District Exempted From Costs of Excess Runoff : Water: The Army Corps of Engineers gives taxpayers a break by not charging a fee of up to $150,000 a year.

In a victory for Orange County, the federal government has reversed itself and decided against charging the county’s water district up to $150,000 a year for the right to use water now being dumped into the ocean.

William R. Mills Jr., general manager of the Orange County Water District, said of the decision: “It is a tremendous relief. . . . The people of Orange County should not have to pay for water that would otherwise end up in the Pacific Ocean.”

The decision, spelled out in a letter from Assistant Army Secretary Robert W. Page to Rep. C. Christopher Cox (R-Newport Beach), ends a dispute that began last August. Then, the Army Corps of Engineers notified the water district that it planned to implement a new pricing policy for excess water stored for the district’s use behind the Prado Dam in Riverside County.

The corps operates the dam largely for flood-control purposes, but it has made some reservoir water available to the water district on an informal basis over the years. Recently, the corps had decided to charge for the water.

However, “because the pricing policy was only recently developed, we agree that in this instance, it would be inequitable to apply the policy to the Orange County Water District at such a late date,” Page wrote in the letter to Cox. Page said the Army may implement the policy elsewhere.

“The taxpayers of Orange County have won a big victory,” said Cox, who was joined by Orange County’s four other representatives in opposing the corps’ action. Cox, Rep. Ron Packard (R-Carlsbad) and Rep. Dana Rohrabacher (R-Lomita) met with Page last November to protest the Army’s plan.

The policy stemmed in part from a new federal directive to recoup the value of services provided as a result of federal projects.

“We believe the new policy is sustainable, and we’ll use it” elsewhere, said Earl H. Stockdale, senior assistant to the Army’s general counsel. “But because the folks out there (in Orange County) got caught right out of the gate, we’re going to wait and defer it there.”

District officials had been pushing for a formal agreement under which the Army would raise the level of the reservoir behind the Prado Dam and then slowly release as much as 1.6 billion gallons of excess spring runoff each year, allowing the district to divert the water into its massive underground storage basin. The naturally occurring basin of sand and gravel can store as much as 3.2 trillion gallons of water.

The district had agreed to pay all extra costs associated with the storage of additional water, perhaps as much as $15 million, but the corps insisted that it wanted more.

In addition to reimbursement for its expenses, the Army planned to charge the district a fee based on the water’s market value, a move that outraged local officials.

The additional costs would have been passed along to most Orange County water users, because the Orange County Water District sells its water to the 40 or so other water districts in the county. Those districts draw about 70% of the water they sell to customers from the OCWD’s reservoir through a system of about 500 wells.