News from Restore the Delta: 5/19/14

“Everybody in Vanity Fair must have remarked how well those live who are comfortably and thoroughly in debt; how they deny themselves nothing . . . .”
— William Makepeace Thackeray

Calling the water shots

Behind the scenes planning by the water contractors who want the twin tunnels is bearing fruit with the formation of two new Offices in the Department of Water Resources (DWR).

One of them, a new Bay Delta Conservation Plan (BDCP) Office in the Executive Division of DWR, will be responsible for that third of the plan that is actually supposed to help the ecosystem – Conservation Measures 2-22. It will be headed initially by Chief Deputy Director Laura King Moon, known to us for her earlier work as assistant general manager of the State Water Contractors and, before that, as director of strategic planning at the San Luis and Delta-Mendota Water Authority. (There’s that blurry distinction between the Department of Water Resources and the contractors for whom the water projects were built.)

This BDCP Office will eventually become the Implementation Office outlined in Chapter 7 of the BDCP.

The other office will be responsible for twin tunnel support activities. It will be called the Delta Conveyance Facility Design and Construction Enterprise (here comes a new acronym: the DCE). This office will have a DWR program manager and will be staffed by DWR employees, people from “participating” water agencies, and private consulting firms, to whom it can issue contracts. It’s a joint powers authority (JPA), with DWR retaining authority for making decisions and acquiring land, while water diverters, primarily the Metropolitan Water District of Southern California, take a major role in designing and planning the tunnels.

These two new offices will get going June 1, 2014.

A Public Records Request turned up documents showing that the water contractors asked for this JPA months ago. Let’s stipulate that this kind of JPA might be an efficient way to design a project that was widely agreed to serve the common interests of all the people of California. But BDCP doesn’t meet that litmus test. It serves the interests of the water contractors.

So why is a state agency teaming up with the beneficiaries to advance the project? Because we have a situation in California where the interests of the water contractors are inseparable from those of the state’s largest water bureaucracy.

Documents obtained by the Public Records Request show that the contractors also insist on
• A commitment that the federal agencies (presumably including the fisheries agencies) will become full project proponents;
• A reliable water yield of 75% of CVP/SWP contracts;
• A guaranteed minimum water supply;
• Publicly funded programs to meet environmental water demands; and
• Assurances that a lack of funding by state and federal agencies won’t invalidate the permits for the tunnels.

As we’ve said all along, the purpose of the Bay Delta Conservation Plan is NOT habitat conservation.

No word from DWR Director Mark Cowin in the announcement memo about how these two new offices will be funded. But we do know how they WON’T be funded. They won’t be funded by the two agricultural water contractors who will get the most tunnel water, Kern County Water Agency and Westlands Water District.

The Public Records Request documents reveal that Westlands Water District, the main federal (Central Valley Project) contractor, has stopped paying its share into the BDCP, and the project will be running at a deficit through October 2014. (The other major CVP contractor is Santa Clara Valley Water District.)

(Westlands currently owes approximately $345 million for the Central Valley Project. As George A. Miller put it in a recent article, “Agribusiness Welfare Makes Water ‘Scarce’ in California,” “How would you like to have a 90-year, interest free mortgage, with no principle payments for the first 50 years? If you are fortunate enough to be one of more than 270 federal water contractors in California, that’s the deal.” No reasonable lender would assume that Westlands will ever be able to pay its share of BDCP.)

So far, the State Water Contractors (the largest are Kern County Water Agency and Metropolitan Water District) have been covering the costs of BDCP. But Kern County Water Agency (KCWA) isn’t sure that Kern County growers will make enough profit per acre to support the financing of the tunnels.

Annual repayment costs for operations and maintenance of the tunnels using the $14 billion cost estimate would run the state and federal contractors $1.2 billion. Kern County gets about one-eighth of the total project water, so KCWA’s share of repayment costs would be $150 million. KCWA’s 2013-14 budget was $142 million.

If Westlands and KCWA, the two agencies expecting to get the most water from the twin tunnels, can’t pay for the next steps in planning and design, who can? Apparently, Metropolitan Water District of Southern California is willing to cover them.

Public Records Requests to MWD for relevant documents won’t be honored until June 14, 2014, the day after the end of the BDCP comment period. It is tempting to think that they don’t want their ratepayers – the actual source of their money – to know that Southern California urban ratepayers are paying for planning that agricultural ratepayers can’t afford. They don’t want their ratepayers to know who is really footing the bill for the next stage of this boondoggle.

Meanwhile, since the Department of Water Resources is an agency of the State of California, we can assume that some of the money to operate the new BDCP offices within DWR will come from California taxpayers.

If the whole BDCP financing strategy weren’t immensely uncertain and problematic (let’s say really sketchy), the entities trying to get permits for BDCP would have produced an Implementing Agreement explaining who would pay. They must submit this Agreement to the U.S. Fish and Wildlife Service (USFWS) and the National Marine Fisheries Service (NMFS) as part of the application for a “take” permit.

In October 2006, a Planning Agreement for BDCP was developed by the California Resources Agency, the fishery agencies, the potential regulated entities, and some non-governmental organizations, mostly environmental groups. They agreed, among other things, to make an Implementing Agreement available for public review and comment with the final public review draft of the BDCP. (See page 18, Section 7.8 of the linked document.) Among other matters, the Implementing Agreement would contain provisions for
• Conditions of species coverage;
• Implementation of mitigation and conservation measures;
• Adequate funding to implement the plan;
• Terms for suspension or revocation of the take permit.

Wouldn’t it be nice to know these things about BDCP?

Over two years ago, in the fall of 2012, former Resources Deputy Secretary Jerry Meral acknowledged that an Implementing Agreement for BDCP was overdue. Because the contractors haven’t yet made firm commitments about funding and implementation, many important matters that have been described only generally in the BDCP and EIR/EIS are supposed to be made specific in the Implementing Agreement.

BDCP now says that this Implementing Agreement will be made available 60 days prior to the final draft, which will not be completed until AFTER the end of this public comment period. So all the public comments being made on the Draft BDCP and the EIR/EIS are for a plan for which there is no financing commitment.

In BDCP Chapter 8, for example, we don’t have critical information about
• The respective financial obligation of urban and agricultural contractors to pay for the tunnels;
• The ability and willingness of agricultural contractors, who use the majority of the water, to pay.

The public needs this information, because if the permittees default on paying for the tunnels, California taxpayers may end up responsible for the costs.

BDCP chapters 6 and 7 discuss how BDCP will be adaptively managed to achieve biological goals and objectives with no net loss to exports, but the details are obscure. We are told that joint responsibility for making decisions about adaptive management will be held by a 4-member Authorized Entity Group (consisting of DWR, the Bureau of Reclamation, and representatives of the state and federal water contractors) and a 3-member Permit Oversight Group (consisting of USFWS, NMFS, and the California Department of Fish and Wildlife – CDFW).
• Will water agencies and contractors allow scientists to decide how much water can be exported?
• How will BDCP determine which of the operational scenarios – high outflow to the Bay (lower exports) or low outflow to the Bay (higher exports) will be the starting point? What is the project yield or water supply reliability for the contractors?
• If there is to be no net loss to exports from managing for ecosystem objectives, where will any additional water and funding come from?

The Authorized Entity Group is given final decision-making authority over all the conservation measures, not just the tunnels. Does this mean that DWR, the Bureau, and the state and federal water contractors will have final authority over habitat restoration, even though taxpayers will put up 90% of the funding for habitat?

These are critical details that we can’t expect to know until we see the Implementing Agreement. Why hasn’t it been released? Probably because the contractors haven’t yet received some assurances that will make BDCP pencil out for them financially. If we could all see the Implementing Agreement, it would be clear to everyone that California’s largest agricultural water agencies cannot afford the water that they want the twin tunnels to provide.

The Implementing Agreement will also have to explain how the habitat component of BDCP will be funded. Presently, the BDCP is looking for a $4 billion contribution from California taxpayers via water bonds and a $3.5 billion contribution from the federal government to pay for the actual habitat portions of this habitat conservation plan. How can BDCP count on funding this project with general obligation bonds not yet approved by voters and with a large federal contribution that will have to be appropriated by a continuously gridlocked Congress? Of course, BDCP can’t count on that funding.

One more assurance that contractors want is public funding to purchase what they call “environmental water.” If they can’t meet the water needs of the environment by the way they operate the BDCP project, they want to be able to buy water from “willing sellers.” Apart from the fact that this would undercut the purpose of a project based on “coequal goals,” we’ve seen before how people like Stewart Resnick can make millions of dollars buying and selling “environmental water.”

There’s an old saying that “He who pays the piper calls the tune.” It is hard to see how the whole BDCP process can continue, year after year, when the beneficiaries clearly can’t pay for the project they want. The answer is that they figured out long ago which pipers they needed to pay – the politicians. If they can keep the politicians in line, they can get taxpayers to subsidize them indefinitely. Political influence is costly, but it is cheaper than paying for the real cost of water.

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