Ag Today Thursday, March 10, 2016

Ag Today

Thursday, March 10, 2016

 

Editorial

Fresno Bee

Bureau of Reclamation should increase Delta water exports

There’s no other way to say it. The federal Bureau of Reclamation’s decision Wednesday to export less water south from the Delta than is legally allowed defies common sense.

Rain and snow finally have returned to California following three years of intense drought. This most recent storm was big enough to inflict damage on coastal areas and bury the northern Sierra under deep blankets of snow.

Reservoirs need to be filled, and Valley farmers dependent on federal irrigation water deliveries need to know that they will get some much-needed relief after having to fallow hundreds of thousands of acres of cropland because of the drought.

But the Bureau of Reclamation, acting on a U.S. Fish and Wildlife determination of current Delta water temperatures, isn’t operating the pumps at the maximum set by the biological opinion that seeks to improve conditions for the threatened Delta smelt.

An official with Westlands Water District told a Fresno Bee Editorial Board member Wednesday that pumping operators and fish agencies should recognize how dry the last three years were.

“This should be a time to maximize water supply deliveries for people, farms and cities, said Johnny Amaral, the district’s deputy general manager for external affairs. “We are in a huge water hole because of the drought.”

The tragedy is that this biological opinion – or management plan – for the Delta smelt is based largely on what fish experts believe to be true or is probably true, rather than proven science. The Delta smelt faces other challenges beyond getting caught in the pumps. These include non-native species, contaminants and the loss of tidal habitat in the Delta, scientists have said.

Understand: We don’t want to see the Delta smelt go extinct. It is an important indicator of the Delta’s health. But the Bureau of Reclamation must also consider the economic impact of its decisions on Valley farmers. In this specific case, its decision to pump less than is allowed under the biological opinion is a blow to our region’s agriculture-powered economy.

Last year, ironically, with the Department of Interior unable to meet its contract demands for water deliveries, it borrowed 200,000 acre-feet of water from Westlands. This was water that the district had bought and then stored in San Luis Reservoir. Under their agreement, the Department of Interior was supposed to return the water by Dec. 31, 2015.

The failure of federal agencies to maximize water deliveries right now – when water is readily available – is a sure-fire way to delay the promised repayment of water or even create a situation in which it is never paid back.

Even as bone-dry California is receiving precious rain and snow from the heavens above and water is pouring into the Delta, vast amounts of water are being allowed to roll out to the Pacific Ocean.

It makes no sense. Especially when long-range scientific modeling suggests that this season’s El Niño could transition into a La Niña and increase the threat of more drought for California.

The Bureau of Reclamation must do better. It needs to stop kicking farmers in the teeth.

 

 

Los Angeles Times

California’s largest water district, accused of misleading investors, settles with the SEC

By Geoffrey Mohan

A sprawling Central Valley water district run by some of the state’s wealthiest growers papered over its drought-related financial struggles and misled investors, federal regulators said Wednesday.

The Westlands Water District shifted about $8.3 million in expenses and other obligations to the revenue side of its ledgers, solely to be able to represent that it had enough revenue to cover debt payments on $77 million in bonds without having to raise rates, according to the Securities and Exchange Commission.

The district’s general manager, Thomas W. Birmingham, jokingly called the moves “a little Enron accounting,” a reference to the defunct Houston energy and commodities conglomerate whose fraudulent accounting led to its spectacular collapse in 2001, according to the SEC. Birmingham agreed to pay a $50,000 penalty, and the district paid $125,000 to settle the case. The former treasurer, L. David Ciapponi, paid a $20,000 penalty, according to the agency.

“The undisclosed accounting transactions, which a manager referred to as ‘a little Enron accounting,’ benefited customers but left investors in the dark about Westlands Water District’s true financial condition,” said Andrew J. Ceresney, director of the SEC enforcement division. “Issuers must be truthful with investors, and we will seek to deter such misconduct through sanctions, including penalties against municipal issuers in appropriate circumstances.”

Neither Westlands nor its administrators acknowledged guilt, and the district did not miss any bond payments, according to a statement issued by the district. The accounting procedures at issue were approved by an independent auditor, according to the district.

“Westlands, Birmingham and Ciapponi determined that entering into the settlement to fully resolve the matter was in the district’s best interest,” the statement said.

At issue was a “debt service coverage ratio,” a measure of the district’s ability to meet its debt obligation. Because of the district’s “extraordinary accounting procedures,” that figure was 10 times higher than it would have been using conventional accounting procedures, the SEC said.

That calculation obscured expenses incurred because of water cutbacks prompted by the state’s drought and allowed the district to avoid raising rates to its clients, which include some of the biggest agricultural companies in the state, according to regulators.

Stretching about 70 miles along the western side of the San Joaquin Valley, Westlands is one of the chief supporters of a $15-billion plan to build tunnels under the Sacramento-San Joaquin River Delta to bring more water directly from the Sacramento River southward.

The SEC violation added vigor to charges by critics of the project that the state’s growers will be unable to shoulder its costs.

“This could put the financing for the tunnels at risk,” said Patricia Schifferle of the environmental group Pacific Advocates.

Schifferle said she filed a complaint with the SEC in 2011, and last year sent the agency minutes of a 2010 Westlands finance committee meeting, obtained through the Public Records Act, that discussed the debt ratio and revenue shortfall.

“I thought it was going in the round file,” she said. “Maybe they finally took a look at it.”

A public agency governed by landowners within its borders, Westlands had operating revenues of more than $120 million in 2014. It contracts with the U.S. Bureau of Reclamation for taxpayer-subsidized irrigation supplies, which it sells to growers.

The district includes about 600,000 acres and is entitled to more than 1.1-million acre feet of water annually, roughly twice what the nearly 4 million residents of Los Angeles use in a year.

Reductions in that water supply, and the cost of replacing it, meant the district could not generate enough revenue to meet the debt service ratio required to maintain its bond rating, which helps reduce the cost of borrowing money. Fitch gave the bonds a rating of “AA-”

The district looked at its books and consulted its auditor to find ways to boost its revenue, at least on paper.

“We’re not collecting any more money from the ratepayers, nor are we paying any more money” to service debt, Birmingham told a Westlands customer during a board meeting in 2010, according to the SEC.

The district reclassified reserves originally earmarked for future expenses, including obligations to the Bureau of Reclamation, the agency charged.

“These reclassifications would not increase cash collections and were merely accounting transactions done for the sole purpose of maintaining the ratio,” the SEC said.

Two years later, the board made other adjustments “to create additional purported revenue” without reporting their effect on revenue or on its bond ratio, according to the SEC.

geoffrey.mohan@latimes.com

Times staff writer Bettina Boxall contributed to this report.

 

 

San Luis Obispo Tribune

Voters send Paso Robles water district back to SLO County supervisors

By David Sneed

Now that voters in the Paso Robles groundwater basin have overwhelmingly rejected the formation of a water management district, it is up to the San Luis Obispo County Board of Supervisors to decide whether it wants to manage the basin or cede responsibility to state water authorities.

No hearing has been set for supervisors to discuss the issue, and they said they will not be in a hurry to make any decisions. They have a little more than a year to decide.

The state Sustainable Groundwater Management Act requires basins that are in critical overdraft, such as the Paso Robles basin, to have a sustainable groundwater agency in place by June 30, 2017. That agency then has until 2020 to adopt a sustainable groundwater management plan.

Overdraft occurs when more water is pumped out of a groundwater basin than can be naturally replenished by rainfall. Many areas of the sprawling Paso Robles water basin have seen aquifers drop by 100 feet or more in recent years, resulting in some wells going dry and forcing homeowners to drill new, deeper wells.

In Tuesday’s election, 78 percent of voters rejected a parcel tax called Measure A, which would have generated nearly $1 million annually for five years to manage the basin. County Public Works officials have calculated that the county would need a similar amount of money to manage the basin.

Also on Tuesday, property owners voted by an overwhelming 74 percent to reject Measure B, which would have given approval to form the district. Both measures needed approval by voters for the district to have been formed. The results are preliminary; final results will be tabulated Friday.

Supporters of the district said they were disappointed at the outcome and were surprised that it was rejected by such wide margins.

“I am afraid that a lot of people listened to misinformation,” said Sue Luft, a member of PRO Water Equity, a Templeton-based group of basin residents who worked to form the district. “I think we are now most likely looking at state management of the basin.”

Members of the group Yes on Measures A & B said they put the measures on the ballot to give stakeholders in the basin an opportunity to work together to locally manage the groundwater basin. They said they ran a positive campaign that focused on a compromise solution.

“The responsibility for managing the Paso Robles basin has been squarely placed by the voters on the shoulders of the Board of Supervisors in San Luis Obispo,” the group said in a prepared statement. “We hope that they will rise to the challenge of managing the Paso Robles basin to preserve our water resources, which are central to our way of life in North County.”

County Administrator Dan Buckshi and Supervisors Frank Mecham and Bruce Gibson said the county should not rush to make a decision on management of the basin. They want to give basin residents some time to come up with other possible management solutions.

“Right now, I think we need to take a break, step back and figure out if there are any other options or avenues,” Mecham said. “What those might be, I’m not really quite sure at this point.”

The county is already managing the basin to some extent. County supervisors have passed a land-use ordinance that requires that any new pumping from the Paso Robles basin be offset by an equal amount of conservation. Supervisors also passed an ordinance banning export of water from the basin.

At their April 5 meeting, supervisors have an item on their agenda to certify the results of the election. Staff has not scheduled a discussion of next steps for that meeting, Buckshi said.

“Unless we are directed to do otherwise, the board will just formally accept the results of the election as they are required by law to do,” Buckshi said.

Gibson and Supervisor Adam Hill have said they would prefer that the state manage the basin because the county does not have the funding or the staffing to manage it properly.

“We are certainly going to have to direct our staff to do something,” Gibson said. “The consequences of the voters’ decision will have to play out, but it looks like the state would be the logical agency to manage the basin.”

Following the election, Supervisors Debbie Arnold and Lynn Compton, who opposed the formation of the district, put out a joint news release saying they think the county Public Works Department, with oversight by the Board of Supervisors, is the best agency to manage the district.

“The landowners of the Paso Robles basin have spoken clearly,” they said. “They do not want to create another layer of government to do the job the county’s Flood Control and Water Conservation District has performed for more than 70 years.”

Arnold and Compton also said large agricultural interests in the basin should consider forming one or more irrigation districts to raise money to bring supplemental water, such as Nacimiento Lake water, into the basin.

“Meanwhile, the many thousands of users of the Paso Robles basin that do not use their property for commercial irrigation purposes should retain their rights to use their wells and work with the county to ensure that the basin is brought into balance,” they said.

Jessica Bean with the State Water Resources Control Board in Sacramento said the state will step in and manage the basin if no local action is taken to bring it into balance. However, she said a better solution would be for a local management agency to be formed to assume management.

“It’s just a matter of who wants to step up and do the job,” she said. “But there’s still time, and we will be watching very closely as the June 30, 2017, deadline approaches.”

David Sneed: 805-781-7930, @davidsneedSLO, dsneed@thetribunenews.com

 

 

Opinion

San Diego Union-Tribune

Borrego Springs facing future of water woes

By Jim Seley

Borrego Springs is known as a desert outpost surrounded by the De Anza State Park where wildflowers bloom in the spring, four-wheelers and hikers explore, golfers can play several courses and snowbirds find a winter haven. It has an economic base of park visitors, tourists, farming and retirement living. The community has a lively population of permanent and seasonal residents as well as thousands of acres of farms that are contributing to the local economy by providing jobs and paying for services.

Farming has played a significant role in the history of Borrego Springs. The first homesteads and water claims were filed by cattle ranchers in the late 1800s. Those ranchers were followed through the decades by farmers who planted alfalfa, date palms, grapes, onions and potatoes. In time those crops gave way to the citrus groves and nurseries that thrive in the desert climate today.

The transition taking place today is the result of the residential and farming community recognizing that water makes Borrego Springs. A massive aquifer lies beneath the surface of the desert, but there is concern about the longevity of that supply. Scant rainfall from the surrounding mountains is not providing sufficient recharge to keep pace with withdrawals. Farmers are no less concerned than are the residents because their very livelihood and the existence of their farms rely on that water.

For several years, Borrego Springs farmers have been active members of the Borrego Water Coalition. This organization is composed of Borrego Springs’ major stakeholders who are united in the common goal of a locally managed and sustainable water supply. Working with the California Department of Water Resources, the coalition has no statutory authority but has a consensus agreement to work toward a managed basin plan that will be feasible, manageable and quantifiable. While the coalition has not changed its end goal, the course for getting there has changed.

On Sept. 16, 2014, California’s Sustainable Groundwater Management Act (SGMA) was signed into law. Under SGMA, there is a mandate to bring the state’s over-drafted water basins into a condition of sustainability. Recognized local agencies have the option to form Groundwater Sustainability Agencies (GSA) or step aside and let the state regulate the basin.

Fortunately, in Borrego Springs, the county of San Diego and the Borrego Water District have both declared their intent to form a GSA and will now work together to meet the state’s sustainability mandate.

Farmers, as well as the Borrego Water Coalition, will stay deeply involved to assist the county and the district in this challenging task. Failure is not an option. Should the local effort fail, the Sustainable Groundwater Management Act is clear that the state will take charge, possibly with a heavy hand.

Geography and weather are among Borrego Springs’ chief assets, but also cause for its biggest water challenges. Lack of rainfall cannot be overcome without an imported supply of water which is presently unavailable to this isolated valley. The answer to the water shortfall lies within the community of Borrego Springs.

Simply stated, everyone in Borrego Springs will have to use less water. The U.S. Geological Survey (USGS) states that based upon its study of groundwater conditions in the Borrego Valley Basin (using 2012 figures) pumping will have to be reduced across the board by 45 percent to 70 percent by 2060. That will bring significant changes to the residences, golf courses and farms. Fortunately, we have already begun this process.

Several farms have sold or transferred their water rights. Other farms have already made significant investments in irrigation and information technology, planting configuration, mulches and additives in order to reduce water usage.

More can and will be done. We as farmers are working on this daily. We as a community must also continue to explore ways to save and conserve water.

The state Department of Water Resources will continue to monitor wells in the valley and it will be interesting to see the effects of the conservation efforts that have already taken place. If the USGS study is correct, the next increment of water savings on the farms will have to come from fallowing productive farmland. This will mean fewer and smaller farms, resulting in the selling of their water rights/credits, exiting the valley and changing the community’s economic base.

It will be incumbent on the decision makers of the local GSA to work with the remaining farmers and the entire community to insure economic diversity. The basic principles of sustainability reinforce the internal relationship between economic development and resource conservation. Bringing the basin into sustainability cannot be farmers vs. golf courses vs. residents. We have learned this by working together in the Borrego Water Coalition. It has to be Borregans for Borrego.

Farming in Borrego Springs is significantly different today than it was in the past. We have to assume that it will be different in the future. If we are using less water, we will be smaller and we may be growing different crops.

How this works out remains to be seen, but farmers can be counted on to participate in the solution, and working together Borrego Springs will continue to be a viable community.

Seley, a Borrego Springs farmer, is a general partner of Seley Ranches and a Borrego Springs Chamber of Commerce board member.

 

 

Fresno Business Journal

Dairy group goes on the offensive in Sacramento

By George Lurie

Modesto-based Western United Dairymen (WUD) has hired a new, high-profile lobbyist and is in the process of rebranding itself as a “major player” in Sacramento, according to the organization’s CEO.

The aggressive change in tactics, says WUD CEO Anja Raudabaugh, is part of an effort to raise the dairy advocacy organization’s profile — and influence — with state legislators, and to keep more Golden State dairies from going out of business.

WUD’s new representative in the state house is KP Public Affairs, a powerful K Street firm with a strong track record of legislative and regulatory wins against the Brown Administration.

Raudabaugh, who took the helm of Modesto-based WUD in mid-2015, said KP specializes in “an aggressive political ground game.”

Gary Conover, who is no longer employed with the organization, handled WUD’s Sacramento lobbying responsibilities in-house until the recent change.
Raudabaugh said the shift in strategy will actually save the organization money.

“Using [KP] is actually much less expensive,” Raudabaugh said. “Our board was heavily involved in the decision-making process. Part of my job is trying to be a good fiduciary controller of how we spend our members’ money.”

In a note to the organization’s members in advance of the annual WUD Convention, scheduled for March 16-17 in Rohnert Park, Raudabaugh said KP has been “setting up a better offense for the California dairy farmer versus defense tactics only” that characterized WUD’s recent lobbying efforts.

Michael Kahl and Frederick Pownall have built KP into the largest public affairs management firm in California. Each man had established his own successful lobbying practice beginning in the 1970s before the two joined forces in 1996.

In Sacramento, KP represents a large stable of high-profile Golden State and national clients, including Westlands Water District, the California Restaurant Association, Hertz, Cisco, Citigroup and Dow Chemical.

“It‘s been a critical task to develop the message of the organization, brand it and sell it to the Sacramento politicians as a force to be understood and reckoned with as a major player in their pond,” said Raudabaugh. She said the stepped up lobbying efforts are part of WUD’s new message to promote “sound legislative and administrative policies and programs” that will boost the struggling industry’s profitability.

WUD represents 65 percent of the state’s dairy producers, many of which have fallen on hard times in recent years. Low milk prices have forced hundreds out of business and today, just 1,200 dairies are operating in the Golden State, nearly all of them family-owned.

But with milk prices continuing to sour, industry officials report that nearly one-third of animals being sent to slaughterhouses today are dairy cows.

And with the February milk price down to $12.95 per hundredweight, Raudabaugh said the pain for dairy farmers just keeps getting worse, especially, she added, with dairy owners spending “at least 50 percent” of their operating margins complying with “onerous” California permitting and regulatory regulations.

“Our message to the lawmakers at the Capitol has got to change,” Raudabaugh said.

For California dairymen to break even today, Raudabaugh said they need a milk price of about $16 per hundredweight. “Without California’s regulatory and permitting restrictions, the break-even price would probably be closer to $10 per hundredweight,” she added.

WUD members have long been frustrated with state lawmakers’ “negative” impact on their industry.

Raudabaugh said that the organization believes its new lobbying and branding strategies will be more effective in securing legislation more favorable to dairymen.

“If these lawmakers continue to pass such onerous policies, the dairy industry will go away from California,” Raudabaugh said. “We have to start rebranding our industry with effective product messages. We have to get everybody thinking differently.”

Raudabaugh said WUD’s new lobbyist is already starting to educate state lawmakers about the increasingly expensive realities of running a dairy business in the Golden State.

Up until recently, she said, “Those making the laws and implementing regulations governing the dairy industry had little to no idea how much those policies affected dairy farmers’ bottom line and that these burdens can not be passed on to the end-product prices.”

At this year’s World Ag Expo in Tulare, dairy officials from the state of New Mexico actually had a booth and were actively trying to recruit California dairymen to move to their state, which is under a federal milk marketing order and where land prices are lower and the regulatory environment is considerably less costly to comply with.

In previous years at recent farm show, representatives from Texas and Wisconsin have also tried to lure California dairymen to relocate to their state.

Even if California is eventually included in a federal order, something U.S. Department of Agriculture officials are currently considering, the boost in milk prices paid to Golden State dairymen may not be enough to offset what many in the industry characterize as “constantly escalating” regulatory pressure.

Raudabaugh said WUD’s new lobbyist have “heavily pressed upon” a number of targeted legislators the dire nature of the situation — and that some of the lawmakers have already made “systematic legislative changes” to the bills they have introduced or intend to introduce this year.

“This reflects a major change in the wind for dairy farmers to date,” Raudabaugh said. “Now the task is to maintain the awareness and press harder.”

 

 

Associated Press

Leader of Western governors: Change endangered species plan

By Dan Elliott

The nation needs to change the way it protects endangered species because the current practice is bogged down in lawsuits and weakened by mistrust, the head of the Western Governors Association said Wednesday.

Wyoming Gov. Matt Mead said Wednesday the problem is nationwide and that he hopes to build bipartisan support for changes in the federal Endangered Species Act, the primary tool for protecting species on the brink of extinction.

He stopped short of suggesting specific changes but said yearslong legal battles frustrate landowners, local governments and industry and eat up resources that could be used to protect other other species.

Mead, a Republican serving a one-year term as chairman of the Western Governors Association, said the problem is partly in the law itself and partly in the way it’s put into practice. Deciding whether to protect a species is nearly always a long, contentious struggle because federal intervention can result in rules that limit oil and gas drilling, mining, agriculture and other land uses.

“I don’t think it’s collapsing, but I do think there’s definite chinks,” Mead said after speaking to wildlife managers, conservationists and business interests meeting in Denver to review how well the Endangered Species Act works. Mead directed the Western Governors Association to conduct the review.

Mead’s initiative comes as southwestern states are battling the U.S. Fish and Wildlife Service over reintroducing endangered Mexican gray wolves in Arizona and New Mexico, and the federal government is attempting to lift protection from grizzly bears around Yellowstone National Park.

Colorado Gov. John Hickenlooper, a Democrat, agreed that decisions about protecting individual species drag on too long with no definitive conclusion. “There’s got to be a point … where we can declare victory,” he said.

Hickenlooper, who also spoke at Wednesday’s gathering, declined to say whether the law needs major or minor changes.

Eric Holst of the Environmental Defense Fund agreed the process of protecting species should be faster and less complicated, but he said changes could be made without rewriting the law.

“We believe that the law has sufficient flexibility in it to solve some of the legitimate problems that folks in this forum (in Denver) have pointed out,” he said.

Mead and Hickenlooper cited a sweeping conservation effort just getting under way to save the greater sage grouse as a model for how endangered species can be protected with support and guidance from a wide range of interest groups.

The federal government decided in September not to list the ground-dwelling sage grouse under the Endangered Species Act, instead opting for new rules and land use policies for federal lands.

The birds, known for their elaborate mating ritual, range across a 257,000-square-mile region spanning 11 states.

Environmental groups, mining companies, ranchers and some state governments have filed multiple lawsuits challenging the conservation plan, arguing it either goes too far or not far enough.

Mead said such protected legal battles threaten to leave residents and state and local officials disillusioned.

Mead also argued that court challenges make it too difficult to remove a species from protection, even if it has recovered. Since the Endangered Species Act was passed in 1973, only 1.4 percent of the 2,200 protected species have been removed from the list because they have recovered, he said.

He pointed to wolves, which were briefly removed from federal protection in Wyoming but then put then returned to protected status after environmental groups filed lawsuits challenging state management plans.

“You have to have a way to reach the goal line,” Mead said.