On a summer day in 1962, President John F. Kennedy helicoptered into the hot, dusty grasslands between Gilroy and Los Banos and pushed a dynamite plunger in a ceremony with California Gov. Pat Brown.

"It is a pleasure for me to come out here and help blow up this valley for the cause of progress," Kennedy told the cheering throngs who had come to see the president launch construction of the San Luis Reservoir.

Now, half a century later, the federal government is proposing to expand the reservoir, a key source of water for Central Valley farmers and Silicon Valley -- albeit with less fanfare.

The $360 million proposal calls for increasing the height of San Luis' 305-foot-tall earthen dam by 20 feet. That would create another 130,000 acre-feet of storage, enough water each year for the needs of 650,000 people.

San Luis Reservoir, 2004.  (SAN JOSE MERCURY NEWS / Nhat V. Meyer)
San Luis Reservoir, 2004. (SAN JOSE MERCURY NEWS / Nhat V. Meyer) ( Nhat V. Meyer )

The idea of expanding the reservoir, seen every day by motorists zooming along Highway 152 near Pacheco Pass, has been considered and rejected at least twice in the past 15 years because of costs and other issues. But recent events have brought it back to life, water officials say.

"Things have changed," said Steve Geissinger, a spokesman for the U.S. Bureau of Reclamation, which owns the dam.

The two things that have changed the most are earthquake risks and new rules aimed at protecting endangered fish.

In 2006, as part of routine tests, engineers determined that earthquake faults in the area could produce more shaking than earlier thought. So because the dam needs seismic strengthening, federal officials say, it makes sense economically to raise the dam and strengthen it at the same time.

Two years later, the U.S. Fish and Wildlife Service issued new rules to protect the finger-sized delta smelt, an endangered fish. That limited the amount of water that can pumped from the Sacramento-San Joaquin River Delta, about 50 miles north of San Luis Reservoir.

The reduced pumping meant less water for Central Valley farmers and for Silicon Valley, particularly in dry years. As a result, congressional leaders and Central Valley farm water districts have stepped up calls to expand the reservoir so that more water can be stored there in wet years as insurance for the times when Delta pumping is curtailed.

"There have been a number of years where there is plenty of water in the Delta and people just didn't have anywhere to put it. Those years are more precious to us now," said Joan Maher, deputy operating officer for the Santa Clara Valley Water District -- which supplies water for 1.8 million people in Santa Clara County.

Although it's not the tallest dam in the United States (that title belongs to to 770-foot Oroville Dam, in Butte County), or the largest reservoir (that's Lake Mead, behind Hoover Dam, east of Las Vegas), San Luis Reservoir is the nation's largest off-stream reservoir.

When full, San Luis holds up to 2 million acre-feet of water -- enough to supply the needs of 10 million people for a year. But it's now only 26 percent full after two dry years.

Every winter, when rains come and snows melt, water is pumped from the Delta into San Luis and then delivered north through a tunnel to Anderson Reservoir near Morgan Hill. It also heads south to Central Valley fields and eventually Los Angeles and other cities through canals and pipes.

Unlike with many other proposed dam projects, most environmentalists don't oppose the idea of expanding San Luis.

"Obviously you'd need more study to see the impact on wildlife and on the Delta, but we see an opportunity for south-of-Delta storage like this to take more water in wet years and less from the Delta in dry years," said Doug Obegi, an attorney with the Natural Resources Defense Council in San Francisco. "It's definitely worth studying."

The project also could help fix a long-standing problem in dry years, when the lake level can get so low that its water warms up, grows algae and develops taste and odor problems.

The project, however, still faces significant hurdles.

The first is money. Federal water officials have not yet identified a funding source, although some would probably come from Congress, and the Santa Clara Valley Water District would most likely have to put up a portion.

The project also faces at least three years or more of engineering and environmental studies.

Bureau of Reclamation officials say that while raising the dam 20 feet wouldn't flood Highway 152, it would put portions of the adjacent Pacheco State Park under water.

The proposed project is part of a trend over the past decade or so: raising existing dams rather than trying to build new ones.

In 2012, the Contra Costa Water District expanded Los Vaqueros Reservoir near Brentwood by 60 percent by raising its dam 34 feet. The $120 million project increased the reservoir's capacity to 160,000 acre-feet.

Federal and state officials are also studying increasing the height of Shasta Dam in Shasta County and New Exchequer Dam on Lake McClure near Mariposa. The reason: Most of the best rivers are already dammed, and damming the rest is fiercely opposed by environmentalists and some political leaders because the projects are costly and would kill salmon and other endangered species.

"It's a matter of impacts," Maher said. "If you have a brand new dam someplace, that is going to have a much bigger range of impacts than raising an existing dam."

Paul Rogers covers resources and environmental issues. Contact him at 408-920-5045. Follow him at Twitter.com/PaulRogersSJMN.