t .

United States Department of the Interior

MAR 2 0 ~97

~~iIvVCTOFr.4Ea~%

U.S. Fish and Wildlife Service U.S. Bureau of Reclamation

Region 1 Mid-Pacific Region

911 N.E. 11th Avenue 2800 Cottage Way

Portland OR 97232-4181 Sacramento CA 95825-1898

Dear Interested Party:

Subject: Central Valley Project Improvement Act Administrative Proposal on Water

Conservation

In September 1995, the Department.ofthe Interior (Interior) invited the public to identify

concerns they had regarding implementation ofthe Central Valley Project Improvement Act

(CVPIA). To facilitate public input and discussion, representatives ofInterior held a series of

public meetings between September 1995 and April 1996. During these meetings, 12 major

areas of concern were identified, and individuals volunteered to form ~voi4teams z and discuss

the specific issues pertaining to those areas. In April 1996, Interior committed to the

preparation ofan Administrative Proposal for each ofthe 12 areas of concern to address the

principal issues raised by stakeholders during the public forum and work team meetings.

To that end, Interior circulated the draft Administrative Proposal on Water Conservation on

May 31, 1996, for review by interested parties, and received written comments from 16 parties.

Enclosed is the final Administrative Proposal on Water Conservation ~vhichhas been revised to

reflect key comments received, as well as previously raised concerns.

We would like to extend our appreciation to all those who participated in our public process to

find waysto resolve this and ~,therCVPIA implementation issues. Completion ofthis and other

final proposals will not end the need forstakeholder involvement in the implementation ofthe

CVPIA. A process for continued stakeholder in~’olvement will be defined in a separate,

forthcoming administrative proposal.
Copies ofthis final proposal can be accessed on the Mid-Pacific Region’s home page at

http:/www.mp.usbr.gov or can be obtained by calling Ms. Alisha Sterud at 916/979-2435

(TDD 916/979-2310).

Si

Roger K. Patterson

Regional Director

U.S. Bureau ofReclamation

Mid-Pacific Region

I

H. Dale Hall

Assistant Regional Director

U.S. Fish and Wildlife Service

Region 1

Enclosure
CVPIA-ADMINISTRATIVE WATER CONSERVATION

PROPOSAL CRITERIA

INTRODUCTION

In September 1995, the Department ofthe Interior (Interior) invited the public to identify any

concerns they had regarding implementation of theCentral Valley.Project Improvement Act

(ritle.XXXIV ofPublic Law 102-575) (“CVPIA”). To facilitate public input and discussion,

representatives ofInterior held a series of public meetings between September 1995 and April

1996. During these meetings, 12 major areas ofconcern were identified,’ and individuals

volunteered to form workteams and discuss the specific issues pertaining to those areas. In

April 1996, Interior committed to preparation of “Administrative Proposals” on each of the

12 areas of concern, addressing the principal issues raised by stakeholders during the public

forum and workteam meetings. To that end, Interior circulated a draft Administrative

• Proposal on Water Conservation Criteria on May 31, 1996, for review by interested parties.

Written comments on the draft proposal were received from 14 parties. This Administrative

Proposal on Water Conservation Criteria has been revised to reflect the key comments

received on the draft proposal as well as previously raised concerns. Responsesto specific

comments are provided in the attached appendix.

BACKGROUND

Section 210 of the Reclamation Reform Act requires Districts with certain types of contracts

for water with Reclamation to prepare and submit Water Conservation Plans (Plans) with

appropriate goals, measures, and timetables. Districts are asked to submit updated Plans every

5 years. This paper addresses water conservation requirements specifically applicable to the

CVP under Section 3405(e) ofthe CVPIA. Thatsection directs Reclamation to develop

“criteria for evaluating the adequacy of all water conservation plans developed by [CVP]

contractors.” In response to this directive, Reclamation published its first set of “Criteria for

Evaluating Water Management Plans” (Criteria) on April 30, 1993. Sixty districts have

completed plans pursuant to the Criteria, including all districts receiving CVP water under

interim renewal contracts.

Section 3405(e) also provides for periodic review of the criteria, at least every 3 years.

Reclamation initiated a public review ofthe 1993 Criteria in October 1995. Reclamation’s

The 12 areas of concern are the following: conservation, contracting, Anadromous

Fish Restoration Plan (AFRP), management of Section 3406(b)(2) water, Restoration Fund,

urban reliability, transfers, refuge supply, San Joaquin River, Trinity River, Stanislaus River,

and the stakeholder process.

1 March 20, 1997
CVPIA ADMINISTRATIVE WATER CONSERVATION

PROPOSAL CRITERIA

Water Conservation Office staffthen met with the stakeholder workteam to discuss the water

conservation Criteria beginning December 19, 1995. Draft revised Criteria were presented to

the stakeholder workteam on March 6, 1996, and were subsequently released to the public.

Many of the comments indicated that the draft revised Criteria represented an improvement

over the 1993 version, although many commenters still raised some concerns. A second draft

of the revised Criteria was prepared and released for comment on July 9, 1996. Comments

received on that draft were incorporated in the final 1996 Criteria, which were issued on

September 10, 1996.

SUMMARY OF ISSUES

The Water Conservation Workteam2 identified six major issues surrounding the Water

Conservation Criteria: (1) Applicability of certain Best Management Practices (BMP’s) in

different regions; (2) measurement; (3) the exemption process; (4) consistency ofReclamation’s

criteria with the voluntary Memorandum of Understanding (MOU) being developed by an

Agricultural/Public Interest Group Task Force; (5) tiered pricing by contractor to grower;

and (6) discretionary benefits? Each ofthe key issues is discussed below.

2 The Conservation Workteam was chaired by JeffJaraczeski of Northern California

Water Association. The other members were David Aladjem, Sacramento River Users;

Roberta Borgonovo, League of Women Yoters; John Brooks, U.S. Fish and Wildlife Service;

Ed Craddock, Department ofWater Resources; Debra Goodman, Bureau ofReclamation;

Dennis Keller, of Keller, Wegley and Associates, representing the Cross Valley Canal Water

District; Laurence Kimura, Friant Water Users Authority; Curtis Lynn, chair. of AB.3616

Committee; Max Sakato, Sutter Mutual Company; Dave Sunding, UC Berkeley; Jeanette

Thomas, Stockton East Water District; Greg Wang, Central Valley Project Water Association;

and Ronnie Weiner-Cohen, Natural Resources Defense Council.

~ The Workteam also raised a number of other issues that are either subsumed in the

major issues discussed in this proposal or addressed elsewhere. They are: (1) Deference to the

San Joaquin Valley Drainage Report; (2) applicability ofWater Conservation Plan

requirement to refuge water and 800,000 acre-feet; (3) public comment on Plan acceptability;

(4) nonapplicability of Water Conservation Plan requirement to non-CVP supplies;

(5) evaluation procedures of BMP’s; (6) definition of good water management; (7) content of

annual reviews; and (8) applicability ofWater Conservation Plan requirement to dedicated

watersupplies. Issue 1 is dealt with in the revised Criteria; Issue 2 in the Refuge Water and

“B2” Administrative Proposals; Issue 3 will be addressed in the revised guidebook for

preparing Water Conservation Plans; Issue 4 will be addressed in the revised guidebook for

2 Mardi 20, 1997
CVPIA ADMINISTRATIVE WATERCONSERVATION

PROPOSAL CRITERIA

DISCUSSION OF ISSUES AND INTERIOR PROPOSALS

Applicability ofBest Management Practices (BMP’s) in Different Regions

Stakeholder Views. Some water users have argued that it is inappropriate tQ establish a single

set of criteria for water conservation plans in theCVP service area due to regional variations

n soil types, hydrologic considerations, presence of return flows, riparian habitat, conjunctive

use, reuse of water, cropping patterns, economic considerations, and drainage conditions. In

particular, Sacramento Valley water users believe that the mandatory BMP for measurement,

and the exemptible BMP’s for canal lining and incentive block pricing, are inappropriate for

their region. They believe that they are already practicing good water management, because

any “excess” irrigation water is eventually recaptured in the Sacramento River, in groundwater basins, and through reuse,or provides riparian or wetland habitat values. They-also

argue that, while pesticide use in the Sacramento Valley has decreased dramatically in recent

years, reduced drainage flows could have negative impacts on habitat due to resulting increased

pesticide concentrations.

Environmentalists, on the other hand, are skeptical about the habitat benefits of Sacramento

Valley water use patterns, arguing that water provided by return flows is not a desirable

substitute for high-quality in-stream flows. They argue that the timing of return flows may

not match fish in-stream flow needs~and that the quality of return flows is likely to be

degraded. They also argue that the riverstretch between diversions and return flows would

benefit from decreased diversions. Last, they contend that incidental groundwater recharge

and return flows into the river are not as efficient as a planned conjunctive use program with

supplies from water conservation, facilitated by volumetric measurement and pricing.

It has been suggested that regional criteria be developed in lieu of a single set of criteria for the

whole CVP. Some people believe that regional criteria are unnecessary in light of the

exemption process contained in the Criteria, which they believe will allow each District to

tailor a plan that fits local conditions. Others are concerned that heavy reliance on the

exemption process creates an unnecessarily negative perception about a district’s conservation

planning process. However, there was consensus in the Water Conservation Workteam that

the possibility ofregional criteria should be explored.

preparing Water Conservation Plans; Issue 5 in the revised Criteria; Issue 6 in the discussion

in this proposal regarding regional criteria; Issue 7 will be addressed in the revised guidebook

for preparing Water Conservation Plans; and Issue 8 in the revised criteria.

3 March 20, 1997
CVPIA ADMINISTRATIVE WATER CONSERVATION CRITERIA PROPOSAL

Interior Response. Interior agrees that regional criteria are worth exploring, and therefore

plans to develop such criteria for one area as an experimental first step. We propose to

develop •a set of regional criteria for the Sacramento Valley, given its unique conditions and

circumstances, because the development ofregional criteria has been suggested primarily in

response to concerns about the appropriateness of BMP’s for that area. These regional criteria

would largely be the same as the CVR-wide Criteria, except on those issues where a separate

approach may be warranted, such as, for example, on measurement and pricing.

Some questions were raised regarding the applicability ofthe existing Water Conservation

Criteria to Sacramento Valley districts during the interim period before regional criteria are

developed. Interior will use the final revised CVP-wide Criteria to evaluate all conservation

plans or plan updates submitted by any district prior to the adoption ofregional criteria. We

expect to adopt regional criteria forthe Sacramento Valley by October 1997. The regional

criteria will be used to evaluate conservation plans that have not yet been submitted under the

CVPIA by Sacramento Valley districts, which are the plans from the Sacramento River water

rights contractors.

As part of settlement oflitigation, in January 1997, eight ofthe largest diverters among the

Sacramento River water rights contractors agreed to develop a basinwide water management

plan in cooperation with Reclamation and in consultation with the State ofCalifornia and

other interested parties. The process for gathering information and developing the plan is set

out in an MOU between Reclamation and the contractors. The parties to the MOU agree to

actively encourage participation of other interested water rights contractors in the MOU.

The MOU stipulates that the plan is to be developed by January 1, 1999, and will be

implemented by January 1, 2000. The Districts have agreed that the basinwide water

management plan will include, among other items, Water Conservation Plans, as well as

opportunities for using incentives to improve water ma.nagement, such as approachesto

improving water measurement and for incentive pricing structures. Interior would expect the

conservation plans included in the basinwide management plan to be developed under the

regional criteria, assuming that regional criteria can be successfully developed.

Interior is committed to a conservation policy that encourages and facilitates the most efficient

use of water for the benefit of all users. The foundation ofthis policy recognizes the

importance both of protecting the environment and its associated resources, and of preserving

California’s agricultural lands, a limited resource that has been and continues to be vital to the

well-being ofthe State. In developing regional criteria for the Sacramento Valley or

elsewhere, we remain committed to improving water use efficiency and to establishing

incentives for reduced water use wherever such reductions are warranted. We will evaluate

the effectiveness of the regional criteria closely before proceeding with a similar approach for

other areas. If we find for any reason that regional criteria are not as effective as the existing

4 March 20, 1997
CVPIA ADMINISTRATIVE WATER CONSERVATION

PROPOSAL CRITERIA

Criteria, we will contin~xe to use the existing Criteria for evaluation ofWater Conservation

Plans.

Other parties commented that regional criteria should also be developed for their district or

service area. While we are willing to consider the adoption of regional criteria for other

regions, we believe it is essential to evaluate the success orfailure of the first set of regional

criteria before conunitting to further regional criteria. Therefore, we will revisit this issue

upon request after completion ofthe Sacramento Valley regional criteria.

Measurement

Stakeholder Views. Environmentalists believe that measurement is a critical element of

improved water management. They argue that an entity cannot manage water efficiently or

improve upon current water management practices unless the quantity of water delivered to

each water user is accurately measured. While they acknowledge some water users’ argument,

primarily in the Sacramento Valley, that the water use is already 100 percent efficient because

all excess water eventually returns to the river, environmentalists believe that the argument

ignores concerns regarding the timing of return flows relative to fish needs, reduced instream

flows between diversion and return flow points, and water quality impacts of return flows.

Furthermore, they argue that the analysis of the cost-effectiveness of on-farm conservation

measures is based upon quantification ofwater savings, which requires accurate measurement

and volumetric pricing.

In addition to arguing that excess water returns to the river, water users assert that excess

water provides riparian habitat and ground-water recharge benefits. They also argue that they

are already measuring the use of water, as it enters the service area, at various places within

the service area, and as it leaves the service area. Accordingly, they maintain that these

measurements, when combined with other information pertaining to known factors such as

evapotranspiration (ET), consumptive use, deep percolation, and water duties for locally

grown crops, provide enough information to determine whether they are using water

efficiently. They believe, therefore, that any benefits that might result from measurement of

individual customers’ water use would be too small to justify the cost.

Interior Response. There is merit in both positions. It may well be true that some water

users are already managing their water efficiently enough that the measurement requirements

contained in the current water conservation criteria would provide little benefit and could be

burdensome on the users. It may also be true in parts of the Sacramento Valley that “excess”

Irrigation water is not lost to the overall hydrologic system by contributing to ground water

and providing wildlife habitat. However, some form of measurement will be needed to

determine the validity of these arguments.

5 March 20, 1997
CVPIA ADMINISTRATIVE WATER CONSERVATION

PROPOSAL CRITERIA

The firststep in resolving the measurement controversy in the Sacramento Valley is to collect

additional information regarding overall water uses within each District. As part ofthe

above-mentioned MOU, we will be working with those Districts that have not yet submitted

plans under the CVPIA, along with other interested stakeholders, to assess how they are

currently measuring water and what indirect benefits and/or impacts are resulting from

current water use patterns~ The MOU specifically provides for an evaluation ofwater

delivery and use within.the Sacramento Valley; a water balance for the Sacramento River

Watershed, including the identification of opportunities to meet full wildlife refuge water

supply needs with the Sacramento Valley; best management practices and opportunities for

conjunctive use ofsurface and ground-water resources consistent with protecting safe yield of

both resources and applicable law; opportunities for using incentives to improve water

management, such as approachesto improving water measurement and for incentive pricing

structures; opportunities for environmental enhancement through modification in wat~er

management, such as decreasing diversion ofsurface water and altering the timing of

diversions and releases to coincide with fishery needs; and an analysis of the use ofwater

transfers to improve the watersupplies of other water users within the Sacramento Valley. As

these efforts proceed, we will be working with stakeholders to develop a consensus on what

regional criteria should be adopted for evaluation ofWater Conservation Plans to be

developed under the regional management plan.

The Exemption Process

Stakeholder Views. The Criteria contain two categories of Best Management Practices—those

considered “critical,” which are mandatory—and those considered “exemptible,” which are

mandatory unless a District demonstrates that the practice is not cost-effective, financially

feasible, legal or environmentally possible for the District to implement. Concerns raised

about the exemption process include questions as to the appropriateness of requiring

demonstration of a practice that “does not make sense” given some ofthe concerns discussed

above regarding appropriateness of certain BMP’sin different regions. Additional concerns

include questions regarding the degree of documentation necessary to justify an exemption

and the desirability of a programmatic exemption approach.

InteriorResponse. The concerns regarding the appropriateness of requiringDistricts to

demonstrate why they should be exempted from a particular BMP appear to be rooted

primarily in the view described above that certain practices are inherently inappropriate for

certain regions. Given ourintent to develop a set ofregional criteria for the Sacramento

Valley, this concern should be alleviated as to that area. We have also included in the final

revised Criteria an attachment describing examples of nonapplicability for each exemptible

BMP. Ifthe nonapplicable category fits the district, the district can write “NA,” and quote

the relevant sentence from the attachment. Where a BMP is “applicable” but not feasible, the

6 March 20, 1997
CVPIAADMINISTRATIVE WATER CONSERVATION

PROPOSAL CRITERIA

user must demonstrate why it is not feasible. We are also considering whetherthe exemption

process under development in the AB 3616 discussions could provide helpful documentation

guidance.

Consistency of Reclamation’s Criteria With State Program

Stakeholder Views. As a result of a State law passed in 1990, AB 3616, a 6-year effort recently

culminated in the signing of an MOU between the Department of Water Resources (DWR)

and members ofthe AB 3616 Advisory Committee regarding efficient agricultural water

management practices (EWMP’s). The EWMP’s are intended to be used by DWR and others

to encourage efficient water management by agricultural suppliers. There are many

similarities between Reclamation’s Criteria and the EWMP’s in the MOU, but some EWMP’s

are treated differently in the MOU than in Reclamation’s Criteria. For example, water

measurement and pricing are treated in the MOU as practices that must be evaluated for costs

and benefits before any decision is made as to their implementation. InReclamation’s final

revised Criteria, measurement and volumetric pricing are mandatory practices. This raises the

question of whether plans developed under the voluntary AB 3616 MOU would be acceptable

to Reclamation.

Interior Response. It is desirable for both the voluntary MOU and Reclamation’s Criteria to

be as consistent and complementary as possible, and that is our goal for the long-term.

However, there remain some significant differences between the MOU and the Criteria in the -

handling ofthe measurement and pricing issues. We are hopeful that these differences can be

resolved through the development of the regional criteria described above. It has been

suggested by the California Department ofWater Resources that we evaluate how the MOU’s

“Net Benefit Analysis” deals with these issues regionally. We will do so in the process of

developing regional criteria, and will continue to work toward the goal of creating one

agricultural conservation program for the Sacramento and San Joaquin Valley basins that can

be supported by both Federal and State agencies. It is our goal to have a single program in

place by 1999, when the Criteria will next be reviewed and likely revised.

Tiered Pricing (Contractor to Grower)

Stakeholder Views. The environmental community feels very strongly that, along with

measurement, pricing is an important foundation for improved water management. They

believe that CVP contractors have historically enjoyed subsidies that have been an economic

disincentive to manage water efficiently, and advocate the use of district pricing structures that

will give growers more accurate signals regarding the true value of water. They have

supported the mandatory BMP of volumetric pricing and the exemptible use of tiered

Qncreasing block) pricing.

7 March 20, 1997
CVPIA ADMINISTRATIVE WATER CONSERVATION

PROPOSAL CRITERIA

Agricultural water users have mixed views as to the efficacy oftiered pricing structures. Some

believe that tiered pricing has been a useful tool to discourage excessive irrigation in areas with

-‘drainage problems. Others have used tiered pricing as a tool to encourage or discourage

ground-water pumping as part ofa conjunctive use program. Where ground water is not

being managed conjunctively, however, tiered Qncreasing block) pricing could have an

adverse effect by encouraging undesirable use of ground water. Some water users also believe

that tiered pricing structures would discourage water use patterns that provide incidental

benefit as wildlife habitat.

InteriorResponse. District pricing structures are an important tool for promoting efficient

water management. However, we recognize that tiered pricing is not appropriate or useful in

all situations. In the process ofdeveloping the regional criteria forthat area, we will analyze

what kinds ofpricing structures might be appropriate in the Sacramento Valley. We also have

broadened the exemptible tiered pricingBMP in the final revised Criteria to include all forms

ofincentive pricing. Water users have indicated their desire for additional clarification as to

what other pricing structures might be acceptable, and we have, accordingly, listed in the

Criteria the following suitable go~ls for pricing structures: (1) Encouraging more efficient

water use at the farm level; (2)supporting planned conjunctive use of ground water;

(3) increasing ground-water recharge; (4) reducing problem drainage; and (5) improved

management of environmental resouyces.

Discretionary Benefits

Stakeholder Views. The 1993 Criteria stated that the benefits of discretionary programs will

not be granted to Districts that do not have Plans that meet our Criteria (hereinafter

“acceptable Plans”) or are not implementing such plans in good faith. The Conservation

Workteam discussed the appropriateness of Reclamation withholding discretionary benefits

pending receipt of acceptable Conservation Plans, but only partial consensus was reached.

Environmentalists believe that Districts have little incentive to develop and implement

Conservation Plans due to the absence of any enforcement mechanisms orsanctions for

noncompliance. They argue that withholding discretionary benefits is an effective

inducement to encourage districts to develop and implement conservation plans, stating that

most of the acceptable Plans that have been completed come primarily from those districts

facing contract renewals, for which an acceptable Water Conservation Plan was a prerequisite.

Some water users believe that Reclamation does not have the legal authority to condition

discretionary actions on the completion of an acceptable Water Conservation Plan.

Additionally, they are concerned about the possibility that Reclamation might withhold

permission on certain discretionary actions,such as water transfers, due to Districts’ decisions

8 March 20, 1997
CVPIA ADMINISTRATIVE WATER CONSERVATION

PROPOSAL CRITERIA

to delay preparation of acceptable Water Conservation Plans, because they were waiting for

the forthcoming revision ofthe Criteria.

Interior Response. We believe that it is appropriate and consistent with the CVPIA to require

completion of an acceptable Water Conservation Plan as a condition of a renewed contract.

Accordingly, we will continue such a requirement. We also believe that development and

implementation of a Water Conservation Plan is an important tool for the evaluation of

proposals for, water transfers, and will therefore encourage that plans be in place for those

Districts wishing to have expeditious approval of proposed transfers. While this policy does

not mean that no transfers will be approved for districts that have not yet submitted

Conservation Plans, it does mean that approval of transfers will likely take longer for districts

without acceptable Conservation Plans because more analysis will be required to establish that

“real” water is proposed for transfer.

9 March 20, 1997
CVPIA ADMINISTRATIVE WATER CONSERVATION

PROPOSAL CRITERIA

SUMMARY AND SCHEDULE OF PROPOSED ACTIONS

Most ofthe issues raised during the Conservation Workteam discussions have been addressed

in the final revised Criteria, with the significant exception of the cluster of issues dealing with

regional variation, measurement, and pricing. As is stated in the final revised Criteria, these

issues will be addressed through the development of regional criteria. As a firststep in that

process, we will work with stakeholders and the interested public over the coming months to

develop consensus on an approach for the issues ofmeasurement and pricing appropriate to

the Sacramento Valley. We expect to issue proposed regional criteria in July 1997, with final

regional criteria issued in October of 1997.

Some commenters have requested that Interior issue rules and regulations guiding preparation

of the Criteria. We agree that it would be valuable to issue general rules regarding the process

for triennial review and modification ofthe Criteria, and intend to do so. We expect that

draft rules on the triennial review process will be published in April 1998. Further, whenever

we propose to change the Criteria, we will provide notice and an opportunity to comment to

all interested parties.

In addition, we found the participation ofthe water conservation workteam helpful in this

effort, and we would consider a similar approach when we conduct our next review ofthe

Criteria.

10 March 20, 1997