C A i, i F O R N I A 

January 12, 2015 

Via Electronic Mail and U.S. Mail 

Brooke Miller-Levy 

Bureau o f Reclamation, Mid-Pacific Region 

2800 Cottage Way 

Sacramento CA 95825-1898 

Email: bmillerlevy@usbr.aov 

Re: Questions regarding Central Valley Project Cost Allocation Study: Considerations 

on the Two Cost Allocation and Two-Period Repayment Approach (Dec. 12, 

2014) 

Dear Ms. Miller-Levy, 

We are writing regarding the December 12, 2014 U.S. Bureau o f Reclamation 

("Reclamation"") Issue Paper titled "Central Valley Project Cost .Allocation Study: 

Considerations on the Two Cost Allocation and Two-Period Repayment .Approach.'" The Issue 

Paper provides helpful insights into Reclamation"s current efforts related to cost allocation for 

the Central Valley Project ("CVP"), and we appreciate having an opportunity to submit 

comments at this phase o f Reclamation"s process. 

Our understanding is that the Two Cost Allocation and Two-Period Repayment Approach 

remains conceptual, and that, with respect to the second period. Reclamation has not yet 

determined what proportion o f project costs would be allocated as reimbursable and nonreimbursable, or how the costs would be divided among project beneficiaries. This detailed 

information wil l be helpful in more fully evaluating the proposed cost allocation method. For 

now, the conceptual overview that the Issue Paper provides has raised several questions that we 

hope you can address: 

(1) Could the new allocation method result in any changes to the total amount o f 

money that is paid into the CVP Restoration Fund each year? I f so, can you 

explain any anticipated or potential changes? 

(2) Under the proposed method, it appears that a substantially higher percentage o f 

project costs may be considered non-reimbursable than under the existing cost 

allocation method. How would implementation o f the proposed method impact 

Reclamation's budget? 
(3) Would implementation o f the proposed method lead Reclamation to seek 

repayment from any entity that is not currently subject to a repayment obligation? 

(4) Is continued reliance on a 2030 repayment completion deadline realistic in light o f 

the amount o f repayment that has occurred to date? 

In addition to these basic questions, we are interested in better understanding the 

relationship between this effort and the cost allocation study that was completed in May 2001. 

The 2001 cost allocation study included an analysis o f the "Contractors" Proposal,"" which 

entailed "accountjing] for the environmental reoperation o f the CVP by creating a new 

environmental water use for the determination of repayment responsibilities o f costs allocated to 

the water supply purpose." 2001 CVP Cost .Allocation Study, Executive Summary at ES-2.' 

The Contractors" Proposal advocated that the existing allocation method did not adequately 

reflect environmental benefits that have been generated by the re-operation o f the project in light 

of environmental laws including the Central Valley Project Improvement Act, the Endangered 

Species Act, and the 1994 Delta Water Quality Control Plan. Id. at ES-3.-

Reclamation rejected the Contractors' Proposal and determined that the exiting allocation 

method was the preferred approach. The Contractors' Proposal was inappropriate, Reclamation 

concluded, because (a) "unlike other provisions o f the CVPIA wherein cost sharing 

arrangements and surcharges on water and power users have been specified, Congress neither 

directed that a new cost allocation study be undertaken as a result o f likely reductions in water 

contract deliveries nor provided a cost allocation formula"' (id.): (b) the Contractors' Proposal 

would delineate some water uses as environmental enhancement, but the uses are properly 

classified as mitigation, protection, and/or restoration (id.); (c) it could lead to double counting o f 

water use because environmental water releases can also be used for other downstream beneficial 

uses (id. at ES-4); (d) fish and wildlife considerations predate modem environmental laws and 

were included in the initial CVP authorization (id.); and (e) pursuant to state law, CVP water 

rights are junior to state water quality requirements (id.). "In short,'" Reclamation concluded, 

•'the introduction into the CVP cost allocation o f an environmental water account proposed by 

the water and power contractors is not consistent with provisions o f federal law, Reclamation 

guidance on allocating costs. State water rights decisions, and would likely double count water 

use."' Id. 

While the Two Cost Allocation and Two-Period Repayment Approach differs from the 

Contractors" Proposal discussed in the 2001 cost allocation study, it seems that most, if not all, o f 

Reclamation's stated reasons for rejecting the Contractors' Proposal apply equally to the current 

proposal. Are there ways in which the current proposal is materially different from the 

Contractors'Proposal that would eliminate these concerns? 

Available at http://www.usbr.gov/mp/cvp/laws.html. 

' The Contractors' Proposal focused on the 800,000 acre-feet o f water dedicated annually by 

section 3406(b)(2) o f the CVPIA to fish and wildlife purposes. 2001 CVP Cost Allocation 

Study, Executive Summary at ES-3. 

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We appreciate your taking the time to consider these issues, and look forward to any 

responses you are able to share with us. Please feel free to contact us i f you would like to 

discuss these matters further. 

Sincerely, 

Rachel Zwillinger 

Defenders o f Wildlif e 

Jay Ziegler 

The Nature Conservancy 

Jeffrey Volberg 

California Waterfowl Association 

Mark Biddlecomb 

Ducks Unlimited 

Michael Lynes 

Audubon California 

Ric Ortega 

Grassland Water District & Grassland 

Resource Conservation District 

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