Water Bill Puts Priority on Environment : Congress: Proposal to reform Central Valley Project would reallocate 1 million acre-feet annually from farmers and cities to threatened wildlife.

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In a last-ditch attempt to reform the massive Central Valley Project water supply system this year, House Interior Chairman George Miller (D-Martinez) offered a proposal Tuesday that would provide substantial relief for the environment and wildlife as well as Southern California urban water users.

"There is a tremendous amount of support for this," said Miller, who predicted the measure would be approved by Congress before the legislative session is scheduled to close Oct. 3. "This is a fundamental change in the history of California water."

The proposal would make saving threatened fish and wildlife a top priority of the Central Valley operation. This would be accomplished by reallocating an annual 1 million acre-feet of water away from farms and cities to the environment and establishing a $50-million annual environmental restoration fund through operation and maintenance fees.

The Central Valley Project, a system of 20 dams and more than 500 miles of diversion canals, reservoirs, pumps and other facilities, controls about 20% of California's water supply. Through a series of federally subsidized long-term contracts signed 40 years ago, the project provides water to about one-third of the state's 9 million acres of irrigated farmland.

Miller introduced the bill--parts of which were contained in earlier legislation passed by the House--at the first meeting of a conference committee appointed to resolve differences between House and Senate legislation. The Central Valley legislation is part of an omnibus bill involving dozens of water projects in 17 Western states.

"This is in no way a done deal on the Senate side," said Sen. J. Bennett Johnston (D-La.), chairman of the Committee on Energy and Natural Resources. "This is a very good first step. We need this."

Miller's portrayal of the legislation as a compromise measure that gives "careful consideration to all points of view" was harshly disputed by Sen. John Seymour (R-Calif.). Seymour, who introduced a Central Valley Project bill passed by the Senate and favored by agricultural interests, said that neither he nor anyone on his staff was given an opportunity to see the Miller proposal until a few minutes before the conference committee met Tuesday.

"It's going to cost the state of California jobs at a time when we can ill-afford to lose them, and I'm going to do everything in my power to see that doesn't happen," Seymour said.

Environmental groups in California embraced Miller's proposal.

"It's an historic compromise that will benefit both urban and conservation values," said Patricia Schifferle, California coordinator for Share the Water, a coalition for federal water reform. "It strikes a true balance between urban and environmental concerns and begins to put some balance back in a system that primarily has been run for one select group of people for the last 40 years."

While permitting Central Valley Project users to renew existing federal water contracts for 20 years, Miller's legislation for the first time would allow contractors to sell water to any willing buyer in the state.

This language has long been sought by the Metropolitan Water District as a way to provide a new source of water for drought-stricken Southern California.

"It really makes an awful lot of sense," said Carl Boronkay, general manager of the MWD. "It is a great advance over a project that reflects policy that is decades old and obsolete."

Boronkay said the opportunity to buy Central Valley water from farmers--at a minimum of about twice the current Central Valley Project rate--is far better and cheaper than the alternative of building a water project.

However, farmers in the Central Valley were angry over Miller's proposal.

Rep. Richard H. Lehman (D-Sanger), who represents farming interests in the San Joaquin Valley, said the proposal was nothing more than an agreement between two pro-environmental Democrats, Miller and Sen. Bill Bradley (D-N.J.), chairman of the Senate water and power subcommittee.

Lehman said the 1 million acre-feet of water for the environment would leave little or no water for growers during a drought. "This bill would result in complete devastation on (the agricultural) economy," he said.

Mary Wells, a Colusa County rice farmer and manager of the Westside Water District, said the bill was a recycled effort by Miller to impose water restrictions and fees on growers. "I came out of the hearing in shock," Wells said. "I see it as an attempt to ram this bill down the water users of CVP. . . . How can you do any good when it is going to put you out of business?"

As Miller was outlining his legislation, Gov. Pete Wilson's Administration was announcing in Sacramento that the state and the U.S. Department of Interior had moved a step closer to ironing out problems associated with transferring the Central Valley Project to state control.

Saying that it made more sense for one government entity to control the state's major systems, Wilson has advocated transfer of the project to the state and urged Congress to delay action until negotiations are completed.

Congressional Democrats saw Wilson's announcement as a ploy to stop a Central Valley Project bill from getting passed this year. They noted that the state-federal negotiations have not provided any solutions for repaying the current $400-million annual federal subsidy to operate the project.

"The (Bush) Administration's agreement with Gov. Wilson isn't reform," Sen. Bradley said. "It won't fix anything for anybody and it will probably cost the state of California billions of dollars it doesn't have. It is hard to take seriously."

California Resources Secretary Douglas Wheeler said the two sides have agreed that the best way to accomplish the transfer would be for the state to assume title by 1995. He said they determined that the state would pay for the system but that the amount would not be negotiated for a while.

Boronkay of the MWD said Wheeler and the federal negotiators had not "scratched the surface" on resolving the issues that would determine whether the transfer was in the best interests of the state, the environment or urban water users.

Boronkay said it won't be known whether the transfer helps urban water users until it is determined if any of the water supplied to agricultural interests could be available for urban interests.

Another key question is whether the state, as new owner of the system, would continue to grant long-term contracts to farmers and irrigation districts at highly subsidized rates, as the federal government does, Boronkay said. If those contracts are continued, he said, the state would essentially be getting a "financial white elephant"--expensive to operate and overgenerous to agricultural users.

Environmentalists said the major unresolved question is whether the transfer will make water available to the environment.

Bunting reported from Washington and Ellis reported from Sacramento.

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