TUESDAY, APRIL 26, 1994, 10:00 A.M. MR. CAFFREY: If you'll find your seats, we will begin the proceeding. Good morning and welcome to these proceedings. My name is John Caffrey, Chairman of the State Water Resources Control Board. By way of introduction to the people at the dais, to my far left is our Executive Director, Walt Pettit. Proceeding from there, Marc Del Piero, Board Member; Mary Jane Forster, Board Member; then yours truly, and on my immediate right is Board Vice Chairman, James Stubchaer; Board Member John Brown. Welcome to you all. Before we get to the blue cards this morning and hear your presentations, I am going to read a statement into the record that will take a few minutes, which will lay out what we are about today and how we intend to proceed. This is the time and place for the State Water Resources Control Board to hear comments and recommendations regarding the water quality standards for the San Francisco Bay/Sacramento-San Joaquin Delta Estuary. Today marks the beginning of the Board's triennial review of its 1991 Water Quality Control Plan for the estuary. We are conducting a series of workshops through July on a number of issues and factors that affect conditions in the estuary. Our purpose is to develop new water quality objectives for protection of the estuary's public trust values. We intend to do this in a manner which respects the needs of the other established beneficial uses of Delta waters. We intend to develop and release a draft plan by the end of this calendar year. In a few minutes we will begin hearing presentations from the various parties who wish to speak on the subjects noticed for today's workshop. If you intend to speak today, please fill out a blue speaker card and give it to our staff at the front table. Our staff at the front table, lest I forget to introduce them, we have our Senior Engineer, Tom Howard from the Delta Unit; and Barbara Leidigh, who is from our legal office and is our senior counsel. We also have other staff present today who will assist us from time to time. The comments and recommendations received today and during the workshops in May, June and July, will be used to prepare a draft water quality control plan. We expect to release a draft in December, 1994. About two months after the draft is released, we will hold a hearing on the draft. After the hearing, we will make whatever changes are needed, provide copies of the revised draft to the interested parties, and then hold a Board meeting to consider it for adoption. When it is adopted, the new water quality plan, with its new or amended water quality objectives, will replace the 1991 Bay-Delta Plan. We intend to include objectives that will supplant the new standards which the United States Environmental Protection Agency is proposing. The plan will include a program of implementation which may outline an approach for implementing the plan under water rights law, but the plan will not establish any responsibilities among the water right holders. The water right proceeding that will commence after the water quality control plan is adopted will address the responsibilities of water right holders. Conduct of the workshop: Today's procedures are described in the notice for today. Additional copies of the notice are available from the staff. This workshop and the workshops in May, June and July will be informal. Today we want to hear from the parties on the key issues specified for this workshop. We will give each party 20 minutes for an oral presentation. I should say up to 20 minutes. You don't have to take 20 minutes if you don't need 20 minutes. If a party needs additional time, the party's representative may request additional time at the beginning of the presentation. Please explain why the additional time is necessary. If we are not able to provide you all the time you think you need, and such a decision would be out of fairness to the other parties, we encourage you to submit your presentation in writing. In the interest of time, we ask that parties avoid repeating details already presented by other parties wherever possible and simply indicate agreement. Alternatively, parties with the same interests are welcomed and encouraged to make joint presentations. We will also accept and we encourage written comments. You need to provide the Board and its staff 20 copies of any written comments and recommendations, and make copies available to the other parties who are here today. A court reporter is present and will prepare a transcript. If you want a copy of the transcript, you must make arrangements with the court reporter. There will be no sworn testimony or cross- examination of the parties, but the Board members and the staff may ask clarifying questions. Now, we have at the moment about 20 cards, and I have had some requests for people who have scheduling problems and I will announce that in a little while. We do have two days scheduled for the workshop, and I don't know if there will be blue cards coming in throughout the course of the day, but if this is any indication of the number of cards we're going to have, and if the presentations are held reasonably in check in terms of their time, it's conceivable that we would complete the proceedings today, but we will take a look at that situation as the day progresses. If we have to go into tomorrow, we would be in our hearing room across the street. Key issues -- today's key issues are: A. Which standards should the Board focus on during this triennial review? B. What level of protection is required by the California Water Code and the Clean Water Act for protection of public trust uses in the Bay-Delta estuary? C. What are the principal environmental, water supply and economic effects of U. S. EPA's draft standards? Should these standards, or modified versions of these standards, be considered as alternatives in this review? In addition to comments on the key issues, the Board welcomes written or oral comments on the timing, or placement, if you will, for the discussion of specific subjects in this series of workshops. Other key issues will be discussed at the other workshops in May, June and July. By now you should have received a notice listing the key issues we currently expect to discuss during those workshops. I will call the parties in the following order: 1. Elected officials for the State, Federal and local governments; 2. Representatives of State, Federal and local agencies; 3. All others in the order that your speaker card was submitted to the staff, unless you have special time constraints which you have noted on your speaker card. Before we get into calling the various speakers, I would like to say to the parties that the Board encourages you throughout the duration of these workshops to work together to identify and develop areas of agreement. The Board is interested in having this kind of information as it hears facts and opinions regarding the very complex subject of standard setting for the estuary. We hope that all the parties will use these proceedings as an opportunity to help the Board develop a plan that will afford reliable and reasonable protections for the estuary and all its beneficial uses, rather than using the workshops solely to assert positions of advocacy. We wish to note the presence of representatives of Club Fed. Welcome to members of that agency. I see Mr. Seraydarian is here and will soon be making a presentation. We have noted with interest the settlement agreement between the U. S. EPA, Region 9, and the various environmental groups, and we also note the express desire of Mr. Seraydarian and the staff, and other members of Club Fed to work as closely as they can with this Board in its process to hopefully develop standards that are acceptable to all parties. Now, that completes my statement. Do any of the Board members wish to make a comment at this time or add anything to what I have said? Nothing at this time. Mr. Pettit, do you wish to make any comments or add anything? MR. PETTIT: No, Mr. Chairman, we don't have any formal staff presentation prepared. I believe that the March 25 notice lays out the process for the next few months pretty well, and your opening statement pretty well covers the issues and the procedures for today's session. I think it would be most productive to get right to the presentations by the parties. I will ask Ms. Leidigh and Mr. Howard if they have any last-minute housekeeping details to advise you before you get started, but that would be the only thing. MS. LEIDIGH: I don't have any. MR. HOWARD: No. MR. CAFFREY: All right, thank you all very much. I notice there are some individuals standing in the back. There are, at least from this point of view, still a number of seats available in the audience. Please feel free to sit down and relax. This probably won't be a very short day, so I just thought I would mention that. Well, as I mentioned earlier, we do not have cards for any elected officials yet, so we will go to our public officials representing State, Federal and local governments. We have a request from Mr. Seraydarian of the U. S. EPA, that he be allowed to come early because of the press of his schedule, and I believe, Mr. Seraydarian, you have a panel presentation that you want to make with other members of Club Fed; is that correct? MR. SERAYDARIAN: That is correct. MR. CAFFREY: Please come forward and good morning. MR. SERAYDARIAN: Good morning, Mr. Chairman and Board members. Thank you for this opportunity. We are here as the Federal Ecosystem Directorate. With me is Wayne White with the Fish and Wildlife Service, Dan Fults with the Bureau of Reclamation and Roger Wolcott with the National Marine Fisheries Service. I want to make reference to a memorandum of coordination that was signed last September, 1993, between and amongst the U. S. Fish and Wildlife Service, National Marine Fisheries Service, Bureau of Reclamation and EPA. This created the Federal Ecosystem Directorate with the goal of coordinating Federal resource protection and management decisions in the Bay-Delta estuary and its watershed. The memorandum specifically called for coordination with the State, and I will quote: Coordination also states the Federal agency's commitment to work closely with all the involved agencies of the State of California and the Federal government so that to the greatest extent possible our implementation of Federal law in the Bay-Delta estuary complements the State's role in allocating water resources and the State's continuing efforts to preserve, protect and enhance the natural resources of the estuary. I will make a short statement as the lead for this particular workshop and we expect that we will rotate the lead and be present for all your workshops. I think some of the other subsequent subjects are more appropriate for Fish and Wildlife and NMFS and the Bureau to take the lead. I want to recognize the importance of the State Board's role, first of all. We look forward to working with the Board in developing mutually acceptable standards and we are pleased that the Board has chosen to develop new standards under the triennial review process established by the Clean Water Act and our goal continues to be the State adoption of approvable standards. I would like to provide a brief status report on the EPA process. As you all know, we disapproved the fish and wildlife standards in September of 1991. EPA held off on promulgating any Federal standards in hopes that the State's process would lead to approvable standards. When D-1630 was withdrawn, we moved ahead together with the other Federal agencies to propose Federal standards and other actions under the Clean Water Act, the Endangered Species Act, and the Central Valley Project Improvement Act. EPA specifically proposed three sets of criteria, a two-part per thousand salinity criterion in Suisun Bay, survival targets for migrating salmon and salinity criteria to protect striped bass spawning habitat on the lower San Joaquin. We have also been working closely with the Department of Water Resources, the Bureau and Contra Costa Water District and others to develop modifications that would better tailor the standards to natural hydrologic conditions. Our goal is to adopt final standards that would restore the health of the estuary while minimizing impacts on water users. The comment period closed March 11. We encouraged comments on alternatives that would provide more flexibility and reduce the water supply impacts while maintaining the environmental benefits. We are generally pleased that several organizations took this challenge seriously and submitted detailed alternatives. We are now in the process of reviewing these comments and we would be happy to make them available to the Board. We recently announced that we have entered into a settlement agreement to issue final standards by December 15, 1994; and Fish and Wildlife has agreed to issue its final decision on the designation of critical habitat at the same time. This should allow us sufficient time to address the comments received on the proposal and to work with the Board in developing draft standards. Because we are now in the decision-making process, we cannot discuss our final conclusions with respect to the issues raised in the proposal. We can discuss, however, the requirements of the Clean Water Act and how they relate to the Board's process and the development of final alternatives before the final decision. I would like to address the key issues raised by the Board: What standards should the Board focus on? I am paraphrasing. Because we approved the standards in the Board's 1991 plan for agriculture and municipal and industrial uses, we agree that the Board should focus on the fish and wildlife standards during this triennial review. Second, what level of protection is required by the Clean Water Act and State laws? The Clean Water Act requires that State standards must be based on sound scientific rationale and be sufficient to protect the most sensitive designated use. In our proposed rule and previous statements, we have suggested that this requirement would be met for the estuarine habitat and fish migration uses by standards that would restore habitat conditions to those that existed in the late '60s and early '70s. For the San Joaquin River salmon, we propose somewhat higher levels of protection because the runs are smaller and more at risk. To protect striped bass spawning habitat, our proposal was based on more specific information developed by the State Department of Fish and Game on salinity levels necessary to protect this habitat in the lower San Joaquin River. We also raise this issue for comment as part of the proposed rule and have received comments on the level of protection. Third, the Board also asked about the environmental, water supply and economic effects of EPA's draft standards, and whether the standards -- or modified versions, should be considered as alternatives in this review. We hope the Board will build on the momentum created by the proposed rule and ongoing efforts to address the issues raised by the commenters. Once again, we would be happy to make available the comments received on the proposed rule to you and your staff. We certainly hope and expect that the Board will develop and adopt standards that are consistent with Federal requirements, and we look forward to working with you to accomplish that goal. And we would all be happy to answer any questions that the Board members may have. MR. CAFFREY: Thank you very much, Mr. Seraydarian. Do the Board members have any questions at this time? Nothing at this time. How about staff? We certainly appreciate your being here for the kickoff of our process, so to speak, Mr. Seraydarian, and we look forward to continued involvement of the members of Club Fed, and we certainly are hopeful as well that we can develop standards that are mutually acceptable, not only to your agency and ours, but to all parties, so we look forward to working with you in the next several weeks and months, and toward that year-end goal. Thank you very much. I have a request from John Wodraska, General Manager of Metropolitan Water District, and Andy Moran, General Manager for San Francisco Water, who are desirous of making a joint presentation, and you may have other parties as well. Then, after that presentation, we will hear from the Department of Water Resources, and then, depending on where we are at that point, we may go out of category to accommodate some people from the other categories that have time constraints, and we will see where that takes us. Good morning, gentlemen. Please introduce your- selves for the record. We know who you are, but we want to get it in the transcript. MR. MORAN: My name is Andy Moran and I am General Manager of the San Francisco Public Utilities Commission and current Chair of the California Urban Water Agencies. MR. WODRASKA: John Wodraska, General Manager of Metropolitan Water District of Southern California. MR. QUINN: Tim Quinn, Director of the State Water Project and Conservation Division, Metropolitan Water District of Southern California. MR. BERLINER: Tom Berliner, Deputy City Attorney, City and County of San Francisco. MR. CAFFREY: Welcome to you all. MR. MORAN: Mr. Chairman and members, we have several submissions that we will not read to you, but we will provide to the clerk. The first is a statement of the San Francisco Public Utilities Commission, basically a two-page statement. We also have a statement from the California Urban Water Agencies, both dated today. Coming to the Board are copies of the Public Utilities Commission comments on the EPA proposed regulations, specifically on standards, and the draft RIA. We also have copies coming of the comments by the California Urban Water Agencies on the EPA standards as well. In addition to that, as background to the CUWA comments, there were about 800 pages of technical reports which we have made available to the staff and would like as part of the record. We are a little reluctant to provide 20 copies of that, but we will look to your guidance on that matter. My role here today, really, is to represent the California Urban Water Agencies and just a brief word as to who we are. We are an association of 11 of California's largest urban water agencies. We serve roughly 20 million water consumers in the state and support roughly three- quarters of the State's economic activity. CUWA is a non-profit organization. One of our primary roles is to sponsor technical review and studies. We have done several of those over the years. Also, one of the principal purposes of the organization from the first day was to bridge some of the traditional gaps that exist within the water community and perhaps the most successful bridge that we have done is between north and south urban water interests, and my presence today with Wodraska, Tim and Tom, I think is evidence of that fact and evidence of the fact that northern agencies can be concerned about reliable water supplies, and that southern agencies can be concerned about fixing problems that exist in the Delta. We are committed to both of those. Shortly after EPA issued its Draft Regulations, CUWA commissioned a series of studies which took over four months. They consisted of work by biologists and hydrologists, statisticians, engineers and other professionals, some of whom were obtained directly by CUWA, some were provided by member agencies. We also work very closely and cooperatively with the Delta-Mendota Water Authority incorporating the work that they were doing at the same time. From the beginning of that effort, the presumption was that that work would be done in public, it would be subject to public review, that we would basically cast our lot with whatever the science determined, and that that work would be public whether we liked the answer or not. That has happened. Those reports are public, they are being discussed broadly today, and one of the things that CUWA is committed to is making its staff and members available to review those findings and reports with people who have an interest in doing so. One thing that I might mention is that this is probably not the forum to go into detailed technical review of all those reports and findings, but we would offer to do that on any basis that is useful to this Board, whether it is staff to staff, some of which has already happened; whether it is in the form of work groups, whatever works we will be glad to do. The results of that work in general confirms and refines work that has been done in other forums, both by EPA and others. For instance, it does support the use of standards, but it also recommends refinements to the standards which end up providing equivalent protection for the estuary but makes more efficient use of water allocated to the estuary. Specifically, CUWA recommends the adoption of a Suisun estuary standard to be measured at the confluence of the Sacramento and San Joaquin Rivers, and also, at Chipps Island, which would provide a level of protection for the estuary which is as effective, if not more effective, than the EPA proposal in protecting estuarine habitat and fish resources. And it is fully consistent with EPA's stated goals with lower water supply impacts. CUWA does not support extending the standards to include Rowe Island, Port Chicago, for four reasons: (1) At this location the correlation between flow and fishery abundance is very weak; (2) The water cost is very high; (3) The Chipps Island standard concentrates the fisheries in an environment specifically in the Suisun estuary which is more desirable for estuarine processes; and (4) As to some species the standards may result in counterproductive environmental effects. There are some species which actually seem to suffer by the use of the Rowe Island standard. On the goals of EPA's proposed fish migration and cold-water habitat criteria, these goals are not met by the EPA proposal. The proposed criteria are not directly indicative of biological response because the indices are not valid over a wide range of hydrologic and hydraulic and operating scenarios. Rather, criteria for salmon smolt survival are more appropriately addressed by a basin-wide management plan developed to control the full range of variation which affects salmon smolt survival. Several activities are currently under way basically working on recovery programs, the San Joaquin River Management Plan, the Central Valley Project Improvement Act; implementation efforts all address that activity and we feel are more effective. As to the striped bass spawning standards, we believe that it should not be set as proposed by EPA. Action to improve striped bass spawning habitat would be better managed in a multispecies planning effort and should be consistent with the U. S. Fish and Wildlife Service and NMFS's recovery plans for threatened and endangered species. Such actions should also be consistent with the State's program to regulate and control agricultural drainage. I would also like to refer to something which is not part of CUWAs comments, but is in San Francisco's submittal to the U. S. EPA. In Appendix 2, there is a letter from Dr. Peter Moyle which addresses this issue and specifically he states that there is likely no genetic distinction between the Sacramento River and the San Joaquin River striped bass, and because of that, there is no need for special protection. The specific criteria to enhance the non-native striped bass population will increase predation pressures on other species such as the already depressed San Joaquin stock of chinook salmon. And finally, any specific additional protection for the striped bass should be deferred, and that's important, deferred and not eliminated, but deferred until there has been significant recovery of the San Joaquin salmon population. That's very briefly an overview of the process that the CUWA went through in its findings, and I would like to turn it over to John Wodraska. MR. WODRASKA: Mr. Chairman and Board members, I sit as the General Manager of Metropolitan Water District, but it is important for you to know that I sit on this panel as a member of the urban coalition or the California Urban Water Agencies. When I first came to Metropolitan, I asked what's your mascot, and they told me an 800-pound gorilla, and you don't often find an 800-pound gorilla sitting with other people or joining up in a team, and it's retiring the 800- pound gorilla at Metropolitan, and it is most important that you understand we are joining together with the urban interests in the State of California to solve what we believe are the most important economic and water resource problems facing California and maybe the nation. One of the questions that I got asked as we came out with our March 11 statement, which Andy has summarized the urban position to respond to the EPA proposal, and the question was, why do the urbans do this? And it's important for you to understand and the State of California to understand that under the Clean Water Act when EPA came out with their proposal, if no one had developed an alternative, they are required to proceed based on the information they received going through that process. By the urban alternative having been submitted, laying out the documentation and the science that was submitted, that gives us flexibility and what we think is a preferred alternative, and as a matter of fact, EPA is required to consider alternatives that are less costly but accomplish the same objective. We think we have come up with a better approach and would invite the State Water Resources Control Board and other entities to review what the urbans have put together as an alternative in managing the Bay-Delta estuary. One of the other questions that was raised is, are the urbans trying to pre-empt the State Water Resources Control Board? Why did we jump into this fray? The fact is we have so much at stake we could not afford not to be involved in it, but clearly understand, our position is the State needs to exercise the leadership. We see a State-Federal partnership with the emphasis on the State, and we look forward to this being the kick-off of that leadership process. It is really so important for us to solve this problem. This is not going to be easy and the stakes have been raised recently. Last week I was invited to attend in Washington with the National Academy of Engineers hosted by the National Academy of Sciences, how as a nation do we solve complex engineering problems that have ecological constraints? There were about 30 top people in the country, engineers and systems ecologists, and we used the Bay-Delta as one of the case studies and identified that we don't have a successful track record in this nation of how do we retrofit an existing engineering problem to solve environmental problems with it. We are creating a new record here and creating a new mousetrap, and how as a society are we going to make these things work. So, clearly, what you are embarking on, you cannot go and say, let's learn based on what somebody else did or rely on that track record. We are plowing new ground here. Also, the reason the stakes have been increased -- on March 21, Standard & Poors' Credit Week Municipal came out with an article and let me quote: The allocation of water supplies for consumption in California remains in gridlock as both Federal and state forces try to achieve a workable solution to the conflicting interests in the Delta. The day after, the Bond Buyer, on March 22nd, had this headline. It said: California Water Credit Ratings at Risk, Standard & Poors Warns. The Standard & Poors article went on to say: Problems faced by California water suppliers will have a generally negative impact on credit quality for years to come due to the economic impact and rising costs associated with water supply and reliability. Now, you might ask, what does this mean? Standard & Poors is saying a down-rating, decrease in the credit rating for California water agencies. Metropolitan is the anchor credit rating west of the Mississippi. If Metropolitan, which serves as -- if you think of dominoes, loses a credit rating, which would be 25 basis points, to our agency alone with our capital improvement program, we are looking at an increase of 344 million dollars of added interest. It you look at the other capital improvement programs throughout just Southern California, add another 250 million dollars in added interest costs, plus everybody else that would be affected if our credit rating is adversely impacted. It is imperative -- the business community is sending a warning shot over our bow and saying, we have to solve this problem from a financial standpoint, and the stakes are indeed very high. I mention that the nation is watching. This is New York and Washington, commenting and focusing on what we are doing in California to solve this problem. Just as in the EPA proposal, when the urbans got together, and we felt those standards were too rigid and they weren't going to accomplish the end objective, we also asked that the State Water Resources Control Board rely on the information, we pledge our support in generating the information, the modeling. There is certainly a lot of data, the analysis of this data, to come up with the solution that is going to address the issues and set a standard by the end of this calendar year, which is really going to be critical for the future of California. The urbans are sitting on the side lines. We're passing the baton to the State. We think we have helped get us to this point, but really, the work is in front of us and we pledge our support to make this successful. Thank you very much. MR. CAFFREY: Thank you, Mr. Wodraska. Mr. Quinn, are you next? MR. QUINN: I think so, yes. Tom and I would like to address the specific questions that you identified at the outset of this hearing. I will address the question of what standards are implied by the work that we think the Board should focus on, and very briefly, a comment on the impacts of the EPA proposal. And then, Tom Berliner of San Francisco will address the question surrounding the level of protection, and we will also suggest a fourth question we think is important: What are the specific procedures that the Board might consider for submitting their results to the Federal Government that respects the relative roles of the Federal Government and State Government in these matters? Let me also point out that in addition to the materials that Mr. Moran indicated would be submitted, there were comments filed by an ad hoc group that we called the Bay-Delta Urban Coalition that were joined by more than 20 urban agencies. Those comments, which were submitted to EPA on March 11, will also be put into this record so the Board and the Board staff have access to them and can use them in their deliberations as well. Turning to the question of appropriate standards, as Mr. Moran implied, first to the issue of an estuarine habitat standard, we believe the inclusion of such a standard is essential in what the State Board produces. We would recommend that you give strong considerations to the urban alternative as a way to approach that estuarine habitat standard. Second, with respect to salmon, we have disagreed with EPA's approach to protecting salmon, but recognize the importance that salmon smolts be protected in the system and think it is appropriate for the Board to consider operational constraints in its deliberations as it comes together with a program for the Bay-Delta. Third, as to striped bass, as Mr. Moran indicated, we think the striped bass should be considered only as a part of a multispecies effort and it is probably wise to allow the salmon and other endangered species and the habitat to recover before you engage striped bass in earnest. Fourth, with respect to Delta resident fish, our strong supposition is that other standards will adequately protect the other resident fish, so it is not clear to us that separate standards for those species are required, but they probably need to be looked at as part of the process. Fifth, with regard to Suisun Marsh, we would like to suggest that the Board consider adopting the 1985 Suisun Marsh Preservation Agreement as an appropriate means of protecting the habitat and environmental values in the Marsh. Lastly, on the question of M&I, municipal and industrial standards, for the purpose that they now serve, which is protection of water quality for industry primarily, we see no reason to change those standards. However, we would remind the Board that virtually all urban agencies in the State have serious concerns with drinking water quality and source quality of the water that we now divert from the Delta. Let me also add that we will submit some written comments to follow up these verbal comments once we can all agree to words on the same page. Very briefly, impacts of the EPA proposal -- they are well documented in the CUWA material and other materials being submitted to you. The bottom line is we believe that the impacts of protecting the estuary can be substantially reduced with a carefully drawn up plan that is based on sound biology. The latest estimates we have, and we are still refining them, but it appears the urban alternative would reduce the water supply impacts and, therefore, the economic impacts of the EPA proposal by approximately 40 percent. MR. CAFFREY: Thank you, Mr. Quinn. MR. BERLINER: Thank you. Good morning. I am Tom Berliner. The Board also asked for information on the reference period that should be used to guide their decision, and we are recommending that a reference period of the late 1960s to mid-1970s be adopted as an appropriate starting point to begin focusing on the environmental needs of the Bay-Delta environmental resources. We recognize that there is value in identifying a desired level of protection in order to focus the analysis which California law requires. We also understand the need in view of the documented decline in the number of aquatic resources in the Bay-Delta estuary for a concrete goal to guide the actions necessary to allow restoration of these resources to an appropriate level. The EPA and Fish and Wildlife Service and others have suggested that a level of protection which would restore habitat conditions to those existing in the late '60s and early '70s is required. In the recent EPA proceedings to adopt Federal Bay- Delta standards, we assumed this target period for the purpose of analyzing EPA's draft estuarine habitat proposal. In the course of doing so, we determined that with important revisions the estuarine habitat standard which is based on the proposed target period would likely provide reasonable protection. We think that this period should be considered as one of the alternatives by the Board. The estuarine habitat standard proposed in our recent comments was developed with the intent of providing a flow regime approximating that which occurred during the target period. You will be receiving additional data concerning this proposal in the submittals that were referenced before. As Mr. Quinn stated earlier, an important question that we thought that the Board should address is how the State's program will be submitted to the EPA. Under the Clean Water Act, EPA's principal authority in the area of water quality concerns discharges. We think that the Board has the ability to adopt any one of three types of standards in this proceeding. The first would be a true water quality standard. The second would be a fresh water outflow or salinity repulsion standard, and the third would be operational constraints such as diversion limits and pumping restrictions. I might add a fourth, which is that there also needs to be a recognition that water diversion and outflow are not the only impacts on the system and that standards need to be developed to address the diversity of other issues that are affecting water quality and water use in the state. It is our belief that only in the first category, water quality standards, must the State submit this question to EPA for its approval. Outflow requirements and operational constraints could be submitted, but there is no absolute requirement. In addition, you can consider non-quality measures adopted by the Board for inclusion in the program of implementation under State authority. Another approach would be to submit the entire package to EPA in order to apprise EPA of the State's overall approach consistent with the options described previously. This would provide the EPA with a clear demonstration of the State's intent under Section 303 and applicable other State and Federal laws. In closing, I might add a note that each of us here has been in Washington, D. C., and several others as well from the ad hoc group that was formed that Mr. Quinn mentioned, and we have had a very good reception in Washington. We have met a lot of people that are keenly interested in this ranging from representatives of the White House, EPA, Department of the Interior, and elected officials, including Representative Cal Dooley and other offices where we have met with staff, and without exception, the effort by the California Urban Water Agencies and the integrity of the science behind the work that they did, was well received. I don't think anybody was at the point of endorsing the CUWA recommendations partly, of course, because they hadn't had a chance to study them and understand them, but as far as the effort was concerned, it was extremely well received and we have been told specifically that EPA regards the work that the scientists did as being legitimate science and worthy of respect and consideration. And we offer the State to work closely with you to follow up on the CUWA work and to continue to work with the Federal Government and other interested parties who want to investigate further the CUWA alternative. Thank you. MR. CAFFREY: Thank you very much, gentlemen. We do recognize your positive effort to come up with an analysis and alternative to the proposed standards the U. S. EPA gave us, and we look forward to your continuing exercise and we hope it will be a part of this workshop where appropriate, and that you will keep our staffs informed as you refine your analysis and findings. With that, before you leave, I would like to ask, Mr. Del Piero, did you have a question? MR. DEL PIERO: Mr. Moran, I have not had the benefit of seeing the report supplied by the California Urban Water Agencies, and if it is not too much trouble, could you forward a copy to my office? MR. MORAN: We will certainly do that. MR. DEL PIERO: I understand not all of the report is finalized; is that correct? MR. MORAN: The report is finalized. The submission that we made to the EPA, the official submission was complete some time ago, and we will be glad to get you a copy of that. MR. DEL PIERO: If you would be so kind. MR. CAFFREY: I think we have one set of the volumes, which is making its way around. MR. MORAN: You will receive 20 of those probably within the next 24 hours. We will make sure you have a copy directly. MR. DEL PIERO: The other comment I wanted to make was that Mr. Wodraska and I have met before today, and the other Board members are aware of the comments that he made about the weakness of the bond market, which is something that we are aware of. I was afforded the opportunity to be invited to a conference of investment bankers and bond brokers about a month ago at Scottsdale, Arizona, to talk about financing public facilities in the state, and virtually to a person, with the exception of those that were located in the State of California, there was an express concern about the weakness of the water system in the state and the express desire that we resolve both the environmental problems as well as the supply problems. And it was interesting because the representations indicated that one-half of the equation was not going to be considered by them to be a solution. Both halves of that equation were going to have to be resolved for them to have confidence in continuing to invest in facilities for the State of California. So, it is really interesting to hear your perception on that because it's virtually the same thing I heard a month ago in Scottsdale. MR. WODRASKA: Mr. Del Piero, I think we're going to have a new player and I think it is going to be the business communities of California, and this week we are meeting with the Federal Reserve Commission, who has asked for a meeting of the major business community to understand the full implications and what's going on with respect to water resource planning. So, it is our desire that as you have your future hearings, that the business community become more active than they have in the past, and clearly understand what is at stake for California. MR. DEL PIERO: It's particularly interesting for me because there was not a reluctance, there was not an intentional express reluctance to invest in California; it was a reluctance to invest in an area where there was uncertainty. And as we all know, the business community, more than anything else, wants certainty in terms of resource availability because they have got enough problems to deal with running a business, let alone worrying about whether there is going to be adequate water coming out of the tap. MR. WODRASKA: A week doesn't go by that somebody doesn't call up and ask about reliability and affordability of water for the future of California. MR. CAFFREY: Thank you, Mr. Del Piero. Any other members? Mr. Brown. MS. BROWN: Mr. Wodraska, a 25-point down rating, if I understood your correctly, I think I ended up 600 million dollars in the MWD service area. MR. WODRASKA: Actually, we are into a 6 billion dollar capital improvement program, which, with a 25-basis points would amount to about 344 million dollars of increased interest payments just to our capital improvement program, but all of our member agencies, if you were to combine all of their capital improvement programs as well, that's another 6 billion dollars, so just for the water agencies in Southern California, you are looking at approximately 700 million dollars added interest costs. MS. BROWN: That's the criteria currently proposed by EPA that you are responding to? MR. WODRASKA: I want to make it clear that we have talked to Standard & Poors and there is no indication of any immediate negative credit rating. Met bonds are still a good investment. The question is if we don't as a State solve this gridlock problem, and they are talking in a generic sense and they did not get into any -- if you follow any of these proposals -- they are simply giving us the message and we need to solve this problem. MS. BROWN: Thank you, that's very helpful. EPA has a copy of your report and recommendations or suggestions. Are you expecting a response back from that any time soon? MR. WODRASKA: I think that will be incorporated -- they are going through our technical information now and as Tom Berliner indicated, we have given them the 800 pages of technical and the modeling, and all the work that we had done in developing the urban position and have a working relationship with them. MS. BROWN: So, when we receive it, we will have your comments added to it? MR. WODRASKA: Yes. One of the questions you might want to ask EPA at future meetings is their review of the work on the urban position and assessment of the science that we submitted. MR. CAFFREY: I think it is important -- we may want to give Mr. Seraydarian an opportunity to comment. I think there are perhaps legal restrictions as to how much they can comment. This is part of the commentary process in your promulgation; is it not, Mr. Seraydarian? I don't want to give the impression, maybe you do, that you intend to answer all critical comments prior to your finalization of your standards. MR. SERAYDARIAN: No. We will not specifically respond to all comments before the final action, but we will try and develop an array of alternatives based on the comments we have received for the final decision making, and we will try and involve the interested parties as much as we can in that process respecting our decision-making process under Federal rules. MR. CAFFREY: That was my understanding of your process. I just didn't want to leave any misimpression with any of the Board members or anyone in the audience. MR. MORAN: And, Mr. Chairman, the material you will be receiving in the next few days, obviously, will not have those comments attached. It will be our submission to them without comments at this point. MR. CAFFREY: Anything else? MS. BROWN: No. MR. CAFFREY: Mr. Pettit. MR. PETTIT: No. MR. CAFFREY: Staff? MR. HOWARD: No. MR. CAFFREY: Thank you, gentlemen, very much for appearing today. We appreciate it. It has been very helpful. We will next hear from the Department of Water Resources that has asked for about half an hour, which we will grant. The last speakers took a little extra time. I think it was appropriate. They were representing a number of parties. After that, let me announce we will go out of category and hear from Mr. Greg Thomas from the Natural Heritage Institute. He has a timing problem and we want to get Mr. Thomas in before noon, so we will do that. Good morning, Mr. Potter. MR. SCHUSTER: Can we get who will be after Greg? MR. CAFFREY: Sure. Mr. Schuster is asking -- perhaps if I could read some names to see what the order is -- that is a good suggestion. Let me do that. After Mr. Potter, like I say, we will go to Mr. Thomas. I do intend to break for lunch around noon, and after Mr. Thomas, we will have David Anderson, and then we have Perry Herrgesell, then Dave Schuster, Dave Whitridge, Austin Nelson, and Austin Nelson asked to speak before lunch. I am sure we are going to be able to accommodate that. Then Bill Baber, Michael Heaton. That is the order and that will probably take us into the mid-afternoon. All right. With that, Mr. Potter, why don't you proceed. MR. POTTER: Thank you, Chairman Caffrey, and good morning, members of the Board and staff. It is appropriate that you begin this proceeding in a year in which we are going to see the Sacramento River index in the neighborhood of 8.5, so we will be able to watch California struggle with short supplies but plentiful storage. The Department supports the Board's efforts to have California seize the initiative to protect the estuary and to protect the reliability of the State's water supply system. As you heard from the panel that just left, the stakes are extremely high, both in terms of water and in terms of economic impacts. The Department especially appreciates the workshop format that you have chosen, which will enable you to have a free give and take of ideas. As you know, State agencies are involved right now with the Federal Government in an attempt to draft a framework agreement which would supplement the work that you are doing here today. But with or without that agreement, it is appropriate that the Board lead this effort. The Department team involved will be a group of people with whom you are familiar from our past work together. I will just remind you that our team is led by Ed Huntley, the Chief of the Division of Planning, and Dave Anderson from our legal office, and Dave will now respond to the three specific questions that you put forward in today's announcement, and I congratulate you in undertaking this important mission. MR. CAFFREY: Thank you very much, Mr. Potter, for being here. We look forward to working with the Department and the other parties as well as we go through this workshop series. Good morning, Mr. Anderson. MR. ANDERSON: Good morning, Mr. Caffrey. My name is David Anderson and these are our comments in response to the three questions proposed in the Board's notice of the public workshop for review of standards. The first question asks about which standards ought to be focused on by the Board during this review, and specifically, during this triennial review. The phrase triennial review suggests that the Board's inquiry may be limited to the water quality objectives adopted by the Board in its May, 1991, Water Quality Control Plan for Salinity, and which then was subsequently reviewed by EPA. The Department believes that the 1991 Plan is both too broad and too narrow a scope for the Board's purposes in this review. It's too broad in the sense that we agree that the Board's inquiry ought to be focused on the issues of current importance. A review of the non-fish and wildlife objectives in the 1991 Plan, Delta M&I and Delta ag, should probably be deferred. In deferring that review, of course, the Board should keep in mind the new balance that it is setting out to achieve for the Delta must include Delta agriculture and Delta M&I uses, requirements, and obligations. As a practical matter, however, a comprehensive review should be put off until next year in order to focus our time, attention and energy on the estuary's pressing fisheries and habitat issues. So, in that sense, we think that the 1991 Plan is too broad a perspective. But more importantly, it is way too narrow. The 1991 Plan is about water quality. The pressing fisheries and habitat issues just referred too, issues which investigate the impact of water users and water right holders on the estuary's biological resources, mainly deal with the effects of flow and diversion, not the effects of salinity, dissolved oxygen, or controllable temperature. I am going to repeat, the pressing fisheries and habitat issues regarding the effect of water use are about flow and diversion, not water quality. You see in my remarks that I have a footnote here talking about distinguishing the effects of the discharges and pollutants, and that is not what I am speaking of. I am talking about the relationship of water use with respect to the natural resources of the estuary. The issues that people are talking about, wherever that may be, are the entrapment zone, diversion through the Delta Cross Channel and Georgiana Slough, reverse flows downstream or upstream, QWEST, transport flows, agricultural and other unscreened diversions, project pumping, removing organisms from the Delta zone of influence, and predation losses. Whatever their merit, and it is the investigation of that merit which is going to be the Board's task here, these are the important issues with respect to water use and they have nothing to do with water quality or with the effects of salinity. Our concern on this point is heightened by the fact that the Board's notice talks about water quality in terms of its process, but not about flow and diversion, although the issues which it identifies for future workshops certainly engage those issues. I'm not sure exactly what this means. Perhaps it means that the Board intends to address flow and diversion in the water rights hearing that's going to follow this process as was the Board's intent in 1989, when it separated flow and diversion from the water quality planning process. If that's the Board's intent, then we emphatically urge the Board to take a different course, to establish procedures to join these issues now, to identify and consider policy and objectives for flow and diversion, before the water rights hearing, up front, alongside water quality. Then, once this has been done, you will have objectives of a planning and policy nature for both flow and diversion and water quality which then you may seek to implement appropriately in a water rights hearing. The two paragraphs on page 2 of the Board's notice under the heading Regulatory Basis of Action refers to the Board's authority on the one hand to adopt water quality control plans and objectives in those plans, and two, to set State policy on water quality. These are really towards essentially the same thing and operating at different particularity. They involve the establishing of substantive rules, legislative-type rules, of general applicability integrating State policy on water quality. The Department's view is that comparable steps are required for State policy on flow and diversion. In the water rights phase, you are going to be asked to implement policy. We think it is wise to set that policy up front. We recognize that the Water Code does not expressly set out a process for this. Nonetheless, we do believe that the Water Code clearly authorizes you to undertake these measures. I am not going to go through the next few paragraphs which describe and set out our views on the legality and the authority in the Water Code to do this, but it basically draws from the very large and liberal authority that the Board has in its water rights administration, jurisdiction, as well as its authority under Section 275 of the Water Code. The Department believes, as Mr. Potter indicated, that the workshop process that the Board has outlined is well suited to the development of information relevant to policies for flow and diversion. We do ask, however, that the Board do two specific additional things. The first is simply to make policy guidance or objectives for flow and diversion an added purpose of its review of standards; and second, expressly provide for the issuance of a plan or statement of policies applicable to flow and diversion, under the authorities that we have cited, or additional authorities, at the same time that the draft and final water quality control plans are published. These two documents would then guide the Board in its implementation of a policy for both water quality and flow and diversion in the subsequent water rights hearing. These policies for flow and diversion would be of general application and, like water quality objectives, would not be binding upon any given water year until and unless they are made binding in the water rights proceeding. They may have the degree of specificity of the water quality policy or of a water quality objective, or somewhere in between. These are specific concerns that we are going to hear about and the questions we are going to be engaging about in the particular standards that will be developed over the course of the Board's workshops to come. The particular issues that you will be hearing from the Department on will be in addition to the central fisheries and habitat questions, the treatment of endangered species, how from a regulatory perspective will the Board be addressing those concerns, the regulation by Federal agencies; The inclusion of recommendations for Suisun Marsh and also the need to increase project flexibility, specifically the advisability of adopting interchangeable points of diversion for problems in the Delta. The second question asked about level of protection, specifically the level of protection for public trust uses under both State and Federal law. First, under State law, the standard which, of course, governs Board determinations in general throughout the state as well as the Delta in particular, is a constitutional standard of reasonable use, and the Water Code injunction to serve the public interest. It follows that the State standard for level of protection is that level which secures the reasonable use of water. We note that the California Constitution does look to the Legislature to give some guidance on issues of reasonable use, but we would note, however, that there is no single overriding statutory policy which reconciles the many interests and values in the Bay-Delta estuary. There are, in fact, dozens, if not hundreds, of statutes and legislative policies that are relevant to the estuary, but they are diverse and they frequently compete and at times they are contradictory. What this means is that the level of protection that needs to be afforded to any given beneficial use requires the Board administratively -- to determine what is reasonable, to weigh and balance the many diverse policies, interests and equities which apply to the estuary. As the Board hears and entertains specific recommendations for levels of protection for the public trust uses of the Bay-Delta estuary, I think it might be helpful to keep in mind a simple but important perspective, and that is that the determination of reasonable use have a symmetry about them. A reasonable level of protection for a given use can only be defined in reference to the costs which it imposes upon the other uses of water. The level of protection is reasonable when the costs which it imposes are reasonable. At the same moment, however, that we decide that the reasonable costs are that are imposed upon those uses are reasonable, that decision defines the reasonable level of protection for those other uses. The symmetry is that we should be able to start with any given beneficial use and achieve the same result. If the reasonable level of protection for consumptive uses is defined in terms of the social and economic costs which they impose upon environmental uses of water, it is equally true that the reasonable level of protection for environmental uses is defined in terms of the water and economic costs which that level of protection imposes upon other uses of water. Conceptually, it should make no difference what the focus or starting point is, but that is not the important point. The important point is that the level of protection for one use cannot be defined until it can be defined for all uses. When a particular level of protection is advocated for a given use, the first question that the Board should ask is, what are the costs of that level of protection in terms of other uses foregone, or the levels of protection of other uses which are thereby diminished? From this we can see that for the Board's purposes level of protection is not the starting point; it is the ending point. Parties and interests will come in and recommend various levels of protection for the uses that they represent. But it is only after the Board has considered all those interests and uses, and after it has balanced them and made a reasonable allocation of water among them, that we can discover the level of protection to which any given use is entitled. Just as we cannot say that export users are entitled to a level of protection insuring seven million acre-feet of export per year during the critical period without asking what the environmental consequences of that level of protection are, we cannot say that the public trust uses of the estuary ought to receive a 1967 or 1975 level of protection without also inquiring what the water costs and economic consequences of that level of protection are. The weighing and balancing of those uses and costs are precisely what the Board's job is, and the end result will be the determination of reasonable levels of protection for all uses. The specific goals or advocated levels must be seen as unbalanced proposals or positions advanced by parties which may frame the Board's inquiry, but which cannot predetermine its outcome in advance. I guess what I am saying is, it is not timely for the Board to set a level of protection. Instead, the Board must examine a variety of levels of protection, assess the benefits expected to be achieved, and array them against their costs. I would note that this is the process, the procedure, the methodology that the Board employed at the outset of its scoping phase in the Bay-Delta hearing. I think that was a correct process. I think that is what the Board should be doing now. And, of course, at each point the Board must ask whether benefits may not be achieved and costs diminished through non-water costing or less water intensive alternatives. The second issue also asks what level of protection is required under the Clean Water Act for public trust uses. What the Clean Water Act literally requires is not directly relevant. The Board is acting under State law and must only meet the requirements of State law. State law does not in and of itself say that Federal requirements must be met. As a practical matter, the standards under review directly implicate the State's water allocation system. I don't think anyone can doubt that. If the Clean Water Act requirements were found to vary materially from State requirements, then I believe that the Clean Water Act Section 101(g) would sustain the State requirements. Of course, the Federal requirements are relevant as sources of Federal water quality policy, for which the Board should first look to EPA to present and explain. The Board notice cites EPA for the proposition that the 1960s to 1970s level of protection is consistent with the Clean Water Act. That statement, to us, is unclear. At that level it may be consistent begs the question whether or not other levels of protection that may also be consistent with the Clean Water Act. Level of protection, as we also indicated in our comments to EPA, to the extent it is cognizable under the Clean Water Act, is one of designated use, not scientific criteria, but EPA has not attempted to designate uses in the Bay-Delta estuary under the Clean Water Act, so its invocation of a certain level of protection is at best confusing. Third, Federal officials have suggested that the Clean Water Act does not permit balancing. Although we disagree with that interpretation, we do agree that EPA, in fact, did not balance in arriving at its proposed standards, and that fact is fundamentally at odds with the California constitutional policy and statutory mandates to this Board, which require consideration of competing uses, values, and policies, as well as the facts and circumstances surrounding the uses of water in the Bay-Delta estuary. As the Board considers what levels of public trust uses may be reasonable to protect, there are some very important questions that it should keep in mind, not only keep in mind, but do its best to answer. When we speak of level of protection of these uses, we must ask level of what? Of populations? Of certain species, of which species? Native species? Or the current species composition, which is largely not native? Of certain indicator species? Of habitats, which habitats? Especially in a changing estuary, we will discover that habitat is fluid and that species compete just as other uses of water compete. And the question I have here is which should be protected? The second question is, protection from what? And that goes to the scope and the method of the Board's inquiry. Is it protection from water quality impairment alone? From flow and diversion, or from other changes? From climatic changes? Or uncontrolled flood flows? From toxic pollution? From changes in the food chain? From the introduction of exotic species? Well, obviously, the Board's actions will concern only those factors which are within its jurisdiction and which are, in fact, controllable. The important point is that the Board is likely not able to fully protect uses of the estuary solely through manipulation of controllable water quality, flow, and diversion factors. Third, have we candidly and forthrightly recognized and dealt with uncertainties that attend the determinations pertaining to biological phenomena? It is entirely appropriate for a decision maker to take an action based upon facts and circumstances that are less than certain, but it is imperative that the factual or scientific basis for such decisions be fully and accurately represented so that society and future decision makers will not be misled by the character of the determinations and actions taken today. Fourth, to the extent that we are tempted to invoke the phrase stop the decline; decline of what? What species are we talking about? What habitats are we talking about, again the need to address these issues specifically. Are decline and change the same thing? How, if there are causes beyond the Board's reach and beyond the reasonable use of water, may a given decline be stopped? We also note that the ability of the State Water Project or the water supply systems in general to meet increasing demand is also declining. Is this a decline that should also be stopped? The third question asks about the principal environmental, water supply and economic effects of EPA's standards. And then, it goes on to ask, should these standards or modified versions of these standards be considered? On March 11, the Department submitted, along with many others, its comments to EPA and those comments contain an analysis of the water supply impacts of the EPA proposals. We have previously made these analyses available to the Board and have attached a summary table from that exhibit for comments today. I won't go over that again, but note that it's immediately after page 13 of the written material. In addition, we are providing a 1993-1994 operational analysis which shows how EPA standards would have affected the projects this year. Jim Snow of our Division of Operations and Maintenance, can explain that analysis to you, if you have any questions, but what it does show and explain is how it is allocated, that had EPA standards been in effect this year and the impacts of those standards over and above D-1485, above the biological opinion requirements for both winter run and the Delta smelt would have been 2.2 million acre-feet of water. The second part of this question asks whether EPA's proposals or versions thereof should be considered as alternatives in the Board's review. Inasmuch as EPA is a major Federal agency that has proposed or advocated certain water qualities, outflows and operational constraints for the Delta, these may appropriately be considered by the Board and should be considered by the Board. Moreover, in attempting to find common ground with Federal agencies, the State has a strong interest in taking their views and positions into consideration, even beyond submitting comments to them as we all did on March 11, and we believe we may do this without rehashing the Clean Water Act issues which are relevant to the federal proceeding. There is, however, one issue which relates to the structure of the primary EPA standard, X2, which is a matter of concern to us as a matter of fundamental State policy. This same structural problem existed with the work of the San Francisco estuary project from which the EPA proposal was derived. We believe that the Board's process to find the reasonable and efficient use of water will deal with this problem. Nonetheless, we believe it important to state our concerns up front. The two parts per thousand standard was developed by putting together an assortment of biological factors and considerations in the estuary; the desire to avoid entrainment of organisms at agricultural diversions and project export facilities in the Delta, the desirability to transport flows, the location of the entrapment zone, reverse flows, cross-Delta flow, low salinity habitat, food supply, organic loading and so forth. We heard from the proponents of X2 in the flows subgroup of the San Francisco estuary project that one of the most salutary features of using a single estuarine variable as a management device is that policy makers could simply dial the amount of estuarine protection they wanted. This single variable is outflow. Whether it is indexed by X2 or not, it is outflow, and outflow is water. Under this approach, even problems which do not necessarily need water or need more water could be cured or their effects mitigated by dialing for more water. This formulation may be stunning in its simplicity, but it absolutely contradicts the idea that we are supposed to be looking for solutions that don't cost water or that don't cost less water. We are extremely concerned that aggregating biological phenomena to be represented by a single index achievable only through outflow, which means the commitment of large volumes of water violates the fundamental principle of California water policy that water be used efficiently, that beneficial uses be accommodated wherever possible, and that water not be taken from one beneficial use to serve another where non-water solutions or water efficient physical solutions are available. To explore physical or other non-water costing solutions, we must, rather, disaggregate biological and hydrologic phenomena to be able to respond individually to those needs that do not necessarily place a demand upon scarce water supplies, such as entrainment, flow regime and so forth. The same basic State policy that compels conser- vation and reclamation for consumptive use also compels efficient water use by instream uses. We are concerned that aggregation of multiple factors into a single index that requires outflow alone, or directly requiring outflow in this manner, is simply throwing water at the problem and contravenes the fundamental water policy of this State. That is not to say that there is not a place for outflow in your considerations. There certainly is, but the question is, are we looking at outflow in the most efficient manner possible and are we looking to water solutions only after we have adjusted the non-water and less water intent solutions? Thank you very much. MR. CAFFREY: Thank you, Mr. Anderson. That completes the DWR presentation? MR. ANDERSON: Yes, it does. MR. CAFFREY: Are there questions or comments from the Board members? Mr. Stubchaer. MR. STUBCHAER: On Table 2 there's a reference to water costs with and without X2 buffer. Could you briefly explain what the buffer is? MR. ANDERSON: I can't, but I think we have somebody from the Division of Operations and Maintenance that can explain it better. My understanding of the buffer is simply a margin of error that is placed in the operational runs to account for the extreme variability in salinity at the designated locations. There's extreme uncertainties involved in the equation which translated the position of X2 to the outflow that's required to sustain that position. MR. STUBCHAER: Is there a percentage of time met associated with the buffer? MR. ANDERSON: I can't answer that, but perhaps -- MR. HUNTLEY: Ed Huntley from the Department of Water Resources. Can I answer from here? MR. CAFFREY: Go ahead, Ed. MR. HUNTLEY: The buffer is to bring the proceeding of meeting the standard up to 90 percentile. Without the buffer you would be at about 50 percentile. MR. STUBCHAER: Thank you. MR. ANDERSON: I would point out for clarification the work done by the 1994 year was with the -- without buffer formulation. MR. CAFFREY: Mr. Del Piero. MR. DEL PIERO: During the course of your discussion, particularly in regard to competing beneficial uses, there was some noticeable absence of any discussion about public trust resources within the context of the prioritization given to them by the Audubon decision. Is there a reason for your having left that out of your presentation? You talked about statutory authority, but you failed to reference any case law at all, and I listened real intently to make sure I didn't miss any of that, and it was noticeably absent from your presentation. MR. ANDERSON: I think my point with respect to statutory law was there was no overriding policy that indicated how reasonableness and balancing ought to include reconciling the various interests. My view is that that has not changed with the case law, that public trust uses must be noticed by the Board, the Board may go into and re-examine the need to protect public trust uses, but there is no greater priority under the case law given to public trust uses. MR. DEL PIERO: Okay. MR. ANDERSON: So, it's a clear balancing. MR. DEL PIERO: Thanks. It might be worth your while to take a second look at Audubon then. MR. ANDERSON: Upon that advice, I certainly will. MR. CAFFREY: Wisely spoken. MR. STUBCHAER: Getting back to the tables, the one entitled Summary of 1994 Potential Impacts, and it is based upon a 50-50 split of the impacts between the two projects? MR. ANDERSON: Yes. MR. STUBCHAER: Is that based upon some analysis of what would be required or is it just an assumption for the purpose of the analysis? MR. ANDERSON: Purely an assumption. Obviously, many of the new requirements that are coming from the Endangered Species Act and so forth are not easily handled and we are in the process currently of discussing these matters with the Bureau, but for the purpose of analysis, we just simply assumed a 50-50 split. MR. STUBCHAER: Thank you. MR. CAFFREY: Anything else from the Board members? Mr. Pettit? MR. PETTIT: No. MR. CAFFREY: Thank you very much, Mr. Anderson. We appreciate your being here, and thank you, Mr. Potter. We look forward to working with you throughout the process. It is now 11:30. I would like to accommodate Mr. Thomas of the National Heritage Institute. Good morning, sir. MR. THOMAS: Good morning, Mr. Chairman and members of the Board. I do appreciate your taking me at this time to uncomplicate my schedule and complicate Dave Schuster's schedule in the process -- fringe benefits. I have prepared some written comments for you which I passed out to you. MR. CAFFREY: We have them, sir. MR. THOMAS: In the interest of time, I will just try to hit some of the main excerpts here and lay out some basic themes. I can't resist opening by basically urging you forward. This marks the fifth time by my count in seven years that the State Board has announced an intention to finally set standards to deal with the decline of the public trust resources in the estuary. Every time, it's miscarried for one reason or another. The public trust resources in the meanwhile continue to decline, as indeed, they have over the 16 years that the now applicable standards have been in place, and the consequence of that, easily observable, is that the Endangered Species Act has, in effect, put the estuary in Federal receivership for all intents and purposes, and this cannot be good for the California bond market. This is a problem for everyone. It is a problem that has to be dealt with. The sooner the State Board can see this process go through to completion, the better. There never will be a solution to the problem that is going to satisfy every constituency, every legislator, every governor, for that matter, whoever that governor may be in November, and there is an additional reason why we are eager to see this matter brought to closure. For the non-profit conservation organizations that have been participating in this process for the last seven years, there simply is a limit to the extent to which we can engage in a way of attrition. We raise our resources the hard way, through charitable contributions, and every time the Board gets religion on setting standards for the Delta, we have to go out and find those resources to participate. So, if the participation is valuable, and we hope it is, please understand that it is a limited resource on our part. I would like to address quickly the three key issues that have been posed for consideration in the proceeding this morning, the first of which is which standards should the State Water Board focus on during this triennial review. Well, at a minimum, of course, the same standards that have been proposed by the Federal agencies. In order to bring this matter to closure, it is going to be essential, it seems to me, to articulate a set of standards that this time can pass Federal muster; in other words, can be approved. EPA has, and the Club Fed agencies have basically laid down a marker with the proposals that are now on the table. As I understand the timing of your process, the Federal standards, EPA standards will be finalized at roughly the same time that the State Board will produce a draft, so that marker will be all the more firm and certain. Certainly, at a minimum, this State Board ought to be sure that the standards it develops are at least as protective of the public trust resources, the designated environmental uses, as are the totality of the Club Fed proposals. So that ought to take a good bit of the mystery out of the equation that seems to have bedeviled this process for the last seven years. And that should include, by the way, a Rowe Island standard or the equivalent for reasons developed at considerable length in testimony that Dr. Pete Moyle presented to you in the D-1630 proceedings. That westerly checkpoint in Suisun Marsh is quite vital for a suite of species, not one or two, an entire suite of species in which he presented testimony that are currently at jeopardy in the estuary, so, you know, thinking about the Federal marker that has been laid down, that is one we think is particularly important to preserve. Well, the Federal aiming points are aiming points that the State Board ought to take seriously. Those Federal proposals do meet some critical resource that is under- protected, so there is a larger agenda for the State Board than simply satisfying the Federal requirements. In the comments we prepared for EPA, we itemized a number of respects in which the Federal proposal appears to be under-protective. Let me just mention one to you today that is of particular concern, and that's the spring-run salmon. This is a run of salmon that used to be the most abundant and commercially important in California. The run has been entirely extirpated in the San Joaquin River. It remains marginally viable in some tributaries of the Sacramento River. The news is very bad on the species. Last year less than 200 adults returned to their spawning streams in the Sacramento basin. We are talking about the native fish now and there is no real protection in prospect. In 1992, as you know, this organization did file a cluster petition for listing of a number of species that appeared to be on the brink of extinction in the estuary. Action has been taken on at least a portion of those species. We did not include in that listing the spring-run salmon even though it was quite apparent at that time that it was in serious trouble, and the reason was simply that we wished to provide an opportunity to the commercial fishing industry to attempt measures short of the strictures of the Endangered Species Act to try to begin the recovery of that species. And a very vigorous process, I can tell you, has been under way in the meanwhile. But one of the opportunities and short of the Endangered Species Act, that we had in mind in not filing a petition at the time was action by the State Board. So, this is an action of particular salience in this proceeding. We did just last week, in fact, convene, and I guess you could call it a workshop of salmon experts from State and Federal agencies and the academic world, to consider this specific question and particularly the issue of whether or not the EPA and Club Fed proposals would provide sufficient incidental protection to the species so that additional protective measures would not be necessary. The discussion was inclusive but it appears that the Federal proposals will not be sufficient and that some kind of a hydrodynamic standard will be necessary specific for the spring run to protect them from extinction. We are working with the State and Federal agencies to develop a concrete proposal for your consideration in your June workshop. Other holes in the safety net, if you will, include San Joaquin salmon smolt survival criteria, the issue of whether or not it is prudent to permit relaxation of the Rowe Island standard every year in the extended drought period or whether or not some particular protections will be necessary in every second or every third year of an extended drought, again based upon the considerations that Peter Moyle testified about in the D-1630 proceeding. And finally, apparently some additional protection for the tidal brackish marsh is going to be necessary beyond the EPA salinity standard, and in January's and February's of critically dry years. Let me move to the second question, what level of protection is required by the California Water Code and Clean Water Act for protection of public trust uses in the Bay-Delta estuary. This is basically a legal question and answered to a considerable extent by the Clean Water Act. At a minimum, in order for the State to develop standards to be approvable by the Federal Government, it is going to have to be clear they are sufficient to protect the designated beneficial uses. Now, it may be helpful in coming to terms with what that standard means to specify a period of reference for water quality conditions in the estuary, historic period of reference, that would be sort of the aiming point for the State Board to use in considering standards. It would seem that's required by the antidegradation policy of both State and Federal law. Now, we regard that as simply a floor. The real aiming point, of course, has to be whatever is better than those floor conditions, whatever above those floor conditions may be necessary to actually protect these beneficial uses. Just to concentrate on this reference period for a second, as you know, the Club Fed specified reference period was late 1960, early 1970. For purposes of the State process, we do not believe that is sufficient. The State antidegradation policy specifies now a 1968 marker date and we think that's the date that the State Board ought to use. Now, of course, a discrete date isn't a particularly workable aiming point because of the great variations in conditions in the estuary from year to year. So, we think a workable way of translating that antidegradation marker into standards would be to develop standards that will work for all types of hydrology assuming a 1968 level of development in the estuary, storage and diversions as of 1968. Let me move to the last question posed for discussion, what are the principal variable water supply and economic effects of EPA's draft standards. NHI did commission an economic analysis of the proposed Club Fed standards and it was quite revealing. What we essentially did is pose this question, assuming that the State were to choose an implementation strategy for the Federal standards as currently proposed, a least-cost approach, what would be the cost to the economy of California of satisfying those standards? As we considered it, a least-cost arrangement would be one where the water necessary to meet the standards would be generated through voluntary acquisitions, voluntary water transfers from willing sellers, and we would assume that that water, the requisite water would come from the least economically productive uses to which water is currently put in the state today. So, this analysis essentially asks that question, where is the State economy getting the least bang for its water, if you will. Let's then assume that a purchase fund could be constructed that would allow that water to be purchased for compliance purposes. Now, if this sounds like a familiar idea, it should, because it is not our idea. It is your idea. What we basically modeled was the implementation of the water mitigation and purchase fund that you proposed in your draft D-1630 proceeding. And, by the way, that matter is currently before you again for consideration in spite of the collapse of 1630 because some months ago we did, in fact, petition on behalf of some eight or so conservation organizations for your consideration of adopting that feature of D-1630, so it is pending before you for decision. Should you adopt that kind of approach to implementing the Club Fed type of standards, the analysis that we conducted reveals the following conclusions, and by the way, that analysis wasn't done by me, it was done by a professor at the University of California at Berkeley in the Department of Agricultural Resource Economics dated Sunday, who, by the way, will be joining our staff come June. The model yielded these results: Assuming that water trading from north to south is going to be constrained by Delta pumping, taking that assumption as the most likely case, the average year impacts to the State's economy would be less than 4 million dollars. In a critically dry year, those impacts would be less than 4 million dollars. Now, this is hardly a scenario for horrible economic ruin of the State of California, 4 million dollars. That's assuming that half of the water necessary for compliance would come from the Federal water purchase program established under the Central Valley Project Improvement Act. The other half would come from the State water bond the State has already proposed. So, another conclusion out of this, again, assuming that water trading is constrained through pumping restrictions in the Delta, this purchase fund lowers the economic impacts of additional Bay-Delta standards on agriculture by 61 million dollars, a 94-percent reduction in an average year, and by 205 million dollars, an 83-percent reduction, in a critically dry year. So, to the extent that the economic consequences of rule making are of concern to this Board, I would simply submit that there is a relatively painless way out and it's an analysis that we want to present to you in detail in July during that workshop and open it up to all interested parties to discuss and critique. That is my only comment. MR. CAFFREY: Thank you very much, Mr. Thomas. We look forward to your further information. Are there questions by Board members of Mr. Thomas? What about staff? Thank you very much. Mr. Brown. MS. BROWN: The 4 to 40 million dollars, was that based on San Joaquin Valley crops that have least payment capacity like irrigated pasture? MR. THOMAS: It looked at four different areas, I believe. The analysis looked at crops in the San Joaquin Valley both east and west, the Delta, and the Sacramento Valley, so state-wide. MS. BROWN: The Sacramento Valley would still require transfer of some use through the Delta? MR. THOMAS: Talking now about purchase of water for improved Delta inflow and outflow. MS. BROWN: Okay. MR. CAFFREY: Any other questions? Thank you, Mr. Thomas. It is now roughly 15 minutes to the hour. This is probably as good a time as any to break, so let's be back at 1:15. We have 11 more speakers, so we should be able to finish today. Thank you. We will see you at 1:15. (Whereupon the noon recess was taken.) TUESDAY, APRIL 26, 1994, 1:15 P.M. MR. CAFFREY: If you will please take your seats, we will resume the workshop. A recount of the blue cards reveals that we have 12 parties or groups wishing to speak, and I am going to read them in the order that we will be taking them: Perry Herrgesell, Dave Schuster, Dave Whitridge, Alex Hildebrand, together; Austin Nelson, Gary Bobker, Ann Schneider and Jim Easton together; John Krautkraemer, Bill Baber, Michael Heaton, Michael Jackson, Laura King and Patrick Porgans. All right, let us begin with Perry Herrgesell representing the Department of Fish and Game. Good afternoon, sir. MR. HERRGESELL: Good afternoon, Chairman Caffrey and members of the Board and members of the staff. For the record, my name is Perry L. Herrgesell and I am Chief of the Department of Fish and Game's Bay-Delta Special Water Projects Division in Stockton. Today I will present a brief summary of our Department's comments on your review of the standards for the Bay-Delta estuary. We have handed out copies of our complete statement and I assume you have that already. I might say at the outset that our Department really welcomes the opportunity to continue our participation in your process to review and set standards for the estuary. Notice that I said continue, since as you know, we were significantly involved in your 1987 and 1992 efforts, and, in fact, our comments today are consistent with our position in those earlier efforts. To put our comments in perspective, I would like to repeat the Governor's well worn statement that the Delta is broken. For more than 40 years our Department, and this has been in conjunction, at least a lot of that time, with the interagency ecological program. We have researched conditions in the estuary and probably the most ominous fact that we have found is that most fish species which are dependent upon the estuary for food or for nursery habitat and migration routes are in a state of decline. You have heard that already today but, for example, I might mention a couple. Adult striped bass populations in that time have declined by about 70 percent. The winter-run chinook salmon are less than 10 percent of their historical abundance. There is a correction in our draft which says 90 percent. It is less than 10 percent, and the spring run are down 80 percent, and the fall run has decreased 50 percent. At the same time, the starry flounder and bay shrimp populations are also quite severely depressed, and as you know, the winter-run salmon and the Delta smelt have been listed under the Federal Endangered Species Act and it is likely that the Sacramento splittail will be federally listed as well. Well, how does all this relate to today's proceedings? Our work over the years has led us to the conclusion that many of the estuarine species are affected by the amount of fresh water flowing through the estuary, particularly during the spawning and early nursery periods. To state it in very general terms, we found that greater fresh water outflows and the associated movement of the salinity gradient downstream clearly benefits the entire estuarine ecosystem. Although outflows are crucial, we have recently become more aware of the significance of exports and diversions in this process. Significant fish losses occur directly through entrainment in diverted water and indirectly through the disruption of migration patterns and altered nursery habitat conditions. Parenthetically, you might note that most of these effects are caused by exporting water from the Southern Delta while most of the water originates in the Sacramento River. As a result of all the complex interactions between flows and exports and diversions, and other factors, I think we emphatically support efforts to develop a comprehensive habitat-based approach to the maintenance and restoration of the ecological health of the estuary. We are very eager to advise the Board and your staff regarding the standards that would be consistent with that kind of approach, and to that end, I would like to relay to you today our position on the three key issues in your workshop notice that others have commented on today as well. First of all, what standards should the Board focus on during this triennial review? We, as others have, recommend dealing only with standards that affect fish and wildlife in this process. We say that simply because we feel that these are the most controversial and, in fact, are the most crucial to restoring a healthy aquatic ecosystem. Parenthetically, we believe that the scientific case for salinity-based water quality criteria that has been proposed by Club Fed and EPA is sound, but from a cause and effect standpoint, we believe that in some instances, at least those associated with the transport of young fish through the estuary and losses of fish that are entrained in the water diversions, in those cases it may be more effective to regulate outflow and exports. Those are the factors that are in the realm of your authority rather than EPA's authority, and it may be important to do that as opposed to just salinity alone. However, I think there are other cases with standards needed to maintain Suisun Marsh, for example, where salinity criteria are definitely more appropriate in those cases. The next question was, what level of protection is required by the California Water Code and the Clean Water Act for protection of the public trust uses in the Bay-Delta estuary? I think our position there is that we believe the long-term level of protection goal that should be established by the Board should be to simply assure maintenance of a healthy aquatic ecosystem, and that development of such a goal as that should come about through testing and analysis where that's feasible so we can really know more about what it will take to reach that kind of goal. But, in any case, we feel that attainment of that kind of goal will require eventual changes in Delta facilities that are used by the Central Valley Project and the State Water Project and other diverters that manage water in the estuary. Beyond that, we think that the Governor's Bay-Delta Oversight Council is an appropriate forum for evaluating those kinds of changes. The upshot of that suggestion is that restoration of the ecosystem can't really be achieved entirely, we believe, within the scope of this triennial review, but it must be a long-term objective. In light of that, the short-term or the interim goal of the present proceedings, in our opinion, should be to halt the decline in aquatic populations and at least begin their recovery. One measure that the Board could take to make interim progress towards halting the decline and starting this recovery is to set an ecosystem goal of reaching fish populations that existed during the late 1960s and early 1970s. For example, these kinds of conditions would improve the striped bass population from its current level of about 635,000 fish to about 1.7 million. Now, although that sounds large, that target is really conservative. In fact, it is shy of the Central Valley Project Improvement Act mandate goal of about 2.5 million striped bass, and it is well under the roughly 3 million adults that were actually present in the early 1960s. Referring again to the EPA and Club Fed standards, or proposed standards, for a minimum we believe that those proposals are actually a step towards achieving the goals of the late '60s and early '70s populations, but we are concerned that the EPA proposed standards do not, and by their nature cannot, address the needs for year-round protection of the habitat and fish populations in the estuary, and that's based on the fact that some of the benefits that are gained through the improved habitat proposed by EPA from February through June would still be diminished by inadequate protection during the remainder of the year. Our studies since the 1960s, which we have summarized in previous DFG exhibits to the predecessors to this process have established that striped bass year class strength is really modified considerably by environmental conditions during subsequent months of the year after the June period. From a salmon perspective, there is also justification, we believe, for year-round protective criteria as well. And finally, the third issue deals with what are the principal environmental effects of EPA's draft standards? Three quick points on this issue. Number one, the proposed EPA standards, we believe, would improve fishery habitat from February through June, but as I just said, the standards will have to be mutually developed by the State and Federal governments so that year- round protections can be attained. Secondly, it's true that EPA's proposals would move fish nurseries farther away from the unfriendly Delta diversions, but without restrictions on exports that occur later in the year, any protection gained would be reduced. We feel that these kinds of restrictions; in other words, year-round standards jointly developed along with other habitat protection strategies, would really be consistent with an ecosystem multispecies approach. Thirdly, we think that any evaluation of the environmental effects of EPA's proposed standards for the estuary should include a full evaluation of the potential to impact upstream water quality standards. Specifically, we want to insure that adequate carryover storage is maintained in all the affected reservoirs. We previously commented or made recommendations to you in other phases of this process regarding the minimum pool volumes at Shasta, Oroville, and Folsom, that we believe are necessary. So, in summary, we believe that the Board's review should consider a full range of alternatives, including the U. S. EPA proposals, or the appropriate modifications, and our Department certainly looks forward to working with you and your staff in its deliberations to attain that end. Thank you. MR. CAFFREY: Thank you very much, Mr. Herrgesell. You are based in Stockton? MR. HERRGESELL: Yes. MR. CAFFREY: We are glad to have you here and appreciate your input. Any questions from any of the Board members? Mr. Stubchaer. MR. STUBCHAER: Do you have any comments on the possible conflict between the endangered species restoration and maintaining a high striped bass population? MR. HERRGESELL: I think before we consider that that is the reality, we need to continue looking at that relationship. We have established the process already. The Department has met with the U. S. Fish and Wildlife Service and the NMFS people, and we are in the very early stages of beginning a consultation with them under the Endangered Species Act, and we are anticipating doing a Section 7 consultation and getting a biological opinion on our striped bass management activities and see how those things actually do relate to Delta smelt and winter-run salmon. We are certainly concerned about that potential and have started that process. It may be months or half a year before that is finished, but we are in the phase of that now. MR. STUBCHAER: Thank you. MR. CAFFREY: Any other questions of Mr. Herrgesell? Staff. MR. HOWARD: Have you looked at or considered the water supply location of attempting to reach the 1.7 million striped bass? MR. HERRGESELL: No. MR. HOWARD: I know that EPA standards were about 600,000, which is about the existing conditions, and they had some substantial water supply costs, and getting the 1.7 could be problematic. MR. HERRGESELL: We haven't looked at that, but keep in mind we talk about a comprehensive kind of package where we need to think about facilities, we need to think about other kinds of constraints and various things in addition to just the amount of water, and that would certainly be part of that process. MR. STUBCHAER: Has the Department of Fish and Game looked at some sort of dynamic management where you test something and see if it works, and if so, implement it; and if it doesn't you try something else? I don't know how we could incorporate that in standards, but it seems to me things aren't so cut and dry that you can predict in advance what is going to happen. MR. HERRGESELL: No, that's certainly the case. The nearest thing we may have are the various models. Frankly, the biological models are not as well developed as they could be. We have some. Hydrological models are easier to come by these days, but that's the one way to do something like that. But, you know, it's hard to predict up front what's going to happen. We don't have a good answer to that, but we are certainly willing to work with the staff to develop what we can. MR. CAFFREY: Anyone else? Thank you very much, sir. Next, we will hear from a panel representing Kern County Water Agency, Dave Schuster, Tom Clark and Cliff Schulz. MR. SCHUSTER: Thank you, Mr. Chairman. I hate to start the process by negotiating with the Chairman, but we thought with your permission, instead of each one of us testifying separately for 20 minutes, we would go ahead and do it as a panel. I am going to guess, unless either Clark or I get a motion, it will be less than 35 minutes. Is that all right with you? MR. CAFFREY: Thirty-five minutes -- we will allow you thirty-five minutes. MR. SCHUSTER: With that lead, I will turn it over to Tom. What we are trying to do is not only address your questions, but also, give you a sense from Kern County which we believe you and others will need to have when we get into the balancing process. MR. CAFFREY: All right, thank you. MR. CLARK: I am Tom Clark, the General Manager of the Kern County Water Agency and thank you, Mr. Chairman and members of the Board, for giving us the opportunity to speak today. I would like to start by confirming what a number of others have said, which is we very much support this process with the State Board. We do believe that the water rights of the state are appropriately controlled by the State and that this process is welcome. What I thought I might do as far as my presentation, I am going to kind of be all over the wall. I am the uncontrolled one. Schuster is the controlled one. I am sure he will give you much more technical information than I can, but I thought what I would do is give you a little perspective in terms of starting off on this process. We put up two charts here that are right in front of you which are not within the handout that we have given either to the public or the ones that are in front of you, but these are two charts that I used recently with the Senate Ag and Water Committee where they held a hearing on the status of the State Water Project. The chart on your left represents the State Water Project as it was envisioned in the early 1960s. The red line was the projected yield of the project over time beginning with construction in 1965 and continuing. This chart goes through 2020. The blue bar charts are the buildup of entitlements by State Water Contractors. The initial facilities that were to be constructed in the early '60s include Oroville, San Luis and a Delta transfer facility as provided for in the Burns-Porter Act. By the mid '80s, the upper Eel River development was scheduled to complete the project yield to meet the entitlements of the State Water Contractors of 4.22 million acre-feet. The concept of the State project was to build the yield in advance of demand. In other words, you would have a reliable water supply, so facilities were constructed in advance of anticipated demand. The chart on your right is a chart from the 1994 perspective. It asks the question, what do we have now? In that particular chart, again, the red line is the developed yield of the project as we see it today. The first vertical line was the project facilities, the initial project facilities that were built in the '60s, which as most of you know, includes Oroville, San Luis and the Harvey Banks pumping plant. The Delta transfer facility was postponed. So, as a result, our initial yield was something under 3 million acre-feet and then, of course, through D-1485 that was adopted by your Board in 1978, there was a reduction in yield from about 2.8 million acre-feet down to about 2.3 million acre-feet. The next reduction in yield that you will see is the EPA-Club Fed reductions as proposed on December 15. This includes winter-run salmon protection, Delta smelt, as well as the EPA standards. Now, the blue bars through 1994 are the actual deliveries of project entitlement to contractors. Two things have happened. The demand has not been as great as we thought it would be, principally in Southern California, but we have also -- and particularly during the period 1990 to the present, experienced severe water shortages. So, if you look at the State Water Project, it's not a very pretty picture in terms of what do we have to deal with. So, I would like to have that picture hopefully fixed in your mind as you go through this process, that the beginning point in this process for water users is not with an abundance of water but with a shortage of water. This year is a classic example and I think the Department gave you some pretty good numbers on what would have happened this year had we had the EPA standards, but I can tell you personally from the standpoint of someone that has to operate within the State Water Project, we have right now a 50 percent shortage. Our bill to the State is 70 million dollars. That bill does not go away whether we get the water or not, so we're going to try to pay a 70 million dollar bill with half the water. Right now we have crops in the ground today that do not have a water supply. Unless we go out and find water to buy to deliver to these lands, we will have more land out of production. So, I really wanted to start you in this direction that we truly believe and are convinced that there is a need for standards in the Delta. We do believe that there should be fish and wildlife protection. However, we feel that the EPA approach, Club Fed -- we supported in a big way the creation of Club Fed. We also supported an MOU with the State. We think that's a good process. We feel the EPA standards, however, fail to consider balancing, fail to consider our water needs. Greg Thomas earlier gave you a good dissertation of how great he thought, in fact, I was thinking about asking Greg to testify with us just as a statement of a new coalition, but once I heard his testimony, I am glad I didn't. I think the presentation is completely wrong in terms of the regulatory impact assessment that EPA conducted. I think that EPA themselves were even apologetic about that study. They managed to study the impacts of major shortages on the water users, but without having even visited our service areas. They have the basic concept that I told you about that Kern County has a 70 million dollar water bill with the State, and we have to pay it whether we get the water or not. They didn't know that. So, they reached the conclusion there is a 4- to 40- million dollar economic impact state-wide. I just don't think that study is credible. As a result, our agency authorized our economist, Northwest Economic Associates, to conduct a study of the economic impacts of the EPA proposals. The conclusions that we reached, as opposed to their numbers, and we were looking San Joaquin valley-wide. We looked both within the State project and the Central Valley Project, but the economic impact just on a revenue base was about 600 million dollars per year San Joaquin valley-wide. Of that 600 million dollars about 340 million dollars of that was income and if you run a present value of that, it's about a 8.3 million dollar impact on income within San Joaquin valley. There would be an associated job loss on the order of 12,000 people. I know that in your documents I have seen that you are also committed to investigating the economic effects of these proposals. I would suggest that the State take that issue on in a very sincere way and I know that our report is going to be discounted by the environmentalists and others. They are going to say it is self-serving, it is not objective, all those things. We would like to see our report scrutinized, peer review, whatever, but also, I would suggest that the State take on the job of bringing in the responsible experts and some objectivity into the process to tell you and the rest of us what are the impacts of what you propose. On one of the earlier issues, one of your questions was, what are the goals for Fish and Wildlife, and I heard the gentleman from Fish and Wildlife Service and I have heard Club Fed, EPA and so forth today, and, gentlemen, we think that 1968 is a good benchmark. Well, of course, that's a great benchmark. That is before we had 30 million more people and two water projects diverting water. Similarly, if this Board is going to balance, ask us, the water users, what are our goals. I haven't heard that question yet. If I get to pick my goal, my goal is going to be the period 1978 through 1986, when we received a full water supply every year, and we were told on December 1 what the reliability was of our water. We had a full water supply. And I am not trying to be facetious on this point, but I think that to ask in advance what level of protection should be attained flies in the face of a balancing process. We are not dealing here in terms of, gee, what do we think is the best? We've got to deal in the real world to manage a system and balance competing needs. I hope that you would go into this process without preconceived ideas and then try to make the process fit what your assumptions were in advance. I have kind of jumped around here. One document that we gave to you is this document that we gave to Secretary Babbitt and Senator Feinstein. This is also available to the public out there. We went to Washington, D. C., along with several other San Joaquin valley ag interests, and met with Secretary Babbitt and Senator Feinstein, and this is dated August 2, 1993. I would really encourage you to look through this. We have done several of these presentations since then and, frankly, this one stands above all the others in terms of presenting the issue, and at this time, we are presenting it to the Federal agencies as best we could. I think it tells a very good story with respect to what the situation is in the San Joaquin valley and with agriculture, but it also makes certain recommendations and you will find that a number of those recommendations, some of them have come to pass. We are not taking credit for them, but for example, the joint Federal-State effort, I think, it is obvious to everyone we need that. We have got to move that process. So, I would encourage you to read that through. I might wind up by just touching on a few issues here that I personally feel are important. These are things that I have jotted down as we start into this process. I think your process here must have Federal buy-in and by Federal buy-in, I mean, and unfortunately, I was late and didn't get to hear the Club Fed presentation, but I find it somewhat ironic that we have got EPA on its path towards December 15, we have got you on your path towards about the same target date, and I haven't yet heard how those two proposals are going to interface. I would hope that the end product is something that is akin to agreement between the agencies. I think it would be a disaster for everyone if there is still this separate path between the Federal and the State agencies, and that we go into December and we find that we have got yet another impasse. That's not why we are here. We are here to work out a plan that hopefully finally is going to put something to bed for some period of time. We also believe that there must be balance and I think that's a major difference between the State Board and the Federal agencies. Club Fed, frankly, are advocates for fish and wildlife purposes. We consistently ask them, you have committed to balance towards economic needs of the state. Who has that responsibility, and we can't find one agency within Club Fed that has the responsibility for jobs in the California economy. We hope the State Board can bring that to the table. In the balancing process, of course, there must be good economics, there must be good science, and the benefits of whatever we do in the Delta must be measurable. It troubles me that outflow issues, and again, from my perspective, is a gut issue with a lot of people. I've been in a lot of consensus type processes and I hear people say the same thing, got to have more outflow. All right, let's make the assumption there is more outflow. How are the benefits of that going to be measured because I think it is suspect that outflow is going to fix this problem. I don't think the answer is any one thing. I think it is a series of actions. And if we do dedicate more water to fish and wildlife purposes, creating havoc in our service areas, we need to know that that's going to be measurable somehow, because if, in fact, the fish species continue to decline -- let's say that we put two million acre-feet out the Bay and we still have decline in fish species, then what? Does that mean that we need to, as it was alluded to, frankly, here by the gentleman from Fish and Game, that the next step is, oh, what we really need is to shut the pumps down. That's the real answer. So, we need some accountability in the process where if the water users are going to make concessions, and I know that Secretary Wheeler referred to this as shell fly -- we can't be incrementalized on this. We have got to have something that is going to last. Another thing I would like to talk to you about is South Delta facilities. This is something I am personally pushing. The Governor, in his policy statement, water policy statement, advocated interim standards together with improvement in supply, including South Delta facilities. I would like to see you bring that back to the table. I know I talked with a few of you after D-1630. I said, where are the South Delta facilities, and the answer I got from some people was, well, the State Board can't authorize those. That's not the issue. The point is you can set standards and you can set the stage to promote certain things. Now, if you are going to ask the water users to concede more water, you have got to build flexibility into the system. In other words, give us the opportunity to be able to move water in wet years, the wet periods, that type of thing. I think the South Delta facilities could go a long ways to providing that flexibility. Right now the pumps are constrained. If we have South Delta facilities, then we will have the ability to move more water over a shorter period of time, thereby reducing environmental effects. Another point that I was very concerned about as a result of D-1630 is the concept of an environmental fund. Everybody advocates it. Water users put money up, then environmental agencies, regulatory agencies, buy water to fix environmental problems. The problem that I had was that while there was recognition of the Central Valley Project contractors in D- 1630, that they are paying something because of the Miller- Bradley bill. I don't know if you remember that. They said, well, they are paying something through Miller- Bradley, so they should have relief on the proposed environmental fund created by the State Board. One thing the State Board failed to recognize is that the State Water Contractors have been in the Delta for 30 years and for most of those 30 years we have been standing alone. It took a lawsuit against the Federal Government before we got them to acknowledge any responsibility in the Delta, and it was only in the recent Miller-Bradley bill that there has been any generation of funds for that purpose. I asked for an audit by the Department of Water Resources last summer as to how much had the State Water Contractors spent in the Delta. The total amount is more than 200 million dollars. This does not include the cost of the construction of the pumps and so forth. That's the cost for doing all of these studies and all the mitigation measures that we have already undertaken. I would hope that the Board would take into consideration the fact that we now are paying for things that we put in place in the Delta, that we have done in the Delta in an attempt to mitigate our impacts. You need to let us know where we stand as far as mitigation. Sharing the pain is my last issue, and then I will be quiet. A lot of people have talked about what I call sharing the pain, anyway, which is that the obligations in the Delta should be spread throughout the watershed. It is not just the obligation of the State Water Project or the Central Valley Project. I happen to agree with that. However, it is the position of our agency that we not throw the area of origin statutes out the window. We came into the Delta with the understanding that we would be taking water surplus to the needs of the north. We plan to live by our promises. We do, however, believe that every agency, whether you are an exporter or in the Delta, or whether you are upstream from the Delta, has an obligation to mitigate your own respective impacts. Now, so far, you know, again, maybe it is from my own biased perspective, the State Water Project has been sitting there as basically the cash cow to do most of these things. We look forward to others joining with us in an attempt to resolve Delta problems. So, I will end my share of the testimony with that. MR. CAFFREY: Thank you very much, Mr. Clark. Mr. Schuster, you are next? MR. SCHUSTER: Yes, sir. Thank you. One thing I should have said in our opening statement was we have been trying to do as you have suggested, Mr. Chairman, is work with others, in this case mainly through Cliff Schulz's efforts and probably due to mine. We have been working very very closely with the Department of Water Resources and fully endorse their comments, and do not intend to go back and repeat that. So, I just want to say, me too, as far as what the Department of Water Resources has got to say. Very quickly, because we don't have too much time here, just to finish up Tom Clark's points in terms of what we think about the Club Fed proposals of December 15, and I say that on purpose. We all in this room have had a tendency to look at EPA only, and there's a lot of other things happening to the water users that are not EPA related. In fact, so far EPA hasn't done anything to us yet other than threaten. What we have done here, Kern County in this case, using Department of Water Resources studies have gone back and tried to make a calculation of what would have happened -- the right charges the most important -- what would have happened for us this last drought should that proposal have been in place during that entire period. Obviously, we have had to make some estimates in terms of how the Bureau and the Department would decide how to split the Coordinated Operations Agreement. We have tried to make an estimate of what we think this Board may do in terms of sharing responsibility for Delta outflow with others, and a number of estimates like that to get this number. Actually, I think it's a little conservative, but it was an effort on our part to try to characterize why what Club Fed did in their media blitz in December was not totally truthful. My sense of what they said is that they found a solution to the Delta problems from an environmental point and then that solution did not harm the urban ag users in any significant way, and, in fact, the impact on ag users was only 20 million per year. Looking at it from a water supply standpoint, at least in our estimate, you can see in terms of those double bar charts there, you can see what would have happened to us if the Club Fed proposal had been in place. One last thing I want to say about this, this is not just for Kern County Water Agency, this is State Water Project deliveries, so like in 1991, we show zero deliveries, we, the Kern County Water Agency got zero deliveries in 1991 from the State Project. The urban people got about 33 percent. They would hae gotten zero also, just to give the sense of the magnitude of what could have happened if that had been in place. This second chart, which I will spend almost no time on, but will become important to us as we work together in the next few months is what would have happened in the '29 through '34 historical drought that's used by the Department and others to try to measure the impact of any kind of proposal in terms of deliveries during a serious drought. The same relationship, of course, occurs, we get much bigger reductions in terms of our deliveries due to the Club Fed proposal. It is not insignificant in any way as was described -- in fact, one of our ag people put it in perspective for me that if you really did solve it and it only cost 20 million dollars, he would personally contribute 5 million dollars. That's a good deal. And in our sense that's not what the cost truly is. Another thing I wanted to do today, and again, I will not take too much time because you have been told quite a bit, at least it has been implied in response to your three questions, especially the first two, as to what standards you look at and what the level of protection is. In different ways those questions aren't the right questions to ask in the sense that in the real protection if you actually answer the question of the real protection level, you have already balanced to some extent. I sort of look at those questions a little differently. What the Board members and the staff probably mean, what range of standards, the first question, should you look at, and on the second one, I'm really putting words in your mouth, how do we balance, how should we balance? Give us some suggestions from the participants standpoint. And I'm just going to give you some suggestions on how to approach this tough issue. I went back and thought about a document that I read last year that Secretary Babbitt, Secretary of the Interior, gave on April 1, 1993, to the House Committee on Merchant Marine and Fisheries, and the issue there was a little broader then what we are looking at here, but the same issue was concerning the management of the nation's biodiversity resources. That's part of the jargon we all have to live with today, and I started reading through the Secretary's statement and I saw lots of quotes, which I want to use now to make a point here, but I think he has given us some guidance policywise in terms of how to figure out how to balance the needs of the environment, in this case the estuary's environment, and probably upstream where there's conflicts, with the need to maintain economic growth in California. When I read Secretary Babbitt's statement, it was really one of the first published statements by anybody in the administration other than Mr. Clinton, who had the so- called spotted owl summit, and I kept waiting for April fool. It was actually quite good. The first one, and I don't encourage people to go back and read the whole statement, the first quote that really struck me and that fits this issue, and I am going to quote directly: In a world in which the impacts of human activities are omnipresent, maintenance of biodiversity will require the careful management of habitat systems in the context of ongoing human use, including the use of the biodiversity resources themselves. One thing that struck me on that is most of the Board members are new since we together started this process in 1987. One of the major points or themes of the State Water Contractors' presentation starting in 1987 was that we, mankind, have had an impact on the Delta and the Bay, and in a lot of cases that's been a negative impact. We need to figure out how to manage that system. From my standpoint it is too simple, in fact, it is almost irrelevant to go back and say how are we going to return the system back to where it was, don't care when it was, historically. We have a system that we, mankind, have negatively impacted, not always negative, and it's time for us to figure out how to manage that so we can protect that resource, but also, continue development of California. The second one, and again I quote from the Secretary: It is right to deal with crisis involving individual species, but we should not manage our lands and resources so that we either consciously or unwittingly produced and then react to endless progressions of crisis. Of course, what he was talking about back in that area, and these are his words, not mine, continue the train wrecks that we run into, especially through the Endangered Species Act. He was thinking about the spotted owl. We could have a bigger one, not with the Board, but with this whole issue related to the endangered species. That was not what struck me. What struck me there, he is right in the sense that we in Kern County and others keep having to focus on, first, this winter run and then Delta smelt, and back to winter run, and we keep getting hit from all different side, and we can't even keep track of all the players in terms of their personality and what they are trying to do to us. It's a very difficult process to work through. And through working with you, if we can come up with some kind of balance situation, maybe we can get that certainty, our word, Secretary Wheeler uses the shell fly terminology and others use different words, certainly in terms of what the near short term would look like so farmers would know what to plan on in the next few years to see if they can possibly survive. Of course, we are talking that you need to balance a decision in terms of how to protect the environment with the economic impact. We don't want the certainty that 1630 gave us or Club Fed would give us; that is, the certainty that our farmers on the west side will go broke. That's not the kind of certainty we are looking for. We are looking for the certainty of what will happen environmental protection-wise in the next few years, and it's something we can probably live with, speaking for the farmers because I am a consultant. I always live with the farmers in a way that they have a chance to survive in the near term. This next one is interesting. It's one of the key things of his: When all interested parties work together with a genuine commitment to develop solutions rather than create confrontations, we can have economic growth while protecting wildlife. Two things there. The one on which I am going to spend the most time is trying to have economic growth while protecting wildlife. In this case, we are really focusing on the fisheries, but also, the wildlife stuff. That is the balancing we are trying to do. The other point he is making here is really difficult to do, and this Board knows that to do that when you haven't got a genuine commitment from all of those involved and look for that balance, we have all faced that over and over. Another quote: Managing living natural resources without reference to good science guarantees future disappointment and failure. Obviously, we need to use good science. What has been used as a monitor by some people in terms of science isn't any good, therefore do nothing, and that's not what we in Kern County mean in any way. What this one made me think of is two facts: One is there is a lot of good science that's been done by a lot of good scientists over the last 30 or 40 years, and as Tom Clark stated, the State Water Contractors have paid for most of those. Is that science good enough to be definitive to give us definitive answers as we go through? No. Does that make it bad science? No. I think we have enough science but we are still going to have to make educated judgments at this point in time in terms of if we do this, what's the chances of a biological benefit and does that work a likely negative economic impact. That triggered a thought which is what Tom started to get to. The Governor defined, at least he implied interim standards that you are trying to establish here and did try to establish a couple of years ago as being standards that would be in place until a long-term solution or the Delta is fixed. And I agree with that. And I also think we have to think of these standards as being even more short-term interim-wise. Somebody, I think it was Perry, talked about -- or Jim Stubchaer asked Perry about using the Delta itself as a resource, I mean as a laboratory. I think that's what we need to look at. We should think of these standards as being very short term, establish a very very quantitative, if possible, monitoring program where we can see how they work and then come back and make the triennial review real and meaningful over time, so interim in that sense as well as the way the Governor meant it. The last two, the first parts were lead-ins. While we must continue to provide support for individual species that are already endangered or threatened, and while we must commit ourselves to dealing with the backlog of candidates and providing protection to those requiring it, it is vital that we seek ways to carry on economic activity, manage our land, and steward our resources so that species, ecosystems and our very life support systems do not continue to be put at risk. Actually, the State Board in the last 25 years that I have been involved in have been trying to do that since the '70s. That's what this Board is empowered to do, and the task you have been given is to try to figure out some way of protecting the environment. You are the only ones I think that really do have that task and the legal authority to do that clearly, as opposed to the Clean Water Act where EPA has told us they do not have the authority to balance, which they are probably correct. I am not challenging that. So, this is the first place that we have got to look at the ecosystems and don't be too narrow. We need to look at this much broader than what EPA did, which is outflow and some stuff for salmon and so on, and very limited for striped bass. We have to find some way to maintain carrying on economic activity while protecting the system, and if we don't, we put everything we care for at risk. The last one, I guess, is almost a plea more to the participants than to individual Board members. Secretary Babbitt's quote is: I believe we are starting to see the future of resource management in this country, and that it involves greater development of and reliance on science in support of management, as well as a greater coming together of individuals, groups, and organizations to achieve sustainability in natural systems. And I'm not sure about that last part. I am glad he sees it. I haven't seen a whole lot of it lately. I agree with him that if we are going to have any chance, and I really mean we rather than just the Board, the participants and the Board of actually coming together with a recommended solution, a proposal in July which you have asked for, we have got to start working together. We in Kern County commit ourselves to trying to do that with other individual entities and hopefully we will definitely come to you with a proposal in July, hopefully not just by ourselves. One reason for going through this litany is that we in Kern County and much of the ag community are always being accused of the assumption that we want here is freedom to do nothing, that you take no action in terms of negatively impacting our water supply. Actually, I heard humorously from some environmental people that they felt Met was selling out the environment. That's not the issue. We are sincere about trying to find some kind of way of getting all of us, including the environment, out of the dilemma we find ourselves in today. Thank you. MR. CAFFREY: Thank you, Mr. Schuster. Mr. Schulz. MR. SCHULZ: Thank you. My job over the last several months was to listen to Tom and Dave and see if I could summarize what their positions were and get it down on some pieces of paper. I am responsible for the last two handouts in your package, namely, Kern County Water Agency statements in response to questions 1 and 2, and I would like to just briefly summarize those. With respect to question 1, our position is very similar to DWR's and surprisingly, not that dissimilar to what Perry Herrgesell said for Fish and Game; namely, that we want you to develop a comprehensive package of policies and regulatory actions that will balance the public trust and water supply needs, and attempt to return full regulatory control of California's water resources to the State. To do that, we think you have to be much broader than just focusing on the items that it presently has before it. we think you need to take a look at the entire public trust batch of items, whether or not they are flow related or water quality related, and that includes endangered species issues, some of the issues, again, that Perry Herrgesell had with respect to other species, et cetera. The remainder of our response to that question talks about the Board's legal authority and some recommendations for the way you proceed, and like DWR, we believe that you should not simply, as the notice did in your regulatory basis for action, recite only the triennial review and the water quality statutes. We also believe that you have the authority under the water rights statutes to establish flow and diversion policies. We think that you should be setting flow and diversion policies in these proceedings as well as water quality policies. But, and I am not going to summarize or read what our statement in that respect says, but we quote a number of Water Code sections and point out that we believe that the Board clearly has the authority to set policies outside of the quasi-judicial water rights hearing process that relate to outflow and diversions. Now, what I have just said only discusses the Board's policy-setting authority and does not address the implementation of policy, and that distinction certainly raises the question of how the Board should disseminate any flow and diversion policies that are developed during this workshop process. The question that is of fundamental importance is that all potentially affected water rights holders must be assured their due process rights are protected before permits are modified. The Board can't finally decide what terms and conditions should be added to the water rights permits until the water rights hearings have been completed, but that doesn't mean that you can't set general policies to guide you in that activity, and you should be doing that as part of this workshop process. The non-binding nature of such flow and diversion policies will not detract from their usefulness. They can still be submitted to EPA and EPA can use them to see how the State is going to act in order to try to more fully balance public trust and water supply needs. In addition, policies could be used to develop alternatives for water rights CEQA evaluation and would allow us and others to prepare focused evidence for the water rights hearings. There has been a lot of discussion this morning about the Board's water quality jurisdiction as it relates to the Clean Water Act, and I want to spend a little time on that. The Board, in its workshop notice, correctly emphasized its reviews can be conducted under State law under the Porter-Cologne Act, and the Board, as a creature of State statutes, only has the power to act as authorized by the Legislature and you don't have the authority to implement the Clean Water Act. This notion seems to confuse some people principally because the Clean Water Act contains procedures for submitting your standards to EPA for their approval. We recommend that the Board early in these workshops inform all the parties that the EPA approval process does not convert the State level water quality planning into a procedure controlled by Federal law. The Board needs to emphasize that the balancing process built into the Porter-Cologne Act will be followed. We know that the EPA review process will always be a factor, but particularly in a situation like this where flows and salinity intrusion are the primary issues before you, the integrity of the balancing process needs to be maintained. Now, our recommendation is that we expect and want these workshops to emphasize a broad range of policy matters irrespective of whether they raise water quality control and diversion issues, but that requires some careful attention to how the results will be submitted to EPA, and Tom Berliner from San Francisco touched on this very briefly. We recommend that the Board state its intent to treat the issues before it in a manner which is consistent with your comments to EPA which were submitted on March 11 of 1994. That means that you would treat the two parts per thousand or X2 standard as outflow rather than salinity intrusion, that you would treat the salmon smolt survival standard as a flow and diversion issue rather than a water quality issue, and that you would treat the striped bass spawning standard as a non-point source pollution, which would be only submitted to EPA under Section 208 of the act. The broader issues that should also be considered should be categorized by whether they are water quality or flow and diversion related. If they are water quality, they should be categorized by whether they are in Section 303 or 208 issues under the Clean Water Act. Then, when the process is complete, the Board can provide EPA with a series of submittals, one under 303 which is classic water quality matters, if that's necessary; one under 208 which deals with non-point sources such as salinity intrusion; and one for informational purposes which would be the State level water rights policy guidance which would guide the Board as the starting point for the water rights hearing. We think if this approach is followed, there will be much less chance of confusion as to the proper roles of EPA and the State Board in this entire process. Turning quickly to question 2, I think we stated pretty clearly that we do not believe that the Board should establish any historical or other base-line water quality levels as a target. Such an approach prejudges the balancing process before it begins, and the same caution should be followed if you establish flow and diversion issues such as required Delta outflows, et cetera. In other words, it would be improper in the beginning to establish an historical outflow regime which the Board then tries to achieve by restricting water supply operations. To avoid prejudging the outcome of the balancing process, we believe that you should choose a wide range of alternatives, request data from experts on the water supply and biological impacts of those alternatives, and then, find out what level of protection is appropriate under California's law after the balancing process is completed. You set your standards after you have completed the process. You don't prejudge the process by trying to guess whether it is late '60s or early '70s, or some other standard today. This process is not only correct from a policy standpoint, it is also mandated by State law, and we have discussed the State law requirements of both the Water Code and the Porter-Cologne Act that require balancing. I want to point out one thing here that was touched on in a question by Mr. Del Piero earlier. It is our position that the various Water Code provisions, including Section 1257, allow the Board to balance. The Audubon decision, which applied the public trust doctrine to water rights also authorizes the Board to balance public trust with consumptive use requirements. That decision, like the Water Code sections, does not mandate a priority or specific level of protection for instream uses. Either it's a badge of honor or blood. Our firm was the lawyers in the Audubon case for the City of Los Angeles, and we believe that that's definitely the correct interpretation of the Audubon case. The Board presently has pending before it the Mono Lake case, and just as it would be improper there to establish the lake level before the hearing starts and then try to justify the policy level, it would be improper in this case to try to get an early '60s or early '70s, and then justify it. The balancing process has to occur first before you set the historic period or other standards that you would use in this matter. The Federal Clean Water Act is not at variance with that approach, we don't believe, in this case. The Clean Water Act clearly indicates that salinity intrusion and matters that will be before you, to the extent they are covered by the act and it only covers quality, not flow and diversion issues, are 208 issues. And non-point sources, including salinity intrusion, are only controlled by the State to the extent feasible, so that you have the authority under the 208 process even with the Clean Water Act to balance. Not only that, but if you balance and find that it would be inappropriate under State law, or unconstitutional under State law, to set a level of water quality or salinity intrusion that is satisfactory to EPA, Section 101(g) of the act clearly gives the State water rights priority over the requirements of the Clean Water Act in that regard. So, it is our conclusion and recommendation that you act under State law, that you operate under State law. You won't have to determine until the end of the process whether there is a conflict between what you do and the Clean Water Act, but at the outset, you simply should start with an open balancing process and the chips will fall where they may as we go through the process. MR. SCHUSTER: Thank you, Mr. Chairman. I am sorry I estimated poorly, but we went eight or nine minutes longer. MR. CAFFREY: We're inclined here at the outset to be a little bit lenient when people try to combine their presentations and we appreciate your comments, and we are giving a lot of careful thought to them. Are there questions by the Board? MR. DEL PIERO: Mr. Clark, would you be kind enough to give me a list of the projects that were built with the 200 million dollars? MR. CLARK: Sure. MR. DEL PIERO: I would appreciate that because the comparison you drew was between that and the environmental fund in D-1630, and that was only for facilities, not for studies. So, if you would be good enough to let me know what that 2 million dollars was spent on. MR. CLARK: I would be happy to. MR. DEL PIERO: Thank you. MR. CAFFREY: Mr. Stubchaer. MR. STUBCHAER: Mr. Clark, this economic study you gave to us says it is highlights on the impasse. Have you submitted the backup material that our economic staff can analyze? MR. CLARK: We will certainly do that. Have we given the State Board staff the complete reports yet? MR. HOWARD: You haven't . MR. CLARK: We will make it available to the Board as well. MR. STUBCHAER: Will it have all the interest rates, growth rates, and all the assumptions? MR. SCHULZ: Everything. It's about a hundred-page report. MR. SCHUSTER: We haven't had time to make copies, but we will definitely get it to staff. MR. CAFFREY: Let me say with regard to that and with regard to the submittals of everybody who is going to be appearing before the Board over the next several weeks as we go through the process, we welcome and encourage any information that you may be able to provide us. As you develop your thoughts and your ideas as we go through this process, be sure that you provide that to the Board, to Mr. Pettit or Mr. Howard. We are very anxious to see that and, again, I want to encourage you all to work together whenever possible, wherever possible, to bring ideas to the Board, especially those where you do agree, because that would be very helpful and interesting to us as we try to forge our way through this and develop a proper plan. Are there other questions by the Board? Mr. Brown. MS. BROWN: Mr. Clark, has EPA received a copy of this or are they going to comment back? Have they commented on it? MR. CLARK: We did submit that with the March 11 comments. Did we submit the full report? MR. SCHULZ: The full report was submitted and there actually have been some meetings with EPA where we have provided them with supplemental information, and we have been having discussions with them about the processes that were used and the numbers that were reached. MR. SCHUSTER: I actually met with Patrick Ryan and Palmer Reese, and Bruce was there also last week for three or four hours, and Bob McKusick was with us and Harold Meyer. We are going through now on the economics, but how do we come up with an allocation of impacts in terms of water supply deficiencies to the ag districts? So, we are actually trying to help work with them in terms of understanding what we did and by implication what they should have done. MR. SCHULZ: It is our understanding that the Board is going to have some economists on the staff with respect to this process; is that accurate? MR. CAFFREY: We have an economics unit and they are present today, at least one representative, I believe, and we have established a unit which was not only something that we wished, but was required by the last budget, so we do have three economists and so we have got up and running as of about a month ago, so they will have input to this process. MR. SCHULZ: I would like to work with them also. MR. CAFFREY: We encourage you to do that and encourage all the parties to participate in this in as many levels as you can possibly that. Mr. Pettit? MR. PETTIT: Mr. Schulz, a question with regard to the flow and diversion policies -- looking at your statement on page 4, the middle paragraph and the first sentence of that paragraph triggered a question in my mind. The succeeding sentence and the oral comments seem to say the main purpose for these policies would be to keep the jurisdictional distinction between the Board and EPA straight. Is there any other reason in your mind for adopting these flow and diversion policies before we go into the water rights process? MR. SCHULZ: I think there is from a practical standpoint. The water rights situation in California is becoming so complex that to try to invent anew each time you hold a water rights hearing the policies the State of California is going to be following with respect to the water supply allocation system, we don't think is very efficient. I think it would be helpful to the parties and the Board to have some general policies. You know, that's exactly what you have when you adopt a water quality control plan. Water quality control plans are not automatically implementable against a water rights permit holder until the Board goes through an implementation process of holding a water rights hearing and deciding whether it is in the public interest to require a project to be operated in accordance with that plan. We think that you could beneficially do the same sort of thing in the water rights area and set general flow and diversion policies which could then be taken into the water rights process. The people who are in the process would know more about the way the Board is thinking when they come in, structure their evidence and decide whether it is in the public interest then to impose that policy on any particular water rights holder, and adjust the rights and share the burden, and those kinds of things can just be better done with more advanced information, plus we don't see how you know what water quality standards it is reasonable to adopt unless you also have some idea at least from a policy standpoint of what you are going to do in the flow and diversion area and how those things affect the species you are trying to protect with the water quality. They are so interrelated in the Delta that it seems to me that you have got to consider flow and diversion and water quality in the same process. But as you just said, it's important that you do that in a way that doesn't confuse the water quality jurisdiction which has Clean Water Act overtones and the water rights jurisdiction which solely resides in the State. MR. SCHUSTER: I agree with everything Cliff has said. I think you are right. In this case, 90 percent of our reason for raising those issues is what you just stated. Just don't fall back into the trap we have been in together before of confusing the Board's water quality and water rights authority, and also, in that context, not confusing those authorities with whatever EPA role has in the Clean Water Act. That's our major concern. Just don't add flows to water quality and have to go back through that again. MR. DEL PIERO: I don't understand what the so- called water rights policy concept means within the context of the Water Code. Can you refer me to some statutory authority that authorizes the Board to set up policies like that? MR. SCHULZ: There are some quotations in the paper. For example, Water Code Section 1251 says that the Board shall make such investigations of the water resources as are necessary for the purposes of securing information in order to administer the water rights process. MR. DEL PIERO: That refers to the elementary process of granting water rights. MR. SCHULZ: It also applies, as far as I believe, to permits where you have continuing jurisdictions, where you have basically the same authority to impose terms and conditions as you do in a brand new water right, so in the circumstances -- and so, I think it also would apply in circumstances where perhaps the public trust or Article 10, Section 2, gives you continuing jurisdiction over permits, because there is no difference in your right to impose terms and conditions in those circumstances as there is in the application area. MR. DEL PIERO: I understand that, Mr. Schulz. Are you aware of any precedents where the Board has ever set these types of policies outside the context of specifically water rights hearings? MR. SCHULZ: I am aware, yes, that in your regulations you have adopted a series of permit standards, permit terms and conditions, which you propose to put into permits. I think those are policy oriented. They are in the regulations. MR. DEL PIERO: They don't drive the hearing, though. They are applied at the end of the evidentiary process, not prior to it. MR. SCHULZ: But they are there as a policy to guide the people as you go through the hearing. You can't definitely decide if you are going to impose a policy on a water rights holder until you finish the hearing, but you can certainly give policy guidance to him in the flow area the same as you can give him guidance in the water quality area. I don't see a logical distinction between the two that would require one result in one setting and another result in another. MR. DEL PIERO: Do you believe modification to the notices that have been published for these hearings would of necessity have to take place in order to properly have that matter before the Board? MR. SCHULZ: Yes, and that's one of the things we recommended, because we think you are planning on covering flow issues. We think that the only thing you have set forth in your hearing notice is water quality sections. We don't want to find ourselves in the confusion of trying to set flow standards in something that has been noticed as a pure water quality proceeding. MR. DEL PIERO: If that's the case, Mr. Chairman, the calendar on these hearings is going to be extended far longer than this Board has -- MR. CAFFREY: Ms. Leidigh, did you want to say something? MS. LEIDIGH: I was curious as to what form you would see water rights, flow and diversion policies taking. It comes to my mind that there are three possibilities, and I was curious as to what form you would see flow and diversion policies taking in terms of how it would be presented. There are three different forms that I can think of just off the top and those are regulations, or a resolution, or part of the Porter-Cologne plan, or -- MR. SCHULZ: I vote for resolution. MS. LEIDIGH: Now, why do you think a resolution rather than regulations or something under the -- MR. SCHULZ: Well, for example, water quality objectives don't require regulation -- well, actually, you do -- I am trying to think -- no, you have specific procedures under your water quality control plans where they don't go through the Office of Administrative Law. MS. LEIDIGH: Well, they do now. MR. SCHULZ: There is a shortcut proceeding which I get confused on. MS. LEIDIGH: There's a shortcut procedure that came in about a year ago in legislation, but it does have to be submitted to the Office of Administrative Law. MR. SCHULZ: And you should not do it under the Section 13000 section of the Water Code, and that is water quality. When we are talking about opening and closing the cross-channel gates or putting a limit on the amount of water that can be diverted at a pumping plant, it doesn't fall under the Porter-Cologne Act. It should not fall under the Porter-Cologne Act. The State should, quite frankly, from a policy standpoint avoid putting it into the Porter- Cologne Act because of the Clean Water Act implications of flow. If California is going to maintain control of the water supply, it is going to be through 101(g) that deals with flow and diversion issues, where they belong, in the water rights portion, and not through the water quality provisions. MS. LEIDIGH: Okay. With regard to your resolution which you indicated was your favorite, do you think that a resolution would have the reliability that would be necessary to give people comfort that those are, indeed, standards that the Board is going to follow in the future? MR. SCHULZ: I think they give guidance to the parties on the direction the Board is planning on going in the future, which I think is what we want. The ultimate decision-making process will be made through the implementation or water rights process. But, again, I think in all likelihood, the answer to your question is yes. MS. LEIDIGH: Okay, thank you. MR. CAFFREY: Mr. Del Piero. MR. DEL PIERO: Mr. Schulz, would you assume those policies once adopted by the Board would be enforceable against the Board should the Board decide to deviate from that? MR. SCHULZ: No, because the Board has the authority to determine whether or not the adoption of the implementation of a policy against a specific water rights holder is in the public interest and would constitute a reasonable use of water under Article 10, Section 22, so you still have broad discretion to determine in specific instances whether and how the policy should be implemented on a water project. MR. DEL PIERO: Would it be possible then based on the way that you just described it to challenge a decision of the Board alleging that the Board was arbitrary and capricious in the way the policies were applied? MR. SCHULZ: The way the policy was applied, I suspect somebody could. MR. DEL PIERO: Okay. MR. SCHULZ: But I think they would have an extraordinarily difficult time in prevailing. I have never wanted to challenge the Board on a factual determination because your powers are so broad in those areas. MR. DEL PIERO: The reason I ask the question is because a number of the proposals that have come forward today have been to attempt to deal with the problems of the Delta and diverters from the Delta in the aggregate, and yet, I think it was the Department of Water Resources submittal, I believe it was and if I am wrong, I will stand corrected, or maybe it was the contractors, I'm not sure. it was one of the two that indicated that they thought the responsibility for mitigation for adverse impacts on the Delta should be incrementally applied to each diverter or recipient of water from diversions based on the incremental impacts. I know I heard that this morning. MR. SCHULZ: It certainly wasn't Kern. MR. DEL PIERO: The reason I ask that is based on the idea that somehow those standards could ultimately be used against the Board in terms of attempting to overturn the decision made by the Board subsequent to that if that proposal put forth was, in fact, adopted. Could that, in fact, not be cause or be used, whether effectively or not remains to be seen, as a way of challenging the Board's subsequent decision? MR. SCHULZ: Let me answer that in a little bit of a round-about way. It is my understanding that Mr. Bradford is planning on dealing with things like X2, a flow matter, and things like the salmon smolt survival standard which deals with closing the cross-channel gates, and that you are planning on adopting some sort of policy through that process with respect to those items, but apparently, at least the way the notice reads, is that you are going to be setting those policies under the Porter-Cologne Act. We want you to set policies in those areas, but we don't want you to do it under the Porter-Cologne Act. We don't think those are water quality matters. We want you to put those in their proper category of flow and diversion, matters which come under your water rights jurisdiction. Go ahead and set policies in those areas, but do it under the right grouping. MR. DEL PIERO: One last question. If we were to do what you propose and set policies under our water rights jurisdiction, would the adoption of those policies necessitate the preparation of an environmental impact report pursuant to CEQA, inasmuch as the adoption of policies by governmental agencies have been construed by both the courts and now the Office of Administrative Law as a project? MR. SCHULZ: You are going to be doing a functional equivalent as part of the policy-setting process. MR. DEL PIERO: A functional equivalent isn't going to work for a water rights policy. That's why I am asking the question. MR. SCHULZ: I don't think that would be the case if you are going to implement it in the water rights process, but that is something I would be willing to look into and give a further response to the Board on. MR. DEL PIERO: Ms. Leidigh, do you have an opinion on that question? Do you understand it? MS. LEIDIGH: Would you repeat it? MR. DEL PIERO: If this Board were to adopt a policy based on our water rights authority, not water quality, where we have the authority to adopt a functional equivalency document, would that, in fact, require compliance with CEQA? MS. LEIDIGH: I think there is a strong argument it would require compliance with CEQA because you would be expecting there is going to be a result from that, that the physical world would change as a result of that policy. MR. SCHULZ: But not until you do an EIR on the implementation through the water rights process. MS. LEIDIGH: No, if that were true, I think that you wouldn't necessarily have to do a CEQA documentation on a water quality control plan. MR. SCHULZ: That's self-implementing with respect to a discharger. It's probably not worthwhile for us to debate that here and take up your time, but I would be willing to get together with Barbara and provide a supplemental response. MR. DEL PIERO: I would be interested in hearing the opinion of anyone who has an opinion on that one way or the other. The reason I am so concerned about it is because the argument about the functional equivalency document was used by this Board in terms of the adoption of the inland surface water plan and we got it handed back to us, and we are in the process of having to do an EIR on that, and it's almost unprecedented in terms of the extension of CEQA jurisdiction as to the functions of this Board. It just strikes me that adopted policies for this Board in a water rights context almost certainly is subject to evaluation under CEQA. MR. CAFFREY: It would be important to develop the concept a little further, Ms. Leidigh and Mr. Schulz, and also, Ms. Leidigh, to share our recent experience with the inland surface water plan that Mr. Del Piero is referring to to see what the similarities are there. Mr. Schuster. MR. SCHUSTER: I agree with you. I think it is a good idea and I agreed with Mr. Del Piero, it should be. I guess I just wanted to add something, speaking as a non-lawyer, I think what we are trying to deal with here and I am not sure we have all the answers to the questions that have been asked, but basically, this Board put out a water quality opinion in 1991, that made a very strong legal argument in terms of what is a water quality standard and what is a flow standard that would be rightly dealt with in water rights, one we like and I think a lot of other water industry people like also. The situation we find ourselves in collectively now is that we have got a Federal proposal on the table, so to speak. The majority of that is not water quality, it is flow related whether we talk about an ESA flow restriction or we talk about cross-channel gate closures for salmon and those things. So, if the Board literally just did a triennial review and stuck with their original legal opinion on water quality, which is what we would like you to do, you are not really addressing what the Club Fed proposal did, which is what you want to do, and we agree with you. I want to make that very clear, that we agree with you that you've got to find some way to deal with the broader context of just water quality and flows. We are just trying to throw out some ideas to find some way to do that, that doesn't get us collectively back in the trap of changing that legal opinion of 1991. This discussion is good. I am not being critical of the discussion at all, but any way we or you can find a way of doing that without getting back into water quality, we will support. You want to and we agree with you, you need to give all of us, including Club Fed some indication of where you think you want to go in water rights. Otherwise, we can't politically resolve this thing or have a chance to politically resolve it late this year. That's all we are trying to say. MR. CAFFREY: We appreciate that. Anything else from Board members? Anything else from staff? Thank you, gentlemen, very much for giving us your insights. You have now given yourselves an assignment. We will look forward with great anticipation to what comes out of the discussion with Ms. Leidigh. Thank you, Mr. Clark; thank you, Mr. Schuster; and thank you, Mr. Schulz. All right, we are going to take a break in about a half-hour and that will give us an opportunity for at least one more presentation. It will also give the court reporter an opportunity to take a rest, so let's go with Dave Whitridge and Alex Hildebrand of the South Delta Water Agency. Good afternoon, gentlemen. MR. WHITRIDGE: I am David Whitridge. I am here today with Alex Hildebrand on behalf of the South Delta Water Agency and numerous agricultural water users in the Southern Delta. I would like to focus the Board's attention this afternoon for jut a minute on an issue that really hasn't been discussed much today, and that is the implementation of your existing Water Quality Control Plan. The present Water Quality Control Plan for salinity, which was adopted in May, 1991, establishes new salinity objectives for the Southern Delta agricultural beneficial use required by the Racanelli decision. However, these as of yet have not been implemented, with the plan setting up staged implementation with stage 2, which is Vernalis and Brandt Bridge to be implemented no later than 1994. I think at this point it is important to ask how does the Board intend to carry out this implementation? The hearing notice, and I believe correctly under key issue 1, states that the Board intends to review only the highest priority issues, and that these issues are those for which EPA is now proposing standards. It seems to us that further analysis of EPA concerns for fishery resources should not provide any justification for delay of implementation of these other objectives which are not being reviewed and which are long overdue for implementation, as was noted in the Racanelli decision in 1986. Implementation of existing objectives which were painstakingly developed over years of analysis is needed now and not further delay while considering additional objectives. The question, I guess, is how does the Board intend to meet its announced 1994 implementation requirements for beneficial uses and objectives not subject to this review? I think the flip side of this concern is that if the Board does not begin to implement existing agricultural objectives, what effect would new fishery objectives have upon water availability and the availability to meet other existing objectives? The main concern within the Southern Delta with the EPA proposed objectives is the striped bass objective on the San Joaquin. Shifting the release of the limited San Joaquin system water that is available into April and May to meet the EPA proposed objectives would further reduce water available for streamflow at other times, particularly during the summer when needed to meet the Southern Delta agricultural objectives. We feel then a thorough analysis should be made of water needed to meet the proposed EPA objectives and the remaining water available for any such purpose after the additional water is needed for present and as yet unimplemented Water Quality Control Plan requirements. Such an analysis should also include the effect of the increased groundwater overdraft that could be expected to result from the proposed increased instream water demands. It should further include an analysis of the effects on the dangerously low San Joaquin salmon population of the EPA proposals requiring large water releases for the EC objective to protect bass, an exotic species which feed upon the juvenile native salmon. Finally, if it is decided to increase the protection of striped bass to the detriment of the native San Joaquin salmon, this quality objective should be accomplished not by increasing water releases, but rather, by timing the release of west-side drainage from the Central Valley Project service area to the river to accommodate water quality needs. In summary, it is important that the Board get about its business of implementing its existing Water Quality Control Plan pursuant to the commitments in that plan, rather than overlook or forget about them in the process of considering additional water quality objectives for subsequent implementation. That's all I have and I think Alex has some comments on some of the statements that have been made earlier today. MR. HILDEBRAND: Perry and others have called your attention to the decline in certain native species in the estuary and have suggested that that is indicative of a general decline in the suitability of the habitat for aquatic species generally. They then go on to indicate this decline has occurred concurrently with increased export and reduced Delta outflow, and have inferred that, therefore, those declines and flows must be responsible for this decline in habitat. But that line of logic overlooks a rather important point, and that is that during this same period of declining outflow and increasing exports, and declining native species and certain species at least, we have had an enormous increase in introduced species, even disregarding the striped bass. All through the food chain from the Asian clams on up, we have had burgeoning populations that weren't there 30 years ago. So, to say that the general suitability of the habitat for aquatic species has declined is defied a little bit by that indication. It may have been bad for some, but certainly good for others, and one has to raise the question then, is it the decline or to what extent is the decline due to the competition of these other species rather than the change in the flow regime, and that doesn't seem to get addressed very much. There's so many potentially serious causative factors of the Delta's ecological problems that one cannot assume with any confidence that any selective few causes are so determinative that the rest need not be addressed in order to achieve a substantial environmental improvement. Now, we can't wait until all the factors and interrelations are fully understood and evaluated. On the other hand, we should not implement mitigative measures involving very large financial and/or water costs without at least having a carefully evaluated and considered opinion that such measures can provide significant environmental improvement in the absence of measures addressing other potentially significant factors. In particular, the impacts of introduced species of all types must be evaluated. It has not been technically or scientifically established that some of the presently and most seriously proposed water management measures can be substantially effective unless something can be done with the competition within the entire food chain by introduced species. At the very least, it seems as though we ought to move toward these measures rather slowly and find out whether, in fact, these drastic changes in management will achieve the objectives or whether they are precluded by the introduced species and some other issues that we haven't got time to go into today. MR. CAFFREY: I would point out that in our June workshops we do have that subject, the influence of introduced species, scheduled for discussion. MR. HILDEBRAND: I noted that, but since it was brought up by Perry today, I thought maybe we should mention it while it is on your mind. That's all I had to say. MR. CAFFREY: All right, we appreciate your being here, Mr. Hildebrand. It is good to see you. Are there questions from the Board members of Mr. Whitridge or Mr. Hildebrand? Always nice to see you, Alex. MR. HILDEBRAND: Thanks. MR. CAFFREY: Anything from staff? Thank you very much for being here today. We appreciate your input. Austin Nelson from Contra Costa Water District. MR. NELSON: Thank you and good afternoon, Chairman Caffrey and members of the Board. The materials that we have submitted, I believe you have copies of them, include a formal statement, a technical analysis of the proposed estuarine habitat standards which was a part of the series of studies performed and submitted by the California Urban Water Association, and a copy of Contra Costa Water District's formal comments to the Environmental Protection Agency. On the key issues that are identified for this workshop, we certainly agree with others that it is appropriate for the State Board to concentrate its attention during this review on the fish and wildlife standards. On the matter of water supply effects, the technical report that is a part of the material that we have provided to you addresses water supply effects in terms of incremental Delta outflow requirements based on other historical records since 1968. The method and its calibration using field data are described in our report. Because of the way in which EPA's estuarine habitat standard is formulated based on broad categories of hydrologic years, we have come to a couple of conclusions. One of them is that Delta outflow requirements are highly variable within year type, and the second is that they are not well correlated with year type. Those findings point to the need, we think, for refinement to the standards that can achieve the environ- mental objectives that have been outlined by EPA and they also point to a way to make those refinements in such a way that the water supply effects are reduced. We have made some very specific proposals on that topic and we look forward to discussing that with you further in subsequent workshops in this series. Thank you. MR. CAFFREY: Thank you very much, Mr. Nelson. Any questions of Mr. Nelson at this time from Board members? From staff? Thank you, sir. Gary Bobker of the Bay Institute. Is Mr. Bobker here? I will move his card to the back and call him again later. Ann Schneider and Jim Easton representing Delta Wetlands. MS. SCHNEIDER: Thank you, Mr. Chairman and members of the Board. I am Ann Schneider and I am appearing for the Delta Wetlands Properties. Delta Wetlands Properties has participated for a number of years in your proceedings and we will be continuing with that tradition. We have submitted a -- MR. DEL PIERO: I have to tell you I am glad that this Board holds these hearings once a year whether they need to or not because at least we get to see old friends. MS. SCHNEIDER: Nice to see you, Mr. Del Piero, and everyone else. MR. CAFFREY: In December we are going to give an award to the best line throughout the entire process. That may be the best one so far. Go head, Ms. Schneider. MS. SCHNEIDER: We have submitted a mercifully brief statement and Mr. Jim Easton is here. He is a consulting engineer for Delta Wetlands Properties and he will explain some of the points that we make in that statement. Dave Forkel, who is the Delta Project Manager, is also here and B. J. Miller is on the Delta Wetlands Properties team as well. They can answer questions if you have them, but we will keep this to Mr. Eaton's very brief summary of the statement. MR. EASTON: Mr. Chairman and members of the Board and staff, what I am about to say is against the advice of counsel, but as Ann mentioned, she has prepared this voluminous two-page document which I have managed to condense down to a purple presentation which I assure you will not take longer than one minute over three hours to present. Delta Wetlands is pleased to participate in the Board's workshop process to develop a water quality plan. I would like to, first, very briefly describe to you the Delta Wetlands project, and then address the three questions which were in the hearing notice. Delta Wetlands project is a proposed privately financed water supply project which includes four Delta islands, Bouldin Island, Holland Tract, Webb Tract and Bacon Island. The project's preferred alternative proposes that Bouldin Island and Holland Tract be dedicated for habitat only, or for habitat purposes with only incidental water supply benefits. This aspect of the Delta Wetlands project will significantly enhance the Delta's habitat for terrestrial species. Webb Tract and Bacon Island are proposed to be used primarily for water supply reservoirs on a year-round basis with only incidental, but sometimes very significant environmental benefits. The proposed water supply storage capacity of the project is about 230,000 acre-feet per year. An updated draft of the Environmental Impact Report and Environmental Impact Statement is being prepared now and will be on the street for public review this summer. We expect that water from our project will be available by 1996 if the permit process goes as scheduled. We would like very briefly to respond to the three questions that were asked on the notice. The first dealt with what standards should the Board focus on during this triennial review. We certainly agree that the Board's review of EPA's draft standards should be a high, if not the highest priority of this process. This may be the only opportunity that the public and those that have interests in Delta water have for an in-depth participatory hearing on all the technical aspects of the proposed Federal standards. We believe this exploration should include positive and negative aspects of the proposed EPA standards. In addition to reviewing the EPA's draft standards as proposed, and perhaps as modified, Delta Wetlands believes that the Board should identify and seriously consider those portions of your Draft Decision 1630 that may be appropriate for inclusion in the standards that you ultimately adopt, for instance, QWEST of that draft decision. Of critical importance in any standard is not only the amount of water required to meet the standard, but also, the timing and the source of the water that is required to meet that standard. Delta Wetlands believes that the Board's process should review the relevant impacts of the various changes in the flow regime from the Delta and the Delta Wetlands will be prepared during this workshop process to demonstrate modeling approaches that we believe should be considered for this purpose. Your second question dealt with the level of protection that's required under the California Water Code and Clean Water Act for protection of public trust uses in the Bay-Delta estuary. Whatever level of protection is required and ultimately adopted by this Board, we believe that the Board should set standards based on the best science available, and that the standards should be flexible depending on year types or progression of year types, which should include consideration of critical years. Without such consideration resulting environmental impacts and benefits, as well as water costs, may not be adequately balanced. The third question had to do with the effects of the EPA standards and whether or not a modified version should be considered. We certainly suggest that both the original standards and any subsequent modifications are appropriate to be considered during this process. Delta Wetlands believes that it can offer a unique perspective to the Board on EPA's draft standards. We have included in the modeling that has been done for our project as part of the EIR/EIS the EPA draft standards, and later in this process we will be prepared to address the impacts of those draft standards on projects within the Delta. That concludes my remarks. If there are nay questions, I would be happy to try to answer them. MR. CAFFREY: Thank you, Mr. Easton. Any questions by the Board members? Mr. Stubchaer. MR. STUBCHAER: Is the model you refer to the same one that was submitted during the D-1630 process or is it enhanced? MR. EASTON: We used several models, Mr. Stubchaer, and we will be happy to discuss those with you probably in the May presentation. MR. CAFFREY: Anything else? Thank you, Mr. Easton. Thank you, Ms. Schneider for being here. We appreciate it. We will now hear from Gary Bobker from the Bay Institute, and as Mr. Bobker is approaching, let me say that after his presentation, we will take a short break, and after that, I think we have six more cards, so it looks like we will be able to finish today. MR. BOBKER: Thank you, Mr. Caffrey. I appreciate your inserting me back into the order. I got some very dirty looks from my ride back to the area when I missed my turn, so thank you. Mr. Chairman and members of the Board, my name is Gary Bobker. I'm the policy analyst at the Bay Institute of San Francisco. I have been surprised that nobody has made any cracks, which I expected to hear. MR. CAFFREY: I was tempted myself. MR. BOBKER: I think we all were. Frankly, as I approached the podium I realized that this continues to be not the best forum for flip remarks about something so serious. We have made available to your staff extensive materials that we prepared in connection with the EPA promulgation and related matters that are germane to the main issues that were raised in the hearing notice that you sent out for this workshop, and I will not go into depth on those. They are technical in nature and deal with the level of protection, what criteria are necessary to protect the estuary and so forth. Instead, I want to make some very brief comments that probably can be misconstrued as non-constructive, but I think need to be said, and that is that, bluntly put, we are somewhat discouraged by the Board's decision to re-engage in this kind of process, for some pretty obvious reasons. I think that this process that the Board decided to re-engage in is something that really defines the phrase, reinventing the wheel. The main issues that are the subject of the hearing notice have been the subject of extensive presentations to this Board beginning in 1987, and arguably beginning well before then, and in the hearing record of the Bay-Delta hearings from 1987 onward and in the subsequent formal rule-making process now being undertaken by EPA, there has been work cited, summarized or entered into the record which I think pretty conclusively demonstrates the need for protections for the Bay-Delta's estuary and the details of those protections, specifically, the provision of adequate low salinity habitat to protect estuarine species, provision of increased fresh water outflow from San Francisco Bay, improved restrictions on export operations from the South Delta are certainly other measures as well. Despite the existence of that record and the clear admission of the need for increased protection that has been offered by this Board and other parties over the years, there has been no remedy forthcoming. I am not going into the litany of the Board's aborted attempts to resolve this problem. We are all familiar with that. At this point in time, rather than duplicate the exhaustive efforts undertaken by this Board in the past in at least three separate hearing processes, and reduplicate the effort undertaken by EPA during the course of the rule- making activities since September of 1991, we recommend instead that the Board begin preparations for implementing new improved standards for the estuary after that adoption later this year by the Federal Government. As you know, we and other groups have signed a consent decree with EPA which is being submitted to the judge in the case. We expect him to sign it and we will see after all these years final rules promulgated by December 15. Under our interpretation of the law, somewhat at variance with what you have heard earlier, both Federal and State law make it clear that EPA's standards, once promulgated become the operable standards for this Board, and the Board must be held accountable for achieving them and insuring that water users, water suppliers and other parties comply with those standards. That's a task the Federal Government cannot be engaged in, but which this Board is eminently qualified to do and authorized to do, and it has shown excessive creative energy in addressing the issues of implementation in the draft of D-1630 that it offered a year ago. Although we disagreed with the level of protections which were sought in that draft decision, we nonetheless appreciated the work that went into trying to implement, or rather, design creative mechanisms to reach water users and to deal with water supply impacts. Considering the legal mandate to the Board and EPA's continuing commitment which was expressed once again this morning to work with the input from all parties, including the Board, in fashioning the final form of the Bay-Delta rule, the wisest course of the Board would be, we believe, would be to devote its resources to designing a water rights proceeding including the preparation of the environmental documentation that would be necessary to insure that the Federal water quality standards are implemented in an equitable and effective manner, and in a timely manner, and in a final manner as well, of the problem that we have with a parallel process to issue standards that will further delay the final implementation of standards. A workable program to implement within the shortest possible time line which incorporates all uses of the estuary's water and which exploits creative mechanisms such as were contained in D-1630 to manage water through mitigation funding, conservation requirements and other measures, would be your greatest contribution to solving problems of the Bay-Delta environment while at the same time providing a greater measure of reliability to water supplies and users. In conclusion, I guess the only thing I would like to add is that directing your energies to that implementation process will, I think, achieve effective protection in a timely manner, which is what we are all interested in seeing, and get us closer to effectively addressing water supply impacts through more rational water management strategies and water supply operation requirements. To proceed in going back to the water quality standards setting phases, really in some sense is something in the past, and that concludes my statement, Mr. Chairman. MR. CAFFREY: Thank you very much, Mr. Bobker. We recognize your frustration and you have stated it eloquently, but we do appreciate your participating in this process and I feel compelled to say, and I hope it is not naive of me, but I do feel compelled to say that out of this process, as I said earlier, the kind of standards that hopefully we are all looking for will be developed in a cooperative way and this Board could move fairly quickly, hopefully, into the water rights process and implementation, so we do think it is important for you and the other environmental groups to participate in this process, and we are glad you are here. Are there any comments or questions from Board members of Mr. Bobker? Anything from staff at this point? Thank you, sir. Okay, let's take a ten-minute break. (Whereupon a recess was taken.) MR. CAFFREY: Let's take our seats and begin again. Mr. Krautkraemer. MR. KRAUTKRAEMER: I am John Krautkraemer and I am a senior attorney for the Environmental Defense Fund in its Oakland, California, office. I will try to make my comments as brief as possible. I am one of those rides back to the area. I am the ride back to the area. MR. CAFFREY: Take your time, John. MR. KRAUTKRAEMER: I am going to echo a little bit what Gary said. I actually think it is good that the Board has re-engaged in this process and that you are once again trying to tackle the issue of Bay-Delta protection. I think I would agree with Mr. Bobker, though, that the focus of this effort is misplaced, at least at the moment. I think it is clear, based on the schedule that you sent out and the time frame that we are looking at, that any final promulgation of standards by the State Board, and this assumes everything goes well, that we get to the draft when you say we are going to get to the draft, and that the draft moves to final, and I have gone through a couple of experiences where we have had some difficulty getting the draft to final, that even under the most optimistic scenario it is going to be well beyond the final promulgation of the EPA standards before the State can adopt a standard. And I think some of the concerns we have heard expressed by the water users today are concerns that really can be addressed more directly, not through the standard itself, but through how that standard is implemented. We have had extensive hearings in 1987, we had hearings after that, we had hearings during the summer before last on the interim standards, and we have a lot of evidence. We really pretty much know what is necessary and what is needed to be done in terms of standard setting. The tough issues, and I think the issues that are most important to address in terms of how protections for the Bay-Delta are going to affect other users are implementation issues, and what I would urge the Board to do is to focus your efforts now on putting in place, starting the processes that are going to be necessary to implement the standards that come out of the EPA process. Now, that's not to say there isn't a role for you during the EPA process in trying to comment on and get your viewpoints expressed in that process, but that the real important issues and where you can really contribute are on the implementation side. There are two issues I can think of that are extremely important when it comes to implementation and one is the concept of sharing the responsibility for meeting the standards. I think as EPA's Regulatory Impact Analysis correctly shows, how the standards are implemented will have a big effect on what their economic impact is going to be on other users, and that can be a wide range depending on how the standards are implemented. One of the things that can be done is to spread the responsibility for meeting those standards among water users throughout the entire watershed and this, obviously, needs to be done consistent with area of origin laws, but I would agree with Tom Clark, and you can note this if you want, that I actually agree with something that Kern County Water Agency says, that everybody that diverts water in this watershed has a public obligation to protect the beneficial uses of the Bay-Delta estuary. And I think the second area, there's actually two related issues, to ameliorate the economic effects have to do with using market mechanisms. One is transfers which you have heard a lot from EDF over the years and we have submitted a lot of testimony in the various hearings about how transfers can serve to move water from the lower value economic uses to the higher values and help insure that those higher uses that are most important to the State's economy remain viable. But the second is the concept that Greg Thomas addressed earlier and one that's embodied in the restoration fund in the Central Valley Project Improvement Act and one that I think was one of the most laudable attributes of Draft 1630, was the concept of the restoration fund, that rather than going through the transfer mechanism and relying on consumptive users to reallocate water, set up a fund of money so we can go out and purchase water directly for the environment, and that will help insure you can target the uses of water, those willing sellers who almost always represent the lower valued uses of water, and that's the way to insure that the economic impacts are going to be minimized. So, I would urge you to begin the process and to look at those implementation mechanisms and begin to take the steps so that you can move quickly toward implementing the standards that come out of the EPA process. What I would like to do, I guess, in closing, is address the three issues you identified. The first has to do with the standards that should be addressed in this process. Given what I just said, I think that should not be the major focus of what you are attempting to do here certainly in the short term. Over the long term, I think it is appropriate for the Board to re- engage in the standard-setting process, but in the short term, I don't think that's where your attention should be. It should be implementation. But I am going to answer the question anyway with that caveat. I think clearly the major deficiency in the standards is the fish and wildlife standards, and that should be the focus of your attention, not the municipal and industrial and agricultural standards. I note with some irony that what DWR and some of the other folks here would like to see you do is combine flow objectives into water quality objectives. The reason you are in the bind you are in now and the reason they are trying to come up with these processes to allow you to combine the two things is because back in 1989 you made the decision at the urging of the Department of Water Resources and others to drop flow objectives from the water quality planning process. That was a serious mistake. I think it was based on a misreading of the Racanelli decision. The easiest way to remedy that is to go back to the way you intended to do that all along back in 1987, is to adopt a comprehensive set of standards for the estuary which include flow objectives, which include operational constraints, do that through the water quality planning process, and then move into the implementation stage. You had it right the first time. Go back and do it that way. The second question has to do with the level of protection. I have heard a lot about balancing and not establishing the level of protection ahead of time. The problem with that is it ignores the requirements of the State and Federal law which established minimum anti- degradation requirements, and establish a balancing, if you will, as a matter of law, that establishes a minimum flow below which you cannot go in terms of protection, and that level of protection is tied to the late '60s under State law and the middle part of the 1970s under Federal law, and the concept underlying that principle is pretty basic. It is that when these laws took effect, these water quality protection laws, the idea was not to make things worse than they are now, which when you think about it is a good objective for water quality law which must try to make things better than worse. So, the anti-degradation policy requires that you protect existing uses and existing is defined at the time that the policies reference. So, the late '60s, and 1968 I think is the appropriate target today in terms of level of protection. One comment we had in the EPA standards which we think pertains here also, is that the level of protection doesn't necessarily mean the water quality conditions that existed at that time. What it requires is the protection of the existing uses and what is required then is the level of water quality that's necessary to protect those uses. That doesn't necessarily mean that if you can replicate the late '60s and early '70s water quality conditions, you can look at that period of time, and we go into more detail in our comments. We believe that the evidence shows a lot of species were already in decline during that period and probably the reason you don't see more serious decline is because there weren't any critical and dry years during that period. It was a relatively wet period and it wasn't until 1976-77 that you hit a dry period, and then you saw some pretty severe declines in some of the resources, so it was a problem waiting to happen. And one of the problems here is that you have to structure your standards over a full range of hydrologic conditions, and protections during drought years are particularly important. The final question asked about the environmental economic impacts of EPA's standards. Clearly, we believe that the EPA standards would be a significant step toward protection of the estuary. We go into more detail in our comments about what we like and don't like about those standards, and I won't go into that now. I will just refer you to the comments. As far as the economic impacts, as I mentioned earlier, I think there are some ways in which this Board could play an important role to implement those standards in ways which would minimize the economic impacts for other water users that may be affected by dedicating more water to Bay-Delta protection. That's, really, all the comments I have right now, and I would be happy to answer any questions you might have. MR. CAFFREY: Thank you very much, Mr. Krautkraemer. Are there questions by Board members? Anything from staff? Mr. Brown. MS. BROWN: Mr. Krautkraemer, probably in your report you have it here, but what were you ideas on funding the restoration fund? MR. KRAUTKRAEMER: We referenced D-1630. We also referenced the CVPIA fund. I think most of those could serve as models. There has been some discussion about legislation which would be some combination of user charge and bond funds. So, there are different ways that you could put together a fund like that. We don't really propose a specific way. I think that is one of the things the Board could do, is hold hearings targeted specifically toward this issue. You could explore the issue. Can we do this ourselves? Should we do this ourselves? Maybe it's better to get legislative approval just to get a larger buy-in to it. Those are the kinds of issues I think that are the ones that I would like to see the Board start to address now so that when we come to the point where we have standards, we are in a position to move quickly to implement those standards. One thing I might add, I think the restoration fund concept also helps you bridge the gap with this sharing responsibility among water agencies. I think there are a lot of sort of difficult technical issues and administrative issues about how you spread responsibility among all the water users in the watershed. And one way to kind of bridge that is through the restoration fund concept where you can pool money from all the water users maybe as an alternative to a specific regulatory control over their diversions and operations. MR. CAFFREY: Thank you, Mr. Krautkraemer. We have had two more cards added, so we are down now to, I believe, seven more cards. We do intend to finish today or tonight, so we are making progress. Mr. Baber, please. MR. BABER: Thank you, Chairman Caffrey. Mr. Chairman and Board members and staff, my name is Bill Baber. I am with the Minasian law firm out of Oroville. These comments that I am going to give you now are made on behalf of the water supply districts in the Sacramento Valley and Northwestern San Joaquin Valley, and they include Byron Bethany Irrigation District, Clear Creek, Community Services District, Cordua Irrigation District, El Camino Irrigation District, Biggs-West Gridley Water District, Butte Water District, Sutter Extension Water District, Richvale Irrigation District, Nevada Irrigation District, Oakdale Irrigation District, Oroville-Wyandotte Irrigation District, San Joaquin River Exchange Contractors Water Authority, which consists of the four exchange contractors, South San Joaquin Irrigation District, Western Canal Water District and the Tri-Dam Authority. My comments are directed primarily to the proposed EPA regulations, but will indirectly answer your questions 1 and 2, the selection of standards for review and the level of protection. The proposed rules to be adopted by the EPA are economically shortsighted at best. It is clear pursuant to the section of rules entitled Summary of Costs and Benefits, that the implementation plan for the Federal proposals has not yet been developed, making it difficult to project the actual level of economic impacts. The EPA proposals estimate that the cost of implementation could be 40 million dollars for the agricultural sector and 25 million dollars for the urban sector, assuming cost effective and flexible implementation. The Environmental Protection Agency greatly under- estimated the economic impacts of the proposed rules. Even using a crude measure of economic impacts, the market value of the additional water required for these sets of rules demonstrates the absurdly low nature of a 40 million dollar conclusion. Despite EPA's recitation of the portion of Governor Wilson's comments on April 6th, 1992, in which he stated that the Delta is broken, EPA needs to state that on April 1, 1993, a year later, Governor Pete Wilson asked then Acting Chairman of the State Board, Mr. Caffrey, the following: The National Marine Fisheries Service and the U. S. Fish and Wildlife Service, acting under the virtually unlimited powers of the Endangered Species Act, has set limitations on the operation of the Central Valley Project and the State Water Project. At the Board's workshop on May 22, 1993, Federal Government officials said that Federal standards would build on the proposed D-1630, but might also go far further. Federal officials stated that anywhere from one to three million additional acre-feet beyond flows prescribed by D-1630 could be required by ESA to protect the Delta smelt. So, imprecise a statement gives rise to great suspicion as to the quality of the science being employed. Moreover, it is the ESA which permits the Federal Government to pre-empt the State in the allocation of water resources. The U. S. Supreme Court interpretation of the act makes clear that it is a blunt instrument that can be used to achieve a judicious balancing of the needs of the endangered species and of California's endangered economy. Instead, it has been interpreted as demanding that the needs of the endangered species be pursued absolutely without regard for any other consideration. In light of these events, I believe the wisest course is for the Board to turn now to the effort of establishing permanent standards for the protection of the Delta. It is my strong intention to return control of California's water allocation process to the State and to your Board. I believe the Board can provide a needed forum for resolving scientific questions and unresolved jurisdictional issues. Regrettably, despite the diligent efforts of the Board, additional action by the State to provide interim standards at this juncture would serve only to increase the regulatory confusion surrounding this issue. What is paramount is that the State proceed to identify a permanent standard and a permanent solution for the Delta which will permit all California's major water user groups, urban, agricultural and environmental, to enjoy assurances of adequate water resources well into the 21st century. The State Board is the proper jurisdictional forum for resolving scientific questions raised by the proposed EPA water quality regulations such as the use of large amounts of fresh water to repel salinity in the Bay. The Federal Government is attempting to use its regulatory authority to cause a de facto reallocation of California water rights in violation of provisions set forth in the Clean Water Act and particularly in Section 101(g). EPA admits that the State Board has full discretion to determine the source of water flows. However, EPA ignores the State Board's authority in California through the proposed rules by proposing salinity criteria to restore estuarine habitat conditions that existed prior to 1976, in fact, as far back as the late '60s and early '70s. EPA is wrongfully attempting to invade the jurisdiction of the State Board in allocating and maintaining water rights in this state. We support the level of protection analysis given by Dave Anderson of the Department of Water Resources this morning. It is timely to select a level of protection now as it depends upon which fish species or habitat your regulation intends to protect, and then, the cost analysis, both water and money, for adopting a level of protection varies with whichever fish species or habitat you decide you wish to protect. As Governor Wilson stated to then Acting Chairman John Caffrey in his letter of April 1, 1993, he desired return of control of California's water allocation process to the State and to the State Board. For that reason, the State Board was proceeding to develop an environmental impact report investigation and study to determine the environmental effects and impacts of implementation of proposed D-1630 and proposed permanent long-term goals in deference to the interim goals which Governor Wilson thought unnecessary due to the Federal Government's implementation and, in effect, wielding as a club the Endangered Species Act to take water from farmers to benefit fish habitat and fish. In fact, Governor Wilson's April 1, 1993, letter references the March 22, 1993, State Board workshop which commenced with a joint presentation by the U. S. Fish and Wildlife Service, NMFS, and the California Department of Fish and Game, which is something similar to the Club Fed that was formed following Governor Wilson's letter of April 1, 1993. At that meeting, NMFS testified that California's water system could be manipulated to increase fish species by putting more water through the system, by using Section 7(e) consultation with other public agencies in the development and implementation of biological opinions. The statement was made by representatives of the U. S. Fish and Wildlife Service that the listing of the Delta smelt would definitely require two parts per thousand at Chipps Island in the summer of June, July and August, that failure to cooperate by the remaining beneficial users of water in this state would result in more onerous enforcement by the custodians of the Endangered Species Act. In fact, ladies and gentlemen, that two parts per thousand translates to 1.5 million to 3 million acre-feet of additional water depending upon the water year, which is in the range of the fresh water supply impacts that the State Board estimates will be removed from California's water system in another critically dry year by EPA's adoption of the standards and subsequent implementation by the State. We understand that the State Board estimates fresh water supply impacts resulting from the adoption of the proposed rules over the average 70-year hydrological cycle would be 930,000 acre-feet to 1.6 million acre-feet, 1.6 million acre-feet in a critical year and 3.1 million acre- feet in a critically dry year. EPA's estimate of fresh water supply impacts caused by the adoption of their proposals are significantly less, in fact, 2 million acre-feet less than the State Board's estimate in a critically dry year. EPA admits in the RIA at page 10 that the impacts on small farm entities, which they define as making less than 500,000 a year in gross sales, and the alternatives to regulating the small farmers were not fully analyzed. EPA, and certainly, the State Water Resources Control Board, if they choose to adopt these draconian regulations, should know the economic and environmental impact on farmers before it adopts and enforces such regulations. We believe that the impacts of the EPA regulations could put small farmers out of business, change land uses and otherwise damage permanently what is readily acknowledged as not only this nation's, but the world's, fourth or fifth largest agricultural economy. We ask for a continuation of the State Board's intent to develop long-term goals complete with environmental review as requested by Governor Wilson back in April of 1993. Thank you for the opportunity to present these comments. MR. CAFFREY: Thank you, Mr. Baber. Any questions from the Board? Mr. Brown. MS. BROWN: Mr. Baber, you mentioned a reduction of two parts per million, two parts per million of what? MR. BABER: Were you talking about the State Board's estimate and the EPA estimate? MS. BROWN: Yes. MR. BABER: Two million acre-feet in a critically dry year, 1.6 and 3.1, something like that. MS. BROWN: Is it two parts per million TDS? MR. BABER: Two parts per thousand. MS. BROWN: Two parts per thousand. MR. BABER: Two parts per thousand at Chipps Island. MS. BROWN: Two parts per thousand. MR. BABER: Yes. That was the testimony on March 22 of last year, the workshop held by the State Board on the Delta smelt. MS. BROWN: Okay, thanks. MR. CAFFREY: Thank you, Mr. Baber. Mr. Heaton. Mr. Heaton is here representing the Westlands Water District, and following Mr. Heaton will be Michael Jackson, Laura King, Patrick Porgans, Greg Gartrell and Alan Lilly. MR. HEATON: My name is Mike Heaton, staff attorney for Westlands Water District. MR. CAFFREY: And you have a familiar face with you, Mr. Heaton. MR HEATON: B. J. Miller is with me in his capacity as consultant to Westlands and the San Luis Delta Water Authority. B. J. has two jobs here today. One is to say anything that I miss, and since this is the first time that I have appeared before the Board, he is also supposed to give me a kick if I say anything really stupid. MR. DEL PIERO: Sir, years ago, Mr. Miller used to provide advice to the Monterey County Board of Supervisors and he kicked me, too. MR. HEATON: That's what he gets paid big money for. MR. DEL PIERO: He is also a former member of this Board. MR. HEATON: And we are sitting down not because we have a lengthy presentation, but mostly because we are tired. We are at the point in this proceeding where our comments are going to be starting to be redundant, so we will try to minimize that. I wanted to make a couple of general comments sort of in the order of putting this into context, and then, second, deal briefly with the three questions you asked in the notice, and third, a thing I just added, is that I want to respond to the comments made by the Bay Institute and EDF just briefly. Why is Westlands here? Westlands is here because we support the State Board's process. We think it is imperative that the State Board re-engage or continue its engagement in the Delta solutions, that it is imperative that the State Board take back full control of the Delta and the State water quality and water rights process. Agriculture has traditionally been accused of resisting change, of being unwilling to accept movement in the direction of environmental protection and mitigation if it means reduced water for agriculture. Agriculture is characterized as resistant to that process. It is probably true that in the past that has been the case to some extent. I don't think that that's the case any more and it is particularly not the case with the Federal contractors on the west side of the San Joaquin valley, and certainly, not the case of the Westlands because the status quo, as it exists right now, is unacceptable to us. The status quo right now, to us, means basically the slow strangulation of the Central Valley Project and consequently, the economic strangulation of west side agriculture. The constraints on the project that we now deal with, that we now face on a daily basis, resulting from the implementation of the Endangered Species Act and the Central Valley Project Improvement Act, have cost us substantial quantities of water, and just to give an idea of the magnitude of this thing, and recognizing that it is a little bit difficult to sort out because of the drought, since 1990, looking at the last five water years, '90, '91, '92, '93 and '94, we have been shorted over three million acre- feet of water out of our contractual entitlements. Westlands has a contractual entitlement to 1.15 million acre-feet per year. We have had supplies in the last five years of 50 percent in 1990, 25 percent in 1991 and '92, 50 percent in '93 and right now we are looking at 35 percent. Adding all them up, the shortages themselves exceed 3 million acre-feet. Now granted, the first two years, '90 and '91, were mostly drought functions, but the last three years we have tried to some extent to isolate out the impacts of ESA and CVPIA, and it is difficult, but my own non-engineering estimate is that it is in excess of 1 million acre-feet that Westlands alone has contributed, if you will, to environmental protection, environmental mitigation, threatened and endangered species protections in the Delta. Since Westlands represents a little more than half of the total Federal water service contracts on the west side, you can double that impact when you are looking at the Delta-Mendota Canal contractors, the San Luis contractors and the San Benito Water District in Santa Clara valley. The impact of that has been primarily twofold, threefold, I guess. Land fallowing has increased, groundwater pumping has dramatically increased, we have probably a safe yield in Westlands of somewhere in the order of 200,000 acre-feet a year on the average. We have probably overdrafted in Westlands in the last five years something over a million acre-feet. The third thing that happened is that the credit and financing conditions have pretty much gone down the tubes and I know that's been addressed by a couple of people earlier in the day, but I see that on a daily basis in the bankruptcies and foreclosures and receiverships in the district. It's not a tidal wave of foreclosures and bankruptcies and receiverships, but it has been a steady stream of farm failures over the last three or four years. Basically, these water users are not going to make it on 50 percent water supply, and if the status quo continues, that is basically what we are looking at and that is our own calculation as well as what we have been told to expect for the next 20 or 25 years by the Bureau of Reclamation. So, we come in here with the idea that we would sure like to see the State Board get a hold of this situation and do something about fixing the Delta. Now, I'm not quite sure what that means. A lot of people have spoken to that issue repeatedly today who know a heck of a lot more than I do about water quality and water right issues, and authority and jurisdiction of the State Board, and so, I guess just to put it very plainly, we hope that the end result of the State Board's process will be to restore some certainty to our water supply. We think that you have got to set some standards that will reflect the political realities. You have got to have buy-in as has been suggested by the feds. You probably have to have buy-in to some extent from the environmental groups; otherwise, we look at simply more and more years of litigation, which again, just tends to perpetuate the status quo, and we believe the projects, the exporters, bearing the burden of providing the water that's allegedly needed to solve the environmental problems in the Delta. So, that's what we want out of this is, is we would like to see some standards that basically get us out of the box that we are in in terms of providing the water that's needed to restore habitat conditions in the Delta, and hopefully, in that process make the Endangered Species Act constraints irrelevant. Ideally, what we would have is standards under which the projects could operate, that would allow them to operate with non-jeopardy opinions, that would allow them to operate as they were designed to operate to deliver water to their contractors. That's sort of the context for this thing. In brief response to the three points that you raised in the notice, to take the last one first, we have submitted copies to staff of the comments of the Westlands Water District on the EPA proposal. Those comments are identical and basically done jointly with the San Luis Delta-Mendota Water Authority. There is also substantial overlap, I believe, in the technical analysis of our comments with the technical comments of the California Urban Water Agencies and one of the things that is interesting in the dynamics of this process, both as I think you will see here before you in the next few months and as we went through with the EPA standards, is as strangely enough, we find ourselves in considerable agreement with where the Urban Water Agencies are on a lot of these issues. As I sat and listened to the gentlemen from San Francisco and Metropolitan this morning, I found myself in agreement with almost everything they said. And then, I found myself in agreement again with most everything that the Department of Water Resources said, and I was trying to figure out how to synthesize the two and see if there was some sort of grand unified field there, and I was almost there, and then, after lunch I got sleepy and I kind of lost it. I guess the one common theme in there, as I see it, is everybody agrees that at some point we've got to deal with outflow and we can no longer pretend we aren't dealing with outflow, and we can put whatever kind of label on it you want, call it X2 or call it salinity intrusion, or whatever, but eventually we are going to deal with outflow, and it seems to me that it's difficult to confine this thing then to the water quality issues and not address the flow issues at the same time, and I don't know how you do that. I am sort of inclined, I think, to agree with where Cliff Schulz was going that somehow you need to acknowledge that in the water quality process and expand the scope, if you will, a little bit of this thing to fold in ultimately policies or objectives that will provide a base or a starting point for the water rights phase. The other thing that relates to the question of what are the standards, is outflow is not all of the answer. If there is one thing, I think at least all the water users agree on, it is that there's a lot of other things that have gone wrong in the Delta. It is not just the project, it is not just exports, it is not just outflow, and again, there are limitations on where the Board can go. You know, the Board probably can't do much about overfishing and poaching, but maybe the Board can address some of the other issues that relate to toxics and pollution and food-chain problems and exotic species to the extent that these can be dealt with in the context of water quality or water rights issues. One other point related to this outflow question is that we recognize that that is going to be part of the eventual solution, if you will. We would also encourage the Board to keep in mind that the Federal contractors have made a contribution, somewhat unwillingly maybe, but nevertheless a contribution in the form of 800,000 acre-feet prescribed by Section 3406(b) to the Central Valley Project Improvement Act, and while we have a dispute with the Federal Government over the method and manner of implementation of that provision which is now in litigation, we know that somewhere down the road there is going to be 800,000 acre-feet of Central Valley Project yield dedicated to fish and wildlife purposes. And while we quarrel with their interpretation of how they implement that, particularly with respect to NEPA compliance and Section 3411 compliance, which is the provision that says they have to come before this Board to modify their permits before they can use that water. It's more a dispute about timing than end result, I think. And again, we would ask the Board to keep in mind that that water is out there, and we would hope that when we get to the water rights portion of this thing, that that can be reflected as a Federal contribution, if you will. I have listened with a great deal of interest to this discussion about the level of protection and balancing, and basically, everything I know about that I have learned today, and for what it is worth, I have come away convinced that you can't establish the level of protection without going through the balancing and without going through the balancing first, and I think what I have learned is that granted there are instream uses that are reasonable and beneficial uses, or environmental uses that are reasonable and beneficial uses, but that until you know what you are trying to protect and what you are trying to protect those things from, and then, having decided those two things, how you are going to balance those protections against the other existing reasonable beneficial uses, you can't determine the level of protection, and so, how can you say, well, we are going to create a level of protection that's based on some historic period, and we have heard what EPA proposed was the '68 through '75 period. How can you do that without doing the balancing first? It just seems to me, and I became convinced listening to the argument today, if you set the level of protection first, you, in effect, jumped over the whole balancing process and you have also jumped over what some refer to as the threshold questions of -- well, what are the biological objectives here that we are trying to protect; don't those need to be described somehow, don't those need to quantified, don't the standards that you are going to propose have to have some objective measurements associated with them? How do you know when enough water is enough, and how do you know when you are getting biological benefits from that water? I thought David Anderson's analysis on that was excellent, so for what it is worth, I second David Anderson on the level of protection argument. The last thing I wanted to say is in response to what the gentleman from the Bay Institute and EDF said about basically why you should just cut to the chase and get to the water rights phase of this thing, and quit fooling around with water quality issues because everybody knows what needs to be done. I take exception to that remark. I don't think any of us know what needs to be done. Westlands, more than any other contractor or at least as much as any other contractor, is interested in getting to the point where the Federal contractors no longer have to bear the burden of Delta protection, where there is some equity or sharing of the pain, if you will, in terms of where the water comes from to provide Delta protection. We want to get to the water rights issues and we want to deal with this on a state-wide basis, and basically, we want everybody at the table -- and recognizing the area of origin statutes have to be dealt with and it's going to be a long and painful and contentious process. We want to get there as much as anybody, but we don't want to get there by having this Board simply role over, if you will, for the EPA proposal, which is a flawed proposal and not based on good science, based on maybe the best science that's available right now, but it is certainly not the best the technical people in this state and water community are capable of producing. And I guess if I had to live for another year or two years or three years under the status quo, which means under the constraints of the Endangered Species Act, that's still preferable to having the Board simply adopt standards and implement standards that don't do anything but just throw more water at the problem, that don't do anything more than ratchet it up another notch, which is basically a one-year box, ratchet up and up and throw more and more water at it, but there is no reverse on this machine. There is no way to ever ratchet it down, and I guess I am a little skeptical or suspicious of what some of the environmental groups might have in mind. We would strongly encourage the State Board to not simply advocate water quality and water rights prerogatives here and slog through this process one more time. Like I say, I don't think any of us have the answers, but I think collectively we are getting closer, and Westlands is committed to working within the authority and with Santa Clara and with Contra Costa and with Kern County, and with the other urban agencies, and anybody else who has relied on exports or is interested in resolving these problems. We will be there and we will do what we can. And I thank you for the time. B. J., anything else? MR. MILLER: Well, it's nice to be back at water camp with the same issues, except everyone looks a little older, except for the Board members. Dan Nelson is the General Manager of -- MR. DEL PIERO: We didn't make them swear under oath to tell the truth. MR. MILLER: Dan Nelson is the General Manager of the San Luis Delta-Mendota Water Authority and he would be here today except his daughter was injured yesterday playing softball, and he told me that I should come and I could say anything I wanted to, then later on he called me back. The San Luis Delta-Mendota Water Authority is an association of 39 agencies who get Federal water out of the Delta. It includes Westlands, the exchange contractors, the Santa Clara Valley Water District and a number of other agencies that make up what is generally known as the west side. San Luis Delta-Mendota Water Authority worked with California Urban Water Agencies on the technical analysis of the EPA standards and submitted comments on those standards that were similar to what CUWA submitted. In terms of what we have heard here today, the Department of Water Resources' comments were particularly interesting, I thought, and I think many of the agencies that make up the San Luis Delta-Mendota Water Authority would concur with those comments to the extent that there is some conflict between them and what we said on the EPA standards, and there are other members of the San Luis Delta-Mendota Water Authority who would not necessarily concur with the DWR comments. One final sort of general thought -- I was thinking back listening to all this here all day to something that Don Kelley, who is a prominent fisheries biologist and who is now retired, said a number of years ago at a meeting of the Interagency Ecological Study Program where he sort of lamented that we, he was using the term collectively, were being asked to do something that was impossible, which was to protect and restore the environmental values of the Delta and to protect the reasonable uses of water by agriculture and urban water users, and to do this without building anything in the Delta. And he commented that that was impossible. I think it is probably impossible. There may be a way to do it, but I think the reason that the Board, this Board, has not been able to do it in the past is that the task you have may not be doable. You may not be able to balance and to do that without inflicting serious harm on one or more of the users. If that's true, then what prospect is there for this Board to do something that's fundamentally different than what EPA and the endangered species agencies can and are doing? The answer to that, I think, lies in the fact that the Board has broader authority than these Federal agencies, that you can do things toward solving these problems that they cannot do. So, I would urge you to step forward here in a big- time way, I suppose is one way to put it. I would urge you to assume that you are the way this problem is going to get solved and not BDOC -- BDOC is a commendable process, but you have two great advantages over BDOC. One is you are legitimately and unquestionably powerful and BDOC may or may not be. We will have to see, but there isn't much question that you are. I remember when I was on the Board how that was pretty apparent. And second, we are all pretty sure that you are going to be here even if Kathleen Brown is elected, and we are not sure of that about BDOC. MR. DEL PIERO: The institution will be here. We can talk about in terms later on (laughter). MR. MILLER: You will be here for a while, which actually maybe is one of the best things we could all hope for. MR. DEL PIERO: Thank you, B. J. MR. MILLER: You know, you will have a parting shot and you know you will be gone after that, but aside from the possibility that we can through this and you will hear something new on the technical side that will provide some insights that your Federal counterparts have not had the opportunity to consider, that's a possibility, but there are three things that you can do that the Federal Government can't do that I think you ought to strongly consider doing. One, obviously, is you can -- as Tom Clark said -- spread the pain. You may be able to diminish the social and economic effects of whatever standards you impose simply by spreading around the Central Valley and into the export regions. I kind of doubt that that's going to do the job. There are two other things that I think are at least worth considering without necessarily endorsing them. One is a thing that Greg Thomas mentioned about the environmental water fund, the idea of purchasing water for the environment, rather than taking it in an involuntary, uncompensated, relatively economically inefficient way. It seems to me that is something worth considering. And finally, you could do something about Delta facilities. I am not exactly sure what that would be, but I don't believe that you are powerful in that regard. I think there are steps that you could take, maybe not under your direct authority, but certainly, you have some power that you can cause good things to happen in that regard, and I am not suggesting that you cause something to happen that the environmental interests would be strongly opposed to. I think there is a way if you are creative and expansive in the way you view your powers, to make some real progress in that area, and possibly start to break up this logjam we have had on that issue for a number of years. And I hope you decide to take that on and not leave that task to BDOC with its feeble power and its questionable continued existence. I think that's it. MR. CAFFREY: Thank you very much, gentlemen. Are there questions by Board members beyond the discourse we have already enjoyed? Mr. Del Piero. MR. DEL PIERO: Mr. Miller periodically comes to make presentations to this Board and it always strikes me after he has made a presentation why he served on this Board. I listened very closely to what you said and I know the other Board members did, too. MR. MILLER: Thank you. MR. CAFFREY: Thank you, B. J., and thank you, Mr. Heaton. Mr. Jackson, good afternoon. MR. JACKSON: Good afternoon, Mr. Caffrey. When I first started coming to camp, as Mr. Miller calls it, it was seven years ago and I think we have had five different camps, and since I have listened to all of the testimony by all of the people, what I want to do is try to recount what might be different about this camp. What seems to be different is that in the years since we have been gone, people have begun to realize that gridlock hurts a different interest than it used to hurt. In the first six years that I came here, gridlock frustrated me tremendously because it was the public trust that was dying and the gridlock essentially kept us from doing anything about the trust. And then, it became apparent as time went on that the California public and the American public were not going to stand for the greatest estuary on the Pacific Coast and maybe, indeed, the greatest estuary on the planet, to die. And I think the Board members themselves began to realize that they didn't want to be responsible for its death. I have been through about four incarnations of boards while this has been going onn, and I realize that we came very very close in D-1630 to going forward with an ecosystem management approach long before ecosystem management became a catch word of those who are dissatisfied with the Endangered Species Act and the present gridlock which is killing agriculture. Now, what's happened in the last year is that agriculture is beginning to die. It is beginning to die as species do in different places. Some agriculture will go before other agriculture because of its location. When I looked at the notice, I realized immediately the Board was not yet ready to be serious. The reason that I know you are not ready to be serious is because the notice does not deal with the whole equation. There are only two things that we can do about reordering the supply of water in the Delta and that it's water out or water in. We haven't talked at all about water in. Now, this Board knows, or members of this Board know, or staff knows, that there's probably two million acre-feet of water that need to be released from upstream reservoirs upstream of the Delta in order to meet the ecosystem standards of the rivers of California. If that water were released, that would be essentially an addition to the Delta that could then go to solving the water problems of the 20 million people who live in the urban areas of California and to solve the problems of the half of agriculture that's south of the Delta. Well, agriculture can't have it both ways. They can't take water out of the Central Valley Project and the State Water Project with those organizations being the only ones responsible for salinity questions or endangered species questions in the Delta, without requiring that their brethren in agriculture release some water to come downhill into the Delta to help us resolve this problem. Now, I live in Northern California and I have lived in Northern California all my life, and I believe in the area of origin laws, the original reason. I believe in the Delta Protection Act, but maybe we need to look at them again. Following straight California water law, which I have been trying to do for this seven years, and it's now become, I guess, my will, my business; it's become very clear to me that if we applied straight water law to the Delta, the Delta is over-appropriated and junior appropriators would be kicked out. Great. We kick out the mess. How long is that going to last? The idea of California water law removing the junior appropriator in the Delta, the appropriator of surplus water which Mr. Clark in his honesty agreed that that's what happened when the State Water Project went in, but while the law says we kick out the junior appropriator, that's not the right result. I think the Board needs to take as large a view as possible. You do have the authority and the reason I keep coming back is because at the end you are going to enforce the law. You are the only ones who can and, consequently, you need to take advantage of all your water right authority, all your water quality authority, all of your public trust authority. It's kind of amazing to me to sit here and listen to the people who are now talking about asking you to take public trust jurisdiction of the Delta is the ag industry. And yet, in the first five times to camp, they were the ones who were asking you not to do that. What's changed this? The urban water users are now having to talk to their bankers. The Cortesi bill is only the first step toward applying growth and water in order to limit what's happening in urban California. I would suggest this, that you take a look at suggesting to the Legislature that they make a change. I think we would all be in better shape if the urban water users got every drop of their water before anybody in agriculture or the environment got theirs. Now, I understand that that's -- you know, I'm an environmentalist and, of course, I may not be after making that statement, but the point is that what drives California water and the power of the urban areas is droughts and the lack of water. And when that happens, we get these screwball ideas about some law to pass that harms the environment and harms agriculture. If we can deliver 15 percent of the water first to the urban areas, then we don't need to worry too much about bad law caused by needs in the middle of a drought. If you can take your water quality or water quantity jurisdiction and your water rights jurisdiction and begin to tinker with the 85 percent we have left, you can use it conjunctively in many ways to help the environment. The rice to wetlands is only one idea. We believe that out of the 2 million acre-feet of water that should be released down the rivers of California, that you can do that very slowly. You can store water leaving you with more ability to collect water in agriculture. A million acre- feet could be stored in the rice areas alone to be released when you need it for fish in the high flow period of the spring. You can try to work in the same way with conjunctive use with groundwater in the rest of agriculture. The point is that the Board is the only people with enough authority to attempt to use water in California more often than once for more purposes than one. And I would ask you to do that because right now gridlock favors single uses. Now, I believe that that single use is the most important because I believe that my children's children's children are going to want to farm. They are also going to want to duck hunt. They are going to want some ducks. They are going to want to fish. They are going to want some fish, so the idea here is that while the environmental public trust is the key issue if we believe in our children. It doesn't mean that we can't use all of this engineering talent, all of this ability in management that we have within the existing three-way process to use water. I disagree with Mr. Miller. I hate to do that because he is a very smart guy, so it means I am probably wrong, but I have been wrong before. So, I am going to suggest something. I suggest that there is enough water and I suggest that it is simply a matter of vision. I suggest it is simply a matter of people like me, and like the people in agriculture, and people in the urban areas looking at short-term bottom line for their interest and growth and not long-term gain for California, and I think this Board needs to do it. I know there were three votes to do 1630 for one minute at some point in the past. I think we ought to start with 1630. I don't think we need to have more hearings. I think the evidence is in. I think we all know what it is. I think we ought to take advantage of what's happened in a year, which is that I believe that agriculture has now realized that gridlock will kill them, and I think the bankers have realized gridlock will kill the California economy. So, Mr. Caffrey, Mr. Del Piero, Mr. Stubchaer, and the two new Board members whom I haven't had the opportunity to meet, step up to the plate as we are all asking you to do and knock this thing out of the park because people want it done now, and you can do it now with the authority you have. Look upstream, that's where your solution is. MR. CAFFREY: Thank you very much, Mr. Jackson. Are there questions of Mr. Jackson? MR. STUBCHAER: Lots of questions, but I won't ask them now. MR. CAFFREY: How are things in Quincy? MR. JACKSON: We are busy doing ecosystem management in the forest. Actually, it's not as hard as you think when people have the will to do it. MR. STUBCHAER: I thought you lived in Santa Barbara for a while. MR. JACKSON: Actually, I don't live in Santa Barbara. I am looking forward to the renewal in June of the Santa Ynez hearings, however. MR. DEL PIERO: Because it's such a pleasant place to visit; isn't it? MR. JACKSON: The thing about coming to Sacramento is that there is some strange mystique that brings all of these people from everywhere to the camp for all of these hearings. I guess what I am saying is the Santa Barbara solution lies in the Delta. The Mokelumne solution, the Shasta Dam solution, it's all here. MR. CAFFREY: Thank you, Mr. Jackson. Laura King. MS. KING: Mr. Chairman, I do have a couple of statements on EPA standards that we submitted to EPA, and I know staff has seen them. MR. CAFFREY: Ms. King is representing East Bay Municipal Utility District. She is the Environmental Affairs Officer. MS. KING: Thank you for that introduction. Most of you on the Board are new to me. I am new to East Bay Municipal Utility District. I have been with the District for three months now and before that I was with the National Resources Defense Council for over 16 years, and in that capacity I appeared a number of times before the Board dealing with agricultural drainage and Bay-Delta standards, and the staff faces are certainly very familiar. It's actually been a number of years, though, since I came before the Board or was involved in the debate on the Bay-Delta standards, and for me, I think, in contrast to some of the other folks here, it's kind of a pleasure to be back involved in the debate again and perhaps because I have been gone for so long, I don't have the same sense of deja vu that other people have been alluding to. Actually, I think things have changed quite a bit in the last five years or so, and the previous speaker, I think, commented on that as well. The District welcomes the State Board's re-entry into this process, like a number of other speakers today. Regardless of one's opinion about whether EPA has the authority to issue standards, we all agree that it is the State Board that needs to implement the standards. Given the likelihood that EPA is going to be revising the proposed standards over the coming months as they indicated this morning, I believe it is really valuable to have these workshops that you are holding to focus on the key unresolved issues and I am optimistic that this Board will find a way to develop standards cooperatively as Chairman Caffrey alluded to earlier, and if they are developed cooperatively, I think they have a good chance of sticking. I am not going to go through our statement on the EPA standards in any detail because of how late it is. I would like to just make a couple of points. First, with regard to the urban proposal that you heard about this morning on the salinity standards, one point that I don't think completely came across in the presentation this morning is that I don't believe that anyone associated in that effort believes that the CUWA alternative is the final word on the subject. In fact, we are still looking at it ourselves and discussing a number of the technical and scientific issues with members both of the environmental and the agricultural communities. And so, it is quite possible that we will come back at a later workshop and say, we think after reflection and discussion that further modifications of the proposal that was submitted to EPA are desirable, and hopefully, if we do come back with changes, they will be changes that an even broader group will be supporting. I know that there's provision in one of the workshops that is coming up later on to propose alternative standards, and I assume that would be the suitable forum for coming back with something like that. I would like to turn now to two concerns that East Bay MUD has regarding implementation of the standards, and we have talked a lot today about are people really concerned about the standards, or are they concerned about the implementation, and obviously, it is both. The first concern that we have, and let me just preface by saying that East Bay MUD does very strongly support the adoption of strong standards and we have been on record taking that position for a number of years now. But we have two concerns. One deals with upstream impacts on our own river system, the Mokelumne River; and secondly, we have a concern that we would like to highlight for you today that regards the shared-pain philosophy. On the upstream impacts, since Decision 1630 was put out, we have been working on a management plan to improve conditions on the Mokelumne River, and actually, we have a plan that is under consideration here at the State Board as we speak. That plan is an attempt to balance the inflow, the instream needs of the habitat with the needs of our 1.2 million customers. We are concerned that some of the kinds of requirements that could be coming out of the EPA standards or that could come out of the standards that you adopt, may be in conflict with some of the actions that we are considering or that we are already doing on the Mokelumne, and I would like to just read from page 6 of the letter just to emphasize the specifics on this. We are concerned that changes in Delta hydrology potentially required in the implementation of the standards could adversely affect upstream and downstream migration of salmonids on the Mokelumne. For example, any increase in spring-time releases from the Camanche Reservoir on the Mokelumne that might be required to comply with the standards above and beyond the flows prescribed in our management plan will reduce the lower Mokelumne River weighted usable salmon rearing area, the principal indicator of habitat availability and quality. In addition, higher early spring flows, which potentially will be required under the standards, could prematurely move salmon fry and smolt into the Delta when they are not physiologically ready to migrate, making them more vulnerable to predation, entrainment and the effects of less than optimum rearing conditions. Also restricting water project pumping operations in the early spring to comply with an estuarine habitat standard would likely result in greater fall pumping and higher cross-Delta flows of Sacramento River water that would result from such operations may influence or obscure olfactory and hydraulic cues utilized during upstream migration and result in adult chinook and steelhead straying from the Mokelumne to the Sacramento River. So that's just to give you an indication of the kind of possible conflicts with upstream needs if the standards are not developed carefully, and we will be providing you with more information specifically on that at the appropriate point in the workshop process. The second issue I just wanted to cover briefly, share the pain, East Bay MUD is on record as saying that we are willing to share part of the water costs for meeting the standards despite the fact that we are not one of the project operators, but we do have a concern that some people when they talk about sharing the pain may have some kind of formula across the board that would be per acre-foot of diversion, and we don't believe that a straight across-the- board formula is appropriate. We believe it should be based on relative impacts on the Bay-Delta, and we believe that our diversion upstream on the Mokelumne have lesser impacts relative to diversion than other exporters that are tied to pumping. We will be providing more information at the workshops on this as well. I did see staff comments on EPA's proposed standards raise this issue, suggesting that an across-the-board formula was not necessarily appropriate, so I was pleased to see that. I think I will stop there and would be happy to answer any questions. Thank you very much. MR. CAFFREY: Thank you very much, Ms. King. Are there questions of Ms. King from Board members? Anything from staff? Thank you very much for being here. We appreciate your input and thank you for waiting. We do have three more cards. I will read the order in which we will take them: Patrick Porgans, Greg Gartrell and Alan Lilly. Mr. Porgans, welcome. MR. PORGANS: Thank you, Mr. Chairman. MR. CAFFREY: Good to see you again, sir. MR. PORGANS: Thank you very much. I am from the water camp of the mid-1970s. MR. CAFFREY: I believe there are two water camps. MR. PORGANS: I was in the one when we had the D- 1485 issues. MR. CAFFREY: You go back a ways. MR. PORGANS: I don't want to sound like I am any younger than Mike. What I would like to address here today, and I think it is along the same theme as what Mike was saying and Mr. Miller was saying, and some of the views that the Board shared with me and others in the past. And I am sitting here and I am thinking about how easy it is for me to decide how the water should be shared because I don't operate any of the projects. Now, I know that that's like a double-edged blade because I don't have to go back and talk with the guys on the quarterly report. I'm the type of guy that I believe in fundamentals. I am fundamentalist. I am a born-again just a basic fundamentalist, and what I am trying to grasp here, and I am listening to what the Department of Water Resources is saying, I am listening to what other agencies are talking about, and I am trying to grasp the essence of how we can transcend the so-called debacle and, you know, I could lie and tell you I have all the solutions, but I am not going to do that. What I would suggest, however, is that one way we need to deal with the problem is we have to recognize that the problem has to be dealt with in its entirety. And I don't sympathize with any member of this Board, you know, being an election year or non-election year, because I realize that you have certain limitations in terms of what you can do, be it water rights issues, complying with Federal water quality requirements, and going through a process to develop standards that are called acceptable, and at the same time trying to minimize the impacts associated with the decision you make. Good luck. My point today, and I want to keep this very simple, and you will see why I am a fundamentalist, I don't even want your standards. I'm not even asking for that. What I am asking for, as I always do, and I know that most of the Board members are new from '87, except for Mr. Caffrey -- MR. CAFFREY: I wasn't even here -- MR. PORGANS: Excuse me, see my memory is slipping. MR. CAFFREY: I arrived in 1990. MR. PORGANS: You are late to the water camp. So, what is happening here with what I am looking at, I see and I realize the concerns that the Department of Water Resources have, you know, they have a project where they can't quite meet the total demands, and I realize their intrinsic problems in terms of financing and revenue, and all these factors. Please be mindful that I started a whole series of reports on the state of the State Water Project in 1978. I want to make sure my wife is not here. She told me I can't come to water camp anymore. I am in the process of, and I fear my wife more than I fear anything in government, believe me. I have to live with her. At any rate, don't let that out. Anyway, my point is that I am in the process of finishing the report on the state of the State Water Project and I am looking at all these issues, supply, demand, financing and management. In 1980, and please, I am 40 volumes into water rights. I have 40 fact-finding volumes done. I think I am up to 17 on this one here. I lost track. My point is that I have been talking about this credit rating issue for some time. I discussed it with a former fiscal adviser, Mr. Sanderson, a great man, and I have foreseen this coming, and I'm suggesting to you that I realize that there are problems and I realize the guys down in the Central Valley have problems. The issue here is that we can't react to conditions that have evolved over decades. We need to respond, but we need to respond in a way which is more in line with taking into account that everybody is going to feel some pain. How do we distribute the pain across the board? I'm suggesting that, and if anyone comes here pleading ignorance today, I am not going to let that happen. We know that the provisions in the water supply contracts under Article 18A and 18B foreseen shortages, possibility of temporary and permanent shortages. It's there. We know under Decision 1485 this Board has the right to come back in and look at issues like salinity, terms and conditions attached to permits. We know that the Constitution -- I wrote it down, Article 10, Section 2 -- I am not really smart, wrote it down -- all have these types of limitations that are relative to the way these projects are being operated. I am suggesting that if we are really serious, and I am not going to deny -- I give everybody the benefit of the doubt, that the Governor is serious, the Board is serious and we are going to move forward, and I suggest that we cannot isolate the two issues. That's what, if I remember correctly, was at least part of what the fight was over, that you can't isolate water rights from water quality, and somehow the Federal Government has the ball and you know how it goes. I need some assurances as a member of the public, I am here as a member of the public today, and I am concerned about future generations and I am not being paid to be here today. I figured the amount of salaries that was sitting out there by the hour today and I was astonished. My point here is very simple. What we need to do is we have to look at where the problem stems from. It's the demand side. It's the changing priorities by the public. It's the need to try to rectify problems that have been evolving. I strongly suggest that we can't do anything unless we start looking at ways to see what's realistic in terms of what amount of water we provide through these projects. I am suggesting that we can keep agriculture productive, but we have to change the way the water is allocated. I called Standard & Poors and I talked to them. I called all the boys back there and I informed them of what I know is going on, at no cost, at no charge, because I believe that we have a whole series of issues going on here and it is not just the bankrupt Delta, it is not just the potential of bankrupting the agricultural system, it's bankruptcy in our whole system. So, in conclusion, I stand by the way I have always been. I am looking to try to resolve the problem. I want to see agriculture stay productive, I want to see the fish swimming in and out of that estuary, and I don't even fish, I have no time. And I am suggesting that all these things can be done if everybody is willing to give up what they have to give up in order to make the transition. The short-term transition is probably a five-year period of time and we can make the adjustments before we move into the 21st century, we can retain our competitiveness in the global environment and we can do all this with pre-existing resources without causing significant damage. If anybody wants to talk about, if they want to really go for that, I'm here. So, thank you. MR. CAFFREY: Thank you, Mr. Porgans. Any questions by members? Thank you, sir. Mr. Gartrell, good afternoon, sir. MR. GARTRELL: Thank you, Chairman Caffrey and members of the Board. I am Gary Gartrell of the Bay-Delta Modeling Forum. I have submitted a statement and I am going to briefly summarize it. The Bay-Delta Modeling Forum was recently formed with the adoption of by-laws and is the result of the joint effort by private, environmental and educational activities, and State and Federal agencies, to develop a mechanism for the exchange and improvement of the modeling information. The Forum was established because of the consensus there is a need to resolve technical disagreements in a non- adversarial setting, to allow an open exchange of technical information, and help insure that technical work continues to take into account the needs of stakeholders and decision makers. The purpose of the Forum is to increase the usefulness of models for analyzing the water-related problems in the Bay-Delta estuary, to provide an open Forum for the exchange, improvement and pooling of water-related modeling and modeling information, to seek input from the California water resources system stakeholders and decision makers to better meet their modeling needs, to mediate any technical disputes and conduct impartial peer reviews. The Forum has recently conducted two well-attended workshops on issues related to the proposed EPA standards. The first concern is salinity/outflow relationships and issues related to meeting the proposed standards, and the second focused on the narrow issue of development of a sliding scale to be used to implement the proposed standards. A third workshop is being planned in the near future on issues related to biological aspects. In the next several months, the Forum will be developing a detailed work plan, beginning work on peer reviews, establishing funding and selecting an executive director. The Forum is open to all the individuals and entities who have an interest in the Bay-Delta system. It's led by a steering committee and includes 15 State, Federal and local agencies, as well as representatives from water agencies and private, environmental and educational groups. The general administration of the Forum will be located in the Aquatic Habitat Institute and the peer review related activities will be housed in the Lawrence Livermore National Laboratory. In conclusion, I would like to say the Forum urges the widest participation in its efforts and hope that all become active participants in its efforts to improve communications on technical issues related to the Bay-Delta estuary. That concludes my remarks. MR. CAFFREY: Thank you, Mr. Gartrell. Any questions by Board members? From staff? Thank you, and I am sorry you had to wait so long. We have one more card from Mr. Lilly. You get to close. MR. LILLY: Jerry Johns asked me if I was going to pull it together. I will do my best and I will follow your admonition and try not to repeat anything anyone else said. MR. CAFFREY: The closing one always pulls every- thing together. MR. LILLY: Just for the record, I am Alan Lilly of Bartkiewicz, Kronick & Shanahan, representing several water districts in the Sacramento valley. I wanted to start out with a compliment for this Water Board. I am not sure there have been too many of them given today. I think the staff -- MR. DEL PIERO: Let me prepare myself, please. MR. LILLY: I am not sure whether or not you deserve it, Mr. Del Piero (laughter). MR. DEL PIERO: I was hoping. MR. LILLY: I don't know who drafted the comments on EPA's proposed water quality standards, but while we didn't agree with everything in them, I thought they were very good, and frankly, they show that the Board has spent a lot of time on these issues, and certainly has a very detailed grasp, and I think very effectively pointed to the problems of EPA's proposal. I look at that as a very encouraging sign for this process going forward. My comments are down to four, and I will run through them very briefly so we can all go home. First of all, I think in any process that this Board does in the Bay-Delta, it must recognize that simply providing greater Delta outflows won't solve the declines that have occurred. There are too many other things that have happened. Some of those have been listed today, certainly the diversions from the Delta, both by the projects and the in-Delta users, the introduction of exotic species, the harvesting of species, both in the ocean and inland, particularly salmon and striped bass, various forms of water pollution, the filling in of wetlands, tidelands and other habitat, these are all things that have happened over the last 20 years that won't be corrected simply by throwing out more water into the Delta, and I think the Board has to recognize that as part of the decision-making process. It may simply not be possible to restore conditions that existed in the past. I don't think the Board should be ashamed or hesitant to make recommendations to other regulatory agencies, particularly the State and Federal agencies that have control over the harvest of both ocean and inland fishes. To the extent that the Board finds through its detailed scientific inquiry that that is part of the problem, while the Board can't regulate, it certainly has the authority to make recommendations to those other agencies, and should do that. Obviously, water quality is something within the Board's concern and that needs to be addressed as well because that certainly is part of the cause of the problems that we have today. The second point I would like to make, and I think others have made this, and this is why I really am encouraged with the Water Board's detailed comments to EPA and I think it is very clear by now that any plan or decision involving the Delta has to be based on a detailed scientific analysis, both biological and hydrological. I think that is the big problem of EPA's proposed standards, that the Board's staff and others have pointed out very effectively, and frankly, I think that was the fundamental problem of D-1630 and the 1988 proposed standards that were eventually withdrawn by the State Board and the staff. It is just not going to work to say that standards or requirements that do have large impacts don't have large impacts. It just won't work and it doesn't, frankly, allow the Board to perform its proper balancing process. Going on, I just wanted to comment on point No. 3 regarding flow and diversion policies that Mr. Schulz alluded to. I am certainly not going to repeat legal argument at this late hour. I think it is clear that the Board has some legal authority to do that, either as a water quality policy or under its general water rights authority, and I think it is very important that any plan that's adopted or any other resolution or decision that's adopted, follow this process. Clearly, separate out that flow requirements are not water quality standards that are submitted to EPA. It's, obviously, a different thing and it just doesn't work to have flow be treated as water quality when it is not water quality. Finally point No. 4, implementation, there's been a lot of talk about implementation today, and my understanding is that the water quality plan that the Board envisions adopting will have an implementing element as required by Porter-Cologne, and as past water quality control plans have. However, it's also my understanding that the details of water rights will be deferred to the follow-up water rights hearings, very similar to how the 1991 plan did that. With that understanding, I won't go into this in detail, but there are a couple of things that I have to respond to based on numerous comments from other people. First of all, I think everyone says they recognize the county of origin and watershed protection statutes, but they don't think this Board should follow them, is what I hear several comments saying. Well, we, obviously, on behalf of the Sacramento Valley Water Users, disagree with that. Those statutes were the basic premise on which agreement was reached to build the Central Valley Project and the State Water Project. In each case, the political decision was made that the Sacramento Valley would not be turned into another Owen's Valley, and frankly, just taking away water rights will be even worse than what happened in the Owen's Valley. At least those landowners received some compensation for their water and land that was taken away. There's been the comment that everyone has an effect on the Delta and, therefore, everyone must mitigate those effects. Again, we will go into more detail in the water rights phase, but I just ask the rhetorical question, does anybody think we would have been here today if the Water Board would have started the proceeding back at least with D-990, which is the first one I'm aware of, leading up to D- 1485, D-1630 to today, and EPA standards, if the Central Valley Project and the State Water Project had not been built and started diverting water which has reached up to 6 million acre-feet per year? I think it is very clear that that is -- I don't know whether I would say it is the straw, that might be the 800-pound gorilla that broke the camel's back as far as the Delta is concerned. Finally, Mr. Jackson and I have dealt with each other in other forums and I just have to comment on this 2 million acre-feet of water in the Sacramento Valley. Obviously, he is alluding to the Yuba River and we have a disagreement on that. I think the hearing we held on the Yuba River made it very clear that, number one, there is no decline in the species in the Yuba River that justify the higher flows that he and others were advocating, certainly no scientific proof in DFG's own IFIM analysis that those were necessary, and also, there was clear proof that releasing tremendous amounts of additional water for greater instream flows would have adverse and substantial adverse impacts on the local water users. So, I think that just highlights the point that there are no simple answers. There is not simply a large amount of water waiting somewhere to be devoted to the Delta, and I know, particularly for Yuba County Water Agency, one of my clients, there has been a feeling they made all that money in '87 through '91 with water transfers, so they must have an infinite amount of water that they are holding back which could be devoted to the Bay-Delta. That is just not true. Timely precipitation was higher than the drought-year conditions in the rest of the state in those years, so Yuba had some water to transfer, and also, its local demands were lower even than they are today, having increased by approximately 50,000 acre-feet just between that period and today. So, there is not a simple solution like that and I think that just highlights the general point here. We need a detailed hydrological analysis, and we need responsible balancing. That's the only way that we are going to solve this problem. I do appreciate your patience in waiting for me until five o'clock. MR. CAFFREY: Thank you very much, Mr. Lilly. Good to see you again. Any questions of Mr. Lilly by Board members? Staff? Thank you, sir. That completes the cards for today. Let me just say that when next we meet it will be May 16. We have noticed that workshop. We have three subjects for that day. We also have set aside the dates of May 17, 23 and 24, for any discussion that may extend over and there may be a good likelihood that we will have to avail ourselves of some of those days. I want to thank you all for being here today. It's been a fairly long day and I think we will have some longer ones as we go through this process. Unless there are any closing statements that any of the Board members want to make or anything from Mr. Pettit or the staff, and I don't see a response, we will conclude and we will see you on May 16. Thank you very much. (Thereupon the workshop was concluded.) REPORTER'S CERTIFICATE THIS IS TO CERTIFY that I, ALICE BOOK, a Certified Shorthand Reporter, was present during the workshop held on April 26, 1994, by the State Water Resources Control Board to review Water Quality Standards for the San Francisco Bay/Sacramento-San Joaquin Delta Estuary; That I recorded in stenographic writing the statements given; That I thereafter caused the stenographic writing to be transcribed into longhand typewriting and that pages 1 through 211 herein constitute said transcript, and that the same is a true and correct transcription of my said stenographic writing for the date and subject matter hereinabove described. Dated: May 9, 1994 ______________________________ ALICE BOOK, CSR NO. 43