U.S., California Arrive at Truce over Conflicting Urban, Rural Water Rights.(Knight Ridder/Tribune Business News)

Jun. 8--Seeking to end decades of battles over one of California's most contentious issues -- water -- Gov. Gray Davis and U.S. Interior Secretary Bruce Babbitt have arrived at a fragile, multibillion-dollar truce among farmers, environmentalists and thirsty cities.

The agreement outlines a $10 billion blueprint for the next 30 years. Its goal: to restore the health of San Francisco Bay and its ecologically struggling delta, the state's largest source of fresh water, while providing a more reliable water source for farms and cities.

The plan does not call for the construction of any major new dams in California, either on rivers or as off-stream reservoirs, according to numerous water experts who have seen preliminary copies of the agreement during meetings in Davis' office this week.

It also abandons the so-called "Peripheral Canal," a highly controversial plan rejected by state voters in 1982 to build a 45-mile concrete canal around the eastern end of the delta to more easily move water to Southern California.

Instead, the 50-page summary scheduled to be unveiled at a Sacramento news conference on Friday recommends raising the height of the dam on the state's largest reservoir, Shasta Lake near Redding, by six feet. It …