Deal on Control of Water Reached, State Official Says : Resources: Bush Administration has apparently agreed to give ownership of Central Valley Project to California. But environmentalists call agreement a sham and a political maneuver.

SACRAMENTO — California Resources Director Douglas Wheeler said he will announce today that he has reached agreement with the Bush Administration on a plan for transferring the vast Central Valley Project water supply system to state control by 1995.

The new agreement establishes that the two sides have determined the best way for transferring the Central Valley Project is to give the state title to the 50-year-old federal system of dams, canals, reservoirs, power plants and other facilities. The state in return would pay a yet-to-be determined purchase price.

Environmentalists viewed the announcement with skepticism, saying the agreement was more a political maneuver than real progress. Noting that there was still no agreement on what the state would pay, they said it seemed timed to discourage U. S. Senate and House conferees from reaching a consensus on legislation that would reshape Central Valley Project operations.

But Wheeler said that after reviewing preliminary cost figures provided by federal consultants, he is optimistic that the state could negotiate an affordable price.

“This is as far as the federal government has ever progressed with the notion that the transfer would be in the public interest--not just in the interest of the federal taxpayer but in the interest of the people of California,” Wheeler said.

Wheeler is scheduled to make his announcement on the same day the conference committee begins discussions on an omnibus water bill involving dozens of Western water projects, including the Central Valley Project. Initially the committee, whose members include Sen. John Seymour (R-Calif.), is scheduled to take up only the non-controversial aspects of the bill and save debate on the Central Valley Project and other politically sensitive topics until later.

Senate and House versions of the legislation would result in more Central Valley Project water going to the environment but the House version would rewrite terms of contracts, which for years have provided highly subsidized water rates to farming interests. The Central Valley Project serves about 2 million urban customers and provides water to one-third of the state’s 9 million acres of irrigated agricultural land.

Gov. Pete Wilson has urged Congress not to pass any legislation until Wheeler completes negotiations on the Central Valley Project transfer. Once the transfer takes place, the state would take control over the water network.

Karen Garrison, a member of Wilson’s advisory committee that is reviewing the negotiations, said the announcement of the new agreement appears to be a thinly disguised effort to carry out the governor’s goal of stopping the Central Valley Project legislation.

“This is a meaningless agreement. It’s a sham,” said Garrison, senior project scientist for the Natural Resources Defense Council. “They haven’t reached any conclusions about anything significant and that leads me to believe the decision to announce an agreement is political.”

She said all the important matters--such as the price to be paid for the project, the amount of water to be put aside for environmental purposes and a determination of whether farmers would continue to get subsidized water--have all been put off for the future.

But Wheeler said the agreement represented major progress toward Wilson’s goal of providing a coordinated and integrated water system for California to replace the current dual system. The federal government manages the Central Valley Project, the state operates the State Water Project, which is smaller and serves mostly Southern California users.

Wheeler said the new agreement represents a decision by both sides that the best way to transfer the project is to give the state full title. Among other scenarios under consideration had been a partial transfer that would permit the state to operate the facilities but allow the federal government to retain ownership.

The federal government has placed various values on the project--a book value of $3 billion, a depreciated value of $1.9 billion and a replacement value of $7 billion. Wheeler said the depreciated value of the project is roughly the same as the amount of original cost remaining to be repaid by agricultural, urban and industrial water users.

He said if those groups continue their current repayment schedule the state would only have to pick up the costs of operating the facilities and providing environmental protection to the affected ecosystems. He said the environmental costs are the big factors that have not yet been determined.

Wheeler denied that his announcement is politically timed, saying he was not even aware that the conference committee in Washington was scheduled to meet.

“Their claim is nonsense,” he said of critics.

Wheeler said he doubted that any of the environmentalists had read the agreement, because “if they had read it they would see that it is the result of several months of serious work by all parties.”

Garrison, however, said she received an advance copy of all materials and studied them carefully.