Central Valley Project Water Contracts are Renewed for Farms and Cities

Water Service and Settlement Contracts Expiring After 40 Years

Media Contact: Jeffrey McCracken, 916-978-5100

For Release: February 25, 2005

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.

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.

"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."

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.

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.

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.

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.

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.

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.

Facts and Figures

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.

The CVP irrigates 1/3rd of all farmland in California. The CVP delivers 1/3rd of all the irrigation water used in California. Counties irrigated by CVP water generate $13 billion in gross farm product. California is the 4th largest agricultural region in the world behind the United States, Brazil, and China. One of every 4 jobs in the CVP service area is related to agriculture.

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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 www.usbr.gov and follow us on Twitter @USBR.