Chevron USA and several big California farmers could benefit from a $37 million no-interest federal loan and possibly federal irrigation subsidies if Congress passes legislation being pushed by some California Democrats.
The bill, engineered by Rep. Tony Coelho (D-Calif.), passed the House Interior and Insular Affairs Committee last week and is scheduled for a floor vote Tuesday on the "suspension" calendar, a process usually reserved for noncontroversial legislation.
Coelho's proposal, designed to benefit farmers in Fresno County who want access to lower-cost federal irrigation water, was tacked onto a noncontroversial bill sponsored by Rep. Richard H. Lehman (D-Calif.), also of Fresno. Sen. Alan Cranston (D-Calif.) is pushing a similar water-subsidy bill in the Senate.
The Coelho plan has been challenged by the Department of the Interior and by Rep. Charles Pashayan Jr. (R-Calif.) of Fresno, although they have not objected outright to its passage. Pashayan and the department contend that other California water issues should be considered at the same time.
The Environmental Defense Fund (EDF) and the National Wildlife Federation, although caught off guard by the bill's swift trip through the House in September, are opposing the legislation.
EDF attorney Thomas J. Graff, based in Berkeley, Calif., charged that the measure is "special treatment" and "a substantial subsidy" for a few agricultural interests.
The proposal involves the 35,000-acre Pleasant Valley Water District, centered around Coalinga in southwest Fresno County, where farmers now irrigate their arid land by pumping water from deep wells. The year-to-year drawdown of well water has increased pumping costs and limited the crops that can be grown.
The farmers contend that with federally provided water they could increase employment in the area by diversifying from cotton and grain. Although they say they plan to turn more to vegetables and melons, they also intend to expand the planting of cotton -- a crop frequently in surplus.
Chevron owns about 17,000 acres in the Pleasant Valley district, but leases its land to farmers while pumping oil from beneath it. The remainder of the district's acreage, owned by about 150 persons, is leased by five farmers, according to testimony at a House hearing in September.
The Coelho-Cranston bill would expand the boundaries of the San Luis Unit of the Central Valley Project, a federal water-collection and -distribution system, to include the Pleasant Valley group.
This would clear the way for the district to get a no-interest loan of $37 million, most of the cost of a water-distribution system. Such loans are authorized by a 1955 federal law.
The committee's action last week posed new questions about application of the 1982 reclamation revision act, which raised from 160 acres to 960 the land one farmer may irrigate with low-cost federal water. Beyond 960 acres, the water user is supposed to pay the full cost.
The new law limited corporations, such as Chevron, to no more than 640 acres' worth of subsidized water. If Pleasant Valley were to become part of the San Luis Unit, the firm would be required by the 1982 law to dispose of irrigated acreage beyond the 640 limit.
According to sources, Chevron, after private talks with Coelho, agreed to support its neighbors' move to seek federal water and to sell its excess land on several conditions. One condition would require a change in the 1982 law to allow Chevron to reserve mineral rights and "broad" easements on any land it might sell.
Chevron also has insisted on issuance of an Interior solicitor's opinion that would allow the company to suspend the required sale of any excess land under which oil is found.
Meanwhile, if those conditions were met and if Pleasant Valley entered the San Luis Unit, all 17,000 acres of Chevron's land apparently would be eligible for subsidized water for at least five years. The 1982 law gives an owner five years to dispose of excess holdings. After that, at least 640 acres of the Chevron property would be eligible for subsidized water, enhancing its value for leasing purposes.
EDF attorney Graff, in an August letter to Cranston and Coelho, protested that the legislation would give Chevron (formerly Standard Oil of California) unreasonable assistance.
"Whatever assurances are given that Standard will sell its land . . . under the reclamation laws, the massive abuses that have long characterized the history of the Bureau of Reclamation's enforcement of acreage limitations give scant confidence that in selling its land Standard will not profit from the prospect of the district's receiving a new firm surface water supply," he wrote.
Graff added: "The district's own consultant projects only a very thin margin between the cost of new delivered water and its value to Pleasant Valley farmers. So the chances are high that the purchasers of Standard's interest will soon be looking to the United States for still more subsidies to maintain their operation."
Pashayan, worried that the bill would clear the way for Pleasant Valley to be assured of federally subsidized water in the future, said last week that he is bothered by the haste with which the measure is moving. He said Congress should deal at the same time with a number of other water issues involving California -- a position rejected by Coelho.
"I am not against Pleasant Valley, and I am not against big farmers," Pashayan said. "But my constituents who are small water users are concerned that their problems find some support in Congress."