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<br />. <br /> <br />. <br /> <br />. <br /> <br />Mr. Phil Pace <br />January 11, 1999 <br /> <br />3 <br /> <br />undertakes actions that undermine the progress made to date in California's <br />attempt to develop an enforceable and credible 4.4 Plan, why would the outcome <br />be different today or tomorrow? <br /> <br />Should the Secretary allocate publicly subsidized water to <br />agricultural users for resale to urban users at a markup? <br /> <br />Answer: The question's premise is false. Imperial does not receive <br />subsidized water. Furthermore, the anti-market theme is at odds with express <br />state and federal law and policy. <br /> <br />Imperial's water rights and contracts do not generate publicly subsidized <br />water for agricultural use. Imperial has state appropriative water rights that pre- <br />date the Boulder Canyon Project Act. As part of the federal project, Imperial <br />agreed to limit the further development of its state water rights and received a <br />federal contract for permanent water seNice. Many years ago. Imperial fully <br />repaid its contractual obligations for the construction of Imperial Dam and the All <br />American Canal. Only the ill informed would characterize Imperial's water rights <br />and contracts as .subsidized waler". <br /> <br />A more relevant question is should market transactions provide economic <br />incentives for the conseNation and transfer of water? Imperial agrees with the <br />express conclusion of the federal government, the California government, and <br />the CALFED participants: YES! The Attachment states that Metropolitan's <br />"Board is also concerned about and wants a thorough review of other aspects of <br />the Secretary's plans to develop a 'market' in California's allocation of Colorado <br />River water." While vague, the three questions are variants of an underlying <br />anti-market theme. Metropolitan's premise is directly contrary to the unanimous <br />consensus in favor of voluntary market transactions. <br /> <br />In closing, it would be a shame for Metropolitan to develop policy positions <br />and take actions based upon fundamental misunderstandings of Colorado River <br />facts and law. <br /> <br />Sincerely, <br /> <br />~~~ <br /> <br />BRUCE KUHN <br />President <br /> <br />cc: <br /> <br />David Hayes, Esq. <br />Mary Nichols. California Secretary of Resources <br />Coachella Valley Water District <br />San Diego County Water Authority <br />