WASHINGTON -- As lawmakers scurry to finalize a massive spending bill for most federal agencies, Representatives Miller and Tauscher today urged appropriation members to oppose any funding for the Westlands settlement finalized yesterday by Judge Oliver Wanger. Over one month ago, in an unprecedented show of unity, the entire 55 member House and Senate California delegation wrote Attorney General Ashcroft and Interior Secretary Norton opposing the Administration’s proposal to fund the $107 million settlement by cutting other essential California water projects.

In addition to reminding key lawmakers that the delegation opposed the Administration’s settlement funding proposal, Miller cited concerns over the potential of this settlement to establish precedent for the remaining 176,000 acres of land impacted by the lack of drainage. The letter raises questions about the additional cost to taxpayers, above the settlement amount. Specifically, the letter points out provisions which allow the farmers to maintain their farm subsidies and allow Westlands Water District to maintain the water used to irrigate the retired lands while forgiving the District of its obligation to repay multi-million dollar government loans used to develop the irrigation infrastructure. These provisions could result in hundreds of millions of dollars in additional cost to the federal government.

“Funding this controversial settlement - negotiated with no input or review by the Congress, which is now expected to fund it - could put us on the path of funding hundreds of millions of dollars in settlements that we have no opportunity to design or ensure that sound public policy is followed and that taxpayers are fully protected,” said Representative Miller.

"This is not good for taxpayers, and it's not good for California's precious water supplies," said Representative Tauscher. "This settlement is a significant departure from Reclamation law. Congress has not been afforded an opportunity to review or endorse the policy changes proposed and has an obligation to do so before we spend tax dollars to pay for this settlement.”

The full text of the letter is attached.

Representative Bill Young
Chairman
House Committee on Appropriations
H-218 The Capitol
Washington, DC 20515

Representative David Obey
Ranking Member
House Committee on Appropriations
1016 Longworth House Office Building
Washington, DC 20515

Dear Chairman Young and Ranking Member Obey,

We write to urge that you do not provide any funding or provisions providing future funding for the settlement of the lawsuit Sumner Peck Ranch Inc., v. Bureau of Reclamation, No CV-F-91-048 in the Omnibus appropriations package. Funding this controversial settlement, negotiated with no input or review by the U.S. Congress which is now expected to fund it, could put us on the path of funding hundreds of millions of dollars in settlements that we have no opportunity to design or ensure that sound public policy is followed and that taxpayers are fully protected.

As you know, the Department of Interior submitted a budget amendment on January 7, 2003 that reallocates $34 million from other important California projects and the Army Corps of Engineers to fund this settlement. Every Democrat and Republican in the California delegation wrote in opposition to this proposal and urged the Departments of Justice and the Interior to reconsider the use of the Judgment Fund as a source of payment for the settlement. While we agree that appropriated funds from California water projects should not pay for this settlement, our concerns go beyond the source of the payment and speak to the settlement itself.

In summary, the Sumner Peck settlement arises from damage claims made against the Bureau of Reclamation by Central Valley farmers pertaining to agricultural drainage. The plaintiffs contend that the government’s failure to provide irrigation drainage to their lands resulted in contamination from salt, selenium, and other toxic chemicals. Initially, the government began construction on the San Luis Drain pursuant to Public Law 86-488. Construction of the San Luis Drain was halted at the Kesterson Reservoir and the project was never completed. For decades, the Energy and Water appropriations bill has contained language prohibiting the Bureau of Reclamation from expending federal funds to complete the drain to a point of final discharge in the San Joaquin-Sacramento Delta. While Congress continues to object to the San Luis Drain, the Bureau of Reclamation and the 9th Circuit Court have determined that the government does have an obligation to provide some alternative form of drainage service to this area, although the cost-sharing and repayment obligations of the irrigators must be resolved.

There have been hundreds of thousands of acres of lands impacted by drainage. To date, the Department of the Interior has finalized one settlement, the Britz settlement, involving 3000 acres for $7.3 million of expended federal funds without apparent Congressional authorization. The Sumner Peck settlement involved 34,000 acres with a settlement payment by the United States of $104 million. Thus, the government’s settlement cost per acre is ranging from $2500 to $3058 (and the landowners would receive additional funding from other sources). If the remaining lands are treated similarly, the federal government could face hundreds of millions of dollars in future obligations.

In addition to the potential of over $110 million in direct settlement payments, the Sumner Peck settlement also contains provisions which create new water policies for California. None of these have been reviewed by the State Legislature, the State Water Resources Control Board (which allocated water rights), or the U.S. Congress. As you know, the original Central Valley Project authorization enabled irrigation districts to borrow money interest free from the federal government to construct irrigation facilities and water distribution systems. To date, only a small fraction of these costs have been repaid, although contractors have received large volumes of water each year for decades. As part of the Sumner-Peck settlement, the Westlands Water District is forgiven of its obligation to repay the government many millions of dollars for facilities and distribution systems related to the impacted lands identified in this settlement. However, the Westlands Water District retains the water the Bureau of Reclamation provided under contract to the lands in question. The value of the water alone is estimated to be $150 million. To date, the Department of the Interior has refused to provide information related to the lost revenues of the repayment forgiveness, although independent analysis estimates the revenue loss to be between $8 to $10 million. This loss will impact either federal taxpayers or the other water and power contractors of the Central Valley Project; the Administration has not disclosed which.

The plaintiffs also receive benefits in addition to damage payments. A provision in the settlement allows the plaintiffs to retain the Crop Histories for the lands that Westlands Water District will hold title to. Stated differently, the plaintiffs will retain all direct farm subsidies and crop support payments for land they no longer hold title to. Plaintiffs have received almost $13 million in subsidy payments since 1996.

Provisions in this settlement are a significant departure from Reclamation law. Congress has not been afforded an opportunity to review or endorse the policy changes proposed and has an obligation to do so before they expend money for the settlement. Again, we urge you to avoid funding this settlement until we have a complete understanding of the short and long term impacts.

Sincerely,

GEORGE MILLER, M.C.
7th District, California

ELLEN O. TAUSCHER, M.C.
10th District, California