Arizona water interests, seeking to keep the nation's largest water project on track and on schedule, have negotiated an agreement with the federal government that would forgive construction delays from floods, pestilence and war -- but not from Gramm, Rudman and Hollings.
The proposed agreement, awaiting a signature from Interior Secretary Donald Hodel, would buffer the $3.3 billion Central Arizona Project from deficit battles brought on by the Gramm-Rudman-Hollings budget-balancing law that are expected to cut deeply into budgets for everything from medical research to military procurement.
Instead, the agreement would require the Interior Department to accelerate funding for the project or risk penalties that would cost the government some of the upfront local financing that has been the centerpiece of the Reagan administration's policy on federal water projects.
Backers of the project, including Rep. Morris K. Udall (D-Ariz.), chairman of the House committee with jurisdiction over western water development, say that the proposal wasn't designed to spare the water project from budget crunchers but to make sure that Arizona gets the project it has been asked to help finance.
"There is a great fear in Arizona, among farmers and others, that they'd be left high and dry by the federal government," Udall said. "This somewhat intricate proposal was designed to see that the project was finished."
To conservationists, who have battled the Central Arizona Project for years as an environmentally damaging and unnecessary "pork barrel" project, that is a distinction without much difference.
"This agreement commits the government to rigid construction schedules for specific features, dam by dam," said Edward R. Osann of the National Wildlife Federation. "It is a policy departure and an effort to insulate the project" from funding cuts.
Local interests have long been responsible for part of the costs of federal water projects, but their share was financed through long-term, low-interest government loans to be repaid after the project was in operation. The administration, seeking to relieve pressure on the treasury and dampen ardor for water projects, has demanded more cash in advance.
Under the proposed agreement, Arizona interests would come up with more than $300 million in advance financing for the next stage of an elaborate system of dams, reservoirs and pipes that will carry Colorado River water across the desert to the Sun Belt cities of Phoenix and Tucson.
But the proposal outlines a tight construction schedule and allows breaches only in case of "uncontrollable forces" such as earthquake, flood, epidemic or sabotage.
Court orders are considered uncontrollable and so are contractor bankruptcies. But government actions, including congressional refusal to appropriate federal funds, are specifically excluded from the list.
If federal funds are not forthcoming and the dams are not built on schedule, some or all of the local money would be credited instead against the beneficiaries' long-term debt to the government. The loss to the government would come in the form of interest. The more the local interests pay up front, the less the treasury has to subsidize at below-market interest rates.
"If we slip, their contribution would be less valuable to us," said Kenneth Maxey, head of the Bureau of Reclamation's contract division. "It's the timing of the revenue. We'd get the same number of dollars, but we'd get repayment later."
However, Maxey said, the government would fare better with the cost-sharing agreement even if it missed all the deadlines. Interest subsidies in that case would amount to $80 million, instead of the$180 million in subsidies that Arizonans would receive without the agreement.
But Roy Gear, deputy director of the Colorado regional office that oversees the project, admitted the proposal would make it difficult to postpone or slow construction.
"These are stringent conditions, and whether they will be acceptable to the Office of Management and Budget or the department remains to be seen," he said.
The wildlife federation said there is another catch: The Central Arizona Water Conservation District, which will manage the water from the project, intends to raise its share of upfront financing from the sale of federal power generated by the project.
Under the agreement, the district would be allowed to buy power at cost and resell it at market rates, using the proceeds to pay off about $175 million worth of bonds.
"This provision is not a step toward local responsibility for resource development," federation vice president Jay D. Hair wrote to Hodel. "It is a federal handout that will pass through local hands."
Interior officials agreed that the government would not come out ahead on the power sale, but contend the government would not lose more than it is already losing.
"Those revenues go to the (Arizona water) district anyway," Gear said. "Federal power is usually sold at the cost of service."