, President, Potomac Resources, Inc., on 
            behalf of the Natural Resources Defense Council

    Chairman Calvert and members of the Subcommittee. Thank you for the 
opportunity to speak with you today. My name is Edward R. Osann. I am 
here today on behalf of the Natural Resources Defense Council (NRDC), 
an organization with over 500,000 members, 100,000 of them in 
California, to testify regarding Sacramento-San Joaquin Delta 
operations and related water supply issues.
    By way of background, I have appeared before this subcommittee on 
many occasions in the past. From 1993 to 1995, I served as Director of 
Policy and External Affairs for the Bureau of Reclamation. Prior to 
joining the Federal Government, I served as Director of the Water 
Resources Program of the National Wildlife Federation from 1980 to 
1993. I currently maintain a consulting practice specializing in energy 
and natural resources policy.
CALFED: Key to the Future.
    For the past 10 years, stakeholders and agencies have been working 
in California to develop a comprehensive plan to address a broad range 
of complex ecosystem restoration, water quality and water supply issues 
related to the Bay-Delta system. This extraordinarily challenging 
effort resulted in a final plan, adopted through the CALFED Bay-Delta 
Program in August of 2000. This ambitious plan enjoys support from the 
Bush and Davis administrations, as well as from agricultural, urban, 
environmental, and other stakeholder groups. If implemented in a 
balanced fashion, NRDC believes that this plan will result in 
significant water supply, water quality, and ecosystem benefits. West 
side CVP water supply is one of many issues addressed in this plan. In 
short, the CALFED plan is currently the only map available to help 
decision-makers navigate complex water problems in California.
Westlands: Reckless Attacks on CALFED.
    One of the issues you are considering today is the delivery of 
highly subsidized water from the Central Valley Project (CVP) to the 
Westlands Water District and other growers on the west side of the San 
Joaquin Valley. We acknowledge that growers in this area face 
significant challenges, but it is important to recognize that they knew 
of these challenges when they made business decisions to purchase land 
and sign water contracts in this area. Westlands growers paid lower 
prices for their land because of the selenium and other drainage 
problems in this region. These west side interests have always known 
that their CVP water supplies are junior to other water users and that 
their CVP contract provides a supplemental supply, to be delivered when 
available and well short of what they claim to be their full need. 
Because of these lower land prices, Westlands growers have been able to 
invest in water transfers, higher value crops and drainage and 
irrigation systems. They have also been aided by massive water, crop, 
and other subsidies.
    The Central Valley Project, like many water projects, is 
overcommitted. Water users have succeeded in persuading project 
operators to write contracts for far more water than they are capable 
of delivering. In California, the Friant unit of the CVP regularly 
cannot deliver full Level 2 supplies. The State Water Project has never 
delivered all of the water for which it has written contracts. In fact, 
it regularly delivers 60 percent or less of contract entitlements. The 
West side of the San Joaquin Valley also exhibits this trend, although 
no more than other water projects. Other water users--in the Friant 
Unit and the State Project--have recognized this uncertainty and have 
planned appropriately to meet their needs. Westlands, however, has 
adopted a different strategy. Its approach has been to attempt to 
litigate and legislate its way to a more reliable subsidized water 
supply, at the expense of the ecosystem and other water users. We urge 
you not to encourage this destructive and destabilizing approach to 
resolving water issues.
    The remainder of my testimony will focus on a number of 
recommendations which we believe would keep the CALFED program moving 
forward in a balanced fashion and would result in West side water 
supply benefits, together with additional benefits throughout the 
state.
    We urge Congress and the Department of the Interior to take the 
following actions--
    1. Support Implementation of the CALFED Program. The CALFED program 
is already providing benefits to water users, including those in the 
Westlands Water District. These benefits have included funding for 
groundwater, water quality, and water use efficiency programs. CALFED 
has also created an Environmental Water Account, which is helping to 
restore the Bay-Delta ecosystem and provide growers with greater 
certainty of supply. Ultimately, a healthy ecosystem, another goal of 
the CALFED program, will also provide greater certainty for water 
users.
    Congress is currently considering legislation to authorize Federal 
participation in the CALFED program. NRDC strongly supports S. 1768. 
However, H.R. 3208, as reported by the Resources Committee, would 
fundamentally undermine the CALFED program and threaten its success. We 
have shared with Committee staff a summary of some of the key 
differences between these bills. We urge the House to pass a CALFED 
bill this year that implements, and does not alter, the delicate 
balance in the CALFED plan. Future appropriations for CALFED could be 
at risk if an authorizing bill is not passed soon.
    2. Prevent Rollbacks of Environmental Laws that Would Threaten 
CALFED. The Westlands Water District has sued the Department of the 
Interior as part of an attempt to force the Department to withdraw key 
decisions of the implementation of section 3406(b)(2) of the Central 
Valley Project Improvement Act. The Department's October 1999 decision 
has been upheld by the courts in the past. Last week, however, Interior 
suffered a legal setback in this case. We strongly urge the Department 
to appeal this ruling and continue to defend the implementation of the 
CVPIA. We are confident that Interior's October 1999 provision will 
prevail on appeal. This issue is a critical test of the 
Administration's support for the CALFED Program. The October 1999 
decision is a key foundation for the CALFED program, as outlined in the 
attached letter to Secretary Norton. In particular, it is important to 
note that if Interior does not continue to defend (b)(2) 
implementation, it will eliminate the water supply assurances that have 
benefited Westlands and all other water users in the Central Valley, 
Southern California, and the Bay Area. A failure to fully implement--
and defend--the CALFED Record of Decision requirements regarding the 
CVPIA and the ESA would jeopardize the entire CALFED program. It would 
directly undermine both ecosystem restoration and water supply 
reliability for much of the state. Over the long term, it would 
undermine CALFED programs designed to benefit the entire state's 
environment and economy. We urge the Department of the Interior not to 
roll back environmental protections established under the CVPIA, the 
Endangered Species Act, and the Trinity River Restoration Act.
    3. Refuse to Interfere in California Water Allocation Issues. 
Westlands is seeking legislation to guarantee its CVP water deliveries. 
Such a provision is included in H.R. 3208 as reported by the Resources 
Committee. Although less damaging than previous versions, the current 
language would still undermine the CALFED program, including its 
environmental protections and its water supply reliability benefits for 
other urban and agricultural water users. Such legislative assurances 
also represent substantial interference in state water allocation 
issues. Attached is a letter opposing legislative water delivery 
assurances signed by the Friant Water Users Authority, the Metropolitan 
Water District of Southern California, United Farm Workers, California 
Trout, and NRDC.
    4. Urge the Westlands Water District to drop its Legal Attacks. In 
the past several years, the Westlands Water District has launched legal 
attacks to weaken legally-required environmental protections, to halt a 
project by the East Bay Municipal Water District, to undermine the 
water supply for farmers in the Friant Unit of the CVP, and, 
indirectly, to weaken the CALFED water delivery assurances which 
benefit all south-of-the-Delta water users. As a result of the attack 
on the Friant Unit of the CVP during 2001, farmers withdrew an offer to 
sell 200,000 acre-feet of water to Westlands. In short, during the past 
year, Westlands managers' aggressive legal strategy cost Westlands 
farmers 200,000 acre-feet of water. Withdrawing this action would allow 
Westlands to begin to rebuild these business relationships, which 
benefit both seller and buyer. Westlands' confrontational actions are 
not leading to durable solutions that will benefit its farmers.
    5. Write Renewed CVP Contracts with Responsible Financing and 
Quantity Provisions. The Bureau of Reclamation is currently negotiating 
long-term contract renewals in the Central Valley. In the past, Federal 
subsidies have inflated demand for water and worsened environmental 
problems. These subsidies also worsen the overproduction and commodity 
price problems facing agriculture throughout California. For your 
information, I have attached a Bureau of Reclamation graphic that 
indicates that over the past half century, CVP water users have repaid 
only 5 percent of the taxpayer investment of the CVP allocated to 
irrigation and M&I water. The repayment shown is in nominal dollars, 
and still leaves Federal taxpayers shouldering all of the interest on 
this investment for CVP agricultural water users. We urge the Bureau to 
write contracts that move away from the massive subsidies of the past 
and that contain contract quantities that accurately reflect the 
delivery capability of the CVP.
    6. Require an Open Process to Develop a Land Retirement Program. 
Tom Birmingham, the General Manager of the Westlands Water District, 
has suggested that it might be appropriate to stop farming, or to 
``retire,'' up to 200,000 acres of Westlands--one third of the 
District. In retrospect, some of this land should never have been 
irrigated. In principle, we agree that an ambitious land retirement 
program could produce multiple benefits, including environmental, water 
supply, and water quality benefits. However, despite the fact that NRDC 
is a party to the litigation in which these issues are being addressed, 
and despite multiple requests, we have received only scant information 
regarding pending land retirement and settlement discussions. What 
information we have received raises serious concerns regarding 
potential environmental impacts, impacts to other water users, and the 
appropriateness of the expenditure of hundreds of millions of Federal 
dollars. We believe that a land retirement partnership could produce 
broad benefits, but it will not succeed unless it is developed through 
an open process with other stakeholders--now excluded from the 
process--at the table. We urge the Bureau of Reclamation to ensure that 
the process used to develop a land retirement program is an open and 
inclusive one.
    7. Promote Urban and Agricultural Water Use Efficiency. CALFED has 
undertaken an economic analysis of all water supply options in 
California. Even without adding the economic benefits of a healthy 
environment, this analysis shows that the least expensive new water 
supplies in California are those that focus on improving water use 
efficiency--for agricultural and urban water users. The CALFED program 
has a major water use efficiency program.
    The CALFED Process has led to a ``fragile peace'' on water issues 
in California. This ambitious effort is implementing a balanced program 
to serve the environment and economy of a state with over 30 million 
residents. However, the Westlands Water District, which represents a 
few hundred landowners, has chosen a different path. We urge Congress 
and the Administration to pursue the workable recommendations listed 
above, rather than abandoning this promising approach for the Westlands 
strategy of confrontation and conflict.
    Thank you for this opportunity to address these important 
California water issues.
    Attachments :
     LAugust 28, 2001 letter regarding the CVPIA and CALFED
     LFebruary 1, 2002 letter regarding legislative water 
deliver assurances
     LCentral Valley Project repayment graphic
                                 ______
                                 

    [Attachments to Mr. Osann's statement follow:]

Natural Resources Defense Council * Save San Francisco Bay Association 
* California League of Conservation Voters * League of Women Voters of 
  California * Pacific Coast Federation of Fishermen's Associations * 
    Sierra Club * American Rivers * Friends of the River * The Bay 
Institute of San Francisco * California Trout * California Sportfishing 
  Protection Alliance * Planning and Conservation League * Mono Lake 
 Committee--CLEAN South Bay * Marin Conservation League * Golden Gate 
 Audubon Society * Santa Clara Valley Audubon Society * Sierra Nevada 
Alliance * WaterKeepers of Northern California * Friends of the Trinity 
   River * California Urban Creeks Council * Save the American River 
                              Association

August 28, 2001

Gale Norton, Secretary
Department of the Interior
1849 C Street, NW
Washington DC, 20240

Re: LImplementation of Section 3406(b)(2) of the CVPIA

Dear Secretary Norton,

    We are writing to express our appreciation for your continuing 
efforts to defend the final October 5, 1999 Department of Interior 
final decision regarding implementation of Section 3406(b)(2) of the 
Central Valley Project Improvement Act (CVPIA). The ``(b)(2)'' 
provision requires the Bureau of Reclamation to dedicate 800,000 acre-
feet per year from the Central Valley Project to the restoration of the 
Bay-Delta estuary and its anadromous fisheries. The October 1999 final 
decision was issued after years of negotiation, and ultimately 
litigation, regarding implementation of section 3406(b)(2). It has 
repeatedly been upheld as legally valid by the Federal court.
    We understand that some have requested that the new administration 
reopen the October 1999 final decision. We write to urge you to reject 
these requests. Although we disagree with some portions of the final 
decision, we urge you not to administratively re-open this decision. 
The CALFED Record of Decision (ROD) is premised on full implementation 
of the CVPIA, including the commitment to provide 800,000 acre-feet of 
CVP water to Central Valley fish and wildlife each year. Strong 
implementation of the CVPIA is critical to restore the Bay-Delta 
ecosystem and its fisheries. Because of the close relationship between 
CVPIA implementation and CALFED, any decision to weaken CVPIA 
implementation would have direct and immediate impacts on the CALFED 
process. We would like to briefly present a few of these connections.
    Environmental Water Account: The Environmental Water Account (EWA) 
is intended to ``provide water for the protection and recovery of fish 
beyond water available through existing regulatory actions related to 
project operations,'' (ROD, p. 54) clearly including the CVPIA. In 
fact, the size and operating rules of the EWA were determined based on 
extensive modeling and evaluation which assumed the full use of the 
800,000 acre-feet supply of water ``pursuant to section 3406(b)(2) of 
the CVPIA in accordance with Interior's October 5, 1999 decision, 
clarified as follows'' (ROD, p. 56). (The ROD goes on to resolve 
``offset'' and ``reset''--two critical CVPIA accounting issues.) The 
permits which allow water project operators to export water from the 
Delta, providing the EWA is being implemented, could be invalid if the 
CVPIA baseline for the EWA were no longer in place.
    Endangered Species Act and Delta Pumping Commitments: The 
Biological Opinions that support CALFED implementation and commitments 
made to water users regarding ESA implementation, the Environmental 
Water Account and Delta pumping are explicitly dependent on 
implementation of the CVPIA as described in the October 1999 final 
decision and the ROD. In particular, resource agencies found that the 
CALFED ROD complies with the requirements of the ESA because of the 
benefits of the full range of protection and restoration tools in the 
ROD. A weakening of the CVPIA would undermine CALFED's compliance with 
the ESA and require a reinitiation of consultation. It would likewise 
undermine commitments made to water users regarding Delta pumping and 
water supplies.
    Balancing: The CALFED ROD requires a finding of balanced 
implementation. Specifically, this section of the ROD requires that 
agency actions be ``consistent with the intent of this ROD and 
applicable regulatory compliance documents'' (ROD, page 5). Any 
decision to reverse final decisions regarding implementation of (b)(2) 
would be inconsistent with the ROD and with environmental compliance 
documents and would make it impossible to make a credible finding of 
balanced implementation.
    Consistency with the CALFED ROD: Interior signed a CALFED 
``Implementation Memorandum of Understanding'', which is included in 
the CALFED ROD. One of the implementation principles states that ``The 
Agencies will support the implementation of the CALFED Program as 
described in the ROD. Agencies will support and implement actions 
consistent with the ROD'' (ROD, Attachment 3, page 5). Clearly, it 
would be impossible to honor this commitment if Interior were to 
reverse critical commitments about implementing section 3406(B)(2) made 
in the ROD.
    National Environmental Policy Act: The October 1999 final decision 
and the clarifications regarding ``offset'' and ``reset'' are formally 
incorporated into the CALFED ROD and environmental documentation. Any 
change in these positions would affect the validity of the CALFED 
environmental documents and could require a new NEPA analysis, and most 
likely the issuance of a supplemental environmental impact statement.
    The key to the success of the CALFED program is maintaining the 
balance in the ROD that attracted broad support from all stakeholder 
groups and from the state and Federal legislatures. The CALFED ROD 
resolved a range of outstanding issues and created a package of 
programs and strategies that will provide broad benefits for all water 
users and the ecosystem. They key word here is ``package.'' It is not 
possible to undermine one portion of the ROD without causing that 
package to unravel, both politically and legally. Any such actions 
would not merely damage CALFED, they would damage the California 
environment and economy.
    We would be pleased to meet with you to discuss the CALFED program 
and implementation of the CVPIA. In particular, if you consider any 
reopening, revisiting or clarification of (b)(2) implementation issues, 
we request an opportunity to meet with you before you make any 
decisions. We look forward to working with you to implement the CALFED 
ROD. Thank you for your consideration of our views.

Sincerely,


 
                 ,--                                   ,
 
Barry Nelson                           Cynthia Koehler
Natural Resources Defense Council      Save San Francisco Bay
                                        Association
 
Sarah Rose                             Roberta Borgonovo
California League of Conservation      League of Women Voters of
 Voters                                 California
 


 
                 ,--                                   ,
 
Dan Sullivan                           S. Elizabeth Birnbaum
Sierra Club                            American Rivers
 
Elizabeth Reifsneider                  Gary Bobker
Friends of the River                   The Bay Institute of San
                                        Francisco
 
Nick Di Croce                          Richard Izmirian
California Trout                       California Sportfishing
                                        Protection Alliance
 
Gerald H. Meral, Ph.D.                 Frances Spivy-Weber
Planning and Conservation League       Mono Lake Committee
 
Bob Raab                               Trish Mulvey
Marin Conservation League              CLEAN South Bay
 
Arthur Feinstein                       Kelly Crowley
Golden Gate Audubon Society            Santa Clara Valley Audubon
                                        Society
 
Laurel Ames                            Jonathan Kaplan
Sierra Nevada Alliance                 WaterKeepers of Northern
                                        California
 
Byron Leydecker                        John Steere
Friends of the Trinity River           California Urban Creeks Council
 
Zeke Grader                            Alan D. Wade
Pacific Coast Federation of            Save the American River
 Fishermen's Associations               Association
 


                                 ______
                                 


                                 
[GRAPHIC] [TIFF OMITTED] 77682.001
[GRAPHIC] [TIFF OMITTED] 77682.002

                                 
    Mr. Calvert. I thank the gentleman.

 STATEMENT OF JOHN STOVALL, GENERAL COUNSEL, KERN COUNTY WATER 
                             AGENCY

    Mr. Stovall. Thank you, Mr. Chairman. It is a pleasure to 
be here on behalf of the second largest contractor on the State 
water project. I am pleased to be here with Mr. Quinn, another 
minor contractor on the project, and particularly pleased to be 
here with Steve Macaulay, the Chief Deputy Director of the 
Department of Water Resources. They have been a consistent and 
reliable partner in trying to provide sufficient water to the 
State of California. We are not so sure that the west side CVP 
contractors would say the same about the bureau.
    And by that, I will explain it later, but I don't mean to 
criticize Mr. Raley and his staff, because in our view they are 
sort of the new kids on the block here and they deserved a time 
to get their feet on the ground. But we expect that they do 
have their feet on the ground now, and we expect them to begin 
to comply with the law as announced by the courts recently.
    To understand the CALFED puzzle, we believe you have to 
step back and get a little perspective on the situation. CALFED 
has been a multiyear process which examined dozens of 
alternatives that were presented to it, and they selected three 
that were ultimately carefully studied for consideration. It is 
no surprise to you probably that our agency supported the dual 
conveyance alternative, but CALFED selected a less intensive 
alternative, less intensive infrastructure at least, that they 
are pursuing. We support that vigorously and are working toward 
its implementation.
    What that alternative does though, is to make those 
infrastructure components that are part of it that much more 
critical. The groundwater and surface storage is critical, an 
also critical, as you have heard here today, are the south-of-
delta improvements that improve conveyance capacity at the 
pumps.
    Another key, or the key actually to success of all of this, 
is administrative cooperation and flexibility. If we don't have 
that administrative cooperation and flexibility, in our view 
the whole thing falls apart, and we will have a repeat of the 
electrical crisis that California has suffered. And as the 
Chairman has pointed out, we can't build ourselves quickly out 
of a water crisis like we seem to have on the electrical side.
    There are three major components required administratively 
for this solution. The first is, we believe that the bureau 
must abandon the discredited policies for implementation of 
CPIA that it has pursued. The court in the Eastern District of 
California has now ruled that those policies were beyond its 
discretion and weren't supported by the law. We believe the 
bureau has the opportunity to vigorously move to follow the 
law, and we believe that they should use this opportunity to 
recommit themselves to serving the water needs of Californians.
    If they do that, it will go a long way, even if they are 
providing the 800,000 acre-feet that CVPIA requires, it will go 
a long way to helping resolve our current situation. Their 
current policy has in effect driven some of their contractors 
in desperation to attack water supplies of others, and that has 
generated tremendous amounts of discord in the California water 
community which would be eased significantly if the bureau 
actually lived up to their obligations.
    We all need to stand by the creative efforts of the 
Environmental Water Account, and support its continuation, 
because it is a key to resolving the ESA concerns that created 
such havoc in California in the early parts of the 1990's.
    Finally, the infrastructure components here are a balanced 
package with all of the ecosystem components and other items in 
the alternative that CALFED has decided to pursue, and it is 
important that they move together as a balanced package. Key to 
that is the passage of your bill, the passage of Senator 
Feinstein's bill in the Senate, and the development of a final 
product that creates balance and allows us to move forward. We 
would encourage everyone to do everything possible to make that 
happen, and that may involve in some cases taking language that 
they might not be particularly fully satisfied with in order to 
make it happen.
    And with that, I will just be available for questions.
    [The prepared statement of Mr. Stovall follows:]

         Statement of John F. Stovall, Kern County Water Agency

Introduction
    Thank you for the opportunity to present the views of the Kern 
County Water Agency on the important issues you are considering today 
related to CALFED and California water supply in 2002. My name is John 
F. Stovall and I am the General Counsel of the Kern County Water 
Agency. Additional personal information will be submitted as an 
exhibit.
    The Kern County Water Agency is a local governmental entity with 
political boundaries encompassing the County of Kern, a territory 
approximately the size of Massachusetts, Vermont and Rhode Island 
combined. It has a population of more than 600,000 people. Almost 1 
million acres of the most productive farmland in the world and about 
400,000 people rely on the Agency for a significant portion of their 
water supply.
    The Agency is the largest contractor for agricultural water on the 
State Water Project, and also the third largest contractor for 
municipal water. We contracted and paid for this supply intending to 
achieve an adequate water supply for the people and lands of Kern 
County. Although the uncertainties of nature render our exact water 
supply this year difficult to predict, we are certain that the systems 
which we have paid (and continue to pay) great sums of money for are 
now incapable of providing us with the reliable and adequate water 
supply which was promised. That situation exists throughout most of 
California, and CALFED and Californians currently face tremendous 
regulatory obstacles in trying to improve California's water supply.
    Solutions to our water supply shortages require cooperative 
efforts. Those of us relying on the State Water Project are working 
hard to ensure that unreasonable regulatory restrictions do not further 
impair our future and our economies. We are also resolved that other 
water users, stressed by their own situations, not attack our own 
supplies in desperation. Those interested in an adequate water supply 
must constantly encourage Federal and State agencies work vigorously 
and creatively to improve the water supply for all Californians while 
they meet their statutory environmental responsibilities. Unwise and 
overzealous environmental regulation in the past has reduced supplies 
to many California water users. We believe that both the Federal and 
State systems will now work together to improve water supplies for all.
    In 2001 Kern county's people and farms received 39% of their 
contracted supply in the first dry year after a series of wet years. 
The State Water Project we bought was supposed to provide a full supply 
in the seventh year of a drought.
    In 2002, it appears as though we may essentially have a mythical 
``normal'' year in the watersheds serving the State Water Project, yet 
we have a 45% allocation at this time. If that normal year 
materializes, it is still likely our supply will be significantly below 
our contracted entitlement. CALFED is supposed to help resolve this 
problem and the problems of others in the state who are similarly 
situated, but CALFED faces a number of serious challenges to the 
assumptions upon which it was built.
    CALFED has chosen to pursue the least intensive of the solution 
alternatives it identified in the hope that administrative and 
regulatory flexibility, coupled with minimal infrastructure 
improvements would suffice. While some creative administrative programs 
have been implement (the Environmental Water Account for example), 
other basic components of an administrative solution have been slow in 
coming (for example, changes in the administration of CVPIA to comply 
with the law.) Pending challenges to the programs instituted thusfar 
call into question the viability of those creative programs. Overcoming 
these challenges will require a cooperative effort by all concerned to 
either prove that regulatory restrictions can be reasonably implemented 
to minimize infrastructure requirements, or to implement more 
significant infrastructure improvements which may be needed to satisfy 
regulatory requirements.
    I turn now to your specific questions:
1. Given that present and future demands of urban, agricultural, and 
        environmental needs exceed the capacity of the project(s), 
        where do we find solutions to reliably meet these needs in the 
        21st century?
    Regulatory flexibility and administrative dedication to meeting the 
needs of water users are key to reducing infrastructure needs for both 
projects, the State Water Project (SWP) and the Central Valley Project 
(CVP), as well as other California water systems. If these are not 
forthcoming to supplement minimal infrastructure improvements, then we 
must have more extensive infrastructure solutions.
    The solutions currently attempted are essentially the first CALFED 
alternative that was under consideration. Each of the alternatives 
relied on significant conservation efforts, but the hallmark of the 
first alternative was utilization of regulatory flexibility and minor 
infrastructure improvements to achieve benefits theoretically 
approaching those of the third, ``dual conveyance'', alternative.
    The first alternative relies heavily on assumptions that 
administrative solutions have the potential to reach a 65% normal 
supply for CVP south of delta contractors with minimal infrastructure 
improvements. Administrative solutions for the CVP are discussed in the 
response to the next question on general administrative solutions. But 
the assumptions of regulatory flexibility and the potential for 
effective administrative relief are now called into question by threats 
of litigation from those who have been opposed to any infrastructure 
improvements at all. We believe that prudence requires a careful 
examination of returning to a more intensive infrastructure solution if 
the ``soft path'' of the first alternative proves to be a quagmire.
    Fortunately, CALFED has done the groundwork for a significant 
infrastructure solution; it is the third or ``dual conveyance'' 
alternative. Coupled with the significant conservation regimens and 
storage improvements contained therein, the dual conveyance solution 
holds the most promise for actually protecting endangered species, and 
improving water supply and drinking water quality.
    Creation of significant off-stream surface storage, enhancement of 
existing storage, and conjunctive use are all contained in the ``dual 
conveyance'' alternative. But the hallmark of the alternative is its 
namesake, the system of dual conveyance which allows operational 
flexibility to avoid entrainment of fish and other adverse 
environmental impacts, enhance source drinking water quality, and avoid 
impairment of water supply due to catastrophic or regulatory 
disruptions.
    The duel conveyance alternative provides the following benefits:
    1) LThe majority of the water diverted to water users with the duel 
system will come from the Sacramento River upstream of the Delta and 
the result is significant reductions (close to elimination) of the 
THM'' precursors currently in the export water from Delta peat soils 
and bromides due to salt water intrusion from the San Francisco Bay. 
This will allow urban water waters users to meet all existing and 
likely future EPA water quality standards using current treatment 
methodologies.
    2) LThe duel system provides the CVP and SWP operational 
flexibility to provide all of the fishery enhancement protections 
currently desired by state and Federal fishery regulatory agencies at 
no water cost to the projects. The duel system allows the projects to 
provide these benefits and to increase the average annual CVP and SWP 
deliveries by about 100 to 150 TAF.
    3) LThe duel system also provides operational flexibility that 
allows the CALFED proposed storage facilities upstream of the Delta to 
be fully utilized. With current Delta transfer facilities water supply 
produced by new storage north of the Delta could only be utilized in 
very dry years. With the duel system, that storage could be utilized in 
almost all years and would allow projects such as the Kern Bank and the 
East Reservoir to be fully utilized to the benefit of many water users 
south of the Delta.
    Local conjunctive use and water banking projects such as our own 
Kern Water Bank are also an essential component of a solution to the 
problem regardless of the CALFED alternative pursued. Responsible local 
agencies have recognized the necessity of pursuing local and regional 
responses to the inability of the State and Federal Governments to 
solve this urgent problem. Conjunctive use has been recognized as a 
valuable and environmentally beneficial method of storage, and we in 
Kern County, with the assistance of CALFED, are at the forefront of 
this effort. Our Agency and others in Kern County created groundwater 
banking programs to help stabilize our supplies before CALFED was 
created and continue to work to enhance its capabilities.
    The Metropolitan Water District of Southern California is another 
local agency that has acted on its own to improve its supply. It has 
developed its own significant off-stream storage project, the Diamond 
Valley Reservoir. Other local agencies have similar success stories in 
improving their own water supplies through development of water, 
without taking water from others. These programs, however, require the 
cooperation of State and Federal agencies.
    Ultimately, if the first alternative is unsuccessful in meeting 
California's needs then the more significant infrastructure 
improvements in the form of dual conveyance and more surface water 
storage will be required. We are working hard to make the first 
alternative work, but it requires sufficient funding, administrative 
and regulatory creativity, and good faith by those who led CALFED to 
try the first alternative with quite limited infrastructure 
improvements.
2. In your opinion, what administrative or operational changes, 
        consistent with existing law, or legislative changes can be 
        made to meet the goals of water supply and reliability set 
        forth in the CALFED Record of Decision?
    As mentioned, if the ``soft path'' is to provide any relief to the 
California water crisis, administrative solutions and regulatory 
flexibility must be forthcoming. Some of these have been implemented 
and are working reasonably well; the Environmental Water Account is an 
example. We view the following as the administrative and regulatory 
actions which must be implemented to make the current CALFED 
alternative work, and we believe they are possible within the existing 
statutory framework. It may be however that some legislative 
improvements are necessary as discussed below. If these cannot be 
achieved two choices remain: pursuit of the dual conveyance alternative 
or serious disruptions of water supply for Californians.
Administrative
Reasonable and balanced implementation of CVPIA.
    It is true that the Department of Interior and state have 
environmental responsibilities which must be met. Meeting these 
obligations must not be an excuse for avoiding their clear contractual 
and governmental obligations to provide an adequate water supply for 
the people they serve however. In the case of the Department of the 
Interior, past policies led the Bureau of Reclamation to discount the 
importance of its commitment to provide a water supply to its 
contractors. A recent decision in the Federal courts supports this 
belief. In the words of the Federal Judge examining the Bureau's 
implementation of the CVPIA:
        ``Interior is contractually bound to provide specific amounts 
        of water to the water districts absent a water shortage. There 
        is no justification to increase the use of CVP ``yield'' for 
        (b)(2) purposes over 800,000 AF, when (b)(2) uses have not 
        caused or contributed to the increase in CVP yield. Instead, 
        Interior is arbitrarily preferring (b)(2) uses over all other 
        water uses that have claims to CVP yield.'' San Luis & Delta-
        Mendota Water Authority et al. v. United States of America, Civ 
        No. F 97-6140 OWW DLB (EDCA Feb.5, 2002) (Supplemental 
        Memorandum Decision and Order Re: Summary Judgment Motion on 
        Offset/Reset) at p. 12 (footnote omitted).
    This was done without regard for contractual obligations of the 
Bureau to their contractors, and without any legal authority. Again, 
the trial judges' words are instructive:
        The government and the environmental plaintiffs have pointed to 
        no legal authority that authorizes Interior to create 
        accounting concepts of ``reset'' and ``offset'' that ignore and 
        do not account for the actual use of CVP yield for (b)(2) 
        purposes in violation of Congress' direction that exactly 
        800,000 AF of CVP yield are to be dedicated and managed 
        annually for (b)(2) purposes.'' San Luis & Delta-Mendota Water 
        Authority et al. v. United States of America, Civ No. F 97-6140 
        OWW DLB (EDCA Feb.5, 2002) (Supplemental Memorandum Decision 
        and Order Re: Summary Judgment Motion on Offset/Reset) at p. 
        16-17.
    Put simply, the Bureau, without apparent concern for its 
obligations to its contractors, got very creative in its accounting to 
take more water from them than Congress intended. It is an example of 
why we are concerned that the administrative dedication to solving the 
real problems of California water users may be difficult to develop.
    Administrators and regulators should focus their creativity on 
helping to supply adequate water for Californians. If they do, we 
believe that the 65% targeted supply for south of delta CVPIA 
contractors can be met with the minimal infrastructure improvements 
contemplated in the first phase of CALFED without taking water from 
other water users. This should reduce markedly the tensions among 
California water users, and allow those who have attacked the supplies 
of others to work cooperatively with others.
Flexible implementation of the ESA based on sound science.
    The administration of the Federal Endangered Species Act is another 
case in point. The recent review of Federal actions on Klamath project 
by the National Academy of Science supports what we have suspected all 
along. Federal regulatory agencies are relying on their own inclination 
to take water from water users in a ``meat ax'' approach to solving 
environmental problems. We believe a more economically sophisticated 
approach is required. Before decisions are made that are catastrophic 
to communities, regulators should give due regard to whether there is 
actual peer-reviewed sound scientific support for taking the water. The 
jobs of people, indeed entire communities, depend upon that water.
    Klamath is a dramatic example of a problem that has been present in 
regulatory agencies for a decade: Federal agencies with single purpose 
missions disregard or discount impacts on humans in their decision 
making. The troubling new development reflected in the recent San Luis 
& Delta Mendota Water Authority v. U.S. decision is that even agencies 
who have clear obligations to serve people, under both contract and 
mission, have discounted those obligations. This has serious 
implications regarding the potential for success of an alternative that 
requires commitment to balance. We are hopeful that those in the 
Federal Government responsible for water supply will again recognize 
their contractual commitments, and work to meet those commitments 
without taking water from other water users.
    Achieving reasonable and scientifically sound implementation of the 
Endangered Species Act may be extremely difficult. It will require 
dedication within the Department of Interior and elsewhere to serving 
people while utilizing valid science to both protect the environment 
and insure that people are not harmed without solid scientific reason. 
That dedication from the Bureau of Reclamation is necessary to ensure 
that regulatory restrictions are reasonable.
    We believe the existing Endangered Species Act provides the 
regulatory flexibility to achieve many of the goals if administrative 
solutions are sought. Existing mechanisms for consultation and habitat 
conservation planning can achieve solutions that both benefit species 
and improve water supply. But these solutions are now the subject of 
legal challenges by radical environmental groups who seek to undo the 
progress made thus far. We do not believe those challenges will be 
successful, but if they are then the death of the first CALFED 
alternative will be their responsibility.
Continuing beneficial use of flood and high flow water.
    The history of California water in the past decade has been the 
actual reduction in existing supplies due to overzealous environmental 
regulation. A key to making the first CALFED alternative successful is 
at least maintaining the status quo on existing supplies. Yet recent 
actions by the Department of Interior threaten historical uses of high 
flow and flood waters for conjunctive use projects that ``bank'' such 
water for use in dry years. In fact, they threaten a substantial source 
of Environmental Water Account water in normal and dry years. The most 
basic step in solving our water supply problem is for Federal and State 
agencies to work with local agencies to preserve existing supplies.
    Our Agency has been a reliable partner of the Friant Division of 
the CVP for many years in taking high flow and flood waters to enhance 
flood protection in the San Joaquin valley and store those waters for 
benefit in dry years. We hope to continue that function of storing high 
flow water for beneficial use in dry years. It will require the 
cooperation of the Bureau however, and willingness to work with an 
Agency which has been a reliable partner for many years. We call upon 
the Bureau to facilitate our use of this water which has both 
environmental and water supply benefits.
Cooperative Efforts with Other Water Systems.
    The Bureau and the State Water Project have long been partners in 
addressing California's water supply needs. We call upon the Bureau to 
renew its commitment to being a reliable and trustworthy partner with 
the SWP. We on the State Water Project join in the concern of CVP 
contractors at the apparent disregard for their contractual rights that 
has now been confirmed in Federal court. We are confident that the 
Bureau will now work hard to meet those commitments. We are also 
confident that they will work toward cooperative solutions to improve 
the water supply for all Californians.
    Specifically, the Coordinated Operating Agreement has been a stable 
and unifying landmark in a stormy sea. We urge the Bureau to resist any 
temptation to enhance its own supplies to the detriment of others. The 
COA should remain a source of stability that enables the Bureau and the 
Department of Water Resources to work together to solve the problems 
that face us and create additional yield in difficult circumstances.
Local agencies must work to improve their own supplies.
    It isn't just Federal and State agencies that have administrative 
problems. Local agencies too are faced with difficult administrative 
decisions: to take the high and challenging road of working toward 
improved supplies for all, or the low road of taking water from others. 
Our agency fully appreciates the frustration of dealing with Federal 
and state agencies who have occasionally seemed intent on creating 
rather than solving problems (though we must commend the State 
Department of Water Resources on their work in trying to help solve 
these problems.) We are confident that recent court decisions will 
reawaken a commitment to improving the water supply for Californians. 
We would encourage all local agencies to give Federal and state 
administrators a chance to improve supply administratively; passage of 
HR 3208 is a first step even if some of the controversial provisions 
have to be modified.
    Then, if the first CALFED alternative is not successful it will not 
be because water users have not tried hard to make it work.
Legislative
    The passage of the Calvert and Feinstein bills and achievement of a 
product that pass both houses of Congress is critical to success. 
Without the necessary funding and assurance of balance provided by HR 
3208 in particular, the future of CALFED and California's water supply 
is bleak indeed.
    Ultimately, if challenges to the program reveal aspects of the 
program that need additional legislative authorization, then it must be 
forthcoming. We believe that the program can be achieved with current 
regulatory authorizations under the appropriate acts however.
Conclusion and Summary
    CALFED has been a long process. We are now in the midst of 
determining if regulatory and administrative flexibility, coupled with 
relatively minor infrastructure improvements, can achieve the same 
benefits as the major infrastructure alternative--the dual conveyance 
alternative. It can achieve significant benefits for water quality, 
water supply and the environment. If the current attempted ``soft 
path'' is unsuccessful, we must be ready to move aggressively to the 
third alternative to prevent serious damage to California's economy.
                                 ______
                                 
    Mr. Calvert. I thank the gentleman.
    Mr. Quinn?

  STATEMENT OF TIMOTHY H. QUINN, VICE PRESIDENT, STATE WATER 
  PROJECT RESOURCES, METROPOLITAN WATER DISTRICT OF SOUTHERN 
                           CALIFORNIA

    Mr. Quinn. Thank you, Mr. Chairman. My name is Timothy 
Quinn. I am Vice President, State Water Project Resources, at 
the Metropolitan Water District of Southern California.
    The blessing or the curse of being last, most of what I 
have got in my testimony has been put before you, so I will try 
and very briefly summarize how we responded to the two 
questions that you directed to us in your letter of invitation.
    The first question was, given that demands on the existing 
major projects clearly outstrip supply capabilities, how are we 
going to balance demand and supply in the 21st century? As I 
said in my written statement, we think the answer to that 
question is, in a word, diversification, which has been 
mentioned by several other witnesses up here.
    What I mean by diversification is you have to rely more on 
local investments and local resources for your reliability 
future, not at the expense of ignoring the import systems that 
are important to you, but your reliability to a substantial 
degree lies in your own back yard. Southern California 
experience is instructive in this regard.
    I came to the district in 1985 as a new upper manager at 
the district, I was taught the ``complete the State water 
project'' speech. It was ``We've got a contract for 2.0115 
million acre-feet of water, and we want the State to honor that 
contract and to deliver the water even when it's very dry.''
    Well, that one-dimensional strategy failed. In 1991 we had 
widespread mandatory rationing in our service area. Economic 
damages were substantial. Firms were saying that they couldn't 
locate plants or expand plants in California because of a lack 
of reliable water supplies. Chaos reigned.
    Yesterday Senator Feinstein said that she didn't want 
energy to be the forerunner for California water. Well, in some 
sense it is the post-runner, because we had an energy-type 
experience in 1991 and it was no fun. It was very damaging to 
our economy.
    In Southern California we determined to start investing in 
a more diversified strategy, and I think it is worth noting 
that last year in 2001 our allocation of State project water 
was very similar to what it had been 10 years earlier in 1991. 
We didn't push any panic buttons. We pulled water out of our 
groundwater accounts. We had the cushion of Diamond Valley 
Lake. Our demands were down because of very aggressive 
investments in reclamation and conservation. We went for a 
modest amount of water to a very businesslike dry-year transfer 
program administered by the Department of Water Resources. We 
maintained reliability.
    CALFED has embraced that strategy. That strategy is 
essential to the economic well-being of the entire State. That 
is why we so strongly support the efforts to authorize that 
diversified strategy. The competitive grant program fits like a 
glove on a hand for the problem that we are trying to solve 
with the CALFED program.
    Let me turn to the second question. I agree with much of 
what has been said previously. The fact is, you can't read the 
commitments in the ROD and then read the projections for supply 
of the Bureau of Reclamation and come to any other conclusion 
than this system is broke and it has got to be fixed consistent 
with the supply commitments in the ROD.
    We continue to believe that a statute is not the way to 
solve that problem. We view this as a problem, a serious 
problem in administrative discretion. We also don't think that 
this is about a legal dispute. Whatever happens on appeal, 
whether Judge Wanger's decision--we substantially agree with 
his analysis--is upheld or not, there is a problem.
    The problem is that Interior has used its discretion to 
undermine balance instead of supporting the balance that is in 
the Record of Decision. And the real policy question here is, 
is Interior willing to use its discretion in a way that 
supports the balanced outcomes of the ROD or not? If it is, 
there are a lot of tools available and we think the job can get 
done. Start with following the judge's order. Look for other 
ways to apply discretion that accomplish the balance in the ROD 
instead of disproportionately favoring one use over another.
    Over the longer term I think Interior and their contractors 
are going to have to get much more aggressive. The State water 
contractors, Kern County, Metropolitan, virtually every State 
water contractor has gone through some very aggressive form of 
integrated resources planning, implementing a diversification 
strategy in their service areas. We went through the difficult 
job of renegotiating our State water contract, rethinking it 
from one end to the other, and the Monterrey Agreement 
dramatically changed how we managed the resources available to 
us under our contract, and it worked.
    Federal contractors have not done either of those things, 
and we think it is long overdue. The bureau should be working 
with its contractors and with others to do essentially a 
Monterrey Agreement, where they are rethinking their own 
project, how do they deal with the challenges that we are 
facing today, instead of just relying on the operational 
procedures that they have always used in the past.
    Let me close with a couple of things that are important to 
Metropolitan. One is, I wish that the Southern California 
representatives were still here. We are concerned that there 
could be serious negative impacts on Southern California from 
this judge's decision. We are hearing rumors that the CALFED 
agencies may decide that we don't need ESA assurances any 
longer because a judge has ruled that decisions by the Federal 
Government were unlawful. The loss of those assurances would be 
devastating from a Southern California perspective, and we will 
argue strongly against it.
    I think with that I will close and be glad to answer any 
questions.
    [The prepared statement of Mr. Quinn follows:]

  Statement of Timothy H. Quinn, Vice President, State Water Project 
     Resources, Metropolitan Water District of Southern California

    Mr. Chairman and Members of the Subcommittee, thank you for this 
opportunity to appear before you on matters of considerable importance 
to California. My name is Timothy Quinn. I serve as Vice President of 
State Water Project Resources at the Metropolitan Water District of 
Southern California.
    Today, you have asked witnesses to address two questions:
        Given that present and future demands of urban, agricultural, 
        and environmental needs exceed the capacity of the project, 
        where do we find solutions to reliably meet these needs in the 
        21st century?
        In your opinion, what administrative or operational changes can 
        be made to meet the goals of water supply and reliability set 
        forth in the CALFED Record of Decision?
    Mr. Chairman, I will address these questions in order.
Meeting Water Needs in the 21st Century: The Diversification Strategy
    Metropolitan believes the answer to the first question is, in a 
word, diversification. While California's water managers once believed 
our water supply security rested solely in the completion of large 
water projects, primarily the State Water Project (SWP), we have come 
to recognize we must invest heavily in local resources as well as 
assure the security of the statewide water supply system.
    Nowhere has this diversification strategy been more vigorously 
implemented than in Southern California. Twenty years ago, Southern 
California water planners embraced a long-term vision that was one-
dimensional: We wanted the state to honor its contract with us for 
2.0115 million acre-feet (MAF) of SWP entitlements, even during the 
driest of years. That vision, for better or worse, was not realized, 
largely as the result of legitimate environmental concerns.
    Today, through Metropolitan's Integrated Resources Plan, we have 
moved substantially toward restoring the reliability of the region's 
water supplies by investing heavily in local resources, including:
     LVast reclamation plants to reuse imported water supplies;
     LConservation programs that save more than 700,000 AF 
annually, equal to the combined water demands of the cities of Los 
Angeles and San Francisco;
     LGroundwater storage projects in Southern California and 
in partnerships in the San Joaquin Valley and along the Colorado River 
Aqueduct in which we have accumulated 1.5 MAF of stored water;
     LRegional surface storage in Diamond Valley Lake, with a 
storage capacity of 800,000 acre-feet built at a cost of $2 billion; 
and
     LStrategic use of water transfers with Colorado River and 
Central Valley agricultural partners.
    Due to these investments, water use in Southern California today is 
about the same as it was in 1975, despite an increase in population of 
5 million people.
    The importance of these regional resource investments is difficult 
to overstate. Today, water demands in Metropolitan's service area 
average about 3.8 MAF. By 2020, regional water demands are expected to 
average about 4.8 MAF. Our supply challenge is to provide that 
additional 1.0 MAF for the $680 million regional economy and fulfill 
our unwavering commitment to implement the California Plan to live 
within the state's allotment of Colorado River water. Fully 85 percent 
of the water expected to meet these growing demands will come from 
regional and local investments. These plans for a diversified supply 
strategy are not merely written on paper. We are implementing them, 
committing billions of our ratepayers' dollars.
    To be successful, the diversification strategy requires that the 
CALFED Program be successful. From CALFED, we require better water 
quality in our SWP supplies to protect public health, assure the 
success of reclamation investments, and maintain a balance of SWP and 
Colorado River supplies. We require the financial assistance CALFED 
promises for the massive investments required in local water supply 
resources and expensive water treatment technologies that must be 
implemented, if we are to continue using SWP water in our treatment 
plants and still meet increasingly stringent drinking water standards. 
And we require reliable SWP supplies, to replenish our south-of-the-
Delta storage capacity when it is relatively wet and meet a portion of 
dry-year demands.
    The CALFED Program has embraced the diversification strategy. At 
its core, the CALFED Record of Decision (ROD) is an aggressive, 
balanced plan of action, with deadlines and budget commitments to 
provide accountability. The CALFED Program strongly emphasizes a 
commitment to habitat restoration--an unprecedented program now well 
underway--and to investments in local water supply resources throughout 
California. It contemplates up to 4.5 MAF of new storage capacity and 
necessary improvements to through-Delta water conveyance. Equally 
important, CALFED has successfully implemented an Environmental Water 
Account, to provide flows for the restoration of fisheries and 
essential regulatory assurances for water supplies against further 
takings under the Endangered Species Act.
    In Southern California, the diversification strategy is working. A 
little more than a decade ago, at the end of the 1987-1992 drought with 
a SWP supply of only 30 percent, mandatory rationing was widespread in 
Southern California, as it was elsewhere in the state. Economic damages 
were substantial. Reports were widespread of companies hesitant to 
expand plants or locate new ones in California due to unreliable water 
supplies. California water in the early and mid-1990s looked a lot like 
energy markets at the beginning of the 21st century. Simply stated, 
chaos reigned.
    In sharp contrast, last year with SWP deliveries similarly limited, 
there was no panic. Instead, water demands had been lowered through 
aggressive demand management strategies; Metropolitan withdrew water 
from its groundwater storage accounts and from Diamond Valley Lake; and 
we purchased a modest amount of water from the business-like dry-year 
transfer program administered by the California Department of Water 
Resources. There was no rationing. Reliability of supplies was 
maintained. At the same time, in part due to the historic efforts to 
improve habitat and restore beleaguered fisheries, most fishery species 
of concern appear to be on a recovery trend.
    To keep California on this successful track, it is imperative that 
we fulfill the vision of CALFED. It is for this reason that we so 
strongly support the efforts to authorize the CALFED Program in H.R. 
3208 1, introduced by Chairman Calvert, as well as the 
efforts of Senators Feinstein and Boxer to pass authorization 
legislation for the CALFED Program in the Senate.
---------------------------------------------------------------------------
    \1\ As discussed below, Metropolitan continues to oppose the so-
called ``assurances'' language in H.R. 3208.
---------------------------------------------------------------------------
Administrative and Operational Changes
    While overall the CALFED Program provides a sound plan for a secure 
water future for California, success has not been universal. One of the 
most notable exceptions is the operation of the Central Valley Project 
(CVP) both prior to and after the adoption of the CALFED ROD in August 
2000.
    Recognizing the serious water supply shortfalls experienced by CVP 
agricultural service contractors in the west San Joaquin Valley, the 
ROD includes a commitment to increase supplies for this region to 65 to 
70 percent of their contract amounts under ``normal'' hydrologic 
conditions. Yet, in a January 25, 2002 statement, the U.S. Bureau of 
Reclamation (Bureau) announced water supply projections that clearly 
fall far short of this commitment. Based on the current operating 
guidelines for the CVP, under dry conditions, CVP Westside contractors 
can expect deliveries of 45 percent, comparable to the current 
allocation to SWP contractors. But while SWP contractors can expect 
increased deliveries under more favorable hydrologic conditions, CVP 
deliveries will be no more than 45 percent even under above-normal 
hydrologic conditions. Ironically, if the year turns out wet, CVP 
deliveries will be reduced to 35 percent due to the Department of 
Interior's (Interior) current plans to implement the Central Valley 
Project Improvement Act (CVPIA). The current operational guidelines of 
the CVP are not consistent with the clear commitment in the CALFED ROD 
to balance water supply and environmental benefits.
    Wherein lies the remedy? In a December 11, 2001 letter to Chairman 
Calvert (Attachment A), Metropolitan's Chief Executive Officer Ronald 
Gastelum expressed our opposition to statutory remedies for this 
problem. Like many other water districts throughout California, we 
believe that statutory protections to guarantee the water supplies of 
one select group of water users, no matter how carefully worded, 
inherently pose the risk of putting others at a disadvantage. Such 
statutory solutions threaten to replace one form of imbalance with 
another. For this reason, we continue to oppose the so-called 
``assurance'' language in any CALFED reauthorization bill.
    Metropolitan believes just as strongly that the remedy lies in 
appropriate use of administrative discretion, as expressed in a 
subsequent January 8, 2002 letter to Secretary Norton (Attachment B). 
We believe that Interior has ample discretion under existing law to 
achieve the balance promised in the ROD. In recent years, Interior has 
used its discretion to implement a number of questionable measures in 
implementing Section 3406(b)(2) of the CVPIA, which dedicates 800,000 
AF of CVP yield for specified environmental purposes (b(2) water). 
Chief among these discretionary acts are three accounting practices for 
tracking the use of b(2) water that have been labeled ``reset'', 
``offset'', and ``credits''. In a decision dated February 5, 2002, the 
United States District Court, Eastern District of California has now 
found all three of these practices unlawful. For the reasons set forth 
below, regardless of the ultimate outcome in the courts, each of these 
discretionary actions warrants reexamination.
    Reset. One of the uses of b(2) water is to release water from 
upstream storage to augment in-stream flows for specific environmental 
purposes. Under Interior's reset accounting practice, if storage 
subsequently recovers due to wet conditions before the end of January, 
the b(2) account is ``reset'' as though the delivery of water for 
environmental purposes had never occurred. Using this logic, it could 
be argued that if Interior releases stored water for delivery to a CVP 
contractor and storage levels subsequently recover, then its contract 
obligations should be ``reset'' and Interior should still be obligated 
to deliver the contractor's full contract amount as though the initial 
delivery had never occurred. The soundness of such a policy is subject 
to question. Certainly, allowing for ``reset'' after one project use 
but not another introduces systematic imbalance to CVP operations which 
has contributed to the water supply shortfalls in the west San Joaquin 
Valley. 2
---------------------------------------------------------------------------
    \2\ According to the Federal District Court decision: ``[Interior] 
is not free to use ``reset'' to ``undedicate'' and not account for (b) 
(2) use in a water year, because the current year's overall CVP water 
delivery capacity has been increased by the windfall of increased 
precipitation. . . Other than to prefer one competing use for water 
over another, without legal authority, the reset mechanism is a post 
hoc rationalization to justify not charging actual (b) (2) use.'' U.S. 
District Court, Eastern District of California, Supplemental Memorandum 
and Order, February 5, 2002, pages 12-13.
---------------------------------------------------------------------------
    Offset. The offset accounting practice affects CVP operations 
during summer months of peak irrigation demand. During these months 
with virtually no natural precipitation, water generally must be 
released from storage to be delivered to CVP export contractors. 
Accordingly, under some circumstances upstream storage will be higher 
in the system because export deliveries are cut to protect fish as a 
b(2) measure. Under the offset accounting practice, such shortages of 
water during peak irrigation months may not count as a use of b(2) 
water, because, under certain circumstances, the increase in storage 
``offsets'' the loss of export water supply in Interior's accounting 
methodology. Thus, despite the fact that an environmental benefit 
ostensibly occurs by reducing exports and the fact that a clear 
economic harm occurs for the westside water user, Interior's offset 
accounting practices may treat such water as never being used for b(2) 
purposes. Like reset, the Federal District Court has found the offset 
accounting practice arbitrary and capricious and has ruled it unlawful. 
3
---------------------------------------------------------------------------
    \3\ The District Court held: ``Thus, although CVP yield was 
actually used for (b) (2) purposes, and not made available for other 
CVP water users, it was not accounted for under the (b) (2) account. 
Once water is used for (b) (2) purposes, it must be accounted for. 
Interior may not use ``offset'' to ``undedicate'' and not account for 
as (b) (2) use, water that has already been used for (b) (2) purposes 
in a water year.'' Ibid, page 15.
---------------------------------------------------------------------------
    Credits. The CVPIA expressly states the purposes of b(2) water 
include water used pursuant to the state's Water Quality Control Plan 
(WQCP) and to meet ESA objectives. Water used for these purposes should 
be fully credited against the 800,000 AF of yield dedicated for 
environmental purposes under the Act. Yet, Interior's accounting 
practices place an arbitrary cap of 450,000 AF annually on the amount 
of water credited for these purposes. When actual impacts on the CVP 
exceed this amount, this accounting practice makes it likely that more 
than 800,000 AF will be taken from CVP contractors and used for the 
environmental purposes of the Act. In an October 19, 2001 ruling, the 
District Court agreed, ordering Interior to fully credit water used for 
WQCP and ESA purposes. 4
---------------------------------------------------------------------------
    \4\ Emphasizing the importance of maintaining some certainty for 
CVP Contractors, the court argued: ``[I]f it were left to Interior's 
``discretion'' whether or not to count CVP yield used for such [WQCP or 
ESA] (b) (2) purposes, the annual 800 TAF cap would be illusory. The 
800,000 TAF [sic] is intended by Congress as an immutable floor and 
ceiling on annual reallocation of water from CVP yield for (b) (2) 
purposes. If Interior uses more than 800 TAF for (b) (2) purposes in 
any year, but does not count all CVP yield used for such purposes, it 
violates CVPIA Section 3406 (b) (2).'' U.S. District Court, Eastern 
District of California, Memorandum Decision and Order, October 19, 
2001, page 35.
---------------------------------------------------------------------------
    Whether within Interior's legal discretion or not, Interior's 
current b(2) accounting practices are inconsistent with the balance 
objectives defined in the CALFED plan of action. The use of water 
dedicated for environmental purposes, whether b(2) or otherwise, should 
reflect the best scientific information available and attempt to 
achieve environmental restoration objectives with the least economic 
impact on others. Interior's practices appear to result in the use of 
more than 800,000 AF annually. Moreover, many of these practices have 
the effect of concentrating fish protection actions disproportionately 
on reducing CVP exports where the scientific support for such use tends 
to be weaker and the economic costs higher. Regardless of the ultimate 
outcome in the courts, Metropolitan urges Interior to reexamine its use 
of administrative discretion in implementing CVPIA and make appropriate 
adjustments consistent with the objectives of the CALFED ROD to balance 
water supply and environmental restoration objectives.
Environmental Considerations and the Role of Science
    We are aware some interests may be concerned about the implications 
for environmental restoration of changes in the administration of CVPIA 
or other environmental laws. Metropolitan strongly agrees that the 
water supply benefits of the ROD should not be achieved at the expense 
of environmental restoration. Indeed, the philosophy of the CALFED 
Program is that we can accomplish both environmental restoration and 
water supply reliability--and that is the case here.
    Already, some have suggested that because portions of the CALFED 
environmental baseline have been declared illegal there should be an 
immediate acre-foot for acre-foot increase in the Environmental Water 
Account or that ESA assurances should be withheld this year from the 
State Water Contractors and others. Such actions are premature. The ROD 
contains an orderly, public process based on science for dealing with 
such uncertainties and addressing whether additional EWA assets should 
be implemented. Metropolitan strongly urges Interior to follow those 
procedures.
    It is important to recognize that California's fisheries are in far 
better shape today than they were a mere decade ago. That is certainly 
the case for the three ESA listed species that have been a concern in 
the operations of the CVP and SWP in recent years: the winter-run 
chinook salmon, the spring-run chinook salmon, and the delta smelt.
    The winter-run chinook salmon has been the subject of intense 
management activities and, for the first time in decades, the 
population of this species is on a recovery trend. The winter-run 
numbered only 191 returning adults in 1991, but last year more than 
7,500 adults returned to spawn, the largest number since 1982. If 
CALFED is able to proceed with plans to restore 42 miles of cold water 
river habitat for this species on Battle Creek (a Sacramento River 
tributary near Redding), the winter-run may well be within reach of the 
population restoration goals of CVPIA and CALFED. Similarly, 
populations of the spring-run chinook salmon are rebounding on other 
Sacramento River tributaries. On Butte Creek, a critical spawning area 
for this species, CALFED restoration efforts with local and statewide 
cooperation have restored nearly 30 miles of prime habitat. As a 
result, where once only a few hundred fish returned to spawn, in recent 
years the returning adults number in the tens of thousands. The Delta 
smelt population index is also up, having climbed nearly to recovery 
levels in the past few years.
    While these recent trends are encouraging and certainly suggest 
that we are doing something right through the CALFED Program, the fact 
is none of these species have yet achieved the sustainable population 
levels established as goals by both the Federal and state governments. 
For this reason, any changes in the use of discretion to accomplish 
water supply objectives must be part of the broader CALFED package that 
also keeps these and other species on a recovery track. To assure that 
these decisions are based on the best scientific information and do not 
undermine environmental restoration efforts, Metropolitan urges that 
Interior follow the procedures outlined in the ROD and consult the 
CALFED Science Program for guidance. For the same reasons, we recommend 
that Interior, in cooperation with the CALFED Science Program, convene 
an independent panel of scientists to offer advice on the best means of 
refining CVP operations in a manner that is consistent with the 
environmental restoration goals of the CALFED Program.
    Mr. Chairman, once again, thank you for the opportunity to appear 
before you today. I would be glad to answer any questions the 
Subcommittee may have.
                                 ______
                                 
                              Attachment A

December 11, 2001

Honorable Ken Calvert
Chairman
Subcommittee on Water and Power
United States House of Representatives
1522 Longworth House Office Building
Washington, D.C. 20515

Dear Chairman Calvert:

Re: LWater Assurance Language in H.R. 3208

    On behalf of the Metropolitan Water District of Southern 
California, I want to commend you for the extraordinary leadership that 
you have demonstrated in seeking legislation to authorize the CALFED 
Bay-Delta Program. After decades of gridlock, the CALFED program holds 
the promise of investing in California's future in a balanced manner 
that advances the interests of all California water users, its economy 
and environment. We believe that H.R. 3208 addresses the most important 
California water issues before the Congress in a generation.
    It is therefore with considerable concern that we have watched the 
debate unfold regarding water supply assurances for certain Central 
Valley Project agricultural contractors in the west San Joaquin Valley. 
This so-called assurance language remains one of the most significant 
obstacles to the passage of this historic legislation. Metropolitan 
agrees that water supply reliability for these contractors must be 
addressed in a manner consistent with the CALFED Record of Decision. 
However, we strongly believe that any attempt to do so in H.R. 3208 or 
any other Federal legislation is inappropriate. A statutory mandate to 
guarantee water supply levels for one water user inherently risks 
creating a disadvantage to others'directly contrary to the balanced 
outcomes promised by CALFED.
    We urge that the assurance language in H.R. 3208 be deleted and, 
instead, all parties focus on developing effective administrative 
remedies to resolve the agricultural water supply reliability problems 
in the west San Joaquin Valley. We are prepared to participate in this 
administrative process in any way we can to help assure a balanced and 
fair solution. The passage of CALFED authorizing legislation is too 
important to put at risk when more effective and equitable 
administrative solutions are available for such a contentious issue.

Very truly yours,

Ronald R. Gastelum
Chief Executive Officer

cc: Senator Diane Feinstein
   Senator Barbara Boxer
   Secretary Gale Norton
   Governor Gray Davis
   California Congressional Delegation
                                 ______
                                 
                              Attachment B

January 8, 2002

The Honorable Gale Norton
Secretary
United States Department of the Interior
1849 C Street, NW
Washington, DC 20240

Dear Madam Secretary:

Re: LAdministrative Resolution of Water Supply Assurances Issues

    In a December 11, 2001 letter to Chairman Ken Calvert regarding 
water supply assurance language in H.R. 3208, Metropolitan urged that 
the Department of Interior (Interior) develop administrative solutions 
to the water supply reliability concerns of Central Valley Project 
(CVP) agricultural contractors in the west San Joaquin Valley. We 
believe that Interior must act now to implement effective and balanced 
administrative solutions to these water supply problems. Indeed, the 
success of this effort this year could be critical to the overall 
success of the CALFED process.
    While at times controversial and complex, at it's heart the CALFED 
process is built upon the foundation of balanced outcomes--a promise 
laid down in the Framework Agreement of June 2000 and the Record of 
Decision (ROD) in August 2000. To be successful CALFED must meet the 
reasonable needs of agricultural, urban, and environmental interests. 
The CALFED program does not and should not alter the underlying 
statutory authorities of the participating state or Federal agencies. 
But, the success of the Program does require that the considerable 
discretion these agencies have in accomplishing their charge be used to 
accomplish the fundamental promise of balance as defined in the CALFED 
program.
    While the CALFED program enjoyed many successes in 2001, we believe 
that the operational plans governing the delivery of export water, 
particularly to CVP agricultural contractors in the west San Joaquin 
Valley, is falling considerably short of the promise of balance in the 
ROD.
    Metropolitan firmly believes that Interior has ample discretion to 
meet this supply objective and that it can do so in a manner consistent 
with the environmental restoration goals of CALFED and without 
threatening the supplies of the Friant Water Users Authority or others. 
It is far better to accomplish this task administratively than to rely 
on uncertain and time consuming legislative solutions. We respectfully 
urge you to immediately address this issue, with open participation by 
agricultural, urban, environmental, and other stakeholders, and commit 
to developing a solution in a timely manner so that CVP project 
operations during 2002 achieve the balanced outcomes promised in the 
ROD.
    Metropolitan stands ready to assist in this process in any way that 
we can. If you would like to discuss this critical issue further, 
please do not hesitate to call me at (213) 217-6211.

Very truly yours,

Ronald R. Gastelum
Chief Executive Officer

cc: Bennett W. Raley
   Assistant Secretary for Water and Science
                                 ______
                                 
    Mr. Calvert. Thank you. We have a series of votes on, and I 
am going to ask a quick question and then I am going to recess 
the hearing, and Mr. Radanovich is going to come back to chair 
the hearing because I have to be at another meeting which has 
already started.
    Very quickly, Mr. Wright, please explain the previous 
administration's policy on offset/reset under the (b)(2) 
policy. And after that, please explain the judge's decision in 
regards to this policy made last week, as well as he came to 
that conclusion, and hopefully you can make that quickly so I 
could run over and vote.
    Mr. Wright. I have never heard anybody clearly and simply 
explain offset and reset, so I am not going to pretend that I 
can. What I will say briefly is that--and clearly you need to 
hear this from Interior--they made certain judgments in 
interpreting the law that, when you allocate water for fish, if 
that results in increases in storage, that you some up with a 
different accounting method than if you simply count every 
acre-foot that is allocated. And that has been a raging issue 
ever since the law was adopted.
    It is clear that we have new marching orders. As Secretary 
Raley said, that may change. There may be a stay, there may be 
an appeal, but for now the court's decision is the law of the 
land and we are going to, the agencies are going to implement 
it in that fashion.
    Having said that, there is still a lot of work that needs 
to be done with respect to (b)(2) and EWA water, depending on 
how the remaining assets are allocated, that certain water 
users and fisheries come off better or worse. So there is still 
a lot of work to be done with respect to the relationship 
between the water that is remaining to balance the three goals 
that I talked about earlier: to protect fish; to maintain the 
assurances that the State water contractors are concerned 
about; and also to meet the target.
    Mr. Calvert. Thank you. I am going to recess this hearing 
until 12:30. Mr. Radanovich will be coming back to chair the 
hearing, so if you could please be patient with us, we are 
going to go off and vote. So we are in recess.
    [Recess.]
    Mr. Radanovich. [Presiding.] OK, we are back in session. I 
have a real quick question of one person before I turn it over 
to Cal, and that is to you, Dan. Do we know for sure that it 
was Arthur Andersen that was the chief accountant for the 
(b)(2) water? You don't have to answer. That is OK.
    Cal, do you want to go ahead?
    Mr. Dooley. Yes, thank you. I thank all of you for your 
testimony, and --
    Mr. Radanovich. Excuse me, Cal. If you don't mind, can we 
just go for 5 minutes a pop, and we will just go back and forth 
until all our questions are done?
    Mr. Dooley. Sure.
    Mr. Radanovich. OK.
    Mr. Dooley. I appreciate all your testimony, and Mr. 
Bishop, I appreciate your suggestions in terms of some specific 
actions that could be taken that could address some of the 
challenges that we face.
    I guess, you know, what I hear everyone saying though is 
that in some ways that what was offered or was presented in the 
Record of Decision in terms of providing some assurances in 
terms of south-of-the-delta is that I haven't heard anyone say 
that they think that we could meet those under, you know, the 
present circumstances, and there has been some question whether 
or not we can meet them at all. And, I guess, what has changed 
from the time that the Record of Decision was being promoted by 
a lot of you, and certainly people in the Department of 
Interior, and from what we find this today?
    I mean, nothing has really changed, but all of a sudden now 
for all of the protestations that Secretary Hayes and others 
made, that we could hit this 65 to 70 percent with operational 
flexibility, that they promoted to us, now suddenly that seems 
to have evaporated. Mr. Wright, you made a pretty strong 
statement in your testimony that you didn't know if we could 
hit that. What changed? Or did anything change? Or were we sold 
a bill of goods?
    Mr. Wright. Well, I think what has changed recently is, we 
finally have a group of Federal appointees that are in place 
and are confirmed that are serious about addressing the 
problem. We had a lag of about a year or so where, to be 
candid, we didn't have the kind of leadership that we have 
needed, and what I am hearing and what you heard from Assistant 
Secretary Raley is that you now have the commitment from the 
administration to tackle this problem.
    Also certainly, you know, the court case gives us--changes 
things in terms of our ability to meet the target, and I 
think--
    Mr. Dooley. But, I mean, I guess my question is that there 
are a lot of folks were promoting the Record of Decision, said 
that we could hit that 65 to 70 percent. The court decision was 
post that Record of Decision, which gives us greater 
flexibility, we think, to hit it. But, you know, were people 
misrepresenting what was possible in the Record of Decision?
    I mean, I put a lot of confidence in that. I mean, I 
encouraged some of my constituents to continue to be supportive 
of this process because of what was offered, you know, and was 
presented, and I haven't heard anything today that--you know, I 
don't know what this was based upon, by a lot of the testimony 
I have heard.
    Mr. Wright. Well, I think that the tools are there, and you 
would not have heard what you heard from the State and Federal 
representatives if they weren't--
    Mr. Dooley. And I guess, you know, maybe Mr. Bishop and Mr. 
Quinn on this, it is that you both identified some actions that 
the department could utilize, that could provide for perhaps 
increased water availability to meet the assurances. Mr. Quinn, 
I think it was you in particular that expressed a frustration 
that the department hasn't been as aggressive in utilizing some 
of these options.
    If you are in a position such as we are in Congress, if you 
have an agency that is not following through and is not 
enacting, you know, policies to achieve a statutory objective, 
why shouldn't we be a little more prescriptive? Why should we 
have the confidence that we can continue to rely on 
administrative discretion in order to hit these targets? When 
you clearly indicate in your testimony that it hasn't worked in 
the past years, why should we have any confidence it is going 
to work in the future? And why should we not, as a body of 
Congress, prescribe to the department that they utilize some of 
these procedures that both you and Mr. Bishop identified?
    Mr. Quinn. The fundamental problem will still remain the 
use of discretion. The fundamental problem that we have today 
is that discretion has not been used with an eye toward 
balance.
    The fact is, we have a new administration. That 
administration has just gotten up in the saddle, and I think we 
need to--I frankly don't think you should accept the response 
that you can't get there from here. That has not been 
demonstrated to my satisfaction. If we think creatively, in a 
balanced way, maintain our commitment to ecosystem restoration, 
I have not come to the conclusion that you can't get there from 
here, and am somewhat disturbed to hear that coming from the 
Bush administration.
    The 65 to 70 percent didn't come out of whole cloth. It was 
bureau analysts. It was based on studies done by the bureau, 
and they went to their experts in Sacramento, and they were 
told that they could accomplish 65 to 70 percent. And now we 
are being told we can get to 45 percent even if it is wet. 
Those numbers are not stacking up for me.
    But the fundamental answer to your question is, whatever 
you do in legislation, our concern is to make sure that it 
doesn't tip the scales. We want discretion applied toward 
balance. If you have a statute that says, ``Apply your 
discretion for this select group of people,'' we think that 
potentially undermines our interests. So does Friant. So do the 
San Joaquin River group. And even if you get those words in 
legislation, your fundamental problem is, how are they applying 
their discretion?
    Mr. Dooley. Well, I guess, and now that you brought up the 
assurances language, have you read the last version of that 
where--you know, I guess, what is it that--you know, we went 
over it with Secretary Raley, where we are not directing the 
Secretary, we are giving them maximum discretion, we are 
providing the protections for water, you know, other water 
users in terms of quality and cost.
    What additional, you know, language would you need in order 
to give you a greater comfort that what we are trying to do 
here is to ensure that the Secretary is using their discretion 
in a practical manner, holding everyone else harmless, in order 
to achieve a target which was prescribed and which was offered 
in the Record of Decision? I mean, we made, I made a good faith 
effort to try to make sure that we could address some of these 
legitimate concerns, and what more would you suggest we have to 
do?
    Mr. Quinn. Let me start my response by, with no 
equivocation, this is a problem that must be solved. We are not 
arguing about whether we should be meeting supply commitments 
in the ROD. We are perhaps arguing over what is the best 
strategy to do so in a balanced fashion.
    Now, with that firm commitment from us to solve the 
problem, we continue, with Friant and with others, to have 
concerns about any language in the bill that is built around 
the notion of protecting the supplies of a single group. I 
think that you have shown--
    Mr. Dooley. But how does it protect the supplies of a 
single group when it simply says that the Secretary used, to 
the maximum extent possible--you know, whatever is practical 
actually it says, not even possible--you know, to try to strive 
to achieve the 65 to 70 percent? How would that--you know, it 
is not saying, directing the Secretary, ``You hit this.'' It is 
encouraging them to do what they can that is practical, while 
holding everyone else harmless. I mean, I think I find it a 
gross overstatement that we are trying to carve out a separate 
group here and providing them some additional protection.
    Mr. Quinn. Well, the way we interpret the language, Mr. 
Dooley, is still that the discretion is to be applied toward an 
objective of meeting a supply objective for a select group of 
CVP contractors--
    Mr. Dooley. Which is consistent with what was in the ROD--
    Mr. Quinn. Which is consistent, well, it is consistent with 
what was--it is consistent with the goal that is in the ROD, 
but there are other goals in the ROD, and the implication is 
that you can't get there from here, there is going to be a 
balancing process in implementing the ROD. I am greatly 
disturbed. I believe in that commitment in the ROD. I would 
like to see the bureau fulfill the commitment, but we are 
hearing testimony today that they can't. So if they have got a 
statutory requirement to do so, whose hide is it going to come 
out of? That is the concern that other water users in 
California--
    Mr. Dooley. If you could give me an analysis of the 
statutory requirement that would be in the legislation that I 
put together, that would require them to hit that 65 to 70 
percent, I look forward to that.
    Mr. Radanovich. Thank you. Also, Tim, while we are on the 
subject, if you have got an idea about how we can meet that 
commitment without assurance, can you put it in writing for me 
or show me the studies that the bureau conducted to come up to 
that 65, 75 percent? I would love to see you send me some 
information that shows me how that can be done without a 
legislative fix.
    Mr. Quinn. I would be glad to respond to that, and 
encourage you to be pressing the bureau for the same 
information.
    Mr. Radanovich. Sure. Yes, I would be happy to.
    Just on my opening line of questions, I really want to 
comment on some of the opening statements, because I keep 
hearing ``fair and balanced'' as far as when it refers to 
CALFED and how we have proceeded over these last 7 years in 
this process, and I--frankly I don't. I would love for somebody 
to convince me that this has been a balanced approach to 
accomplishing some of the water needs in this State.
    I think that, and I don't have the numbers exact, but the 
example should be accurate that we have spent about $300 
million so far on CALFED, and about 80 to 90 percent of that 
has been on environmental restoration, which I think is great. 
I think that that portion of water in California needs to be 
addressed, but I certainly see a lopsided approach to solving 
some of these problems.
    And Patrick, God bless you, you mentioned some of the 
things that CALFED has accomplished, and you mentioned in there 
that progress on assurance--the only people that have got 
assurance now are the people that had assurance all along, and 
the only ones who don't have assurance now are the people that 
never had assurance. We still have Westlands at 45 percent.
    We have got no movement on water storage. CALFED has ducked 
on all the major water storage issues. They have put them out 
into the future. We have got a real threat when this--you know, 
as this law is progressing hopefully into law, that we are 
going to end up authorizing and giving the green light to 
spending on more environmental restoration while we simply 
study storage projects again for the next go round.
    And I would like somebody to explain to me how this has 
been a balanced project so far, and meeting everybody's needs, 
because I think that is literally just a bunch of crap. And 
furthermore, what I don't want to hear is how some of the 
environmental restoration projects have had an ancillary effect 
by increasing very small, limited amounts of water supply for 
other users. So please don't tell me, unless you have got a 
good argument to tell me how this has been a balance so far, 
don't come to this Committee and say that this is balanced and 
moving forward.
    Patrick, you mentioned three things that CALFED wants to 
do. You still listed fish ahead of allocation and assurance, 
and to me that still presents the problem in this plan, and 
that is that environmental restoration is still the driving 
force in this thing. Not that I am against environmental 
restoration, but don't tell me that it is in balance with 
allocations and assurance and increased water supply, because 
it is not.
    And Mr. Osann, since you are representing the environmental 
community, feel free to respond, but there still is no 
commitment from the environmental community that I find that is 
supportive of increased water supply in California, other than 
perhaps some type of underground water storage.
    So this is what I see from my view, from here. This is 
going nowhere, and we have got a very good possibility when 
this bill comes up that we are still not going to address 
California's most urgent need, and that is increasing water 
supply so that we can achieve a balance between environmental 
restoration, agricultural needs, and urban needs. And frankly, 
guys, I don't see it.
    I mean, we have got a good chance of it if this bill passes 
on the House side and goes into law, but if there is any 
deviation from that in a conference with what is being proposed 
in the Senate, we are going to get nothing more than what we 
see. And if any one of you cares to respond, that is fine, but 
I feel it is important to make that statement for the record, 
because I have been hearing a little bit too much about 
balanced approach, and it is just I have not seen any of that 
in 7 years on this project.
    Tim, if you would, do me a favor and give me a brief 
explanation of offset/reset. I have been in this business for a 
while and I don't understand offset/reset and how that pertains 
to the recent court decision on (b)(2).
    Mr. Quinn. I will do my best, and there may be others here 
who can help me out.
    Reset deals with water operations for the CVP early in the 
water year. One of the uses of (b)(2) water is to release water 
from Shasta for an environmental purpose, so you have drawn 
down your storage for an environmental purpose, to do an 
environmental good. Then if before January 31st Mother Nature 
is kind to you and gives you storms, and the storage recovers, 
then Fish and Wildlife Service resets the 800,000 acre-feet and 
they get to proceed as though that water use had not occurred.
    The judge found that that would lead to using more than 
800,000 acre-feet of water. He raised questions about it. If 
reset were appropriate, why do it just for one use and not for 
others? And he questioned the balance in the policy that 
Interior has established.
    So that is reset. Offset affects project operation later in 
the year, in the summer. During the summer months, frequently 
to deliver water to the export pumps when Mother Nature is not 
giving you any natural precipitation, you have to release water 
from storage.
    So if you reduce pumping in those months at the export 
pumps in order to reduce fish entrainment, and later on in the 
year because of those actions there is a higher level of 
storage upstream in the system, then the argument is the 
increased storage offsets the reduced pumping. So despite the 
fact that the farmer didn't get his irrigation supply in peak 
irrigation demand and economic harm hurt, ostensibly an 
environmental benefit occurred, although the science is not 
strong on just what kind of environmental benefits you get from 
this particular activity.
    The argument was that, similar to offset, it was as though 
the water had not been used for environmental purpose, and the 
judge found fault with that as well, arguing both practices 
would lead to using more than the 800,000 acre-feet, and this 
judge is very firm. You get 800,000 acre-feet, not 799,999 or 
800,001 acre-feet. You get 800,000 acre-feet, no more, no less.
    Mr. Radanovich. I see. Thank you.
    Dan, I have got a question. You were in my office the other 
day talking about an MOA, and could you tell me what the status 
of that is and where it is at? And be aware that Friant is now 
represented in the room, and since they are not here to testify 
I am going to ask you to let them know that this is out there, 
because I want to get what their reaction is going to be to 
this thing.
    Mr. Nelson. There have been ongoing efforts to resolve our 
differences with Friant, and we are on the very front end of 
even conceptualizing an MOA, and primarily the MOA just 
establishes sort of a process and how it is that we are going 
to go about discussing issues, what the issues are. And so it 
is very preliminary, and the only paper that is out is in very 
preliminary draft form. Have I put enough caveats on yet? And 
that is what I know about the MOA.
    Mr. Radanovich. I was led to believe, at least, that there 
was an MOA heading toward Friant and you were waiting for their 
decision as to whether to accept it or not.
    Mr. Nelson. Well, there has been an MOA that has been 
developed as a result of several conversations amongst the 
potential participants, and now all of the individuals are 
taking that back home and sort of fleshing it out at home.
    Mr. Radanovich. Meaning both sides are in this process of 
doing that?
    Mr. Nelson. That is correct.
    Mr. Radanovich. So there is not a formal MOA that is going 
to Friant, that Friant is going to make a decision on, as I was 
led to believe yesterday?
    Mr. Nelson. I have just been informed that it is an MOU, 
not an MOA, just for clarification.
    Mr. Radanovich. Thanks.
    Mr. Nelson. And as well that the Westlands board has 
adopted this, and it is going to the Friant board here soon.
    Mr. Radanovich. Would you mind communicating with the 
Friant representative who is here now, who is not able to 
testify--his name is Joe Rader, in the back there--to ask him 
to find out when Friant is going to deal with that issue?
    Mr. Nelson. I would be happy to work with Joe on that, 
Congressman.
    Mr. Radanovich. Thank you very much. I appreciate it.
    Cal?
    Mr. Dooley. I guess, you know, there has been a lot of talk 
about the need, you know, to make sure that we are having the 
independent review on the science and the peer review, and a 
number of you talked about that. You know, I have requested 
that the Secretary request the National Academy of Sciences 
engage in a similar study in the delta as they did in the 
Klamath. And I guess I would ask, would anyone see that there 
would be any harm in NAS conducting such a study, and would you 
all agree that it would provide some value perhaps in terms of 
operations? Would anyone object?
    Mr. Bishop. Let me just jump in. I am a big advocate of 
this. I believe that it gets to some of your questions there 
about whether you deal with some of these discretion areas by 
being prescriptive in law or allowing the discretion.
    I am on the side of, every time Congress has tried to be 
prescriptive, they have oversight hearings as to whether the 
prescriptive number was never met. When they rely on what the 
courts have found over and over, the discretion of the 
delegated person, and give them the tools and give them the 
goals and the criteria for applying that discretion, you have a 
much better outcome.
    In this particular case, what we see over and over again is 
the science is immature, and when the agencies that have to 
apply immature science--this is whether it be the Clean Water 
Act, the Clean Air Act, the Endangered Species Act--every time 
a regulatory agency has to apply science in the absence of a 
mature, robust, peer-reviewed, accepted science, they err on 
the side of conservatism. And when you do that, particularly I 
heard it today, in a changeover administration with leadership 
not in place, conservatism gets placed on top of conservatism, 
and you end up with an outcome that doesn't balance the 
decision at all.
    National Academy of Science is one vehicle that has been 
used by many agencies, regulatory, to come in and put a fresh 
light on the science and say, ``This type of a decision, while 
being very conservative, is not justified based on the science 
to date, and you might want to wait, or you might want to try 
something different.''
    I alluded to CALFED is trying to do that on the ecosystem 
restoration program, outside scientists coming in, and some of 
their preliminary findings, if anybody attended their meetings, 
were along the same lines, which is they cannot find a cause/
effect why water is being released now and what benefit it is 
going to have on the fish, but it has been some widely held use 
that the pumps cause the damage, so therefore that is what you 
have got to do.
    I think the National Academy of Science coming in would 
look and say, ``You have spent $500 million on habitat 
restoration, ecosystem restoration. You have more tools to deal 
with the issues, other than water, and we need to review our 
reliance on water as the only tool for fishery recovery.''
    And I think that gives you the basis on which now you can 
have administrative discretion, which is characterized by 
swinging to one end of the spectrum or the other.
    And that is why I would strongly encourage that happening, 
and happening as a regular basis, and if it has to be put in as 
a prescriptive reason, how you make these decisions--
    Mr. Dooley. OK, so I would take that as a yes, then. How 
about you, Mr. Nelson? NAS review, would you support that?
    Mr. Nelson. Absolutely, and we have been requesting for 
several years that there be independent review of the science 
behind the regulations.
    Mr. Dooley. I don't know, Mr. Wright, if you can take an 
official position on that. Would you have any objection to 
that?
    Mr. Wright. We don't. Obviously we need to discuss that 
with our State and Federal colleagues. We are clearly committed 
to independent science. We have had several panels, as I talked 
about, that include some of the best experts in the country. I 
think the only issue is, you know, is the National Academy 
itself, you know, the right vehicle? What are the costs 
involved? What is the timing involved? There is certainly 
nobody in the program that has any issue with independent 
science. It is just trying to find the best vehicle.
    Mr. Dooley. I am working on the assumption that there 
wouldn't be any cost to the stakeholders in this, and so it 
would be, you know, totally independent.
    Mr. Quinn, would MWD have any objections, or would you 
support an NAS--
    Mr. Quinn. No, we would strongly support it. We just want 
to make sure that CALFED's chief scientist is part of the 
process.
    Mr. Dooley. And Mr. Stovall?
    Mr. Stovall. Yes, we would support it, and I think sound 
science is critical. We are already, as a result of Judge 
Wanger's decision, we are hearing environmental groups sort of 
chanting the mantra of trying the water somewhere else, and 
there needs to be a sound scientific review of whether there 
aren't better solutions than just taking water from people.
    Mr. Dooley. And Mr. Osann?
    Mr. Osann. Yes, with the approval of the Chair, Mr. Dooley, 
I would like to have a chance to reply for the record on this.
    Mr. Dooley. OK. Do you have a preliminary reply or--
    Mr. Osann. My initial sense is that NRDC would not object 
to an NAS review if you want like a third opinion, bearing in 
mind that there is a substantial science component, independent 
science component, built into CALFED, so you are getting a 
second opinion now, and also bearing in mind that NAS is not 
going to be going out doing field work. They are going to be 
doing review of what is available, and as a priority we would 
recommend funding the people that are actually doing the work 
in the field.
    Mr. Dooley. OK, and the reason why I am--you know, the 
reason--you know, I have already put this request in, and so 
your, the statements that you have made is something that I am 
going to also forward to the Secretary. And Mr. Osann, we will 
wait for your formal review to support that.
    George, did you want to go ahead?
    Mr. Radanovich. No.
    Mr. Dooley. Mr. Osann, you made a statement in your written 
testimony regarding Judge Wanger's decision, that goes to the 
extent that if Secretary Norton should, you know, obviously 
appeal this, and you say in your statement, ``In particular, it 
is important to note that if Interior does not continue to 
defend (b)(2) implementation, it will eliminate water supply 
assurances that have benefited Westlands and all other water 
users in the Central Valley, Southern California, and the Bay 
area.''
    Now I will say that, you know, some of the water agencies 
and Westlands in particular look at Wanger's decision certainly 
as not something that jeopardizes their water supply 
assurances, and I just, I don't quite understand, you know, 
what is--you know, how you are making the statement that 
Westlands is jeopardized by the Wanger decision.
    Mr. Osann. It looks to us as though it casts doubt on the 
validity of the current biological opinion and the NEPA final 
environmental impact statement of the ROD, and injects a degree 
of instability and uncertainty into the whole mix.
    Mr. Dooley. So what would be the outcome of that, I guess? 
How does that--I guess I need to play that out in terms of, OK, 
so it does bring this into question. How does that, you know, 
reduce the supply of water that is going to Westlands?
    Mr. Osann. What will be the basis for the ESA compliance 
for the 2002 operation of the pumps?
    Mr. Dooley. Mr. Nelson, what would be your response?
    Mr. Nelson. Well, a quick clarification on a minute point. 
It doesn't just affect Westlands. It would affect 24 other ag 
service contractors south of the delta in the same way that it 
affects Westlands.
    With that, the (b)(2) decision, we need to be very clear 
about what it does and what it doesn't do. We have always had 
that discretion. I think what you have heard from everybody up 
here, regardless of what the judge says, this is, the reset and 
offset is something that has been on the top of the list of 
discretionary items that should be used in meeting the 65 to 70 
percent.
    And so notwithstanding whatever it is that Judge Wanger 
ultimately said or ultimately will say, or what the 9th Circuit 
appeal court will say, the fact of the matter is, we have 
discretion to account for the 800,000 acre-feet in a way that 
doesn't take into consideration reset and offset, which allows 
the Bureau of Reclamation to use much more than 800,000 acre-
feet.
    The second point I would like to make is, we have an array 
of tools that are available to us for meeting environmental 
objectives. We have (b)(1) water, which is a reoperation of 
CVP, without any cost to contractors. We have (b)(3) water, 
which allows the Restoration Fund, which the CVP water users 
pay each and every year into, to be used to go out and purchase 
additional water. We have the EWA to be able to go out and 
purchase some additional water, as well as several other tools 
that are available to us to meet our environmental objectives.
    Essentially, what the judge has said is, ``Department of 
Interior, you have overstepped your bounds on this one tool.''
    So I would suggest that we take a couple of steps back, No. 
1. Evaluate do we need this level of protection, and that is 
where the earlier discussion of scientific review, do we need 
this level of protection for endangered species. And, No. 2, 
what are the other ways that we accomplish that? What other 
tools can we use to accomplish that?
    Mr. Dooley. I guess my final question for the panel is, Mr. 
Osann provided information where--I think from a number of 
environmental groups, requesting the Department of Interior 
appeal the Wanger decision. Have any of the other groups that 
you all represent, are any of you requesting the Secretary to 
appeal the Wanger decision? Mr. Quinn?
    Mr. Quinn. No.
    Mr. Dooley. Mr. Stovall?
    Mr. Stovall. No.
    Mr. Dooley. Mr. Bishop?
    Mr. Bishop. No.
    Mr. Dooley. Mr. Nelson?
    Mr. Nelson. No.
    Mr. Dooley. Mr. Wright?
    Mr. Wright. No.
    Mr. Dooley. So all of you--yes, Mr. Osann?
    Mr. Osann. Excuse me, Mr. Dooley. The attachment that I 
provided was a letter in support of the (b)(2) formulation of 
the department but it was not following the opinion of last 
week.
    Mr. Dooley. Oh, excuse me, so I didn't characterize that 
correctly and I apologize for that.
    Are you guys going to be appealing the decision of Judge 
Wanger, the NRDC?
    Mr. Osann. I don't know. We haven't reached a decision on 
that yet.
    Mr. Dooley. All right. Thank you very much.
    And I think on this my--I am finished up my questions--I 
just want to thank all of you, not only for your testimony 
today but, I mean, we sometimes have disagreements but I really 
do acknowledge that each and every one of you have a great deal 
of expertise and have been a real constructive part of trying 
to address a lot of the water problems we face out there, and 
they obviously are very challenging. And I just want to make 
sure you understand that, you know, I am committed to being a 
partner with you as we try to further bring clarity and 
resolution to these issues.
    Mr. Radanovich. Thanks, Cal, and I want to echo your 
sentiments as well. It is such a frustrating process, but I 
remain committed to CALFED and to all of you to try to reach a 
balanced solution. I still want to hear from each and every one 
of you, do you all think that this process, everybody is moving 
forward together? Tim? Come on.
    Mr. Quinn. I learned a long time ago, the Member is always 
right.
    Mr. Radanovich. Come on, you know me well enough. Just give 
me a guess.
    Mr. Quinn. As I state in my testimony, Mr. Chairman, there 
are clearly places where we are not achieving the balance that 
the ROD promised and we need to fix that, but that is far from 
the conclusion that CALFED is totally broken. We are moving 
forward on studies for surface storage. That process must 
continue, and Metropolitan will aggressively support it.
    The EWA is out there. It is an enormous step in the right 
direction, from our perspective. Our ESA assurances, for the 
first time in my career I could go to my board and say our 
State project supplies were reliable last year. We got the 
principle established in the accord, but we never had any means 
to enforce it. EWA gives us the tool that can provide those 
assurances, which is why I am so horrified that some are saying 
because a Federal court makes a decision over here about 
something other than the State water project supplies, we could 
wind up losing our ESA assurances.
    So I do believe CALFED is part of the solution. They are 
now in implementation mode. They are moving forward, not 
exactly the way I would like, but if they don't deserve an A, I 
don't think they deserve an F either. Perhaps B minus.
    Mr. Stovall. I think, Mr. Radanovich, we would actually 
concur with you on that as far as what has occurred this far, 
and to some extent that has been part of the plan. It was known 
that some of these environmental solutions or impacts would 
occur first. But we are now entering a critical testing period.
    The things that will actually improve water supply--and Mr. 
Quinn alluded to the EWA, a very significant part of that, 
improvement of the south delta pumping facilities--are things 
that are critical to making this happen, and I think critical 
to making the 65 percent come into reality, and those things 
are facing environmental challenges now, challenges from groups 
who actually never really supported CALFED in the first place. 
It is going to be critical, in our thinking as to the 
continuation of the CALFED process, if we do actually pass this 
test and some of these water supply things do start happening 
now, because now is the time they have to start happening.
    Mr. Radanovich. Do you see the current Senate version as it 
relates to implementation of water storage as a positive 
direction or a negative direction?
    Mr. Stovall. We like Mr. Calvert's bill better in that 
regard. We think that Mr. Calvert's bill provides more 
assurances of balance and that this balance will continue. We 
believe that and support moving Senator Feinstein's bill 
forward, although we think the protections for balance are very 
fragile in that bill, and we certainly wouldn't want to see any 
reduction. We would like to see some improvements of protection 
for balance out of whatever final product comes out of both 
houses.
    Mr. Radanovich. Thank you.
    Mr. Osann?
    Mr. Osann. Yes, with regard to your--the points you made 
earlier about balance and the position of the environmental 
community relating to storage, I did want to comment on that.
    Mr. Radanovich. Sure.
    Mr. Osann. I can't speak for the entire environmental 
community here today. I can speak on behalf of NRDC, and I 
don't think the record will support a contention that NRDC is 
implacably opposed to any surface storage.
    We have supported the CALFED ROD. The ROD calls for the 
study of additional storage in an orderly way, study of the 
economics and the environmental consequences associated with 
specific storage projects. I don't think we have done anything 
to obstruct or discourage those studies from going forward, and 
like I said in my opening remarks, we are enthusiastic about 
some portions of the ROD, we are skeptical about other 
portions, but we support the project, the CALFED program going 
forward in a balanced way.
    Mr. Bishop pointed out that surface storage in the CALFED 
framework is not for new growth but is to firm up existing 
supplies and in that context the storage comes into the system, 
if it does, comes into the system as an insurance policy. And 
the beneficiary pay principle is embodied in the CALFED ROD. 
That is another element of it that we strongly support. So at 
some point there are going to be some decision points a few 
years out as to whether the potential beneficiaries--whether 
the premium, if you will, for this insurance policy is 
commensurate with the hazard that is being insured against, 
which is a shortfall of supply.
    We don't know how those decisions are going to come out. We 
don't know if the storage options that are developed under 
CALFED are really going to be seen as economical or practical 
by potential beneficiaries, to the point where someone is 
really willing to come forward and put their own dough into 
those projects. But we are certainly willing to see that 
process play itself out, environmental evaluation and the 
economic evaluation. We are not discouraging anybody from 
funding those studies.
    Mr. Radanovich. Was it the intention--I am hearing from the 
previous speaker, too, that when CALFED began, although I 
understood it to be something to where no one stakeholder was 
going to be allowed to kind of get ahead of the others, so that 
you could bring everybody along together, that seems to be in 
conflict with what I have heard said, that there was some idea 
that the environmental restoration ought to occur first and 
therefore all the funding kind of went in that direction right 
away. It seemed to be in conflict with the idea that everybody 
would be brought forward, you know, kind of closely together, 
but instead put the environmental stakeholder much further out 
than the others.
    Mr. Osann. I think there are some ripeness issues here, as 
well. CALFED does envision a progression of investments, and 
some investments are small, easily understandable, and they are 
more or less ready to go. Others take more advance preparation 
and the lead time on them is necessarily going to be longer.
    Mr. Radanovich. It still seems hard to get that principle, 
though, because in my appearance it looks like the 
stakeholders, the environmental stakeholders are way out ahead 
on a lot of this stuff, and yet there is still resistance to 
move forward I think a little bit more aggressively on storage.
    Mr. Osann. I know, for instance, that in the area of water 
conservation and efficiency there are--in the ROD there were 
pretty ambitious plans to ramp up spending for both 
agricultural conservation projects and urban conservation 
projects. Now, a good number of those have gone forward, but we 
are not near the funding levels in the early years that were 
envisioned in the ROD.
    Mr. Radanovich. Yes, and I equate more water availability 
to storage. I think the conservation measures are good, but 
they are not going to get us there for--
    Mr. Osann. There are significant chunks of water associated 
with both agricultural and urban conservation.
    Mr. Radanovich. Right.
    Mr. Bishop?
    Mr. Bishop. I don't want to repeat what is ahead of me, but 
I agree with Tim in that the balance is not perfect but it is 
not an F, and I would equate water quality delays as as 
critical as water supply. I know we are focused on supply, but 
we are not going to get supply if we don't improve the quality, 
and that is another area we are going to focus on.
    I also agree with Mr. Stovall in that this is the testing 
period, and the only comfort I can give you as you share your 
frustrations is, I think I am the only one at the table that 
has built a reservoir in the last 10 years that got a 404 and a 
water right. The toughest process. Los Vaqueros. And I will 
tell you, I was about where you are, sir, in the first 3 years 
of that process, where we were spending $30 million on 
environmental restoration and net benefits, and no permits, no 
authorities, and significant opposition, even though today 
everybody says they were in favor of it, significant opposition 
at that time.
    And I would just say we are in the wandering in the desert 
period, where the next year or two we can catch up pretty 
quickly on storage studies, and we are not going to get storage 
without ecosystem restoration and efficiency. You know that. So 
the money we are putting in right now may frustrate us because 
we are not making the kind of progress on quality and storage, 
but if we get the funding, we can move on that, and those two 
will be critical underpinnings for the critical permits.
    Mr. Radanovich. Yes. OK, thank you.
    Mr. Nelson?
    Mr. Nelson. We are very apprehensive about CALFED and how 
at least what we have experienced over the last couple of years 
in the initial implementation of CALFED, we have actually 
realized some of the apprehensions that we did have going into 
it, when the ROD first came out or when we first analyzed the 
ROD. When the ROD came out, we first looked at the regulatory 
baseline and immediately recognized that it was excessive and 
without any science or any scientific support, and certainly 
that is proving to be true.
    Secondarily, it appears to us as if a lot of the 
environmental provisions are sort of front-loaded, on the front 
end of being able to move forward with a lot of the 
environmental protections and provisions, while most of the 
water supply provisions are several years away and many studies 
away.
    And then, last but not least by any means, especially from 
our area, we looked at the language in the ROD about the 
balance, trying to balance our water supply, and the water 
supply objectives as being ambiguous, and certainly we are 
realizing how it is, the difficulties as a result of that that 
the CALFED agencies are having in meeting those water supply 
objectives.
    So we are still working with moving CALFED forward, but we 
are watching very carefully and it certainly is headed in a new 
direction that we couldn't support ultimately.
    Mr. Radanovich. OK.
    Patrick?
    Mr. Wright. We, among the CALFED agencies, continue to 
believe that the plan as a whole is a balanced plan. Having 
said that, I share your concern that if we cannot meet the 
commitments in the plan, and particularly those that Mr. Dooley 
and others have raised, that support for the plan is going to 
evaporate. Hopefully this hearing will be another wake-up call 
for us to put our heads together and come up with a plan that 
meets all the objectives that we have talked about, 
particularly with respect to 2002 operations.
    I did not mean to imply earlier that our goals, the three 
goals of meeting the 65 to 70 commitment, the water supply 
reliability assurances for the other south-of-delta 
contractors, and meeting needs of fish, were in any particular 
order. We need to meet all of those goals and, as Wally Bishop 
emphasized, we also need to protect--
    Mr. Radanovich. That was the order I was looking for 
originally.
    Mr. Wright. It is a challenge. It is a delicate balancing 
act, but with your help and leadership and hopefully a 
reauthorization bill, we will be able to get there.
    Mr. Radanovich. Patrick, I am aware--I have got this study, 
which is a beautiful study, in front of me, the tracking 
report. Is this not being funded anymore? What is the deal with 
this?
    Mr. Wright. We are struggling to find money to continue our 
planning and tracking system. We are going to find it. If we 
have to cut other elements of the program, it is going to be 
painful, given our general fund cuts and the fact that we have 
only got now in the President's budget $15 million.
    The first thing to go when we get funding cuts are 
organizational activities as opposed to projects, and so our 
concern with respect to the program is with less funding the 
program elements that are most at risk are things like science 
and planning and tracking and oversight and coordination. So we 
are going to need to work with you and others to make sure that 
those--that that is where the added value of the CALFED program 
is.
    There is somewhat of a perception among even some of the 
stakeholders that now the plan is out, the agencies can just go 
and implement the plan. Well, as we have seen today, that is 
not as effective as having a strong CALFED staff that is 
keeping the agency's feet to the fire, doing the science, doing 
the planning and tracking, doing the public outreach that is 
necessary. So we continue to believe at the program that the 
CALFED entity and a governing structure that gives you more 
accountability than you have had on this issue for the last 
couple of years is vital to our continued success.
    Mr. Radanovich. So you are committed to maintaining this?
    Mr. Wright. Yes, absolutely.
    Mr. Radanovich. Good news, because this is a valuable 
document here. It is very good.
    Well, I want to thank you all.
    Cal, you have no other questions?
    And I don't want to come across as being anti-environment. 
I think that I support the goals of the environmental 
restoration that is in the plan, in the ROD, and in CALFED, but 
I think that the time has come, as everybody knows, to start to 
concentrate on storage, and it needs to manifest itself in 
dollars, percent funding, overall increases, and time and 
attention. And I am fearful that that is not happening, and I 
hope that it does manifest itself in whatever bill this House 
and Senate passes and the President signs.
    So thank you for being here. Continue to work, and 
hopefully we will continue to progress on this. Thank you very 
much.
    [Whereupon, at 1:18 p.m., the Subcommittee was adjourned.]

    [A letter submitted for the record by Mr. Barry Nelson, 
Senior Policy Analyst, Natural Resources Defense Council, 
follows:]

March 6, 2002

The Honorable Ken Calvert, Chairman
Subcommittee on Water and Power
U. S. House of Representatives
Washington, DC 20510

Dear Chairman Calvert:

    At your February 14 hearing regarding Delta operations and the 
CALFED program, you asked for NRDC s position regarding a proposal for 
a National Academy of Sciences (NAS) review of CALFED decision-making. 
Ed Osann indicated that we would provide additional views on this 
subject. I am writing to provide these views.
    NRDC has been involved in the CALFED process since its inception. 
We have consistently advocated the establishment of a strong science 
program to assure that CALFED decision-making has a firm scientific 
foundation. We are pleased that CALFED has taken this need seriously. 
CALFED has hired Sam Luoma, an experienced and well-respected scientist 
from USGS to serve as its head scientist. This science program has 
played a central role in assuring the strongest possible scientific 
basis for CALFED s ecosystem restoration decisions. In fact, CALFED has 
already involved key members of the scientific community who would be 
almost certain participants of any NAS review. In short, CALFED has 
already obtained extensive independent scientific review of ecosystem 
restoration actions.
    However, other areas of the CALFED program have not received such 
careful external scientific evaluation. For example, there has been 
little outside scientific review of the following issues:
    Cumulative Impacts from Existing and Proposed Increases in Delta 
Pumping: Despite the extensive work CALFED is undertaking regarding 
water diversions from the Delta, the program has not convened an 
outside panel of experts to evaluate the cumulative impacts from 
existing Delta pumping. Such an evaluation would be particularly 
valuable because CALFED is moving to relax existing pumping limits in 
the Delta. The impacts from increased Delta pumping could be 
significant. Ten years ago, the last major external review of the 
science regarding Delta diversions set the stage for the Bay-Delta 
Accord. However, that process, and the work of the CALFED program, have 
not resolved several key issues. For example, how would additional 
pumping affect tidal wetlands and wildlife in the Suisun Marsh the 
state s largest brackish marsh? An external review would reveal 
scientific progress made in the past ten years regarding Delta 
diversions.
    The Impacts of Renewing Federal Water Service Contracts: The 
Department of Interior is currently negotiating the renewal of expiring 
Central Valley Project water service contracts that, collectively, will 
control the delivery of millions of acre-feet of water during the 
coming 25 years. There has not, however, been an independent scientific 
review of the environmental impacts of these proposed renewals. 
Likewise, there has not been an independent review of the potential 
conservation benefits of moving away from historic water subsidies 
towards realistic pricing of CVP water.
    The Economic Merits of Proposed New Surface Storage Facilities: 
CALFED is pursuing several proposed new and expanded surface storage 
facilities. CALFED s own analysis suggests that alternative water 
supply options would be less expensive. NRDC s additional analysis has 
raised serious concerns regarding the economic viability of these 
proposed projects. However, not all stakeholders have been convinced by 
this analysis. We would welcome an independent analysis of the economic 
merits of proposed new surface storage facilities and the willingness 
and ability of water users to pay the full cost of water from these 
proposed facilities.
    While the ecosystem program has received extensive scientific 
review, the critical issues outlined above have received little outside 
scientific review through the CALFED program. If there is any NAS 
review of the scientific basis of CALFED decisions, we recommend that 
this review begin in these areas.
    Thank you for keeping the hearing record open to allow us to 
provide these additional comments. We look forward to continuing to 
work with you to address critical California water issues.

Sincerely,

Barry Nelson
Senior Policy Analyst

cc: Senator Barbara Boxer
   Senator Dianne Feinstein
   Congressman George Miller
   Assistant Secretary Bennett Raley
   Resources Secretary Mary Nichols
   Patrick Wright, CALFED

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