December 10, 2002

Bureau of Reclamation, Mid-Pacific Region

Sacramento, California

Contact: Jeffrey S. McCracken 916-978-5100

The Bureau of Reclamation, Westlands Water District, and approximately 100 landowners in Area 1 of Westlands Water District have reached an agreement to settle claims related to the federal governments obligation to provide drainage service to the San Luis Unit.

In exchange for $107 million from the United States and $32 million from Westlands, the landowners agreed to waive tort, contract and inverse condemnation claims against the federal government and Westlands, as well as their ability to demand drainage service to their lands in the future, and to convey nearly all of the lands that were the subject of the agreement.

In addition, the United States will have the right to prohibit irrigation activities on those lands.

The landowners had claimed damage to their lands due to the lack of drainage service.

In addition, the Bureau of Reclamation has been under a December 2000 court order to submit a plan for and subsequently provide drainage service to the San Luis Unit.

Settling the claims for damages and the claims to enforce construction of drainage service appeared the least expensive option for the federal government.

The plaintiffs had claimed damages in excess of $400 million.

Also, an additional potential cost to the federal government would be actual construction of drainage service to the lands.

For several years, there have been discussions with litigants on possible settlement scenarios.

A recent set of discussions, begun in early 2001, led to settlement in September of this year of claims related to about 3,000 acres (Britz claims).

Additionally, the agreement before the court would settle claims related to about 34,000 acres (Sumner Peck claims).

The agreement does not affect the water service contract between Westlands and the U.S. -- or any future renewals -- so long as the Central Valley Project water can be put to reasonable and beneficial use on agricultural lands in Westlands. The water would not be permitted to be used to convert natural habitat, cannot be used outside the district and cannot be used on other drainage-impaired lands.

Under the terms of the agreement, action by the U.S. District Court for the Eastern District of California is required to effectuate the agreement.

The Bureau of Reclamation is on schedule to release its San Luis Unit Drainage Feature Re-Evaluation Plan Formulation Report later this month. Prepared in response to the December 2000 federal district court order, this Plan Evaluation Report will identify options for drainage service for lands in the San Luis Unit other than those covered by the agreement.