STATE WATER RESOURCES CONTROL BOARD PUBLIC WORKSHOP FOR PHASE 8 BAY-DELTA WATER RIGHTS HEARING JANUARY 11, 2001 9:00 A.M. PAUL R. BONDERSON BUILDING SACRAMENTO, CALIFORNIA REPORTED BY: ESTHER F. SCHWARTZ CSR NO. 1564 CAPITOL REPORTERS (916) 923-5447 1 APPEARANCES 2 BOARD: 3 ARTHUR BAGGETT, ACTING CHAIR JOHN BROWN 4 PETER SILVA 5 STAFF: 6 ED ANTON, EXECUTIVE DIRECTOR VICTORIA WHITNEY, SUPERVISING ENGINEER 7 COUNSEL: 8 CRAIG WILSON, CHIEF COUNSEL 9 BARBARA LEIDIGH, SENIOR STAFF COUNSEL 10 AUDIENCE: 11 DAVID GUY THOMAS HANNIGAN 12 LESTER SNOW STUART SOMACH 13 CLIFFORD SCHULZ MARK ATLAS 14 WILLIAM BABER PAUL BARTKIEWICZ 15 PETER HUGHES VAN TENNEY 16 JOHN COBURN TIMOTHY QUINN 17 LAURA KING MOON ALLEN SHORT 18 ROBERT MADDOW MIKE STEARNS 19 JAMES CHATIGNY DANTE JOHN NOMELLINI 20 MATTHEW CAMPBELL JANET GOLDSMITH 21 FREDERICK BOLD RONALD VAN BLARCOM 22 JOHN HERRICK KARNA HARRIGFELD 23 MICHAEL JACKSON VIRGINIA CAHILL 24 FRANK DAVIS 25 ---ooo--- CAPITOL REPORTERS (916) 923-5447 1 SACRAMENTO, CALIFORNIA 2 THURSDAY, JANUARY 11, 2001, 9:00 A.M. 3 ---oOo--- 4 ACTING CHAIRMAN BAGGETT: Good morning and welcome to 5 this workshop on the schedule for resumption of the 6 Bay-Delta water rights hearing and on the status of the 7 proposed settlement agreements. 8 I am Art Baggett, Chairman of the State Water Resources 9 Control Board. On my left is Board Member Pete Silva. 10 MEMBER SILVA: Morning. 11 A.C. BAGGETT: On my right is Board Member John Brown. 12 MEMBER BROWN: Morning. 13 A.C. BAGGETT: Mary Jane Forster is excused from this 14 meeting. We will be assisted today by Ed Anton, Executive 15 Director; Craig Wilson, Chief Counsel; Vicky Whitney, Chief 16 of the Hearing and Special Projects Section, and Barbara 17 Leidigh, our senior staff counsel. 18 This workshop is being conducted in accordance with the 19 Notice of Public Workshop dated November 16th, 2000. If you 20 intend to speak today, please fill out a blue card at the 21 front table and present it to staff. If you're not sure, 22 fill out a card and mark it "If Necessary" so that we may 23 plan our time. 24 The purpose of this workshop is to receive comments 25 from parties to assist the Board in determining an CAPITOL REPORTERS (916) 923-5447 3 1 appropriate schedule for Phase 8 of the Bay-Delta water 2 rights hearing, to obtain comments on the status of any 3 existing or expected agreements among parties to assign 4 responsibilities for meeting the flow objectives. 5 The workshop notice lists two key issues: When should 6 the State Water Board resume Phase 8 of the Bay-Delta water 7 rights hearing? When should the State Board require opening 8 briefs and exhibits for Phase 8 to be submitted? What is 9 the status of negotiations between export water users and 10 upstream water users and when will the negotiations be 11 completed? 12 All parties are welcome to comment on either issue. 13 Parties are requested in the workshop notice to limit their 14 presentation to ten minutes. The Members of the Board and 15 the Board staff may ask questions at appropriate times 16 during or after presentation. Because this is not a 17 hearing, there will be no cross-examination. The parties 18 should not attempt to present detailed evidence in support 19 of their positions at this time. We ask the parties avoid 20 repeating details already presented by other parties 21 whenever possible and simply indicate agreement. Parties 22 with the same interest are welcome and encouraged to make 23 joint presentations. I understand we have one here at the 24 beginning. 25 In the notice of this workshop the Board requested that CAPITOL REPORTERS (916) 923-5447 4 1 participants provide copies of written comments and 2 supporting materials to the Board and to the parties on or 3 before Friday, January 5th. Additional copies should be 4 provided today for participants not in the service list. We 5 have received several written comments and we have read 6 them. 7 The parties who provide written comments are encouraged 8 to summarize their comments orally today. We ask the 9 parties present only oral comments that stay within the ten 10 minutes. A Court Reporter is present and will prepare a 11 transcript. And when you come up to speak, if you have a 12 business card, it always helps with the transcript process. 13 To accommodate the Court Reporter, if you can speak into the 14 microphone it helps a lot. If you want a transcript of 15 today's workshop, you must make arrangements with the Court 16 Reporter. 17 With that, we have a few cards. I think we will begin, 18 unless staff or Board Members have any additional comments. 19 A few more seats over here. With that we will begin with a 20 joint presentation with David Guy and Tom Hannigan and 21 Lester Snow. 22 MR. GUY: Morning, Mr. Chairman, Members of the Board. 23 I am David Guy, Executive Director for the Northern 24 California Water Association. 25 I appreciate the opportunity to be here today. The CAPITOL REPORTERS (916) 923-5447 5 1 State Water Board, of course, has in your notice repeatedly 2 encouraged opposing parties to reach agreements and to make 3 joint proposals to the Water Board on the responsibilities 4 of the parties to meet the flow objectives in the 1995 Water 5 Quality Control Plan. That is, in fact, what we are here 6 today to do, to make a joint proposal and to talk about the 7 agreement that we have forwarded to you last week. 8 What we would like to do if possible is we would like 9 to have essentially three parts to this. First to give some 10 overview of the agreement. That will be myself. It will be 11 Director Hannigan and Regional Director Snow in that panel. 12 And then beyond that we will have Stuart Somach and Cliff 13 Schulz talking about the agreement in a little bit more 14 detail, the specifics of it; and then Kevin O'Brien will be 15 providing some ideas on what the State Water Board can do 16 eventually to implement this agreement. And then finally we 17 have a group of folks from around the state that have been 18 part of this agreement that will talk about how they view 19 the agreement particularly. 20 So if it is okay, that is what we would like to do this 21 morning. We appreciate you giving us that opportunity to do 22 that. 23 The agreement that you have received is essentially an 24 agreement to resolve Phase 8 and to begin a process to do 25 some other things that will help in that process. We have CAPITOL REPORTERS (916) 923-5447 6 1 been meeting for some time. And the parties that have been 2 involved in this discussion have included Northern 3 California Water Association, the Department of Water 4 Resources, the Bureau of Reclamation and Department of 5 Interior, the San Luis Delta-Mendota Water Authority, the 6 State Water Contractors and the San Joaquin River Authority. 7 As you can see, it is a group that represents water users in 8 a large portion of the State of California. 9 And what does the agreement do? I just want to 10 highlight on some of the broad things that I believe the 11 agreement will do, and, again, others will fill in with some 12 of the specifics as far as what does this agreement do. 13 I think there are eight things that I would like to 14 highlight that I believe this agreement does. The first is, 15 in my view, is an unprecedented collaborative process 16 between folks in the northern part of the state and southern 17 part of the state, eastern and western part of the state. 18 And we believe it is an unprecedented process to be 19 collaboratively working together in this type of a setting. 20 I think as you all are aware, most of the time when we are 21 in front of you these parties are at each other's throats, 22 not working together. And this is very significant. 23 The second thing that the agreement does that I think I 24 would like to highlight is that this agreement really sets 25 forth a positive vision for water management in the state of CAPITOL REPORTERS (916) 923-5447 7 1 California. And what I mean by that is that we are going 2 to, through this process, hopefully search and begin to 3 develop ways to benefit not only water supplies, but water 4 quality and also the environment. We believe that this 5 agreement will set in motion a process to do that. It is a 6 very positive vision for water management in the Sacramento 7 Valley and throughout the state of California. 8 The third thing that the agreement does that is, of 9 course, very important to this process is that the 10 flow-related objectives in the 1995 Water Quality Control 11 Plan will be met. I will just leave that at that. It will 12 be met. 13 The fourth point is that there is a strong commitment 14 by all the parties to this agreement and hopefully a whole 15 group of other parties that may not be part of the agreement 16 but will hopefully become part of this process to prepare 17 work plans and to begin this process again for a positive 18 vision for water management in the state of California. 19 These are real commitments, and, again, others will talk 20 about it in a little more detail. These are not allusory. 21 These are very real, and we are going to assure you that we 22 are committed to making these work and to making the 23 milestones and the parts of the agreement work. 24 The fifth point is that the work plans and the process 25 that will be developed through this will foster local CAPITOL REPORTERS (916) 923-5447 8 1 partnerships. And at least in my experience throughout the 2 state of California that to succeed in any sort of a water 3 management proposal is you have to have the locals fully 4 involved from the outset. And that is really it has to be 5 driven from the ground up, rather from the top down. And 6 this agreement fosters local partnerships to get some things 7 done. We are not just going to be talking about it, we are 8 actually going to be able to do it. 9 The sixth point that I would like to highlight is that 10 this really talks about an integrated water management 11 approach for the Sacramento Valley and some other areas. 12 That, I believe, is how we are going to achieve all of these 13 benefits that we have talked about, through integrating the 14 different water supplies. Of course, in the past we have 15 looked at water supplies only on a piecemeal basis. This 16 really opens the door for a more integrated approach, and we 17 believe will benefit all of the parties. 18 The seventh point is that this agreement really tries 19 to move beyond some of the abstract legal principles that 20 folks are always bringing before you. Let me give you an 21 example. Rather than talking about areas of origin and 22 watersheds of origin, counties of origins, we believe that 23 this agreement starts to actually implement the intent and 24 spirit of those types of provisions. We don't need to state 25 it in the agreement. In our view we are actually taking it CAPITOL REPORTERS (916) 923-5447 9 1 the next step in trying to implement that and to make it 2 work, again, for all of the different parties. 3 The final point that I would like to touch on that I 4 believe the agreement does is that it hopefully sets up a 5 public process that will be very inclusive, that all the 6 parties that are interested in these issues will be able to 7 participate in this process and, of course, with your help 8 we can even make that more of a public process as this moves 9 forward, and it will truly be a broad, public process. 10 So with that I think I am going to sit down and 11 following we will hear from Director Hannigan and then 12 Regional Director Snow and, of course, any time we are 13 available for questions as you deem appropriate. 14 Thank you very much. 15 A.C. BAGGETT: Thank you. 16 MR. HANNIGAN: Morning, Mr. Chairman, Members of the 17 Board. My name is Tom Hannigan, and I am the Director of 18 the Department of Water Resources. 19 I am here this morning because the Department supports 20 this agreement as a constructive, cooperative approach to 21 addressing the legitimate water needs of both the Sacramento 22 Valley and the export areas of the state. This approach, 23 like the CalFed process, is based on the belief that we can 24 all achieve more by working together than by seeking to 25 advance interest of one group or one area at the expense of CAPITOL REPORTERS (916) 923-5447 10 1 another. At the same time it recognizes that projects in 2 the Sacramento Valley must be the product of local 3 initiative to produce local benefits. It is only in 4 partnership with and support of that local action that the 5 exporting interest may share the benefits of the projects 6 which this agreement looks to achieve. 7 Although this agreement has taken longer to reach than 8 others, it is fully in the spirit of the Board's 9 longstanding invitation to the stakeholders and the agencies 10 to settle amongst themselves how the responsibilities for 11 meeting the objectives of the Water Quality Control Plan 12 should be shared. Cooperation and negotiation are the heart 13 of the CalFed process which embodies the state and the 14 nation's preferred policy for solving the problem of the 15 Bay-Delta Estuary. 16 The possibility of win-win solutions that address water 17 needs upstream of the Delta as well as in the export areas 18 has been greatly enhanced by the water supply reliability 19 strategy adopted in the Bay-Delta framework agreement and 20 the CalFed Record of Decision. Implementation of the 21 agreement will be in a manner consistent with this CalFed 22 process. 23 The Department agrees to assume, along with the Bureau 24 of Reclamation, the responsibility for meeting the water 25 quality objectives of the 1995 Water Quality Plan that was CAPITOL REPORTERS (916) 923-5447 11 1 to be allocated in the Phase 8 among all users of Delta 2 water supplies for the term of this agreement. The Board 3 can be satisfied that its water quality objectives will be 4 met through enforceable standards. The Department has 5 further agreed to meet these objectives along with the 6 Bureau of Reclamation for up to one year after the agreement 7 terminates to allow the Board to hold new hearings with no 8 gap in enforceability. 9 We are here before you today not only because we 10 believe in the merits of the agreement, but because we have 11 considerable apprehension about embarking on an adversarial 12 process involving water rights, first in front of this Board 13 and then without a doubt in lengthy and contentious 14 litigation. 15 The question is not only how long will that take and 16 how much will it cost, but what will it do to our broader 17 interests set forth in the measures California and the 18 United States have adopted in the CalFed Phase I ROD, 19 measures that absolutely require us to work together. And I 20 might add at this point that we strongly encourage the Board 21 to conduct periodic workshops during this period to ensure 22 that we are staying on track and to ensure that the public 23 has an opportunity to provide input and to monitor what we 24 are doing. 25 Think about it: watershed management, water supply CAPITOL REPORTERS (916) 923-5447 12 1 reliability, the environmental water account. Is it very 2 difficult to imagine how those actions can be efficiently 3 and cooperatively undertaken when the necessary parties to 4 them are at each other, either here or in court or over 5 something as important as vital to their interest as their 6 water rights. 7 So not only are the actions within the agreement to be 8 consistent with CalFed, following a consensual rather than 9 an adversarial path makes the agreement itself consistent 10 with CalFed. I strongly urge the Board to take the steps 11 necessary to accommodate this settlement. 12 Thank you. 13 A.C. BAGGETT: Thank you, Director. 14 Any questions? 15 Director Snow. 16 MR. SNOW: Thank you, Mr. Chairman and Members of the 17 Board. My name is Lester Snow. I am Regional Director of 18 the U.S. Bureau of Reclamation and among the 19 responsibilities is operation of the Central Valley 20 Project. 21 I come to this with a particular perspective that 22 conflicts over water rights, and in this case obligations 23 under those water rights, are the types of disputes that are 24 often handed down generation to generation, and an attorney 25 who is a father can pass on the case to the attorney who is CAPITOL REPORTERS (916) 923-5447 13 1 the son or daughter as the case may be. And as probably 2 evidenced in this room now that I stop to think about it. 3 UNIDENTIFIED AUDIENCE MEMBER: Some of us have 4 daughters. 5 MR. SNOW: The point is that this can all be part of 6 California's rich history of conflict over water and water 7 rights. Recent efforts, however, notably the Bay-Delta 8 Accord of '94, Water Quality Control Plan of 1995 started to 9 mark an era of attempting to resolve disputes with 10 collaboration, instead of confrontation and exhaustion of 11 legal recourse. 12 The Department of Interior, including Reclamation and 13 Fish and Wildlife Service, has much at stake in these 14 matters, and I might add, strong opinions about our water 15 rights and our obligations. However, it is because of all 16 we have at stake that we are willing to dedicate our 17 energies to a collaborative effort at water management to 18 address the issues of Phase 8 and beyond, not simply 19 stopping with the obligations under the Water Quality 20 Control Plan. 21 Let me be clear that the Bureau of Reclamation and 22 Interior supports the approach outlined by Mr. Guy. With 23 DWR we will voluntarily meet the flow-related 1995 Water 24 Quality Control Plan objectives for a finite period of time 25 as these water management efforts continue. We will CAPITOL REPORTERS (916) 923-5447 14 1 continue that for ten years as long as progress continues. 2 A significant program like this will foster the type of 3 partnerships necessary to meet not only the needs of the 4 Water Quality Control Plan but also implement the CalFed 5 program in a timely fashion. We are dependent on the kind 6 of partnerships that will be fostered through this 7 agreement. 8 As has been described, this draft agreement, when 9 executed, triggers a significant process. There is some key 10 aspects to that: development of milestones, identification 11 of projects. In fact, within the first six months there is 12 a critical period of what actions will be taken and how will 13 we move forward. Within that are issues that are extremely 14 important to Interior, developing the detail on what kinds 15 of project, schedules of costs and the allocation of 16 benefits from those projects; and for us that includes 17 environmental benefits, such as aiding the environmental 18 water account or water for refuge supplies. I would add 19 that it is clear to us that project purposes, CalFed 20 purposes as contained in the draft include the benefits to 21 eco system purposes. 22 Interior prefers this collaborative approach to 23 conflict and litigation. We encourage you to aid in this 24 approach and follow the progress on milestones with us as we 25 track our own progress. We will do our part to make this a CAPITOL REPORTERS (916) 923-5447 15 1 successful agreement in terms of meeting the Water Quality 2 Control Plan objectives, developing clear and comprehensive 3 milestones which need to balance projects, press for 4 continual progress in all areas and seek a higher level of 5 water management benefits than would otherwise be achieved 6 through mere compliance with standards. 7 With that I will be glad to answer any questions. 8 A.C. BAGGETT: Questions? 9 Barbara. 10 MS. LEIDIGH: I think that staff has a few questions. 11 Do you want us to go first? 12 A.C. BAGGETT: If it would be useful to the parties to 13 have any questions, so whichever one of your speakers can 14 address that, that might be more useful to you than you have 15 somebody down the road. 16 MS. LEIDIGH: Or they may want to ask somebody else in 17 their group to answer detailed questions. 18 MR. SNOW: I can assure you of that. 19 A.C. BAGGETT: We can wait until the whole 20 presentation, and maybe some will be answered. Does that 21 make sense? 22 MS. LEIDIGH: Is there further presentation? 23 A.C. BAGGETT: We have five more names here. 24 Let's continue. I think that might be more 25 advantageous. CAPITOL REPORTERS (916) 923-5447 16 1 Stuart Somach. 2 MR. SOMACH: Mr. Chairman, Members of the Board, I am 3 Stuart Somach. I am with the law firm of Somach, Simmons & 4 Dunn, and I am General Counsel to the Glenn Colusa 5 Irrigation District. 6 My task here is to provide you with a survey summary of 7 what is in the agreement. Mr. Schulz, representing the 8 export water users, will focus in on some of the more 9 specific important provisions of the agreement, and I will 10 highlight where he will focus as I get to those provisions. 11 If there are any substantive questions about the agreement, 12 it might be appropriate to ask those questions after Mr. 13 Schulz and I finish our presentation. That probably will be 14 the most beneficial way of proceeding. 15 I do believe that there were copies brought of this 16 draft agreement. It is a draft that was submitted to all 17 the parties on the service list under cover of a letter 18 dated January 5, 2001, and we've brought about 50 copies 19 with us. I only mention that because I intend to move 20 through, and I guess they were on or still are on that side 21 table. I would like to refer to pages within the agreement 22 as I move forward. 23 Initially, the agreement begins with certain goals and 24 principles. And my task here is not to read the agreement 25 aloud to everybody, but I do want to highlight certain CAPITOL REPORTERS (916) 923-5447 17 1 aspects of the agreement that I think are important. 2 Among the goals and principles of the agreement are to 3 provide a mechanism for satisfying the flow-related 4 objectives of this Board's 1995 Bay-Delta Water Quality 5 Control Plan, and that it be implemented in lieu of 6 proceeding with Phase 8 of the State Board's current hearing 7 process. The focal point of the way we would like to 8 actually resolve these issues is through facilitating the 9 development of an integrated water management strategy that 10 would enhance water available for upstream and export water 11 users and optimize our ability to use existing supplies and 12 enable us to develop additional supplies to meet existing 13 and future water needs. And in that context, enhance 14 existing water management through the addition of the 15 ability to be more flexible in how we do this. 16 Among the goals and principles are that as we proceed 17 we want to implement in a manner compatible with CalFed's 18 goals. And we want to provide net water quality benefits 19 ultimately for the upstream water users, export water users, 20 as well as the Delta. The idea is that, if we are 21 successful, it will result in a statewide resource and in 22 environmental benefits that will be broad based as opposed 23 to focused, as might otherwise occur. 24 The principles and goals go beyond that, certainly, but 25 those are the key elements of what we had in mind when we CAPITOL REPORTERS (916) 923-5447 18 1 put the agreement together. Initially, our idea is that we 2 work through cooperative water management partnerships. I 3 think that you have been aware over the years of efforts 4 that we have had to try to reach some resolution of these 5 issues in a fashion through agreement rather than through 6 some kind of regulatory fiat or adversarial proceeding. The 7 difference in approach here is that the idea was that we 8 would attempt not just simply to cut up the existing water 9 supply that was available, but rather that we would attempt 10 to grow the pie a bit through the mechanisms that the 11 agreement talks about so that we had in essence more to work 12 with. And that appeared to be and that is I think one of 13 the most significant differences in terms of our prior 14 approaches and the approach that we took here. 15 This agreement contemplates but does not specify a 16 whole host of additional local partnership-type projects 17 that would be put on line. And one of the things I want to 18 underscore is that no one is asking this Board or anyone 19 else at this point in time to approve all of these very 20 specific projects which we contemplate and which will be 21 part of the work plans that I will mention in a moment. 22 Each one of those projects as they are developed will 23 need to move through their own environmental scrutiny, their 24 own approval process. Some that the Board here and now 25 would never be and is not being asked to approve anything CAPITOL REPORTERS (916) 923-5447 19 1 specific in terms of projects. What we have here is a 2 process for the development of projects. Again, each one of 3 those projects as we move through development will go 4 through their public outreach, go through their own 5 environmental compliance. And to the extent regulatory 6 approval by this Board or other bodies is necessary, it will 7 also go through that process. 8 In that context we contemplate the direct involvement 9 of other parties that are necessarily signatories to this 10 agreement. They will include individual water districts and 11 water users within the north part of the state. They will 12 include, for example, the Fish & Wildlife Service, the 13 National Marine Fishery Service, California Department of 14 Fish and Game, in-Delta water users, and a whole host of 15 others that have very real and vital interests in what we 16 will be doing. The fact that they are not necessarily 17 signatories to the agreement does not mean in any way, 18 shape, or form that they won't be involved in future 19 processes. In fact, the agreement specifies that they -- we 20 contemplate that they will be involved, and, in fact, they 21 will be involved. 22 The first step that we have outlined in the agreement 23 is in essence the quantification of water demand and 24 supplies, trying to get our arms around exactly what is the 25 universe of concerns we have, and we divided that basically CAPITOL REPORTERS (916) 923-5447 20 1 into three areas. The first is the unmet and future demands 2 in the upstream areas. They are to be approximated and 3 developed. And once those demands are determined, the idea 4 is that they will be provided for. In the agreement we have 5 attempted to outline with some specificity the categories of 6 upstream area that we believe to be the appropriate areas to 7 be concerned with. They range from all the tributary areas, 8 to urban areas, to areas that are served through drainage 9 waters and bypasses. 10 The second area of quantification concern is the export 11 water supplies. And here the idea is to attempt to improve 12 water supplies. I think we all know realistically that we 13 are not going to be able to meet all of the unmet demand 14 within the export area. But the idea is that we want to 15 show improvement in terms of meeting the demands and needs 16 of folks in the export areas. 17 The third area of concern that we are trying to address 18 here is general environmental benefits. And that is and you 19 will see within the agreement several references 20 specifically to the environmental benefits. And remember 21 that when we talk about environmental benefits in the 22 context of this agreement, we are building upon the 23 environmental benefits dealt with in the CalFed process and 24 most fundamentally, of course, the environmental benefits 25 that are in the State Water Resources Control Board Water CAPITOL REPORTERS (916) 923-5447 21 1 Quality Control Plan which is, of course, the central base 2 upon which we begin with. 3 We have isolated a couple of areas for significant 4 focus, and one of them is the role of the Sites Reservoir 5 Project, which is dealt with in the CalFed ROD as a critical 6 element of what we are looking at. We note that the 7 reliability of water supplies for upstream and export areas, 8 the flexibility for meeting fishery needs during certain 9 periods, storage benefits for CalFed programs, all of which 10 Sites Reservoir has been identified as a mechanism that can 11 serve those purposes. 12 In particular, this agreement links itself with the 13 Sites Reservoir Memorandum of Understanding that was entered 14 into between upstream water interest and CalFed agencies. 15 So as a consequence you will see with specific reference to 16 Sites, but also other areas linkage between this agreement 17 and other critical agreements that seek to resolve and to 18 address water supplies, environmental water issues up and 19 down the state of California. 20 Enlarge Shasta is also dealt with as a specific program 21 that is linked to what we are doing here. As is a basinwide 22 water management plan that is being worked on between the 23 Sacramento Valley water rights settlement contractors and 24 the Bureau of Reclamation as a means to attempt to address 25 the water supply needs and concerns associated with those CAPITOL REPORTERS (916) 923-5447 22 1 contractors and the Bureau of Reclamation. Not only is that 2 program in and of itself critical to much of what we are 3 talking about, but it is intended to serve as a model of 4 what can be done in other areas besides where the Sacramento 5 River settlement contractors are, both in the Sacramento 6 Valley as in the San Joaquin Valley. The agreement lists 7 certain management tools which are listed on Page 5 of the 8 agreement. That is certainly not intended to be an 9 exclusive list, but to provide some outside scope of what it 10 is that is intended. 11 Paragraph 3 of the agreement deals with resolution of 12 Phase 8. This is an area that Cliff will talk about in some 13 more detail. I will just simply in summary fashion indicate 14 that as you have heard from Director Hannigan and Regional 15 Director Snow, the intent is that during the pendency or the 16 term of this agreement DWR and Reclamation will assume 17 responsibility for meeting what otherwise would be the Phase 18 8 obligations associated with the 1995 Water Quality Control 19 Plan; and that is not just Sacramento River, but it would be 20 all of the -- the idea is to resolve all of the contributing 21 rivers and tributaries that were associated with Phase 8 as 22 part of this agreement, and that there would be no 23 obligation from upstream water users to, in fact, meet any 24 of the obligation. 25 And that as part of this, however, we would, working CAPITOL REPORTERS (916) 923-5447 23 1 with the State Board and other parties, jointly develop a 2 program to prevent unauthorized diversions. And the concept 3 of unauthorized diversions, as we look at what is 4 unauthorized, would have to be compatible with the programs 5 that are within the agreement itself. 6 There is some detail provided for in the agreement on 7 how Term 91, the State Water Resources Control Board's Term 8 91, would apply. I definitely don't want to go into the 9 detail of the nuances of that, but it is addressed, unless 10 there is specific questions ultimately, but I am not jumping 11 into that. There is reservation of rights with respect to 12 Phase 8 issues as well as Term 91 provided for. 13 There is an effective date provision in the agreement, 14 and I am looking at basically on Page 7, Subparagraph 3(e). 15 Cliff is going to deal with that in detail, so I am not 16 going to address it at all. But it is a very critical 17 portion of the agreement and deals with some of the State 18 Board actions that are being -- would need to be taken in 19 order to facilitate the agreement. 20 Paragraph 4 on Page 7 recognizes that there are a lot 21 of issues out there that certainly we cannot resolve in this 22 agreement. But that those other issues may have some 23 critical impact upon what we are trying to do here. So it 24 is kind of an eyes open provision, making certain that 25 everybody knows that, you know, no one is being Pollyannish CAPITOL REPORTERS (916) 923-5447 24 1 about what is or is not possible. We have a lot of problems 2 out there, and that as we get to them, they may affect our 3 ability to perform under this agreement. 4 Paragraph 5, which begins on Page 8, is a milestone 5 provision. Again, Cliff will focus in on the importance of 6 these milestones. But basically what we have is an initial 7 milestone of the development of a workplan within 180 days 8 of the effective date of this agreement. Thereafter, there 9 are other workplan related dates. 10 And the idea is that we have divided tasks and 11 milestones and work plans into basically three phases. The 12 first is that associated with short-term projects, which we 13 define as those which can provide benefit for the three legs 14 of the stool. That is export, upstream as well as 15 environmental benefits by 2002 and 2003 water years. We 16 then have a medium in long-term projects. The medium 17 projects are those which can be operational by December 31, 18 2005. Long-term projects are those which are operational by 19 December 31st, 2010. I will say 2010, barring earlier 20 termination, is the term of this agreement. 21 There is a provision that calls for what needs to be 22 within the work plans, standards for the work plans. There 23 is provision with respect to funding. We do expect to pull 24 outside dollars into the process. CalFed dollars, Prop 204 25 dollars if this Board is involved. These are, in fact, the CAPITOL REPORTERS (916) 923-5447 25 1 types of projects we are talking about here which were 2 identified both in the proposition that authorized the Prop 3 204 dollars as well as within the CalFed authorizations. 4 There is a provision for workplan updates. There is 5 a separate provision on Page 9, Subparagraph (f), that is 6 specific to Sites Reservoir. It provides specific Sites 7 Reservoir milestones which are consistent with the 8 Memorandum of Understanding on Sites Reservoir, plus it adds 9 a couple of other milestone dates associated with 10 implementation decisions by August 2005 and assuming a 11 decision to proceed after appropriate environmental review. 12 The notion of initiating project construction on Sites 13 Reservoir around August 2006. 14 There are on Page 10, Paragraph 6, provisions for the 15 termination of the agreement, as I have indicated, the term 16 and termination of the agreement. As I've indicated, 17 December 31st, 2010, unless one of the earlier termination 18 provisions kicks in as the date that the agreement will 19 proceed through. I will allow, again, Cliff to talk about 20 some of the earlier termination provisions. I will note, 21 however, if you take a look at Paragraph 6(c), the idea here 22 is that if we are having trouble meeting some of these 23 milestones, the idea is not to automatically terminate the 24 agreement, but rather to move into a mediation process to 25 see whether or not we can resolve some of the problems which CAPITOL REPORTERS (916) 923-5447 26 1 have caused us not to meet milestones with some objective 2 criteria built into this agreement which would be applied in 3 that mediation proceeding. And it would be only after 4 mediation failed that the agreement would terminate under 5 some of these provisions. 6 Certainly the modification of the 1995 Water Quality 7 Control Plan in terms of increasing the flow-related 8 objectives would be something that would have a potential of 9 causing termination because it would change the basis upon 10 which the parties negotiated this agreement. If there is a 11 termination for whatever reason, the parties have agreed 12 that they would come back to the Board and petition together 13 to have the Board reopen or actually reinitiate a Phase 8 14 hearing and that we would be willing to move forward with 15 that process as soon as it could be brought back to life, so 16 to speak. 17 And during the term, however, I think you have heard 18 that DWR and the Bureau would nonetheless meet the standards 19 so that at least that would not be in jeopardy while we are 20 moving forward. 21 Paragraph 7 on Page 11 is this mediation provision. 22 Paragraph 8 is another reservation of rights 23 provision. 24 There is a provision in Paragraph 10 on the development 25 of technical and management committees. CAPITOL REPORTERS (916) 923-5447 27 1 Paragraph 11 is an important provision. It does call 2 for public participation. Again, individual public outreach 3 programs will be developed for individual projects as they 4 are developed as part of a workplan development process. 5 But we understand that public participation and outreach is 6 an essential part of what we need to do. 7 Paragraph 12 is a recognition that, and I think I have 8 referenced that there are a lot of other things going on and 9 we will to the maximum degree possible attempt to coordinate 10 our activities under this agreement with other programs and 11 agreements that are moving forward. 12 Paragraph 13 is another commitment to make certain that 13 all appropriate environmental compliance is met with respect 14 to any of the projects that are identified within this 15 agreement. 16 Finally, the document assumes that it will be executed 17 by the Department of Water Resources, the Bureau of 18 Reclamation as well as some umbrella organizations, 19 including the State Water Contractors, the San Luis and 20 Delta-Mendota Water Authority and the Northern California 21 Water Association. 22 Rather than having a million parties accountable, we 23 have limited the list of accountable parties and created 24 internal mechanisms to have smaller units interact with the 25 larger units. CAPITOL REPORTERS (916) 923-5447 28 1 That is a conclusion of a summary of what is a fairly 2 detailed agreement. I am going to turn it over to Cliff to 3 kind of fill in the details, and then, as I said, if there 4 are substantive questions about the substantive provisions 5 in the agreement, I think Cliff and I would be more than 6 happy to respond to those questions. 7 A.C. BAGGETT: Thank you. 8 MR. SCHULZ: Mr. Chairman, Members of the Board, I am 9 Cliff Schulz. I am the attorney for the Kern County Water 10 Agency and have been with a couple other lawyers 11 representing the export interests in the negotiations of 12 this agreement. 13 I am one of the attorneys that Lester Snow was talking 14 about. If I remember right I started my first Delta water 15 rights 32 years ago with the beginning of D-1379. And I 16 think that actually in some ways -- there is a twist on 17 that. I have to go farther with that story. I do have a 18 daughter that just recently graduated from law school. 19 She's told me she wants absolutely nothing to do with 20 this. 21 I actually think the fact that I have been doing this 22 for 32 years indicates how amazing it is that we have this 23 agreement before you today. This is the first time in my 24 memory that we have had a truly cooperative effort going on 25 between Northern California folks and the water users, and CAPITOL REPORTERS (916) 923-5447 29 1 the export water users. 2 I am going to spend all of my time on Pages 7, 8, 9 and 3 10 of this agreement and really go through the heart of it 4 in some detail. But, quite frankly, understanding Page 7, 5 which is what we are asking the Board to do, means you need 6 to understand the milestones and termination provisions 7 first. So I am actually going to start with Page 8 and then 8 end up on Page 7. 9 The milestones were extremely important to the export 10 water users because of the fact that we were recommending to 11 the Bureau and the Department as their contractors that they 12 step up and confirm a new obligation to meet all of the 13 standards for a period of time, up to ten years. We were 14 not willing to do that on a "Oh, let's work things out." We 15 had to see positive progress in terms of improvements in 16 supply situations or else we weren't willing to do this. 17 So we negotiated, we spent a lot of time on the 18 section with respect to milestones and deadlines and 19 termination rights in this contract. And we came up with 20 two work plans that we said were going to be the key things 21 that would start this process off. 22 The first one is the short-term projects, and we stated 23 that we had to have a workplan that would identify the 24 short-term projects within 180 days of the effective date of 25 this agreement. The effective date of this agreement is CAPITOL REPORTERS (916) 923-5447 30 1 defined as when this Board approves the agreement and agrees 2 to stay Phase 8. I will get back to a timeline on this a 3 little bit later in my presentation. 4 Then, the second thing that we said was that there has 5 to be a separate workplan in place one year from the 6 effective date which would identify medium and long-term 7 projects. And between those two, when they are both done, I 8 guess we consider that sort of when the marriage ceremony is 9 complete and we really have something in place that we can 10 work with. But we are looking in that short-term projects 11 workplan for benefits that could be provided in year 2002 12 and 2003. That is critical because in combination with the 13 governor's drought plan and other things in the short-term 14 that CalFed is doing, we can see some potential for benefits 15 that make this a very, very worthwhile way to go, rather 16 than to fight in Phase 8. 17 The next thing that we have in the agreement under 18 Paragraph 5 on Page 8 is the workplan standards. There is a 19 couple things that I want to point out about the workplan 20 standards. It is going to be a fairly detailed document, 21 and that we want to describe, not only describe the projects 22 that we think will be done within these time frames, but the 23 expected net benefits and their proposed allocations have to 24 be included in those work plans. Those allocation issues 25 could be very difficult. We recognize that. But we have to CAPITOL REPORTERS (916) 923-5447 31 1 have some understanding of what the benefits, what benefits 2 would flow and where they will flow as we move forward with 3 this program. 4 We also say there has to be cost estimates. We have to 5 identify major environmental issues, and we have to have a 6 plan for financing. So in those work plans there is going 7 to be some very, very tight schedules that we have left 8 ourselves with respect to these two work plans. We feel we 9 can do it. And even though the language of the agreements 10 says that the deadlines run from the effective date, we are 11 already working on both of those work plans now at the 12 technical levels trying to see what the potentials are and 13 what is available. 14 I want to really direct your attention to the last 15 sentence in 5(c), which says each workplan shall also 16 provide a timetable for implementation of identified 17 projects which shall then constitute additional milestones 18 for this agreement. 19 We have a few milestones stated in this document, 20 particularly with respect to Sites Reservoir and things of 21 that type. But when we come out with the work plans, we 22 will then have a whole new set of deadlines which will also 23 become milestones and if not met will result in the 24 termination of the agreement, and which will keep our feet 25 to the fire, making progress throughout the ten-year period CAPITOL REPORTERS (916) 923-5447 32 1 of the agreement. We consider that to be a very key part of 2 the work plans and key part of the agreement. 3 5(d) deals with funding. Stuart talked about funding. 4 We are going to be putting in applications for the Prop 204 5 money that is earmarked for meeting the Water Quality 6 Control Plan standards, and that will be part of the early 7 funding mechanisms to get some of these things done. 8 We have provisions for adjusting the milestones if there is 9 an inability to get funding in a timely manner, but that 10 doesn't mean that it automatically happens. We still have 11 to meet the actual milestones. And we set up a process for 12 extending those milestones if financing lags. But that is 13 going to be a real tough process, particularly from the 14 exporter's standpoint. We really need the milestones to be 15 met as we expect them. We have left ourselves room through 16 the mediation process to extend when necessary. 17 Stuart talked about this. There is going to be 18 workplan updates, and those are going to happen on an annual 19 basis, or could happen on an annual basis through an annual 20 process that we have set up in the document. And Stewart, I 21 think, talked enough about the Sites Reservoir milestones 22 that I do not need to go into that any further. 23 I am going to turn to Page 10 and deal with the annual 24 reviews and the termination provisions. And I am going to 25 try to see if I can lay out a little bit of a timeline CAPITOL REPORTERS (916) 923-5447 33 1 here. I am going to make an assumption that we are 2 successful in convincing you that this is a good idea and 3 that at your March Board meeting you approve this agreement. 4 I'm just doing that for purposes of trying to set up a 5 beginning time in the timeline. 6 That would mean six months after that date in March we 7 would have to have the first workplan completed. So that is 8 September of 2001. And we give ourselves 60 days under the 9 provisions of the plan after the technical work is done and 10 the workplan is available for the parties to approve it. 11 Now we are at November of 2001. That is the first time 12 when, if we fail, that the termination provisions of this 13 agreement click in. The termination provisions are 14 virtually automatic with respect to completion of the work 15 plans. So that if the work plans aren't done by November of 16 2001, we would be coming back to this Board and asking them 17 to reinitiate Phase 8 proceedings. Assuming that that 18 milestone is met and the Board has acted in March of 2001, 19 then the deadline for the second workplan is March of 2002, 20 one year after the effective date. And we have until May of 21 2002 to review and approve that. 22 If that isn't done, the agreement automatically 23 terminates. We don't go through the mediation process on 24 those, although we could for financing reasons or others 25 adjust it slightly. But in effect the mediation process CAPITOL REPORTERS (916) 923-5447 34 1 that Stuart referred to in the agreement are not applicable 2 to the deadlines for meeting these first two milestones of 3 the work plans. 4 So, assuming that we have both of the work plans 5 completed and approved by May of 2002, then our first annual 6 review under 6(b) on Page 10 of the agreement would occur in 7 May of 2003 and annually thereafter. What the agreement 8 provides for, basically, is that through an annual review 9 process we would determine whether the milestones are being 10 met. And if they are not, then we would step into the 11 mediation process to see whether we should extend those 12 milestone dates; and if agreement isn't reached through that 13 mediation process to extend them, the agreement terminates. 14 Now let's go back, then, to Page 7 with that process in 15 mind, and we will show what we are asking the Board to do in 16 order for this agreement to become effective. What (c)(i) 17 [verbatim] on Page 7 says is that we ask for a stay of Phase 18 8, an immediate stay of starting the Phase 8 proceedings, 19 pending development of the work plans described in 5(a) and 20 5(b). In other words, both the short-term and medium- and 21 long-term work plans. 22 A.C. BAGGETT: Which will be November, by November 1, 23 assuming March 1. 24 MR. SCHULZ: That is correct. And then if beyond that, 25 it would be May. If we get the first one, but not the CAPITOL REPORTERS (916) 923-5447 35 1 second one, then it would be May of 2002. Right. 2 A.C. BAGGETT: Annually. 3 MR. SCHULZ: Then during that time and what (c)(ii) 4 says is that if either of the work plans are not completed 5 or approved the agreement is terminated, and we will 6 immediately notify you and ask you to lift the stay and 7 proceed with the Phase 8 hearings. Now, there is a -- let 8 me mention this. I get to (c)(iii), that there is a mistake 9 in (c)(iii). I know I'm going to get asked this by staff, 10 so I may as well correct it now. The reference to extending 11 the obligations under Conditions 2 and 3 should be 1 and 2 12 and possibly 3, and I will talk to your staff about that, 13 about what they would prefer. But it should not have been 14 two and three. It clearly should have been one and two 15 which have cutoff dates at the end of this year. 16 So the order we expect would include an extension of 17 that obligation that is set forth in D-1641 to June 30th, 18 2003, which, based on the calendar I gave you, is a little 19 more than a year after I said the latest date that we would 20 have failure on the workplan to occur. We have given a year 21 after that, roughly, as the time that we would suggest that 22 we extend it to. 23 What we have done in (c)(iv) is said that, and we've 24 talked about this a lot, that if we get to the point where 25 we have approved both of the work plans and now we are going CAPITOL REPORTERS (916) 923-5447 36 1 into implementation, that it seems best to us if Phase 8 2 were dismissed because it won't be at the very earliest 3 until May of 2003 that we would be back before you saying 4 something is wrong. And it seemed to us that the whole 5 thing would be pretty stale by that time, and it would be 6 best under those circumstances just to notice a new hearing 7 with the proper parties at that time. We don't know at that 8 time whether we would have the right parties before us. So 9 we make a distinction in this document between a stay while 10 we do the work plans and then just terminating Phase 8, 11 subject to a new notice of hearing if we successfully get to 12 the work plans and are actually implementing the agreement. 13 So, that's the way we have structured the document in a 14 way that we hope will keep everybody's feet to the fire by 15 having the risk that we will be back here before you if we 16 aren't able to work out a physical solution that we hope 17 will be developed by this document. 18 A.C. BAGGETT: You're contemplating signature or 19 effective date of this agreement to be three weeks? Five 20 weeks? When the parties actually -- 21 MR. SCHULZ: We expect to be ready -- we have to go 22 through a number of boards, but we expect the month of 23 February to be -- 24 A.C. BAGGETT: In mid February? End of February? 25 MR. SCHULZ: Definitely. I will look at a couple of CAPITOL REPORTERS (916) 923-5447 37 1 people. Mid February? Late February? 2 UNIDENTIFIED AUDIENCE MEMBER: Yes, yes. 3 MR. SCHULZ: Late February. 4 If there are some -- we would like to work with your 5 staff if there are anything in these terms of what the Board 6 would do, that they have comments on, we would be delighted 7 to receive those. And, yes, we expect to be ready during 8 the month of February, to have this fully executed. 9 A.C. BAGGETT: Any other questions? 10 Barbara? Vicky? 11 MS. LEIDIGH: Yes. 12 A.C. BAGGETT: Took care of the big one I had, 13 clarified. 14 MR. SOMACH: Incidentally, for the record, the 15 subparagraph that Mr. Schulz has been talking about is (e). 16 MR. SCHULZ: My reading glasses aren't working. 17 A.C. BAGGETT: (e)(iii); it was circled on mine. 18 MS. LEIDIGH: First question we have is: In the 19 hearing notice for Phase 8 the Board listed a number of 20 issues in addition to the responsibilities of the 21 parties, and that would include, as an example, the method 22 to be used for determination of carriage water. There are 23 also some issues about monitoring and compliance and how 24 that should be done. By referring to Phase 8 in the 25 agreement, do you mean to include only the responsibility CAPITOL REPORTERS (916) 923-5447 38 1 for the parties to meet the Delta flows or do you also 2 include these other issues that are in the hearing notice? 3 MR. SCHULZ: What we would suggest in that area is that 4 to the extent that some of those should go forward, that 5 there be some meetings among State Board staff and those 6 issues that are important and notice a hearing or procedure 7 to get those done. 8 We would have no problem with moving forward with some 9 of those items. I don't think they were in any way intended 10 to be barred by this agreement. And as a matter of fact, I 11 believe you have a letter from the Department of Water 12 Resources that talks about two other issues, namely the 13 interior Delta, couple of the Delta salinity standards and 14 the measuring point at pumping plant number one for the 15 Contra Costa Water District. So we believe the Department 16 was correct in what they said in that letter also. 17 MR. SOMACH: I think conceptually the way to approach 18 it would be to identify them among staff and the parties, 19 what are the issues out there, and to renotice them 20 separately, as a separate matter. 21 MS. WHITNEY: What about the responsibilities of 22 parties on the Calaveras and the Cosumnes Rivers? 23 MR. SOMACH: I think you will find that the Bureau of 24 Reclamation and the Department of Water Resources' 25 willingness to meet the standards would take care of CAPITOL REPORTERS (916) 923-5447 39 1 obligations from those two rivers. I think in terms of 2 flow-related obligations, this Phase 8 agreement would cover 3 everything. 4 MR. SCHULZ: I agree with that. 5 MS. LEIDIGH: I wanted to verify that the foundation of 6 this agreement appears to be the development of new water 7 storage in Shasta Reservoir and the proposed Sites 8 Reservoir. Is that correct, basically an agreement to 9 develop additional storage? 10 MR. SOMACH: No, no, I don't think. I think that the 11 way the agreement reads is those are critical elements. We 12 think that is where you get the most possible benefit in the 13 context of the program we are talking about. But, again, I 14 said none of these parties, this agreement, we have been at 15 these issues for a long time, and we recognize that these 16 are all very hard issues to grapple with, particularly those 17 associated with additional storage. 18 We think that is where you get the most. That is why 19 they are highlighted. That is where, we think, the real 20 benefits are. That doesn't mean that there aren't a whole 21 host of other projects in that list of management tools that 22 can't be implemented and, if implemented, can't provide 23 significant and material benefit that will meet the goals of 24 the agreement. 25 MR. SCHULZ: We do think in the long term that new CAPITOL REPORTERS (916) 923-5447 40 1 storage is pretty critical to making the best advantage of 2 the conjunctive use type of programs that we are trying to 3 carry out. 4 MR. SOMACH: Not to get on a soapbox, that is just a 5 bare reality. It would have nothing to do with this 6 agreement if we are going to proceed, those things are going 7 to be essential, at least from our perspective. 8 MS. LEIDIGH: The next question we have is with regard 9 to the expiration date of June 30th, 2003, for Conditions 1 10 and 2. We are concerned this period may be too short to 11 allow the Board to complete a decision after a delay in the 12 hearing, because by then there may be a need for additional 13 environmental documentation or other things that would have 14 to be done. 15 MR. SCHULZ: I have mixed emotions on that question. 16 Looks like we had given, in our view, about 13 months to 17 complete a process. We do not want something that is 18 open-ended. We want a strong motivation to move it rapidly 19 on reopening Phase 8 at that point and getting it 20 completed. But I think we are more than willing to talk 21 about what a reasonable time is. 22 MR. SOMACH: I have no mixed or other emotional 23 response to the question, but I think that it just simply is 24 a pragmatic process-related question. Those are the dates 25 we are talking about. It's been very clear that one of the CAPITOL REPORTERS (916) 923-5447 41 1 things that those on the opposite side of the table from the 2 upstream water users want is some certainty and some end in 3 term, and I think the parties will work with the Board to 4 come up with something that reasonable and rational so long 5 as it meets the project's need to make certain that they are 6 not creating a situation where they have an open-ended 7 obligation, if they are not getting any benefits back from 8 the operation of the agreement. That is something we 9 certainly can work with and come up with a rational solution 10 that meets your needs, but also meets the needs of the 11 project components. 12 MS. LEIDIGH: Assuming that the water storage projects 13 are completed, it appears that this agreement contemplates 14 that the project would remain responsible for the flow 15 objectives no later than December 31st, 2011. We are 16 curious, do you really intend that this responsibility would 17 remain with the projects indefinitely, assuming that 18 milestone is achieved or until the projects would receive 19 authorization from the State Board to assign part of the 20 responsibility to others? And I am thinking of a petition 21 filed by the project at some point in the future, is what I 22 am talking about, in terms of future. 23 MR. SCHULZ: What we foresee in this is before this 24 agreement ends, if we have been successful, in ten years out 25 there is going to be another agreement. It is obviously our CAPITOL REPORTERS (916) 923-5447 42 1 intention in doing this is to see if we can come up with a 2 permanent agreement among the parties as to the allocation 3 of responsibility. 4 So our vision is that we at that time are showing up 5 with another agreement which hopefully would solve things 6 forever. 7 MR. SOMACH: Let me offer an alternative. That 8 certainly, what Cliff indicated, is a clear possibility. 9 Another way that that could be addressed is as we move 10 through project specific agreements, and I will use Sites 11 Reservoir as an example, it may be that that type of an 12 issue gets subsumed in terms of that project agreement and 13 the obligation, whatever it is, for Bay-Delta flow from the 14 Sacramento side of the system is wrapped into that project 15 agreement or any of the other project agreements. 16 And so, Cliff's response is accurate, but I don't want 17 it to be viewed as the only way one could address that 18 issue. I think we are going to be looking for opportunities 19 with every one of these agreements as we move through the 20 term of this agreement to be able to make certain that when 21 the term is over we just don't resume some kind of warfare. 22 We will have real projects on line if we are successful, and 23 we ought to address how these standards are met over that 24 period of time. 25 MS. LEIDIGH: Based on what you have said, I assumed CAPITOL REPORTERS (916) 923-5447 43 1 that the parties -- my question was going to be: Would you 2 object to the Board deleting the expiration date in 3 Conditions 1 and 2 to facilitate moving through this and 4 come back to it later if that was appropriate? I am 5 assuming that your answer is probably no, but I would like 6 to hear it from you. 7 MR. SCHULZ: Yes. No, we would like to have a date 8 certain in it. 9 MR. SOMACH: I think there needs to be a date certain; 10 that was part of the deal. 11 MS. LEIDIGH: The litigation challenging Decision 1641 12 includes challenges to Condition 2 in the decision and those 13 challenges were filed by the State Contractors and by 14 Westlands Water District. 15 Would these causes of action be dismissed if the Board 16 were to adopt the order discussed in the agreement? 17 MR. SCHULZ: I was expecting that question, and I 18 talked to Westlands about this. So I guess I can speak for 19 both Westlands and the State Contractors. 20 We believe that the entry of an order by the Board 21 would in all likelihood render the cases moot. Exactly how 22 it is handled is something I need to have some further 23 discussion with my clients about and with Westlands and 24 possibly with Board staff. Because I am trying to figure 25 out whether or not that becomes the case within the workplan CAPITOL REPORTERS (916) 923-5447 44 1 period or whether they truly become so moot that they can be 2 dismissed at what stage in this process. That is something 3 I would -- I agree that we are now coming in and asking that 4 a term that we objected to, we are asking that it be 5 extended through this process. It creates some interesting 6 issues. 7 A.C. BAGGETT: I noticed that. 8 MS. LEIDIGH: What facts must be determined before the 9 Board can adopt an order approving the agreement and 10 extending Conditions 1 and 2? 11 MR. SOMACH: There may be another show here. Why don't 12 you drop it. 13 MS. LEIDIGH: The other part of the question is: What 14 existing final environmental documents will support adoption 15 of the requested order by the Board? 16 MR. SOMACH: We don't think any other facts in the 17 sense of an evidentiary hearing facts are necessary. This 18 is merely an agreement to meet the standard. And as a 19 consequence, I am not certain what facts would be necessary, 20 other than asking the projects whether they, in fact, will 21 meet the standards. So I don't know what facts are in 22 existence. 23 In terms of the second part of the question, which 24 actually alludes me. What did you ask me about? 25 UNIDENTIFIED AUDIENCE MEMBER: Environmental. CAPITOL REPORTERS (916) 923-5447 45 1 MR. SOMACH: Environmental. I don't think any 2 additional environmental review is necessary at all. 3 Because what we are doing is really continuing -- the 4 standards are in place. And all we are doing is having the 5 projects agree to continue to meet those standards. I will 6 say that each and every one of the these projects -- I have 7 said it already. I am just going to simply repeat what I 8 said -- will undoubtedly be subject to their own extensive 9 environmental review, whatever it may be. I don't know what 10 it is because I don't know what these projects are going to 11 be. 12 So it is not a situation where there will be no 13 environmental review. There will be a great deal. This 14 agreement, however, is not the agreement that triggers that 15 environmental review. 16 MS. LEIDIGH: We were just consulting to see whether or 17 not we had any more questions. It looks like that is it on 18 staff questions. 19 MR. SOMACH: Any questions from the Board? 20 MEMBER BROWN: Thank you, Mr. Chairman. I have some 21 comments and maybe a question or two. 22 David Guy's integrated management approach, I like that 23 idea, that is very appropriate for what you are doing, and 24 the public process, the continuation of that. That all 25 sounds good. The uniqueness of developing a supply versus CAPITOL REPORTERS (916) 923-5447 46 1 demand analysis, Mr. Somach, is useful. I'd like to see 2 that up front. And you are looking, I suspect, total 3 demand, not just the demand within the Delta itself. 4 I would be interested in maybe having an estimate of 5 what you're talking about in the way of projections. It is 6 easy to determine what day's demands are, but I would also 7 suspect that you would have some projections of what future 8 demands are such that you could continue to have a balance 9 of supply versus demand program. 10 Developing a workplan to do this is very proper, and I 11 suspect some of the facts that Barbara was talking about 12 would come out in the workplan as it progresses. 13 Do you visualize most of the work being done by staff 14 or the Department and Bureau, or are you talking about 15 putting together a request for proposals and having work 16 contracted out for the first step? 17 MR. SOMACH: I can respond to that. The answer to that 18 question is probably, yes, all of that. I don't know yet 19 exactly how and who will do the work. I will tell you that 20 the technical committees include not only staff from the 21 Bureau and the Department, but also consultants for the 22 exporter water users as well as the upstream water users. 23 What additional outside consultants, if any, that will 24 be utilized will come out of the technical committee 25 meetings and will be based upon recommendations that they CAPITOL REPORTERS (916) 923-5447 47 1 make to the management committee. Of course, much of this 2 will be predicated on some of the funding issues that are 3 also part of the agreement. 4 MEMBER BROWN: Who do you visualize as being the 5 project manager? What organization? Who is going to be on 6 point with this? 7 MR. SOMACH: Any time anybody has a tough question 8 about who is doing what, in that regard I always say David 9 Guy is doing it. I suspect it will be David Guy plus 10 others. 11 MEMBER BROWN: David Guy. 12 MR. SCHULZ: Let me comment on that point, too. 13 Although I know we will be using the Department and 14 Bureau's technical expertise, it is important to understand 15 that this agreement contemplates the local control of those 16 local Northern California projects. It is not going to be 17 something where the Department or the Bureau decide what can 18 be done up there. I think you will see a lot of the project 19 management being referred through David's members. 20 MR. SOMACH: Cliff's having said that shows something 21 that I think I should underscore here, is the fact that one 22 of the things that has occurred through this process is that 23 we both have become very sensitive to the extent we weren't 24 already to the other side's needs and issues. Among those 25 is what Cliff just said on the upstream water users' CAPITOL REPORTERS (916) 923-5447 48 1 behalf. And that is these have to be true partnerships and 2 there has to be a lot of local control over the way these 3 things proceed. This is not going to be a top-down 4 situation where the Bureau or DWR comes in and institutes 5 programs. 6 Our intention is to become very, very much involved in 7 these projects that are going to be in our backyards. So I 8 think you will find a much greater level of local 9 participation, both from a technical and management 10 perspective than you have seen in any of the projects that 11 we have had in California before. 12 MEMBER BROWN: Then, I guess the last question will be 13 that your milestones, you seem to be pretty adamant that if 14 the six months was passed that would trigger Phase 8. 15 Having worked in a consulting business a few years, I know 16 how those timetables can lengthen out. 17 I suspect that if you needed some extra time beyond the 18 six months you'd be asking for that before you would be 19 triggering Phase 8, would you not? 20 MR. SCHULZ: We wrote the agreement with the specific 21 purpose of making sure that everybody's feet were in the 22 fire. When we got to that point, if there was a couple-week 23 delay because of something, I am sure there would be 24 flexibility. But we gave ourselves a very intentional 25 opportunity to say, "We just don't like the way this looks CAPITOL REPORTERS (916) 923-5447 49 1 like it is going to go." 2 MR. SOMACH: That is a -- that is clearly understood. 3 Cliff has stated it. All parties to this agreement 4 understand that those are real timelines. 5 MEMBER BROWN: When you do your supply versus demand, 6 you are talking about also the growers, the farm communities 7 in Northern California, as well as what you might be wishing 8 to try to export and balance out? 9 MR. SOMACH: In fact, I would argue that that is the 10 focal point of what we are looking at in demand. Cliff 11 would shade that differently, but our intention is to meet 12 demand in Northern California, unmet demand and look for 13 future demand also. 14 MEMBER BROWN: Thanks for a very fine presentation. 15 A.C. BAGGETT: Any more questions? 16 If not, Kevin O'Brien. 17 MR. GUY: I think if it is okay, we will just move on 18 to the testimony. I think some of Kevin's points have been 19 answered at this point. 20 MR. O'BRIEN: It's also been accepted that I can only 21 screw it up at this point. 22 A.C. BAGGETT: We have about five cards, all say two 23 minutes. If we can actually keep them short, we will do 24 these cards, take a break and proceed with eight or nine 25 other cards which are not part of this group. If you can CAPITOL REPORTERS (916) 923-5447 50 1 hold on. 2 I have Mark Atlas, Bill Baber. 3 MR. ATLAS: Good morning. I am Mark Atlas. I am a 4 lawyer in Willows. I represent today the Tehama-Colusa 5 Canal Authority and its member agencies as well as two water 6 right settlement contractors who have preproject water 7 rights on the Sacramento River. And maybe it is apropos 8 that coincidentally at least I am the first to offer 9 testimonial. Because at least with respect to the water 10 service contractors that I represent in Tehama-Colusa and 11 Corning Canal service areas, they are an area that 12 represents perhaps the majority of unmet demand for 13 agricultural water at least in the Sacramento Valley. 14 Both of the constituent districts that I represent are 15 strong supporters of this agreement and have been active 16 participants in the negotiation of it. And, obviously, we 17 are here to tell you that we would like very much for you to 18 issue an order along the lines of what is called for in the 19 agreement. 20 First, with respect to the water rights settlement 21 contractors that I represent, what the agreement provides 22 them is a certainty with respect to the water supply that 23 they have over the next few years so long as the agreement 24 is in place. It helps to pave the way for them to implement 25 -- to finish the development of and to implement the CAPITOL REPORTERS (916) 923-5447 51 1 basinwide management plan. 2 I want to focus on that for just a second and tell you 3 that that is perhaps a historic plan, if you will, being 4 developed between the water rights settlement contractors 5 and the Bureau of Reclamation. We are hopeful that what it 6 will do is help to pave the way for the third thing that 7 this agreement allows those two districts that I represent 8 to do and that is to focus on a contract renewal process 9 with Reclamation which will be less contentious than it 10 otherwise might have been without that basinwide management 11 plan. 12 As you may know those water rights settlement contracts 13 are up for renewal by February 2004, which means that very 14 soon after now the agencies, both the contractors and the 15 Bureau, have to begin engaging in specific negotiations. 16 And the basinwide management plan perhaps will help to 17 provide some tools that will allow that process to be a lot 18 more smooth than it might have otherwise been. 19 With regard to the water service contractors that I 20 represent in the Tehama-Colusa and Corning Canal service 21 areas, they look upon this agreement as perhaps being -- 22 first of all, as being historic, if nothing else. Because 23 what you have heard and what you have seen on paper is maybe 24 the time, at least -- I have ten years less than Mr. Schulz 25 doing this kind of stuff. But at least in that time I don't CAPITOL REPORTERS (916) 923-5447 52 1 know that I have ever seen an occasion before when the 2 exporters have expressed so strongly an understanding and a 3 desire and a commitment to see that water supply 4 circumstances in the Sacramento Valley are improved. 5 In the past my clients have at least seen, in their 6 view, the exporter saying, "What is it that we can get out 7 of the Sacramento Valley for our purposes?" And clearly 8 there are things that call for that in the agreement. There 9 is no priority stated in the agreement of meeting needs in 10 the Sacramento Valley before or with some priority over the 11 needs that are called out in the agreement for the export 12 areas. But there is a very strong commitment, and it has 13 been carried through in the negotiations in so many ways 14 that I can't begin to list them all for you, that 15 commitment. 16 What the agreement provides, then, for these 17 contractors that I speak of is, of course, some improved 18 water management and water supply. The canal authority that 19 I represent and its members contend, as you may know, 20 operate the Tehama-Colusa and Corning Canals under an 21 agreement with the Bureau of Reclamation. Therefore, to the 22 extent those facilities may figure in to implementing some 23 of the projects that are called for in this agreement, they 24 are committed to continuing that cooperation and to see that 25 those facilities are operated in a way that carries out the CAPITOL REPORTERS (916) 923-5447 53 1 intent of the agreement. 2 Again, in summary, at least with respect to those 3 people that I represent, we very much request that you issue 4 the order that is called for in the agreement. I am ready 5 to answer any questions, if you have any. 6 A.C. BAGGETT: Thank you. 7 Let me ask a quick question. We have ten more on this 8 list and I only have four cards. Which is accurate, David? 9 Are all ten of these people here? 10 MR. GUY: Yes. 11 A.C. BAGGETT: Let's do one more and then take a break. 12 MR. BABER: Mr. Chairman, I suppose I am the next one. 13 Bill Baber. 14 A.C. BAGGETT: Yes. 15 MR. BABER: Thank you. I am a member of the firm of 16 Minasian, Spruance, Baber, Meith, Soares & Sexton, 1681 Bird 17 Street, Oroville, California. 18 Here today we are representing a number of Sacramento 19 Valley water districts on the east side of the valley, 20 primarily the Joint Water Board consisting of Butte to West 21 Biggs, Gridley, Richvale and Sutter extension. We have 22 western canal and then foothill districts of Nevada 23 Irrigation District, Oroville-Wyandotte Irrigation District. 24 Mr. Chatigny from Nevada is present, and he will also be 25 speaking a little later this morning. CAPITOL REPORTERS (916) 923-5447 54 1 You're looking at a very, very, as Mark has said and I 2 guess Cliff and Stuart before that, a very unique method of 3 resolving these Bay-Delta hearings which are now down to 4 Phase 8, having started in July 1987, 14 years ago I 5 believe. And we think this is a very good way of resolving 6 this, and we encourage you to give it every opportunity to 7 succeed and enter an order adopting the agreement. We think 8 all of the provisions that are called for in the agreement, 9 whether expressed in the agreement, will provide all of us a 10 way to provide additional water supplies and benefits which 11 can do nothing but help the entire state, including the 12 environmental benefits which were spoken to by both Mr. 13 Schulz and Mr. Somach. 14 Our clients are both members of NCWA and not members of 15 NCWA. So it will probably take us through February, and I 16 know, Chairman Bagget, you were asking when is the date that 17 we could adopt an order. I am thinking the later part of 18 February for us to get through all of our clients to express 19 satisfaction with this agreement maybe even into March for 20 an adoptive order by the State Board. We think that this is 21 definitely, most definitely, the way to proceed. And what 22 our clients have seen and heard from us to date is 23 satisfactory. They all express very much optimism with this 24 type of agreement, including a big meeting in Colusa about 25 two days ago. So this is, as you see, on a very, very fast CAPITOL REPORTERS (916) 923-5447 55 1 pace, fast track. 2 Thank you. 3 Any comments or questions? 4 A.C. BAGGETT: We have none. 5 With that let's take a ten-minute recess. 6 (Break taken.) 7 A.C. BAGGETT: We have a few more cards. Let's get 8 back. 9 Mr. Bartkiewicz. 10 MR. BARTKIEWICZ: Morning, Mr. Bagget, Mr. Silva, Mr. 11 Brown. My name is Paul Bartkiewicz with the Sacramento law 12 firm of Bartkiewicz, Kronick & Shanahan. 13 We've represented a number of water agencies in these 14 Bay-Delta proceedings, including Yuba County Water District. 15 Yuba County Water Agency, Browns Valley Irrigation District, 16 Yolo County Flood Control and Water Conservation District, 17 Georgetown Divide Public Utility District, Pot Springs 18 Irrigation District, and South Fork Irrigation District. 19 I am pleased to come before you this morning and tell 20 you that all of our clients that have participated in the 21 Bay-Delta process strongly support this proposed settlement 22 agreement and, in fact, have been active participants in the 23 development of it. I think when water supplies do not meet 24 needs, prudence would dictate that we evaluate the supplies 25 that we have and determine how to maximum their use in a way CAPITOL REPORTERS (916) 923-5447 56 1 that meets local needs as well as enhancing the state's 2 water supply and providing environmental benefits. In 3 addition, we should be planning to develop new 4 supplies. 5 And this agreement I think takes that prudent approach, 6 evaluate what we have and let's determine how we can use it 7 in the best way to meet all the competing interests. This 8 approach is consistent with the CalFed framework agreement 9 that talks about collaboration and cooperation. And 10 speaking for Yuba County Water Agency, Yuba certainly 11 embraces the approach of seeking collaboration and 12 cooperation rather than conflict and confrontation. 13 Mr. Somach mentioned Article 4 of the agreement. That 14 is a pretty important element. It says that, just points 15 out that it is important that regulatory agencies take 16 actions that -- take a broad perspective on competing needs 17 and uses of water so that by their action agencies are not 18 prevented in effect from participating in the solutions that 19 the settlement agreement calls for. And, again, for Yuba, 20 certainly I think Yuba is a candidate for one of the early 21 work plans that would be developed in the first six months 22 of this agreement. To have an integrated adaptive water 23 management plan for the Yuba River that takes into 24 consideration reservoir operations, conjunctive use, 25 fishery habitat improvement, both through enhanced and CAPITOL REPORTERS (916) 923-5447 57 1 improved instream flow conditions as well as nonflow factors 2 such as gravel, restoration and riparian habitat improvement 3 and things like that. To use water for multiple purposes 4 that provides balance and benefits. 5 Director Hannigan mentioned that this agreement will 6 help us find win-win solutions. I think that kind of 7 adaptive comprehensive water management can be a win for 8 Yuba County environment and the State of California as a 9 whole. 10 In conclusion, we are finding very strong support for 11 this approach throughout the Sacramento Valley, the water 12 users we have talked to, and we urge the Board to support 13 its implementation. 14 I would be happy to answer any questions. Following me 15 will be Peter Hughes from Natomas. 16 A.C. BAGGETT: Any questions? 17 Thank you very much. 18 MR. HUGHES: Mr. Chairman, Members of the Board, I will 19 take about two minutes or less. I am General Manager of the 20 Natomas Mutual Water Company, and for reference that is out 21 at the Sacramento Airport. 22 Natomas has been a supporter and a negotiator of this 23 agreement and is ready to sign it. We are also a member of 24 the executive committee and working for the last two and a 25 half years on the basinwide management plan. That is one of CAPITOL REPORTERS (916) 923-5447 58 1 the examples used in this agreement for effective future 2 planning. 3 Natomas intends as part of this agreement to do one or 4 more short- and long-term projects to improve flows for both 5 environment and for export use. One of the roles that 6 Natomas has had as a founding member and continuing 7 participant in the Sacramento Water Forums, which I think 8 you are familiar with and has to be pointed to as a 9 considered success, and we believe that this agreement can 10 be done in the same spirit and have the same kind of 11 outcomes. 12 We know that you as a Board you can allocate supply, 13 but you can't allocate responsibility. And we believe this 14 agreement gives the parties an opportunity to treat each 15 other as brothers, rather than as enemies. 16 Following me, from the other end of the valley, Van 17 Tenney, the General Manager of Glenn-Colusa Irrigation 18 District. 19 MR. TENNEY: Mr. Chairman, Members of the Board, my 20 name is Van Tenney. I am General Manager of Glenn-Colusa 21 Irrigation District. 22 I am one of those guys to whom the responsibility for 23 implementing a lot of this stuff is going to fall. I wanted 24 you to hear -- you hear from Pete Hughes and Natomas. I 25 wanted you to hear from us as managers to get the sense of CAPITOL REPORTERS (916) 923-5447 59 1 how strongly we feel about integrated management, integrated 2 resource management and how this kind of program can be 3 implemented. 4 My own district, Glenn-Colusa Irrigation District is 5 just finishing two major projects, an $80,000,000 fish 6 screening project and a $20,000,000 refuge water supply 7 project. I will tell you that neither of those projects 8 have been all that painful. And as I look forward to this 9 new arena of integrated resource planning and 10 implementation, I think we can borrow from the experience we 11 have had with those two projects and realize that there are 12 a variety of objectives out there, both environmental as 13 well as export interests, as well as our own people's 14 interests that we can address and meet. I know the two 15 projects that we are just finishing, ten years ago in my 16 district never would have been attempted. 17 There is a new attitude, and I think you have seen 18 demonstrated by all the participants today a reflection of 19 the attitudes that we are ready to mount a different 20 approach, a new vision, and one in which we can move forward 21 with a different way, really, of doing business. Having 22 participated in a number of different processes over the 23 last six years that I have been in California, CalFed being 24 a major part of that, although even the earlier negotiations 25 under the Bay-Delta process were a learning experience. CAPITOL REPORTERS (916) 923-5447 60 1 When I first arrived, the Bureau of Reclamation was 2 engaged in what is called conservation criteria. And all of 3 those processes have really led to and created, I think, the 4 thinking that has brought about this vision for how we can 5 move forward with a better approach to managing water. I 6 know in my district if you look at the concept of integrated 7 management in its most simplistic terms, we have some 8 groundwater capability. We have certainly a significant 9 amount of surface water diversion. We recapture and recycle 10 water, and we are hopefully going to participate in new 11 surface diversion through the Sites Reservoir. 12 If you take all of those elements and you look at them 13 and examine how to optimize all of those resources, you 14 truly come out with a sum or a sum that is greater than -- 15 the whole that is greater than the sum of its parts, as the 16 saying so often goes. 17 That is kind of the spirit of what we believe can 18 happen from this integration program and looking at our 19 resources a little bit differently. It is a way to not look 20 at a zero sum gain in which we merely fight over how to 21 divide the pie, but look at ways to improve and increase 22 efficiency so that the pie is effectively enlarged. We at 23 Glenn-Colusa have high hopes. Personally I am glad that 24 David Guy has accepted the responsibility for managing 25 this. CAPITOL REPORTERS (916) 923-5447 61 1 Thank you for your time. If you have any questions. 2 A.C. BAGGETT: Thank you. 3 I don't have any more cards. I assume you know who is 4 following, David? 5 MR. COBURN: Good morning, Mr. Chairman, Members of the 6 Board. My name is John Coburn. I am General Manager of the 7 State Water Contractors. 8 State Water contractors represent 27 of the 29 public 9 agencies that have water supply contracts with the State of 10 California. The State Water Contractors are very interested 11 in proceeding with the agreement as outlined by the previous 12 speakers. We feel it is going to be a very positive 13 process, much more productive than getting into a protracted 14 regulatory hearing process and possibly subsequent legal 15 actions afterwards. We think this is a much better road to 16 go down. We have been actively involved in the 17 negotiations. We strongly support the implementation of the 18 agreement, and we would urge that the Board issue the stay 19 on future Phase 8 proceedings. 20 Any questions? 21 A.C. BAGGETT: Thank you. 22 MR. QUINN: Mr. Chairman, Members of the Board, my name 23 is Timothy Quinn. I am Deputy General Manager of the 24 Metropolitan Water District of Southern California. 25 On behalf of Metropolitan I have been heavily involved CAPITOL REPORTERS (916) 923-5447 62 1 in the development of this proposed agreement. As important 2 as it is, as unprecedented as it is, it is not really the 3 first time. I was also heavily involved in the development 4 of the San Joaquin River Agreement. And I think the success 5 of that latter agreement is maybe the best reason I can give 6 you for giving this a chance to succeed. 7 Today all of the Delta related objectives on the San 8 Joaquin River are being fully met. We are conducting a very 9 important 12-year experiment to gather more information. We 10 are doing all of this with the strong support of the local 11 water districts because we approached it through a 12 settlement approach. 13 The same prospects for success, I believe, are here on 14 the other end of the Central Valley. My Board of Directors 15 at its meeting earlier this week unanimously approved moving 16 forward with the settlement approach as opposed to an 17 adversarial approach through Phase 8. 18 I should emphasize, however, that they did so fully 19 cognizant of the fact that the status quo is unacceptable 20 from our perspective. We do not believe that the state and 21 federal projects should have the sole responsibility for 22 maintaining environmental objectives in the Bay-Delta. But 23 with that said, we believe this is a better way to get 24 substantial improvement relative to our current situation. 25 We'd like to try doing it through a cooperative path before CAPITOL REPORTERS (916) 923-5447 63 1 we move to the adversarial path. 2 I don't think this works without recognizing that 3 fundamentally what is going on here is the Board's process, 4 and the State Board has to accept ownership and some 5 management responsibility of it. We think that you have to 6 establish a process that monitors what is going on at the 7 negotiating table, provides for public input and ultimately 8 you're prepared to take the actions that would be required 9 to implement a settlement agreement that provides benefits 10 for the parties and for the environment. And we are hopeful 11 that you will do so. 12 Thank you. 13 MS. MOON: Mr. Chairman, Members of the Board, my name 14 is Laura King Moon. 15 I am a consultant with the State Water Contractors and 16 until recently also represented the San Luis and 17 Delta-Mendota Water Authority, which is also supporting this 18 agreement. You will hear from them as well. 19 I sat with Van Tenney for a number of years on the 20 CalFed Water Usage and Steering Committee, and I just wanted 21 to emphasize that I think that this basinwide management 22 plan that is a key part of this is very much in the spirit 23 of that aspect of CalFed. 24 The agreement does represent a very sincere desire and 25 attempt to meet all of the reasonable water needs within CAPITOL REPORTERS (916) 923-5447 64 1 both regions so that agriculture can continue in a 2 sustainable way in both Valleys. I believe it holds a lot 3 of promise. The key is, as a number of speakers have 4 emphasized, that it will grow the resource. It will do that 5 both by managing it more efficiently on a regional basis as 6 well as allowing for water to be captured during wet periods 7 through a combination of surface and groundwater capacity 8 increases as well as conjunctive use. 9 This agreement will provide incidental environmental 10 benefits as well. Obviously, it provides for continued 11 meeting of the standards and that is an important benefit. 12 Provides for a stable environment for meeting the standards 13 for a number of years, and that in and of itself is a very 14 valuable thing. Additionally, there will be incidental 15 water quality and temperature benefits to the environment 16 that I believe will go beyond what the standards call for 17 already. 18 This provides for a partnership that will make these 19 things happen that have been talked about in the CalFed 20 program and that everyone has agreed are needed, and I think 21 that this is something that will actually make it come into 22 reality. So we very much support it, the State Water 23 Contractors, and hope you will issue an order approving the 24 agreement. 25 Thank you. CAPITOL REPORTERS (916) 923-5447 65 1 A.C. BAGGETT: Allen Short. 2 MR. SHORT: Thank you, Mr. Chairman and Board 3 Members. 4 I do have a statement that has, I think, been 5 distributed to you and put on the table. What I would like 6 to do is take a minute to summarize. 7 First of all, four years ago we took the directive of 8 the past administration and the Board, that stakeholders 9 come to you with agreements on the complex issues. Mr. 10 Quinn has alluded to the San Joaquin River Agreement. And I 11 want to tell you that that has been very successful. We are 12 in the first year of its implementation, and we will be 13 bringing you a report on the success and the first year's 14 results soon. So the precedent nature for stakeholder 15 agreements and the Board taking appropriate action has been 16 set, and we certainly support that. 17 Secondly, we have been a part of the negotiations. We 18 have been able to monitor those negotiations and currently 19 as we see those, there is no direct or indirect impact to 20 the San Joaquin River. And as long as that continues to 21 occur, we will be very supportive of the process and will be 22 very supportive of agreements as they come forth. 23 As the Board knows, the devils in the details, so we 24 will continue to monitor the work plans as they come forth 25 and those agreements as they come forth. But as long as the CAPITOL REPORTERS (916) 923-5447 66 1 Board does not adopt any action which will provide a 2 negative impact to the San Joaquin River or obligations to 3 the San Joaquin River in terms of any type of requirement or 4 regulatory requirement until the end of the Vernalis 5 Adaptive Management Program, you will find us very 6 supportive, and you will find as a part of that process 7 looking for solutions much like we did with the San Joaquin 8 River Agreement. 9 Thank you for your consideration. 10 Any questions? 11 A.C. BAGGETT: Thank you. 12 Robert Maddow. 13 MR. MADDOW: Good morning, Mr. Chairman and Members of 14 the Board. I am Robert Maddow. I am appearing this morning 15 on behalf of the Contra Costa Water District. 16 I've submitted to the staff a written statement, a 17 brief statement, and we have made copies of it available 18 over on the side. We are going to serve all the parties by 19 mail. I do not intend to read it. I just have a couple of 20 comments. 21 Contra Costa rises in support of this agreement. Among 22 the people who were the planned speakers this morning, 23 Contra Costa is listed last, perhaps because uniquely we 24 could have been on either side of this agreement, if you 25 think of this agreement as really being between upstream CAPITOL REPORTERS (916) 923-5447 67 1 interests and export interests. We really have much in 2 common with the upstream interests. Some of the things that 3 David Guy actually alluded to in his opening remarks today 4 about the affect of protective statutes and that sort of 5 thing. We share, we believe, many of those rights in common 6 with the upstream interests. 7 We are grouped with what has been called the export 8 interest for the purpose of this agreement, although we 9 don't believe we are technically an exporter in the same 10 manner as the other export interests. We consider Contra 11 Costa to be an in-Delta water user and in-basin water user. 12 There are those in this room who might argue with some of 13 the ways in which we have described our role in this, but 14 the beauty of this agreement is it allows us to not have 15 those legal arguments now. Because what this does it to 16 provide for cooperative relationships among entities to try 17 and actually solve some of the real issues. We think this 18 works well as an adjunct to, a parallel with, the CalFed 19 process of which Contra Costa has been a strong supporter 20 from the beginning. 21 So as I say, I will reiterate we are a strong supporter 22 of this agreement. Like the others, urge you to adopt an 23 order which would allow it to be implemented. 24 You have heard earlier today in the comments by Mr. 25 Schulz and you have seen in the comments by the Department CAPITOL REPORTERS (916) 923-5447 68 1 of Water Resources there are some other outstanding issues. 2 One that was mentioned is a compliance location for a 3 standard that relates to the Contra Costa Canal. We believe 4 that there are some technical issues there that can be 5 worked out between the parties. It's an important issue to 6 each of us, and yet we share the Department of Water 7 Resources' view that this is an issue that we ought to be 8 able to work on from a technical perspective and try to find 9 a resolution without necessarily requiring an adversarial 10 hearing before this Board. 11 That is the extent of my comments this morning. I 12 would be happy to take any questions. 13 A.C. BAGGETT: Thank you. 14 MR. GUY: We skipped one. 15 MR. STEARNS: Morning, Mr. Chairman and Board Members. 16 I am Mike Stearns. 17 I am a farmer in the San Joaquin Valley, and I serve as 18 the chairman of the San Luis Delta-Mendota Water Authority. 19 I am here this morning in appreciation of the chance to 20 support this agreement. We have had a long concern about 21 the disproportionate impacts on our area, and we feel this 22 is truly the avenue to take to find the solution rather than 23 a protracted conflicted process through the hearings that is 24 likely going to create more conflict than cooperation. 25 As has been mentioned, we feel that the San Joaquin CAPITOL REPORTERS (916) 923-5447 69 1 Valley is experiencing real positive results from the VAMP 2 agreement, and as well in our own region the Grassland Basin 3 Drainage Program has been very successful in developing a 4 regional approach where we have actually mended some 5 longstanding problems amongst districts besides getting some 6 results that occurred much quicker than people have 7 expected. 8 Again, we very much appreciate and support this 9 agreement and approach and appreciate the opportunity to 10 comment. 11 A.C. BAGGETT: Thank you. 12 MR. GUY: That is it. 13 Thank you. 14 A.C. BAGGETT: With that, let's move to a few more 15 cards here. 16 Jim Chatigny, followed by Dante Nomellini. 17 MR. CHATIGNY: Good morning, Chairman Baggett and Mr. 18 Silva and Mr. Brown. 19 We heard earlier that some of the attorneys have long 20 tenures in the time spent here. Managers have some of that 21 staying power also. I can remember Racanelli when I first 22 came to work at the district, and then we went to Decision 23 1485. We survived 1630, a draft decision, and, of course, 24 you passed 1641 a few months ago. But it is the managers 25 that have to put all of these decisions into practice and CAPITOL REPORTERS (916) 923-5447 70 1 into work. And I applaud all the managers that are here 2 today that have survived and been able to meet the needs of 3 getting the water where the water should go. 4 The Nevada Irrigation District is not a member of NCWA. 5 Therefore, I need to make a few brief statements on behalf 6 of the district as well as some of the other supporting -- 7 those that are supporting the negotiations. While the 8 district is concerned regarding the preservation and 9 protection of its water rights and its use, it has been 10 actively involved in these efforts to eliminate the risk of 11 litigation over these water rights and to substituting a 12 constructive process for enhancing water supply to the 13 benefit of all consumers in the state as well as well-being 14 of the Delta. 15 The district supports the agreement presented to you 16 this morning, including the stay of these proceedings. We 17 intend to stay involved with the discussions and the 18 development of the milestone agreements. Because as those 19 agreements are developed and analyzed, they will determine 20 how the district works towards achieving some of those 21 goals. Your Board should recognize that fights, with 22 quotes, over existing supplies is a zero sum gain. It will 23 produce not only ongoing disputes, litigation, political and 24 public turmoil, but it does not produce one drop of 25 additional water supplies, which are crucial to the CAPITOL REPORTERS (916) 923-5447 71 1 protection of the Bay-Delta as well as the preservation of 2 the economy of the State of California. 3 We think this agreement and process and the potential 4 agreements which are contemplated is a far better step in 5 the better direction and that it certainly deserves your 6 support. We look to your Board as well as other agencies to 7 support these ongoing efforts under the agreement so that 8 support can be gained and cooperation from all federal, 9 state and environmental agencies that will be certainly 10 involved in what is going on. 11 On behalf of my Board of Directors we urge your 12 favorable consideration to this agreement and understand 13 that our support will be ongoing in this endeavor. 14 Any questions, I would be happy to answer. 15 Thank you. 16 A.C. BAGGETT: Thank you. 17 Dante John Nomellini followed by Matt Campbell. 18 MR. NOMELLINI: Mr. Chairman, Members of the Board, I 19 am Dante John Nomellini. 20 I am here on behalf of Central Delta Water Agency, and 21 I am happy to know that Lester Snow was talking about Cliff 22 Schulz and not me, about having generation after generation 23 of attorneys involved in this problem. 24 First of all, we have no objection to a deferral of the 25 commencement of Phase 8 of the hearings. We have expressed CAPITOL REPORTERS (916) 923-5447 72 1 to you before what we thought were the various items that 2 needed to be sorted out before we could have a meaningful 3 adjudicatory hearing on allocation of the burden for the 4 1995 Water Quality Control Plan flow requirements. Some of 5 those are in litigation now. Hopefully they will help clear 6 the way. Maybe with new atmosphere they could be negotiated 7 to solution. I don't know. 8 We also view the existing environmental document to be 9 inadequate, and we have to challenge it in court. So, we 10 think a start of a Phase 8 without additional environmental 11 documentation is also compounding of the error. So, we will 12 not stand in the way of your effort to either delay making a 13 decision when to start the hearing or otherwise. 14 We would be very concerned about the nature of the 15 order that you enter. If you, in fact, intend to approve 16 this agreement, and I don't think the agreement itself asks 17 you to approve the agreement, but I heard speakers talk 18 about asking you to approve it. We would strongly object to 19 your approval of the agreement. That is a little different 20 than what I think what they have actually requested of you, 21 and, of course, the devils and detail, we would have to see 22 the technical aspects of your proposed order. 23 We are not against and never have been, although we 24 tend to be on the short end of the stick and so we litigate 25 on these issues. Just as a matter of history, way back when CAPITOL REPORTERS (916) 923-5447 73 1 we spent a lot of time trying to negotiate our way through 2 these solutions, and we are not unwilling to work at that 3 again. But what we see are critical issues and differences 4 over commitment to the watershed protection statute 5 principles and the Delta Protection Act and a clear, what we 6 think is legal, prerequisite for the projects, that the 7 needs in the north, I am going to talk about the areas of 8 origin, come first over exports. 9 We are willing and continue to be active in trying to 10 get solutions so that all people in California, all water 11 users, have a water supply. In our opinion, it is not going 12 to come out of the Sacramento and San Joaquin watersheds. 13 There is just too great of a demand. And the trick is to 14 try to preserve all the areas of the state while getting 15 adequate water supplies, and we are actively pursuing 16 efforts to fund aggressively and get political commitment to 17 self-reliance in the importing areas, including active 18 desalting of brackish groundwater and get structured for 19 desalting ocean waters for the future development of the 20 southern portion and those regions that are near saltwater 21 sources, even in Northern California. 22 Putting that aside, let's talk about some specifics. 23 The agreement, the draft agreement, we could not 24 endorse and we would fight strongly against your endorsement 25 of it in that it does not make clear that the needs of the CAPITOL REPORTERS (916) 923-5447 74 1 areas of origin have a priority. Now an extended effort to 2 make it very neutral perhaps would avoid the need of our 3 litigating the state and federal participation in the 4 agreement. The intent is not clear to me. If I heard Mark 5 Atlas correctly, and I hope I heard him wrong, he said it 6 was clear that there was no priority recognized for the 7 north. We know that they are not going to develop enough 8 water out of this agreement to take care of the needs in the 9 north and the needs in the south. They are just too short 10 of water. 11 So, whether or not that can be crafted in a way that we 12 can avoid a challenge, I don't know. As it presently stands 13 with the testimony that comes in, I think we probably have 14 to challenge and, therefore, I don't know what that does to 15 your decision making. Again, we have no objection, you 16 know, to deferral of the start of the hearings on Phase 8. 17 There is a recognition in here, in the agreement, that 18 disturbs us, and it talks about the substitution of 19 groundwater for surface water. If that is where these 20 people are headed, and I kind of gather from some of the 21 testimony that they are clearly not, that means this is not 22 real water. We run into the problem where we end up 23 exporting water that is needed to sustain the watersheds, 24 and we end up with just another problem of exportation of 25 more water at the expense of either the environment or the CAPITOL REPORTERS (916) 923-5447 75 1 north compounding rather than solving the problem. 2 Now, it is not often that we share any views with Allen 3 Short. However, to the extent that there is care here not 4 to allow this agreement to aggravate problems on the San 5 Joaquin River, I think that would be an element that would 6 lead us to a position of neutrality. We have serious 7 problems with the existing export pumping. And although 8 there are some efforts being made, they are kind of Band-Aid 9 approaches. We are lowering pumps. We are doing some 10 dredging to connect the pump sump to the little thread of 11 water that exists out in the waterway. There are serious 12 problems with the level of pumping that is going on. If, in 13 fact, we develop more supplies that are to be exported and 14 we are going to increase the pumping when we have low water 15 levels in the Delta, that is a bad thing, and that would be 16 a bad result out of this agreement. 17 By the same token, to the extent there is more water 18 delivery to the west side of the San Joaquin Valley, there 19 is a potential for aggravating the problems on the San 20 Joaquin River. Now fortunately we have enjoyed some fairly 21 good water years. And the crunch on what happens when the 22 reservoirs are out of water and we want to meet the 23 Vernalis salinity standard has not occurred. And that is 24 the problem that we have with the San Joaquin River 25 Agreement and the allocation of a lot of stored water to CAPITOL REPORTERS (916) 923-5447 76 1 meeting the Vernalis salinity -- I mean, the flow objectives 2 for fish in the spring, because we deplete the reservoirs 3 that we are going to need for water quality to take care of 4 an experiment for fish that we think should be taken care of 5 with poorer quality water. 6 In the testimony you heard about a desire to change the 7 requirements to meet certain standards, the salinity 8 standard terminus for interior Delta water quality. The 9 triennial review of the 1995 Water Quality Control Plan is 10 going to have its second anniversary with no action taken by 11 your Board in 2001. Those elements that, in fact, alter the 12 1995 Water Quality Control Plan in a de fact manner by not 13 having any enforcement, to me need to be addressed in a 14 revisit of the 1995 Water Quality Control Plan. I think 15 you are supposed to do it -- triennial used to mean ever 16 three years. 17 We have concern over the Vernalis fish flow requirement 18 as whether or not it is justified. We think the experiment 19 could be conducted within the framework of existing water 20 availability rather than depleting the reservoirs. You 21 could expect us to be giving you some input with regard to 22 how you handle it. 23 Now, one last comment and that is I think the Board 24 ought to be very cautious about allowing its staff to 25 participate in nonpublic meetings or negotiations involving CAPITOL REPORTERS (916) 923-5447 77 1 these agreements. I think it is essential to protection of 2 the due process that should take place before this Board 3 that the staff members who participate in the adjudicatory 4 process and in making recommendations to you on the decision 5 be involved with those of us who are parties only in open 6 forums. I would ask -- I know there is a sensitivity on it. 7 We have a number of pieces of litigation directed at it. 8 The Board has kindly asked for input on the subject, and I 9 expect to give you more, and I view that as positive. I 10 know some of the comments here talked about the Board's 11 participation in the process. 12 So, I think if you could find anything in it, I think 13 there is some positive stuff here that shouldn't be allowed 14 to fall to the wayside. I think we have to be careful how 15 we do. 16 Thank you. I would be happy to answer questions. 17 A.C. BAGGETT: Thank you. 18 Matt Campbell. 19 MR. CAMPBELL: Deputy Attorney General Matt Campbell on 20 behalf of the State of California, Department of Fish and 21 Game. Good morning, Members of the Board. 22 The Department of Fish and Game submits the following 23 comments in response to the Board's Notice of Public 24 Workshop. The Department of Fish and Game submits these 25 comments in the exercise of its public trust and endangered CAPITOL REPORTERS (916) 923-5447 78 1 and threatened species jurisdiction and expertise as 2 designated by the Legislature and confirmed by the courts. 3 DFG's comments address the schedule of resumption of 4 Phase 8 of the Bay-Delta water hearing. 5 The first topic I would like to address is the 6 integration of D-1641 and Phase 8. And the Department of 7 Fish and Game believes an important component of that 8 integration would be for the Board to update its existing 9 model runs. D-1641 establishes the responsibilities of 10 water rights holders in the following watersheds: San 11 Joaquin River upstream of Vernalis through the year 2011 12 unless the San Joaquin River Agreement is terminated 13 earlier; Mokelumne River; Putah Creek; Cache Creek; and the 14 North Delta Water Agency. 15 The analytical model runs in the environmental impact 16 record for implementation of the 1995 Bay-Delta Water 17 Quality Control Plan are no longer current for purposes of 18 decision making in Phase 8. DFG believes the outcome of 19 implementing the alternatives considered in Phase 8 may have 20 changed significantly as a result of the Board's actions in 21 D-1641. Consequently, the Department of Fish and Game 22 requests that the Board conduct new model runs that include 23 actions taken in D-1641. Updated model runs would allow the 24 Board and the parties to see how those actions in 25 combination with the alternatives to be considered in Phase CAPITOL REPORTERS (916) 923-5447 79 1 8 may affect the rest of the Bay-Delta watershed. 2 The Department of Fish and Game and other parties 3 should be given an adequate opportunity to review the 4 updated model runs prior to submitting testimony for Phase 5 8. DFG suggests that once the new D-1641 model runs are 6 completed that the Board allow at least 60 days for the 7 Department of Fish and Game and other parties to review the 8 model runs, to review the model output and prepare their 9 exhibits and briefs for Phase 8. 10 Second topic is the relation between schedule for Phase 11 8 and any proposed settlements which we may have heard of 12 today. As the state trustee agency for public trust 13 resources, Department of Fish and Game requests the 14 opportunity to review any proposed settlements in advance of 15 the Phase 8 hearing. DFG believes that the Board and the 16 parties will also benefit from review of any proposed 17 settlements prior to issuance of a hearing notice and the 18 development of exhibits. 19 Fish and Game requests 60 days to review any proposed 20 settlements prior to any deadlines for submission of 21 exhibits or briefs for Phase 8. Based on those two 22 scheduling components, the Department of Fish and Game 23 recommends that in the event the Board determines to go 24 ahead with a Phase 8, that it take the following actions and 25 adopt the following elements within its schedule: CAPITOL REPORTERS (916) 923-5447 80 1 First, the Board should issue a new Phase 8 hearing 2 notice only after completion of the following: Completing 3 and circulating to the parties updated model runs of Phase 8 4 alternatives based on the actions taken on D-1641. 5 Second, setting and reaching a deadline for any 6 proposed settlements in Phase 8. Once again, assuming that 7 the Board decides to go forward with the Phase 8 hearing, 8 some further scheduling refinements that Department of Fish 9 and Game recommends based on the importance, complexity and 10 size of this proceeding, as we have seen over the last 11 couple of years. Department of Fish and Game recommends 12 that a new hearing notice, any new hearing notice for Phase 13 8, provide at least 60 days for preparation of and 14 submission of opening briefs and exhibits and another 30 15 days for review of the exhibits submitted by the other 16 parties prior to the commencement of the hearing. 17 Department of Fish and Game appreciates the opportunity 18 to present these comments. 19 A.C. BAGGETT: Do you have any comments on the proposed 20 agreement? Does the Department approve a stay? You have 21 had it a few days. 22 MR. CAMPBELL: A few days is the key phrase. 23 A.C. BAGGETT: You don't have any comments? 24 MR. CAMPBELL: No, not at this time. The Department of 25 Fish and Game is evaluating it. It really did just receive CAPITOL REPORTERS (916) 923-5447 81 1 it. 2 A.C. BAGGETT: Thank you. 3 MR. CAMPBELL: Thank you. 4 A.C. BAGGETT: We have Janet Goldsmith, if necessary. 5 MS. GOLDSMITH: It is not certainly speaking necessary, 6 but I did want to rise in support of the agreement. 7 I am Janet Goldsmith. I am here representing Placer 8 County Water Agency. 9 The agency is not a member of the Northern California 10 Water Association, but it has a good history and practice of 11 being involved in integrated solutions to water resource 12 problems in its own area. It is involved in the American 13 River Watershed Management Program and it has also been 14 involved in American River Water Forum, which is an 15 integrated management of the American River water-related 16 issues. 17 Despite the fact that we have not been involved in the 18 Northern California Water Association, the agency has been 19 pursuing its own collaborative approach to water issues 20 related to the Bay-Delta hearings. We have nearly completed 21 the guts of a draft of a water purchase agreement in dry 22 years between the agency and the water exporters. And one 23 of the things that I am very glad to support in the proposed 24 agreement is the postponement, the stay, and eventual 25 dismissal of the Phase 8 hearings for the reason that we CAPITOL REPORTERS (916) 923-5447 82 1 have not been able to complete and would not be able to 2 complete that agreement before the Phase 8 hearings could 3 occur, if they were to occur this year. 4 Among the things that still need to be worked out is 5 refill obligations resulting from the sale; and also it is 6 our understanding that California Public Utilities 7 Commission would need to approve the agreement before it 8 became final, and I understand they are fairly busy on other 9 matters at the moment. 10 In sum, we like to say that we certainly support the 11 agreement, and even though we are not part of it, as an 12 agency we intend to go forward and put our efforts toward a 13 solution. 14 Thank you very much. 15 A.C. BAGGETT: Frederick Bold. 16 MR. BOLD: Mr. Chairman, gentlemen of the Board, I am 17 Frederick Bold, attorney representing the City of Pittsburg, 18 City of Antioch, and the Diablo Water District. 19 We are here before the Board at the Bay-Delta hearings 20 for special and a very limited purpose; that is, to 21 implement our rights under the Delta Protection Act to 22 purchase our requirements of CVP water. Now this right is 23 prior to any exportation of water from the Delta. But this 24 issue, our issue, doesn't fit in to any of the key hearing 25 issues that have been specified for Phase 8 or, for that CAPITOL REPORTERS (916) 923-5447 83 1 matter, for Phases 1 through 7. 2 We are concerned, frankly, that we may be overlooked. 3 So we urge you to give special notice of the date on which 4 we can present our evidence, and it shouldn't take more than 5 an hour and a half. We first appeared and announced our 6 purpose, our issue, five years ago. It was at a workshop on 7 March the 12th, 1996, and we pointed out then that the 8 Bay-Delta Accord requires the Board to comply with, and I 9 quote from the Accord, the water rights priorities system 10 and the statutory protection for the areas of origin. 11 Now, when we received the notice of the Delta hearings, 12 which listed the eight phases and key issues of each, we 13 couldn't figure out under which we belong. So we consulted 14 the staff. And they said, "Well, you belong in Phase 2." 15 But at the first day of the hearing our assignment was 16 changed to Phase 8. Now the notice of hearing in Phase 8 17 indicates 26 or more days of hearing, and we still have no 18 idea of when we will be permitted to present our evidence. 19 With regard to the subjects of this workshop it is 20 immaterial when the hearings are resumed, and we are not 21 involved in the negotiations between the export and upstream 22 interests of the contract that is before you. We simply 23 request a rather gentlemanly urgently request that you set a 24 particular date on which we can present our evidence and 25 give notice of it. CAPITOL REPORTERS (916) 923-5447 84 1 Thank you for hearing me. 2 A.C. BAGGETT: Thank you. 3 Ronald Van Blarcom. 4 MR. VAN BLARCOM: Mr. Chairman, Members of the Board, 5 my name is Ron Van Blarcom. I am with the law firm of Van 6 Blarcom, Leibold, McClendon & Mann in Orange, California. 7 I represent the Municipal Water District of Orange 8 County. We filed a letter, and I will simply summarize and 9 supplement that letter. 10 The Municipal Water District of Orange County is known 11 by the acronym MWDOC, but because the MWD is already taken 12 down in our area, we call ourselves MODOC, and we don't need 13 to be confused with Modoc County. So we have a little bit 14 of a personality problem. But we are here. 15 I want to let you know that. 16 MEMBER BROWN: Know the organization well. 17 MR. VAN BLARCOM: I wanted to let you know that we have 18 recently consolidated Municipal Water District of Orange 19 County and the Coastal Municipal Water District, so we are 20 now the second largest member agency of the Metropolitan 21 Water District. We are second in assessed value to Los 22 Angeles. We are second to be measured by purchased water to 23 San Diego County Water. We provide a reliable supply of 24 high quality imported water to over 2,000,000 people, 25 basically serve all of Orange County, except for the cities CAPITOL REPORTERS (916) 923-5447 85 1 of Anaheim, Santa Ana, Fullerton, which are original member 2 cities to Metropolitan. 3 I also want to thank you for taking the time to hear 4 all the comments, particularly to receive our comments from 5 Orange County. I would like to address the two questions 6 that were identified for the workshop. 7 First, you asked about the negotiations. We have not 8 been involved in the negotiations between the export and 9 upstream water users. We have been monitoring the progress 10 of those negotiations through our involvement with 11 Metropolitan. And although we don't have an official 12 position on it, we do believe that every opportunity should 13 be provided to facilitate negotiating solutions. 14 If the settlement is not reached, however, we believe 15 that it be necessary to expand the data available in these 16 Phase 8 proceedings to allow for consideration of 17 implementation of the Public Trust Doctrine to all uses of 18 water in the Central Valley which deplete the Delta flows. 19 You've asked about the schedule, and we will support 20 postponement of the hearing until that September or November 21 2001 off-ramp date. I think in our letter we picked an 22 August 1st. We wouldn't quibble with a couple of months' 23 difference to make that settlement work. And with regards 24 to the briefs, the notice from last year gave about a 25 three-week notice. We would be happy with that same kind of CAPITOL REPORTERS (916) 923-5447 86 1 notice and schedule before a hearing date is set. 2 We do have some additional concerns that I would like 3 to address. Last year's notice did suggest that you needed 4 to consider whether or not to supplement the environmental 5 impact report that previously certified for implementation 6 of the 1995 Bay-Delta Water Quality Control Plan. MODOC 7 does believe the EIR will need to be supplemented in 8 connection with Phase 8 hearings, should they continue. The 9 environmental requirements that were incorporated into that 10 plan were based on data collected really only up till about 11 1990. We now have ten more years of data to be examined to 12 see if those underlying requirements should be revised. 13 If the hearings go forward, we suggest perhaps setting 14 another workshop prior to resuming the hearings so that your 15 Board could receive public testimony just on what the scope 16 of the supplemental review would be. 17 Orange County -- a point that I want to make with this 18 Board, Orange County has long understood that it has limited 19 local water supplies. We have significantly invested in 20 facilities necessary to protect, expand and manage those 21 local water supplies. We have done more than most. Invest 22 in reclamation, conservation programs to stretch our 23 supplies, and some have even said that we pursued projects 24 before they were economically feasible. Even so, our local 25 supplies are not enough. The visitors, millions of visitors CAPITOL REPORTERS (916) 923-5447 87 1 that come to Orange County together with the business people 2 that work there and more importantly the families that live 3 there, depend on imported supplies, and we've invested 4 significantly in a reliable system to bring imported water 5 supplies. 6 We understand that your Board is duty bound to adopt a 7 solution of comprehensive benefits for the environment and 8 for Bay-Delta water users, and we are ready to support that 9 solution. However, we want the Board to understand that our 10 water customers demand assurance that the solution must 11 recognize that all water users are responsible for 12 protection and preservation of public trust values, and it 13 must ensure that the burdens of providing water for 14 environmental protection and avoiding waste and unreasonable 15 use of water are fairly allocated among all water users 16 throughout California. 17 Your Board has the duty to protect the public interest 18 in considering the settlement proposals or imposing a ruling 19 or an order after hearing. You have jurisdiction to examine 20 waste and unreasonable use on a case-by-case basis. If 21 necessary, you have the authority and perhaps even the duty 22 to reexamine old water rights. Municipal Water District of 23 Orange County is prepared to do whatever is necessary to 24 keep these principles before you during your deliberations 25 of these proceedings. CAPITOL REPORTERS (916) 923-5447 88 1 And I thank you again for permitting us an opportunity 2 to speak. 3 A.C. BAGGETT: Thank you. 4 John Herrick. 5 MR. HERRICK: Thank you, Mr. Chairman, Board Members. 6 John Herrick for South Delta Water Agency. 7 Mr. Nomellini obviously covered a lot of things that 8 South Delta joins in. We certainly believe it is laudable 9 that the parties can get together and try to work out 10 solutions. But there are more important underlying issues 11 that have to be taken into consideration. 12 The goal of making the pie bigger is good, but we are 13 not here to argue how we divide up a future additional 14 supply. There is limited supply now, and those are the 15 issues that have to be dealt with. How the Bureau and the 16 state are going to voluntarily meet these obligations or 17 objectives in the plan is very important, and just saying 18 that we are going to do it doesn't answer the question of 19 how other people's rights may be impacted. 20 You will notice the agreement intends to increase the 21 water available for upstream users and exports and then 22 intends to avoid unmitigated impacts to Delta water 23 quality. Well, if everybody were involved in the 24 discussion, it would have said let's intend to identify how 25 much water is needed to supply area of origin or Delta CAPITOL REPORTERS (916) 923-5447 89 1 Protection Act needs, and then see what is left over or what 2 we can develop to improve that. The agreement doesn't say 3 that. 4 We learned from the CalFed process that improvements 5 for Delta water quality mean improvements for export water 6 quality. Doesn't mean improvements for southern or central 7 Delta water quality, which would help meet the interior 8 Delta standards. It would be more appropriate for us to 9 embark upon a plan which would allow us to meet the 10 standards, not to get a promise to meet them. We know from 11 the last phase that the modeling indicates the operations 12 contemplated will not result in water quality compliance in 13 all year types. We have disagreement on whether the 14 violations will be exacerbated or not, but we know they are 15 not going to be met. So we shouldn't embark upon further 16 promises to meet objectives of the plan unless we are 17 determining how we are going to do that. Then, of course, 18 the environmental review as to what the effects of that may 19 be. 20 I think it is important to note, as Mr. Nomellini said, 21 whether or not you agree or add to what Mr. Nomellini said, 22 whether or not you agree that the Bureau and DWR have 23 responsibility to meet certain objectives anyway, it should 24 be determined whether or not they need to mitigate certain 25 things before other people are considered responsible. That CAPITOL REPORTERS (916) 923-5447 90 1 is a big difference. Sharing in the burden by other parties 2 is only necessary once the people who have caused a problem 3 are caused to create that. 4 Why am I complaining about this? Well, if we continue 5 on, if we just have an extended or delayed Phase 8, we will 6 continue on with something that just happened recently. By 7 not determining what Delta protection or area of origin 8 rights are, the system can be operated to the detriment of 9 the small guys. And the small guys are my clients. 10 Under D-1641, joint point operations would allow the 11 Bureau to purchase water and export it, not at its pumps if 12 it was pumping at full capacity, which it tries to do, but 13 it could use the state pumps. Well, a month and a half ago 14 -- excuse me. 15 If they do that, then there is a response plan that 16 puts conditions on how that might occur. A month and a half 17 ago, rather than buy water an upstream diverter was paid to 18 get a temporary permit change so that their point of 19 diversion was the state pumps. So Bureau didn't buy it. 20 So the Bureau is not using the state pumps, the upstream 21 diverter is. So the place of use was added, 400 miles net 22 downstream. That use of state pumps to accomplish Bureau 23 purposes was not bound by the response plan for joint point 24 pumping, which puts conditions on it. 25 What happened was during that time parts of Middle CAPITOL REPORTERS (916) 923-5447 91 1 River and North Canal were dry, and people couldn't 2 irrigate, although people don't understand that there is 3 irrigation in the dead of winter. There is. So we had 4 people who could not pump in the Delta where in order to 5 provide additional water for refuges. That accomplishes the 6 goals of fish and wildlife, but ignores Delta protection and 7 area of origin rights, there is harm. So if you want to 8 embark upon a plan that may continue to do that, then this 9 sort of agreement will do it. Mind you, everybody is not in 10 this agreement. 11 It is, as I said in the beginning -- I will finish here 12 real quickly. It is laudable to try to figure out how to 13 get more water, but I think it is self evident, generally 14 speaking, that conservation, conjunctive use, although they 15 can help and they might produce some amount of yield, they 16 don't produce a lot of new water. That is what troubles us 17 about this plan when it refers to groundwater substitution. 18 We know that there is future growth in the north, and we 19 know that the north will need that water. Understand the 20 Delta needs some. 21 To agree that we will work with parties to develop 22 additional supplies for both north and exports is fine. But 23 what happens in the interim? When you have an agreement 24 that says we are going to help to increase exports or firm 25 up the supply for exports, then you say and we will consider CAPITOL REPORTERS (916) 923-5447 92 1 groundwater substitution, it looks like in the short term, 2 besides anything else that might happen, somebody is going 3 to be paying somebody to pump their groundwater so that 4 there is available supplies to export. That creates a 5 problem when it is not a new supply. 6 There is a lot of argument and debate, you know, which 7 groundwater basin is troubled or not. But California relies 8 on an overdraft of its groundwater to get through droughts. 9 And if we have something that doesn't improve that, but 10 encourages it, a couple of droughts from now everything is 11 going to come crashing down, not just the Delta. 12 That is what -- that is how we look at it. Not trying 13 to be the few parties that keep throwing stones, but these 14 are serious questions to us, certainly because our member 15 agencies, our member growers are very much affected. 16 Thank you very much. Appreciate it. 17 MEMBER BROWN: John, you bring up an interesting 18 point. The conjunctive use program, as I understand it, 19 will pull a basin down at the appropriate time, during times 20 of need, to the extent that the average or plentiful 21 rainfall can come back in and recharge the basin. As 22 opposed to keeping a basin full all the time or stagnant, at 23 a stagnant level, such that there is no increase in yield. 24 If you look at pulling the basin down a reasonable 25 calculated amount, that can be recharged annually, that is CAPITOL REPORTERS (916) 923-5447 93 1 an increment of yield. 2 MR. HERRICK: It can be. 3 MEMBER BROWN: Yes. Well, it is. The Orange County 4 Water District does that very effectively in Orange County 5 and have done so for years. I would suggest that the 6 proponents are suggesting that kind of conjunctive use. 7 That is truly new water as opposed to your concern which 8 could be the mining of groundwater basin which is a concern 9 to all of us. 10 MR. HERRICK: I appreciate that, and it makes a 11 difference if you are doing this at the far end of the 12 system or at the top of the system. And, again, I admit, I 13 agree that you can do certain things to increase yield 14 somewhat. But when you have a program that changes the 15 operation to draw down a reservoir more, normally it also 16 involves the users of the water supplied from that thing 17 trapping their return flows, reusing their water, trying to 18 apply less water. That has a result on the flow in the 19 stream and not only for the Delta uses but for fish, too. 20 MEMBER BROWN: Different issue. 21 MR. HERRICK: Yes. But it is normally part of a 22 conjunctive use program. Then again, this is a very broad 23 description here. But it depends upon what's still flowing 24 five miles downstream. 25 MEMBER BROWN: Your point -- I think your point is CAPITOL REPORTERS (916) 923-5447 94 1 well, is that you will be keeping an eye on that and I am 2 sure others will, too. That is a good suggestion. 3 Thank you. 4 MR. HERRICK: Thank you. 5 A.C. BAGGETT: Thank you. 6 We have Karna Harrigfeld, if necessary. 7 MS. HARRIGFELD: Good morning, Chairman, Members of 8 the Board. My name is Karna Harrigfeld. 9 I am representing Stockton East Water District today. 10 We submitted written comments, and I am not going to 11 summarize. I just want to make one brief statement 12 regarding the proposed settlement agreement. 13 From an initial review of the settlement agreement, it 14 was unclear as to the intent or at least from our 15 preliminary review, it was unclear as to whether or not it 16 would be covering the Calaveras and Cosumnes River. What we 17 heard today is that it is crystal clear that it is the 18 intent of all the parties that the Department of Water 19 Resources and the Bureau of Reclamation will meet the flow 20 objectives as they pertain to the Calaveras. 21 So any order that the State Board adopts, we 22 respectfully request that you would dismiss all of Phase 8 23 participants, including the Calaveras River. 24 Thank you. That is all we have. 25 A.C. BAGGETT: Thank you. CAPITOL REPORTERS (916) 923-5447 95 1 Michael Jackson. 2 MR. JACKSON: My name is Michael Jackson. I am here 3 today representing the Regional Council of Rural Counties, 4 which has been active in the first seven phases of the water 5 rights hearing. 6 We have appeared. Some of our members are, for 7 instance, Plumas County Flood Control, who I also represent, 8 is the smallest of the state water contractors, not a member 9 of the water contractors organization because their interest 10 and ours are very different. 11 The Regional Council of Rural Counties basically has 12 involved itself in water issues because they determined the 13 future of the 28 counties, all but one of which are upstream 14 of the Delta. We arise today to indicate agreement with the 15 resolution section of the Phase 8 issues proposed by NCWA, 16 the export users and the federal and state government. 17 We support what they are requesting because of 3(a), 18 3(c) and 3(d) on Page 6, which we believe is the responsible 19 application of existing California law. The moment that 20 those three things break down, we will move to opposition of 21 the resolution on Phase 8. But since they are here, we 22 think that it is a valid opportunity to allow folks to 23 attempt to negotiate agreements that might solve other 24 people's problems by negotiation rather than litigation. 25 We also acknowledge that there are already enough CAPITOL REPORTERS (916) 923-5447 96 1 lawsuits to establish the legality of almost everything 2 that has happened. We are relying on Plumas County Flood 3 Control's role in the Monterey Agreement lawsuits, which 4 will continue. We also are relying on the existing lawsuits 5 in regard to the CalFed ROD and the lawsuit on D-1641 which 6 we are not a party to. 7 That said, we believe that the agreement, while a good 8 start, is a delicate little thing that needs to be flushed 9 out so we can all figure out exactly what our role will be. 10 The first thing that seems to me to be important here is 11 that in dealing again with the State Board Phase 8 proposed 12 settlement, the timelines are way too short and there is too 13 few people involved in the planning of the work product. I 14 would suggest -- I heard from the proponents and take them 15 at their word that what they are looking for is a broad 16 public process, one which should include everyone who showed 17 enough interest in Phase 8 to be a party to Phase 8. 18 And so, I would expect that that would be one of the 19 requirements of the Board at the time that this document or 20 this proposal is accepted. 21 I like the agreement in concept because this is the 22 State Water Resources Control Board taking responsibility 23 for the agreement and the decisions on California's water 24 problems. I believe that the State Water Resources Control 25 Board is the appropriate legal authority, and I believe that CAPITOL REPORTERS (916) 923-5447 97 1 much of the problem has been caused by the deviation to 2 something as abstract and completely unrecognized in law as 3 CalFed. So I believe that this is for the first time the 4 beginnings of a process that might work. 5 Now addressing myself to that process. Basically the 6 Legislature gets closer every day to saying that if you do 7 any economic activity you have to have a firm yield of 8 water. Our counties are continually being told that you 9 cannot develop without firm water supplies. The 27 counties 10 that are upstream of the Delta have submitted -- we didn't 11 get to Phase 8 so we didn't get to submit our evidence. But 12 at some point earlier before we divided the baby into the 13 first seven phases, we submitted to the State Board for the 14 record in this case the estimate of our general plans above 15 the Delta for what we would need in terms of additional 16 water supplies for 2030. We are required to do that by 17 state planning law. 18 So each county has developed their expected water use 19 as required by the government code. That amount is 20 approximately is approximately 7,000,000 acre-feet. One of 21 the problems that we have had with the CalFed process and, 22 frankly, this process until we got here is that there is no 23 recognition that that 7,000,000 acre-feet will take 24 precedence over export use. 25 Now that 7,000,000 acre-feet is dependent in many CAPITOL REPORTERS (916) 923-5447 98 1 cases, since most of our urban areas now presently use 2 groundwater, on groundwater and its relationship to surface 3 water. We, too, are very interested in the question of 4 groundwater substitution. Because after the Tehema v. 5 Baldwin case, it has become clear that we do have the 6 authority under the police power granted to the counties to 7 take care of public health, safety and welfare, all of which 8 are directly impacted by water. 9 And so, we are very interested in starting at the 10 start, which is everybody put on the table what it is they 11 are going to need. So it seems to us that the first key 12 part of the agreement is correctly laid out in terms of 13 quantifying water demands and supplies. We will transmit 14 the 7,000,000 acre-foot compilation of the county's general 15 plans to whatever group you decide. I guess it is David who 16 is going to handle this problem. 17 Now much of that will be duplicative with the 18 irrigation districts' request. For instance, 1,000,000 19 acre-feet of the 7,000,000 acre-feet comes from Glenn County 20 which I presume is what will be negotiated by Tehama-Colusa 21 Canal Authority and Glenn-Colusa Irrigation District. We 22 believe these needs are real. We believe they are 23 legitimate and we believe they should be filled. 24 However, you must understand that the whole design of 25 the state and federal projects was to use surplus water CAPITOL REPORTERS (916) 923-5447 99 1 until the time in which it was no longer surplus. So, to 2 those of us upstream, we have begun to the look at the 3 problems from the Southern California perspective. In doing 4 so we have become encouraged with the continued savings that 5 can take place on demand side. To us this is incredibly 6 necessary, particularly as the environmental document for 7 Phase 1 through 7 indicates that pumping water as a solution 8 long distances is a net energy loser. 9 Very few people in California understand that the total 10 energy production of the Central Valley Project and the 11 State Water Project is wiped out, and there is four -- 12 excuse me, I am not good with energy numbers. But there is 13 a substantial percentage of energy required by the pumping 14 system beyond what the Central Valley Project and the State 15 Water Project produce. So exporting more water causes an 16 energy crisis. If that is going to be our solution, we may 17 never ever catch up, if constantly we are going to be 18 sending more water long distances. 19 So, at our RCRC we have begun to look at the fact that 20 in quantifying water demands and supplies our future water 21 supply in Northern California can be thought of as existing 22 on the Colorado River and in groundwater and proper water 23 management in Southern California. It took us a long time 24 to understand why the Metropolitan and others were so 25 interested in Northern California water, because it's not in CAPITOL REPORTERS (916) 923-5447 100 1 their geographical area. Well, it turns out they were just 2 smarter and add more sophisticated than we were, and that 3 our future growth for this 7,000,000 acre-feet and the 4 future of our economy is dependent on us becoming more 5 helpful and more knowledgeable about what is happening with 6 water on the Colorado River and in the urban areas of 7 Southern California. 8 Consequently, we would suggest that the quantifying 9 water demands and supplies not only be those for upstream 10 areas, but, for want of a better word, downstream areas as 11 well, so that we can take a look at how we in the long run 12 California is going to be able to put the next 15,000,000 13 people into this system. We would -- we will -- we 14 understand that in six months, understand from listening 15 today, we will be back to see whether or not you accept the 16 basinwide management plan. We will look at that basinwide 17 management plan and judge it on one criteria. And that 18 criteria will be whether or not it meets our needs for 19 additional water by 2030. 20 Thank you. 21 A.C. BAGGETT: Thank you, Michael. 22 Last card I have is Virginia Cahill. 23 MS. CAHILL: Good morning, Mr. Chairman and Members of 24 the Board. I am Virginia Cahill here today representing the 25 Rancho Murieta Community Services District which is located CAPITOL REPORTERS (916) 923-5447 101 1 on the Consumnes River. 2 We filed comments without the benefit of having seen 3 the proposed settlement agreement, and now that we have I am 4 going to skip all but the last one which basically asks that 5 it be comprehensive and that Phase 8 not go forward as to 6 any parties if it was stayed as to all parties. 7 Ms. Whitney asked specifically whether the Consumnes 8 and Calaveras Rivers would be included in the stay. I 9 believe the responses from Mr. Somach and Mr. Schulz made it 10 perfectly clear that it would. So on the basis that the 11 Department of Water Resources and the Central Valley Project 12 meet the Delta standards in the Delta, we would support a 13 stay of Phase 8 as to all parties. 14 A.C. BAGGETT: Thank you. 15 Frank Davis, and that is the last card. 16 MR. DAVIS: I know you have a busy agenda today. Thank 17 you, Mr. Baggett. 18 I am Frank Davis, the Executive Director of The Bay 19 Institute of San Francisco. I will expedite my remarks 20 given the nature of the day. I greatly appreciate the 21 opportunity to be here. 22 Bay Institute viewed the recent reports of the 23 Department of Water Resources on the negotiations resolved 24 issues in Phase 8 of the Bay-Delta water rights hearings. 25 We are concerned the Board's postponed Phase 8 in deference CAPITOL REPORTERS (916) 923-5447 102 1 to these ongoing negotiations between export contractors and 2 upstream Sacramento River interests. It may continue to 3 defer final decision until these deliberations are 4 completed. 5 As a principal negotiation of the San Joaquin River 6 Agreement, TBI is not adverse to negotiated settlements, but 7 we wish to draw the Board's attention to some of the 8 political flaws in Phase 8 negotiations process. November 9 7th DWR report states the parties will seek approval for a 10 long-term agreement that establishes a partnership to expand 11 system capability under CalFed guidelines based on the 12 principles that focus on actions that are consistent with 13 the CalFed framework and its September 28 Record of 14 Decision. 15 The matter before the Board is how the parties will 16 meet their existing legal obligations to provide water to 17 meet the objectives of the 1995 Water Quality Control Plan, 18 not how the parties will pursue opportunities to expand 19 system capacity. The CalFed decision is not relevant to the 20 Board's deliberations. The Clean Water Act is. Adoption of 21 the San Joaquin River Agreement resulted in immediate 22 implementation of actions to provide water to meet basin 23 flow objectives. Any proposed Sacramento River agreement or 24 agreements must do the same for the Sacramento basin 25 objectives. CAPITOL REPORTERS (916) 923-5447 103 1 The parties should pursue opportunities to expand 2 system capacity as part of the CalFed implementation process 3 or other venues, not in regulatory proceedings before the 4 Board. 5 There are several other items here that I can submit 6 for the record, but my main message here at this point is 7 the Board has not established a firm and timely schedule for 8 discharging its obligations to issue a final Bay-Delta water 9 rights decision, the process the State of California 10 originally committed to complete by mid 1997. Consequently 11 the Phase 8 negotiations do not have adequate incentive to 12 complete the negotiations in an expeditious manner. 13 Based on these concerns we recommend that the Board 14 establish and adhere to a Phase 8 schedule that ends in 15 2001 and requests negotiating parties to include 16 representatives of interested parties in the discussion and 17 review proposed agreements relating to the Phase 8 hearings. 18 Thank you very much. 19 A.C. BAGGETT: Thank you. 20 There is no other cards on this issue. So thank 21 everyone for coming, participating in the workshop today. I 22 think for the Board I can probably speak on behalf of all of 23 us up here feel substantial progress is being made and 24 people are making a very strong, good faith effort to 25 resolve these issues. CAPITOL REPORTERS (916) 923-5447 104 1 We'll take this under submission and make a decision in 2 the next couple weeks and get word out to all the parties. 3 With that, we are recessed. At 1:00 we come back for 4 the continuing 42 cards on the Yuba. 5 (Board closed Bay-Delta hearing at 12:05 p.m.) 6 ---oOo--- 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CAPITOL REPORTERS (916) 923-5447 105 1 2 REPORTER'S CERTIFICATE 3 4 5 STATE OF CALIFORNIA ) ) ss. 6 COUNTY OF SACRAMENTO ) 7 8 9 I, ESTHER F. WIATRE, certify that I was the 10 official Court Reporter for the proceedings named herein, 11 and that as such reporter, I reported in verbatim shorthand 12 writing those proceedings; 13 That I thereafter caused my shorthand writing to be 14 reduced to typewriting, and the pages numbered 3 through 105 15 herein constitute a complete, true and correct record of the 16 proceedings. 17 18 IN WITNESS WHEREOF, I have subscribed this certificate 19 at Sacramento, California, on this 18th day of January 2000. 20 21 22 23 24 ______________________________ ESTHER F. WIATRE 25 CSR NO. 1564 CAPITOL REPORTERS (916) 923-5447 106