FOR IMMEDIATE RELEASE                                          AT
FRIDAY, AUGUST 18, 1995                            (202) 514-2008
                                               TDD (202) 514-1888

                                 
                   U.S. FILES SUIT AGAINST THE 
           CENTRAL ARIZONA WATER CONSERVATION DISTRICT


     WASHINGTON, D.C. -- The Justice Department, on behalf of the
Department of the Interior's Bureau of Reclamation, today filed
suit in the federal district court in Phoenix, Arizona, against
the Central Arizona Water Conservation District (CAWCD).  The
suit seeks to resolve several issues related to the construction
of the 335-mile Central Arizona Project (CAP) aqueduct system. 
The U.S. funded the project and is seeking repayment of
reimbursable construction costs as agreed to in the 1988 CAP
Master Repayment Contract between the Bureau of Reclamation and
CAWCD.  

     In today's lawsuit, the U.S. asserts that under the
contract, the federal government should be repaid $219 million
more than the Central Arizona Water Conservation District claims
it owes.  The United States maintains that $2 billion is owed,
rather than the $1.781 billion claimed by CAWCD.  
                                 
       The contract governs the financial terms for constructing
and operating the CAP aqueduct system.  The lawsuit aims
primarily at determining the extent of CAWCD's construction cost
repayment obligation for the CAP water supply system, New Waddell
Dam, and modified Roosevelt Dam.  

     The parties also disagree over how the costs to be included
in the repayment obligation are determined.  In addition, the
suit seeks to resolve a dispute over the federal share of CAP
operating costs and the management of project revenues.

     The United States and CAWCD have been negotiating these and
other issues related to the CAP since early 1994.  The
negotiations proved unsuccessful, and on July 10, 1995, CAWCD
filed suit against the United States in the bankruptcy case of
one of the CAP non-Indian irrigation districts, the Central
Arizona Irrigation and Drainage District.  The Justice Department
has filed a motion to dismiss CAWCD's lawsuit.

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95-449