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<DIV><BR><FONT face="Times New Roman" size=3>Mid-Pacific Region<BR>Sacramento,
CA<BR><BR>MP-05-021<BR><BR>Media Contact: Jeffrey McCracken
916-978-5100<BR></FONT><A href="mailto:jmccracken@mp.usbr.gov"><FONT
face="Times New Roman" size=3>jmccracken@mp.usbr.gov</FONT></A><FONT
face="Times New Roman" size=3> <BR><BR>For Release On: February 25,
2005<BR><BR>Central Valley Project Water Contracts are Renewed for Farms and
Cities<BR>Water Service and Settlement Contracts Expiring After 40
Years<BR><BR>The Bureau of Reclamation's Mid-Pacific Region is nearing
completion on contract negotiations with about 200 water districts and water
contractors in the Central Valley Project (CVP), and starting today Reclamation
will begin signing long-term contracts for 25 or 40 years, depending on contract
type. In addition, Reclamation has completed the required environmental
compliance, including Endangered Species Act (ESA) and National Environmental
Policy Act (NEPA) for all but a few of the contracts. ESA and NEPA
compliance requirements will be completed prior to execution of any
contract.<BR><BR>The contracts will provide water for 3.4 million acres of
farmland in the Sacramento and San Joaquin Valleys that produce billions of
dollars in gross farm revenue and provide municipal and industrial (M&I)
water for more than 3 million people and businesses, including Silicon
Valley. Delivering this water also generates enough electricity for 2
million households.<BR><BR>"This has been a long, complex, and demanding
process, and these contracts have been weighed and measured through two
administrations," said Mid-Pacific Regional Director Kirk Rodgers. "The
results will bring continued economic stability to one of California's biggest
industries - agriculture - and provide our growing cities, industries, and
businesses with the water they need for tomorrow."<BR><BR>The signing of the
contracts culminates years of public negotiations that began in the late
1980s. Negotiations included opportunities for the public and interested
parties to comment on negotiated terms and conditions in the contracts.
More than 190 public negotiating sessions took place throughout the
process.<BR><BR>The Programmatic Environmental Impact Statement (PEIS) for the
1992 Central Valley Project Improvement Act (CVPIA), Public Law 102-575, was
completed in 1999. Subsequent environmental documents for contract renewal
"tiered off" the PEIS and were made available for public review and
comment.<BR><BR>The renewed contracts will see the cost of CVP water increase
consistent with regional rate-setting policies. These policies are
designed to meet the congressional mandate to recover the cost of construction
of the CVP main project features by the year 2030. Water rates can be
adjusted annually to ensure cost recovery is achieved. The previous
contracts had fixed water rates for irrigators. The renewed contracts will
charge a cost-of-service depending on location of the Contractor and the
facilities used to deliver the water. Contractors will also pay an initial
restoration charge into a fund. This Restoration Fund collects about $50
million a year which is used for environmental and fishery restoration
purposes.<BR><BR>These contracts meet all the statutory requirements including
CVPIA and State of California permits and licenses issued to Reclamation
authorizing the diversion, storage, and use of water.<BR><BR>The water service
contracts serving districts from Redding to Bakersfield account for
approximately 5.6 million acre-feet of water annually. These contracts are
being renewed for a period of 25 years for farmers and 40 years for M&I
users. The CVPIA requires the Secretary to renew the existing CVP
contracts.<BR><BR>The Sacramento River Settlement contracts, which provide about
400,000 acre-feet of "Project Water," are being renewed for a period of 40
years. These contracts cover irrigators and water districts that were
diverting from the Sacramento River under State water rights claims before the
CVP was constructed. As a result, these contractors receive 1.8 million
acre-feet of "Base Supply" to satisfy their senior water rights.<BR><BR>Facts
and Figures<BR><BR>The renewed contracts provide water for homes and businesses
in Antioch, Applegate, Auburn, Avenal, Brentwood, Campbell, Citrus Heights,
Clayton, Coalinga, Colfax, Concord, Cupertino, Fair Oaks, Folsom, Fresno, Fresno
County, Gilroy, Granite Bay, Huron, Lindsay, Loomis, Los Altos, Los Altos Hills,
Los Gatos, Martinez, Milpitas, Morgan Hill, Mountain View, Oakley, Orange Cove,
Orangevale, Pacheco, Palo Alto, Penyrn, Pittsburg, Placer County, Pleasant Hill,
Port Costa, Redding, Rocklin, Roseville, Sacramento, Sacramento County, San
Jose, Santa Clara, Santa Nella, Saratoga, Shasta County, Shasta Lake, Sunnyvale,
Tracy, Visalia, Walnut Creek, and West Sacramento.<BR><BR>The CVP irrigates
1/3rd of all farmland in California.<BR>The CVP delivers 1/3rd of all the
irrigation water used in California.<BR>Counties irrigated by CVP water generate
$13 billion in gross farm product.<BR>California is the 4th largest agricultural
region in the world behind the United States, Brazil, and China.<BR>One of every
4 jobs in the CVP service area is related to agriculture.<BR><BR># #
#<BR><BR>Reclamation is the largest wholesale water supplier and the second
largest producer of hydroelectric power in the United States, with operations
and facilities in the 17 Western States. Its facilities also provide substantial
flood control, recreation, and fish and wildlife benefits. Visit our Website at
</FONT><A href="http://www.usbr.gov"><FONT face="Times New Roman"
size=3>http://www.usbr.gov</FONT></A><FONT face="Times New Roman" size=3>.
</FONT><BR></DIV>
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<H2 style="MARGIN: 0in 0in 0pt"><SPAN
style="FONT-SIZE: 14pt; FONT-FAMILY: Tahoma; mso-bidi-font-family: 'Times New Roman'"><FONT
size=4><SPAN class=743425117-25022005></SPAN></FONT></SPAN> </H2>
<H2 style="MARGIN: 0in 0in 0pt"><SPAN
style="FONT-SIZE: 14pt; FONT-FAMILY: Tahoma; mso-bidi-font-family: 'Times New Roman'"><FONT
size=4><SPAN class=743425117-25022005>Editorial</SPAN>: Pending deal would
undermine state's water solutions<?xml:namespace prefix = o ns =
"urn:schemas-microsoft-com:office:office" /><o:p></o:p></FONT></SPAN></H2>
<H2 style="MARGIN: 0in 0in 0pt"><FONT size=4><?xml:namespace prefix = st1 ns =
"urn:schemas-microsoft-com:office:smarttags" /><st1:City w:st="on"><st1:place
w:st="on"><SPAN
style="FONT-SIZE: 14pt; FONT-FAMILY: Tahoma; mso-bidi-font-family: 'Times New Roman'">Sacramento</SPAN></st1:place></st1:City><SPAN
style="FONT-SIZE: 14pt; FONT-FAMILY: Tahoma; mso-bidi-font-family: 'Times New Roman'">
Bee – 2/25/05<o:p></o:p></SPAN></FONT></H2>
<H4 style="MARGIN: 0in 0in 0pt"><SPAN
style="FONT-FAMILY: Tahoma; mso-bidi-font-family: 'Times New Roman'"><FONT
size=5><FONT size=4>By Peter H. Gleick, guest editorialist, president of the
Pacific Institute in Oakland<BR
style="mso-special-character: line-break"></FONT><BR
style="mso-special-character: line-break"><o:p></o:p></FONT></SPAN></H4>
<H4 style="MARGIN: 0in 0in 0pt"><SPAN
style="FONT-WEIGHT: normal; mso-bidi-font-weight: bold"><FONT
face="Times New Roman"><FONT size=4>The federal government is on the verge of
destroying for decades any chance of peacefully and economically solving
<st1:place w:st="on"><st1:State w:st="on">California</st1:State></st1:place>'s
water problems.<o:p></o:p></FONT></FONT></SPAN></H4>
<H4 style="MARGIN: 0in 0in 0pt"><SPAN
style="FONT-WEIGHT: normal; mso-bidi-font-weight: bold"><FONT
face="Times New Roman"><FONT size=4><SPAN
style="mso-spacerun: yes"> </SPAN><o:p></o:p></FONT></FONT></SPAN></H4>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><FONT
face="Times New Roman"><FONT size=4>Unless the governor and our
<st1:country-region w:st="on">U.S.</st1:country-region> representatives
intervene immediately, the Department of Interior's Bureau of Reclamation will
push through new long-term contracts to provide heavily subsidized water to a
small number of powerful irrigation districts at the expense of <st1:place
w:st="on"><st1:State w:st="on">California</st1:State></st1:place>'s cities,
family farmers, environment and economy. <o:p></o:p></FONT></FONT></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><o:p><FONT
face="Times New Roman" size=4> </FONT></o:p></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><FONT
face="Times New Roman"><FONT size=4>The decisions are being made behind closed
doors, with little or no public input or scrutiny. The consequences will be
perpetuating waste and inefficiency, worsening conflict among water users and
accelerating ecological destruction. <o:p></o:p></FONT></FONT></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><o:p><FONT
face="Times New Roman" size=4> </FONT></o:p></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><FONT
face="Times New Roman"><FONT size=4>For the past 50 years, federal water policy
has encouraged a few farmers to consume vast quantities of <st1:place
w:st="on"><st1:State w:st="on">California</st1:State></st1:place>'s water. The
water delivered by the federal Central Valley Project (CVP), built for and paid
for by taxpayers, is sold for pennies on the dollar. The price doesn't even
cover the project's operating and maintenance costs, much less the cost of
building it. This might have made sense when the West was young, but in the 21st
century, we know that such subsidies encourage the waste of water, lead to the
production of surplus crops and hurt, rather than help, job growth and our
economy. <o:p></o:p></FONT></FONT></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><o:p><FONT
face="Times New Roman" size=4> </FONT></o:p></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><FONT
face="Times New Roman"><FONT size=4>Yet those original contracts are about to be
renewed without the reforms or price increases needed to account for the new
reality of water scarcity. According to a new analysis by the Congressional
Budget Office, the cost to taxpayers of renewing these subsidies is at least
$500 million over the next 10 years. In some cases, the new contracts offer
water that may not be reliably available to irrigation districts that cannot
prove they will actually use it. <o:p></o:p></FONT></FONT></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><o:p><FONT
face="Times New Roman" size=4> </FONT></o:p></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><FONT
face="Times New Roman"><FONT size=4>We can, and should, support a healthy and
strong agricultural sector in the state but without the waste and inefficiency
encouraged by these federal subsidies. We know that heavily subsidized water is
wasted. This is as true in <st1:State w:st="on">California</st1:State> - where
we grow crops that can be grown more efficiently elsewhere - as it is in
<st1:country-region w:st="on">India</st1:country-region> or <st1:country-region
w:st="on">China</st1:country-region> or the <st1:place w:st="on">Middle
East</st1:place>, where inappropriate subsidies are leading to groundwater
depletion and contamination and the destruction of ecosystems.
<o:p></o:p></FONT></FONT></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><o:p><FONT
face="Times New Roman" size=4> </FONT></o:p></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><FONT
face="Times New Roman"><FONT size=4>The use of 1,000 acre-feet of water in
<st1:place w:st="on"><st1:State w:st="on">California</st1:State></st1:place>
produces 9,000 jobs in the semiconductor industry, 2,500 jobs in commercial
offices, 35 jobs in grape and wine production - but only three jobs growing
cotton. The use of one acre-foot of water by the semiconductor industry produces
gross state revenue of nearly $1 million; one acre-foot of water used to grow
cotton and alfalfa produces just $60. <o:p></o:p></FONT></FONT></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><o:p><FONT
face="Times New Roman" size=4> </FONT></o:p></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><FONT
face="Times New Roman"><FONT size=4>This is another example of the federal
government burdening <st1:place w:st="on"><st1:State
w:st="on">California</st1:State></st1:place> employers and taxpayers and
worsening our water challenges. It has shunted onto state taxpayers the costs of
fixing California Bay-Delta water problems that were caused in no small part by
inappropriate federal projects built over the past century. Now, these new
contracts will take water owned by Californians and use it as political
patronage. <o:p></o:p></FONT></FONT></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><o:p><FONT
face="Times New Roman" size=4> </FONT></o:p></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><FONT
face="Times New Roman"><FONT size=4>The governor and our elected representatives
in <st1:State w:st="on">Washington</st1:State> must step in to protect
<st1:State w:st="on"><st1:place w:st="on">California</st1:place></st1:State>'s
interests, minimize taxpayers' costs and maximize economic growth.
<o:p></o:p></FONT></FONT></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><o:p><FONT
face="Times New Roman" size=4> </FONT></o:p></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><FONT
face="Times New Roman"><FONT size=4>If the federal government pushes these
contracts to satisfy special interests, they must be limited to a single
renewal, as required by law. The contracts must not give away water not reliably
available or truly needed. The price of water must reflect the true costs of
building and operating projects as well as the costs of providing that water in
order to encourage those few subsidized farmers to use water efficiently and
effectively. <o:p></o:p></FONT></FONT></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><o:p><FONT
face="Times New Roman" size=4> </FONT></o:p></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><FONT
face="Times New Roman"><FONT size=4>These are the only ways to protect our
critical supplies of freshwater for now and for the future.
<o:p></o:p></FONT></FONT></SPAN></DIV>
<DIV style="MARGIN: 0in 0in 0pt"><SPAN style="FONT-SIZE: 14pt"><o:p><FONT
face="Times New Roman" size=4> </FONT></o:p></SPAN></DIV>
<DIV class=MsoNormal style="MARGIN: 0in 0in 0pt"><I
style="mso-bidi-font-style: normal"><SPAN style="FONT-SIZE: 14pt"><FONT
face="Times New Roman" size=4>Peter H. Gleick is president of the Pacific
Institute in Oakland, a MacArthur Fellow and a member of the Water Science and
Technology Board of the U.S. National Academy of Sciences. Reach him at
</FONT><A href="mailto:info@pacinst.org"><FONT face="Times New Roman"
size=4>info@pacinst.org</FONT></A><FONT face="Times New Roman"><FONT size=4>.
#<o:p></o:p></FONT></FONT></SPAN></I></DIV>
<DIV class=MsoNormal style="MARGIN: 0in 0in 0pt"><SPAN
style="FONT-SIZE: 14pt"><A
href="http://www.sacbee.com/content/opinion/story/12451916p-13308069c.html"><FONT
face="Times New Roman"
size=4>http://www.sacbee.com/content/opinion/story/12451916p-13308069c.html</FONT></A><o:p></o:p></SPAN></DIV>
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