CalFed Issues Revised Phase II Report

February 1999

California Water Law & Policy Reporter

On December 18, 1998, Secretary of the Interior Bruce Babbitt and then-Governor Pete Wilson released the CALFED Revised Phase II Report with much fanfare. Secretary Babbitt described the Report,—which was the subject of intense discussion and negotiations for much of 1998—as “a great stride forward toward solving California’s environmental and water needs.” Then-Governor Wilson similarly lauded the Report as outlining: the practicable steps for California to achieve continuous improvement in the quality of our drinking water, the quantity of our water supply, and the protections afforded to wildlife and habitat. And it does so through a balanced program of conservation, transfers, and increased storage capacity.

As suggested by Secretary Babbitt and Governor Wilson, the Report represents a major step forward towards achieving an ultimate solution to the many problems facing the Bay-Delta watershed. Understanding the Report—and the way it seeks to broker the still-substantial differences among urban water users, farmers, and environmentalists— will be important to all members of the California water community. Controversy is an inherent part of trying to broker these differences; the Report itself notes that, given the CALFED program’s wide-ranging resource management goals and the history of conflict in the Bay-Delta ecosystem, “any proposed program to address this broad spectrum of resources will be controversial.” Nonetheless, the Report represents a consensus—in places fragile and in places relatively firm—about the best way to attempt to resolve California’s water problems. As such, the Report will set the agenda for California’s water issues through 1999 and into the new millennium.
Fundamental CALFED Program Concepts

The initial sections of the Report are useful in two ways. First, they describe the basic problems that the CALFED Bay-Delta Program is designed to address. Second, in describing the implications of the variability in the Bay-Delta Estuary, .the Report collects otherwise scattered data.

At this point in time, the fundamental problems that the CALFED Bay-Delta Program seeks to address are relatively well-known. CALFED seeks to address four problem areas: ecosystem quality, water supply reliability, water quality, and levee system integrity. The Program seeks to improve ecosystem quality by improving and increasing “aquatic and terrestrial habitats and improv[ingl ecological functions in the Bay-Delta to support sustainable populations of diverse and valuable plant and animal species.” The Program seeks to improve water supply reliability by reducing the “mismatch between Bay-Delta water supplies and current and projected beneficial uses ependent on the Bay-Delta system.” The Program seeks to address water quality by ensuring that there is “good water quality for all beneficial uses” recognizing, of course, that “good” water quality varies by the proposed beneficial use. Finally, the Program seeks to improve levee system integrity so as to: “reduce the risk to land use and associated economic activities, water supply, infrastructure, and the ecosystem from catastrophic breaching of Delta levees” either from earthquakes or flooding or from less dramatic events like continued Delta island subsidence.

The Report usefully describes the main problem with California’s water supplies as the extreme variability in water supplies and demands and brings together data from a number of sources to substantiate this analysis. The Report, after describing that variability, points out that “averages don’t tell the whole story” instead, “dry and critical year supplies are substantially more important given the higher demand and reduced alternatives.” To drive home this point, the Report illustrates the impacts of recent regulatory changes (the 1994 Bay-Delta Accord and the CVPIA (b) (2) water) on water supplies for the state and federal export projects. Operating under Water Right Decision 1485, the state and federal projects would deliver a long-term average of about 5.9 million acre-feet, which would be reduced to about 5 million acre-feet during dry periods. With the implementation of the Bay-Delta Accord and CVPIA’s (b) (2) program, long-term average deliveries would be reduced by about 500,000 acre-feet. During a dry period, though, average deliveries would be cut by about 1.1 million acre-feet. In other words, with the implementation of the Bay-Delta Accord and CVPIA’s (b) (2) program, long-term average water supplies to the state and federal export projects are cut by about 10 percent, while dry year supplies are cut by about 20 percent. As the Report states, “conflicts in the state intensify in the driest water years, when all uses, both environmental and consumptive, are competing for a drastically reduced natural water supply.”

The Draft Preferred Alternative
The heart of the Report is its discussion of the Draft Preferred Alternative. Although most public attention has been focused on the Preferred Alternative’s proposal for the conveyance of water through the Delta (see below), the Preferred Alternative actually consists of eight different program elements: storage, conveyance, water transfers, water quality, ecosystem restoration, water use efficiency, levee system integrity and watershed management.

Staged Implementation
CALFED recognizes that, in an ecosystem as complicated as that of the Bay-Delta Estuary, it is unlikely that the first attempts at ecosystem restoration are likely to be fully successful. Accordingly, monitoring and the adaptive management of resources are built into the definition of the Preferred Alternative. Similarly, given the fractious nature of debates over the linkage of various elements of the Preferred Alternative, CALFED recognizes that the key to successful Program implementation is to: “allow actions that are ready to be taken immediately to go forward, while assuring that everyone has a stake in the successful completion of each stage.” Only by this strategy does CALFED believe that it can hold its coalition together for the period of time needed to address the many problems facing the Bay-Delta Estuary.

In particular, CALFED uses the staged implementation concept to define success in implementing the so-called “Stage 1” actions (i.e., those that can be taken during the next seven years). CALFED believes that success in implementing Stage 1 will involve: (1) “overall continuous improvement for all resource areas,” (2) “stability in the water resources management framework,” (3) improving conditions for, listed species and those proposed for listing, 4) the use of the principle “beneficiary pays” for financing, (5) addressing the needed “conditions and linkages (assurances) before proceeding with storage and conveyance,” and (6) an “ongoing stakeholder process.” Because Stage 1 only involves “short-term implementation efforts” it will be possible for CAL-FED to keep fairly close tabs on the satisfaction (or dissatisfaction) of stakeholders with the process. The parties retain the ability to walk away from the CALFED process if is not meeting the requirements for success, or as the Report states: “[e]ffectively, the commitment of all interested parties will not have to be any longer than Stage 1.”
The Program Elements

Conveyance Plan
The most controversial element of the Preferred Alternative is its plan to convey water through the Delta. In the Draft Programmatic EIS/EIR, which was released for public review in March 1998, CALFED identified three potential ways to convey water through the Delta: (1) the existing system conveyance, which would maintain Delta channels in their current configuration while allowing sufficient channel improvements to allow full use of the State Water Project’s export capacity; (2) the modified through-Delta conveyance, which would make significant improvements to channels in both the northern and southern Delta; and (3) the dual Delta conveyance, which would involve the construction of an isolated conveyance facility with a capacity between 5,000 and 15,000 cfs to convey water from the northern Delta to the state and federal export facilities.

In response to a large number of public comments on the March 1998 draft, CALFED has refined its proposal for the conveyance of water through the Delta. CALFED’s strategy is to: develop a through-Delta conveyance alternative based on the existing Delta configuration with some modifications, evaluate its effectiveness, and add additional conveyance and/or other water management actions if necessary to achieve CALFED goals and objectives.

In other words, CALFED appears to be endorsing some version of the modified through-Delta conveyance (perhaps a version with less dredging of Delta channels than might have been anticipated earlier) while, at the same, time, reserving the option to move to the construction of an isolated facility if conditions warrant.

Under these circumstances, the conditions under which CALFED determines whether it has been successful in implementing Stage 1 (discussed above) become critically important, for it is only if the Stage 1 actions are not “successful” that CALFED may move towards an isolated facility. Of equal importance are the conditions under which CALFED would decide to move from the potential of an isolated facility towards the actual construction of an isolated facility. CALFED defines those conditions as including: (1) limitations on export quantities based on hydrologic conditions, (2) a commitment to continuous improvement of in-Delta water quality, (3) long-term funding for Delta levees and a commitment to address seepage and other impact associated with an isolated facility, and (4) protection for areas of origin. CALFED also states that it will not proceed with an isolated facility until and unless it (or a successor agency) determines that: the through-Delta conveyance with the other Program elements cannot meet CALFED goals and objectives, and that an isolated conveyance facility is the most cost-effective and least-environmentally damaging measure to correct this deficiency in meeting the goals and objectives. (emphasis added).

Finally, CALFED suggests that the enactment of additional legislation—from the California Legislature and, potentially, the U.S. Congress—will be the manner in which a decision will be made on whether or not to proceed with an isolated facility. CALFED anticipates that such: “legislative action will not include legislative overrides or exemptions from the state or federal environmental laws.”

Storage Plan
Running a close second in controversy to the conveyance plan is CALFED’s plan for additional storage. CALFED recognizes that additional water storage is a key element of a sound water management strategy for California, writing in the Report that: [s]torage which is properly managed and integrated with other water management tools can achieve improvement with regard to water management objectives: reduce conflicts, decrease drought impacts on all beneficial uses, increase supply availability, increase operational flexibility, and improve water quality.

CALFED also believes that: it must evaluate and implement a broad range of water management options to achieve the Program’s objectives. Therefore, new storage will be developed and constructed, together with aggressive implementation of water conservation, recycling, and a protective [proactive?] water transfer market.

CALFED believes that California would obtain most benefits available from above-ground storage from the construction of about 3 million acre-feet of new storage in the Sacramento Valley and the construction of another 2 million acre-feet of storage in the San Joaquin Valley. Efforts to identify new storage locations have focused on new off-stream locations but could include the expansion of existing reservoirs. CALFED states flatly that it will “not pursue storage at new on-stream reservoir sites.” Based on inventories of groundwater storage opportunities, CALFED believes that there is the possibility of developing 250,000 acre-feet of groundwater storage in the Sacramento Valley and 500,000 acre-feet in the San Joaquin Valley. Potential sites for above-ground storage include: the Colusa Reservoir Complex, which would store 3.3 million acre-feet; in-Delta storage, which would store 230,000 acre-feet; the enlargement of Los Vaqueros Reservoir, which would store an additional 965,000 acre-feet; Panoche Reservoir, which would store up to 3.1 million acre-feet; the enlargement of Lake Shasta, which would store an additional 290,000 acre-feet; and Sites Reservoir, which would store up to 1.9 million acre-feet. Potential sites for groundwater storage would include the Butte Basin, Colusa County, Sacramento County, Sutter County, the Stockton East basin, the Madera Ranch site, the Semitropic Water Storage District water bank, and Mojave River basins.

Water Transfer Program
CALFED recognizes that water transfers have been an important ingredient in California’s past water management efforts and that “CALFED actions must not interfere with the historical ability to transfer water.” To assist water transfers, CALFED suggests a California Water Transfers Information Clearinghouse, which would not function as a regulator, a market broker, or a water bank. Instead, the Clearinghouse would collect information about water transfers and their potential impacts on third parties and conduct research on the impacts of water transfers on third parties. CALFED also suggests streamlining the process to transfer water for those categories of transfers that have not caused appreciable concerns in the past. Finally, CALFED suggests that it address several of the most difficult issues relating to water transfers: the availability of conveyance capacity for nonproject water in project facilities, the definition of transferable water (i.e., paper water vs. wet water), reservoir refill criteria, appropriate protection so that water transferred for instream uses is not diverted, and the protection of groundwater basins in areas from which water transfers originate.

Water Use Efficiency Program
CALFED’s policy towards water use efficiency derives directly from California’s: legal requirements for reasonable and beneficial use of water: existing water: existing water supplies must be used efficiently, and any new water supplies that are developed by the Program must be used efficiently as well.

It is unclear from the Report, however, whether, by using the term “efficiently” CALFED means to impose a more stringent standard on its programs than the legal standards for waste and unreasonable use that have been developed by California courts and the State Water Resources Control Board.

CALFED distinguishes between two types of potential types of improvements in water efficiency: recovered losses and recovered currently irrecoverable losses. Recovered losses are those losses that: “currently return to the water system, either as groundwater recharge, river accretion, or direct reuse.” Recovering these losses does not increase the overall volume of water available, but can have other water management benefits. Recovered currently irrecoverable losses are those losses where the water lost was previous unusable (e.g., flows to a salt sink). Recovering these losses actually adds to the volume of water available for use. CALFED estimates that its programs could total about 1.6 million acre-feet in recovered losses from agriculture and 620,000 acre-feet in recovered losses from urban water users and recycling. CALFED estimates that its programs could total about 160,000 acre-feet in recovered currently irrecoverable losses from agriculture and 1.4 million acre-feet in recovered currently irrecoverable losses from urban water users and recycling. All told, about 60% of cumulative savings from CALFED and other programs comes from currently recoverable losses (largely in agriculture); the remaining savings come heavily from recovering currently irrecoverable losses associated with urban deliveries and urban recycling.

Ecosystem Restoration Program
The Ecosystem Restoration Program (ERP) is perhaps the signature CALFED program. As released, the ERP Plan consists of vision statements for each ecological zone within the watersheds tributary to the Bay-Delta Estuary, over 700 programmatic restoration actions, and a strategic plan that describes the CALFED adaptive management approach to ecosystem restoration. CALFED intends to use the adaptive management approach to refine the programmatic actions identified in the ERP Plan.

There were a number of critical comments on the original draft of the ERP Plan that related to the potential impacts of the Plan on agricultural lands. The Report states directly that CALFED seeks: “to preserve as much agricultural land as possible during implementation in Phase III consistent with meeting all Program goals.” The Report also states that it is CALFED policy: that adverse environmental effects to agricultural resources resulting from CALFED programs, projects, and actions will be fully assessed and disclosed under CEQA and NEPA, and avoided or mitigated as required by law.

To these ends, CALFED intends to maintain land in private ownership as much as practicable, prioritize the use of government lands for habitat restoration, and work with local landowners to develop mutually agreeable projects.

Water Quality Program
The water quality program element focuses on the goal of achieving “continuous” improvement in water quality in the Bay-Delta Estuary. CALFED defines “continuous” as “a steady or step-wise trend over the 30-year time horizon of the CALFED Program, and does not include short-term fluctuations.” CALFED measures water quality by means of water quality targets, which include, but are not limited to, water of sufficient quality to permit municipal suppliers to deliver water to their customers that meets drinking water standards. In addition, CALFED indicates that it will undertake best management practices designed to reduce loading from pesticides, organochlorine pesticides (DDT and chlordane), and trace metals. CALFED will address selenium impacts by reduction of loads at their sources “and through appropriate land fallowing and land retirement programs. Finally, CALFED will address the difficult issues posed by salinity in the San Joaquin Valley not through a San Luis Drain, “which is beyond the scope of the CALFED Program” but instead through the San Joaquin Valley Drainage Improvement Program.

Longterm Levee Protection Plan
The focus of the levee plan is to improve levee integrity, particularly at so-called “non-project” levees. To this end, CALFED proposes to reconstruct all Delta levees to the standard used by the U.S. Army Corps of Engineers in its PL 84-99 program. CALFED will provide what it describes as “base-level funding” for such reconstruction and maintenance. The model for this program is the highly successful Delta Levee Subventions Program. Other portions of the program would involve the control of subsidence at Delta islands, an emergency management plan, and a seismic risk assessment to determine the risk of slumping or liquefaction of Delta levees as a result of a nearby earthquake.

Watershed Program
The watershed program recognizes that many CALFED programs will be most successful if they are developed on a “bottom up” rather than “top down” approach. The watershed program seeks to support local watershed activities, provide coordination and assistance for local watershed groups, identify watershed processes that are relevant to CALFED’s goals, and assist in integrating watershed management into the remainder of the CALFED Preferred Alternative.

The Environmental Water Account
Perhaps the most interesting idea contained in the Report is a proposal for what is described as an “environmental water account” (EWA). Given CALFED’s emphasis on flexible management of a complicated ecological system, it makes sense to provide some means to achieve that flexibility and, at the same time, provide certainty to water users.

CALFED recognizes that this effort to meet the needs of the environment more flexibly while providing certainty to water users could pose several problems, specifically: ensuring that the EWA has sufficient assets, ensuring that the manager makes environmentally appropriate decisions, accounting for the water owed to the environment, and establishing an initial baseline of assets for the EWA. To test the magnitude of these problems, CALFED conducted a simulation of the activities of the EWA over four water years. CALFED concludes that the EWA has significant promise as a means to benefit the environment and water supplies. Accordingly, CALFED suggests that a pilot-project EWA should be developed during the 1998-99 water year.

The Report continues down the general path that CALFED has established over the past few years. No interest group will be satisfied with the proposals contained in the Report. Environmentalists will say that the Program places too much emphasis on new storage and the potential construction of an isolated facility; farmers (particularly in the San Joaquin Valley) will say that the Program does not go far enough to assure water supply reliability and to protect water rights; and urban water agencies will say that the Program does not really assure sufficient source water quality to enable them to comply in a cost-effective manner with regulatory standards (especially for bromide) that are anticipated in the near future. Perhaps the fact that CALFED has crafted a consensus position that takes into account these fundamental disagreements means that CAL-FED has found the common ground where long-lasting compromise is possible. Only time will tell.

David Aladjem is a partner with the law firm of Downey Brand LLP. His practice involves the representation of individuals, corporations, and public agencies in a wide range of matters relating to the management, use, and distribution of water resources. He also serves on the editorial board of the California Water Law & Policy Reporter. The views expressed in this article are solely those of the author and should not be attributed either to Downey Brand LLP or any of its clients.