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57–837 l




before the


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Serial No. 106–27

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Printed for the use of the Committee on Resources

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


DON YOUNG, Alaska, Chairman

W.J. (BILLY) TAUZIN, Louisiana
JIM SAXTON, New Jersey
JOHN J. DUNCAN, Jr., Tennessee
KEN CALVERT, California
RICHARD W. POMBO, California
WALTER B. JONES, Jr., North Carolina
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JOHN PETERSON, Pennsylvania
RICK HILL, Montana
DON SHERWOOD, Pennsylvania
ROBIN HAYES, North Carolina

NICK J. RAHALL II, West Virginia
BRUCE F. VENTO, Minnesota
DALE E. KILDEE, Michigan
FRANK PALLONE, Jr., New Jersey
CALVIN M. DOOLEY, California
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ADAM SMITH, Washington
WILLIAM D. DELAHUNT, Massachusetts
CHRIS JOHN, Louisiana
RON KIND, Wisconsin
JAY INSLEE, Washington
TOM UDALL, New Mexico
MARK UDALL, Colorado
RUSH D. HUNT, New Jersey

LLOYD A. JONES, Chief of Staff
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
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CALVIN M. DOOLEY, California
ADAM SMITH, Washington

ROBERT FABER, Staff Director/Counsel
JOSHUA JOHNSON, Professional Staff
STEVE LANICH, Minority Staff


    Hearing held May 20, 1999

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

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


THURSDAY, MAY 20, 1999
House of Representatives,
Subcommittee on Water and Power,
Committee on Resources,
Washington, DC.

    The Subcommittee met, pursuant to call, at 11:10 a.m. in Room 1324, Longworth House Office Building, Hon. John Doolittle [chairman of the Subcommittee] presiding.
    Mr. DOOLITTLE. Subcommittee on Water and Power will come to order. We're meeting today to hear testimony on the California Central Valley Water Management. First session of the hearing will be devoted to issues regarding the California Bay-Delta program. And during the second half the hearing, we'll discuss the implementation of the Central Valley Improvement Act.
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    This hearing concerns water management in the Central Valley of California, it involves some of the most important issues we will consider in this Congress. It represents a major Federal, State and local commitment to solving California's water needs and sets the stage for future water management policies and facilities in the State of California.
    I believe that the participation of Secretary Babbitt and Secretary Nichols indicates both the importance of this issue as well as an opportunity to discuss among some of the major policy leaders the steps we need to take to provide for California's water management future.
    While I recognize that there are other pressing issues we will discuss, it is encouraging to see that the stakeholders have agreed that $35 million of the CALFED funding for next year should be allocated for activities that address water quality and water supply issues. Although I don't believe that this sum goes far enough in addressing the needs for additional water supply, it does represent an important acknowledgment and commitment for augmenting California's future water supplies.
    Today I would like to address four areas of specific interest to the Subcommittee regarding water management and the Central Valley of California. These areas include ecosystem criteria, and performance standards, the development of a cross-cut budget, augmenting our current water supply and addressing where we are going with the CALFED program.
    We need to ensure that there are adequate criteria to evaluate the effectiveness of CALFED's restoration program. Not only do we currently lack many of the project descriptions to be undertaken by CALFED, but we have a shortage of measuring sticks to determine when we have achieved a specified goal once the money has been spent. The CALFED program must incorporate milestones and objective measurements that define the future essentials of success as well as when specific goals have been met.
    The Committee is concerned that the Federal agencies involved in the CALFED program are not coordinating the myriad of activities going on in the watersheds under restoration. I am currently discussing with the congressional support agencies a way to determine how fundings are currently being accounted for and how an effective cross-cut budget should be prepared. Last night we receive the long-awaited program-level cross-cut budget for the expenditures dedicated to the CALFED program. Today I seek Secretary Babbitt and Secretary Nichols' commitment to develop the more comprehensive project-level cross-cut budget, which identify all Federal and State expenditures being allocated to achieve the objectives being pursued by the CALFED program.
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    Our existing water management systems can no longer provide a sufficient reliable water supply to meet the needs of the environment and our current water users. How are we going to develop the process to meet the future California urban, rural, agriculture, business, labor and environmental water needs if we can't even meet our current needs? Conservation, transfer and adaptive management are part of the solution, but they are not enough by themselves.
    Storage needs must be addressed immediately for two reasons. First, the demand for water in California currently exceeds the supply during normal years, and according to the California Department of Water Resources and CALFED's own documents, this shortage will grow to between 3 and 7 million acre-feet a year in the year 2020. If we do not immediately begin to address these needs, we will lose the valuable time necessary to prepare for this occasion.
    Twenty years ago computer programmers knew the phenomenon we now call the Y2K bug, and they knew that would have to be addressed, yet policymakers failed to act until very recently. The results are far greater costs and the risks of significant dislocations. Surely we have the wherewithal to avoid these mistakes in water.
    I do not believe that these concerns present insurmountable obstacles. Rather, they represent reasonable attainable goals which should reflect the way government conducts its business. The CALFED partnership represents potential funding in the billions of dollars. It has the potential to be used to enhance the water quality and environmental resources in the Bay-Delta as well as for other water resource activities in California. Yet how it is administered will be a test of government's ability to transition to a smarter, more efficient, less coercive mode of operation.
    Finally, I believe that we need to continue our scrutiny of the Central Valley Project Improvement Act. The implementation of this Act not only has a significant impact on the CALFED program, but it also is an indication of whether or not the government can approach these water problems in a constructive manner or will continue to do so with a heavy hand.
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    In my conversation yesterday with Secretary Nichols I was encouraged with the spirit of cooperation that she extended. I look forward to hearing the testimony and discussing the future of California's water management with the witnesses and will now recognize our Ranking Member Mr. Dooley for his statement.
    [The information may be found at the end of the hearing.]

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

    Mr. DOOLITTLE. Mr. Miller.

    Mr. MILLER. So I don't shock people, but I would like to associate myself with Mr. Dooley's remarks, and if I could include my opening statement in the record.
    Mr. DOOLITTLE. Yes, without objection, so ordered. And that will certainly be the case for any of the other Members who wish to incorporate their statements into the record.
    [The prepared statement of Mr. Miller follows:]
    Mr. Chairman, I appreciate the participation of Interior Secretary Bruce Babbitt, Assistant Secretary Patricia Beneke, California Resources Secretary Mary Nichols, and all other witnesses who will participate in today's hearing. We have an ambitious schedule today, and my remarks will be very brief.
    The timing of this hearing is certainly interesting:
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    • A Federal judge in Fresno has just ordered the Interior Department to comply with the Central Valley Project Improvement Act.
    • The United States Supreme Court just refused to intervene in the case involving the Friant Unit contracts.
    • The long-awaited Flow Study for the Trinity River will be released, perhaps as early as next week.
    • And CALFED will reach another milestone in a few weeks when the revised draft EIS/EIR is released along with the draft preferred program alternative.

    The convergence of these California water events is a reminder that California water issues are a reflection of the vibrant growth and energized nature of our State. Nowhere else in the West is water truly a statewide issue with direct impacts on the daily lives of tens of millions of people. We have a real opportunity in California to demonstrate our ingenuity and to devise the best and most creative ways to use our water resources responsibly. The CVPIA and CALFED are the tools we have at our disposal, and we have to make them work together.
    I continue to support the goals of the CALFED program, and I will work hard to secure the funding we have requested for the coming fiscal year. I hope we can get the entire California delegation to support us. The CALFED team has very effectively responded to the concerns raised during the last budget cycle.
    I also look forward to working with Chairman Doolittle, the California Delegation, and the CALFED stakeholder community, to promptly enact legislation to extend the spending authority for the CALFED Bay-Delta programs. We cannot put this critical program at risk by allowing the funding authority to expire.
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    While there are many benefits associated with the CALFED process, we have to keep a close eye on where we are regarding implementation of the CVPIA. The CVPIA is designed to make basic changes in the priorities of Federal water policy in California, changes that inevitably impact traditional water uses and water users. Implementation of the law has been proceeding, but at a slower pace than many of us would prefer. I am working closely with Secretary Babbitt as we close the gaps on CVPIA implementation, and I am confident the fundamental precepts of this law are sound and that challenges to the implementation of the law will not prevail.
    There are too many issues, and not enough time. I appreciate the cooperation of everyone who participates in the development of CALFED and the constructive implementation of the CVPIA. I look forward to hearing the statements of our witnesses today.

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

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

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

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

Importance to the Davis Administration

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

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

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

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

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

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

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

CALFED Funding

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


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

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

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

  Increased commitment from EPA and other key agencies to help urban agencies achieve drinking water quality goals; timely achievement of a long-term target for bromate or bromates for total organic compound and for total dissolved solids through a combination of higher source quality protection and new treatment technology; the creation of a Delta Drinking Water Council, a Delta Ecosystem Restoration Authority and an overall CALFED management entity with fair and balanced stakeholder representation on each; keeping the dual conveyance option on the table for further study; completing feasibility studies and beginning construction of a North Delta diversion to mitigate environmental actions detrimental to water quality.
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    The urban agencies have made it clear in the CALFED process that these are the water quality issues that must be addressed. We remain helpful and optimistic this will be done.
    In closing, Mr. Chairman, let me say that I have also included in my written testimony an additional list of issues which relate to those elements of concern to urban California and that is water supply reliability. And I will only respond to those if you ask for additional comments.
    I would like to thank you and your Committee for the continued support for holding this hearing and to indicate the urban support for continued funding and the continued oversight of this CALFED activity. Thank you very much.
    Mr. DOOLITTLE. Thank you.
    [The prepared statement of Mr. Sprague follows:]
    Representatives of the Bay-Delta Urban Coalition(see footnote 1) have been active participants in the CALFED Bay-Delta Program to develop a long-term, broad-based consensus agreement for improving the California Bay-Delta Estuary. Our Coalition, consisting of 11 urban water agencies, collectively supplies water to over 22 million people in urban communities around the State of California; communities that form a cornerstone in the state's thriving economy.

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

    • Increasing commitments from EPA and other key agencies to help urban agencies achieve water quality goals for human consumption.
    • Providing for the timely achievement of long-term targets of 50 ug/l for bromide, 3 mg/l for total organic carbon and 150 mg/l for total dissolved solids through a combination of higher quality source water and new treatment technology. Timely means prior to the time that EPA or CDHS require additional treatment based on source quality which exceeds these levels.
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    • Creating a Delta Drinking Water Council, Delta Ecosystem Restoration Authority and overall CALFED management entity with fair and balanced stakeholder representation on each.
    • Keeping the dual conveyance option on the table. Begin planning and feasibility studies for the isolated facility portion of the dual conveyance option in Stage 1 and define a clear procedure for the decisions on construction.
    • Completing feasibility studies and beginning construction of a North Delta diversion to mitigate environmental actions detrimental to water quality. Such diversion must first be assessed and mitigations identified for its impacts on the Mokelumne fishery.

    It is imperative urban water agencies see action in the CALFED Program in the near-term to address water quality issues. We must be able to demonstrate to our Boards and consumers that CALFED, state and Federal agencies are serious about public health protection as it relates to water quality. Continued support for the CALFED Program hinges on our ability to show CALFED action in this direction.

Other Priority Issues of Concern:

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

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

    Mr. DOOLITTLE. Well, ladies and gentlemen, I have some good news and some bad news. The good news is you're going to get to have an hour off for lunch. The bad news is it's an hour that we'll have to interrupt at this point. There are a series of votes. The first one is a 15-minute vote, then two 5-minute votes, a little discussion, and then another 15-minute vote, so it makes sense at this point to suspend operations.
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    When we do come back there will be no more votes out on the floor, so we should be able to move fairly expeditiously through the remainder of the hearing.
    So, with that, we stand in recess until 2:15.
    [Whereupon, at 1:15 p.m., the Subcommittee recessed, to reconvene at 2:15 p.m., the same day.

    Mr. DOOLITTLE. The Subcommittee will reconvene. We're going to begin.
    I don't see Mr. Guy here. We'll start with Mr. Don Kaniewski.

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

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

    Mr. GUY. Thank you, Mr. Chairman and members of the Committee.
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    My name is David Guy. I am the Executive Director for the Northern California Water Association. The Northern California Water Association represents 65 agricultural water suppliers in northern California as well as counties and local business leaders.
    I am today going to give you an agricultural perspective on the CALFED process and would like to start off by indicating that we are also part of this coalition that supports the fiscal year 2000 appropriation.
    One of the reasons that we support the fiscal year 2000 appropriation is that we see a shift towards a more balanced program, as just indicated by the previous panelist; and we think that this is very significant and very important for the agricultural community.
    There are three pieces of this program that I would like to talk a little bit about that are particularly significant; and this will, I think, shed some light on both the successes and some of the potential shortfalls in the CALFED process as we see it.
    One of the most positive efforts we have seen in the State are the fish passage improvements that have been made throughout the State. Secretary Babbitt this morning mentioned Butte Creek and held that out as a great example, and he's right. In the Appendix A to our written testimony we list a sample of the water and the fish passage improvements that have been made in the Sacramento Valley; and these have been true win-win type solutions and are really, I think, the essence of what CALFED should be all about. It improves the ecosystem, and it improves water supply reliability. This has been real positive, and we need to build upon this part of the program.
    The second piece is the integrated storage investigation, and although we feel that in the past that not enough attention has been paid to storage within the CALFED process, we are very encouraged that we are starting to see some progress, and the integrated storage investigation is a good indication of that.
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    The bottom line is that we need to augment the supplies in the State of California to meet not only current demands but also future demands in the State. This will require storage not only north of the Delta, but in the Delta, south of the Delta and in southern California, and that will be essential to maintain this balanced program as part of the CALFED program.
    Finally, the third point that I want to touch on is land acquisition. Land acquisition is, again, something that we have significant concern with, and there's a lot of concern in the rural communities in California about the land acquisition part of CALFED. Because what we would like to suggest is that we recognize that there is some land acquisition that will take place and needs to take place and that we make sure that we have responsible land acquisition.
    We have outlined in our testimony some steps that we believe are important to assure that we have, in fact, responsible land acquisition as part of CALFED. Some of these measures are under way and others will need to be pushed as we go forward in the CALFED process.
    The most important thing about the land acquisition is that we try to avoid the redirected impacts. And that's, of course, one of the solution principles in the CALFED process and is really essential to assure that rural communities are protected in California in the CALFED process.
    We're also encouraged that public lands are being looked at rather than private lands when that is possible and when it's conceivable.
    We're looking forward to the EIS/EIR that will be coming out, and we are hoping that this document will give adequate attention to the agricultural and rural resources in California. We think that this is very important, and it will send a strong message to rural California about how we are going to treat those resources.
    So, with that, I would just like to say that we are very positive about CALFED. We recognize that there are some serious shortfalls, but we feel positive that we can overcome that and that we will and that the fiscal year 2000 appropriation is a good starting place to begin that process. We'll have to keep moving forward to ensure that we have a balanced program that will, in fact, benefit not only agriculture but also all the other sectors of the California economy and the environment.
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    Thank you.
    Mr. DOOLITTLE. Thank you.
    [The prepared statement of Mr. Guy follows:]
    Mr. Chairman and members of the Subcommittee, my name is David Guy. I am the Executive Director of the Northern California Water Association (NCWA). NCWA is a non-profit association representing sixty-five private and public agricultural water suppliers and farmers that rely upon the waters of the Sacramento, Feather and Yuba rivers, smaller tributaries, and groundwater to irrigate over 850,000 acres of farmland in California's Sacramento Valley. Many of our members also provide water supplies to state and Federal wildlife refuges, and much of this land serves as important seasonal wetlands for migrating waterfowl, shorebirds and other wildlife. I appreciate the Subcommittee's inclusion of my written testimony in today's hearing record.
    We appreciate the opportunity to provide the Northern California perspective on CALFED. NCWA has actively participated in the CALFED process, as a signatory to the 1994 Bay-Delta Accord and a participant in the development of California's Proposition 204, the Federal Bay-Delta Security Act (Pubic Law 104-333) and the CALFED Revised Phase II Report. Two representatives of NCWA's Board of Directors, Chairman Don Bransford and Director Tib Belza, currently serve on CALFED's Bay-Delta Advisory Council (BDAC). NCWA is also a member of the Ecosystem Roundtable—the entity chartered to allocate state and Federal ecosystem restoration funds.
    The Subcommittee's interest in water management in California's Central Valley and particularly the CALFED Bay-Delta Program (CALFED) is appropriate given the importance of a successful resolution to the environmental and water supply problems in the Sacramento–San Joaquin River Delta and San Francisco Bay (Bay-Delta). The Bay-Delta is a tremendous economic and environmental resource to California and the Nation, and there is much at stake in how CALFED implements its numerous ecosystem restoration and water management actions. Both the Department of Interior and the California Resources Agency's testimony today before this Subcommittee will be very useful for private interests participating in this process.
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    NCWA has been invited today to discuss the status of the CALFED program from an agricultural perspective. It was a year ago (May 12, 1998) that we provided testimony to this Subcommittee on the CALFED program and particularly the allocation of Federal funds for ecosystem restoration. Since that time, there has been good progress in certain parts of the CALFED program and very little progress in others.
    Most notably, CALFED late last year issued its Revised Phase II Report. This report was significant for several reasons. First, it gave CALFED a needed boost to sustain the program. More importantly, the discussions leading up to the report revealed the need for CALFED to begin broadening its scope to show progress not only for the ecosystem, but also with respect to water management and the water supplies that will be necessary to satisfy the growing demands for water in California.
    Like many others, we will provide detailed comments to CALFED when it releases its draft Environmental Impact Statement (EIS)/Enviromnental Impact Report (EIR) and another revised Phase II report this summer. Our testimony cannot and will not cover every CALFED issue. Today, we will focus on the four general CALFED programs that most directly affect the farms, cities and the environment in Northern California: (1) fish passage improvements; (2) surface and groundwater storage; (3) rural land acquisition and (4) water acquisition.

1. Sacramento Valley Fish Passage Improvements

    A major success in Central Valley water management is the fish passage efforts in the Sacramento Valley to jointly improve the ecosystem and water supply reliability. These projects are the type of programs that CALFED was formed to develop and implement. These projects also embody CALFED's overall mission ''to develop a long-term comprehensive plan that will restore the ecosystem health and improve water management for beneficial uses of the Bay-Delta ecosystem.'' If successful, CALFED will rehabilitate native fish and wildlife species and their habitat in the Bay-Delta system, and increase water supplies and reliability for California's cities, businesses and farms. One measure of success in the overall program is an improving environment, achieved in part by implementation of restoration projects that resolve known problems. A good example is the installation of fish screens on agricultural diversions to prevent the entrainment of fish species. Program success can be measured by decreasing regulatory disruption of water project operations, and reduced regulations on individual agricultural water suppliers and farmers.
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    Many of the private interests following CALFED, such as Sacramento Valley agricultural water suppliers and farmers, are financially participating in cost-share arrangements with CALFED agencies on specific restoration projects. Nearly a dozen water suppliers throughout the Sacramento Valley are engaged in the study, design or construction of a fish screen or passage project to protect candidate, threatened and endangered fisheries. Rather than describe every project in detail, we have instead enclosed Appendix A—a sample of the fishery projects that have either been completed or are underway by NCWA members in the Sacramento Valley.
    Some of these projects are now complete, such as Western Canal Water District's Gary N. Brown Butte Creek Siphon Project. This unique project resulted in the installation of a concrete siphon to convey agricultural water supplies under Butte Creek, allowing the removal of several small dams that historically hindered spring-run salmon migration to spawning habitat. Completion of this project illustrates the effectiveness of restoration actions in providing immediate benefits to the environment; in this case for spring-run salmon, presently listed as a threatened species under California law and proposed for Federal listing—and for the local community and area farmers who benefit through development of a more reliable water supply.
    As with Western Canal's farmers, other agricultural water users in the Sacramento Valley have a vested interest in ensuring state and Federal funds are effectively managed to ultimately improve the fishery, and alleviate regulatory mandates. Their participation is based on the belief the projects will succeed, and are an effective way to restore fisheries and protect landowners from burdensome regulations. Although many projects are either completed or underway, there are many more similar projects that can serve both the environment and water supply reliability. CALFED has been and can continue to be successful in promoting and encouraging these types of projects.

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2. Integrated Storage Investigation

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

    CALFED plans to implement projects that will replicate natural processes associated with instream flows, stream channels, watersheds and floodplains. CALFED proposes to accomplish this objective primarily by the acquisition of farmland and water supplies to create river meander corridors, riparian forests, and increased instream flows. As an example, CALFED's Ecosystem Restoration Program recommends the implementation of nearly 700 actions over a thirty-year period; however, work has already begun on several of the program's main elements. As a further example, CALFED's earlier draft environmental impact report and impact statement, released in March 1998, recommended the acquisition of roughly 200,000 acres of Central Valley farmland (30,000 acres in the Sacramento Valley) to meet certain goals outlined in the Ecosystem Restoration Program.
    The proposed implementation of these particular actions raises legitimate concerns for upstream and downstream communities, landowners and water suppliers. In this regard, it is important that Congress and CALFED understand the groundswell of opposition and concern that is developing in agricultural and rural communities throughout California in response to the large-scale land acquisition program that is being undertaken as part of CALFED and several other programs in California. The Wall Street Journal article entitled ''U.S Land-Buying Program Leaves County in the Dark—and Furious'' provides a glimpse into this problem in Northern California. (See May 5, 1999, CAl.)
    CALFED's staff acknowledges the scientific uncertainty underlying the potential benefit to fish and wildlife from these actions. River meander and riparian forest projects necessarily require the acquisition of land along a river or stream in order, for example, to allow the river to inundate land during high flow periods. There are numerous consequences that may arise as a result of these projects, including river level and flow fluctuations and increased sediment and debris loading, which threaten existing water diversions and fish screens. Due to the unpredictable nature of these projects, and the risks they present, NCWA encourages CALFED to initially focus on restoration actions that fix known fish and wildlife problems. NCWA recognizes, however, a limited number of actions that attempt to replicate natural processes may be necessary to restore habitat for at-risk species.
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    There are several specific steps CALFED should consider before embarking on a large-scale river meander plan in order to avoid adverse social, economic or environmental affects to local communities, landowners, and water suppliers. This is consistent with CALFED's stated principle of implementing actions and a long-term plan that does not result in the redirection of adverse impacts.
    As a first step, CALFED must attempt to utilize public lands with similar ecological characteristics prior to acquiring private property to achieve restoration measures. If public lands are unavailable, conservation easements, rather than outright fee title acquisition, should be a priority, and all acquisitions must be voluntary
    Second, there is concern that the EIS/EIR has not adequately analyzed the potential impacts to the existing environment, which specifically includes agricultural resources under both the California Environmental Quality Act (CEQA) and National Environmental Policy Act (NEPA). CALFED actions have and will result in significant impacts to the agricultural resource base in California, including agricultural land, agricultural water supplies and water quality. In a nutshell, this is the existing environment as it is utilized for agriculture. These actions will have socioeconomic impacts to local communities, local jurisdictions and local economies. CALFED should develop a plan to either avoid or to adequately mitigate for agricultural impacts. A meaningful plan will be critical for CALFED to gain confidence in rural areas and to assure that long-term environmental goals are accomplished in CALFED. Completion of both CEQA and NEPA requirements should be initiated before the acquisition of private property.
    Third, CALFED's top-down approach to land-use planning where Federal and state agencies, by either purchasing land or by funding land acquisition, are dictating local land use policies with little local participation in this process. Put differently, there is a deep concern in local communities that CALFED and its member agencies are usurping the land use authority that has traditionally resided in local governments, including counties and cities. There has been progress made by CALFED to incorporate local governments in the funding process for ecosystem projects, but much more effort needs to be made in this regard. Establishment of a representative public process to ensure local involvement must be a cornerstone of any land acquisition program.
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    Fourth, there has been little, if any, progress on developing assurances that water suppliers and landowners will not be adversely affected by CALFED or its member agencies acquiring adjacent or nearby lands for habitat purposes. NCWA in concert with water users in Northern California has developed an assurances package that we believe will protect and encourage cooperating landowners and local agencies that allow restoration projects on their lands or on nearby lands. We believe that this is a very constructive approach to advance the ecosystem goals in the CALFED process while providing reasonable and necessary assurances to landowners and local water suppliers. The bottom line is that CALFED must adopt clear assurances, or legal guarantees, that address issues of liability for future damage resulting from project implementation, as well as local tax and assessment responsibility. We look forward to working with CALFED and other interested parties on this proposal.
    Finally, in this regard, NCWA has encouraged CALFED to consider adoption of a pilot program that may serve as a model for its future projects involving land acquisition. Although the specific principles of our recommendation are still under development, our goal is to accomplish restoration actions compatible with economic activities, including farming, water district operation and flood control protection.

4. Water Acquisition

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

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

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

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NCWA: Local Fishery Projects in the Sacramento Valley

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

1. Browns Valley Irrigation District

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

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

3. M & T Chico Ranch

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

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4. Maxwell Irrigation District

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

5. Natomas Central MWC

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

6. Pelger Mutual Water Company

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

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

8. Reclamation District 108

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

9. Reclamation District 1004

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

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

11. Tehama-Colusa Canal Authority

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

12. Western Canal Water District

    The Central Valley Project Improvement Act and the Anadromous Fish Screen Program have identified several projects within the Butte Creek watershed that would improve fishery resource conditions, specifically spring-run chinook salmon and steelhead trout. A number of these projects at Durham-Mutual, Rancho Esquon (Adams Diversion Dam), and Gorrill Land Company (Gorrill Diversion Dam) are scheduled to be constructed during 1998 and 1999. The Western Canal Water District $11 million siphon project completed last year features construction of a siphon under Butte Creek to transport irrigation water across the creek without impacting migrating salmon, including the spring-run chinook—a fish recently designated as a threatened species by the California Fish and Game Commission. As a direct result of this work, several existing barriers to migrating fish will be removed.
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13. Lower Butte Creek Project—Sutter Basin Butte Sink Water Users Association, Reclamation District 1004, RD 70, Butte Slough Irrigation Company, RD 1500, Butte Sink Waterfowl Association, Western Canal, RD 1660.

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

14. Yuba County Water Agency

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

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

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

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

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

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

    Mr. KING. Thank you. My name is Dennis King. I'm senior research scientist at the University of Maryland Center for Environmental Science, and direct that Center's Natural Capital Research Group. I am also managing owner of a consulting firm, King & Associates, where we specialize in natural resource accounting and environmental assessment and mitigation trade scoring.
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    A great deal of my research, consulting and teaching involves the economic aspects of environmental restoration. I'm currently working on projects related to wetland mitigation, riparian buffer construction, prioritizing investments in noxious weed eradication and fishery habitat problems. I'm also writing a book for Columbia University Press entitled, Economics of Ecological Restoration.
    I currently live in Maryland, but until 10 years ago I was a California resident. I also have family out there, so I have some personal interest in the issue of California ecosysytem restoration.
    I'm here simply to encourage the use of clearly defined investment indicators to prioritize and manage CALFED ecological restoration investments and to recommend perhaps that CALFED be managed as an exercise in what Wall Street investors or businessmen would call integrated risk management.
    My written testimony has some details on the differences between investment indicators versus performance indicators. The basic difference is that investment indicators are leading indicators of success. The analogy on Wall Street would be the criteria used to pick stocks which include risks and expected financial returns, as opposed to the performance criteria, which would pretty clearly be defined as the rate of return in your investment.
    The concept of integrated risk management is described in more detail in my written testimony. It's really just a practical way to implement adaptive ecosystem management. It involves managing individual investments in ecosystem restoration as part of a portfolio, managing those risks that can be managed, carefully monitoring indicators of those risks that are uncontrollable and, mostly importantly and most difficult, responding quickly when risk factors change. This is particularly difficult in the case of ecosystem restoration which involves applications of technologies and science that are relatively new; and subject to lots of vagaries related to floods, droughts, fire, invasive species, water diversion and so on.
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    I have arrived at this conclusion that using investment criteria is more important than using performance criteria based on three general experiences dealing with the failure of ecosystem restoration which I think were a result of an inability of restoration managers to lay out clear decision-making criteria.
    The first is related to Prince William Sound and the aftermath of the Exxon Valdez spill. There were billions of dollars spent on restoration. It provided good public relations for Exxon and for some regulators. It transferred a lot of wealth to Alaska. It satisfied a public need to punish Exxon. It did a lot of other things. However, in terms of a public investment and restoration a lot of it was a waste and in some cases it did more harm than good.
    My second experience included 8 years on the Scientific Committee of the Pacific Fisheries Management Council. These regional fishery councils are composed of scientists and regional stakeholders. Over the last 20 years the scientists have studied fish, and the stakeholders have liquidated them. In that case, too, we in the process didn't provide good investment criteria; and we basically allowed an industry to liquidate a publicly owned asset and called it economic production, even though the scientists and stakeholders were in a regional organization and approved the decision. So that sort of made me think again that we really need more public investment criteria even though I completely understand the need for stakeholder consensus and limits of benefit cost analysis and so on.
    The third experience is one I'm involved in right now, which is scoring wetland mitigation trades and looking at the cost and success of wetland mitigation projects. Like most other environmental economists, I have been pushing for market-based environmental solutions my entire career. But now what we find is that when you're dealing with environmental goods where the units of exchange and debit/credit criteria are vague, the risks associated with these environmental trades are enormous. So much so, that even scientists and people who have argued in this context that all wetlands are unique and special and wanted ad hoc negotiating criteria are beginning to beg for clear debit/credit criteria. There is so much money and political risk involved that in ad hoc negotiations scientists and resource managers tend to lose.
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    Based on this experience, I have three recommendations for CALFED. First is that it be viewed as an exercise in integrated risk management. Again, that means considering the success of the overall program, not just individual projects, and providing incentives for project managers to take on the same consideration.
    To consider the sufficient conditions, not just necessary conditions. It's very common for managers of restoration projects to focus on creating the necessary condition that they are responsible for without monitoring whether the other necessary conditions are evolving. They should be encouraged to blow the whistle on their own projects if the likelihood to success gets so low that the money would be better diverted to somewhere else.
    It means rewarding people who manage those risks and rewarding those people for monitoring risks that cannot be managed and, most importantly, responding to those things. We found in our review of restoration projects it's very difficult.
    Second, CALFED should use investment indicators to select and manage projects. The stakeholder role, I know they're enormously important, need to be managed to put preferences on outcomes, not on investments. They're too complicated for stakeholders to select.
    Scientists can help define opportunities and constraints and the need for projects to generate new information. But, again, the management of these complex projects is too complicated for scientists and involves more decision-making under uncertainty than they prefer—Third, and perhaps most importantly, is these indicators provide some cover for the ecosystem restoration manager to manage for outcomes and to minimize waste. What I'm finding in wetland mitigation is that if there is a lot of squirm room in what success criteria are used, the people trying to manage these projects have very little justification or particular technical cover for stopping wasteful projects.
    And so I think, whether you call it adaptive ecosystem management or integrated risk management, investment indicators are needed to provide restoration managers with the ability to deal with two very substantial challenges. One is the fact that ecosystem restoration investments are enormously risky and involve unavoidable risks that science is not going to be able to reduce very much. Two, the fact that they result in benefits that are very difficult to measure in conventional dollar terms and may take many years to appear. We cannot demand the impossible. Even if we can't guarantee that an investment will suceed or has succeeded, we can certainly guarantee that we're using all the best criteria for allocating our investments and management risks.
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    There are eleven exhibits attached to my written testimony which help clarify and expand some of these points, and I welcome any questions. [See attached Exhibits.]
    Mr. DOOLITTLE. Thank you.
    [The prepared statement of Mr. King follows:]

    Mr. DOOLITTLE. Dr. King, as you look at the CALFED operation in the light of your experience, and I took note of how difficult you indicated it was in some cases to actually ascertain performance, but how do you think CALFED measures up, based on your knowledge of these issues?
    Dr. KING. I have to say that I just this morning got a look at the indicator draft, and I thought it was very thorough and covered the conventional types of indicators. However, they're basically performance indicators.
    Occasionally, there will be an indicator listed there that will say, for instance, a life requisite for a salmon might be water quality, habitat and so on and so on. The difference there is that if you're managing investments the hard choices require you to say, we're improving this necessary condition but we can only—that can only reach any meaningful goal if these other necessary conditions exist. And if we have a 5-year program and in the beginning of year one, one of the other necessary conditions doesn't exist, the likelihood of success changes, and we need to change our investment strategy.
    Those are the kind of indicators, these risk indicators, leading indicators of success and failure, which I think build on what are in those indicators that represent primarily scientific definitions of performance.
    Mr. DOOLITTLE. Thank you.
    Let me throw this question out to the members of the panel and see what your answer is. Many of you—all of you I think have supported CALFED and indicated that it's doing good things; and if you want to elaborate on that, I would invite that. But I guess, conversely, what is it about CALFED that isn't in your opinion going as it ought to go? Where could it—where is it falling down or where does it need to improve? Anybody want to take a stab at that?
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    Mr. SPRAGUE. Mr. Chairman, I'll be bold and take a first shot.
    Mr. DOOLITTLE. Okay. Mr. Sprague, for the record, is going to volunteer his opinion. Good.
    Mr. SPRAGUE. You know, there is kind of a group of what I'll call inside baseball players that have been following this CALFED, and I would even include this Committee in that group. But then there's a whole another sundry of people that are outside, for example, my own board of directors that are locally elected that really make the decisions and the consumers that they supply with water. I don't think we have collectively and I think we have to collectively take part of that blame with CALFED. They have the wrong expectations of what CALFED is going to deliver at the end of the day. They're measuring the beef of the success in many instances in the wrong way, and I think we need to work with CALFED and try to get a broader understanding. For example——
    Mr. DOOLITTLE. I didn't understand something you said. You said they're measuring the what for their success?
    Mr. SPRAGUE. They're measuring kind of ''Where's the beef'' in the whole effort.
    Mr. DOOLITTLE. Oh. That was Mondale's slogan, right? ''Where's the beef?''
    Mr. SPRAGUE. Yeah. I believe so. I learned it from a little old lady in Pasadena.
    Mr. DOOLITTLE. Okay.
    Mr. SPRAGUE. But I think one of the difficulties that we have right now is many of us are more used to EIRs and EISs that come out that are very project oriented. So you're going to put a pipeline in the ground, you're going to put a reservoir in place, you're going to put a treatment plant in place, you're going to put a bridge in place, so you're doing an EIR in that fashion.
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    What we're really going to see coming out of this upcoming document really is a foundation that we use then to build on for the next 30 years. And my biggest fear is that, when this EIR is released, our public is not going to see the beef in that document and so, therefore, they're going to declare it a failure.
    And so I think somehow or other we collectively need to work together to help them understand what the process is. Let's get an EIR that gives us the foundation to do the necessary permitting. And then when we go to the individual projects that are necessary, those get dealt with in a separate EIR document. So it's more of a public outreach issue than it is a technical issue where they're bringing the stakeholders together.
    Mr. DOOLITTLE. So you think they're falling down in not doing enough public outreach.
    Mr. SPRAGUE. I think so.
    Mr. DOOLITTLE. Okay. Anybody else want to volunteer an opinion?
    Mr. GUY. Well, I'll——
    Mr. DOOLITTLE. Mr. Guy.
    Mr. GUY. [continuing] reaffirm—talked a little bit earlier about both I think the impatience that you're starting to see in the water user community that we're going to have some water supply reliability and some real water supply reliability. I just think that we need to make some things happen. And there needs to be a balanced package where the water users see some immediate benefit. Otherwise, I think people's patience is going to grow very thin.
    I also made some suggestions on the land acquisition side. I think that that so far—there's been some shortfalls in that, but I think we have seen some progress, and I think there's some ways to get around that. But I think we need to work a lot harder in that area.
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    Mr. DOOLITTLE. All right. Thank you.
    Mr. Dooley is recognized for his question.
    Mr. DOOLEY. I guess on this land acquisition, I'm struggling with this just a little bit. Mr. Guy, what problems are you talking about that have already occurred?
    Mr. GUY. Well, I think some of the—they come in a lot of forms. But I think there's been a real feeling that the counties particularly have not been involved in the process.
    Mr. DOOLEY. But isn't this a voluntary sale? I mean, a willing seller to a willing buyer? So if I'm a private landowner and I want to participate in this program, I just exercise my property rights and—I mean, is—are those being infringed upon in any way?
    Mr. GUY. Well, it is being well-premised on voluntary sales. But the county, of course, typically has some land use authority and has been granted that by the legislature. And they have revenue issues, of course, that when you convert land to habitat purposes there are some revenue losses that occur to the county. And there's been some problems with in-lieu taxes not being paid. I think those are legitimate concerns.
    Mr. DOOLEY. Is that the issue? Because, as a farmer myself and a property owner, if I choose to sell to this program, I don't want the county or anyone else saying, no, I can't do it. So I want to make sure we're defining the issues. Is the problem, then, a lack of tax revenue that you're most concerned with?
    Mr. GUY. That's one piece of it, yes. I think you hit it right on the head. I don't think anybody, at least that I'm hearing, wants to stand in the way of a transaction. That's not, I don't think, what anybody is saying.
    The second piece of this is if you take, for example, some riparian land and make it into setback levees or put trees in the flood plains, what does this mean for existing diversions for water supply? That can create some real problems whether the diversion may get washed out, it may get silted up. That poses some problems. And those issues really, I think, need to be worked out. And so far have—there's really not been a process to do that. I think there will be, though.
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    Mr. DOOLEY. Those are very valid points, and I appreciate that.
    Dr. Gleick, I appreciated your testimony. I guess, though, a lot of the folks I represent which are south of the Delta are concerned about whether or not we do have adequate supplies of water. And where you're—your figures I do not contest. I think they're accurate. But some of the concerns are even with the upcoming PEIS is that there's some modeling that's been doing there that would show just even on almost normal years or slightly below normal years that there could be significant reductions, very significant reductions to agriculture contractors. I guess that's, you know, the concern that some of us have is, you know, how do we ensure that we do have an adequate supply of water that can maintain an agriculture base even when we have these critically dry years? I don't know if you have a comment on that.
    Dr. GLEICK. Well, I have been critical in the past of the long-term water planning process in California, as many people in this room know, in particular the way we project future demand, the way we actually try and calculate what the demand for water is going to be in the different sectors. There are real problems there.
    Having said that, I think the way to think about this is not to separate out the different pieces but to think about it in an integrated way. Our goal is not new storage. Our goal is not individual pieces of this. Our goal is a safe and reliable water supply for our users with a healthy environment.
    And there are a whole series of tools that we have available to us to achieve those goals; and they can only be achieved, we think, in the way CALFED is trying to do it, by bringing together all of the parties and thinking about the alternatives.
    And the Trinity River came up this morning. And I realize no decision has been made about the Trinity River and reallocations of water, but it's an interesting issue. Because the assumption I think of some of the Committee members has been that it's a win-lose situation. You take water out of the Trinity—you put water back into the Trinity River and somebody downstream in the Sacramento River is going to lose.
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    And I would like to suggest that, in fact, there might be another way to think about that. To give you an example, if you look at the Mono Lake situation, the decision was made, legally to return water to the ecosystem. That meant many people believed you lose water in Los Angeles. But the truth of it is that when you get together with the users in Los Angeles and you think about ways of meeting the ecosystem needs required by law, without losing water for users or without losing what the water provides, they were able to figure out ways of increasing the efficiency of water use and providing the same level of services.
    So it was not a win-lose situation; it was a win-win situation. And there are a lot of those. And I think in the agricultural area in particular there are lot of them. I think that's what we have to look for.
    Mr. DOOLEY. And I think you're right, and I think we're seeing some evidence of that to some extent. It's just—but just even like in a year such as this where we've had 120 percent of rainfall in the—you know, the northern California and, you know, the Westlands water district that I represent is at 70 percent of allocation. Their concern and, I guess, willingness to accept that, you know, we—even with the Trinity decision and other decisions that take more water out of the system, you know, they don't have a whole lot of confidence that I guess that this thing can be, you know—that that can be replaced. But I think you're right about the process in terms of that's the best way to deal with it is in its totality.
    Dr. GLEICK. I also don't dispute your point. In a very dry year, in which—I mean, California has dry years. It's a regular part of our system. Not every user is going to get all of the water they might demand. And that's always been true, and it's going to be true in the future. And the question is, how do you reallocate during dry years to meet the needs you really want? And there are economic ways of doing that, and there are regulatory ways of doing that, and it's got to be in a balanced, discussed approach.
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    Mr. DOOLITTLE. Mr. Miller is recognized.
    Mr. MILLER. Thank you.
    Dr. Gleick, let me follow up on your first discussion on the Trinity River. Would you care to expand on why you think this might not be a win-lose situation?
    Dr. GLEICK. I raise that only as an idea to think about. Obviously, no decision has been made about how much water might have to be reallocated into the Trinity or where that water is going to come from. But downstream in the Sacramento River there are many users, urban and agriculture users; and there is enormous potential, we believe, for improving the efficiency with which those users use their water. That may reduce their long-term demand. I think the potential is quite significant to reduce long-term demand and still meet the needs with less water.
    Now, if that's part of the decision, you decide how much water can be reallocated for ecosystem needs at the same time you're figuring out where that water is coming from, I think that's what you have to do. But I can't speak specifically to——
    Mr. MILLER. I just—I didn't know if you had something particular in mind. I agree with you that there is a lot of alternatives to be explored in terms of whether or not people end up actually using, as you say, the purposes for which the water was delivered. There's other ways to do it.
    Let me take you back to your discussion some months ago on the question of Bulletin 160. What has been done to address some of the concerns that you raised with respect to this demand that would be driven by this bulletin and the assumptions that were made in the bulletin?
    Dr. GLEICK. Umm——
    Mr. MILLER. When I say what has been done, I'm asking about in the CALFED process.
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    Dr. GLEICK. Let me address two pieces. The comments we made and continue to make about Bulletin 160 to the Department of Water Resources addressed the assumptions and the methods and the data they used to project future demand in California. And our conclusion then and today was that their assumptions about future demand are very much wrong, that their methods are wrong, their data are wrong, their assumptions are wrong. The final Bulletin 160-98 did not adequately, in my opinion, address the errors in the draft.
    Now, CALFED in its first draft—we were asked by the Bureau of Reclamation to do an independent assessment of their water use efficiency numbers. In the first round, they pretty much assumed the same things Bulletin 160 assumed. They adopted the assumptions, they adopted the data. I would have to say even in their first draft they did somewhat of a better job than did the Department of Water Resources.
    And, in addition, after receiving our comments and other people's comments, I think the CALFED staff has made a very serious effort to understand the nature of the problems in Bulletin 160 and to try and correct them.
    My feeling, based on what I have seen of the latest version, is that they have still not adequately completely addressed this problem of projecting future demand, with the result being that I think they are still overestimating 2020 demand in California. But they are technical issues that I find them open to discuss. I find them open to trying to resolve some of these issues.
    Mr. MILLER. I raise that because in conversations after your initial criticisms and concerns with the Bulletin and its estimates of demand, with the number of people—because I think that it's absolutely crucial that this point get cleared up. I'm not suggesting how or what the conclusion is. But if at some point we envision ourselves going to the taxpayers and asking for very substantial amounts of money, and this is still an ambiguity or certainly the criticism remain credible, that we're sizing the system for demand that is not there. I think you are going to have a lot of difficulty in that measure if you then have opponents to that measure who can use that argument. Because usually those kinds of questions which are deeply imbedded with economic decisions don't do well when they're raised inside the debate on a bond issue or such an effort.
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    So, you know, I don't know whether people want to hold on to these assumptions or you indicate that you think there's some honest review going on here, and I find that very encouraging. Because I think if that doesn't happen, this can be fatal to what some people envision will be part of this process, which is a substantial bond issue to fund these projects. But if the basis of which those decisions are made is flawed, I suspect you—it would not take a lot of effort to discourage voters from voting for that bond issue. So I'm glad to hear that you suggest that there is some correction and some ongoing discussion about these matters but apparently not yet completely resolved.
    Dr. GLEICK. Ultimately, the California water plan is the Bulletin 160 process. And I think that process is broken, and I think it needs to be fixed.
    There was a meeting yesterday at the Department in Sacramento on Bulletin 160, and the next one which will be in 2003. I don't think we can believe the current Bulletin 160-98 demand productions. I think they're not useful for policy making. And I agree entirely with your point if we are planning for a demand that either isn't going to materialize or doesn't have to materialize with relatively inexpensive, relatively simple measures, we could be making very expensive mistakes.
    Mr. MILLER. Well, I just notice that Mr. Gartrell's testimony in the next panel, you know he talks about the fact that in Contra Costa, in the congressional district I represent, the water district, their service area has declined almost 15 percent since 1990, despite a substantial population growth, is—currently is about 25,000 acre feet annually below the level it would have been if he had just taken 1990 and run it out. You know—and I don't know what's going on in other water districts or other users of any kind. But, again, you know, before you're able to go to the taxpayers and ask for hard dollars, I think you better have the justifications for that based upon solid and correct evidence.
    Dr. GLEICK. That trend is not unique. In my testimony, I provide data for Los Angeles, for San Diego, the East Bay Municipal Utilities, every water district showing continued population growth and leveling off of total demand and a decline in per capita water use.
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    Mr. MILLER. I some time ago met with a group of bankers in San Francisco to talk about water in California and about the questions of long-term contracts, water marketing and pricing and all the rest of it. And after long, long discussions their conclusion was that if, you know, if you had a real water market in the State you'd probably have a substantial surplus of water and not terribly high-priced water, not the estimates that you see that are as wild as they suggested.
    I don't know if they're right or not, but their economic model suggested to them that there were a lot of ways to manage demand and deal with it. And the question of how far out they would be driven that aren't consistent with just this, you know, glide path that suggests that you're never really going to be able to catch up to it with supply was sort of the story we first heard about energy.
    When I first came on this Committee, if we didn't build a thousand nuclear power plants the country was going to go black. All the lights would be turned out. That went on here for almost a decade. Obviously, we find the story of electricity is entirely different than that.
    Thank you very much for your help.
    And, Mr. Kaniewski, let me say Max would be proud of you today. It was sterling testimony.
    Mr. KANIEWSKI. Thank you.
    Mr. MILLER. You're welcome. Thank you.
    Mr. DOOLITTLE. Thank you.
    Mr. McCormick, after I concluded it was pointed out to me that you were about to answer my question, I guess, which was where is CALFED falling down or where could it improve. Did you want to take a stab at that?
    Mr. MCCORMICK. Yeah, thank you very much. Not so much falling down but some areas to pay attention to.
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    Although a significant amount of money has been awarded for the ecosystem restoration program, the process for getting that money spent is cumbersome, and I think it hasn't caught up, really, with the demand, and it's a consequence of a number of agencies trying to manage the process. I think a single contracting entity would help enormously. I also——
    Mr. DOOLITTLE. Let me just ask, so you're recommending a single contracting entity. How many contracting entities do we have now?
    Mr. MCCORMICK. Well, there are the State contracts and Federal agencies' contracts and sort of borrowing staff, as it were, from those various agencies.
    Mr. DOOLITTLE. Okay. Dr. Gleick, I find your testimony interesting and useful in the way you've laid out the remarkable strides made with conservation in those examples for LA water demand, but, in general, you make that point very effectively.
    One thing I have wondered about, we're going increasingly towards permanent crops now. Well, I think in the San Joaquin Valley—maybe that trend is in the Sacramento Valley. But, in any event, there is some trend toward that which I guess may use less water than field crops but which demand water every year without having the ability to not use it in a given year. How do—as you see meeting our water needs, how do you think we should address that situation?
    Dr. GLEICK. You're right. There is that trend. Figure 2 in my written testimony shows that trend. I also agree that that trend means some of those crops are going to need water with a higher level of reliability.
    Now, I think that's an interesting issue. I think it hasn't adequately been addressed, and I think there's a real legitimate discussion that needs to happen about how to guarantee higher levels of reliability for certain kinds of crops. And I don't know whether that's an—economic measures are appropriate for that or some sort of regulatory measure, which I'm a little reluctant to recommend. I do think it's valid.
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    California's cropping patterns are still—I mean, the vast majority of the acreage is still in grains and field crops, and that I think still has enormous potential for—all of the crops still have potential for improving the efficiency for which they use water. And that—I mean, there are different ways of doing that. One is, you reduce the amount of water to grow a certain amount of crops or you keep the amount of water constant and you grow more crops. The productivity of the farms goes up. Those are all relevant issues that need to be discussed.
    Mr. DOOLITTLE. So are you of the opinion that the potential for further conservation in the urban areas is still substantial or do you feel maybe they've just about reached their potential to conserve?
    Dr. GLEICK. I think they have nowhere near reached their potential to conserve. I think the potential in urban areas is still enormous. And that includes not just doing what we do more efficiently but there's also enormous potential for much more widespread use of reclaimed recycled water. There is even, in our case, studies, examples of reclaimed water being used for agricultural use. And that's a very reliable source of supply, that you will get that water in drought years as well as wet years. So that's—I think that's an interesting issue that is also—I mean, there are examples already under way. I think it needs to be more widely looked at.
    Mr. DOOLITTLE. Examples of agricultural reuse?
    Dr. GLEICK. Sure. Now, that water tends to be relatively more expensive. You want to use it—it's got to be relatively close to where it's been reclaimed because you can't move it very far. But there are already examples of farms in rural or areas near urban areas using reclaimed water.
    Mr. DOOLITTLE. Would you just as a supplement to your testimony today, if you have this available, forward that to the Committee?
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    Dr. GLEICK. Sure. In the executive summary of the case studies we have, there are brief descriptions. I will leave with you the full report which has the detailed case studies as well.
    Mr. DOOLITTLE. Great. Thank you.
    Mr. Sprague, did you want to comment?
    Mr. SPRAGUE. Thank you, Mr. Chairman.
    One of the things that we have to keep in mind as we move forward with conservation particularly in urban areas, we can do much more, but one of the things that is very critical to us is water quality. As we get a poor quality water, once you move that water through the domestic cycle once, you may not be able to have the second use. So the better we can receive as far as a source water quality, this is going to give us second uses and even third uses of that reclaimed water. So water quality plays a very high role in long-term water use efficiency, particularly in the areas of conservation in the urban areas.
    Earlier this morning we were talking—the Secretary was talking about conjunctive use and groundwater efforts. There are a great number of opportunities for conjunctive use of groundwater basins. But just in Orange County, we are experiencing problems there. In effect, Colorado River water that's brought into southern California can't be discharged even onto crops, in theory, or onto land because it exceeds the basin plan.
    However, we have come up with strategies to overcome some of that. So salinity issue as an element of water quality is extremely important for success in the area of conservation, and I know it's an extreme importance to agriculture. So there's a clear partnership there, and I believe it has the same impacts on agriculture as it relates to conservation as well.
    Mr. DOOLITTLE. Gentlemen, I thank you for your appearance before the Committee. The testimony has been very useful. We may have further questions. We'll keep the record open to receive your responses. And, with that, we'll excuse this panel.
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    I would just like to announce that, contrary to what I had announced previously, apparently we are supposed to have one more vote. So I don't know when that is going to happen, but I guess we'll just roll on through until it does.
    We'll invite our third and final panel to come forward and begin the discussion of CVPIA.
    We welcome the members of our third panel. Let me ask you to rise and raise your right hands.
    [Witnesses sworn.]
    Mr. DOOLITTLE. Let the record reflect that each answered in the affirmative. And I thank you very much for your patience and joining us today for this important hearing where we'll now focus more on the Central Valley Improvement Project Act.
    We will begin with our Secretary—oh, Miss Beneke is available to answer questions. So we'll begin with Mr. Gregory Gartrell. Mr. Gartrell, welcome.

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

    Mr. DOOLITTLE. Our next witness is Mr. Barry Nelson.

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

    Mr. DOOLITTLE. Our next witness will be the Honorable Merv George, Jr.
    Mr. George.

    Mr. GEORGE. Thank you, Mr. Chairman and members of the Subcommittee. On behalf of the entire Hoopa Valley Indian Reservation it's a pleasure to be here before you today.
    As it was stated, my name is Merv George, Jr.; and I am the tribal chairman of the Hoopa Valley Tribe; and I am prepared to testify on the Trinity River.
    The Hupa people have occupied the Hoopa Valley, the site of our reservation, since time immemorial. The Trinity River, which traverses the Hoopa Valley, is the lifeblood of our culture, religion and economy. Everything we are and do as a people is oriented to the Trinity River.
    My testimony today is intended also to give voice to our friends and neighboring communities who more often than not have not—or who have been overlooked in the great debates over California's priceless water resources.
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    The Trinity River is the only source of imported water to the Central Valley. In 1955, Congress authorized construction of the Trinity River Division of the Central Valley Project. In order to protect the fish and wildlife of the Trinity River Basin, Congress specifically limited the Secretary's discretion to divert water to the Central Valley by requiring that in-basin flows needed for the Trinity River take precedence over uses to be served in the Central Valley.
    Between 1964 and 1996, the Bureau of Reclamation diverted 31,780,400 acre feet of Trinity water to the Central Valley with devastating effects on Trinity River fish and wildlife. The river we had known for thousands of years transformed itself in less than a decade following completion of the Trinity River Division. Gone were its broad, braided channel with well-washed gravels for spawning. Gone were its pools, shallows, and shade for juvenile rearing. Gone were the velocity, volume and frequency of flows essential to fish migration and to maintain the dynamic equilibrium of a living river and its riparian ecology. And, more importantly, gone also are the days when my people could fish as they always have without the threat of their harvest being reduced because of an endangered species listing.
    None of this was intended or foreseen by project planners. The politicians promised that not a bucket of water needed in the Trinity River basin would be exported to the Central Valley. Others testified of their expectation that construction of the Trinity River Division would actually improve the Trinity River fishery and that the hatchery built at the base of Lewiston Dam would fully mitigate the loss of upstream habitat.
    Today, most Trinity River fish populations are either listed, proposed for listing, or under status review for listing under the Endangered Species Act. For example, the Trinity River coho salmon was listed as a threatened species in May of 1997. The Trinity River steelhead is a candidate for listing, and the Trinity River chinook is under status for review. From my tribe's perspective, extinction of fish species or their mere recovery to some minimum population is not an option.
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    The Hoopa Valley tribe has worked closely with the Department of the Interior on the Trinity River flow evaluation report and associated recommendations by co-authoring them with the Fish and Wildlife Service. Please note our appreciation for the cooperation and consultation of the California Department of Fish and Game, the geological survey, the Bureau of Reclamation and the National Marine Fisheries Service in the preparation of the report and recommendations.
    We are pleased that the report and recommendations have been completed as required by the CVPIA. We are informed that the report and recommendations will be published by the Department next week. The report and recommendations provide for an increase of releases to the Trinity River from the Trinity River Division. The increased releases would bring the diversions from the Trinity River to the Central Valley in line with the volumes of water originally contemplated for use in the Central Valley by the Bureau of Reclamation in its 1952 ultimate plan report and by the committees of Congress when the project was authorized in 1955.
    It is important to note that the report and recommendations still provide for the lion's share of Trinity River to be diverted to the Central Valley. The law of the Trinity River is clear that the current condition of the Trinity River fishery was never intended to occur. The best available science we have incorporated into the report and recommendations demonstrates that the condition need not continue.
    Finally, we urge you to support appropriation of sufficient funding to meet the restoration goals as well as the Federal trust responsibilities to the Indian reserve rights in the Trinity River fishery.
    In conclusion, every Interior Secretary and every Congressman from the first district, irrespective of party affiliation, has recognized the need to fulfill the original promise of the Trinity River Division for the north coast. I ask that from this day forward the north coast no longer be considered the forgotten region of California but be remembered as the home of a just people who shared their river without sacrifice.
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    Thank you. And I will answer any questions when the time is appropriate.
    Mr. DOOLITTLE. Thank you.
    [The prepared statement of Mr. George follows:]
    Chairman Doolittle and members of the Subcommittee, on behalf of the Hoopa Valley Tribe, thank you for inviting me to participate in today's hearing. You have asked that my testimony address the implementation of the Central Valley Project Improvement Act (Public Law 102-575 Title XXXIV (October 30, 1992) (CVPIA), particularly with regard to the Trinity River provision in subsection 3406(b)(23).
    The Trinity River rises in the Trinity Alps region of California's Coast Range and flows to its confluence with the Klamath River and then to the Pacific Ocean. For the last 60 miles of their course to the sea, the waters of the Trinity River traverse the Hoopa Valley and Yurok Indian reservations. The Hupa people have occupied the Hoopa Valley, the site of our reservation, since time immemorial; scientists have been able to date our presence back as far as 10,000 years. The Trinity River is the life blood of our culture, religion and economy. Everything we are and do as a people is oriented to the Trinity River.
    In the last 150 years, California's population and economy have grown and expanded into the North Coast region. Today, the Trinity River remains not only essentially important to the Hoopa Valley, Yurok, and Karuk Indian Tribes, but also to the commercial and sport fishing industry, recreation and tourism businesses, and the towns and cities throughout Humboldt, Trinity and Del Norte Counties. So while I am here today officially on behalf of the Hoopa Valley Tribe, my testimony is intended also to give voice to our friends and neighboring communities who more often than not have been overlooked in the great debates over California's priceless water resources.
    The Trinity River is the only source of imported water to the Central Valley. In 1955 Congress authorized construction of the Trinity River Division of the Central Valley Project (CVP). In order to protect the fish and wildlife of the Trinity River basin, Congress specifically limited the Secretary's discretion to divert water to the Central Valley by requiring that in-basin flows needed for the Trinity River take precedence over uses to be served in the Central Valley. This special ''area of origin'' protection for the Trinity River in Federal law is in addition to state county of origin restrictions on export of Trinity River water to the Central Valley.
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    The Hoopa Valley and Yurok Tribes have reserved rights in the Trinity River fishery that have been affirmed by the Department of the Interior and the Department of Commerce, and upheld by the courts. In addition, the CVPIA Trinity River provision includes an express declaration of the Federal trust responsibilities to protect the fishery resources of the Hoopa Valley Tribe. It is a well-established principle of Federal Indian law that secretarial discretion is limited by trust responsibilities for Indian resources. The trust responsibility operates in this case to reinforce the Secretary's obligation to operate the Trinity River Division for the benefit of fish and wildlife in the Trinity River.
    Between 1964 and 1996 the Bureau of Reclamation diverted 31,780,400 acre-feet of Trinity River water to the Central Valley with devastating effects on Trinity River fish and wildlife. The river we had known for thousands of years transformed itself in less than a decade following completion of the Trinity River Division. Gone were its broad, braided channel with well-washed gravels for spawning. Gone were its pools, shallows, and shade for juvenile rearing. Gone were the velocity, volume, and frequency of flows essential to fish migration and to maintain the dynamic equilibrium of a living river and its riparian ecology. Upstream of the project, the destruction was absolute: Fish passage to 109 river miles of prime fish habitat was barred forever.
    None of this was intended or foreseen by project planners. The politicians promised that not a bucket of water needed in the Trinity River basin would be exported to the Central Valley. Others testified of their expectation that construction of the Trinity River Division would actually improve the Trinity River fishery and that the hatchery built at the base of Lewiston Dam would fully mitigate the loss of upstream habitat.
    The construction and operation of the Trinity River Division have devastated the ecology of the Trinity River, as well as the customs, traditions, and culture of the Hoopa Valley, Yurok, and Karuk Tribes, and the economies of the North Coast communities. Most Trinity River fish populations are either listed, proposed for listing or under status review for listing under the Endangered Species Act. For example, the Trinity River coho salmon was listed as a threatened species in May, 1997; the Trinity River steelhead is a candidate for listing; and the Trinity River chinook is under status review. From my Tribe's perspective, extinction of fish species, or their mere recovery to some minimum population is not an option.
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    By the end of the 1970s the adverse effects on the fishery were clear and Congress and the Secretary of the Interior took the first steps toward fulfilling the promise—and the legal mandate—that no harm would come to the Trinity River fish and wildlife from construction of the Trinity River Division:

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

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

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

  Number two, it can improve the flexibility of the system through an environmental water account which can provide increased protections and increased supplies through operational change. This is as opposed to a regulatory process that just simply reallocates this water.
  Number three, it can develop new water, increase the size of the pie through surface and groundwater storage, premised on the sharing of water between environmental and water needs.
    In closing, I would also like to add my support for the Federal funding. Again, as the dust settles on the implementation of CALFED and the integration of some of the CVPIA measures into CALFED, the funding is going to be very critical and we are in support of the current efforts for that funding.
    Thank you, Mr. Chairman and I'm available for questions.
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    Mr. DOOLITTLE. Thank you.
    [The prepared statement of Mr. Daniel Nelson follows:]

    Mr. DOOLITTLE. Mr. Gartrell, I don't think in the years I have been sitting here as chairman I have ever heard—I don't think that I have ever heard much criticism at all, especially from the urban water users, of the future for water in terms of the cutbacks. You have graphically portrayed that today. You do know, Mr. Dan Nelson, I assume, right?
    Mr. GARTRELL. Yes.
    Mr. DOOLITTLE. You two ought to get together. You both have sort of the two sides of the coin, it sounds like.
    Mr. GARTRELL. We worked quite a bit together. We worked very hard on the Bay-Delta Accord, all three of us, the Nelson brothers and myself.
    Mr. DOOLITTLE. Well, if even urban supplies are being faced with 50 percent cutbacks, then what is your position on storage?
    Mr. GARTRELL. Our district believes that that is probably going to be an essential component coming out of the CALFED process. I don't think anybody is going to take a position now exactly which element is going to come out on top. But certainly there is, I think, going to be a necessity for storage, whether there is conjunctive use or new offstream storage. While we are doing a lot of conservation and will be continuing to be doing more conservation and more reclamation, that does not get you through a dry period. You need to do something with the water that you save. And for both the environment and for water supply reliability, I think storage is going to be important.
    Mr. DOOLITTLE. Mr. Nelson, you indicated you had—well, Mr. Barry Nelson, that you had a plan for how to increase water reliability. Could you just summarize for me what your thoughts are in that regard?
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    Mr. BARRY NELSON. Briefly, I would be happy to. As I mentioned, we provided your staff with a copy of that blueprint, I think the most detailed water supply reliability comments CALFED has received from any of the stakeholder groups. We recommend a number of different tools. We don't give a simple prescription for any one of these tools because we think they all could be implemented in different ways. There is a laundry list of tools increasingly, we are realizing, that we need to select from to provide reliability. It's not just storage, although I will get to that at the end. It's also conservation programs, agriculture and urban water reclamation programs, water transfer programs.
    There has been a lot of conversation about and controversy about land fallowing, but permanent land retirement has a place that makes a lot of sense. We are also seeing land fallowing arrangements within agriculture that are happening voluntarily with no outside planning that we think represent sound planning that is happening right now from agriculture. There is a broad range of strategies.
    I would like to close, however, by emphasizing one of those; that is, the rule of improved groundwater management. We built the CVP in substantial part because we said it was going to solve our groundwater problems. It didn't. We then built a State water project to solve our groundwater problems. It didn't. We are still now in some parts of the State seeing significant groundwater concerns. We as a State have never wrestled with the question of groundwater regulation as most western States, almost all of the western States have. We are very skeptical of claims that we can either solve our groundwater problems through additional surface storage or that we can solve environmental problems with additional surface storage.
    We think that when we look at improved groundwater management, both conjunctive use and other kinds of improved groundwater management, that there is tremendous potential there. Yes, that is storage. We think it offers the potential both to be more compatible with an ecosystem restoration program and also to be dramatically more cost effective, which is going to be very important more when it is time to finance the final CALFED package.
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    Mr. DOOLITTLE. Mr. George, are there ways to meet the needs that you have for the Trinity River that would tend to temper the amount of water that must be redirected down the Trinity River?
    Mr. GEORGE. There absolutely is, Mr. Chairman, and I would like to sit down with you at some point and go over some of the contents within the flow study. There is some mechanical restoration efforts that are also included, aside from just the flow decisions that are in the flow study. I think that it would be helpful and insightful if we could go over those when they are published.
    Mr. DOOLITTLE. Okay. I appreciate that. We will look for that opportunity. Well, there is a lot of hope being placed in CALFED and it certainly has a good potential. There has been real evidence of progress in some areas that have been drawn out today, improvements have been made, and things in the testimony that have been mentioned so far.
    Mr. Dan Nelson, you heard my exchange with the Secretary over your testimony. He is not here, but we can send him the record. Do you have any further elaboration on that that you want to offer?
    Mr. DANIEL NELSON. Yes, I do. In referring to page 5 in the third line, I would like to insert the word ''below'' in front of ''normal years.'' In editing this, the sentence reads ''years that are less than below normal years.'' My sense is what occurred is the ''less than below'' was looked at as a double negative and so the word ''below'' was taken out. But below normal years is a year type, and so, the word ''below.''
    However, that does not change the fundamental point, and that is that the PEIS and the new modeling that we have indicates that we have a broken project, that the Central Valley Project in many years cannot even meet its regular contractors as well it can't meet its historical water right contractors in many years as well. And so I think that the fundamental point is still valid. That is, that we need to give serious attention about the viability of the Central Valley Project as it exists. And we are going to have to figure out how it is that we can accomplish some of these environmental objectives in a way that is more reasonable to the Central Valley Project and in a way that is consistent with the CALFED approach.
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    Mr. DOOLITTLE. Okay. Mr. Radanovich is recognized for his questions.
    Mr. RADANOVICH. Thank you, Mr. Chairman. In the earlier conversation, I was pleased to hear the Secretary talk about some discussion, at some point in time, this CALFED process, of the consideration of CVPIA and even perhaps the ESA in some of the regulatory issues in those bills being merged into and discussed through the CALFED process. That's one thing that I am looking forward to, especially from the agriculture side of the implementation of those laws and how we can streamline those. One of those issues is tiered pricing.
    Mr. Nelson, I think that I would like you to comment on that. One, if you could elaborate on why CVPIA and tiered pricing just doesn't seem to be working.
    Mr. DANIEL NELSON. On the first point of the relationship with CVPIA and the CALFED process, I was very encouraged by the Secretary's comments of trying to implement CVPIA in a comprehensive way and taking into consideration the impacts to water users.
    Meeting environmental objectives while minimizing impacts. That's very encouraging to hear from the Secretary of the Interior. Frankly, what we are seeing is a disconnect between that policy call from how the laws are actually being implemented out in the field. What we are experiencing out in the field isn't a collaborative, comprehensive-type approach that I think we all envisioned when we signed the accord. As you recall, we referred to the accord as a new way of doing business in California, a new way of addressing water resources in California. Comprehensive, collaborative. We are no longer experiencing what it is we envisioned. We are once again back to where we were in pre-accord, pre-accord days, and that is where individual agencies are implementing individual components of very specific statutes in a very narrow way, not taking into consideration how it fits into a comprehensive plan. My sense is that's the key fundamental problem with the implementation of CVPIA, is that each individual component has been implemented unilaterally from the other components; and then, in addition to that, to take it the next level, CVPIA has been implemented unilaterally from the more comprehensive discussions that we have had from CALFED. From our perspective, that's the key problem of what it is that has occurred and how it is that we have implemented CVPIA post-accord. And we can be more efficient in obtaining our environmental objectives, I think, if we were to take a broader and more comprehensive perspective in implementing this.
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    The tiered pricing thing specifically. Tiered pricing, there is a lot of merit to the concept. In fact, most of our member agencies and most CVP agencies have a form of tiered pricing that they have implemented on a districtwide basis.
    There is three points for tiered pricing. Number one, if you are a contractor that your Federal contract doesn't meet your demands, and so you are continually using all of your CVP contract plus you are out looking for additional water, the tiered pricing really doesn't serve as an incentive for you to use less water. You are going to need to use all of your allocation anyway. So it only becomes punitive at that point.
    The second point, conjunctive use. We all recognize the importance of doing conjunctive use and expanding and optimizing conjunctive use in California. Essentially, tiered pricing could penalize those who want to use conjunctive use. I think that we need to take a very serious look at that.
    Then the third point which kind of umbrellas the other two, tiered pricing is not a one-size-fits-all concept. You have to—as I said earlier, there are some appropriate and legitimate uses for tiered pricing. Most districts have a form of tiered pricing, but it's almost impossible to come up with a one-size-fits-all that is equitable.
    Mr. RADANOVICH. Thank you. These are the issues that I hope that are brought up during the CALFED process. I want to applaud all of the stakeholders for keeping this together. I personally am relieved that we are now beginning to study issues that increase water storage as part of the CALFED process. I think as this issue moves forward, we need to have a policy and in some areas where CVPIA may be deficient in that, policies where agriculture has the opportunity by incentive to enhance the environment in their own area through the policy of CVPIA as it might be modified through this CALFED process, because right now the incentive is almost the opposite and it doesn't work for agriculture to be sensitive to the environmental needs in that area.
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    If there is one complaint that I have about CVPIA it is that it doesn't allow for that, it's not really incentive based. I would like to see that happen as this thing develops and as we talk more as stake holders in the CALFED process to see some modifications in those laws. Thank you.
    [The prepared statement of Mr. Radanovich follows:]
    Mr. Chairman—Thank you for holding this hearing to provide the opportunity to discuss water issues in the Central Valley of California. I appreciate the ability to address the CALFED Bay-Delta program and the Central Valley Project Improvement Act (CVPIA).
    I represent a Central Valley district comprising the two largest agricultural producing counties in the nation. Water is the lifeblood of the economy in this agricultural region that grows over 250 of California's crops. With its fertile soil, temperate climate and water supply capabilities, the Central Valley produces eight percent of the agricultural output in the U.S. on less than one percent of the nation's total farmland. Valley farmers alone grow nearly half of the fresh fruits and vegetables grown in the entire nation.
    As a farmer, I am a conscientious steward of the land and a strong environmentalist. Agriculture and the environment truly go hand in hand. The very livelihoods of farmers are directly connected to the land and its future. The agricultural community recognizes water as a precious resource to be used wisely, and they know proper water management is essential and benefits all users.
    In order to meet the ecosystem, water supply and water quality needs in California, I worked, along with many individuals present here today, toward the enactment of the California Bay-Delta Ecosystem Enhancement Act in 1996. Since that time, Congress has continued its commitment to CALFED by funding this program to build consensus on decisions that effect the future of water in the state of California.
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    I am encouraged by the recent agreement among stakeholders to support $95 million in FY 2000 for CALFED with $60 million for ecosystem and $35 million set aside for non-ecosystem purposes, such as water storage studies and water transfers. I support the $95 million in funding to bring balance to the CALFED process for agricultural, ecological and urban water users.
    My greatest concern, and that of my district's, is the impact CALFED has on agriculture. Water reliability is vital. The Central Valley economy is dependent upon water assurances. Therefore, scientifically sound and locally supported water conveyance and storage facilities are needed to address the supply void in California.
    As the CALFED process moves forward, the protection of private property is also a high priority of mine. Private property rights must be secured throughout the process. Additionally, CALFED representatives or other Federal and state officials must obtain written permission from landowners when conducting surveys or other biological work on private property. Any actions that violate landowners' rights are unacceptable.
    With respect to CVPIA, I believe the Central Valley region has invested a great deal of resources to make this law work. Conservation, land retirement and crop changes have all been implemented by the agricultural community in order to achieve the objectives of CVPIA. The economic security of the area is contingent upon water supply reliability. It is time solid assurances are made to provide for the region's water needs.
    To the detriment of both the environment and agriculture in the Central Valley, the CVPIA has significantly raised water prices in the area I represent. Tiered pricing under CVPIA, for example, has made it extremely expensive to operate conjunctive use systems. Growers pay enormous prices for the water to be stored, extracted and delivered. This creates a clear disincentive for groundwater storage. A more flexible approach to tiered pricing would encourage contractors to conserve and reduce costs. Such flexibility is necessary for CVPIA to be successful.
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    The growing population of our state will continue to place an ever-increasing demand on the water supply. Also, over one million acre feet of water is provided for environmental purposes under CVPIA each year. The state has been blessed with five wet years, however, we have no guarantee these conditions will continue. The enormous pressure on California water allocations are predicted to result in a net agricultural water loss of 2.3 million acre-feet each year by 2020. This would severely disrupt agricultural production. Since water is directly tied to the economy, any disturbance in its supply will cause job losses and decreased agricultural production. For these reasons, an adequate water supply must be planned for and secured.
    In closing, I believe CALFED and CVPIA, along with other Federal agencies, must coordinate their water efforts to guarantee consistency in the implementation of projects and goals. Efforts to sustain productive farmland in the Central Valley region under the CVPIA and CALFED have made the farmers in my area some of the most innovative water conservationists in the world. Central Valley agriculture can continue to thrive as long a reliable, affordable source of water is available. I look forward to working with you, Mr. Chairman, and those present today to achieve this goal.

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

(Footnote 1 return)
 Bay-Delta Urban Coalition consists of 11 agencies representing over 22 million people in urban communities throughout California. Coalition agencies include Alameda County Water District, Central Coast Water Authority, City and County of San Francisco Public Utilities Commission, Coachella Valley Water District, East Bay Municipal Utility District, Metropolitan Water District of Southern California, Municipal Water District of Orange County, San Diego County Water Authority, Santa Clara Valley Water District, Solano County Water Agency and Central/West Basin Municipal Water District.