The national media soon smelled blood in California's near-hopeless efforts to thrash its way out of the Delta quagmire. A year ago, the CBS investigative news show 60 Minutes dispatched ace correspondent Leslie Stahl to the Golden State. In an on-screen interview, Stahl went head-to-head with Gov. Schwarzenegger, who had just pushed his Delta-policy barrage through the Legislature. Stahl noted the seemingly intractable showdown between farms, cities and the environment over the Delta's water, and then put a hard question directly to Schwarzenegger:

"You think you can have it all?"

Schwarzenegger barely missed a beat: "Absolutely, you can have it all." Then, as if realizing how absurd that sounded, Schwarzenegger waffled: "It's just ... you've got to recognize that it is a very, very complicated issue."

How complicated? Stahl never got that far -- thanks, apparently, to some fancy barnstorming on the governor's part. Schwarzenegger strapped Stahl into a Blackhawk helicopter and took her for an Apocalypse Now-style spin over the Delta. When Stahl returned to earth, about all she could manage was to goo-goo that "Arnold Schwarzenegger, who first became famous for pumping iron, wants to be remembered for pumping water back into California."

But the Governator had gotten at least one thing right: The situation is complicated. A bevy of water agencies, state and federal representatives and environmental groups have responsibility for drawing up the new comprehensive vision of the Delta's future, called the Bay Delta Conservation Plan. They have already been working on it for four years, and they got a boost from last year's actions by Schwarzenegger and the Legislature.

The linchpin of the new planning process is a massive hydraulic engineering project known colloquially as the Peripheral Canal, whose blueprints have been around, in various forms, for several decades. If it's ever built, the Peripheral Canal would dispense with the pumps in the Delta altogether, and instead route water from the Sacramento River south around the Delta's periphery in a giant tunnel that would have a wider bore than the Chunnel between England and France.

Such a design could, conceivably, untangle the competing demands for the Delta's water. A portion of the river water routed through the Peripheral Canal would be released through sluice gates into the Delta to mimic its historic flows, although at far less than natural levels. But even as the Peripheral Canal could make the Delta a tidier, more-manageable place, it would also -- by giving San Joaquin Valley farmers and Southern California cities a direct tap into the Sacramento River -- provide them with the means to take even more water than they've been able to in the past.

One of the Bay Delta Conservation Plan's main goals is winning federal and state endorsement that the operation of the Peripheral Canal would not imperil endangered species like the salmon. In the hope of ensuring that an ecologically credible proposal is eventually presented to government regulators, several prominent environmental groups -- including The Nature Conservancy, the Environmental Defense Fund, Defenders of Wildlife, American Rivers and the Bay Institute -- have been participating in the negotiating process.

The Peripheral Canal's proponents are also trading on the deep-rooted California fear of earthquakes. According to the U.S. Geological Survey, there is a 2-out-of-3 chance that the Bay Area will be hit by a magnitude 6.7 or higher earthquake in the next 30 years. "The Big One" would likely collapse many of the levees that give the Delta what little integrity it has as a water-supply source today, swamping the pumps for the San Joaquin Valley farms and Los Angeles and San Diego with brackish, undrinkable water as seawater rushes in. A Peripheral Canal could greatly increase the Delta's resistance to an earthquake, as well as to seawater intrusion from rising ocean levels caused by global warming, which would likewise overwhelm the pumps with salt water.

Critics, though, remain uncertain about the Peripheral Canal's ecological benefits, and many see the Bay Delta Conservation Plan process as merely a smokescreen for an effort to push the new canal through, no matter what. "The (water) exporters wrote the rules for this process," says Jonas Minton, the water policy adviser for the Sacramento-based Planning and Conservation League, which, along with several other groups like the Natural Resources Defense Council, has not joined the negotiations. "They loaded the dice. You had to agree (to the concept of a Peripheral Canal) in advance, before any scientific analysis was performed, or even begun."

Indeed, one irrigation district's boss says he was bluntly presented with a choice: Agree that "the most promising approach" to achieving a balance in the Delta for the next 50 years is the Peripheral Canal, or be left outside the negotiating room. Dante John Nomellini Sr. is the general manager and counsel of the Central Delta Water Agency. His agency supplies farmers in the Delta itself, and he is therefore wary of a project that could streamline other water agencies' ability to export water from the region. "This whole thing is just a fig leaf for the water contractors," he says. "They're just trying to use the Bay Delta Conservation Plan as cover to get through the Endangered Species Act requirements."

And though it's crystal clear how a Peripheral Canal would improve life for Southern California's cities and the irrigation districts in the San Joaquin Valley, it's not clear that it would make things better for fish, given the chance that it could be used to take even more river water that would otherwise flow into the Delta. The environmental groups that do have seats at the negotiating table have played an important role in insisting that the water agencies come up with a plan that will pass ecological muster. "They've been trying to find a lot of shortcuts to get there," says Ann Hayden, who represents the Environmental Defense Fund in the negotiations. "But when it comes to permitting, you've got to have a credible, scientifically sound plan."

Ultimately, the negotiations are less about the technical details of a Peripheral Canal than whether it would be operated in good faith. "It all comes down to how it's operated, and who's governing (the operation)," Hayden says.