The U.S. Bureau of Reclamation (Reclamation) today will publicly offer opportunities to Klamath Project irrigators to participate in an innovative pilot environmental "water bank". Monday’s meeting, scheduled for 10:00 a.m. at Exhibit Hall A of the Klamath County Fairgrounds in Klamath Falls, will outline to the public community Reclamation’s plan to help meet requirements of the 2002 Biological Opinions (BOs) on Klamath Project Operations for threatened and endangered species. Representatives from the Natural Resource Conservation Service (NRCS), Klamath Water Users Association (KWUA), Oregon Water Resources Department (OWRD) and local community leaders will also be present to assist in the discussion.

Klamath Water Users Association last week announced it would support, and assist the Department of Interior in the implementation of, a Klamath Project Pilot Environmental Water Bank in 2003 to provide over 50,000 of additional water for environmental purposes. While noting that Reclamation’s pilot program does not closely resemble KWUA’s vision for a long-term bank (see attachment), water users will continue to work with Reclamation and Interior to complete a long-term water bank proposal in the coming year.

"We are not in a perfect situation," said Dave Solem, general manager of Klamath Irrigation District. "There is no acceptable long-term plan for the operation of the Klamath Project. The science underlying the current biological opinions is not supported. The Project is still being asked to provide an inequitable contribution to solving environmental concerns in the basin. However, through considerable discussions with the Department of Interior, we are assured they are committed to do whatever they can to deliver water to the Project in 2003 and beyond. The 2003 water bank is an integral part of this effort."

Bob Gasser of Basin Fertilizer in Merrill, agrees: "The Bush Administration has requested that a water bank program be implemented this year," said Gasser. "I think that it is in the best interests of the Basin to work with the White House on this effort. This administration helped us to return water to the land in 2002; hopefully our cooperative efforts will result in continued, reliable water deliveries in 2003."

Paul Simmons, KWUA attorney, believes the water Bank serves a key principle in recognizing the principle that a landowner who does not exercise his water right is entitled to compensation. However, he also says that Project water users maintain that Reclamation lacks discretion to deny Project deliveries to existing contractors.

"To forego use of water stored for irrigation in this Project authorized for irrigation only is a substantial compromise," said Simmons.

Water users also believe that the decision makers in the federal agencies understand very well that there are problems with the existing biological opinions.

"We are hopeful that there will new Endangered Species Act consultation soon that will lead to common sense in the future," said KWUA Executive Director Dan Keppen. "Without that understanding, we would be hard pressed to believe that we are on a path that will work to the overall benefit of the community."

The 2003 Klamath Project Pilot Environmental Water Bank will provide over 50,000 acre-feet (AF) of additional water for environmental purposes. Reclamation’s current proposal is considered a pilot project, which will be assessed for performance this growing season by Reclamation, local water users and other agencies. The BO developed by the National Marine Fisheries Service (NMFS) for threatened coho salmon calls for a water bank this year totaling 50,000 AF, with "deposits" to the "bank" coming from temporary crop idling and use of groundwater in place of Project surface water. The Project water "banked" in Upper Klamath Lake will help Reclamation meet lake level objectives for endangered suckers, as well as downstream flow objectives established by NMFS for coho salmon.

Reclamation worked with local water users and producers over the past year to develop a long-term water bank program that could complement an acceptable 10-year Project operations plan (see attachment). That effort is still underway, and this year’s pilot project will be adaptively managed and monitored to generate additional information and improve future decision-making and long-term program development.

Reclamation is soliciting applications to forego the use of surface water from willing participants within the area served by the Klamath Project. Sources of forebearance-generated water include 12,000 acres of idled cropland: estimated to make 30,000 AF of water available, and 25,000 AF of groundwater substitution, for a total of 55,000 AF of water "banked" under this program.

No irrigation will be allowed on lands accepted in the idling program, and restrictions will be placed on use of such lands. In an effort to provide equitable opportunities to participate, efforts will be made to limit idled land to no more than 15% of the area of any irrigation district. This will provide landowners in all districts an opportunity to participate, without placing undo emphasis on particular areas of the Project. Other criteria that will be assessed as applications are accepted will be outlined at Monday’s meeting.

Landowners participating in the crop idling program can expect to be compensated a minimum of $187.50 per acre. Monitoring of the program would likely be done by Reclamation, with assistance from irrigation district managers and ditch riders.

Farmers will be compensated for idling land or pumping groundwater in place of Project surface water based on costs developed by local water users, comparable to similar programs conducted in the West, including:

1. Sacramento River Contractors 2001 Forbearance Agreement with Westlands Water District.
2. 2003 Palos Verde to Metropolitan Water District of Southern California transfer.
3. Various water transfers through CALFED’s Environmental Water Account.
4. The Klamath Basin Rangeland Trust to Reclamation transfer in 2002.

5. The Klamath Project demand reduction program of 2001.
6. The CVPIA transfer of environmental water from Orange Cove Irrigation District to the Bureau of Reclamation proposed for 2003.

"We have evaluated the dollars needed based on farm economics and individual experience within the Klamath Basin," said Marc Van Camp, consultant to KWUA from MBK Engineers of Sacramento. "It is necessary for individual growers to recover the lost opportunity cost provided in their farming operations together with an incentive to make the Water Bank successful. The prices for 2003 are based on the economic needs of the individual farmers and the prices for water obtained in other water transfers."

Reclamation is also soliciting applications from willing participants on the Klamath Project to substitute groundwater irrigation for surface water irrigation. Presently, it appears that groundwater pumpers in Oregon and California will be eligible to participate in the groundwater substitution program. OWRD officials will be present at Monday’s meeting to provide further information on how the program will apply in Oregon.

Land can be enrolled in either program but not both. All selected applicants will be required to sign a contract with the United States for the period March 24 through October 31, 2003.

Reclamation’s 10-year Biological Assessment (BA) developed in February 2002 proposed an environmental water bank through which willing buyers and sellers will provide additional water supplies for fish and wildlife purposes and to enhance tribal trust resources. Reclamation’s BA estimated the size of the water bank to be up to 100,000 acre feet – depending on water year type - with "deposits" coming from a variety of sources, including off-stream storage, temporary crop idling, and groundwater substitution.

Water users committed to pursue developing a bank with Reclamation at the request of U.S. Interior Department Assistant Secretary Raley and Reclamation Commissioner John Keys in January 2002. At that time, KWUA was asked to develop a Project-wide water bank to assist with meeting environmental water demands in drier years.

KWUA’s Water Bank and Supply Enhancement Committee (Committee), chaired by Malin farmer Dave Cacka, initially developed principles and a draft implementation framework for the water bank in March of 2002. At that time, it was mutually agreed between Reclamation officials and local water users that further progress could not be made on the framework until the BOs for long-term Project operations were completed by federal fisheries agencies. Those opinions were delayed and never finalized until early June.

In mid-July, the water bank committee resumed its meetings and submitted a draft plan to Reclamation in December. The Committee held over 30 meetings in the past year to develop the 65-page report/proposal for a long-term water bank, which differs substantially from the pilot water bank proposed by Reclamation this year. This is in large part due to the fact that the water bank concept proposed in the NMFS biological opinion is much different then that outlined by Reclamation in its 2002-2012 biological assessment (BA). While the Reclamation BA envisioned employing a water bank in drier years, the NMFS BO proposes a bank that would require 50,000 AF this year, 75,000 AF in 2004, and up to 100,000 AF each year from 2005-2012.

Water users are concerned about the magnitude of such a bank, particularly when the justification for the NMFS downstream flow regime – which the "banked" water would support - is questionable.

Certainty of water supplies is a key principle imbedded in KWUA’s draft long-term water bank proposal. Local water users insist that, in exchange for voluntary participation in a Project water bank – which would be used to "fund" environmental water needs - 100% of the irrigation demand for remaining Project acreage will be satisfied, season-long. Water users further believe that the water bank cannot be viewed as a stand-alone element.

"We see the Project water bank as one element in a package," said Cacka. "Other measures – like development of new, permanent storage facilities and acknowledgement of restoration benefits - will assist in minimizing, and ultimately eliminating the need for - water bank requirements in the future."

Water users also believe that the water bank concept proposed in the NMFS biological opinion must be modified before a long-term water bank can be finalized.

"Until the NMFS opinion - through future reconsultation - can be modified to better conform to the original Reclamation BA, we will stand by our original proposal and keep it on the table for further consideration during reconsultation", said Keppen.

Moving forward with the development of a water bank intended to compensate farmers for reallocating their water to environmental purposes presents a tricky and politically risky endeavor for local water users. "On the one hand, we want to be able to protect Project water users from a repeat of 2001 by providing dry-year, compensated options", said Keppen. "On the other hand, we must continue to question the need and size of the water bank, particularly if the banked water will be used to support lake levels and downstream flows that have shaky scientific justification."

"We have three options", said Cacka. "We can do nothing, and face a repeat of 2001. We can litigate, with an uncertain outcome. Or, we can try to make this water bank proposal work. Right now, we are focusing our efforts on this last option. At the same time, we will not back away from our efforts to assess and question the justification for higher environmental water demands."