It was called the "Hodel proposal." Unfortunately, the Mercury News requires that I cross their palm with silver before I can read the full articles.

This search parameter gives you most of what you need. Running "Hodel" and "Hetch Hetchy" through Google will find you more.

The proposal was made by Reagan Interior Secretary Donald Hodel, which a cynic might say will tell you all you need to know about why some environmentalists opposed it, even if logically you'd think they wouldn't.

To be fair and less cynical, though, I suspect the opposition was more local than universal, and driven by San Francisco interests.

As one countering example of a leading hardcore environmentalist supporting Hodel, here's the late David Brower's view on it.

I don't know what he'd say now. This was written when CO2 was something you found in soda bottles.