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Informational Hearing of the Senate Agriculture and Water Resources Committee Tuesday, January 21, 2003 Written Statement of Ronald R. Gastelum, President & Chief Executive Officer on behalf of The Metropolitan Water District of Southern California Good morning Chairman Machado and Committee Members. I would like to begin my testimony this morning by submitting a written response to the questions raised in your January 15,2003 letter to Mr. Phillip Pace, Chairman of Metropolitan's Board of Directors. That response is before you. I also would like to introduce Chairman Pace, Mr. Jeff Kightlinger, our General Counsel, and Mr. D~ Underwood. MetrooolitatLs Vice President for Colorado l.9Y..er Reso~s and former Commissioner of the U.S. Bureau of Reclamation. In my testimony today, I will explain Metropolitan's business perspective within the context of the significant public policy issues that are presented by the Quantification Settlement Agreement (QSA). I also will detail the related actions by the Department of the Interior suspending the Colorado River Interim Surplus Guidelines and reducing the Imperial Irrigation District's (lID) water deliveries in calendar year 2003. The lawsuit recently filed by lID against the Interior which challenges the year 2003 reduction in water deliveries, as well as the Secretary's basic authority to regulate their use of Colorado River water, also raised major financial and public policy issues that need to be understood by all of us in California. Today, in the aftermath there are more questions than answers. What happened to those rosy predictions of peace in our time on the Colorado River that were heard even as late as last October when state legislators and high-level administrative officials helped to broker a revised QSA? Is there a villain? What does this mean for California's economy and water supplies throughout the state? Because the surplus water benefits in 2003 and possibly beyond provided by the Interim Surplus Guidelines are currently linked to the QSA, do the more than 18 million California residents that depend on imported water provided by Metropolitan face a water crisis if the QSA is not executed? What is the impact on the rest of the state's residents? As you consider these questions, you may draw your own conclusions on blame and whether any particular party is more at fault than another. For our part, ~tropolitan ~laces the bla!!l~ ~QlJllO\!S complexity of the task we have all been attempting to accomplish. Thus, regardless of any conclusions you might draw about the good faith of the principal interests involved, the failure of the QSA can be better explained by the ~traordina!XAifficulty presented bv tl!e facts and p'JbHc policy i~SJl~~ wtUPDed up in the QS.A. We also have concluded that C9lifornia is E,ot facing an urgent water cri~is. The situation can be managed without adversely impacting the < -1-