	Introduction

Historically, Central California's San Joaquin River supported large Chinook salmon populations. Since the Bureau of Reclamation's Friant Dam on the San Joaquin River became fully operational in the 1940s, much of the river's water has been diverted for agricultural uses. As a result, approximately 60 miles of the river is dry in most years, making it impossible to support Chinook salmon populations in the upper reaches of the river. A U.S. District Court judge has since ruled that operation of Friant Dam violates state law because of its destruction of downstream fisheries. Faced with mounting legal fees, considerable uncertainty, and the possibility of dramatic cuts to water diversions, parties agreed to negotiate a settlement instead of proceeding to trial on a remedy regarding the court's ruling. The Settlement calls for new releases of water from Friant Dam to restore fisheries in the San Joaquin River and for efforts to mitigate water supply losses due to the new releases. Implementation legislation based on the Settlement ( H.R. 4074 , H.R. Other San Joaquin water management bills have also been introduced (e.g., H.R. The quantity of water used for restoration flows and the quantity by which water deliveries would be reduced are related, but the relationship would not necessarily be one-for-one. Congressional authorization and appropriations are required for full implementation of the Settlement. A key legislative issue is how to finance Settlement implementation, specifically how to resolve congressional Pay-As-You-Go (PAYGO) issues. Other challenges are how to achieve the Settlement's dual goals of fisheries restoration and water management, and how to address concerns of stakeholders not party to the Settlement, without disrupting the negotiated agreement. 24 and S. 27 ), it has not been enacted. Settlement Goals and Implementing Legislation: Key Issues

As noted above, the settling parties agreed that it would have two goals: (1) a Restoration Goal: "... to restore and maintain fish populations in 'good condition' in the mainstem of the San Joaquin River below Friant Dam to the confluence of the Merced River, including naturally-reproducing and self-sustaining populations of salmon and other fish..."; and (2) a Water Management Goal: "... to reduce or avoid adverse water supply impacts to all of the Friant Division long-term contractors that may result from the Interim Flows and Restoration flows provided for in this Settlement...". Using two available data sources (which do not account for improvements in water management that may dampen the Settlement's impact on agricultural and municipal users), it appears that annual water supplies for the Friant Division Service Area would be, on average , 15% to 16% less under the Settlement, than average supplies under current operating protocols. On the other hand, the region may benefit from increased recreational expenditures and investment in San Joaquin River restoration activities, as well as increased downstream water supply and water quality benefits. The Settlement will also affect communities and interests not party to the Settlement. "Third Party" Impacts

Communities dependent on groundwater supplies are also concerned about potential effects on groundwater quantity and quality. Therefore, for at least three-quarters of the contractors, the reductions in Friant Division deliveries represents a reduction in one of multiple supplies.
Historically, Central California's San Joaquin River supported large Chinook salmon populations. Since the Bureau of Reclamation's Friant Dam on the San Joaquin River became fully operational in the 1940s, much of the river's water has been diverted for off-stream agricultural uses. As a result, approximately 60 miles of the river bed is dry in most years. Thus, the river no longer supports Chinook salmon populations in its upper reaches. In 1988, a coalition of conservation and fishing groups sued Reclamation (Natural Resources Defense Council v. Rodgers). A U.S. District Court judge has ruled that operation of Friant Dam violates state law because of its destruction of downstream fisheries. Faced with mounting legal fees, uncertainty, and the possibility of dramatic cuts to water diversions, parties negotiated a settlement instead of proceeding to trial. In September 2006, an agreement, commonly called the Settlement, was reached. It calls for new releases of water from Friant Dam to restore fisheries, as well as for efforts to mitigate reductions in off-stream deliveries lost to restoration flows.
Congressional authorization and appropriations are required for full Settlement implementation. Legislation based on the Settlement (H.R. 4074, H.R. 24 and S. 27) is pending. Related bills have also been introduced. A key legislative issue is how to finance the Settlement, specifically how to resolve congressional pay-as-you-go (PAYGO) issues. Other challenges are how to achieve the Settlement's dual goals of fisheries restoration and water management, and how to address concerns of stakeholders not party to the Settlement, without disrupting the negotiated agreement.
The amount of water projected for restoration flows and the volume of reduced Friant water deliveries are related, but the relationship would not necessarily be one-for-one. Available estimates for total annual Friant water supplies (including both contract and temporary water) are, on average, 15% to 16% less under the Settlement than under current operations; but such estimates do not account for improvements in water management that might reduce the impact on water users. For three-quarters of water contractors, the reduction would represent a reduction in one of their available sources of water. The impacts of such reductions will vary by contractor depending on the firmness of existing surface water supplies and the reliability of groundwater supplies. How to offset the decrease and who would pay for investments in other water sources and improved efficiency has not been determined.
Although the region may benefit from increased recreational expenditures and investment in river restoration activities under the Settlement, studies suggest its largest and mostly negative economic impact would be on the agriculture industry, at least in the short term. In addition, downsteam interests not party to the Settlement have been concerned about increased flooding, groundwater infiltration, and competition with existing federal financial commitments. Nearby communities fear harm to groundwater quantity and quality. Some of these concerns have been addressed in the legislation, but some remain. On the other hand, some communities and interests believe restoration will bring other benefits to the river, such as improved surface water quality in lower San Joaquin River reaches. Ultimate Settlement costs and benefits are very difficult to predict.