**Committee on Natural Resources**

**Subcommittee on Water and Power**

**Subcommittee Hearing July 2, 2007**

***"Extinction is not a Sustainable Water Policy: The Bay-Delta Crisis
and the Implications for California Water Management"***

**Testimony of David Nawi**

Madame Chair, Members of the Subcommittee. Thank you very much for
providing me this opportunity to appear before you today.

As you have recognized \[and heard from previous witnesses today\] the
issues you are dealing with regarding the Bay-Delta are of vital
importance and are at a critical stage. Federal and state court judges
have found of violations of both the federal and California Endangered
Species Acts, and current information indicates that the federal and
state listed Delta smelt may be on the verge of extinction. Depending on
the outcome of appeals and further rulings, the courts may be in the
position of determining how the Central Valley Project (CVP) and the
State Water Project (SWP) will be operated.

I will briefly describe relevant legal provisions at issue in current
litigation and regulatory proceedings and then offer some thoughts on
the possible future course of events.

The Federal Endangered Species Act

I will begin with the federal Endangered Species Act (ESA). 15 U.S.C. §§
1531 et seq. Section 9 of the ESA prohibits any person from "taking" a
species listed as threatened or endangered. 15 U.S.C. § 1538. The
statute defines "take" to mean, among other things, to harass, harm,
wound or kill a species. Section 3(18), 15 U.S.C. § 1532(18). Section 10
of the Act provides that take of a species may be permitted if it is
incidental to an otherwise lawful activity and is authorized pursuant to
an approved conservation plan, known as a habitat conservation plan, or
HCP. Of relevance to the CVP and SWP, take may also be authorized by an
incidental take statement included in a biological opinion issued
pursuant to section 7 of the Act.

Section 7(a)(1) directs all federal agencies to utilize their
authorities in furtherance of the purposes of the ESA by carrying out
programs for the conservation of listed species. 15 U.S.C. § 1536(a)(1).
Section 7(a)(2) directs any federal agency proposing to carry out an
action authorized, funded or carried out by the agency to insure that
that the action is not likely to jeopardize the continued existence of a
listed species or result in the destruction or adverse modification of
designated critical habitat. 15 U.S.C. § 1536(a)(2).

The directive in Section 7(a)(2) to avoid jeopardizing the continued
existence of a species was the basis of the seminal Supreme Court case
of *TVA v. Hill* (1978) 437 U.S. 153, a 1978 decision that enjoined a
federal agency from constructing a dam that would have eradicated a tiny
fish, the snail darter. Referring to the statutory directive in Section
7(a)(2), the court wrote, "This language admits of no exception." 437
U.S. 153, 173. (Shortly after the decision in *TVA v. Hill,* supra,
Congress amended the ESA to allow the so called "God Squad" to exempt
federal actions from Section 7(a)(2). Section 7(h), 15 U.S.C. § 1536(h).
This exemption process has rarely been used.)

Section 7 also specifies the procedure pursuant to which federal
agencies must consult with either the Fish and Wildlife Service (FWS),
in the Department of the Interior, or the National Marine Fisheries
Service (NMFS), in the Department of Commerce, to assure that covered
actions comply with Section 7(a)(2). (Administration of the ESA is the
responsibility of the Secretary of Commerce and the Secretary of the
Interior, depending on the species. Section 3(14), 15 U.S.C. §
1532(14).) The statute provides for a biological opinion to be issued on
a finding that the agency action will not violate section 7(a)(2), i.e.,
not result in jeopardy or adverse modification of critical habitat, and
that sets forth the impacts of the taking, reasonable and prudent
measures to minimize the impacts, and mandatory terms and conditions
that must be complied with by the federal agency.

Section 7(d) prohibits a federal agency, after the initiation of
consultation, from making any irreversible or irretrievable commitment
of resources with respect to the action that would foreclose the
formulation or implementation of reasonable and prudent alternative
measures that would not violate section 7(a)(2). 15 U.S.C. § 1536(d).
Section 7(o) exempts from the take prohibition of Section 9 take that is
in compliance with the terms and conditions of a biological opinion. 15
U.S.C. § 1536(o). Pursuant to his provision, biological opinions
generally contain an incidental take statement that has the effect of
authorizing take.

In addition to provisions for civil and criminal penalties, the ESA
contains a provision allowing suits by citizens to enjoin violations of
the Act or implementing regulations. Section 11(g), 15 U.S.C. § 1540.
Courts have held that a biological opinion may be challenged under the
Administrative Procedure Act (APA) on the grounds, among others, that it
is arbitrary, capricious or an abuse of discretion. 5 U.S.C. §
706(2)(A). *Bennett v. Spear* (1997) 520 U.S. 154.

The Fish and Wildlife Service and NMFS issued separate biological
opinions under ESA Section 7 regarding the Bureau of Reclamation's 2004
Operating Criteria and Plan (OCAP), a document that describes the
coordinated operations of the CVP and SWP. Both biological opinions have
been challenged in court. In *Natural Resources Defense Council v.
Kempthorne,* E. D, Cal. No. 1:05-CV01207 OWW (TAG), Judge Oliver Wanger
issued an order on May 25 finding the 2005 FWS OCAP biological opinion
to be in violation of the APA and unlawful. The court has requested that
the parties submit briefs on the question of remedy and has scheduled a
hearing on the issue in late August. Presumably the court will consider
and rule on the manner in which the projects may operate pending the
completion of a new biological opinion, expected some time in 2008.

A second case before Judge Wanger challenges the NMFS biological
opinion. *Pacific Coast Federation of Fishermen's Associations v.
Gutierrez,* E.D. Cal. No C-06-0245. While the court in this case issued
a ruling in June dismissing claims under the National Environmental
Policy Act, the ESA claims have yet to be briefed or considered by the
court.

The California Endangered Species Act

I will briefly turn next to the California Endangered Species Act, or
CESA. CESA prohibits the taking of state-listed threatened or endangered
species. Cal. Fish and Game Code ("FGC") § 2080. CESA contains
provisions that allow the take of listed species through various
mechanisms.

Take is allowed if a person has obtained an incidental take permit or
incidental take statement allowing take of the species under the federal
ESA, and the incidental take permit or statement is determined by the
Director of the Department of Fish and Game to be consistent with the
relevant provisions of the Fish and Game Code. FGC § 2080.1. The
Department may issue an incidental

take permit if certain criteria are met, including minimization and full
mitigation of the impacts of the authorized take. FGC § 2081. Take is
also allowed if it was authorized through a plan or agreement entered
into by the Department of Fish and Game in a specified time period, a
so-called "grandfather" provision. FGC § 2181.1

A lawsuit recently decided at the trial level claimed that pumping by
the SWP was taking state-listed species (Winter Run Chinook Salmon,
Spring Run Chinook Salon and Delta smelt) without incidental take
authorization from the Department of Fish and Game and therefore in
violation of CESA. *Watershed Enforcers v. Department of Water
Resources,* Alameda County Superior Court No. RG06292124. In ruling for
the petitioners, the trial court rejected the claim by the DWR that a
series of five documents served to bring DWR's take of the species
within the coverage of the grandfathering provisions of section 2181.1
The court issued a judgment on April 17 of this year ordering that DWR
cease pumping within sixty days unless DWR had received authorization
from the Department of Fish and Game for the incidental take of the
three species. DWR has appealed the ruling, and it is currently stayed
pending appeal.

California Water Law

In addition to the federal and state ESAs, both projects are subject to
the regulatory authority of the Sate Water Resources Control Board
(State Board). Under the state's Porter-Cologne Water Quality Act (Water
Code §§ 13000 et seq.), the State Board is charged with adopting water
quality control plans, including a plan for the Bay-Delta, to meet the
requirements of section 303 of the federal Clean Water Act. (Federal
Water Pollution Control Act, 33 U.S. C. § 1313). Section 303 provides
the water quality control plan must meet specified requirements and is
subject to approval by the federal Environmental Protection Agency.
Water quality control plans are not self-implementing and do not contain
regulatory requirements applicable to water rights holders, whose
diversions are subject to water rights permits issued by the State
Board.

Both the state and federal projects are required to obtain and comply
with the water right permit requirements of state law. The applicability
of these requirements to the CVP was the subject of the 1978 decision of
the U.S. Supreme Court in *California v. U.S.*, 438 U.S. 645, which held
that under section 8 of the Reclamation Act of 1902, 43 U.S.C. § 383, a
federal project must comply with state requirements that are not
inconsistent with clear congressional directives regarding the project.

The State Board has broad authority and responsibility in administering
water rights permits. If the Board finds a violation or threatened
violation of any term or condition of a permit, it may issue a cease and
desist order. Water Code § 1831. The Board also has the authority, and
in fact is directed, to take action to prevent waste, unreasonable use,
or unreasonable method of use of water. Water Code § 275; Cal.
Constitution Article X, section 2. Water rights permits are also subject
to review and modification pursuant to the public trust doctrine.
*National Audubon Society v. Superior Court,* (1983) 33 Cal.3d 419.

The State Board held a workshop on June 19 to receive recommendations on
short term actions it should consider to improve fishery resources,
including actions to slow or stop the decline of Delta smelt, improve
water quality conditions, and reduce impacts resulting from water
diversion and use in the Bay-Delta. The workshop notice stated that the
Board sought formation on, among other things, reducing diversions, for
export or in-Delta use, from Delta channels; requiring releases from
upstream storage; requiring waste dischargers to provide monitoring
reports; and requiring measures to ease potential dry year conditions to
ensure reasonable protection of water quality and beneficial uses in the
Delta. Following the workshop, the State Board has not indicated what
actions it is considering.

Looking to the Future

What can we say about the future? For the long term, it is apparent that
solutions must be developed that comprehensively address the numerous
and complex factors that affect the Bay-Delta and the totality of the
state's water supply and delivery system. Among other things, a
comprehensive approach must assure compliance with the statutory regimes
discussed above -- the federal ESA, the California ESA, and state water
law, including provisions to comply with the federal Clean Water Act. In
recognition of the need for a comprehensive long-term approach,
California's Delta Vision has been established to address the full array
of issues to achieve a sustainable Delta.

However, any long-term solutions will take time to develop, fund, and
implement, and at least until there is a long-term solution, litigation
almost certainly will continue to be a way of life for water issues in
California and especially the Bay-Delta. The Bay-Delta is a uniquely
valuable ecological resource that at the same time serves as the heart
of the state's water supply and delivery infrastructure. These two
functions seem inevitably to lead to conflict.

In the early 1990s we were faced with a situation that had many features
in common with what we are facing today. Fish species were in sharp
decline, and Endangered Species Act requirements caused unpredicted
shut-downs of the project pumps and consequent uncertainty and cut-backs
in water supply for agricultural and municipal and industrial water
users south of the Delta. Actions of state and federal agencies were not
coordinated and often in conflict.

To remedy this situation, the leadership of state and federal
governments became actively engaged and took a series of actions to
create a sound, coordinated and collaborative approach to moving
forward. From Club FED (the Federal Ecosystem Directorate), through the
July 1994 Framework Agreement, and the December 1994 Bay-Delta Accord
("Principles for Agreement on Bay- Delta Standards between the State of
California and the Federal Government"), to the August 2000 Record of
Decision (ROD) on the CALFED Bay-Delta Program, substantial and tangible
progress was made toward a less adversarial and more collaborative
science based approach that fully involved stakeholders. The enactment
in 1992 of the Central Valley Project Improvement Act, Pub. L. No.
102-575, Title XXXIV (CVPIA), was also intended to help assure the
health of the Delta and the species dependent on it.

Unfortunately, despite implementation of the CVPIA, the benefits of the
collaborative process CALFED created, and the Environmental Water
Account other substantive achievements of CALFED, an indicator species
is in grave peril, and once again conflict and litigation have come to
dominate Bay-Delta issues. In the absence of a sound, collaborative,
scientifically based process for operating the projects in a manner that
provides needed water supply and at the same time maintains clear
compliance with unforgiving statutory mandates, litigation and an
increased role of the courts is likely if not inevitable.

Courts have not been created with the intent that they operate water
projects, and they are not well-equipped to make the scientific and
biological judgments involved in assuring consistency between project
operations and the requirements of the state and federal ESAs. But if
they find that environmental statutes have not been complied with, they
will have little choice but to order such compliance, and there is no
small potential that courts will have to make their own determinations
of the actions needed for compliance.

No one wants the Delta smelt or other species dependent on the Delta to
go extinct. Avoidance of species extinction is the most essential goal
of the state and federal ESAs, the primary purpose for which they were
enacted. And no one wants to see the massive disruptions that drastic
reductions in water supply would cause. Critical decisions regarding
these goals are now being made by the courts in the context of
adversarial litigation. The only alternative to the current situation
will be coordinated and effective agency action to comply with statutory
mandates based on collaboration, balance, and transparent and
scientifically based decision-making. And this will occur only as a
result of strong, positive and far-sighted political leadership of both
California and the federal government.

Thank you again for this to opportunity to appear before you. I would be
glad to answer any questions you may have.