Markets for Federal Water: Subsidies, Property Rights, and the Bureau of Reclamation

By Richard W. Wahl | Go to book overview

agencies (including the Senate Select Committee on Small Business and the Senate Committee on Interior and Insular Affairs in 1975, Secretary of the Interior Horton in 1977, the federal San Luis Task Force in 1978, Interior Solicitor Krulitz in 1978, the department's Office of Inspector General in 1978 and 1979, Assistant Secretary of the Interior Carruthers in 1981, and the authors of the Reclamation Reform Act in 1982) that the $8.00-per-acre- foot rate would fail to cover operation and maintenance costs and capital costs for the water, as well as repayment for the San Luis Drain. Each of these parties made some attempt to modify the repayment terms to require Westlands to pay at least the operation and maintenance costs of its federally supplied water and to bring repayment more into line with sound business practices. Despite these measures, over the twenty-one-year period extending from 1965 to 1986, the water users in the original Westlands Water District were successful in maintaining their original repayment terms for up to 900,000 acre-feet of water. The result is that some farmers in Westlands will continue to pay the United States $8.00 per acre-foot for water even though the operation and maintenance costs alone are $9.19 for 1986 and may increase to $20.94 per acre-foot by 2007.

The Westlands contract dispute shows how tenaciously water districts defend what they believe to be their property rights in federally supplied water and how successful they can be in dealing with the public sector. Westlands made itself felt at all levels--with the bureau's regional directors in Sacramento; with representatives in Congress; and directly with depart- mental officials at the level of the assistant secretary, the solicitor, and the secretary. These officials often feel that they must defend their constituents' interests to the Office of Management and Budget when it performs its final review of proposed departmental actions. Westlands pleaded its case to departmental officials not only through its legal representatives, but also through Kenneth Khachagian, who at the time was a speechwriter for President Reagan (see National Journal, 1985; Mosher, 1986; and Kirschten, 1986). Clearly, when the financial assets at stake are considerable, a wide range of resources will be brought to bear to protect them.

This twenty-one-year history of administrative accommodation may well extend at least that far into the future. Further renegotiations and accommodations are likely to be made in determining the financial responsibility for repaying the costs of containing the selenium contamination in Kesterson Reservoir (see chapter 7), in providing additional drainage service to Westlands, and in developing a new contract for Westlands when the original one expires in 2007.


References

Kirschten Dick. 1986. "White House Kibitzers," National Journal vol. 18, no. 24, pp. 1496-1497 (June 14).

Mosher Lawrence. 1986. "Paying for Water," National Journal vol. 18, no. 22, pp. 1313-1315 (May 31).

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