An analysis of the President's water policy initiatives

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Title:
An analysis of the President's water policy initiatives
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Serial - Senate, Committee on Energy and Natural Resources ; no. 95-129
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v, 1, 47 p. : ; 24 cm.
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English
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Viessman, Warren
United States -- Congress. -- Senate. -- Committee on Energy and Natural Resources
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Includes bibliographical references.
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Also available in electronic format.
Statement of Responsibility:
prepared by the Environment and Natural Resources Policy Division, Congressional Research Service, Library of Congress, at the request of Henry M. Jackson, Chairman, Committee on Energy and Natural Resources, United States Senate ; prepared by Warren Viessman, Jr..
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CIS Microfiche Accession Numbers: CIS 78 S312-20
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At head of title: 95th Congress, 2d session. Committee print.
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Sept. 1978.
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Full Text



95th Congress 1 COMMITTEE PRINT
2d Session J


AN ANALYSIS
OF THE

F A NT'S WATER POLICY
SsITIATIVES

OCT 1978
I EPARED BY THE

NVIRON1 M AND NATURAL RESOURCES

0El S jOLICY DIVISION
SSIONAL RESEARCH SERVICE
LIBRARY OF CONGRESS
AT THE REQUEST OF

IENRY M. JACKSON, Chairman

COMMITTEE ON ENERGY AND
NATURAL RESOURCES
UNITED STATES SENATE






SEPTEMBER 1978


Publication No. 95-129

Printed for the use of the
Committee on Energy and Natural Resources

U.S. GOVERNMENT PRINTING OFFICE
31-612 WASHINGTON : 1978



































COMMITTEE ON ENERGY AND NATURAL RESOURCES
HENRY M. JACKSON, Washington, Chairman
FRANK CHURCH, Idaho CLIFFORD P. HANSEN, Wyoming
J. BENNETT JOHNSTON, Louisiana MARK 0. HATFIELD, Oregon
JAMES ABOUREZK, South Dakota JAMES A. McCLURE, Idaho
FLOYD K. HASKELL, Colorado DEWEY F. BARTLETT, Oklahoma
DALE BUMPERS, Arkansas LOWELL P. WEICKER, JR., Connecticut
WENDELL H. FORD, Kentucky PETE V. DOMENICI, New Mexico
JOHN A. DURKIN, New Hampshire PAUL LAXALT, Nevada
HOWARD M. METZENBAUM, Ohio
SPARK M. MATSUNAGA, Hawaii
WENDELL R ANDERSON, Minnesota
JOHN MELCHER, Montana
GRENVILLE GARSIDE, Staff Director and Counsel
DANIEL A. DREYFUS, Deputy Staff Director for Legislation
D. MICHAEL HARVEY, Chief Counsel
RUSSELL R. BROWN, Professional Staff Member
W. 0. CRAFT, Jr., Minority Counsel
(II)












MEMORANDUM OF THE CHAIRMAN


To Members of the Senate Committee on Energy and Natural Resources:
In June of 1978, the Committee on Energy and Natural Resources
caused to be printed "The Water Resources Policy Study: An As-
sessment" (Committee Print No. 95-108) prepared by Dr. Warren
Viessman, Jr., of the Environment and Natural Resources Policy
Division, Congressional Research Service. The assessment was pre-
pared at my request and provided and( in-depth analysis of the "issue
and option" papers prepared in response to the President's direction
to the Office of Management and Budget, the Council on Environ-
mental Quality, and the Water Resources Council to undertake a
comprehensive review of Federal water resources policy. The results
of the administration's water resources policy review were transmitted
to the Congress by the President on June 6, 1978, in the President's
message to the Congress on Federal water policy initiatives (House
Document No. 95-347).
As a further step in the continuing examination of Federal water
policy, I asked Dr. Viessman to prepare an analysis of the President's
June 6, 1978, message to the Congress. Dr. Viessman's latest analysis
will be valuable to the members of the committee in their consideration
of the Federal water policy initiatives proposed by the President and
will be a valuable supplement to his initial study.
The committee wishes to express its appreciation to the author of
this document. I have ordered it to be printed to make it readily
available to the Members of the Congress and others interested in
water resources policy.
HENRY MI. JACKSON, Chairman.
(III)



















Digitized by the Internet Archive
in 2013














http://archive.org/details/analresid00unit













CONTENTS


Tage
Memorandum of the Chairman ..-------------------------------- II
Introduction ---------------------.----------------------------- I1
Background-------------------------------------------------- 3
Revision of water resources planning and evaluation criteria and proce-
dures ------------------------------------------------------- 5
Cost sharing --------------------------------------------------- 11
Policy considerations and alternatives relative to institutions and institu-
tional arrangements -------------------------------------------- 15
Water conservation ---------------------------------------------- 19
Water quality ------------------------------------------------ 23
Water resources research ------------------------------------------ 25
Federal reserved water rights -------------------------------------- 27
Criteria for selecting water projects for authorization -- -------------- 31
Summary----------------------------------------------------- 33
List of references------------------------------------------------ 35

APPENDIX
The President's Message on Federal Water Policy Initiatives: June 6, 1978. 39
(V)






















AN ANALYSIS OF THE PRESIDENT'S
WATER POLICY INITIATIVES


(Prepared by Warren Viessman, Jr., Senior Specialist in
Engineering and Public Works)
ENVIRONMENT AND NATURAL RESOURCES
POLICY DIVISION
CONGRESSIONAL RESEARCH SERVICE
LIBRARY OF CONGRESS
At the Request of
HENRY M. JACKSON, Chairman
COMMITTEE ON ENERGY AND NATURAL RESOURCES

AUGUST 1978














AN ANALYSIS OF THE PRESIDENT'S WATER POLICY INITIATIVES

INTRODUCTION

This report is an analysis of the President's Federal Water Policy
Initiatives (WPI) of June 6, 1978.1 Recommendations were made on:
'Conservation; cost sharing; planning procedures; and environmental
protection. In his statement the President said:
Last year [1977], I directed the Water Resources Council,
the Office of Management and Budget and the Council on
Environmental Quality, under the chairmanship of Secretary
Cecil Andrus, to make a comprehensive review of Federal
water policy and to recommend proposed reforms.
This new water policy [WPI] results from their review,
the study of water policy ordered by the Congress in Section
80 of the Water Resources Planning Act of 1974, and our ex-
tensive consultations with Members of Congress, State,
county, city and other local officials and the public.
Included herein is a discussion of the WPI proposals, relating these
to the seven principal issues considered in the 1977 water policy re-
view. It is worth noting at the outset that the water quality-water
quantity interface was not considered in the WPI nor was there any
proposal relative to the Federal water pollution control program with
its enormous outlays for capital construction. Although the WPI con-
tained several positive recommendations, many controversial subjects
were avoided and some important issues were given only cursory
treatment.
I Message from the President of the United States. Federal Water Policy Initiatives.
'House Document No. 95-347. U.S. Government Printing Office, Washington, D.C.,
June 6, 1978.
(1)
















31 612-78-2













BACKGROUND
The President's May 13, 1977, environmental message to Congress
inaugurated a wide-ranging review of national water policy. The ob-
jective of that review, conducted by the Water Resources Council
(WRC), the Office of Management and Budget (OMB) and the Coun-
cil on Environmental Quality (CEQ), was to produce viable options
for reform. Major topics under consideration were identified in a series
of "issue and option papers" published on July 15 and July 25, 1977,
in the Federal Register. They were:
-revision of water resources planning and evaluation criteria and
procedures,
-cost sharing,
-policy considerations and alternatives relative to institutions
and institutional arrangements,
-water conservation,
-water quality,
-research, and
-Federal reserved water rights.
In July and August 1977, regional hearings were held in Minne-
apolis, Denver, Boston, Dallas, Atlanta, Los Angeles, Seattle, and
Cincinnati. Considerable adverse reaction was voiced, especially from
water interests in the Western States. Consequently, the Senate passed
a resolution, S. Res. 284 (October 1977), expressing its concern about
possible interference with the traditional State role in water allocation
actions and the need for consultation with the Congress.
On February 3, 1978, Secretary of the Interior, Cecil D. Andrus,
met with the Subcommittee on Water Management of the National
Governor's Association (NGA). It was the consensus of the Governors
that:
* any national water policy should be the result of a
cooperative, national, not primarily Federal, effort: that the
new policy should strengthen the States' capabilities to man-
age; that the Federal Government must be more flexible in its
response to States; and that management should recognize
regional differences in water problems and ensure flexibility
and equity in future Federal water investments * State
representatives who participated in the National Water
Policy Review efforts were and are agreed that coherent goals
and guidelines to provide a common purpose to the process
have not been forthcoming from the Federal Government.
The Governors were seeking a stronger role in the water resources
decisionmakinm process: Of particular importance to them was the
economic viability of their regions. Governors in the East were seeking
more help for urban water problems while those in the West were
concerned about their State-rooted water rights. As a result of intense
State pressures, President Carter agreed to discuss his water policy
pronosals with a delegation of Governors before announcing his
decision.
(3)





4

Following consultations with Members of Congress, State, county,
city and other local officials and the public, the results of the water
policy review were transmitted to the President by the Secretary of
Interior in May 1978. On June 6, 1978, President Carter presented his
Federal Water Policy Initiatives to the Congress (see Appendix for
full text). He said:
I am today sending to Congress water policy initiatives
designed to:
-Improve planning and efficient management of Federal
water resource programs to prevent waste and to permit
necessary water projects which are cost-effective, safe and
environmentally sound to move forward expeditiously.
-Provide a new, national emphasis on water conservation.
-Enhance Federal-State cooperation and improved State
water resources planning.
-Increase attention to environmental quality.
He further stipulated that the Initiatives would not impose any
new Federal regulatory program for water management. Key recom-
mendations were categorized under the following headings: Improv-
ing Federal Water Resources Programs; Water Conservation; Fed-
eral-State Cooperation; and Environmental Protection.
In this report, the President's proposals are analyzed in the context
of the seven original categories of the water policy review. Thus, the
scope of the WPI can be more directly related to that of the review
which led to its development.











REVISION OF WATER RESOURCES PLANNING AND EVALUATION CRITERIA
AND PROCEDURES
Planning and evaluation of Federal water projects and programs
are hampered by the considerable number of agencies and departments
involved and the inconsistencies and complexities resulting from their
procedures. The water policy review of 1977 addressed three major
issues relative to this topic. They were: Goals and objectives; planning
and evaluation procedures; and administration of the planning proc-
ess. The original problem areas defined for each issue are reviewed
herein followed by a discussion of the relevant recommendations con-
tained in the President's WPI.

ISSUE A: GOALS AND OBJECTIVES
Problem areas identified in the water policy review were:
1. Whether the objectives of Federal water resources policy should
be limited to national economic development (NED) and environmen-
tal quality (EQ);
2. Lack of coordination between water resources plans and overall
Federal policy, such as transportation;
3. Nature of the Federal role in water resource development in a
modern context; and
4. Inconsistency in project evaluation: "Principles and Standards"
(P&S) are applied to direct Federal programs but not to grant and
loan programs.
Problem 1
The WPI addressed the problem of revising objectives. On this sub-
ject the President stated that the basic planning objectives of the
Principles and Standards-national economic development and envi-
ronmental quality-would be retained and given equal emphasis. In
additon, water conservation would be made a specific component of
both the economic and environmental objectives.
The proposal to include conservation as a component of the NED
and EQ objectives rather than to assign it separate objective status
appears sound. In fact, conservation is only one of several approaches
which might be used singularly or in concert to meet the principal
objectives set forth in the P. & S. A requirement that conservation
be explicitly considered in the planning phase could result in more
efficient and possibly less structure-oriented alternatives for water
resources development.
Problem, 2
Although problems related to uncoordinated planning in the water
resources field are widespread and deserve prompt attention, this sub-
ject was not addressed in the President's Water Policy Initiatives.
(5)





6

Problem 3
The nature of the Federal role in water resources development was
not directly confronted in the June 6 WPI. Increased emphasis on
State and local efforts was implicit, however, as illustrated by the
following proposed actions:
-Substantially increasing from $3 million to $25 million the
annual funding of State water planning under the existing
50-50 percent matching program administered by the Water
Resources Council (Public Law 89-80).
-Preparation of legislation to provide $25 million annually in
50-50 percent matching grant assistance to States to implement
water conservation technical assistance programs.
-Working with State Governors to create a task force of Federal,
State, county, city, and other local officials to continue to ad-
dress water-related problems.
TWhile increased funding for State water planning is desirable ac-
cording to most authorities, there is a need to question the advisability
of the large increase that has been proposed. The concept of water con-
servation technical assistance programs is also attractive but a pilot
program might be considered by the Congress before setting a funding
level.
Determination of appropriate roles to be played by Federal, State,
and local governments is fundamental to the resolution of most critical
water problems. The WPI gave this subject little attention and Con-
gress might list this high in priority for additional consideration.
Problem 4
The WPI included heavy emphasis on improving the P & S but
this was related mostly to cost-benefit calculations. The lack of P & S
coverage of federally-assisted projects was not discussed. This appears
to be a significant omission, particularly when one considers that
Federal grants and loans for water projects now exceed direct Federal
funding for these by the major construction agencies. For example, the
Public Law 92-500 program of EPA is not included under the P & S

ISSUE B: PLANNING AND EVALUATION PROCEDURES
The planning and evaluation procedures considered in the water
policy review related to:
1. Adequacy and integrity of benefit-cost analyses;
2. Identification of project beneficiaries and consideration of
social equity;
3. Appropriate weighting of environmental factors in project
analyses;
4. Determination of the appropriate discount rate; and
5. Focus of water development planning on construction proj-
ects rather than comprehensive management.
Problems 1 and 2
Problems one and two relate to economic analyses of water projects
and were heavily emphasized in the President's WPI. It was stated
that the implementation of the P & S should be improved by institut-
ing consistent, specific procedures for calculating benefits and costs.
Benefit-cost analyses have yet to be uniformly applied by Federal
agencies, and in some cases benefits have been improperly recognized,





7

"double-counted" or included when inconsistent with Federal policy or
sound economic rationale. To provide a mechanism to assure the
needed consistency, the WRC and its member agencies were directed
to:
** (1) evaluate current agency practices for making
benefit and cost calculations, and (2) publish within 12
months a new planning manual to ensure that benefits and
costs are estimated using best current techniques and calcu-
lated accurately, consistently, and in compliance with the
P & S and other economic evaluation requirements. This
manual will supplement and implement the P & S and other
project evaluation requirements * *
Particular attention is to be given to the following items:
benefits attributed to protecting future development in the
floodplain; surplus crop benefits; navigation benefits; flat
water recreation benefits; extended project life; area rede-
velopment benefits; the appropriateness of calculations for
ability to pay (Reclamation projects); whether benefits to
charter boats should be defined as commercial navigation; un-
certainty and risk of cost and benefits; least cost alternative
analysis; consideration and display of engineering uncer-
tainty; market value of vendible project outputs; determina-
tion of project design flood; the appropriateness of maximiz-
ing net benefits versus maximizing benefit/cost ratios under
budget constraints; the assessment and consideration of costs
of elimination of farmland, wetland, wildlife habitat, and
timberland.
There can be little argument that there is the need to achieve greater
consistency and reliability in economic and other aspects of project
analysis. In this respect, the Water Policy Initiatives are a forward
step.
Problem 3
Weighting of environmental factors was not explicitly considered
in the June 6, 1978, message. However, the emphasis placed on enforc-
ing environmental statutes and the criteria for project selection by the
Executive are likely to result in a more systematic determination of the
relative values of environmental factors.
Problenm 4
To make investment decisions, monetary values must be identified by
amount and time. Amounts in different time periods may be brought
to equivalency by use of the discount rate, a time rate of decrease
expressed in percent per time period. The discount rate used (cur-
rently 67/8 percent) greatly influences project selections. For example,
high discount rates favor projects with low initial investments, while
low discount rates favor capital intensive projects. Remarking on the
appropriate discount rate for use in evaluating water resources proj-
ects, the President stated:
* After careful consideration of a range of options,
I have decided that the currently legislated discount rate
formula is reasonable, and I am therefore reconmmending that
no change be made in the current formula. Nor will I rec-
ommend retroactive changes in the discount rate for currently
authorized projects.





8

The President's WPI, by maintaining the status quo, sidesteps
this politically volatile issue. The level of the discount rate has been
debated intensely for years. Some prominent university economists
and many environmentalists favor considerably higher rates based
upon an opportunity-cost approach, while many pro-development
interests consider that the present discount rate includes provisions
for currency depreciation and is therefore somewhat too high. There
are also many who believe that the grandfather clause allowing some
projects to use interest rates of a time long past is illogical, uneconomic,
inequitable, and should be abandoned.
Problem 5
The WPI confronted the issue of excessive focus on structural ap-
proaches to water resources development. It set forth a requirement
that there be an explicit formulation and consideration of a primarily
nonstructural plan as one alternative whenever structural water proj-
ects or programs are planned. Such plans are to incorporate a com-
bination of nonstructural or demand-reducing measures which could
feasibly be employed or adopted to achieve the overall project purpose.
Floodplain management techniques (such as zoning), pricing policies
and ground water recharge are representative of the types of measure
to be employed.
The requirement that a nonstructural alternative be included in
P & S procedures impacts only on those projects falling under the
jurisdiction of these standards.1 A major problem not resolved by this
mandate relates to facilities constructed under provisions of Public-
Law 92-500. EPA cost sharing approaches not only favor large struc-
tural measures, but also heavy initial capital investments over other
less capital intensive alternatives having higher operation, mainte-
nance and replacement (OMR) costs. This deficiency deserves congres-
sional attention.

ISSUE C: ADMINISTRATION OF TIE PLANNING PROCESS
Problems associated with administration of the planning process:
were categorized as follows in the water policy review:
1. Mechanisms already provided for coordination have not been
implemented.
2. Coordination between water quality planning and water-
quantity planning is lacking.
3. There is considerable variation in implementation of project
planning procedures and review processes.
4. Separation of P & S from Environmental Impact Statement
(EIS) procedures has caused unnecessary duplication.
5. Project termination procedures are lacking.
6. The P & S are difficult to interpret and use.
Problems 1 and 2
Planning coordination is not addressed in the WPI. This is a long-
standing problem and is deserving of prompt attention. Of particular
concern is the issue of water quantity-water quality planning and pro-
gram coordination. The Congress has given this topic some considera-
tion but much more could be done.
1U.S. Water Resources Council. Principles and Standards for Planning Water and
Related Land Resources. Federal Register, Part III, Vol. 38, No. 174, September 10, 1973.




9

Problem 3
The June 6 Initiatives gave considerable emphasis to nonuniformity
in project planning and evaluation procedures. It was stated:
No entity other than the construction agency itself now
effectively monitors water project planning to ensure con-
sistency and accuracy of benefit/cost calculations or com-
pliance with relevant statutes, regulations or procedures.
An entity is needed to provide an impartial review of all
water projects during the planning phase to assure technical
compliance with the Principles and Standards and related
laws and other requirements. OMB currently conducts project
reviews as part of its budget and legislative review function.
Because of its fiscal responsibilities to the President, how-
ever, OMB is perceived to have a bias against budgetary
increases and is not policy neutral. Also, its limited staff pre-
cludes a thorough review of the underlying assumptions of
benefit-cost calculations on each individual project report.
To resolve this problem, the President announced the following
decision:
An independent review function is to be established by
Executive Order, and located within the Water Resources
Council.
This review function will be performed by a professional
staff of about 30, with responsibility to review preauthoriza-
tion and preconstruction plans of the Corps of Engineers,
Bureau of Reclamation, Soil Conservation Service, the Ten-
nessee Valley Authority and the other relevant Federal agen-
cies to determine the consistency of those plans with (i)
established planning procedures and manuals, including the
WRC Principles and Standards, and established benefit/cost
calculation and estimation procedures; and (ii) other Federal
laws and regulations relevant to the planning process.
This review unit will report through the WRC Chairman
to the agency heads who will in turn report to the Executive
Office of the President on compliance of project plans with
established requirements and procedures. Cabinet officers will
maintain responsibility for budget requests to OMB. The re-
view unit would also examine the record of project develop-
ment to ensure that there has been adequate opportunity for
public comment and consideration of public views. The re-
view of each project will ordinarily be completed within 60
days and will always be performed within the budget cycle
during which the Cabinet officer would intend to request proj-
ect funding, thereby producing no delay.
It was stipulated that the Principles and Standards require-
ments and the independent review process would apply to all
authorized projects (and separable project features) not yet
under construction.
The concept of an independent review board to review agency pro-
posals has often been recommended. This mechanism could provide
unbiased evaluations of project analyses and used to address questions
of safety and environmental impact in a detached manner. On the
31-612-78---3





10

negative side, it would add 'another layer to already lengthy review
processes and could aggravate problems of delay. Staffing and time
requirements should be carefully assessed and a determination made
of the nature and scope of projects to be reviewed.
There is some question of the advisability of assigning this type of
review function to the WRC, an agency intended to play a formative
role in guiding U.S. water policy and in developing a national water
planning strategy. Assignment of specific project responsibilities
could easily divert the talents of WRC away from its principal mis-
sion. In addition, the review function could place WRC in an adversary
position with the States, a counterproductive move relative to its co-
ordinating role.
Problem 4
Incorporation of the EIS process into the P & S makes sense and
would streamline procedures and minimize duplication. Originally,
the EIS procedures were devised to remedy deficiencies in environ-
mental planning. Now, however, planning has moved strongly toward
corrective action; and the incorporation of environmental protection
into the planning process 'appears to be timely. This issue was not
addressed but deserves prompt attention.
Problems 5 and 6
Project termination procedures and the complexities of interpreting
the P & S were not considered, although the latter may be addressed
in the manual WRC has been directed to prepare.








COST SHARING
Cost sharing is a critical element of national water policy. Current
cost sharing arrangements are inconsistent among programs, purposes
and agencies. The present disjointed approach favors: structural over
nonstructural solutions; capital-heavy construction alternatives over
more economical solutions (having a higher proportional cost of opera-
tion and maintenance); and high levels of wastewater treatment over
other alternatives such as control of urban runoff and dispersed sources
of pollution.
The cost-sharing options considered in the "issue and option papers"
were:
1. The current situation.-The existing non-Federal cost-shar-
ing rates would continue without change. This option presumes
that the inconsistencies in repayment terms and variations among
agency programs and purposes are supported by valid reasons
(Section 80 C, Public Law 93-251).
2. Cost sharing floor.-Existing cost-sharing arrangements
would be modified to achieve greater consistency among agencies
and measures providing similar benefits.
3. Joint venture.-Fifty percent of the initial capital implemen-
tation or financing costs of projects would be provided by the
Federal Government, and the other 50 percent would be provided
by State, interstate or local governments, or by public nongovern-
mental entities.
4. Block grant.-This option would provide block grants to
States as replacements for the present direct Federal investments
in water-resources programs and projects. Initially, each State
would receive grant funds equivalent each year to the average
annual Federal water-resources investment in that State for the
past several years. Eventually, grants would be distributed on a
formula basis reflecting population, economic, and other factors
related to investments and expenditures.
5. Full recovery.-The Federal Government would continue to
plan, finance, implement, and operate projects and programs as it
does today. However, in the case of projects authorized in the
future, the cost sharing terms for each project purpose or service
provided by a project would require 100-percent repayment of all
costs involved, including operation, maintenance, and replacement
costs, interest during construction, and interest at the project
evaluation rate for all repayments obligations schedules over a
period of years.
Cost sharing was given considerable emphasis in the President's
Water Policy Initiatives. He stated that the approach proposed would
accomplish two important goals:
* (1) involving the States more heavily in water project
decisions; and (2) eliminating many of the conflicting rules
governing cost sharing for flood control projects-especially
with regard to structural and non-structural flood damage
reduction measures.
(11





12

The President directed the WRC to prepare, with respect to the pro-
grams of the Bureau of Reclamation, Corps of Engineers and TVA,
necesary rules, procedures, guidelines or legislation to:
-require that States provide a legally binding commitment to
contribute a 10 percent cash share (in-kind contributions
not allowed) of the construction costs associated with vend-
ible outputs of water projects within its borders plus 5
percent of the cost of other project purposes (in-kind con-
tributions not allowed). (Vendible outputs are defined as
those water supply, irrigation, power, and recreation bene-
fits of projects for which the Federal Government receives
revenues from project beneficiaries under present policies).
The State's cash contributions is to be paid concurrently
and proportionately with the Federal contractual obliga-
tion for project construction;
-provide for the sharing of revenues from vendible outputs
between the Federal Government and the States in propor-
tion to their respective investments;
-make this State cost sharing requirement mandatory on
projects not yet authorized by law, and voluntary on those
projects authorized but not yet under construction. For pur-
poses of determining new construction starts, expedited
consideration will be given those projects for which the
State has voluntary guaranteed these cost-sharing contri-
butions;
-include an annual project-by-project "cap" on State contri-
butions of 1/4 of 1 percent of the State's general revenues;
-provide that for multistate projects, the total States' share
will be computed by determining contributions from bene-
fiting States; a State refusing to participate could not
"veto" a project because other States can pick up the
difference.
The 10/5 percent requirement for State cost sharing would
be in addition to existing cost sharing arrangements. The Soil
Conservation Service would be exempt from this requirement.
Existing cost sharing rules would, however, be modified to
require in addition to the cost sharing requirements covered
above, a 20 percent contribution for either structural or non-
structural Federal flood damage reduction measures. This
would equalize structural measure cost sharing with the exist-
ing authorized arrangement for nonstructural flood control
measures. This requirement would apply to the three agencies
covered above, plus the Soil Conservation Service. The 20 per-
cent contribution could include any combination of cash and
in-kind contribution (land, easements, rights-of-way).
The President's recommendations on cost sharing fall primarily
within category 2, the cost sharing floor which was described above.
By requiring that the States contribute a more substantial portion of
project costs, greater care in setting priorities should result coupled
with the tendency to build only the most worthy projects. In addition,
it is likely that those projects selected will have more expansive bene-
fits and will not be as provincial in their purpose. On the other side
of the coin is the possibility that if non-Federal cost shares become dom-
inant, the national interest will not be well served.





13

The cost sharing proposals, although suggested greater consistency
than the current situation, do not really achieve this. As has been
pointed out in the "Section 80 C study," there exists a wide variation
in cost sharing levels among purposes, programs and agencies. For the
most part, the President's proposals do not eliminate these; rather they
superimpose an additional 5- or 10-percent charge upon existing cost
sharing arrangements. It is difficult to understand why the inconsist-
ency problem was not met head-on.
While there are provisions to guard against stiff cost sharing re-
quirements where larger projects are involved, it is not clear whether
these are sufficient. The condition that the State contribution must be
cash and legally committed may be difficult for some States to accom-
modate. Problems could occur due to the amount of funds required,
and the State's ability to time its commitment in light of budgeting
cycles and possible uncertainty of revenues to cover anticipated costs.
Relative to flood damage reduction, it was recommended that both
structural and non-structural measures require 20 percent non-Federal
cost sharing over and above other requirements. This attempt to elim-
inate inconsistency is commendable. It might have been better, how-
ever, if a uniform level had been set for all flood damage reduction
measures. As it now stands, any existing cost sharing provisions would
be supplemented with the new proposals. In addition, the exclusion of
Soil Conservation Service projects from the 5-percent share for non-
vendible outputs results in a new 20 percent non-Federal contribution
for these projects as opposed to a 25-percent share for projects con-
structed by the Corps of Engineers, Bureau of Reclamation and TVA.
Although the cost sharing requirements are not applicable to proj-
ects already authorized, it was noted that expedited consideration
would be given those projects for which a State voluntarily guaran-
teed these cost sharing contributions. In theory, this is a meritorious
proposal, one which suggests that States sincerely interested in water
development will be accommodated. There exists the very real possi-
bility, however, that poorer States could not comply with this ideal,
thus placing them at a competitive disadvantage.
The cost sharing floor option has the attraction of providing ve-
hicle for eliminating inconsistencies while moving toward options more
oriented to "user-pays-the-full-cost." The 1976 recommendations of the
VRC, based on its "Section 80 C study," reflect this philosophy. The
water policy is a move in this direction but it does little to remove most
inconsistencies and adds a few of its own. A more carefully designed
program seems worthy of consideration, and this might become a con-
gressional objective before changes are enacted.
Legal and institutional aspects of cost sharing deserve as much at-
tention as rate structure, consistency, and other factors, but these issues
were not considered. Practical assessment and collection procedures
and mechanisms for identifying principal beneficiaries should be care-
fully assessed and full cognizance given to Federal laws and regula-
tions, State statutes and financial constraints.
Solution of the cost sharing problem might be simplified by decen-
tralization of responsibility for intrastate projects to intrastate re-
gional and local public agencies. Concentrated in such agencies could
be full authority to obtain financial resources through: issuance of tax-
free revenue bonds, general tax assessments, sale of vendible services,
ta.x assessment of flood control beneficiaries, and loan and/or grant
aid from State and Federal overnments.













PoUCY CONSIDERATIONS AND ALTERNATIVES RELATIVE TO INSTITUTIONS
AND INSTITUTIONAL ARRANGEMENTS
The institutional problem areas addressed in the water policy review
were:
Problem 1: Water subsidies
A prime consideration relative to water-project sulbdides is the po-
tential for competitive advantage of uses such as irrigati,:n, naviga-
tion, and recreation over other uses and values.
Problem 2: Impairment of environmental values by water-related
laws and management
Some water-related laws and management practices may lead to
conflict with environmental considerations.
Problem 3: Groundwater and surface water interrelationships
In many States, the water rights system fails to recognize that
groundwater is related to surface water and that stream flows can be
affected by groundwater pumping.
Problem 4: Inflexibility in water allocation and use
Existing systems of water rights have resulted in institutional ar-
rangements that contribute to inflexibility in water allocation and use.
Problem 5: Lack of access for public involvement in water programs
Despite current emphasis on increased opportunities for public
participation in water-program planning, implementation and man-
agement, problems abound regarding the timeliness and nature of
opportunities for public input.
Problem 1
Water subsidies have resulted in advantages to various water users.
Many of these were established over 50 years ago and a reevaluation
now seems appropriate. This politically sensitive issue was not ad-
dressed in the WPI.
Problem 2
The impairment of environmental values was emphasized in the
President's Water Policy Initiatives. The following actions were pro-
posed:
A directive to the Secretary of the Interior and other Federal
agency heads to implement vigorously the Fish and Wildlife Co-
ordination Act, the Historic Preservation Act and other environ-
mental statutes.
A directive to agency heads requiring them to include desig-
nated funds for environmental mitigation in water project appro-
priation requests to provide for concurrent and proportionate
expenditure of mitigation funds.
(15)





16

Accelerated implementation of Executive Order No. 11988 on
floodplain management. This order requires agencies to protect
floodplains and to reduce risks of flood losses by not conducting,
supporting or allowing actions in floodplains unless there are no
practicable alternatives.
A directive to the Secretaries of the Army, Commerce, Housing
and Urban Development, and Interior to help reduce flood dam-
ages through acquisition of flood-prone land and property, where
consistent with primary program purposes.
A directive to the Secretary of Agriculture to encourage more
effective soil and water conservation through watershed programs
of the Soil Conservation Service by:
-working with the Fish and Wildlife Service to apply fully the
recently-adopted stream channel modification guidelines;
-encouraging accelerated land treatment measures prior to fund-
ing of structural measures on watershed projects, and making
appropriate land treatment measures eligible for Federal cost
sharing;
-establishing periodic post-project monitoring to ensure imple-
mentation of land treatment and operation and maintenance
activities specified on the work plan and to provide information
helpful in improving the design of future projects.
A directive to Federal agency heads to provide increased co-
operation with States and leadership in maintaining in-stream
flows and protecting groundwater through joint assessment of
needs, increased assistance in the gathering and sharing of data,
and appropriate design and operation of Federal water facilities.
The WPI emphasized protection of instream flows for recreation,
water quality, aesthetics, and fish and wildlife habitats. Though crude,
current estimates of instream flow needs suggest substantial conflicts
with other water uses, notably irrigation and energy resources devel-
opment. In general, the amount of water available for storage or for
new use will be reduced by about 30 to 60 percent for any one selected
storage volume and location if present calculations of instream flow
rates are adhered to. Such requirements might well be the most critical
water development issue in a river basin.
To protect instream flows, the President directed that the following
actions be taken:
-The Governors are being asked to work with Federal agencies
to protect fish and wildlife and other values associated with
adequate instream flows.
-Federal agencies, working in cooperation with the States, are
directed to improve, where possible and consistent with State
law, the operation and management of existing projects to pro-
tect instream uses. While not interfering with the responsibilities
of the States, Federal water management agencies are directed
to set a strong example in recognizing and protecting legitimate
instream flow needs. Proposals shall be made to amend author-
izing legislation that now lacks provision for stream flow main-
tenance in order to provide instream flows, where commitments
and economic feasibility permit.
-The Federal planning and technical assistance which will be





17

pro iled to the State s as a part of this water policy reform
shall be lade available ini part to adtress andl correct illst reail
tlow plroble(ms.
Those know ledgeable in the water resources field sutpport the nIeed
for re.earch to produce accurate estimates of the quantities of water
needeld to satisfy inst reaml flow rlequiremlents on an anniual, seasonal
and regional basis. The VWPI does note contain such a research direc-
tive. In addition, data needs for (etermining instreani flow require-
lenis a e i II-d(i'linmd and:! coi)relhensi ve progrIas to secure basic data
are lackiiI. Finally, a coordinated effort by all interested State and
Fe(lera1l agenc~ies to lre u al reenent on appropriate instream flow
I\e el is needed in ligh t of ithe cross-purposes of many of these actors.
The Congrgess coulId .co to meet these needs.
Problem 3
Plroblem ; deals with needed improvements in water management
associated witl the relationship between gromndwater and surface
water and the relationiship between water lquality and water quantity.
The ilmportance of both issues is well doc(oIent(dl. Relative to ground-
water, State laws andl court 1dec;isimons ihave sometimes failed to recog-
nize 1that surfiae waters and grounldwaters are interrelated and often
part of the sate systIem. (On this issue the WVPI stated the following:
SManagernent of groumlwlater resources is essentially a State
and local funiction although EPA has certain statutory respon-
sibilities to pr1otect tunderground water resources in conjunction
with the States. IHowever, the absence of laws and pr()ocedures in
lmany lareas has created problems which have resulted in calls for
Federal water-resource development.
These Irobllems can occu r, for exanmple, where federally-funded
sur'face wateir projects are pr'oposed in areas where no effective
State or local laws or proced(lures control acknowledged ground-
water miniIing in the sane area. In such cases, tle potential avail-
ability of water from tlhe Federal project in the future can be-
comie a contri)buting factor to the continuation of groundlwater
depletion.
To improve Federal cooperation with States with regard to
groumndwater, the 1Presi(dent is directiing that tle following actions
)e taken:
-Fede'al water ,eso'irce ,aglleies a',e (diredted to assess o'i' d -
-- l, er ((hlw er ll S l(18 -'Is "r1e, ( .1,1111A .
water p)r)olemls s as projets ar'e llanned.
--F1edera1':l wavter resourc'es aencies are (lirected to work closely
withll S ats a 11(1 loc(al 'ove'rnnllents to seek 'relsolulton o(f r'ou11d-
water )problemis.
The VWPI re-'onizes the g'roundwater (plroblem bult ldoes not i nc'lmd!,
anyv substantiv e remedial act ions. Federal-St ate i'rtnerships for de-
velop in model water codes and 1)'pogralms wliich set clonditions (,o
: 1ants anld loans to requl re cognizance of surface watelr-'grlonnd wa ter
ai i i~c could 1)ovi de Yu i(lac111 and i (c:1 1etiv (
( '* fIt c' ConIsidl(e'a t ion.
31- C12--78---




18 *

Problems related to the water supply-water quality interface stem
mainly from the fact that federally-directed planning under Public
Law 92-500 (Water Pollution Control Act Amendments of 1972) is
conducted outside the procedures for comprehensive planning de-
veloped by the WRC.1 In addition, the Environmental Protection
Agency (EPA) guidelines do not fully accommodate the water quan-
tity/water quality interface. Particular consideration should be given
to coordination of EPA's 208, 209, and 303e planning processes with
those of major direct Federal programs related to water quantity. This
important issue was not addressed in the WPI. It deserves considera-
tion by the Congress.
Problem 4
It has lonie_ belen reco(nized that the varied nature of States' water
rights and the manner in which they are administered have created
problems. Both intrastate and interstate problems have resulted and
inefficiencies in water use have been a by-product. Greater emphasis
could be placed on total water managemnent and implementation of
conservation practices. To accommodate this, some modification of
States' water rights and/or administrative procedures will be re-
quired. Most of the needed changes could be achieved at the State level,
with pricing and cost sharing mechanisms used to provide incentives.
The States should review their water law doctriner and consider
removin( legal imlediments to water-saving practices. If a district or
user makes reduction in water use that require a significant invest-
ment, a benefit from such savings should be provided. This could be in
the form of authority to use the saved water or to sell it. States could
also consider makin. changes in their laws to facilitate desirable trans-
fers of water rights. The Federal Government. working through the
river basin commissions or other regional authorities, could play a
useful role in assisting States to develop laws that recognize the inter-
relationship of surface water and groundwater and provide for
integrated management and conjunctive use of water supplies.
Although the WPI explicitly avoids imposing any new Federal
regulatory programs, positive steps by the Federal Government to
aid the States in resolving tough' water management issues should be
encouraged. The Congress could explore this subject and devise co-
operative measures to facilitate identification and implementation of
needed changes.
Prohbem, 5
The issue of public participation was not directly confronted in the
President's Water Policy Initiatives. It does receive attention in many
of the Federal water resources planning programs, and efforts by
WRC and others to improve the mechanics of public participation
are underway.
1 Universities Council on Water Resources. Workshop report: Integratine Water Quality
and Water and Land Resources Planning. Cornell University. Ithaca, N.Y. August 1976.
p. 3.










WATER CONSERVATION
The common property character of water has constrained implemen-
tation of conservation practices. Changes in institutions such as water
rights, organizational structures, and long-standing social customs
would appear to be necessary to effect systematic, large-scale conser-
vation. Incremental changes could, however, be made for new water
developments with minimal disruption of current policies and prac-
tices, and existing systems could be modified short of massive changes
in water rights systems. Five major problem areas relative to water
conservation were identified in the water policy review. They were:
1. Waste encouraged by low water prices.-The price of water is in-
adequate to provide incentive for efficient water use.
2. Inadequate watershed management practices.-Inadequate con-
sideration has been given to meeting water needs by means of compre-
hensive watershed management, including management of storage and
transfer of surplus water derived from existing supplies.
3. Limited reuse and recycling.-The quantity and quality of water
available for off-stream and in-stream uses is reduced due to the lim-
ited practices of reuse and recycling.
4. froundwater depletion.-The disposition of groundwater is
poorly regulated, and groundwater supplies in some areas are being
significantly depleted because of excessive withdrawals.
5. Inefficient water use.-Inefficient use of water by all users con-
tributes to water shortages and related problems.
Problem 1
The issue of pricing policies was confronted in the WPI. Special
emphasis was placed on the improvement of irrigation repayment and
water service contract procedures under existing authorities of the
Bureau of Reclamation (BR).
It was noted that 40 percent of the water used for irrigation in
water-short areas comes from Federal projects and that there is a wide
disparity between the price of water from Federal projects and the
cost to the Federal Government of supplying it. Farmers who obtain
BR irrigation water from the Central Valley project in California.
for example, pay from $3.50 to $7.50 an acre foot. The rate for the
Westlands Water District within this project lias recently been raised
to $14.50 per acre foot. Other farmers who obtain irrigation water
from the California State water project pay about $22 an acre foot.
The principal differences between the Federal and California water
pIrojects are that the State charges full cost including interest for the
water and applies no acreage limitations, while for Federal projects,
there is an acreage limitation and full costs, including interest, are
not recovered.
(19)




20

In his June 6 message, the President remarked that the Secretary
of tle Interior will:
-Continue the recently instituted requirement that new and
rene(gotiated contracts include provisions for recalculation and
Trefneotiation of water rates every ) yetars. This will replace the
previous practice of 40-year contracts which often do not reflect
inflation and thus do not meet the e neficiaries' repayment
obligations.
--Ender existing authority, add provisions to recover operation
and maintenance costs when existin A contracts are renegotiated,
or soorim wel('re ntracts have adS0j01tinict' (lauses.
-A-ssre the recovery of a more appopropiate ,shae0 of cal)itta costs
by more Iprecisely and rigorously caiculating and implementing
the "al)ility to pay" provision in existing law on which repay-
1nent a rrangeellnts ar.e currently tbas ed.
In addition, the President is initiating:
-Preparation of a legislative proposal to allow States tle option
of requirinng conservation pricing for municipal and industrial
water supplies from Federal projects, provided that State reve-
nues in excess of Federal costs would be returned to municinali-
ties or other public water supply entities for use in water con-
servation or rehabilitation of water supply systems.
Te proposed( pricing poiccn po ies have much to recoI lend them, but
the impact of changes in most repayment contracts will not be real-
ized for somie (ime. Tlie use of terms such s "more appropriate share"
tend to cloud the significance of other measures.
TrobleIns 2 and 3
Total water manatement and water reise were not considered in the
June 6 iessage. Both of these topics are important and should be
given pioriorit c(onsideration. The resolution of many critical water
problemIIs awaits tle ultimate implementation of comprehensive, au-
thoritative water nanagement programns.
Problem, 4
Relative to ground water depletion, the water policy directed tle
)Departm nents of Agriculture and Interior:
-* * tlrough a variety of approaches to encouraoe conserva-
tion and discourage overextension and groundwater depletion
in their aioTricultural assistPance prog'rans whichl affect water
consnumptioi in wiater-short areas.
rThe problem of gYroundwater Imainagement is of national impor-
tance. It is complicated by: nonexistent, varied, and ill-devised laws;
spotty regulationi ; lack of lata ;: politicl sensitivity; and development
programs oblivious of critical grloundwater, surface-water interrela-
1 ioIshi)ps. TIe Presi den t's water policy gives this important issue only
scant attention.
PI'rolem, )
IThere was vcnsi derale eml phasis in the VPI on methods for com-
lating, ine(icient water use. The President set forth several initiatives
to e lcall:o ge coslsrvation ilncluding pricilg, technical assistance and




21

Federal prograi reforms designd, o h elp alleviateO the lproblems.
The.--e include direct ing:
.. Ai rilculti re, ( o111111ere, and E .l (' lo ol ifly fiIaneial as1 si1st ance
proIras o uniip1l ,water suppl) y and sewel' systemis to re-
iire a pproi V ate 1oTlm l~ nity wer co 1Vset rvatliol p1r'1ogr1s as
a coiitlilionl of loans n1( 1 d Ia t s.
--II7I), Agricii Iture atId VA to modify housinI assis tance pro-
grains to reqinrie use of watl er redhinj te.lologil'ies i0 news
uildi ( ns s 8 co(01d io of receivin i assisla lne.
-(-SA, ia consultatio 011 th ail Cte aPien Ulllcies, t: 110)11.ln1i It meas-
1 res 1o encouraoe wl.er conservatio0 at 1Federal facilit ies. A
Foal will be estab)lis-ed and each agency having fai(ilities will
/)e requied to comply.
--. All Fder l water a eie s to require developl lent of w:O.ev
conservation pIrograill s 1 a. condition1 of colntracts for stom'ge
of delivery of nnicial al indu ial watcr' su ple i f
Federal projects.
-All Federal deamrtients to rexiew t)rog' i.s and policies for
cOI sist t(y with wati er conser vation princil les.
11e' ,e 11st ion; a r,.nents in favor o)f' obf )ani wateIer conlsei'va-
tio11 tlir2l,' p)'iFcin"g sys Vt1 IN ra herw tan by re ation o0 statute. In
mIliiYv (s:es, however, there 1ae liit t t otes on wna1t nligllt )ie acl ie ved
throilgl1 pr icing, and it iy be m)ore fleasible to o i):in tlie ne:essarv
changes by. Ire'u1atory aultlority. In any evelt, i'reiotlal, Sta!e. a1i(1
local deee ar ,e aaist a .ri national policy.
It sho01(ld ble pointed ont tIat reduct io iln ater u>e tllirough con1ser-
vation will b)e limitcd unless es 'istinr systells (e'peciallv those used in
irriiiation) are niodified. New systiems can be desig'ned according to
re'isd proe llurel', lipt tlie treat:'lent of old systemis will require great
cae siillce the cost of tleir revision tlav far exceedt l oiwner' alilitv
to lpav.
TIere is 11meit in1 conditioning glra'lt :ad 1loan prograt s o th!e b1 si s
of requiring e01 Stisllhment of conservation pro'ram s. IDe XPI ilii:Pg t
lnature1 tolf I ~e prograsl a11d how 1 tley c(an e il. plemlenled is lanotler
matter. The 'WP1I does not clarify tlhis point. WVel intentioned as tlie
pi o)posals" 11 v seemI, great hardslipi aJ (1 exp)ense cou0ld result if tlie
condlit ions inipo ed are ill-devised. Caut ion should thus b)e exer-cied
in determvninin:" thleir explicit untu r e.
Finally, it should b)e emphasized that conservation is not l -o, ole
answer to the Nation's water problems. Other measures will also be
req( 1ilred, th eir natlre a ilunctioiU of It lo *aliy iln question.














WATER QUALITY
The water policy review focused mainly on pollution froml point
sources. This is surprising when one considers the repeated warnings
by the National Commission on Water Quality, the National Water
Commission, and the Council on Environmental Quality of the im-
portance of nonpoint sources. These dispersed flows contain toxicity
from petroleum hydrocarbons, anmmonia, heavy metals, nutrients, vari-
ous minerals, acids from mine drainage, sediment, and other pollutants.
The magnitude of the problem is clear when one considers that the
National Commission on Water Quality estimated that primary treat-
ment and disinfection of urban runoff alone would cost $199 billion.
Municipalities and local governments cannot be expected to under-
take a pollution control program of the scale envisioned by Public
Law 92-500 without Federal assistance. Aside from the large costs
involved, complications also arise due to the relationships between
water quality and land use, water resource development and use,
maintenance of in-stream flows, and environmental protection. It is
very likely that current 208 programs will produce "implementable"
proposals quite different from those envisioned by the National Com-
mission on Water Quality.1 Many of these, due in part to time and
financing limitations, will probably not meet the 1983 goals of the
Act. This problem deserves priority consideration.
The President supports the position that money spent on waste-
water treatment should concentrate "on building those projects which
take care of the highest priority needs, represent the imost cost-effective
solution to the treatment. problem, and will not lead to secondary
impacts resulting in even greater environmental assaults to the air,
the water and the land." Further, it has been stated "* * continued
commitment of heavy public funding to this program must be predi-
cated on an environmental obljective." In the July 25. 1977. issue of the
Federal Register (pp. 37944-5), the EPA stated: "If the pro-
.ram * loses sight of its environmental objective, the Federal
water pollution control program will be in danger * However.
according to the National Commission on Water Quality, meeting the
198' foals would cost far more than the Nation could afford (in excess
of $1501 billion). On this basis, priorities will have to be set and choices
made accordingly.
Considering the importance of water quality to the Nation and the
portion of the Federal water budoet devoted to this area (over 50
percent), it is notable that the President's WPI does not confront
this matter. The reality that water quantity-water quality issues must
be dealt with jointly will have to take hold if any real progress in
1 Universities Council on Water Resources. Review of Water Resources Policy Op-
tions, Federal Register, July 15 and 25, 1977. University of Nebraska, Lincoln, Nebr.,
October 1977, p. 26.
(23)






24

reaching conservation or water develolment objectives is to be ex-
pected. In addition, the severity of some ground water quality prob-
lems suggests the need for congressional attention. The recomn Ienda-
tions of the National Water (Cnno issioi and the National Couim is-
sion on Water Quality are worth considering.I The Congress might
review the goals of water quality nmangement in the context of a com-
prehensive policy for total water management.
2National Water Conmmission, WTOler IPoli ie; for the Future. Washington, D.C., U.S.
Government Printinp Olfice, 1!)73, pp. 1(07-108.
: National Commission on Water (Quality. Final IReport of the National Conmmission
on Water Quality. House )Document No. 9)4-418, 94th Cong., 2d sess., U.S. Government
Printing Office, Washington, D.C., Iar. 22, 197G, pp. 7-10.










WATER RESOURCES RESEARCH
President Carter's emphasis on better water management suggests
the need for a dynamic and responsive water research program, one
that considers both current and emerging problems. The water policy
review considered this important issue but the WPI is barren of any
pertinent recommendations.
Unless coordination, planning and implementation of Federal water
research programs are improved, little change from the current situa-
tion can be expected. It also seems that a close, balanced relationship
should be sought between water research and water resources planning
processes. Determination of funding levels to permit effective research
on high priority issues and provision of mechanisms for translating
this information into budget processes should be given top considera-
tion in restructuring the Federal water research program.
(25)














FEDERAL RESERVED WATER RIGHTS
The President has instructed Federal agencies to work promptly and
expeditiously to inventory and quantify Federal reserved and Indian
water rights. In some areas, States have been unable to allocate water
because these rights have not been determined. The quantification ef-
fort is to focus first on high priority areas, and is expected to involve
close consultation with the States and affected water users. It is to
emphasize negotiation rather than litigation.
Although the "issue and option" papers did not address Indian
water rights, the President's Water Policy Initiatives did and his rec-
ommendations on this subject are included herein.
FEDERAL RESERVED RIGHTS
The issue of Federal reserved water rights is especially significant
in the public land States because considerable water originates or flows
through national parks. The uncertainty created in attempting to
strike a water budget where there is no quantification of Federal re-
served rights makes planning difficult at best. To date, adjudication
of these rights has not been extensive. Because of the importance of
this issue, the President has directed Federal agencies:
--To increase the level and quality of their attention to the iden-
tification of Federal reserved water rights, focusing particu-
larly on areas where water planning and management will be
improved, where the protection of Federal water uses is of high-
est importance, and where it is essential to reduce uncertainty
over future Federal assertions of right. States and water users
should be closely consulted as this is accomplished.
-To seek an expeditious establishment and quantification of Fed-
eral reserved water rights consistent with the priorities set out,
and this action should be acomplished primarily through ad-
ministrative means, seeking formal adjudication only where
necessary. Resolution of disputes involving Federal water rights
should include a willingness to negotiate and settle such rights
in an orderly and final manner, seeking a balance with conflict-
ing and established water uses. Where adjudication is necessary,
it should be actively pursued by the agency to a speedy resolu-
tion.
-To utilize a reasonable standard, when asserting Federal re-
served rights, which reflects true Federal needs, rather than
theoretical or hypothetical needs based on the full legal exten-
sion of all possible rights. The agencies will be further directed
to develop procedures and standards for the purposes of this
directive, consulting with the Department of Justice as
appropriate.
Special consideration could be given to integrating Federal reserved
rights into existing State water rights systems. Thereafter, these rights
(27)





28

could be subject to court decrees, interstate compacts or other institu-
tional developments affecting the source of water involved. Establish-
ing a forum outside the judicial system to resolve Federal reserved
water rights questions deserves full consideration.
There are many who believe that the Federal Government should
pay compensation to the holders of established water rights that are
destroyed or impaired by the exercise of Federal reserved water rights.
It can be argued that water-related investment has been made with
full knowledge of the possible consequences of the exercise of such
rights, yet Congress may wish to guarantee that any disruption caused
be ameliorated by adoption of a compensation mechanism.
INDIAN WATER RIGHTS
The competition between Indian and non-Indian water rights poses
some extraordinary problems. Most Indian reservations predate exten-
sive water development projects in the western United States, although
the use of water in significant quantities by the Indians has generally
developed only in recent years.
The tribes are concerned that water used for energy and other non-
Indian development will adversely affect their water rights and lead
to a depletion of supplies critical for sustaining future economic de-
velopment on their reservations. They seek assurances that their water
requirements will be properly considered in all planning scenarios.
Rational water planning is dependent upon quantification of all
existing and proposed water uses. Current studies of future water uses
in the western United States have addressed the issue of Indian water
requirements to greater or lesser degrees, but the fact remains that the
quantities involved are generally unknown or in dispute. Until this
matter is resolved, estimates of future streamflow depletions will be
biased accordingly, and decisions on tradeoffs with other users will
be clouded.
In the President's water policy initiatives, it was stated:
The priority and quantity of these rights present a question,
however, because the quantification of the rights must be deter-
mined by examining the documents establishing each reservation.
These issues can, of course, be resolved through judicial proceed-
ings. This is a time consuming and costly process. The President
strongly favors a negotiation process instead. Where negotiation
is unsuccessful, the rights should be adjudicated in the Federal
courts.
In order to facilitate the negotiation process:
-The Bureau of Indian Affairs, through the Department of In-
terior, is being directed to develop and submit a plan for the
review of Indian water claims to be conducted within the next
10 years. The plan will include the development of technical
criteria for the classification of Indian lands which reflect and
make allowance for water use associated with the maintenance
of a permanent tribal homeland.
-All Federal water development agencies are being directed to
develop procedures to be used in evaluating projects for the de-
velopment of Indian water resources and to increase Indian
water development in conjunction with quantification of rights.
These procedures will be consistent with existing laws, prin-
ciples, standards, and procedures governing water resource
development.





29

The quantification of Indian water requirements for both short- and
long-range planning horizons is urgently needed and should be given
high priority. The negotiation approach suggested in the water policy
is considered superior by most authorities on Indian water rights. If
it can be accommodated, it should shorten the time span for resolution
of many problems. The 10-year time frame proposed for the Bureau
of Indian Affairs to submit a plan for, and conduct a review of, Indian
water claims does not seem in keeping with the President's instruction
to Federal agencies to "* * work promptly and expeditiously to
inventory and quantify Federal reserved and Indian water rights."
Problems associated with these rights are already of critical propor-
tions in some areas and timely action seems warranted. The statement
that Federal agencies should develop procedures * "to increase
Indian water development" * is not consistent with the general
tenor of the President's WPI which is to conserve water and to seek
nondevelopmental alternatives whenever practical. To encourage water
development on Indian lands is to invite more trouble in many water
short regions. This is not to say that Indian waters should not be de-
veloped, but rather that other options for solving their problems should
be emphasized in the planning process.
The need to resolve issues relative to Federal reserved and Indian
water rights has been identified by leading water rights authorities as
paramount and deserving of immediate attention. The President's di-
rectives relative to this issue are generally a move in this direction but
care must be exercised in any quantification scheme to assure that
"reasonable" not "inflated" determination of future water needs result.













CRITERIA FOR SELECTING WATER PROJECTS FOR AUTHORIZATION
The President's WPI stressed the need to apply specific measures
in selecting water projects for inclusion in the Federal budget. Criteria
were prescribed to guide Presidential decisions on annual funding of
water projects and on authorization and appropriation bills, including
the selection of new planning and construction starts. They were:
-Projects should have net national economic benefits unless there
are environmental benefits which clearly compensate for any
economic deficit.
-Projects should have widely distributed benefits.
-Projects should stress water conservation and appropriate non-
structural measures.
-Projects should have no significant safety problems involving
design, construction or operation.
-There should be evidence of active public support including
support by State and local officials.
-Projects will be given expedited consideration where State
governments assume a share of costs over and above existing
cost sharing.
-There should be no significant international or intergovernmen-
tal problems.
-Where vendible outputs are involved preference should be given
to projects which provide for greater recovery of Federal and
State costs, consistent with project purposes.
-The project's problem assessment, environmental impact, costs
and benefits should be based on up-to-date conditions.
-Projects should comply with all relevant environmental statutes.
-Funding for mitigation of fish and wildlife damages should be
provided concurrently and proportionately with construction
funding.
These criteria are essentially a reinforcement of the evaluation
aspects of the P & S combined with more explicit considerations of
safety, cost sharing, and enforcement of environmental statutes. The
provision for giving preference to projects where States provide more
than the required level of cost sharing has merit when considered
from the Federal point of view. This could, however, place poorer
States at a disadvantage when competing for project authorizations.
(31)













SU31MARY
The President's Water Policy Initiatives announced on June 6, 1978,
contain needed improvements in cost-sharing policies and a strengthen-
ing of environmental considerations in water resources development.
WRC is directed to improve the Principles and Standards and to
establish conservation as a principal component of the national eco-
nomic development and environmental (quality objectives of water re-
sources planning. Many politically sensitive issues were sidle-stepp el,
however, and several topics were presented in generalities with no sub-
santive remedial action proposed. Important issues relative to water
quality, research and planning coordination were not menttioned.
The principal features of the WPI are summarized below:
(1) The Water Policy will not preempt State or local water re-
sponsibilities.
(2) Conservation is added as a specific component of the economic
and environmental objectives of the Principles and Standards.
(3) Consistency is to be achieved in calculating benefits 1and costs.
(4) A water project review board within the Water tResolurces
Council is to be established.
(5) Consistency in cost sharing for structural and non-structural
flood control alternatives is proposed (legislation required).
(6) A greater degree of non-Federal cost sharing for all water proj-
ect is proposed (legislation required).
(7) Water conservation measures would be a condition for receipt
of Federal grant and loan funds for various purposes.
(8) Planning grants to States would be significantly increased.
(9) A water conservation technical assistance matching grant pro-
gram is proposed (legislation required).
(10) More vigorous enforcement of environmental statutes is being
sought.
(11) More emphasis is to be placed on determining and encourag-
ing allocation of flows for instream needs.
(12) The Federal agencies are to cooperate with States in solving
ground water problems.
(13) Federal agencies are to inventory and quantify Federal re-
served and Indian water rights.
(33)














LIST OF (REFERENCES
1. Message fromt the President of the United States. Federal Water
Policy Initiatives. House Document No. 95-347. U.S. Govern-
ment Printing Office, Washington, D.C., June 6, 1978.
2. U.S. Congress. Senate. Committee on Energy and Natural Re-
sources. The Water Resources Policy Study: an Assessment.
Publication No. 95-108. Washington, D.C., U.S. Government
Printing Office, June, 1978.
3. National Water Commission. Water Policies for the Future. Wash-
ington, D.C., U.S. Government Printing Office, 1973.
4. National Commission on Water Quality. Final Report of the Na-
tional Commission on Water Quality. House Iocument No.
94-418. 94th Cong.. 2nd sess., U.S. Government Printing Office,
Washington, D.C.. Mar. 22, 1976.
5. Universities Council on Water Resources. Workshop report: Inte-
grating Water Quality and Water and and nd Resources Planning.
Cornell University. Ithaca, N.Y. August, 1976.
6. Universities Council on Water Resources. Review of Water Re-
sources Policy Options, Federal Register, July 15 and 25, 1977.
University of Nebraska, Lincoln, Neb., October, 1977.
7. U.S. Water Resources Council. Principles and Standards for Plan-
ning Water and Related Land Resources. Federal Register, Part
III, vol. 38, No. 174, September 10, 1973.
(35)





























APPENDIX


THE PRESIDENT'S MESSAGE ON FEDERAL WATER POLICY INITIATIVES:
JUNE 6, 1978














[Embargoed for release until after briefing. Office of the White House Press
Secretary]

TIE IWHITE HOUSE.
June 6, 1978.
To the Congress of the United States:
I am today sending to Congress water policy initiatives designed to:
-improve planning and efficient management of Federal water
resource programs to prevent waste and to permit necessary
water projects which are cost-effective, safe and environmentally
sound to move forward expeditiously;
-provide a new, national emphasis on water conservation;
--enhance Federal-State cooperation and improved State water
resources planning; and
-increase attention to environmental quality.
None of the initiatives would impose any new Federal regulatory
program for water management.
Last year, I directed the Water Resources Council, the Office of
Management and Budget and the Council on Environmental Quality.
under the chairmanship of Secretary Cecil Andrus, to make a com-
prehensive review of Federal water policy and to recommend proposed
reforms.
This new water policy results from their review, the study of water
policy ordered by the Congress in Section 80 of the Water Resources
Planning Act of 1974 and our extensive consultations with members
of Congress, State, county, city and other local officials and the public.
Water is an essential resource, and over the years, the programs of
the Bureau of Reclamation, the Corps of Engineers, the Soil Con-
servation Service and the Tennessee Valley Authority have helped per-
mit a dramatic improvement in American agriculture, have provided
irrigation water essential to the development of the West. and have
developed community flood protection, electric power, navigation and
recreation throughout the Nation.
I ordered this review of water policies and programs because of
my concern that while Federal water resources programns have Ibeen
of great benefit to our Nation, they are today plagued with problems
and inefficiencies. In the course of this water policy review we found
that:
-Twenty-five separate Federal agencies spend more than S10
billion per year on water resources projects and related
programs.
-These projects often are planned without a uniform, standard
basis for estimating benefits and costs.
-States are primarily responsible for water policy within their
boundaries, yet are not integrally involved in setting priorities
and sharing in Federal project planning and funding.
-There is a $34 billion backlog of authorized or uncompleted
projects.
(39)





40

-Some water projects are unsafe or environmentally unwise
and have caused losses of natural streams and rivers, fish and
wildlife habitat and recreational opportunities.
The study also found that water conservation has not been addressed
at a national level even though we have pressing water supply prob-
lems. Of 106 watershed subregions in the country, 21 already have
severe water shortages. By the year 2000 this number could increase to
39 subregions. The Nation's cities are also beginning to experience
water shortage problems which can only be solved at very high cost.
In some areas, precious groundwater supplies are also being depleted
at a faster rate than they are replenished. In many cases an effective
water conservation program could play a key role in alleviating these
problems.
These water policy initiatives will make the Federal government's
water programs more eflicient and responsive in meeting the Nation's
water-related needs. They are designed to build on fundamentally
sound statutes and on the Principles and Standards which govern the
planning and development of Federal water projects, and also to en-
hance the role of the States, where the primary responsibilities for
water policy must lie. For the first time, the Federal government will
work with State and local governments and exert needed national
leadership in the effort to conserve water. Above all, these policy
reforms will encourage water projects which are economically and
environmentally sound and will avoid projects which are wasteful
or which benefit a few at the expense of many.
Across the Nation there is remarkable diversity in the role water
plays. Over most of the West, water is scarce and must be managed
carefully-and detailed traditions and laws have grown up to govern
the use of water. In other parts of the country, flooding is more of a
problem than drought, and in many areas, plentiful water resources
have offered opportunities for hydroelectric power and navigation. In
the urban areas of our Nation, water supply systems are the major
concern-particularly where antiquated systems need rehabilitation
in order to conserve water and assure continued economic growth.
Everywhere, water is fundamental to environmental quality. Clean
drinking water, recreation, wildlife and beautiful natural areas de-
pend on protection of our water resources.
Given this diversity, Federal water policy cannot attempt to pre-
scribe water use patterns for the country. Nor should the Federal
government preempt the primary responsibility of the States for
water management and allocation. For those reasons, these water pol-
icy reforms will not preempt State or local water responsibilities. Yet
water policy is an important national concern, and the Federal gov-
ernment has major responsibilities to exercise leadership, to protect the
environment and to develop and maintain hydroelectric power, ir-
rigated agriculture, flood control and navigation.
The primary focus of the proposals is on the water resources pro-
grams of the Corps of Engineers, the Bureau of Reclamation, the Soil
Conservation Service and the Tennessee Valley Authority, where an-
nual water program budgets total approximately $3.75 billion. These
agencies perform the Federal government's water resource develop-
ment programs. In addition, a number of Federal agencies with water-
related responsibilities will be affected by this water policy.





41

I am charging Secretary Andrus with the lead responsibility to see
that these initiatives are carried out promptly and fully. With the
assistance of the Office of Management and Budget and the Council
on Environmental Quality, he will be responsible for working with
the other Federal agencies, the Congress, State and local governments
and the public to assure proper implementation of this policy and
to make appropriate recommendations for reform in the future.
SPECIFIC INITIATIVES IMPROVING FEDERAL WATER RESOURCE PROGRAMS
The Federal government has played a vital role in developing the
water resources of the United States. It is essential that Federal water
programs be updated and better coordinated if they are to continue
to serve the nation in the best way possible. The reforms I am propos-
ing are designed to modernize and improve the coordination of federal
water programs. In addition, in a few days, I will also be sending
to the Congress a Budget amendment proposing funding for a number
of new water project construction and planning starts. These projects
meet the criteria I am announcing today. This is the first time the
Executive Branch has proposed new water project starts since Fiscal
Year 1975, four years ago.
The actions I am taking include: A directive to the Water Resources
Council to improve the implementation of the Principles and Stand-
ards governing the planning of Federal water projects. The basic
planning objectives of the Principles and Standards-national eco-
nomic development and environmental quality-should be retained
and given equal emphasis. In addition, the implementation of the
Principles and Standards should be improved by:
-adding water conservation as a specific component of both the
economic and environmental objectives;
-requiring the explicit formulation and consideration of the
primarily non-structural plan as one alternative whenever struc-
tural water projects or programs are planned;
-instituting consistent, specific procedures for calculating bene-
fits and costs in compliance with the Principles and Standards
and other applicable planning and evaluation requirements.
Benefit-cost analyses have not been uniformly applied by Fed-
eral agencies, and in some cases benefits have been improperly
recognized, "double-counted" or included when inconsistent
with federal policy or sound economic rationale. I am directing
the Water Resources Council to prepare within 12 months a
manual which ensures that benefits and costs are calculated
using the best techniques and provides for consistent applica-
tion of the Principles and Standards and other requirements:
-ensuring that water projects have been planned in accordance
with the Principles and Standards and other planning reouire-
ments by creating. by Executive Order. a project review func-
tion located in the Water Resources Council. A professional
staff will ensure an impartial review of pre-constrlction project
plans for their consistency with established planning and bene-
fit-cost analysis procedures and anplicable requirements. They
will report on compliance with these requirements to agency





42

heads, who will include their report, together with the agency
recommendations, to the Office of Management and Budget.
Project reviews will be completed within 60 days, before the
Cabinet officer makes his or her Budget request for the coming
fiscal year. Responsibility will rest with the Cabinet officer for
Budget requests to the Office of Management and Budget, but
timely independent review will be provided. This review must
be completed within the same budget cycle in which the Cabinet
Officer intends to make Budget requests so that the process re-
sults in no delay.
-The manual, the Principles and Standards requirements and the
independent review process will apply to all authorized projects
(and separable project features) not yet under construction.
Establishment of the following criteria for setting priorities each
year among the water projects eligible for funding or authorization,
which will form the basis of my decisions on specific water projects:
-Projects should have net national economic benefits unless there
are environmental benefits which clearly more than compensate
for any economic deficit. Net adverse environmental conse-
quences should be significantly outweighed by economic benefits.
Generally, projects with higher benefit/cost ratios and fewer
adverse environmental consequences will be given priority
within the limits of available funds.
-Projects should have widely distributed benefits.
-Projects should stress water conservation and appropriate non-
structural measures.
-Projects should have no significant safety problems involving
design, construction or operation.
-There should be evidence of active public support, including
support by State and local officials.
-Projects will be given expedited consideration where State
governments assume a share of costs over and above existing
cost-sharing.
-There should be no significant international or inter-govern-
mental problems.
-Where vendible outputs are involved preference should be given
to projects which provide for greater recovery of Federal and
State costs, consistent with project purposes.
-The project's problem assessment, environmental impacts, costs
and benefits should be based on up-to-date conditions (planning
should not be obsolete).
-Projects should be in compliance with all relevant environ-
mental statutes.
-Funding for mitigation of fish and wildlife damages should be
provided concurrently and proportionately with construction
funding.
Preparation of a legislative proposal for improving cost-sharing for
water projects. Improved cost-sharing will allow States to participate
more actively in project decisions and will remove biases in the exist-
ing system a gainst non-structural flood control measures. These





43

changes will help assure project merit. This proposal, based on the
study required by Section 80 of P.L. 93-251, has two parts:
-participation of States in the financing of federal water project
construction. For project: purposes with vendible outputs (such
as water supply or hydroelectric power), States would contrib-
ute 10% of tle costs, proportionate to and phased with federal
appropriations. Revenues would be returned to the States
proportionate to their contribution. For project purposes with-
out vendible outputs (such as flood control), the State financing
share would be 5%9. There would be a cap on State participa-
tion per project per year of 1/4 of 1% of the State's general
revenues so that a small State would not be precluded from hav-
ing a very large project located in it. Where project benefits ac-
crue to more than one State, State contributions would be cal-
culated accordingly, but if a benefiting State did not choose to
participate in cost-sharing, its share could be paid by other par-
ticipating States. This State cost-sharing proposal would apply
on a mandatory basis to projects not yet authorized. However,
for projects in the authorized backlog, States which voluntarily
enter into these cost-sharing arrangements will achieve ex-
pedited Executive Branch consideration and priority for proj-
ect funding, as long as other project planning requirements
are met. Soil Conservation Service projects will be completely
exempt from this State cost-sharing proposal.
-equalizing cost-sharing for structural and non-structural flood
control alternatives. There is existing authority for 80%-20%
Federal/non-Federal cost-sharing for non-structural flood con-
trol measures (including in-kind contributions such as land
and easements). I will begin approving non-structural flood
control projects with this funding arrangement and will pro-
pose that a parallel cost-sharing requirement (including in-
kind contributions) be enacted for structural flood control
measures, which currently have a multiplicity of cost-sharing
rules.
Another policy issue raised in Section 80 of P.L. 93-251 is that
of the appropriate discount rate for computing the present value of
future estimated economic benefits of water projects. After careful
consideration of a range of options I have decided that the currently
legislated discount rate formula is reasonable, and I am therefore
recommending that no change be made in the current formula. Nor
will I recommend retroactive changes in the discount rate for cur-
rently authorized projects.

WATER CONSERVATION
Managingc our vital water resources depends on a balance of supply.
demand and wise use. Using water more efficiently is often cheaper
and less damaging to the environment than developing additional sup-
plies. 1While increases in supply will still be necessary. these reforms
place emphasis on water conservation and make clear that this is now
a national priority.





44

In addition to adding the consideration of water conservation to the
Principles and Standards, the initiatives I am taking include:
Directives to all Federal agencies with programs which affect water
supply or consumption to encourage water conservation, including:
-making appropriate community water conservation measures a
condition of the water supply and wastewater treatment grant
and loan programs of the Environmental Protection Agency,
the Department of Agriculture and the Department of
Commerce;
-integrating water conservation requirements into the housing
assistance programs of the Department of Housing and Urban
Development, the Veterans Administration and the Department
of Agriculture;
-providing technical assistance to farmers and urban dwellers
on how to conserve water through existing programs of the
Department of Agriculture, the Department of the Interior and
the Department of Housing and Urban Development;
-requiring development of water conservation programs as a
condition of contracts for storage or delivery of municipal and
industrial water supplies from federal projects:
-requiring the General Services Administration, in consultation
with affected agencies, to establish water conservation goals
and standards in Federal buildings and facilities:
-encouraging water conservation in the agricultural assistance
programs of the Department of Agriculture and the Depart-
ment of the Interior which affect water consumption in water-
short areas; and
-reauesting all Federal agencies to examine their programs and
policies so that they can implement appropriate measures to
increase water conservation and re-use.
A directive to the Secretary of the Interior to improve the imple-
mentation of irrigation repayment and water service contract proce-
dures under existing authorities of the Bureau of Reclamation. The
Secretary will:
-require that new and renegotiated contracts include provisions
for recalculation and renegotiation of water rates every five
years. This will replace the previous practice of 40-year con-
tracts which often do not reflect inflation and thus do not meet
the beneficiaries' repayment obligations;
-under existing authority add provisions to recover operation
and maintenance costs when existing contracts are renegotiated,
or earlier where existing contracts have adjustment clauses:
-more precisely calculate and implement the "ability to pay"
provision in existing law which governs recovery of a portion
of project capital costs.
Preparation of legislation to allow States the option of requiring
higher prices for municipal and industrial water supplies from Fed-
eral projects in order to promote conservation, provided that State
revenues in excess of Federal costs would be returned to municipalities
or other public water supply entities for use in water conservation or
rehabilitation of water supply systems.





45

FEDERAL-STATE COOPERATION
States must be the focal point for water resource mnanagement. The
water reforms are based on this guiding principle. Therefore, I am
taking several initiatives to strengthen Federal-State relations in the
water policy area and to develop a new, creative partnership. In addi-
tion to proposing that States increase their roles and responsibilities
in water resources development through cost-sharing, the actions I am
taking include:
Proposing a substantial increase from $3 million to $25 million an-
nually in the funding of State water planning under the existing
50%-50% matching program administered by the Water Resources
Council. State water planning would integrate water management and
implementation programs which emphasize water conservation and
which are tailored to each State's needs including assessment of water
delivery system rehabilitation needs and development of programs to
protect and manage groundwater and instream flows.
Preparation of legislation to provide $25 million annually in 50%-
50% matching grant assistance to States to implement water con-
servation technical assistance programs. These funds could be passed
through to counties and cities for use in urban or rural water conserva-
tion programs. This program will be administered by the Water
Resources Council in conjunction with matching grants for water
resources planning.
Working with Governors to create a Task Force of Federal, State,
county, city and other local officials to continue to address water-
related problems. The administrative actions and legislative proposals
in this Message are designed to initiate sound water management
policy at the national level. However, the Federal government must
work closely with the States, and with local governments as well, to
continue identifying and examining water-related problems and to
help implement the initiatives I am announcing today. This Task
Force will be a continuing guide as we implement the water policy
reforms and will ensure that the State and local role in our Nation's
water policy is constant and meaningful.
An instruction to Federal agencies to work promptly and expedi-
tiously to inventory and quantify Federal reserved and Indian water
rights. In several areas of the country, States have been unable to
allocate water because these rights have not been determined. This
quantification effort should focus first on high priority areas, should
involve close consultation with the States and water users and should
emphasize negotiations rather than litigation whenever possible.

ENVIRONMENTAL PROTECTION
Water is a basic requirement for human survival, is necessary for
economic growth and prosperity, and is fundamental to protecting
the natural environment. Existing environmental statutes relating to
water and water projects generally are adequate, but these laws must
be consistently applied and effectively enforced to achieve their pur-
poses. Sensitivity to environmental protection must be an important
aspect of all water-related planning and management decisions. I am





46

particularly concerned about the need to improve the protection of
instream flows and to evolve careful management of our nation's
precious groundwater supplies, which are threatened by depletion and
contamination.
My initiatives in this area include the following:
A directive to the Secretary of the Interior and other Federal
agency heads to implement vigorously the Fish and Wildlife Co-
ordination Act, the Historic Preservation Act and other environ-
mental statutes. Federal agencies will prepare formal implementing
procedures for the Fish and Wildlife Coordination Act and other
statutes where appropriate. Affected agencies will prepare reports on
compliance with environmental statutes on a project-by-project basis
for inclusion in annual submissions to the Office of Management and
Budget.
A directive to agency heads requiring them to include designated
funds for environmental mitigation in water project appropriation
requests to provide for concurrent and proportionate expenditure of
mitigation funds.
Accelerated implementation of Executive Order No. 11988 on flood-
plain management. This Order requires agencies to protect floodplains
and to reduce risks of flood losses by not conducting, supporting or
allowing actions in floodplains unless there are no practicable alter-
natives. Agency implementation is behind schedule and must be
expedited.
_A directive to the Secretaries of Army. Commerce. Housing and
I rban Development and Interior to lielp reduce flood damages
through acquisition of flood-prone land and property, where con-
sistent with primary program purposes.
A directive to the Secretary of Agriculture to encourage more effec-
tive soil and water conservation through water-shed programs of the
Soil Conservation Service by:
-working with the Fish and Wildlife Service to apply fully
the recently-adopted stream channel modification guidelines;
---encouraging accelerated land treatment measures prior to fund-
ing of structural measures on water-shed projects, and making
appropriate land treatment measures eligible for Federal cost-
sharing;
-establishing periodic cost-project monitoring to ensure imple-
mentation of land treatment and operation and maintenance
activities specified in the work plan and to provide informa-
tion helpful in improving the design of future projects.
A directive to Federal agency heads to provide increased coopera-
tion with States and leadership in maintaining instream flows and
protecting groundwater through joint assessment of needs, increased
assistance in the Prathering and sharing of data, appropriate design
and operation of Federal water facilities, and other means. I also call
upon the Governors and the Congress to work with Federal ,aencies
to protect the fish and wildlife and other values associated with ade-
quate instream flows. New and existing projects should be planned and
operated to protect instream flows, consistent with State law and in
close consultation with States. Where prior commitments and eco-
nomic feasibility permit, amendments to authorizing statutes should
be sought in order to provide for streamflow maintenance.





47

CONCLUSION
These initiatives establish the goals and the framework for water
policy reform. They do so without impinging on the rights of States
and by calling for a closer partnership among the Federal, State.
county, city and other local levels of government. I want to work witli
the Congress, State and local governments and the public to iniplelhient
this policy. Together we can protect and manage our nation's water
resources, putting water to use for society's benefit, preserving our
rivers and streams for future generations of Americans, and averting
critical water shortages in the future through adequate supply, con-
servation and wise planning.
JIMNIY CARTER.
THE WHITE HOUSE, June 6, 1978.

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