Farmers Fuming Over Proposed Shift in Water Policy : Law: Conservationists say the stricter rules on subsidies are needed to save the resource.

As the Clinton Administration sought Friday to downplay the impact of an apparent shift in federal water policy, angry California farmers complained they are once again being “steamrollered” by environmentalists.

Farmers charged that a proposed settlement of a lawsuit against the government by the Natural Resources Defense Council will double or triple the price of irrigation water for thousands of family farming operations in a misguided bid to cut off subsidies to huge corporate farms.

The settlement, filed Friday in U.S. District Court in San Francisco, commits the Interior Department’s U.S. Bureau of Reclamation to rewrite regulations covering water distribution in California and 16 other Western states.

In California, the regulations cover about 20,000 farms on 3 million federally irrigated acres in the Central Valley, the heart of the state’s $18-billion-a-year agriculture industry.

It is aimed at settling a 1988 lawsuit brought by the NRDC aimed chiefly at halting a controversial practice that let big farming operations skirt rules limiting federally subsidized irrigation water to farms smaller than 960 acres.

Through trusts and other legal mechanisms, farming operations far larger than 960 acres were able to break up their acreage on paper to meet the definitions that let them qualify for subsidized water.

Water conservationists have long charged that such subsidies, which take the form of low-interest loans to pay for the water, encourage the growing of water-intensive crops and discourage the use of water-saving techniques.

But farmers contend that while there are schemes created solely to skirt the law, most are legitimate trusts aimed at preserving family farms or deals among neighbors to share equipment and services in the farming of separately owned properties.

“We have to cooperate for economies of scale,” says Ted Sheely, who has a corporation with his brother and brother-in-law to farm tomatoes and cotton southwest of Fresno.

The settlement was portrayed by the NRDC as signaling a major shift in federal water policy. However, it was attacked by farming interests and some lawmakers as a “back-room deal” from which they were improperly excluded.

“We were not included in the discussions, and that’s one of our beefs,” said Jason Peltier, manager of the Central Valley Project Water Users, which is made up of about 80 water districts that sell to farmers. “It affects potentially every farmer who farms with CVP water.”

Agriculture in general feels left out. Rep. Calvin Dooley (D-Visalia) tried to head off the deal, arguing that it exceeds the authority of the Bureau of Reclamation and goes beyond the issues raised in the NRDC lawsuit. Other farm groups said they will challenge it in court.

The “sweetheart deal” that excluded such parties to the lawsuit as the 80 water districts buying water in California’s Central Valley Project is in stark contrast to Interior Secretary Bruce Babbitt’s efforts at consensus problem solving in timber and grazing controversies, Dooley said.

But Daniel P. Beard, the environmentalist and newly named commissioner of the Bureau of Reclamation, said Friday that he doesn’t think that will be the result of what will be a two-year process. Current regulations will remain in effect until then.

“The bulk of these regulations are working and working effectively,” Beard said. “And I don’t see any reason why there is a need for a wholesale rewrite of the entire regulations.”

Dooley and Rep. George Miller (D-Martinez) attempted a legislative compromise in 1991 that would have significantly reduced abuses of the 960-acre rule. The measure cleared the House of Representatives but died in the Senate.

But in letters back and forth this week, the two California congressmen were sharply at odds on the NRDC settlement. Miller contends the court settlement does not dictate what will emerge from the review of the regulations.

However, Bureau spokesman Jeff McCracken in Sacramento said the settlement is clearly aimed at making large corporate farms pay more for water by closing loopholes in whatever new regulations result from the process.

Woutat reported from Sacramento and Bunting from Washington.