Historic Water Transfer Agreement Gets Final Approval as QSA Falters

Short Title
Historic Water Transfer Agreement Gets Final Approval as QSA Falters
With Key QSA Deadline Missed, California Faces Loss of Nearly 620,000 acre-feet of Colorado River Supplies; Work on QSA May Continue
December 31, 2002

The largest agriculture-to-urban water transfer in history received final approval Tuesday afternoon following votes of the Imperial Irrigation District board of directors ratifying a complex set of agreements involving the transfer. Meanwhile, the water agencies' efforts to sign a broader plan to reduce California's draw on the Colorado River ahead of a midnight Dec. 31, 2002, deadline were unsuccessful.

Assistant Secretary of the Interior Bennett Raley expressed a willingness to continue working with the California agencies to complete the Quantification Settlement Agreement.

“The Water Authority is hopeful that negotiations on the QSA will resume in short order and that ultimately, all of the key deals will come together,” said Maureen Stapleton, general manager of the San Diego County Water Authority and the agency's lead negotiator. “Much progress has been made in the past couple of weeks and months, and some agreements have now been completed, including the critical 'linchpin' IID-Water Authority water transfer.”

“We've put way too much time and effort into all of these accords to simply give up,” Stapleton said, cautioning that “reaching agreement in an era of uncertainty may be more difficult.”

In its actions Tuesday, the Imperial Irrigation District (IID) board of directors voted to approve, among other documents:

The Fourth Amendment to the 1998 Imperial Irrigation District-San Diego County Water Authority Water Conservation and Transfer Agreement to transfer up to 200,000 acre-feet per year for up to 75 years;
An addendum to the IID-CWA Water Conservation and Transfer Agreement Environmental Impact Report;

An addendum to the Quantification Settlement Agreement (QSA) Programmatic Environmental Impact Report and a version of QSA (to which the other QSA parties have not yet agreed);
The board also authorized its negotiators to execute the Environmental Cost-Sharing Agreement that spells out each water agency's financial obligation for environmental compliance and the Secretarial Implementation Agreement (SIA) which, when approved by U.S. Interior Secretary Gale Norton, implements all of the agreements. The SIA has been approved by all four water agencies' negotiators.

The Water Authority's board of directors approved the QSA PEIR on Dec. 19. The board authorized Stapleton to execute all other agreements necessary to complete the water transfer and the QSA; Stapleton is expected to execute the water transfer agreement and the environmental documents today.

Because the QSA agencies failed to sign the QSA before midnight December 31, 2002, the Imperial Irrigation District and the Metropolitan Water District of Southern California now face the specter of federally mandated cutbacks in their Colorado River supplies beginning in 2003. On Friday, U.S. Secretary of the Interior Gale Norton announced that Metropolitan Water District would receive cutbacks of 415,000 acre-feet and the Imperial Irrigation District would receive cutbacks of at least 204,900 acre-feet in 2003 if the QSA was not signed by Dec. 31, 2002.

Execution of the QSA by Dec. 31, 2002, was a requirement for preserving the federal Colorado River Interim Surplus Guidelines (ISG). The ISG would provide a “soft landing” for California while it reduces its take on the Colorado River. Under a seven-state agreement, California has until 2015 to reduce its draw on the river from about 5.2 million acre-feet to its basic annual apportionment of 4.4 million acre-feet a year in the absence of surplus water. During the 15-year ramp-down period, California would have continued to receive surplus water from the river. Instead, California will now experience the “hard landing” of an immediate cutback in its Colorado River supplies.

The Interim Surplus Guidelines may be reinstated if the California QSA agencies agree on a plan that is acceptable to the Secretary of the Interior.

The initial water transfer from Imperial Irrigation District to the San Diego County Water Authority was to begin in 2003.According to the delivery schedule, 10,000 acre-feet would be transferred in the first year of the up to 75-year agreement. The deliveries would increase by 10,000 acre-feet per year until they reach a maximum transfer amount of 200,000 acre-feet in year 19; 200,000 acre-feet represents approximately 30 percent of the water sold by the Water Authority in Fiscal Year 2002 (ending June 30, 2002).

To meet environmental compliance requirements of the transfer, IID agreed to a combined temporary fallowing and system improvement program during the first 15 years of the transfer. In the 16th year of the agreement, all temporary fallowing would end and all water for transfer would be produced through on-farm and system conservation measures.

Payment terms were also revised.The transfer would begin in 2003 at a set price of $258 per acre-foot. In any year after year five, either party could “reset” the price to the terms agreed to in the 1998 transfer agreement. A reset could increase or decrease the per-acre-foot price paid by the Water Authority.

Other financial terms of the deal include $20 million of up-front payments by the Water Authority. Of that amount, $10 million is a pre-payment to IID for delivery of water, and $10 million will be paid to a local Imperial Valley entity that will be created to administer the funds for socioeconomic impacts. Beginning in year 2010, IID – in cooperation with Imperial Valley farmers -- will make additional annual payments into the socioeconomic impact fund until total contributions reach $20 million. In addition, the Water Authority will pay any actual socioeconomic impacts associated with the fallowing program above $20 million. IID will begin crediting the Authority’s for its $20 million up-front payments beginning in year 16.

On Dec. 20, 2002, the State Water Resources Control Board gave final approval for the Imperial Irrigation District-San Diego County Water Authority water transfer.

The San Diego County Water Authority is a public agency serving the San Diego region as a wholesale supplier of water from Northern California and the Colorado River. The Water Authority works through its 23 member agencies to provide a safe, reliable water supply to almost three million county residents.

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