Battle Looms Over State Water Project

Environmental groups are rallying against a plan to cede some operations of the massive State Water Project to local water wholesalers as part of a broad restructuring of state government being considered by Gov. Arnold Schwarzenegger.

The governor is expected to signal next month his support, or rejection, of many of the 1,200 recommendations in a proposed top-to-bottom overhaul of the California bureaucracy.

The Environmental Water Caucus, a coalition of 20 environmental groups, has opposed a recommendation buried deep within the California Performance Review that officials allow water contractors to run part of the vast state aqueduct and reservoir system and to buy and sell water and water rights.

Environmental groups say some of those water agencies, including the giant Metropolitan Water District of Southern California, are dominated by development or farming interests and cannot be trusted to protect the environment.

“Environmental groups from throughout California oppose turning the State Water Project over to special interests, because it would take the public’s water and put it in the hands of a few districts to serve urban sprawl and polluting corporate agribusiness,” said David Nesmith, spokesman for the water caucus.

But water contractors said environmental groups are overreacting to plans for strictly operational changes in the nation’s largest state water system. Key policy decisions on when water would be released from Northern California storage facilities and pumped south through the California Aqueduct would still be made by state officials, they said.

“We’re pretty sensitive to everybody’s concerns,” said Terry Erlewine, general manager of State Water Contractors, 29 water agencies that helped finance construction of the water project in the 1960s and ‘70s, and that pay its operational costs and receive its water. “Environmental factors are regulated already [by law] and by fishery agencies through the Endangered Species Act.”

Contractors support changes in operating the State Water Project because they believe they can run aqueducts and reservoirs more efficiently and maintain them better, while saving money when buying huge amounts of electricity needed to move water. Overall, the project costs the water contractors $800 million a year to operate, money that comes from customer fees and local property taxes.

“We’re spending $200 million a year on just regular operations and maintenance costs,” Erlewine said. “And if we’re going to be paying all these costs, we should have a say in how to operate efficiently.”

Tim Quinn, an MWD vice president, said his agency is interested only in efficiency.

“We’re not looking to devastate the environment; we’re looking for opportunities to bring down project costs,” Quinn said.

The MWD, which receives half the project’s water and serves 18 million Southern Californians, has not yet endorsed the performance review’s recommendations, he said.

The plan recommends that Schwarzenegger issue an executive order restructuring administration of the State Water Project, which runs nearly the length of California, serves 23 million people, irrigates 750,000 acres of farmland and supplies wildlife refuges and recreational facilities. In Southern California, the Pyramid, Castaic, Silverwood and Perris reservoirs are part of the system.

It recommends that a joint powers authority of the water contractors help resolve bureaucratic problems related to a state hiring freeze, budget cuts and power purchases.

“Potential activities could include providing contractual services, operating and maintaining portions of the project facilities, and acquiring water and water rights,” the performance review said.

State hiring freezes have left vacancies at critical water facilities and led to more than 40,000 hours of employee overtime, the report said. In addition, the state cannot pay workers enough under its Civil Service system to hire highly skilled consultants to purchase electricity and schedule its use and to coordinate water deliveries, the plan said.

The water project, which uses more electricity than any other customer in California, could save $10 million to $50 million a year if contractors’ consultants purchase power, the report said. By comparison, the project spent $570 million for electricity in 2001.

The plan noted that contracting agencies already run some parts of the State Water Project, the Coastal Aqueduct and an aqueduct extension in the San Bernardino Valley. In addition, since 1995, the federal Central Valley Project has successfully allowed three water contractors to operate canals, according to the performance review.

Environmentalists acknowledge bureaucratic problems with state operations. And independent analysts say the state freeze on hiring project workers is illogical because workforce costs are underwritten by the water contractors, not the state general fund.

But environmental groups say they cannot trust the water contractors with more responsibility, because they’ve cut questionable closed-door deals with state officials on the transfer of water rights and increased pumping of the Sacramento-San Joaquin Delta while excluding environmentalists and the general public from those meetings.

“State oversight of the project should be strengthened, not weakened,” said John Gibler of Public Citizen, a Washington-based nonprofit organization founded by Ralph Nader. The State Water Project “should not be pitched over to agencies dominated by the state’s largest agribusinesses and developers.”

Gibler said one self-serving deal cut by water agencies was the transfer of control of the Kern Water Bank from the state to five Kern County water agencies and a Los Angeles businessman in the 1990s after the state spent $74 million on the project.

The Kern Water Bank -- which was intended to help balance the state’s water supply to cities, farms and fish in times of drought -- has instead allowed a large farming company to double its acres of nuts and fruits since 1994, he said.

The water bank’s operators have argued, however, that the underground reservoir was an inoperable “white elephant” until the water agencies spent millions of dollars to improve its plumbing.

They say it now provides water reserves to a variety of users, including residents of Bakersfield.

Jonas Minton, an analyst for the Planning and Conservation League in Sacramento, said he is concerned that if water contractors begin to purchase energy, they could use that authority to direct when water is released from Northern California reservoirs and pumped south, draining water from the ecosystems of northern rivers and the delta.

“These decisions should be made” by the state, Minton said. “It has a broader responsibility to protect the public trust.”

Erlewine said the environmental groups are trying to confuse the issue. The results of contractors’ private, but legal, meetings with state water bureaucrats in Monterey in 1994 and in Napa last year were made public in accordance with state law, he said. Contractors agree that management of facilities that affect the delta should remain under state control, he said.

“What we’re saying is that it makes sense for the State Water Project to operate like most other utilities operate,” he said. “The state bureaucracy is not set up for managing a utility. They’re having a hard time. And there’s a lot of taxpayers’ and water users’ money at stake.”