SPEAKERS CONTENTS INSERTS
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48–751 CC l
1998
OVERSIGHT HEARING ON THE FUTURE WATER NEEDS OF CALIFORNIA UNDER CALFED, CALFED FINANCING, THE MONITORING AND PERFORMANCE STANDARDS OF CALFED, AND CALFED PUBLIC PARTICIPATION
OVERSIGHT HEARING
before the
SUBCOMMITTEE ON WATER AND POWER
of the
COMMITTEE ON RESOURCES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
SECOND SESSION
MAY 12, 1998, WASHINGTON, DC
Serial No. 105–83
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Printed for the use of the Committee on Resources
COMMITTEE ON RESOURCES
DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana
JAMES V. HANSEN, Utah
JIM SAXTON, New Jersey
ELTON GALLEGLY, California
JOHN J. DUNCAN, Jr., Tennessee
JOEL HEFLEY, Colorado
JOHN T. DOOLITTLE, California
WAYNE T. GILCHREST, Maryland
KEN CALVERT, California
RICHARD W. POMBO, California
BARBARA CUBIN, Wyoming
HELEN CHENOWETH, Idaho
LINDA SMITH, Washington
GEORGE P. RADANOVICH, California
WALTER B. JONES, Jr., North Carolina
WILLIAM M. (MAC) THORNBERRY, Texas
JOHN SHADEGG, Arizona
JOHN E. ENSIGN, Nevada
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ROBERT F. SMITH, Oregon
CHRIS CANNON, Utah
KEVIN BRADY, Texas
JOHN PETERSON, Pennsylvania
RICK HILL, Montana
BOB SCHAFFER, Colorado
JIM GIBBONS, Nevada
MICHAEL D. CRAPO, Idaho
GEORGE MILLER, California
EDWARD J. MARKEY, Massachusetts
NICK J. RAHALL II, West Virginia
BRUCE F. VENTO, Minnesota
DALE E. KILDEE, Michigan
PETER A. DeFAZIO, Oregon
ENI F.H. FALEOMAVAEGA, American Samoa
NEIL ABERCROMBIE, Hawaii
SOLOMON P. ORTIZ, Texas
OWEN B. PICKETT, Virginia
FRANK PALLONE, Jr., New Jersey
CALVIN M. DOOLEY, California
CARLOS A. ROMERO-BARCELÓ, Puerto Rico
MAURICE D. HINCHEY, New York
ROBERT A. UNDERWOOD, Guam
SAM FARR, California
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PATRICK J. KENNEDY, Rhode Island
ADAM SMITH, Washington
WILLIAM D. DELAHUNT, Massachusetts
CHRIS JOHN, Louisiana
DONNA CHRISTIAN-GREEN, Virgin Islands
RON KIND, Wisconsin
LLOYD DOGGETT, Texas
LLOYD A. JONES, Chief of Staff
ELIZABETH MEGGINSON, Chief Counsel
CHRISTINE KENNEDY, Chief Clerk/Administrator
JOHN LAWRENCE, Democratic Staff Director
Subcommittee on Water and Power Resources
JOHN T. DOOLITTLE, California, Chairman
KEN CALVERT, California
RICHARD W. POMBO, California
HELEN CHENOWETH, Idaho
LINDA SMITH, Washington
GEORGE P. RADANOVICH, California
WILLIAM M. (MAC) THORNBERRY, Texas
JOHN B. SHADEGG, Arizona
JOHN E. ENSIGN, Nevada
ROBERT F. SMITH, Oregon
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CHRIS CANNON, Utah
MICHAEL D. CRAPO, Idaho
PETER A. DeFAZIO, Oregon
GEORGE MILLER, California
OWEN B. PICKETT, Virginia
CALVIN M. DOOLEY, California
SAM FARR, California
ADAM SMITH, Washington
RON KIND, Wisconsin
LLOYD DOGGETT, Texas
————— —————
————— —————
ROBERT FABER, Staff Director/Counsel
JOSHUA JOHNSON, Professional Staff
STEVE LANICH, Minority Staff
C O N T E N T S
Hearing held May 12, 1998
Statement of Members:
Doolittle, Hon. John T., a Representative in Congress from the State of California
Herger, Hon. Wally, a Representative in Congress from the State of California, prepared statement of
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Miller, Hon. George, a Representative in Congress from the State of California
Radanovich, Hon. George P., a Representative in Congress from the State of California, prepared statement of
Statement of Witnesses:
Berliner, Tom, City Attorney Office, San Francisco, California
Prepared statement of
Bobker, Gary, The Bay Institute
Prepared statement of
Letter to Lester Snow
Davis, Martha, Board Member, Mono Lake Committee Sierra Nevada Alliance
Prepared statement of
Dickerson, Dick, President, Regional Council of Rural Counties, Redding, California
Prepared statement of
Gaines, Bill, California Waterfowl Association
Prepared statement of
Golb, Richard, Northern California Water Association
Prepared statement of
Hall, Stephen, Association of California Water Agencies, Sacramento, California
Prepared statement of
Moghissi, A. Alan, President, Institute for Regulatory Science, Columbia, Maryland
Prepared statement of
Pauli, Bill, California Farm Bureau Federation, Sacramento, California
Prepared statement of
Potter, Robert, Chief Deputy Director, Department of Water Resources, State of California
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Prepared statement of
Quinn, Timothy, Deputy General Manager, Metropolitan Water District of Southern California
Prepared statement of
Snow, Lester, Executive Director, CALFED Bay-Delta Program
Prepared statement of
Yardas, David, Senior Analyst, Environmental Defense Fund, California
Prepared statement of
Additional material supplied:
CALFED Bay-Delta Program, Briefing Packet, May 1998
Communications submitted:
Wilson, Pete, Governor, California, letter from
OVERSIGHT HEARING ON THE FUTURE WATER NEEDS OF CALIFORNIA UNDER CALFED, CALFED FINANCING, THE MONITORING AND PERFORMANCE STANDARDS OF CALFED, AND CALFED PUBLIC PARTICIPATION
TUESDAY, MAY 12, 1998
House of Representatives, Subcommittee on Water and Power Resources, Committee on Resources, Washington, DC.
The Subcommittee met, pursuant to notice, at 2:30 p.m., in room 1334, Longworth House Office Building, Hon. John T. Doolittle (chairman of the Subcommittee) presiding.
STATEMENT OF HON. JOHN T. DOOLITTLE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. DOOLITTLE. The Subcommittee on Water and Power will come to order.
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The Subcommittee is meeting today to hear testimony on future water needs of California, CALFED Financing, CALFED public participation, and the monitoring and performance standards of CALFED.
We are gathered here today to have further oversight over the CALFED Program. Last year, we held an oversight hearing concerning this program with emphasis on the fiscal year 1998 Federal Funding Request. Since that hearing, the Subcommittee has been monitoring the program and seeking answers to questions raised at last year's hearing. Even though we are into yet another year of budget requests, the information we have requested has been slowly materializing. We hope this hearing will accelerate the receiving of those answers.
Our questions are focused, today, on four central concepts associated with the CALFED Program: water supply, financing, evaluation of progress, and public participation. Witnesses at the hearing are expected to provide current information regarding these areas. To develop the issues more clearly, witnesses have been selected for our floor panels to address the following basic questions: one, has CALFED expanded or reduced the options available to meet future California water needs? Specifically, how are going to use the CALFED process to meet the future California urban, rural, agricultural, and environmental water needs? Has the CALFED prejudged or eliminated some water planning options? For example, on-stream storage, water reuse, water transfer, et cetera.
These issues must be addressed, immediately, for two reasons, First, the demand for water in California already exceeds water supply during drought years, and second, according to CALFED own documents and the California Department of Water Resources, by the year 2020, California will have a 3-million up to a 7-million-acre-foot-per-year shortage. If the CALFED Program does not immediately begin to address these needs through quantifiable means including on-stream storage, we will lose the valuable time necessary to prepare for this need. I'm interested in each of the members first panel providing the Subcommittee with their level of commitment regarding expanded water supplies.
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Two, how does CALFED propose to pay for California's expanding water needs. Interim fundings for the common elements in the CALFED Program is being provided by Federal appropriations and California water bonds. Are the long-term solutions going to be funded by public interest groups, beneficiaries, or government financing? Also, are CALFED costs going to be borne by local communities through unintended program consequences?
In addressing these questions, I would like the second panel to provide its opinion regarding benefit-based financing. Which benefits should be paid for by public money versus user money? Should some groups' contributions be reduced based on their members limited ability to pay? And should contributing stakeholders group be credited for payments they have already made to CALFED or to other ecosystem restoration programs operating within the region.
Three, after spending hundreds of millions of dollars how does CALFED propose to determine if we are any closer to the environmental restoration which it asserts is the reason for asking for the initial funding? How do we evaluate the effectiveness of the funding we are providing? What clear and unambiguous performance standards are being adopted to determine if we are closed to success or have achieved success? Are we going to postpone any major program decision or alternative until we have the results of the early phases or are we going to agree on a basic blueprint and simply adjust it through adaptive management as we move along?
A related issue, the definition of our starting point. It's my understanding that the Early Restoration Program has not defined the baseline for determining the goals and targets for restoration activities. While there maybe a wide spectrum of views on how to create baselines, we nevertheless, must develop both an operating baseline as well as a financial baseline if we are ever to determine if we are making progress for the, literally, billions of dollars we are being asked to spend.
And four, are the affected parties of the public being given an ample opportunity to participate in the process? Have we institutionalized the process to assure that local landowners are fully appraised of potential program impacts? Have we institutionalized a process to assure that local landowners are protected from government manipulation of property values as part of a Habitat Rehabilitation Program.
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I do not believe that these concerns that present insurmountable obstacles of the CALFED Program rather they represent reasonable attainable goals which should reflect the way government conducts its business. As mentioned last year, the Federal California Bay-Delta Environmental Enhancement Act coupled with California Proposition 204 advanced a partnership with potential funds of nearly $1.5 billion. It has the potential to be used to expand the water quality, enhance water quality, and restore environmental resources in the Bay-Delta. Yet, how it is administered will be a test of government's stability to transition to a smarter, more efficient, less coercive mode of operation.
I understand that the Governor and the Secretary of the Interior met yesterday and released a statement and will extend a comment period for a month while emphasizing the importance of selecting a preferred alternative. I understand it will, actually, be only a draft preferred alternative which means that it will spillover into next year, into the lapse of the new State administration. And I presume that means that it will drag on for much, if not most, of next year.
I look forward to hearing from the witnesses and will recognize at this time the gentleman from California, Mr. Miller, for his statement.
STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. MILLER. Thank you, Mr. Chairman, and thank you for convening this hearing. And I appreciate an opportunity to speak today and I welcome the witnesses and others involved in the CALFED process to the hearing. And certainly, in advance of their testimony and others who will not testify, I want to thank all of them for the monumental effort they have put into this effort.
Obviously, this is a critical issue for every Californian. The most important resource to the future of our State is water, and the recommendations, and policies enunciated by CALFED will likely frame how we think about and how we use water in California for a generation or more. For all too long, California and the west, in general, has asked only whether a water development project could be built. Little regard was given to the financing of the project which, generally, was paid through enormous public subsidies. Even less concern was paid to the environmental consequences of the water diversion, massive development, and widespread irrigation that flowed from the water-policy decisions.
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Over the pass 15 years, Congress has enacted important reforms to water policy affecting California including the Reclamation Reform Act, the Coordinated Operating Agreements Act, and in 1992, the Central Valley Project Improvement Act. These laws directly address issues that are the official priorities of the CALFED process, environmental restoration, promoting voluntary transfers, reduction of subsidies and other incentives to an efficient use, and promoting the integration of project operations to serve mutual goals.
Implementation of many of these components of laws has been obstructed for years by those who oppose water management, contracting flexibility, and subsidy reduction. There is, however, a growing and justified concern in California that CALFED is perilously close to repeating many of the mistakes of the past. Particularly, the top-heavy reliance and costly and controversial water project construction. CALFED's common program elements do not receive adequate consideration in the EIS and her proposed alternatives to maximize the market-oriented approaches to promote the most efficient use of water. Transfer conservation, waste water reuse, progressive pricing and groundwater management must be more aggressively implemented. With CVPIA and other statutes, we have learned that the implementing reforms on a timely basis is far more complicated than pouring concrete.
CALFED must maximize water conservation, improve management, voluntary transfers to the maximum extent possible, and if costly new construction projects are necessary, then let us be assured that this time those who desire the projects are also the ones bearing the costs of paying for them. Let us remember that a good part of the goal of CALFED is to save the Bay-Delta Ecosystem which is in the state of collapse because of the decades of massive pumping and withdrawals by State and Federal projects.
A CALFED plan that is, primarily, designed to provide even greater withdrawals to fuel the tremendous population growth in other arid regions of the State strikes me, and I have no doubt, most residents of Northern California is simply being unacceptable. More of the responsibility for managing and conserving water and the naturally arid portions of the State will have to come from residents in those areas rather than making more and more costly demands on taxpayers and residents in the northern areas of Oregon, which in themselves are growing and in need of secure water resources. The CALFED process is historic and all of California should be grateful to the extensive and difficult work already completed by the participants.
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I am confident that public comments and the draft DEIS will help the CALFED participants to develop a new set of alternatives that address the full range of efficient water management resources. Let's make sure that before anyone obligates Californians to decade of debt, we have implemented, and not just promised, the operational managerial efficiencies that we know are possible with modern-water policy.
Thank you, Mr. Chairman.
Mr. DOOLITTLE. Thank you.
The opening statements of other members will be included in the hearing record, without objection, and I do have, specifically, one from Mr. Herger, who is not a member of this Committee, but who has an opening statement, and that will be included in the record as well unless there be objection. Hearing none, that's so ordered.
[The prepared statement of Mr. Herger follows:]
STATEMENT OF HON. WALLY HERGER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Chairman, members of the Subcommittee, I appreciate the opportunity to testify about CALFED and its impact on water within the state of California.
According to projections by the Department of Water Resources, California can expect a population increase by the year 2020 equal to the populations of Arizona, Nevada, Oregon, Idaho, Wyoming, Colorado and Utah. As a result, California could experience a water deficit of at least 1.6 million acre feet during average water years, with the water shortfall possibly mushrooming to 7 million acre feet during drought years. To put this in perspective, Shasta Lake, one of the biggest reservoirs in northern California, holds only 4.6 million acre feet.
The CALFED Bay-Delta Program was created to addresss conflicts over water useage in California's Bay-Delta region. There is no question that this goal is essential and necessary to the future of California. However, a CALFED spokesman recently stated that CALFED was, quote, ''Tasked to fix the bottleneck in the Delta, not solve California's water deficit.'' end quote. While this may be technically true, such a narrow view is dangerously self-defeating. In reality, the problem is that the Delta does not have enough water. You cannot fix the Delta or preserve its unique environment without more water.
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Currently, California is home to approximately 33 million people and sustains the world's richest and most diverse agricultural industry. The state is also home to diverse populations of wildlife and native plants. None of this would be possible, however, if it were not for our ability to store water for use in the arid summer months. Of the past twelve years, seven have been droughts and the state suffered serious water shortages.
California does not have unlimited options for producing new water resources. CALFED, however, focuses on proposals by extremists within the environmental community who suggest we take water away from existing uses through additional water conservation efforts. Again, water experts at the California Department of Water Resources have noted we are quickly reaching the limits of water conservation strategies and that we will soon be hard pressed to satisfy the needs of the state's growing population. Another proposal to increase the water supply is to sink deep wells and increase the water drawn from the underground aquifer. As a third generation rancher who grew up in northern California, I can say this is one of the most extreme and impractical proposals I have ever heard. There was a time when we relied principally on groundwater to meet our water needs, but when the aquifer began to dry up and we sank our wells deeper and deeper, we were forced to install above-ground reservoirs to ensure we had enough water for summer use. We still rely on groundwater, but can only do so by supplementing with additional surface water. It would be fruital to return to past practices and further deplete our limited aquifer.
Clearly, the best solution for the Delta, and for California, is to place greater emphasis on upper watershed maintenance, and on off-stream water storage. In the past month CALFED has increased its commitment to improving the health of the upper watershed, and I commend CALFED for this action, however, none of the three potential alternatives included in CALFED's massive, 3,500 page draft environmental impact statement explicitly plans more water storage. Water storage is talked about in general terms, but you will look in vain for a map that points out where new dams and reservoirs will be built. What you will find, however, is a map that shows a peripheral canal. Not a structure to hold more water for usage, but an isolated channel designed to move northern California water south. Something is terribly wrong with this picture. This situation must be corrected and water storage, not the peripheral canal, should take precedence as the key element to fixing the Bay Delta.
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In closing Mr. Chairman, until CALFED gives increased water supply the serious attention it deserves, I fear that any of the three current alternatives is destined to fail.
[The prepared statement of Mr. Radanovich follows:]
STATEMENT OF HON. GEORGE P. RADANOVICH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Thank you, Mr. Chairman, for the opportunity to convey my comments on CALFED today. The CALFED agreement, which comprises a unique multi-agency partnership that addresses ecological and water supply problems simultaneously, is of significant value to the state of California.
I, along with many members of the California congressional delegation, have worked diligently to secure Federal funding for this project. Bay-Delta was funded at $85 million in fiscal year 1998, and I fully support the fiscal year 1999 budget request of $143 million.
As a farmer in the Central Valley, and a representative of the two largest agricultural producing counties in the nation, I am extremely concerned with any action that CALFED takes with respect to the agriculture community. It is essential for our state to implement a CALFED package that includes a balanced approach, which meets water supply needs, water quality objectives, and ecosystem restoration in the Delta. As it has always been intended, CALFED must address the importance of a reliable water supply to sustain the agricultural economy in our region. Water-use efficiencies must be applied to all stockholders—agricultural, environmental and urban. Additional conveyance and storage facilities are key elements to the program and must be included in any final package.
As alternatives are discussed, the protection of private property is also a high priority of mine. Private property rights must be secured throughout the process. Furthermore, CALFED representatives or other Federal and state bureaucrats must obtain written permission from landowners when conducting surveys or other biological work on private property. Any actions that violate landowners' rights are unacceptable.
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Consideration of the socioeconomic impacts of each of the alternatives is also necessary during this process. Taking agricultural land out of production will not solve California's water problems. Agriculture is a nearly $25 billion industry in California. The livelihoods of farmers and others in local communities who are dependent upon the production of farmland would be devastated in exchange for the minimal gains in environmental protection that this unwise course of action would accomplish.
While I am still evaluating my position on the various alternatives presented in the CALFED Bay-Delta Programmatic EIS/EIR, any final solution that is adopted must be equipped to handle the necessary improvements in the operation of the CVP and the State Water Project for the long-term environmental, water quality, water-use efficiency and flood protection needs for the future of the State of California.
Furthermore any final solution should include the utilization of an open-channel isolated facility. Such a facility would provide the greatest flexibility in terms of future Delta operations, without abandoning the ''common pool'' concept of providing benefits to municipal and industrial and agricultural users alike.
Also, CALFED decisions must be implemented in a timely manner. Certainly, concerns must be addressed, however, this is not an excuse for delays. I urge all stakeholders and government officials involved to forge ahead this year to accomplish the essential tasks necessary to complete the CALFED process.
California's water needs are best met by maximizing an ''adaptive management'' strategy for ecosystem restoration and water quality and efficiency improvements. Adaptive management means having the ability to quickly and easily take water to and from different places in the Delta, at different times, using various amounts. The final solution must allow for this type of ''need based'' management of the resource, improve conveyance capabilities, and provide for the most effective water storage opportunities.
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In summary, the solution to California's water needs must include providing a reliable water supply and a healthy environment at the same time. Some in the environmental community think that CALFED is only about improving the environmental condition of the Delta and not addressing the issue of supply. That is simply not true. One cannot—and must not—be achieved without the other.
I appreciate your time Mr. Chairman, and I look forward to continuing the work of providing long-term solutions to California's water needs, through the CALFED process.
Mr. DOOLITTLE. Today's hearing has a different format, somewhat, from the other hearings that we've conducted. We did this trying to look for, perhaps, a more useful format and one that would lend itself, particularly, to the nature of this hearing. The hearing today is organized into four panels with each panel addressing one program component of CALFED. Each panelist prior to the hearing was asked to address a specific question regarding CALFED, and we will ask the entire panel to give their statements, as we normally do, and then members will alternate questioning these witnesses. I'd like to ask the first panel of witnesses, if you'd pleased come forward and remain standing. Take the oath, and then we'll begin.
Mr. Berlin, you are just going to remain where you are, but——
[Witnesses sworn.]
Mr. DOOLITTLE. Thank you. Let the record reflect each answered in the affirmative. We are very happy to have you hear today.
The first panel will address the following question: how are we going to use the CALFED process to meet the future California urban, rural, agriculture, and environmental water needs, and has the CALFED process prejudged or eliminated some water planning options, such as on-stream storage, water reuse, water transfers, et cetera?
I think you're all familiar with those three lights there, but, basically, we urge you to try and keep within the 5 minutes. At the beginning of the fifth minute, the yellow light will go on, and you don't have to stop in mid-sentence, but it's a guide when the red light comes.
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Our first witness today will be Mr. Tom Berliner from the City's Attorney's Office, city of San Francisco. Mr. Berliner you are recognized for your testimony.
STATEMENT OF TOM BERLINER, CITY ATTORNEY OFFICE, SAN FRANCISCO, CALIFORNIA
Mr. BERLINER. Good afternoon, Mr. Chairman and members of the Subcommittee. My name is Thomas M. Berliner. I'm general counsel for the San Francisco Public Utilities Commission. Thank you for providing me with the opportunity to appear before you to submit this statement concerning the water supplies benefits which are expected from the CALFED Bay-Delta Program.
The San Francisco Public Utilities Commission is a retail and wholesale water supplier. We provide water to approximately 2.4 million residents of the Bay Area in a service area which extends from San Francisco through the South Bay and Silicon Valley and up the eastern side of San Francisco Bay to the city of Hayward. Service areas which abut ours include the East Bay Municipal Utility District and the Santa Clara Valley Water District, with whom we share various customers in the Silicon Valley.
I'm here today representing the Bay-Delta Urban Coalition, which is an unincorporated association of major urban California water agencies. The Coalition has been extremely active in the CALFED process, and San Francisco has been an active member of that effort as well.
The Urban Coalition has put a great deal into the success of the CALFED process. Individually and collectively, we have been working for many years to achieve a long-term solution to the Bay-Delta problems. In our view, CALFED provides the best opportunity we have seen to achieve this long sought after success. Furthermore, the failure of CALFED leads us to an unacceptable return to the insecurity of years past.
I would now like to respond to the questions you posed to this panel. As to how we are going to use the CALFED process to meet the future water needs of urban, rural, agricultural, and environmental California, four basic elements drive the CALFED process: water supply, water quality, ecosystem restoration; and system integrity. The latter focused mainly on levee stability.
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From the Urban Coalition's perspective, improved reliability of water supply is essential to the maintenance of our economy. This reliability will be achieved by improving water quality and quantity, as well as restoring the ecosystem so as to reduce the conflicts between supply and environmental needs. As to water supply, CALFED will provide us with the greatest assistance in terms of improving water quality.
Urban water purveyors have made a strong commitment toward meeting their demands through a variety of sources. We are in the era of integrated resource planning efforts. Every major urban water supplier has invested substantial resources in these integrated resources plans. Components of this plan include improvements to water quality, conservation, reclamation, better use of local storage, including conjunctive use, and water transfers. Improved water quality is necessary if we are to achieve the potential of increased use of reclaimed water. Further, better quality water from the Delta will better enable water supply agencies to fully utilize lower quality water from the Colorado River or local sources.
Finally, improvement of the water transfer market is a major component of the CALFED Program. By improving Delta water quality, and access to transfers, urban supplies can be made substantially more reliable.
As to coordination with other California water planning activities, the urban water suppliers have been planning for their future for several years. As I stated previously, through integrated resource plans, urban agencies are seeking to balance their sources of supply. CALFED provides us with, yet, another opportunity to further augment these supplies. In addition to improving supply by virtue of improved water quality and increased yield, CALFED will also promote improved water management for the environment. For example, we are actively engaged in the effort to develop a sound Ecosystem Restoration Program Plan. An important component of the ERPP is adaptive management of fishery requirements. By improving the efficiency of water management for the environment, it will, hopefully, be less necessary to use water that otherwise could be used to meet consumptive needs.
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Water agencies will continue with their own local planning efforts, and not rely exclusively on the CALFED process to meet their long-term needs. CALFED was not designed to meet everybody's needs, and it should not be regarded as the answer to all water-supply problems.
By coordinating local water supply efforts with the improvements expected to result from the CALFED process, we can decrease the tension between consumptive and in-stream storage uses of water. By reducing this tension, each sector will be freer to pursue those activities which are essential to its long-term security. The Urban Coalition is firmly committed to working with all interests to insure long-term supply reliability.
As to whether CALFED has prejudged or eliminated some water planning options, in our view, the CALFED process has been a remarkably inclusive. CALFED has been open to suggestions of alternatives for meeting water supply, environmental and infrastructure needs. CALFED has reviewed over 100 options and narrowed them down to the most preferred elements. It is considered the role of the water conservation, water transfers, reclamation, and potential infrastructure changes including over 40 reservoirs sites and twelve ways to move water around the State. Each idea has received a fair share of comment and scrutiny. In the end, many ideas had to be eliminated and of the three alternatives which remained, ultimately, only one will survive. It may be that the one alternative chosen will comprise a combination of the others, but in the end, we can have only a single vision for the long-term solution to the Bay-Delta.
I conclude my remarks here. Thank you.
[The prepared statement of Tom Berliner may be found at end of hearing.]
Mr. DOOLITTLE. Thank you.
Our next witness will be Mr. Bill Pauli, president of the California Farm Bureau Federation. Welcome, Mr. Pauli.
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STATEMENT OF BILL PAULI, CALIFORNIA FARM BUREAU FEDERATION, SACRAMENTO, CALIFORNIA
Mr. PAULI. Thank you, Mr. Chairman, and Members of the Committee.
On behalf of the California Farm Bureau and our 75,000 members, I'm pleased to have the opportunity to appear before you. I'm a farmer over in Mendocino County and grow wine grapes and Bartlett pears.
We are committed to seeking solutions which will insure a reliable, affordable water supply for all of California. California population is projected to grow by 17 million people by the year 2020, and without prudent planning, our current water deficiencies will surely grow.
California farms provide key supplies of food and fiber, $25 billion in revenue, $12 billion in exports, and important jobs, and coveted, open space throughout our great State. The CALFED process provides an unprecedented opportunity to craft a plan to meet our State's water needs for the next 30 years. I can't stress that enough. It's to look ahead for the future and the future growth of our State, and to plan for that. Unfortunately, the CALFED plan to date falls short of this goal. Current CALFED effort is based on redirecting agriculture's two most vital resources, land and water, to satisfy other uses rather than developing reliable, and affordable water supply.
Nonetheless, we are optimistic the CALFED process can succeed. There's three critical issues for agriculture: increasing water storage; minimizing fallowing; and strengthening our water rights.
Current total use of water in California is broken down into about 46 percent for the environment, 42 percent for agriculture, and 11 percent for urban usage. And additionally, millions of acre feet of water flows out to the ocean which is available for good uses year in and year out. Instead of redirecting water from productive agricultural and urban uses, we should concentrate on fully utilizing the water that now flows to the ocean. By conserving overflows, we can increase flood protection while saving water for dry years. We need to increase the capacity of existing reservoirs, such as Lake Shasta, Millerton, Los Vaqueros and, potentially, others as well so that that water can be used for agriculture, for urbanites, for our cities, and yes, for the ecosystem.
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CALFED proposes to fallow 250,000 acres of prime agricultural land which holds senior water rights. Overall, fallowing could approach 1 million acres. California agricultural land has significant, global impact. As a matter of good public and social policy, this land should not be converted and we strongly oppose such efforts. We recognize new conveyance system or reservoirs will require the retirement of some acreage, and in those cases the landowners should be compensated. And we clearly recognize the same land will be removed, but the fallowing of agricultural lands for levee setbacks, shallow water habitats and other environmental purposes should not be part of the CALFED process. The combined total, according to the EIR/EIS, could range from 396,000 acres and 914,000 acres removed. Protection of agriculture water rights is a key to the ultimate success of CALFED.
Farmers and ranchers depend on established water rights to maintain their livelihood. CALFED must assure surface and groundwater rights. Areas of origin must be protected and strengthened. Impact in those areas could be monumental. CALFED should abandon the notion that groundwater can be used in areas feeding the Delta as a future source of water for urban and environmental uses under the guise of conjunctive use.
We cannot support the continued investment of public money as long as farmers bear a disproportionate share of the burden in reaching the Delta solution. Farm Bureau supported Proposition 204 and previous Federal appropriations as a down payment to secure major improvements in the Delta water management. Unfortunately, both have been used to fallow agricultural land and set the stage to redirect agricultural water.
We continue to support the need for a long-term Delta plan, but we are losing confidence that the solution will contain meaningful steps, primarily, water storage. Fallowing will seriously hurt California agriculture and the surrounding communities. I cannot stress the amount of impact that it will have in those local communities if that land is fallowed. We tend to forget about the people in the tire shops, the cafes, the newsstands, newspapers. We cannot underestimate the impact on those people. Therefore, it is impossible for us to support continued Federal funding until we see marked improvement in the proposal.
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We are discouraged, but we want to remain optimistic that CALFED will turn the corner and work toward meeting the State's long-term needs for the next 30 years, and we are confident that that can occur. The main concern for us at this point is the devil in the details which we do not understand and have not been able to get clear through.
Thank you, Mr. Chairman, and members of the Committee.
[The prepared statement of Mr. Pauli may be found at end of hearing.]
Mr. DOOLITTLE. Thank you.
The next witness will be Ms. Martha Davis, Board Member of the Mono Lake Committee Sierra Nevada Alliance. Ms. Davis, you're recognized.
STATEMENT OF MARTHA DAVIS, BOARD MEMBER, MONO LAKE COMMITTEE SIERRA NEVADA ALLIANCE
Ms. DAVIS. Thank you very much. Good afternoon Chairman Doolittle, and Members of the Subcommittee. Thank you for the invitation to speak before you today.
My name is Martha Davis. I am speaking today on behalf of the Sierra Nevada Alliance and the Mono Lake Committee. Both of these citizen's groups work on water-policy issues in California. The primary focus of the Sierra Nevada Alliance in on watershed restoration in mountain counties. While the Mono Lake Committee works to promote conservation, recycling, and why-is-water-use programs in Southern California, I also serve as a member of the CALFED Bay-Delta Advisory Council, and on the CALFED Ecosystem Restoration Roundtable.
In summarizing my testimony this afternoon, I want to make sure that I address the two questions posed by the Subcommittee. The first question is how are going to use the CALFED process to meet future-California urban, rural, agricultural, and environmental water needs?
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CALFED is addressing the State's future water needs in the context of fixing the San Francisco Bay-Delta. While it's not CALFED's goal to resolve all water issues in California, the water-use policy CALFED, ultimately, proposes to include in the final preferred alternative, especially the programs for increased conservation and water-recycling, will have a profound impact on how much water is available in the future to share between urban, rural, agricultural, and environmental water needs.
The recent developments of conservation and water-recycling programs in Southern California has already made a tremendous contribution to meeting the State's current environmental, rural, and agricultural water needs. Let me give you two examples, the city of Los Angeles. As a primary result of conservation programs implemented since 1990 in Los Angeles, the city is currently using the same amount of water as it did in the mid-1970's only now we are serving almost 1 million more people. The success of these programs have made it possible for the city of Los Angeles to protect Mono Lake, a vital resource to the rural community of Mono County, without taking water away from Northern California or the Colorado River. And that is a clear benefit to the rest of the State. Further, the city of Los Angeles believes that it can meet all of its future water needs even with all the growth projected for the region through additional conservation and recycling projects.
Second success story, the Metropolitan Water District of Southern California. At the peak of the drought of the calendar year 1990, MWD sold 2.6 million acre feet in imported water supplies. Since then, Metropolitan Water District has developed its Integrated Resources Plan, refocused its efforts on developing a more balanced mixture of local and imported water supplies, and helped the region to start to aggressively implement conservation, recycling, and groundwater management projects. The result, MWD has reduced its imported water sales down to about 1.8 million acre feet. Although this year has been wet, and I think they may go lower. Possibly as low as 1.6 million acre feet. This dramatic reduction in MWD imported water needs means there's more water available to meet the State's other environmental, urban, rural, and agricultural needs.
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How much of a difference can future water-conservation and recycling make to meeting the State's needs? Let me answer with a question. How many in people in 1990 would have predicted the overwhelming success of conservation programs in Southern California. These programs have fundamentally reshaped our water demand, and there is still much more that we can, and should, be doing in Southern California. And what's been done in Southern California can be done elsewhere.
The second question posed by the Subcommittee is whether the CALFED process has prejudged or eliminated some water-planning options from the discussion? The answer is no. I don't think so. CALFED is not yet completed its planning process nor yet made a decision on the preferred alternative. Addressing the Bay-Delta problem is a huge, if not heroic, undertaking and the work of CALFED is far from finished. But I do, briefly, want to raise concerns I have been hearing about some of the information CALFED is relying upon in its evaluation of the water-planning options. These are the assumptions used in the California Water Plan, known as Bulletin 160. Bluntly, the concern is that this document has greatly overstated the future urban-demand projections and, substantially, understated the potential for conservation and opportunities to recycle water. In other words, it's been making the problem with meeting the State's future needs a bigger problem than, perhaps, it needs to be.
I reviewed Bulletin 160 with an eye toward Southern California, and I agree that the document raises some troubling issues. For example, why does Bulletin 160 assert that water demand in 1995 for the South Coast Region was in the vicinity of 4.3 million acre feet when the actual demand was in the vicinity of 3.5 million acre feet? The 800,000 acre-foot difference is more than the entire water needs of city of Los Angeles.
Why does Bulletin 160 identify over 1 million acre feet and potential conservation and water recycling projects for the South Coast Region for 2020 that only count approximately 300,000 acre feet of this water in the final water projection? And how is this information incorporated into the CALFED environmental analysis? I mean, perfectly honest, I find it troubling when I see charts that show a potential shortage of 6 million acre feet for the year 1995, which was a year that we had ample water supplies. And I understand the need to normalize the data, but my question is what is the data that those projections have been based upon.
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I don't yet have the answers, but I am confident that we will find them in the context of the CALFED process.
I'll end my testimony there. Thank you.
[The prepared statement of Martha Davis may be found at end of hearing.]
Mr. DOOLITTLE. Thank you.
Our next witness is Mr. Stephen Hall with the Association of California Water Agencies. Mr. Hall.
STATEMENT OF STEPHEN HALL, ASSOCIATION OF CALIFORNIA WATER AGENCIES, SACRAMENTO, CALIFORNIA
Mr. HALL. Thank you, Mr. Chairman, and members. It's a pleasure to be here. Thanks for inviting us.
The Association represents agricultural and urban water agencies around this State that collectively deliver somewhere between 90 percent and 95 percent of the delivered water in this State. We're the folks who, actually, deliver it to the users, the homes, farms, and businesses. As you said in your opening statement, Mr. Chairman, we're here to discuss the State's water needs and what role CALFED will, and should, play in meeting those needs, and in our minds, the two are inextricably linked.
We need additional water in a growing State. A State that's going to continue to grow by all projections. And CALFED, in our view, is the best way to provide for the water for that growing State.
There's a fair amount of debate still going on. You heard Martha Davis' testimony just now. There was perspective that says the water demands are overstated and the opportunities for the so-called ''soft-path methods'' are understated. I think that debate will continue, but one thing is clear and that is that no single option is going to get us where we need to go with respect to water supply for the State. We're not going to get it by simply building additional reservoirs, but we're also not going to get it through more conservation. I think it's going to take a mix, and that's why we're supporting CALFED because CALFED provides the sort of mix that we think we're going to need.
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At our present rate of growth, the most recent estimate are we're going to be somewhere 3 million and 7 million acre-feet short in the year 2020. Sounds a long way off. It's the planning horizon. By the time you plan it and build it, whatever it is, whether it's a new reclamation plant or new reservoir, you are going to need the water that you started planning now.
There is some question about the estimates that are being proposed by Department of Water Resources Bulletin 160, but frankly, there's no more credible study available. And although there remains debate about how much can be developed through conservation versus additional development, those are all within a reasonable range and if you look at any of them, it clearly shows that no matter whether you take the low end or the high end of the range of estimates, you're still going to need that mix.
Everybody understands in California who studied water that in decades past we met our needs through building additional reservoirs. In the last three decades, the 1970's, 1980's, and 1990's we've met our needs through, what the environmental community calls, the ''soft path,'' conservation, reclamation, land conversion. We've got a remarkable record in that. In the urban setting in Southern California alone they've spent over $160 million, conserved nearly a million acre feet of water, enough to meet the needs of the city of Los Angeles, as Martha pointed out. In fact, I was glad she made my point for me. We've done quite a bit in the urban setting.
In the agricultural setting, the record in some ways is even more impressive. Water use in the agricultural setting through land conversion and conservation has been reduced by 4 million acre feet since 1980. Production in the meantime is increased by 50 percent. Projections are that agricultural-use will go down another 2 million acre feet over the next twenty, twenty-five years. And agricultural has invested over $2 billion—$2 billion with a b, in drip systems alone.
Urban and agricultural-water users have gone a long way in conserving. It's something we should have done and we're glad we did, but clearly, conservation alone is not the answer. It won't fix the system in the Delta which is badly broken. Today, we have conflicts between protecting fish and delivery water. It cannot be fixed with the existing system. We have drinking water quality problems that can't be fix with the existing system, and we're badly in need of additional flood control in this State. That's why we believe as a part of whatever develops, CALFED has to deliver more water for the State. We're glad that CALFED now has up to 6 million acre feet of additional storage in its plan, and we're going to stay engaged and supportive of CALFED and see that as a final plan it contains a significant amount of additional storage.
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We will also, though, continue to support the so-called ''soft-path methods.'' CALFED has as much as 4 acre feet of water through conservation for every 1 acre feet of additional yield in its projections. What that agricultural final mix looks like in terms of how much conservation and how much water supply is what CALFED will sort out over the next several months and, I think, everyone of the stakeholders here at this table, and in this room will stay engaged to try to help them get to that right mix. But the bottom line for all us—the thing that I think we all agree on though we disagree on some of the facts, is that CALFED is the best opportunity that we've had in a generation to solve the problems, reduce the conflicts, and meet our present and future water needs in this State.
CALFED must succeed and the Water Community is committed to staying engaged to make sure that it does.
Thank you.
[The prepared statement of Mr. Hall may be found at end of hearing.]
Mr. DOOLITTLE. Thank you.
For the benefit of the members, we'll probably will do a couple of rounds or so of questions here.
Mr. Pauli, are your members of the Farm Bureau, actually, actively opposing the funding in this year for CALFED?
Mr. PAULI. No. Our concern is that if we don't make progress in terms of the issue related to fallowing and make or have assurances related to additional storage, that it simply does not make sense to continue to fund the process because the process needs to include those two to be viable, and that's what we're saying. Not to cut funding, but in order to continue funding, it needs to be a well-rounded and complete program or we would not favor continuing the funding this next year.
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Mr. DOOLITTLE. Are you expecting some assurances to be given at some point before final action is taken this year or are you waiting to see what happens next year in order to make that conclusion?
Mr. PAULI. Well, hopefully, as we go forward with the discussions during the summer and fall we'll receive some adequate assurance and, there again, that part is quantified, but adequate assurances that those two issues will be addressed in a way in which we can continue to proceed with the process because we all recognize how important the overall outcome of the process is.
Mr. DOOLITTLE. It's my understanding we presently have, not in this year, but on the average we presently have in an average water year a water shortage right now. Is that—anybody disagree with that?
Ms. DAVIS. I'm sorry. Do we have a shortage this year?
Mr. DOOLITTLE. Not this year, but that in an average year, we have a deficit already at least as I understand the California Department of Water Resources analysis of this. Apparently, they estimate that there's about a 1.6 million acre-foot shortage for an average water year.
Mr. HALL. I will say that we cannot reliably meet the needs of all areas of this State in an average water year today, and that there is groundwater overdraft which is, in part, indicative of water shortages.
Mr. DOOLITTLE. OK. I think we're probably get to the quantification in one of the other panels, but—I mean, if no one—does anyone dispute the assertion that we are short on the average right now?
Ms. DAVIS. I don't know how to answer the question because when I read Bulletin 160 and I try to put all the pieces together and understand how they put together their numbers, I don't know they got to the outcome they got to. I think that part of the point of the testimony I wanted to make today was the need for a good, quality answer to that question. What are the water needs of the State currently? How do we define for urban, for agriculture, for the environment the water needs so that we track through those numbers and then take a what the supplies look, and take a hard look at the match and whether there's a mismatch. I do believe there is a perception that there is a tremendous mismatch between supply and demand, but I don't think we've got the document that gives us the answer to the question.
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Mr. DOOLITTLE. Well, we'll ask Mr. Potter when he comes on Panel Number 2.
Mr. HALL. Mr. Chairman, may I just make one additional comment on that.
Mr. DOOLITTLE. Yes.
Mr. HALL. Regardless of what any report says, when you have declining water tables and when you have water users who are chronically receiving 50, 60, 70 percent of what they've contracted for and are paying for, that to me strongly indicates the shortage. And that's in normal and above normal years.
Mr. DOOLITTLE. Well, that would, certainly, be an indicator of that to me as well, and I presume, CALFED believes there's a shortage or they wouldn't be proposing to fallow these hundreds of thousands of acres of prime agricultural land which, I think, is a real concern.
I am interested in seeing our water supplies increase, and Ms. Davis testified she didn't think any of the options had been foreclosed which I guess means that even on-stream storage isn't foreclosed under CALFED. Is that—anybody here disagree? Do you believe it has been foreclosed by CALFED?
OK. No disagreements so far. You all, or some of you alluded to it, but I wonder the discussion of the soft-path land is to increase conservation, and the conservation of the city of L.A. is remarkable. I think it shows what we can do with improving technology and understanding of our water systems.
But it seems to me that it might be dangerous to rely upon conservation as the main solution to our water problems because I look upon that as kind of being the emergency solution, when we run out of water or have a crisis facing us. It seems like we're giving up our response capacity if we use conservation to be the main source for additional water development. I mean, obviously, where we can conserve without impacting significantly our lifestyles, that's one thing, and that apparently has gone on in the city of Los Angeles, and in other areas, and that's very encouraging.
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But there's always the option to impact our lifestyles, when necessary, in the event of a major drought or something. I would like to see our policy increase the amount of water available so that we don't have to—so that we no longer have the ability to respond in an emergency without experiencing grave, negative consequences.
Did anybody want to comment on that?
Mr. PAULI. Mr. Chairman, I think we need to focus to the future. You know, we've made tremendous strides in agriculture, tremendous strides in urban use, in terms of conservation, and being much more efficient with the water we have available. And yet, as we look forward over the next 20 to 30 years, I think Mr. Hall said, as you look forward, what are we going to do with the growth with the next 15 or 20 million people?
We agree already that there is a shortage, the magnitude of which maybe we can't quantify, but clearly, a shortage. What are we going to do for the next 15, or 20, or 30 million people who come to our State? Can we provide water for all of their needs, including recreational environmental without additional surplus or additional supplies and storage? Can we continue to take all of the water that they're going to need from conservation? At some point, I think we can only conserve so much.
Mr. DOOLITTLE. Thank you. Mr. Miller is recognized for his questions.
Mr. MILLER. Thank you, Mr. Chairman, and thank you to all of you for your testimony. This panel alone probably has given us a week's worth of questions, but we'll see if we can get it done this afternoon.
Well, let me just go to the point that's been raised here. Ms. Davis, in your testimony what you describe as discrepancies, or questions raised, I guess would be better, we don't know if they're discrepancies or not, but questions raised by Bulletin 160 of State Department Water Resources, I don't know how exhaustive your list is, at one point, the South Coast you refer to a number of times, but they're fairly substantial numbers. It looks to me like somewhere between conservation and overstatement of use. You're very close to 2 million-acre feed of water. Is that correct?
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Ms. DAVIS. The first number that I refer to is for 1995, and the second was for the year 2020. So I was trying to cover both current and the future situation——
Mr. MILLER. OK, I see. I see.
Ms. DAVIS. But, when you start, there are a very large number of comments that have been submitted to the State Department of Water Resources that raise similar questions, and a substantial amount water, both looking at 1995 and 2020.
Mr. MILLER. Well, my concern would be that if the fall to 160 is as deeply integrated into the CALFED—others can respond to this later—as you suggest it is, if there are flaws there with respect to assumptions made about usage or about conservation or the future of usage and/or conservation, as you carry those into the CALFED process, it seems to me, we start a multiplier effect here, as we start extrapolating these things out to 2020, we hope that CALFED carries us more than a few years down the road.
The impact on water decisions, the impact on taxpayers can be fairly dramatic. You can take a small area here and it can be rather large out there in the future.
Ms. DAVIS. I agree. I think that everything that CALFED stands for is trying to get the best quality information pulled together so that we can make good decisions about California's water future. These questions need to be answered.
Mr. MILLER. You know, my concern is a couple of things. A little bit of this is déjà vu. I sat in this hearing room for 25 years, and I probably spent the first ten with people sitting at that table telling me that if we didn't build a thousand nuclear power plants, if we didn't bring on line X number of generations, year-after-year-after-year, this economy and this country wouldn't go. Later, we find out, that we should be growing economy and decrease your power consumption rather dramatically in this country, actually.
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And now, California taxpayers are looking at $28 billion in stranded costs, because a lot of decisions were made on bad underlying assumptions. It turned out just not to be the case. And here, we're looking at whether you generate a million-acre feet of water in conservation, non-structural ways are two million-acre feet, or whether you generate it behind a large structure is a big difference to the taxpayer—very substantial difference if you're going to ask for general obligation bonds.
So, I don't know if you or Mr. Hall is quite correct here, about how you attribute this, but it seems to me that the test would be if this was the plan to build a motel, and you say, I believe my occupancy rate is 90 percent, loan me the money, but if the figures show that it's really 30 percent, you made a drastic mistake. And so the question is here, if we're going to go to the taxpayer at some point, because I think we're in agreement with what Mr. Doolittle said, that none of these options are off the table, and nobody believes they should be taken off at this point.
But we've got to start in this common-period, and I guess in the next common-period that the Governor and the Secretary have agree to, we've got to harden this information. Because at some point, we're going to go to the market, or we're going to go to the taxpayers, at minimum, if we won't go to the market. It may not fly in the market, but with unfortunately, the taxpayers, it might.
It's analogous to what goes on around here. We're arguing now over cuts, and spending, and tax-cuts. And what they're saying is they want to know you've made every effort to cut the spending, so they know what they have for tax-cuts, or before you raise taxes, you want to know that you've made every effort here.
And so, a good chunk of the questions that the chairman's asked you and other panels to respond to, this discrepancy is absolutely vital. And we're going to go to the people for a big flood control bond. They're either going to double-back on water—they ought to know that we've rung every drop of water out of this system that we can at the lower cost if that's available. Otherwise, we're going to look like the utility industry. Well, we are the utility industry. We just haven't had our turn in the de-regulated atmosphere. But, we shouldn't repeat that history, or be within coming along and asking people in 2020 to keep coughing-up money for a bond issue, and the benefits have disappeared.
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That's my opening statement, Mr. Chairman.
[Laughter.]
Let me just say that I think this is absolutely fundamental. No matter how you think the end of this process comes out, if we cannot go to the public with hard figures, I think we're doing a real disservice to ourselves, in the interest of putting some stability into California's water system. But we're going to be doing a real disservice to the taxpayers who were going to be asked, apparently, under a couple of scenarios to foot most of the bill.
Thank you, Mr. Chairman.
Mr. DOOLITTLE. Thank you. Mr. Pombo is recognized.
Mr. POMBO. Thank you, Mr. Chairman.
Ms. Davis, do you believe that water needs for the future of California can be met through conservation?
Ms. DAVIS. I think the experience from Los Angeles is instructive. In 1990, when we were in the midst of litigation with the city over the protection of Mono Lake, the city insisted that it could not afford to share a single drop of water with Mono Lake. That the city's growth, water needs, and concerns about the growth of those water needs were so large, so monumental that it was not possible——
Mr. POMBO. And we—they adopted low-flow toilets, shower heads, I mean, they did it—we did it throughout all of California. We did water rationing during the drought. We did a lot of different things. But the reality is they've done all of these things to this point. They've gone after the easy conservation, and I think that, that's true with all of California; it's true with agriculture. They've done everything they could, in terms of what they could realistically do at an economically viable place.
Now, we're talking about adding 17 million—the projection–17 million people, additional land, it is going to be irrigated, all of these different factors; will conservation alone do that?
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Ms. DAVIS. Well again, going back to the Mono Lake example, as a result of the conservation that has been done to-date, the city has saved more water than the entire amount of water that they divert from the Mono Lake ecosystem. And the way this city has been looking at conservation, they've linked it with solving every problem that the city is facing.
We have had problems with sewage. We have had problems with antiquated infrastructure in Watts area, South Central Los Angeles, and by investing in conservation, we're investing in our community. It's a combination of solving problems and drought-proofing our economy. So what's happened is, we've learned that conservation is not just a short-term emergency response to a drought, although there's that component of conservation, what we've learned is that if we don't conserve, if we're not building in water recycling projects, we're making ourselves economically vulnerable during droughts.
And so, what the city-council has said, their plan is to meet future growth through conservation water recycling projects.
Mr. POMBO. So their forays up into the valley to buy farmland, and transfer the water from the farmland in the valley into southern California is not real? They're not really doing that?
Ms. DAVIS. I'm not aware of LADWP with proposals to transfer water from the Central Valley.
Mr. POMBO. Well, we'll go on.
Mr. Hall, do you believe that conservation of our water in California will meet the future needs of California over the next 20 or 30 years?
Mr. HALL. No, I don't. As I said in my statement, I think conservation of water, and frankly, of other precious resources is a strongly indebted ethic in California, and that's a good thing, and that we can make additional progress. But, as I said in my statement, we have made remarkable progress in the area of conservation, and the downside to that is, that it does harden demand. The demand that remains is less flexible. And when—because it's not if, it's when—we have our next drought we will have less capacity to conserve. I think that's a risk worth running, but only if we also put together a mix of additional water supply options.
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I think, we're at a point in California water, where the cost of water, both in dollars, and politically, is such that you cannot develop additional supplies, unless they make a lot of sense. I think we're at the point now, where we can go forward with a mix of additional conservation-reclamation if we include additional water supplies, and we can make it work now, and in the year 2020.
Mr. POMBO. Do you believe that any water plan for the future of California that does not realistically look at the development of new surface water resources is being realistic?
Mr. HALL. I frankly don't. I think there are other options that are easier to do, and perhaps, more affordable, conjunctive-ousting—my favorite example. But there are some things conjunctive-use can't do; flood control is one of them. You don't get much flood control benefit out of conjunctive-use as you do out of surface storage, whether it's on-stream or off.
Mr. POMBO. Mr. Pauli, agriculture has done a lot in terms of conservation over the past several years. Do you believe that there is a huge amount that they could do in the future to save water?
Mr. PAULI. Well, we'll currently continue to try to conserve water, and I think we can continue to make progress in a number of areas. But, we will reach a point at which we can no longer conserve additional water. Where that is, I'm not sure because we continue to have technology that does allow us to conserve water, but there will be a limit.
The other thing that's clearly occurring as part of the conservation effort, we're converting from one type of cropland to another type of cropland as though we've gotten some benefits there. But where the limit is, I'm not sure.
Mr. POMBO. Thank you, Mr. Chairman.
Mr. DOOLITTLE. Thank you. Mr. Dooley, you're recognized.
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Mr. DOOLEY. Thank you, Mr. Chairman, and I guess first-off, I'd like to express just a little bit of frustration because some of the opening statements, and including that of Mr. Miller in that, we appear to be finding ourselves lapsing into some of the old rhetoric, and some of the old battles that got us into a position where we weren't able to find solutions. I think I, myself, was looking at this cow-fed-process as a best opportunity for us to move forward in a collaborative fashion with all the stakeholders at the table, in order to try to find some solutions.
And while I had took some exceptions to Mr. Miller's remarks, Mr. Pauli, I would say, as a farm bureau member, I also take some exception to the California Farm Bureau basically coming out, and saying that they're not going to support public funding if these two conditions aren't met. Because I think that disrupts the opportunity, or impedes the opportunity, I guess it is, for us really to try to move forward.
We're not all going to get everything we want; it's clear. And, I hope that there will be a little bit of softening of some of the rhetoric here as we move forward. Because I think, in some of the testimony, where Mr. Doolittle asked all of you to testify on whether or not the CALFED-process was prejudging. I mean, we heard in so many opening statements that it appeared that we were already making statements, in terms of prejudging, in terms, that we are looking at favoring concrete solutions over recycling and others, where we are looking over taking greater withdrawals out of the Delta over the others, and I guess, when I look at the various alternatives that you have been offering, that we're still in a process, I have trouble seeing how any of us can say that we are now at the point where we're prejudging anything, because we haven't determined what the drought process is.
I also express a little frustration over this Bulletin–160. I think it's appropriate for us to really ascertain the accuracy of this document. And, I think, that's a legitimate issue that I would hope that during the remainder, and the balance of the CALFED process, that we will continue to look at, and make our determinations of what the final draft proposals should be. But again, I think that we have to be careful that we are going to be trying to justify whatever our personal pre-judged position should be based on whether or not that is valid or not.
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I guess one of the other issues that I was most concerned with, there was a statement made that there wasn't enough consideration given to market-oriented approaches, and in that reference, I think we were probably referring to transfers. I guess, Mr. Berliner, you made some reference to that. Has this issue from your perspective, been adequately addressed? Has it been taken off the table, or where are we at as we look at water transfers?
Mr. BERLINER. I don't think that water transfers have been taken off the table at all, in fact, quite the contrary. I think water transfers are one of the major issues in the CALFED process, and an area that the urban community is looking to, very favorably and quite strongly, as being available to meet some of our future needs. So, we intend to rely quite heavily on water transfers. I had ordered to move water in the areas that are water-short.
I might comment about an earlier conversation that had taken place regarding conservation. Certainly, urban areas are not going to be able to meet their future needs strictly from conservation. Water transfers and additional yield from the system are going to be essential.
We met last week with members of the business community. There was a letter signed by 28 chief executive officers, urging the President and Governor Wilson to proceed toward a preferred alternative by the end of this year, and in their view, water transfers was one of the key components of the CALFED program, and urged that review of water transfers continue. We support that. We believe that we do need to move toward preferred alternatives, and that water transfers are a very important component. We are glad that the business community is becoming engaged in this. After all, the California economy, the business community is what that's all about, and water is a key, in part, to the survival of our economy.
So, water transfers are hugely important, but I would add a caution which is, that water is essential. It is not equivalent to buying a car, a totally free market in water is not possible. You cannot simply move water toward money. Water has to stay, in communities words, essential. And we cannot see wholesale transfer water, simply based on money alone. So, an entirely free market in water is something we would not support.
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Mr. DOOLEY. Ms. Davis, I understand you're a member of the Bedock process advisory group, would your statement in terms of questioning the need for water, a need for additional water developments—excuse me, and yield, I would point out, through means other than just conservation and soft-path approaches, then, do you object to, during the CALFED process, the consideration as I think, Mr. Berliner identified that they were looking at potential infrastructure changes, including over 40 reservoir sites, and 12 ways to move water around this State, do you think that it is inappropriate for that to be considered during the CALFED process?
Ms. DAVIS. No, I do not.
Mr. DOOLEY. So, then, when we're looking in terms of the potential way we can move the process forward, and you're certainly not saying that you're not open nor should we be open to looking for additional yield that might be actually new surface or whatever water infrastructure developments are in need to increase yield?
Ms. DAVIS. I think the CALFED process has to look at all the options.
Mr. DOOLEY. All right, thank you.
Mr. DOOLITTLE. I'm going to reserve my time for now, and recognize Mr. Miller for his questions?
Mr. MILLER. Thank you, Mr. Chairman.
It would be a mistake if people suggested that these line of questioning is about whether or not an option will fill the needs of California. The whole CALFED process is to determine the range of options, and what mix of options make the most sense for the future of California. And that continues, I think, to be the mission.
The question we get to now ask, and what I characterize as a mid-term review here, and I'm not sure Lester would be happy with that because that sounds like he's going to be doing this the rest of his life. But, it's at the mid-term review, you've got to start asking and narrowing tougher and tougher questions. And, I think, some of the questions raised about the basis, that Ms. Davis had raised, about the basis for 160, and then the use of 160 in this process are very legitimate questions because they have huge ramifications for how you measure different alternatives, the cost, and the efficacy of those alternatives.
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No one here is suggesting that all of our needs are going to be met with conservation. I guess maybe that could be a conclusion, but there's no evidence that that's the case so far. But, when you're picking choices you've got to start at some point, match them-up based upon the need. I have people in the financial community in the San Francisco Bay Area, from our leading banks that tell me if we had a free-market system, there would be a surplus of low-cost water available in our State; they just believe it. I've sat for hours, went through them—they were not exactly ideological travelers with me—and, when we got all done discussing this, and all the ramifications of the politics of water in California, they said, in a real-market system there would be a surplus of water available.
Now, you made a decision, Mr. Berliner, the people you represent, that we have other values in California whether it's supply for San Francisco or whether it's the future of agriculture, or what-have-you, but those decisions also come at a cost. Because if you said you're going to take agricultural water and throw it out on the free-market, it be a dramatic change in the make-up of our State. I don't know if it would be winners or losers. Because I don't know if just trading in a row-crop for a three-bedroom-two-bathroom home necessarily makes it a better State.
But, there are those who suggests, like natural gas, people like myself who fought those market forces all of those years, kept saying, just throw it out in the market, you'll have more natural gas than you know what to do with, and you'll have it at prices that people can afford. Well, for the last 10 or 12 years, they've been proven correct. I don't know if that will be proved in the long-run or not, but these questions must be asked. Because we are now getting into a different process.
We're getting into the process of selection. And so, whether or not there's a million-acre feed in conservation or two-million-acre feed, or the market can generate surpluses, or transfers can generate additional water, these are crucial questions at this stage. And, I just think that it's very important that they be asked.
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Let me, on another point, Mr. Pauli, welcome and thank you for your testimony. But, let me ask you a question because—and I only ask this because I'm not clear of the accuracy of it. Somewhere in your statement, on page two, you said that your concern was about Proposition 204, and you say, ''that Federal appropriations have been used in large part to follow agricultural land and set the stage to redirect agricultural water to other users.'' Is that accurate?
Mr. PAULI. Yes, sir, I believe so.
Mr. MILLER. I thought we were using a lot of this for some restoration projects, and a lot of fish screens so irrigation districts could continue to take water, and some other things.
Mr. PAULI. We're clearly using it for a wide range of products. I mean, there's not one simple answer to one thing that we're using it for. It's a wide range of things. Yes.
Mr. MILLER. OK, so, I guess, maybe Lester can clarify that or we can get that information for the Committee. The chairman's raise, and I think it's an important issue.
Let me just say, Mr. Dooley referred to breaking down the comedy here, the suggestion that somehow, 204 was the environmentalist money, and now somebody else is entitled to a pot of money to build structures, there's a lot of that environmental money that is there, and the reason we're here in the CALFED process is to avoid the crash of the system, so that people think that they can get, as Mr. Hall pointed out, additional yields out of this system if we shore-up the environmental structures. So, the benefits flow a number of different ways. Just as when people go to build these dams, they're going to want to tell us what great environmental structure they are, so they won't have to reimburse for the cost. These will become the biggest environmental projects in the western United States by that time.
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So, I just want to make sure that we don't, ''that was your money, now it's my turn.'' Because there's an awful lot of money there that is going to benefit a whole lot of different purposes. As I understand, some of these projects that are done in terms of watershed restoration, the fish screens, and others. I don't know that money has actually been spent to fallow land.
Mr. PAULI. Well, we clearly supported 204. Our primary concern is the fact that when you start talking about whether 600,000 or a million acres, we know there's a range there, and we don't know the exact number that's going to come out of production agriculture. We're concerned.
Mr. MILLER. Yes, but we haven't spent money. I guess what I'm trying to clarify, we haven't spent money, to date, to do that.
Mr. PAULI. No, but at some point, you'll get an opportunity to spend money for that. I mean, it says voluntary purchases or acquisitions, so you will get a chance if the program goes forward to spend that money. Somebody's going to have to pay for that land.
Mr. MILLER. All right. I'll live with that. Thank you.
Mr. DOOLITTLE. OK, Mr. Pombo.
Mr. POMBO. Thank you, Mr. Chairman.
Mr. Pauli, in terms of land that's going to be fallowed or retired from use, you stated that it would be somewhere between 400,000 and 900,000 maybe as much as one million acres of land that could possibly be retired under this plan. We know that there is a proposal here to take about 250,000 acres of land, and retire that, mostly in my district.
Just to put that in context. San Joaquin County has 467,000 acres of irrigated land. If this were to be put into place, the 250,000, about half of the irrigated land in San Joaquin County would be taken out of production. What impact would that have on the economy of San Joaquin County?
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Mr. PAULI. It would clearly have a major impact, and not just in terms of the land that's removed per production, because clearly, those people in theory, are going to be compensated for the sale of their land to the restoration projects, but the people who are put out of a job, the taxes that aren't paid to the school districts or the water districts for the other community services districts, the cannery and processing facilities are not going to receive that product.
Now, I don't know what the mix would be of that 250,000 acres, but probably, a quarter of it would be tomatoes. I mean, you're talking about an awful lot of tomatoes, and those are going to mean workers who aren't going to be working at those processing facilities. There are going to be banks that aren't going to be getting paid because of the mortgages on those processing facilities. The earthquake effect is going to be felt much broader than just those farmers who receive payments for their land. It's going to have a big impact on the communities across-the-board, in terms of things we haven't even contemplated yet.
Mr. POMBO. Mr. Hall, along the same lines in talking about the retirement of land. One of the things that they go by on this report, and you mentioned six million acre-feet of water in response to a question, one of the basis that this report is going off of, is that, by retiring that land that they're going to create new water. And that water is going to be transferred either to other contractors or to environmental uses. The people that I've talked to will argue that letting those islands flood, creating the wetlands out of it, is going to use as much if not more water than irrigating it. So where is the additional water going to come from?
Mr. HALL. I don't have a ready answer for the last part of your question, though it intuitively makes sense. That, if you keep the area flooded, and divert water to flood it, you're probably not going to save much, if any, water. I will say that my membership is not in support of retiring ag-land to reallocate the water.
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It is true that if we were to build a system today, we would probably set back levies, we would develop more riparian habitat in order to protect the fish, that use that system just like we do. Because the fact is today there are fish numbers declining, and because of that, they're becoming endangered, they're listed as endangered, and that, in turn, impacts on every diverter and user out of that system. It does seem clear that we're going to have to develop additional habitat along the Delta corridor, and along the Sacramento/San Joaquin corridors. I don't think we need to retire the amount of land that you all have used in your estimates, and we would not support that.
Mr. POMBO. Unfortunately, it's not my estimate. I got it out of the CALFED. I mean, if it was my estimate it wouldn't be anywhere near that high.
Mr. HALL. I understand. But the numbers that you all have discussed today, which come out of CALFED, I'll let Lester now talk about that, but we are going to need some land to develop habitat, so that, the water supplies for folks in your district, and the folks who use the system up-and-down, and as exporters, can continue to rely on that supply. Obviously, we're not interested in retiring any more land than is absolutely necessary. And, we would not support anything other than a willing seller sort-of basis.
Mr. POMBO. But the land has to be identified.
Mr. HALL. It does have to be identified, and we would, as I said before, would like to see the amount of active agriculture land that's now in production, see the amount of that converted, kept at a minimum.
Mr. POMBO. Let me ask Mr. Pauli a followup question on that. Mr. Pauli, you're a farmer. If you were looking to expand your operation, and you looked at a ranch in San Joaquin County, and it was slated for possible purchase by the State or Federal Government or by someone else to be turned into habitat, would that be a parcel that you would continue to look at or would you look elsewhere?
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Mr. PAULI. No, I would not look. And the bigger problem would be is if you were interested in a piece of ground alongside of a farmer. He had two pieces. One, he said, I'm not going to commit to the program. I don't want to sell it. I want to see it stay in production agriculture. And I said, well, I'm interested in buying that. And the next day I learned that the 2,000-acre piece of ground alongside of it has a willing seller, and he's going to convert. I would not then be interested in the first piece of ground because of the impact that it's going to have on me to farm that piece of ground alongside of land that's owned by the state or the Federal Government, and the consequences of doing that.
So, we clearly do value the land, and my ability to sell it.
Mr. POMBO. So, the result would be, even though the Federal or State government has purchased the land, not bought an easement on it, they've not bought it fee-title, all they've done is put it on a map or put it in a book, like this, and said, that we want to buy that land. So the end-result is we have devalued the property.
Mr. PAULI. I believe so, yes.
Mr. POMBO. For agricultural purposes, it has less value today than it did before it was put on a map as being possible habitat for something.
Mr. PAULI. I believe it's already impacting land prices in that area, because everybody can see what's coming.
Mr. POMBO. Mr. Chairman, are we going to have the——
Mr. MILLER. I just answered your question. It's absolutely a point in for me. How would you go about this process. I mean, we know that there's going to be some riparian restoration, there's going to be some landowners that have already indicated some willingness in some of these areas. How do you go about that process? You've got to do some planning. You've got to identify it so that it passes must-do. This is an improvement.
Mr. POMBO. I've been arguing for the past couple years that they have to be very careful about the documents that they put together, because once you identify the lands that are suitable for purchase, you've impacted the value of those lands.
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Mr. MILLER. Well, you know, we've had a hearing on that. I don't disagree with you that you don't be a landowner living under this kind of uncertainty. I just wonder, how do you then proceed?
Mr. POMBO. Well, with their proposal, even if you take the lower figure of 250,000-acres, I don't think there's anybody in this room who can honestly stand up and say that they're going to have enough money to buy 250,000-acres of land, and yet, they've clouded the title on that 250,000-acres of land just by saying that we are going to go out and purchase it. And there's nobody in here, George. And you know as well as I do, that they're ever going to have that money.
Mr. MILLER. But you've got to pass environmental must-do, you've got to pass a whole series of riff, they can't put in a blank. Well, you can't say, well we're going to have blank-acres of land. So, at some point, it's what any city or country goes through with zoning or whatever. You've got to say, look, this is open for consideration, and then the process refines it down or something. Maybe it's in these processes that they decide that they should be talking about 100,000 or 200,000, whatever the figure is. But, I don't know what the option is for them. I appreciate your concern. I think it's real. I mean, in the real world, that's a problem, but I don't know what the better vehicle is.
Mr. POMBO. Mr. Chairman, are we going to have an opportunity to have another round of questions with this panel?
Mr. DOOLITTLE. Well, I would remind our members, there's three more excellent panels to go. I think we ought to try and wrap-up. Well, let's just hurry.
OK, Mr. Dooley. OK, Mr. Dooley is going to pass on his questions. I only have one or two myself. There's a lot we could talk about here, and I think that's obvious, from the way the hearing's been going on.
We have three other hearings, Mr. Pauli. There are conversions going on in agricultural land, but we're moving in some areas, more toward permanent crops, and away from the annual plantings, and it's been pointed out that in the case of going to the permanent crop, you then lose your flexibility. You absolutely have to have the water then. You don't have the option of not planting that year, or something like that. And, of course, the permanent crops use water all year long. Would you care to characterize whether this is a trend? Can we generalize, and indicate that this is going on pretty much throughout the Central Valley, or is it just in isolated areas?
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Mr. PAULI. I think, I think, Mr. Chairman, there's a couple of points there. No. 1, generally, we are converting to the higher-value crops, permanent crops, and the trend there is because that's where there's still viable agriculture. It's where you can still make a profit, where some of the other crops, we haven't been able to. Certainly, that doesn't include some of the other major crops. We tended to move away from some of the livestock-type of operations, and more to the tree and vine crops. We haven't necessarily moved out of cotton or rice or some of those crops. So, we have moved to that.
No. 2: clearly, as we look ahead, you don't have the same flexibility. I mean, you can't shut those trees or vines off for a year or for 2 years during the drought. Whereas, if you were in some of the other crops, even tomatoes, as an example, and there wasn't the water available, and you didn't plant for that year, you wouldn't necessarily have the same kind of losses that you would in a permanent crop.
Mr. DOOLITTLE. It's very difficult for farmers to know what amount of water you will have, isn't it?
Mr. PAULI. Well, you know, that's why the question of assurances and reliability become so fundamental in this process. And, that's why we continue to stress that one of the things, I think for all water-users, whether you're an urban water district or whether you're a small, rural agricultural water district, assurances and reliability so that your customers, your members in making their commitments, whether it's to a sub-division in homes, or a school, or a hospital, or whether it's to a processing facility, or 100-acres of almonds, that you're going to have assurance and reliability of that water in order to make that investment. So assurance and reliability are absolutely fundamental in this whole process so that we know where we are, and what kind of commitments we'll have for water.
Mr. DOOLITTLE. Well, do you see CALFED moving in a positive direction with reference to assurance and reliability?
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Mr. PAULI. Well, I think that we're all hopeful. And I know that Mr. Dooley said that he was concerned about my comments. I reiterate the fact, that we have stayed at the table. We've continued to participate in the discussions. We're still optimistic that something can work out, but at some point the rubber meets the road, in terms of assurances and reliabilities, and not having the million acres of following. And if the plan ultimately comes out to be extensive volume, we're clearly going to oppose it.
We want it to work. We hope it will work. We need assurances. We need reliability. We need a plan in California that deals not only now, but into the future for all Californians, and all water-users, and for the ecosystems for the fish, and for everything else. And that's what this process is about, a plan that works for everybody, that we all get better together with. We simply don't remove a million-acres of production from California agriculture as the solution. That, we will absolutely oppose.
Mr. DOOLITTLE. Thank you.
Thank you to all the members of the panel for appearing for your testimony. There are further questions. I know Mr. Pombo has some. I'm sure probably all of us have further questions that we will submit in writing, and we'd urge you to respond expeditiously to those questions.
With that, we'll excuse the first panel, and ask the second panel to come forward.
Mr. HALL. Mr. Chairman, with your permission, the issue of water transfers came up earlier in the discussion, we have recently written a rather extensive letter on this subject. I'd like to attach it to my testimony for the record.
Mr. DOOLITTLE. Thank you, without objection, that will be entered in the record as well.
[The information referred to follows:]
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INSERT OFFSET FOLIOS 1 TO 11 HERE
Mr. DOOLITTLE. If members of our second panel will remain standing for the oath, the three members, panel No. 2. OK, if you gentlemen will please raise your right hands.
[Witness sworn.]
Let the record reflect that each answered in the affirmative.
Thank you. Thank you for coming, and please take a seat. Let's see. Let's focus on our questions from earlier. The second panel, we've asked to address the following questions: one, how are the future needs of California identified through the CALFED process going to be financed; two, since interim funding for the common elements in the CALFED has been provided by Federal authorization, and the California water bonds, are the long-term solutions going to be funded by public-interest groups, by beneficiaries, or by government financing, and three, are CALFED costs going to be born by local communities through unintended program consequences?
Our first witness, Mr. Robert Potter, chief deputy director of the Department of Water Resources, the State of California. Mr. Potter, you're recognized.
STATEMENT OF ROBERT POTTER, CHIEF DEPUTY DIRECTOR, DEPARTMENT OF WATER RESOURCES, STATE OF CALIFORNIA
Mr. POTTER. Thank you, Chairman Doolittle, and members of the Subcommittee.
My name is Robert Potter. I am the chief deputy director of Department of Water Resources. The department operates and maintains the State water project, and develops and updates the California Water Plan. In addition, I serve as the Department's representative on the CALFED policy group.
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It really is too soon to get too specific about how we finance the CALFED program, given that we have not arrived yet at a preferred alternative, nor agreed on a plan for implementation. However, it's an appropriate time to start thinking seriously about some of the things that ought to go into whatever the financing plan is. And there's some things that stand out in my mind.
There is some background that I think we ought to consider when we decide how to fund this program. The CVPIA allocated 800,000-acre feet of water away from the cities and farms in California to the environment. The 1994 Delta Accord allocated an additional million-acre feet of water away from cities and farms into the environment. And thus far, there's been essentially no recovery or compensation for those reallocations.
Within the CALFED program itself, it's not clear yet, what quantity of water will be developed or how it will be allocated. Both issues are still on the table.
In terms of principles for how to arrive at equity, most people involved in the discussions and debates have some support for the concept of user-pays. Most people support the concept that the beneficiary should pay. When you look at California, we basically all use water, and we all benefit from California's healthy economy which in major part, is there because of the strong Federal and State water development programs.
Many, many years ago, the U.S. Senate developed a document that was commonly called the Green Book that presented a set of principles for identifying beneficiaries and allocating water development costs to beneficiaries. All of us spent a lot of time agonizing, maneuvering, discussing, and debating how to apply the Green Book and it served us well. But it was not a silver bullet. The CALFED package itself is certainly too complex for us to arrive at some simple formula as to how to allocate costs. The only real answer is to debate and negotiate and probably arrive at a mix of payment strategies tapping both beneficiaries and users. In the long run in most resource issues in this country, we try to arrive at equity and equity tends to drive the decision—not really economics.
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In closing, I'd like to assure the Subcommittee that the Wilson Administration is strongly committed to CALFED. Governor Wilson supported Proposition 204 which provided moneys to jump start some of the environmental content of this program. Yesterday, the Governor met—this was mentioned earlier I realize, but it's worth reminding ourselves—that the Governor met yesterday with Secretary Babbitt. They agreed to a strategy for moving ahead on CALFED this year. The Governor at the same time announced that because of the healthy state of the State's economy, in his May revisions, he was able to dedicate almost another $30 million of the State's budget to the CALFED process. He, at the same time, directed $170 million to the flood control subventions in California—an area where we've fallen behind in meeting the State's obligation.
The Governor has proposed a 1998 water bond which would provide additional seed money to keep the CALFED process rolling. I would assume that eventually a larger bond or additional bonds will be required to implement the full $10 billion program that is evolving in the CALFED process.
In closing, I would like to submit for the record the Governor's letter to Chairman McDade and I'm not going to read the letter—I'd like to read two sentences from the letter. ''Dear Mr. Chairman, I would like to take this opportunity to share with you California's priorities among the programs funded through the Energy and Water Development Appropriations bill. My top priority continues to be full funding for the $143.3 million requested in the President's budget as the initial Federal contribution toward the restoration of San Francisco Bay Delta.'' The letter goes on and identifies other priorities of the Governor's, but I thought it was important that you hear his first priority. Thank you.
[The information referred to may be found at end of hearing.]
[The prepared statement of Mr. Potter may be found at end of hearing.]
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Mr. DOOLITTLE. Thank you.
Our next witness is Mr. David Yardas, senior analyst for the Environmental Defense Fund from Oak—from California. Mr. Yardas.
STATEMENT OF DAVID YARDAS, SENIOR ANALYST, ENVIRONMENTAL DEFENSE FUND, CALIFORNIA
Mr. YARDAS. Thank you, Mr. Chairman and members of the Subcommittee. I appreciate the opportunity to testify on the issue of CALFED financing. I did submit a fairly lengthy statement for the record, so I'll attempt to just touch briefly on a couple of points from that now in my oral comments and address specifically a couple of the issues that you identified up front.
Just for perspective, I want to be clear that the Environmental Defense Fund, both on its own part and working through the Bay area-based Environmental Water Caucus is—takes CALFED very seriously and is very much committed to CALFED and the consensus that was—set CALFED in motion through the Bay-Delta Accord to which we were signatory. That doesn't mean that it's easy or that we always see eye-to-eye on some of these matters as you heard on the first panel and no doubt as we'll get into on this one and those that follow. That said, my organization, in particular, views the issue of finance—that is, who is going to pay for what out of CALFED as perhaps one of the most, if not the most, fundamental issues to be addressed.
I have personally spent the—better part of the last 3 years involved in the deliberations of the BDAC Finance Work Group or subcommittee attempting to wrestle with at least two of the issues that you asked: how will future needs be financed, and what about the mix of beneficiaries versus public. How will those issues be addressed? We have struggled in attempting to come up with a consensus on how to proceed on that front. I think it is correct to say that most folks agree that a beneficiaries pays principle-based approach makes a lot of sense. We have expressed some major concerns from the very outset, however, that the fundamental problem with the benefits-based approach taken literally is that it essentially assumes a level playing field from the outset. We are mindful of the criticisms that have been made that looking backward is nothing but divisive and unproductive. On the other hand, we feel that there is a need to take an honest look at how we got to the need for a Bay-Delta Accord and a CALFED process in the first place in order to meaningfully address the important issue of finance and what defines an equitable allocation of costs.
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The BDAC Finance Committee, and the CALFED Phase II draft to its credit, identifies an important question with regard to the benefits-based approach, and that is whether or not any adjustment for past impacts is appropriate prior to using the benefits-based approach. This is a matter of ongoing work in the Finance Committee discussions in particular and I know in CALFED's efforts as a whole. The Environmental Defense Fund certainly thinks that the answer is resoundingly yes—that any reasonable accounting for the prior investments and prior impacts of water development will and must acknowledge that the playing field is not level, that the important funds that have been provided or authorized to-date for ecosystem purposes are a good start but are nowhere near to the point where we've reached a quid pro quo kind of situation, as has been argued in the context of the Governor's water bond proposal, at least prior to yesterday's announcement. (I'm still trying to understand exactly what was announced yesterday and what it means for the pending water bond measure.)
But in any case, where we come out at this point, what we would recommend as a way to move forward, and the position that we've taken in the BDAC discussions can roughly be summarized as follows: That partnership funding, public and user-based funding, ought to be available to fund the common programs of CALFED pretty much across the board. We would support that. That seems like a reasonable way to proceed. However, when it comes to the more controversial issues of new dams and conveyance—large conveyance facilities through the Delta—we feel quite strongly that those should be looked at as new water projects and that they should be paid for by the beneficiaries—the direct beneficiaries, the users—who will benefit from those projects which are made necessary by all of the water development primarily that we've done in the past.
We recognize that not only water development—and particularly the State and Federal projects—can be assessed blame for the past. That's why we supported, joined with our urban, agricultural and business sector colleagues in a somewhat controversial—in our community—push for public funds to the exclusion of user mitigation funds under Proposition 204 and the Bay Delta Act. But that said, we will continue to support partnership work and recommend that funding be provided in that way for common programs, but that—I guess what it comes down and what it reflects back on is the prior panel: Somehow price really matters when it comes to how we perceive moving forward in CALFED. CALFED's about a new way of doing business, and we think that making sure that true cost-price signals accompany newly developed water is a fundamental part of the equation. I'd be happy to go into that more in a question and answer, given that my time is up. So, thank you.
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[The prepared statement of Mr. Yardas may be found at end of hearing.]
Mr. DOOLITTLE. Thank you.
Our next witness is Dr. Tim Quinn, Deputy General Manager of the Metropolitan Water District of Southern California.
STATEMENT OF TIMOTHY QUINN, DEPUTY GENERAL MANAGER, METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
Dr. QUINN. Thank you, Mr. Chairman, members of the Committee. Like everyone else, I very much appreciate the opportunity to present some of my views here this afternoon.
My name is Timothy Quinn. I'm Deputy General Manager of the Metropolitan Water District of Southern California. I would also point out I'm one of five panelists appearing before you today to sit on the Ecosystem Roundtable and have some responsibilities for providing advice about the expenditure of CALFED moneys.
Primarily, I am here, as Tom Berliner was, as a representative of the Bay-Delta Urban Coalition and my testimony has been reviewed by a committee, North-South, so that it would reflect a broader spectrum of interests. I would like to try to be responsive to the questions that you posed to this panel by briefly describing four key principles that the Urban Coalition believes will be important in developing a successful financing plan. They're discussed in more detail in my written submitted testimony.
The first principle is that the finance plan must be founded on a CALFED solution that generates widespread value. The concept is simple. First, create value so that you create willingness to pay amongst the people who are going to be asked to contribute financially. We believe that CALFED, for the first time in a generation, offers the opportunity to create value for the environment and for water users in California. For the environment, we're talking about moving into the 21st century and restoring health to the ecosystem through a historically unprecedented ecosystem restoration investment program. For urban California, substantial improvements are possible in the source quality of our drinking water. We see the possibility of creating a stable infrastructure upon which we will build economic prosperity in the future. For agriculture, we're talking about moving into a new era of natural resource management in the 21st century in a way that sustains and strengthens the largest agricultural economy in the Nation. Those are values that we think people are willing to pay for in California through one means or another. Just as the benefits are widespread, we are firmly convinced that the finance plan must have a diverse source of funds.
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The Urban Coalition has long taken a position in favor of user fees as a primary funding source for CALFED solutions, but we also recognize that many of the benefits of a CALFED-preferred alternative are going to be broadly spread and that justifies some participation by State and Federal taxpayers. Exactly how that mix comes together, we're going to have to tackle that question over the next 6 months as we define a preferred alternative consistent with the direction that we're receiving from the Governor and from the Secretary of Interior this week.
I also would emphasize the importance of acting favorably on the appropriations request of the Clinton Administration for keeping the ecosystem restoration elements forward moving.
The second principle is that CALFED must provide benefits at the lowest possible cost. It's not enough to just look at cost allocation. We think this Committee and all others involved in this process have to look hard at the overall price tag. Quite frankly, we believe the $9–$11 billion of estimated costs is too high and the urban community is committed to working with the CALFED agencies and others to find the lowest-cost package that achieves the benefits that can be obtained through the CALFED process.
Principle three: We believe the costs should be shared consistent with the beneficiaries pays principle and that costs should be allocated in a mutually agreeable manner. The beneficiaries pays principle—it comes off the lips easily. We believe there's a lot of devil in the detail here. We are extremely concerned that an arbitrary or academic application of that principle could backfire and upset the whole process. For that reason, we're recommending that the beneficiaries pays principle be implemented to the maximum degree possible by coming up with mutually agreeable allocations of cost. We think that approach will give those who are expected to help pay a voice in defining whose benefiting and by how much. We think it will produce the best alignment of benefits and costs. In the end, it will underscore the importance of assurances to all the parties as we move forward to a preferred alternative.
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The final principle—somewhat in counterpoint to the point made by Dave Yardas—is that we believe the finance plan must be based on a prospective assessment of value and not on a retrospective assignment of blame.
To be successful, CALFED has to look forward. We don't think it's possible to agree on who's responsible or who should be blamed for what problems are in the system today. More importantly, we think the debate itself is counterproductive. Blame does, we think, lead back to divisiveness and to the gridlock that CALFED gives us the opportunity to leave behind us. We would urge that financing decisions be made on the basis of prospective assessments of who's going to gain value from the implementation of a solution and who's going to help pay for that solution.
Let me close on an optimistic note. We believe there's an enormous opportunity here for creating value for California, for agricultural and urban water users and for the environment. We think that there's a lot of work to be done, but that by the time we get to the end of this year, we will have an agreeable financial plan that backs up a preferred alternative that's going to benefit California as we move into the 21st century.
[The prepared statement of Mr. Quinn may be found at end of hearing.]
Mr. DOOLITTLE. So, Dr. Quinn, you actually believe you'll have that by the end of this year?
Dr. QUINN. I think we'll have principles that define a financial plan consistent with the direction we're getting from the Governor and the Secretary of Interior. That they would like to come to some agreement on a single preferred alternative by the end of the year. I would point out that I'm known in the water community as quite an optimist.
[Laughter.]
Mr. DOOLITTLE. Thank you.
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Dr. QUINN. My optimism has proven justifiable on many occasions in the past, however.
[Laughter.]
Mr. YARDAS. What we sometimes use is a slightly different term—but that amounts to the same thing.
[Laughter.]
Mr. DOOLITTLE. Mr. Potter, what's the average shortage—in an average water year—what's our shortage, according to your department?
Mr. POTTER. I believe you quoted the number earlier—that about—I don't have 160 in front of me and I don't do a very good job with numbers, but I think that number is right.
Mr. DOOLITTLE. OK. I think the figure I quoted was 1.6 approximately and in a drought year, it's 5.2 presently. So anyway——
Mr. POTTER. Those are consistent with my recollections. I don't—I didn't bring the bulletin with me.
Mr. DOOLITTLE. OK, could you check on that and verify it——
Mr. POTTER. Certainly, certainly.
Mr. DOOLITTLE. [continuing] for the Committee?
Mr. POTTER. Could I comment just a little bit on the 160 process itself?
Mr. DOOLITTLE. Yes, that's a good——
Mr. POTTER. You know, the State developed the California water plan in 1957, published it and it was adopted by our legislature. At the time it was agreed that it would be periodically updated. The Bulletin 160 series is the series in which we do those updates. If memory serves me correctly, the first update was in the 1960's—some 35 years ago or so. I think this is either the sixth or seventh update. It's easy to go back and take a look at whether or not our crystal ball has been any good. Sometimes we're high and sometimes we're low. In the final analysis, we're guessing the future—there's an old Arab proverb to the effect that he who foretells the fut