Monday, January 20, 2014

Repost - Playing the Odds with Environmental Water - Spillway News Winter 2004

Spillway News Winter 2004
Playing the Odds with
Environmental Water
By Tim Stroshane
In July 2003, the bucolic Napa Valley hosted the California
water industry’s current effort to rationalize the water
system it so uneasily controls. The industry’s new technological
consensus is called the Napa Proposition. If implemented,
the 11-page plan would enable the water industry to
export more water from the Sacramento-San Joaquin River
Delta.1
But that may be just the beginning. Amid Napa’s
Mediterranean splendor, state and federal water contractors
and bureaucrats of the State Water Project (SWP) and the
federal Central Valley Project (CVP) negotiated toward a
future they probably hope will result in merger of the
projects into one hydraulic regime; risk-free security for their
water deliveries; minimal compliance with the federal
Endangered Species Act; and expansion of their canal and
reservoir facilities as contemplated in the CalFED Record of
Decision (ROD) of August 2000.2
The two projects divert water north and south of the Delta
into export pumps near Tracy (see image, page 7). This water
is delivered via the Delta-Mendota Canal and the California
Aqueduct for agribusiness irrigation and southern California
cities (see map, page 9). Together the projects deliver in
excess of 5 to 7 million acre-feet of water each year to places
in California that normally experience very little rainfall.3
Government estimates put the Proposition’s increased
deliveries between 200,000 and 1 million acre-feet a year.4
Each project has its own set of pumps, each capable of
pumping the equivalent of substantial rivers. Maximum
capacity for the CVP pumps is 4,600 cubic feet per second
(cfs), while the maximum capacity of the SWP pumps is
more than twice that, 10,300 cfs. The total for both sets of
pumps is nearly 15,000 cfs; but under earlier permits from
the U.S. Army Corps of Engineers and a 1995 Delta Water
Quality Control Plan, the state’s pumps are regulated to
pump only a maximum of 6,680 cfs at specific times of the
year.
During January 2004, for comparison, average total Delta
exports from both sets of pumps were 11,391 cfs, about one quarter
of average Delta outflow in January 2004. Combining
the controlled flows of all Central Valley rivers to the
Carquinez Straits and the Bay, Delta outflow was 44,487
cfs.5
To avoid impacts on endangered fish and Delta water
quality, the two big water projects must come up with a lot of
extra water to make things work out for everyone. The
increase from the regulated maximum rate of 6,680 cfs to
8,500 cfs at the SWP pumps could occur as early as this fall.
The CalFED ROD calls for export pumping at the SWP
pumps to top out eventually at 10,300 cfs, an increase of
about 66 percent over current pumping rates
.6
The success of the Napa Proposition turns on whether the
water it will need actually exists somewhere in California’s
fabulously complex rivers and its water rights and hydraulic
systems. That’s another topic, full of intrigue. Suffice it to
say that environmentalists and Delta water interests believe
the Napa Proposition will be too much water exported from
the Delta too soon, resulting in another ecological crash,
especially for endangered fish species there. For them,
CalFED’s water quality, fisheries, and ecosystem restoration
programs move too slowly and are short of funds, and yet
these programs were key assurances to environmental
interests, bartered as part of the CalFED ROD.7
Is Napa CalFED?
Increased exports from the Delta by the SWP and CVP
were called for in August 2000 in the CalFED ROD, massing
the bureaucratic inertia of the CVP and SWP projects behind
the Napa Proposition. It’s hard to imagine there being a
damned thing anyone can do to stop the revving of the Delta
export pumps.
Environmentalists maintain that CalFED stands for
ecosystem restoration and fisheries protection first, but when
one reads CalFED reports and plans it is difficult to sustain
that view. CalFED’s top priority is to increase California’s
“water supply reliability.” Restoring compromised fisheries
and ecosystems is in CalFED’s plans an important means to
the end of delivering fresh water to the state’s growing
capitalist economy and largely urban population, but not an
end in itself.8
Under CalFED, public trust resource protection evolved
from a legal theory best embodied in the Mono Lake
decision of 1983 (that is, the state is responsible for protecting public trust resources using its police power) to a market
theory (that is, the government should give private water
users financial incentives to protect public resources),
deteriorating into a reality in which water project operators
and fisheries managers assume all risks of gambling public
funds in the water market for the survival of endangered
species, while guaranteeing water contractors risk-free,
reliable water supplies.
Environmental mainstays at the innumerable CalFED
meetings of the 1990s included Environmental Defense,
Natural Resources Defense Council, the Bay Institute of San
Francisco, Save San Francisco Bay Association, Sierra Club,
Natural Heritage Institute, Friends of the River, the League
of Women Voters of California, and the Mono Lake Committee.
These organizations tried to keep pace with CalFED’s
all-out blitz of a planning process between 1995 and 20009.
Their technical and lobbying expertise are vital to grassroots
environmental protection groups, who haven’t the resources
to bird-dog CalFED.
The Napa Proposition’s stated purpose is “to maximize
water supplies for the benefit of both CVP and SWP contracts
that rely on water delivered from the Bay-Delta in a
manner that (1) will not impair in-Delta uses, and (2) will be
consistent with fishery, water quality and other flow and
operational requirements imposed under the federal Clean
Water Act, Endangered Species Act, the Central Valley
Project Improvement Act, and the CalFED Record of
Decision.”
The proposition calls for the two projects to:
• Continue a wholesome-sounding program called the
Environmental Water Account (EWA), including a detailed
plan for financing and operating the EWA. More on this
below.
• Help each other meet wildlife refuge water needs and
Delta water quality requirements.
• Share information, and their reservoirs and pumping
plants, “without impeding existing uses of those facilities” in
order to accommodate increased water market transfers.
• Share “risk-taking” to “minimize exposure of project
contractors to possible loss of water.”
Once undertaken, these “sharing” tenets of Napa would
ease the eventual merger of the SWP and the CVP, probably
under the State of California’s control.10
Environmental activists are nonetheless angry about the
Napa Proposition, publicly expressing a clichéd populist
indignation about CalFED innovations contained in the
document—especially the Environmental Water Account,
which some among them claim as their idea.
“The process [for the Napa Proposition] stunk,” Tom
Graff, regional director of Environmental Defense in
Oakland, fumed to the Bakersfield Californian in August.
“The contractors and the Department of Water Resources and
the Bureau of Reclamation got together and divvied up the delta’s water and decided to jack up exports and didn’t
bother to include any environmental interests.”11 Environmental
Defense has advocated for a water transfer market
since before the defeat of the Peripheral Canal in 1982.
Barry Nelson, a senior policy analyst with Natural
Resources Defense Council (NRDC) and a long-time water
warrior who cut his teeth on environmental water politics
with Save San Francisco Bay Association, issued an NRDC
communiqué charging that the Napa agreement was “a backroom
deal” that will result in poorer water quality in the
Sacramento-San Joaquin Delta.
“The big contractors are just cherry-picking the parts of
CalFED that they like,” groused Eric Wesselman of the
Sierra Club. “Napa shows a disregard for the standards and
obligations outlined in the CalFED Record of Decision and
its regulatory underpinnings. This is the biggest, baddest
diversion from CalFED yet.”12
“Their basic premise [of environmental critics] is to
oppose improvement of the water supply for the projects, so
of course they’re going to scream and yell,” retorted Tom
Clark, General Manager of the Kern County Water Agency
(KCWA), the largest state water contractor representing
mostly agricultural water users in the San Joaquin Valley.
Clark told the Bakersfield Californian the parties to the Napa
Proposition were merely working out details of the proposal
for increased pumping in the Delta that had already been
agreed to by environmentalists in the CalFED ROD.13 “It
looks like the environmentalists no longer want to abide by
that agreement,” Clark added. KCWA expects to receive an
average of 50,000 acre-feet more in deliveries should Napa
come to pass.14
“Frankly,” says Tim Quinn, a vice-president for SWP
resources with Metropolitan Water District of Southern
California (MWD), the state’s largest water wholesaler, “it’s
a difficult question to say what’s CalFED and what’s Napa.
From the perspective of those of us who were involved,
Napa is CalFED.”15
Quinn claimed to the Contra Costa Times in September
2003 that the Napa agreement represents an environmentally
sensitive approach to meeting Southern California’s water
needs, with neither a peripheral canal nor new dams. It relies
on water transfers, increased efficiency and operational
flexibility. “That vision [of dams and canals] is completely
gone,” he said. “The environmentalists won.”
CALFED’s plans will alter the Delta and its Central
Valley watershed by:
• Construction of tidal barriers and fish screens at the
export pumps to protect local water quality and water levels
in Delta channels for agriculture there. Stabilization and
enlargement of existing Delta channels will also help
accommodate more water deliveries to the south by making
it easier for CVP and SWP export pumps to increase their
pumping rates.
• Recharge of groundwater basins in wet years for use as storage reservoirs so that water may be pumped for later use,
especially in dry years (called “water banking” or “conjunctive
use” water management);
• Raising existing dams and building new reservoirs to
increase water storage in the foothills of the east slope of the
Coast Range and the west slope of the Sierra Nevada;
• Establishment of water quality, supply, and ecosystem
health criteria by which a final decision on a “isolated
conveyance facility” (that is, a newer, smaller peripheral
canal) for the Delta would be reached by 2007; and
• Creation of a water transfer market, which will allow
cities, farmers, and fish and game regulatory agencies to buy
and trade water more easily—including, CalFED officials
and Napa Proposition adherents hope, for protection of
endangered Delta fishery species via the EWA.
Most flows in water transfers are routed through the Delta
to the state’s export pumps; increasing their pumping rate is
likely to increase the overall size of California’s emerging
water market.
A Truly New Idea
The EWA represents the institutional and technological
breakthrough the water industry needed out of the CalFED
planning process to break the impasse over Delta exports and
the pumps’ impacts on endangered fishes, the one truly new
idea that the water industry seized on in five years of
meetings to keep CalFED afloat and working for its interests.
The EWA, in CalFED’s description of it, is a “cooperative
management program, the purpose of which is to provide
protection to at-risk native fish species of the Bay-Delta
estuary through environmentally beneficial changes in SWP/
CVP operations at no uncompensated water cost to the
Projects’ water users. This approach to fish protection
involves changing Project operations to benefit fish and the
acquisition of alternative sources of project water supply,
called the ‘EWA assets,’ which the EWA agencies use to
replace the regular project water supply lost by pumping
reductions.”16
EWA comes into play during project operations when, for
example, real-time monitoring of the export pumps reveals
large schools of, say, endangered Delta smelt congregating
around the pumps and which would be killed (the water
projects’ quasi-Christian euphemism for their mass destruction
is “salvaged”; the Endangered Species Act’s [ESA] term
of art is “take” or “taking”). EWA fisheries managers would
swing into action, perhaps ordering the pumps slowed or
shut down immediately until the problem fish disperse.
Meanwhile, project operators would keep track of how
much water was not exported and the EWA would “pay” that
amount of water, either out of its own water sources stored
underground in a San Joaquin Valley water bank, or from
EWA water stored at the San Luis Reservoir near Los Banos
northwest of Fresno. In other circumstances, EWA “assets”
might be used to provide additional flows to attract migrating
fish upstream or to flush juvenile salmon into and out of the
Delta beyond the reach of the fish-killing export pumps near
Tracy.
“Reclamation, DWR, and their respective contractors
support continuation of the Environmental Water Account,”
states the Napa Proposition, “for the purposes described in
the CalFED [Record of Decision]…and DWR, Reclamation,
and their respective contractors propose to develop in
cooperation with the management agencies a plan for the
continuation of the EWA.” The Napa plan for the EWA is to
include “commitments regarding specific assets”—that is,
both water and money—for use by the EWA agencies (i.e.,
state and federal fisheries agencies); and stable financing for
EWA. The mainstay groups have long recommended user
fees for all Delta exports to fund ecosystem restoration and
environmental water purchases (including EWA), but DWR
and USBR have been too faint of heart to adopt such fees;
their contractors adamantly oppose Delta export user fees.17
Counting EWA’s Cards
But the EWA raises numerous issues that today remain
unresolved three years into its four-year experimental period.
The Bay Institute of San Francisco studied the EWA’s first
two years, finding that:
• EWA is “under-endowed” with funds and water, and
constrained in its functions.
• The mainstays did not intend their spawn, EWA, to
mitigate impacts of additional new export, storage, or
conveyance. But that is how it is turning out with the
CalFED ROD and Napa.
• The EWA needs “better coordination” with other
environmental and non-environmental water initiatives.
• Until the end of 2004, the EWA is an experiment, but
one whose results are only poorly studied by the state and
federal agencies who intend to make it a permanent part of
California’s hydraulic regimes. “It is imperative,” wrote Bay
Institute scientist Christina Swanson in 2001, “that the
results of its actions be more accurately measured and
evaluated.”18
• The Bay Institute and other mainstays take CalFED’s
commitments beyond those actually made to the EWA,
called “Tier 3” water, as a “promise.” However, CalFED
clearly states in its ROD that the Tier 3 commitment depends
on its ability to make water available should CalFED’s
minimum regulatory requirements and the EWA prove
inadequate for fish protection at the export pumps. “It is
unlikely,” states the ROD, “that assets beyond those…will be
needed to meet [Endangered Species Act] requirements.”19
Complaints about EWA spread beyond the environmentalists’
camp, however. Average water prices per acre-foot paid
by the EWA range from $179 in Fiscal Year 2001 to $144 in
2003.20 Steve Ottemoeller, general manager of the Madera
Irrigation District north of Fresno, testified on EWA’s
environmental reports last August that EWA managers
consistently outbid smaller agricultural water districts for
scarce, transferable blocs of water on the Central Valley
water market. Growers in his district are concerned that EWA
will price them out of the water market since it is backed by
taxpayer funds.21 The market’s knack for creative destruction
appears to be at work in the world of California water.22
When to Hold ‘Em...
It also appears that water and environmental policy are
increasingly created and implemented independent of
appropriate political channels (the Legislature, the Governor,
or the Courts). CalFED has free rein to initiate water policy,
conduct scientific and program experiments on natural river
systems, and generally enjoy a freedom from public accountability
available only to anointed “stakeholders.” Elevated to
a new status as the CalFED Bay-Delta Authority by the
Legislature last year, the agency at last faces greater fiscal
scrutiny.
“The EWA guarantees that water deliveries to state and
federal contractors will not be affected as a result of modifications
in water project operations to reduce harmful impacts
on endangered fishes,” wrote Christina Swanson in a 2002
review of the EWA. “Risks to contractors of reduced or
interrupted water deliveries have been eliminated.”23
While endangered fish species in the Delta face reduced
risks of mass destruction with a robustly-funded and endowed
EWA in operation, their risks have hardly been
eliminated. Funding for the program shrunk steadily, from
$69 million in Fiscal Year 2001 to $38.2 million in Fiscal
Year 2003.24 Future funding is unlikely to be robust.
Swanson fears that since the EWA’s experimental years
were “under-endowed,” fishery managers handling EWA
duties face a dilemma of whether to spend water and money
for water early in the October-to-September water year to
protect winter-run chinook salmon in December and January,
or whether to harbor their scarce assets for protecting Delta
smelt in March and April.
This dilemma is compounded by economics and the vagaries of California’s hydrology: prices for available water
in wet years may be cheaper, but EWA’s water buyers will
pay with public funds dearly for water in dry years. And
when its budget is set each autumn no one knows how much
rain and snow will fall in the months ahead. “In effect,”
wrote Swanson, “[EWA’s managers] are forced to gamble
with their fish protection tools and, to date, their strategy has
been to withhold protection or provide minimal levels of
protection, less than would be preferred, in order to husband
their finite resources.”25
...And When to Fold ‘Em
Believing the Delta’s Central Valley watershed held
surplus waters sufficient for California’s post-World War II
booming economy and population, state and federal water
managers dreamt of vast water exports at the pumping plants
adjacent to Clifton Court Forebay at the birth of the great
hydraulic regimes in the 1960s and 1970s.26 Drought
postponed these dreams in the early 1990s, as did near extinctions
of winter-run Chinook salmon, delta smelt, and,
until recently, Sacramento splittail fishes, and because the
pumps caused havoc for Delta farmers’ water supplies and
quality.
EWA holds out the prospect for water contractors of
getting around federal ESA take problems at the Delta export
pumps if enough “assets” can be found.27 And intensive,
deity-like surveillance and coordination of real-time fisheries
management in water operations, on which EWA is premised, creates bureaucratic momentum in the hydraulic regimes for merger of the two hydraulic regimes (the SWP and CVP), as well as the building of additional surface
storage sites, including:
• Construction of the SWP’s Sites reservoir (off stream) in
Glenn County;
• Raising of CVP’s Shasta Dam north of Redding;
• Construction of the off-stream Sites Reservoir west of
Colusa;
• Expansion of Los Vaqueros Reservoir in eastern Contra
Costa County; and
• Either raising of CVP’s Friant Dam on the San Joaquin
River east of Fresno, or construction of a new dam and
reservoir at Temperance Flat, just upstream of Friant Dam.
At its core, the CalFED planning process strived to create a reliable water supply for California agribusiness and urban development interests; the environmental investments are a means to this end.
It was always so with CalFED, which signaled its desire to increase export pumping repeatedly in its deluge of reports and publications. A public debate about whether California as a whole is on the right path of water,
urban, rural and agricultural development recedes further
from the public’s attention.
The Napa Proposition reveals the waning utility of the
mainstay environmentalists’ “win-win” strategy for real
fisheries protection. “Win-win” works best when power
differentials among competing interests are balanced, not out
of balance as they are now. The water industry appears to
have stolen environmentalists’ thunder.
The Environmental Water Account weakens enforcement
of the federal Endangered Species Act at the Delta pumping
plants without legitimate political action by the U.S. Congress.
In the EWA’s first experimental operations three years
ago, about 20,000 Delta smelt were killed at the state’s
Banks pumping plant.28 According to the Bay Institute, this
carnage was 300 percent over the “take limits” set for the
pumps by federal fisheries biologists under the ESA.
Given scientific uncertainties of knowing where fish may
suddenly turn up, EWA managers must adopt a gambler’s
mindset. Biologists and hydrologists and engineers study
“gaming” scenarios to learn how to work the system given
the interests of the house (i.e., the projects’ water contractors,
and California’s mercurial climate). They must learn to, in
effect, count cards they and others hold (their “assets and
tools”) and must learn when to hold ‘em, and when to fold
‘em.
Kinda puts the “western” back into “western water.”
Prudent Buyers and Sellers
Who benefits from the export pumping and, more
generally, from the EWA’s shouldering of the contractor’s
hydrologic and hydraulic risks? New underground “water
banks” will benefit grandly from this risk-free facet of the
“market” for water. Water banks are vast tracts of agricultural
land converted to shallow lakes percolating water into
porous geological “deposits” pin-pricked with extraction
wells and holding huge amounts of groundwater for later
“withdrawal” for sale to thirsty farmers or new towns of the
Tulare Lake Basin in Kings and Kern counties, state water
contractors generally, and corporate agribusiness and urban
sprawl developers.29
A recent report by Public Citizen’s California office in
Oakland disclosed that Paramount Farming, a privately held
agricultural corporation headquartered in Beverly Hills,
owns a mutual water company possessing a 48 percent share
in the Kern Water Bank Authority. Publicly-owned water is
already controlled by private interests there, though how
much and by whom is costly and difficult to determine.30
Other major landowner-speculators like Tejon Ranch and
Newhall Land and Farming Company have stakes in other
Tulare Lake Basin water banks formed at the hydraulic
interchange of the SWP’s California Aqueduct, and the CVP’s Friant-Kern and Cross-Valley Canals west of Bakersfield.
It’s a lot like having Enron, Mirant, Reliant, Duke and
Calpine owning your state’s power plants on the eve of
energy deregulation.
“[DWR deputy director Tom] Glover said the emphasis
on building a 10-year EWA,” writes Gary Pitzer in the water
industry’s Western Water, “gives fishery agencies the
opportunity to look at longer-term investments so they can
become ‘more prudent buyers’ of water assets.”31
And water agencies (especially those that are veneer for
private, usually corporate interests) up and down the state
will certainly look to longer-term water sales strategies so
they can be come more sophisticated sellers of water.
“Market power,” the power industry’s euphemism for
manipulation of supply and price under deregulation, may
gain currency in the water industry someday soon: remember
Get Shorty, Dark Star.
At least one environmental mainstay member worried
openly about being out of touch with the times. “We’re going
to go right back to where we were in the late 1980s, with
sudden fishery collapses,” ED’s Tom Graff groaned to the
Contra Costa Times in August 2003. “Do people care about that more than swimming pools in Orange County? I don’t
know. If this were all about 100,000 acre-feet for Westlands
(Water District, an irrigation district and traditional foe of
environmentalists), we’d all be in our traditional trenches
fighting subsidized agriculture,” he added. “This is Met [and
the 22 million people who rely on the Metropolitan Water
District of Southern California]. This is different. It’s a lot
more water, and it’s for people.”32
It wasn’t like that in 1992 and 1993 when ESA listings of
salmon, smelt, and splittail fishes in the Delta, coupled with
a grinding drought and a major financial crisis within the
State Water Project had the California water industry facing
its worst crisis since the defeat of the Peripheral Canal in 1982.
At that time, environmentalists held stronger cards in
their hands: their threats of litigation to enforce adequate
Delta outflows to protect the region’s decimated fisheries
struck terror into the hearts of drought-battered water
agencies. Rather than be accused of obstructionism, and risk
the environmental damage of perhaps-decades-long Delta
litigation, they anted up with the CalFED process, providing
it with a political-ecological legitimacy the water industry
then so desperately craved.
And California has added a few million people over the
last 10 years.
“Assets” for the Environmental Water Account may exist
or may not. We must think not only of assets from
California’s rivers, streams and aquifers, but of taxpayer
funds allocated from state and federal budgets to the EWA,
which are as under-endowed and over-appropriated as our
grandest rivers. In that light, the strategy of paying for the
public trust with taxpayer funds may be neither fiscally
realistic nor sustainable. All Californians should be asked to
vote on this, but we won’t be.
To insulate the EWA from the troubled public fisc,
agribusiness and urban water contractors would have to
agree to Delta user fees to fund the EWA. As self-interested
political and economic actors, will they step out of character
long enough to achieve this? If it’s important enough, they
will.
But governmental responsibility for enforcing the public
trust in water resources will continue to erode the longer that
a water market takes hold. And it will have happened without
the consent of the governed: the people of California who are
the original, perpetual owners of water here.
“We believe a long-term EWA is necessary,” enthuses
Brent Walthall, who oversees the Kern County Water
Agency’s Bay-Delta Resources Division. “It helps mitigate
for take at the pumps [and] can also be used to recover
species beyond the ESA’s jeopardy level. Paying for it has
not scared us away from the table yet.”33
MWD’s Tim Quinn told Western Water that his agency
would continue the practice of investing in environmental
mitigation and restoration for the Delta; it benefits MWD in
both overall water quality as well as supply. “Exporters are
wedded to the proposition that protection has to precede
operations,” he said. “We do recognize that firm funding for
EWA is important.”34
Mainstay environmental groups weren’t invited to Napa’s
wine country last July probably because water industry
officials felt no need for the mainstays to continue
greenwashing the SWP and CVP; they may believe they can
handle it themselves now that EWA is in their grasp.
ENDNOTES
1 Anonymous, Draft Proposition Concerning CVP/SWP
Integrated Operations (no date), 11 pages, issued on the
Bureau of Reclamation’s web site 30 July 2003; it is no longer
posted there, however, as of this writing. The Napa Proposition
may be viewed at http://www.spillwaynews.net/Napa/
Proposition.
2 CalFED Bay-Delta Program, Programmatic Record of
Decision, August 28, 2000. See especially sections 2.2.6,
Conveyance, and 2.2.7, Environmental Water Account, pp.
48 through 57. Hereafter cited as “CalFED ROD.” These two
sections lay out the physical improvements CalFED Agencies
(which include the California Department of Water Resources
and the United State Bureau of Reclamation) intended to
pursue to increase pumping at the SWP pumps from currently
allowed 6,680 cubic feet per second (cfs) to 8,500 cfs. This
increment of increase is referred to as “Banks 8500” in the
Napa Proposition. Export increases to the full capacity of both
CVP (4,600 cfs) and SWP pumping plants (10,300 cfs) were
factored into the CalFED Final Programmatic Environmental
Impact Statement/Report, July 2000, Attachment A, p. A-15. A
timeline for this export increase presented to state water
contractors in November 2003 indicates that endangered
species compliance reviews and south Delta improvements
for Banks 8500 will be completed by the end of June 2004.
Export increases are expected to start when the South Delta
Improvements Program is completed.
3 An acre-foot is approximately 326,000 gallons of water, an
amount used by a typical California household in a year.
Millions of acre-feet represents trillions of gallons.
4 Gary Pitzer, “The CalFED Plan: Making it Happen,” Western
Water January/February 2004.
5 Flow and export data from Delta Outflow Computation table
available from U.S. Bureau of Reclamation’s Central Valley
Project Operations Office web site for water accounting
reports, www.usbr.gov/mp/cvo/html/pmdoc. Data obtained 12
February 2004.
6 CalFED ROD, op. cit.
7 Pitzer, op. cit., p. 11.
8 CalFED Bay-Delta Program, Ecosystem Restoration
Program Plan: Strategic Plan for Ecosystem Restoration,
Final Programmatic EIS/EIR Technical Appendix, July 2000,
p. 5, which states: “…[C]onfusion and contention still surround
the concept of ecosystem restoration....[T]hat is, the
term itself seems to imply that the ecosystem will be restored
to its pristine, pre-disturbance condition or some structural
and functional configuration defined by a particular historic
baseline….Ecosystem restoration does not entail recreating
any particular historical configuration of the Bay-Delta
environment; rather, it means re-establishing a balance in
ecosystem structure and function to meet the needs of plant,
animal, and human communities while maintaining or
stimulating the region’s diverse and vibrant economy.” A
similar passage is found in the July 1999 draft of this same
report. This is not deep ecology, but it functions as a public
secret.
9 CalFED’s planning process was a meeting marathon for
many years. Having created numerous advisory councils,
working groups, roundtables, and subcommittees, the state
and federal government together have literally hundreds of
expert engineers, consultants, biologists, hydrologists, and
lawyers who can fan out to meetings with impunity. The same
is also true for the Metropolitan Water District of Southern
California and other urban water agencies (including the
Santa Clara Valley Water District). Agribusiness water
districts send high-priced lawyers and engineers on retainer
to CalFED meetings. It is obvious that environmentalists, even the best-paid, most professional, and most foundation grant-
endowed ones, are outgunned and the CalFED process
was no exception. The difference, as will become clear,
seems that the environmental mainstays somehow cling to
the belief that their access to the CalFED process bridged
this inequality; with benefit of four years’ hindsight and now
the Napa Proposition, it probably didn’t.
10 Tom Phiilp of the Sacramento Bee’s editorial board, wrote in
his web log on 8 October 2003, “Schwarzenegger’s campaign
web site had something intriguing to say about water, and the
message of course is a little different [than that of the Davis
Administration]. Translation: We’re adrift because of a lack of
leadership, and part of the solution is for the state to own all
the key plumbing in the Delta. That means somehow buying
the Central Valley Project from the Bush administration. This
idea hasn’t been on the front burner for years. Maybe its
origins trace to a Wilson-era advisor dusting off an old idea.
But was this a plant from the Bush administration, perhaps
Interior’s Bennett Raley [currently Deputy Secretary of the
Interior under Gale Norton]? I don’t know, but California under
Governor Arnold would be the perfect place for the Bush
team to launch an agenda to downsize federal ownership of
its aging western water projects. Even in a budget crisis, the
state could float this purchase if Bush and Congress were
willing to sell the Central Valley Project on favorable terms
(reasonable price, paid over decades). That way the budget
doesn’t take a hit, and all the project water users easily
absorb the cost through a modest hike in the rates.” Posted
to the Salmon Coalition listserv on 9 October 2003. If the
State owns the CVP eventually it would probably also mean
the end of all pretense of acreage limitations on CVP
agribusiness beneficiaries.
11 Quoted in Vic Pollard, “Valley boost on tap: plan between
state projects to increase water for Kern as much as 50,000
acre-feet,” Bakersfield Californian 20 August 2003, p. 1.
12 Quoted in Cariad Hayes Thronson, “Napa Deal
Demystified,” Estuary, December 2003, p. 1.
13 Quoted in Vic Pollard, “Water deal could increase supplies,”
Bakersfield Californian 11 December 2003.
14 Ibid.
15 Quoted in Mike Taugher, “Most wanted: Delta water,”
Contra Costa Times 30 September 2003.
16 The five “EWA agencies” are the Bureau of Reclamation,
Fish and Wildlife Service, and National Marine Fisheries
Service of the federal government; and the State of
California’s departments of Water Resources and Fish and
Game. Hereafter cited as “EWA Agencies.” EWA Agencies,
Environmental Water Account Draft Environmental Impact
Statement/Report, July 2003, Volume III, Appendix J, “Action
Specific Implementation Plan,” Section 2.2, “EWA Program
Overview,” p. 2-3. Emphasis added.
17 Writes Gary Pitzer in Western Water, op. cit., p. 9:
“Using the EWA can be a complicated, expensive process,
given the scientific uncertainty that exists with protecting fish
and the cost of acquiring water on the open market. The EWA
has provided 900,000 acre-feet of additional water [over three
years] above the regulatory baseline to protect the environment
at a cost of $120 million, [Chief of DWR Water Transfers
Office Jerry] Johns said, adding, ‘This is by no means an
inexpensive program.”’
18 Christina Swanson, Ph.D., The First Annual State of the
Environmental Water Acccount Report, San Rafael, CA: The
Bay Institute of San Francisco, September 2001, p. 5.
Available from http://www.bay.org/news.htm.
19 CalFED ROD, p. 58.
20 Jerry Johns, Chief Officer of the Water Transfers Office,
California Department of Water Resources, “EWA,
Development of Operational Criteria and Plan Proposal:
Where to From Here,” see slide entitled “EWA Budget.”
Public presentation given to state and federal water
contractors, November 25, 2003. Posted on the Internet at
http://www.usbr.gov/mp/cvo/HTML/present.html.
21 Testimony of Stephen Ottemoeller, General Manager of
Madera Irrigation District, Fresno public hearing August
28, 2003, on the Draft Environmental Water Account
Environmental Impact Statement/Report, contained in the
Final Environmental Water Account Environmental Impact
Statement/Report, Volume 4, Chapter 4, January 1994.
22 On the market’s penchant for “creative destruction,” see
Joseph Schumpeter, Capitalism, Socialism, and Democracy,
2nd ed., New York, NY: Harper & Brothers, 1947.
23 Swanson, op. cit., p. 14.
24 Johns, op. cit.
25 Swanson, op. cit., p. 14.
26 Tim Stroshane, “Water and Technological Politics in
California,” Capitalism Nature Socialism 14(2): 34-76,
June 2003. Copies available from the author on request
via email at editor@spillwaynews.net, or in writing at P.O.
Box 8362, Berkeley, CA 94707-8362.
27 Sources for EWA assets may include water purchases
subsidized with taxpayer funds (rather than Delta user
fees); borrowing of water from SWP and CVP reservoirs;
and perhaps water freed up from the Sacramento Valley
Water Agreement, executed in November 2001.
28 See Steve Burke, “Diablo Grande: A Signature Experience,”
and Lynne A. Plambeck, “Water Newhall Ranch on
a wish and a prayer,” SPILLWAY v1n3&4 Spring and
Summer 2001. Available at http://www.spillwaynews.net/
backissues.html.
29 The Kern Water Bank Authority was created immediately
after Kern County Water Agency obtained the Kern
Water Bank as part of the Monterey Agreement. See John
Gibler, Water Heist: How Corporations Are Cashing In On
California’s Water, Oakland, CA: Public Citizen, December
2003, 30 pages. This free report is available from the
Public Citizen web site at http://www.citizen.org/california/
water/heist/ or by contacting Public Citizen at their
California Office, 1615 Broadway, Ninth Floor, Oakland
California 94612, 510.663.0888, or via email at
california@citizen.org.
30 This unpleasant fact about the EWA’s experimental
phase goes unacknowledged in Western Water by both
Jerry Johns of DWR and writer Gary Pitzer.
31 Pitzer, op. cit., p. 9.
32 Quoted in Mike Taugher, “Tapping of Delta waters
opposed,” Contra Costa Times, 19 August 2003.
33 Quoted in Pitzer, op. cit.
34 Ibid.

Repost - Don't Privatize the State Water Project - Spillway News Fall 2004


Spillway News, Fall 2004
California Performance Review:
Don’t Privatize the State Water Project
By Tim Stroshane
A massive media blitz in early August accompanied
release of Governor Arnold Schwarzenegger’s California
Performance Review (CPR) report, which proposes to
centralize California’s regionally-oriented government—
especially when it comes to natural resource management,
development regulation, and conservation—and to privatize
public facilities, transferring their operation (if not divesting
the state of their ownership) to private corporations to profit
off the public weal. 
Governor Schwarzenegger writes poetically in the report’s
preface. “Never in history have such big dreams come
together in one place, never in history has such an array of
talent and technology converged at one time, never in history
has such a free and diverse community of people lived and
worked under one political system. This is a wonderful
place, California, this empire of aspirations.”1 
It is poetry to fatten lambs by. The state needs
resuscitation, as polls repeatedly show.2
“The governor is prepared to make government efficient for the taxpayer and
will be undeterred by forces who would be opposed to that,”
the governor’s spokesman Rob Stutzman said on the eve of
the report’s release.
The 2,500-page CPR report recommends, among much
else, eliminating a variety of regional regulatory board
structures with power over timber, air, and water quality, and
privatizing operation of the State Water Project (SWP), the
state-owned system moving water from the Feather River
region across the Delta to the California Aqueduct for
delivery to San Joaquin Valley farmers and urban residents
of southern California. The State Water Contractors
Authority (SWCA), a joint powers authority, was formed to
contract with the state for that purpose.3 
“None of this will be accomplished through stopgap
measures and half-hearted attempts at coordination,” the
report reads, striking a note of bravado.4 
“If they eliminate the [state water quality control]
boards,” asks Bob Caustin of Defend the Bay, a non-profit
environmental organization striving to protect coastal bay
waters in Orange County, “where are we going to go—the
state Supreme Court each and every time there’s an issue?”5 
“The regional water boards offer the public an invaluable
opportunity to participate in democracy and to have a voice
in water issues throughout the state,” commented Alisha
Deen of the Environmental Justice Coalition for Water
representing 50 water advocate groups statewide, at the CPR
public hearing in Davis in late September. 
Litigation can be avoided through more open and
democratic access to state boards, Deen added, “The cost
savings to the state in reduced litigation, due to proactive
measures taken at the local level, should be incorporated into
the financial analysis of the CPR. A distant mega-agency
with no face to face communication...is not acceptable” to
low-income and minority communities, “especially on such a
critical issue as water is to human life.”6 
Combined with CPR recommendations to eliminate the
State Water Resources Control Board and reposition the
power to regulate water rights and quality with the Governor,
the CPR report’s authors come into focus as less interested in
promoting efficiency and accountability than in improving
the business climate for corruption of public assets. 
A veneer of sympathy in the CPR report for California’s
public services and facilities is employed to prepare the way
for turning over many of these services to the private sector,
combined with largely simple assertions that what
Californians read in the CPR report must be true. 
“Once the envy of the nation, today our state government
fails the people of California, and it fails the men and women
who have given their careers to its service,” the report reads.7 
The Public and the SWP 
T’ain’t necessarily so. 
Since the 1970s, the SWP delivered an average of nearly
2.5 million acre-feet of water to its customers, annually
contributing value and wealth to the state’s farm and
industrial economies. California voters narrowly approved
general obligation bonds for the SWP’s construction in
November 1960 after a controversial and divisive campaign,
pitting water rights of northern Californians against water
demands of southern Californians.8 
After it began full service in the early 1970s, the SWP played a central, if controversial role in helping farmers and cities to weather droughts. By
rationing deliveries, the SWP made water available through
transfers to water-short regions during the severe drought
years of 1991 and 1992 and in most cases reduced losses that
might otherwise have occurred.9 
The drought water bank purchased water typically for
$125 an acre-foot from water agencies and other sellers
north of the Sacramento-San Joaquin Delta, acquiring a total
of 821,000 acre-feet during 1991 drought water bank
operations. The bank subsequently allocated 389,770 acre-
feet that year, with over half of these allocations being
delivered to the Metropolitan Water District of Southern
California (MWD) by October. Transferred water
subsequently exported from the Delta had transportation
debate.13 
This less-known financial crisis of the SWP, the Monterey
Agreement, the endangered species crises in the Bay-Delta
region, and stricter regulatory Delta water quality
requirements, forced the state and federal government to
create the CalFED Bay-Delta Program and implement its
“framework for action.” 
Frustration with the pace of CalFED projects since
adoption of its Record of Decision and reforms has tried the
water industry’s patience, and the recall election last October
2003 of Arnold Schwarzenegger gave the industry an
opening to further advance its privatization agenda for the
State Water Project. 
Solicitous CPR 
It is one thing to be certain, but you can be certain and be
wrong at the same time, to paraphrase a recent presidential
charges added to it, enabling the state to recover its costs from
bank.11 
San Joaquin Valley agribusiness tumbled into its direst
economic crisis as water deliveries
plummeted to near zero. Yet the Valley’s irrigation and water
districts still had their eight- and nine-figure mortgage payments
due to the State Water Project.12 
The California Department of Water Resources’ (DWR)
performance in those years demonstrated that state
government could successfully operate a drought water bank on
behalf of California’s public as a whole. This success, however, was
anathema to Governor Pete Wilson, in power at the time, and
who would subsequently embark on a major but largely
unsuccessful campaign in state government to privatize many of California’s government services. 
In late 1994, major SWP contractors and David Kennedy,
then-director of DWR (himself a former general manager of
MWD) under Governor Pete Wilson (whose advisers play
prominent roles in both Governor Schwarzenegger’s
campaign and administration), secretly negotiated an
agreement in Monterey that established rudiments of
California’s water market.
This agreement turned control of
one southern California reservoir to MWD and a
groundwater bank to a Kern County mutual water company
owned by Paramount Farms. (Stewart Resnick) It also eliminated the prospect
of shrinking SWP “entitlements” due to the possibility of the
state declaring a permanent drought in California, without
subjecting such an important policy decision to public
candidate. 
Nowhere is this nostrum more in evident than in CPR’s
proposal to privatize operation of the SWP. 
It seems to CPR that the State Water Project is just
too difficult for the California Department of
Water Resources to administer. State budget-related hiring
freezes caused chronic staff shortages [particularly in the San
Joaquin Division of DWR,resulting in “40,000 hours of
overtime to keep the system operating at a high level.” 
Electric utility deregulation14 taxes the beleaguered SWP’s
staff, says the CPR report: 
“Special skills associated with purchasing power and
scheduling power and water deliveries are in demand in the
private sector, and state civil service classifications do not pay
high enough salaries to attract individuals with highly
specialized skills. Limitations and freezes on contracting
impede the timely use of consultants to provide the needed
skills for energy purchasing and scheduling to mitigate for
SWP’s inability to hire state employees.”15 
In other words, privatizing the SWP will enable the
system to hire more expensive employees and
consultants (whose billing rates, lest it be forgotten, include 20 to 50
percent mark-ups with profit margins for administration of
their businesses, costs unrelated to direct provision of state
services). The CPR does not explain how more expensive
staff will provide the state of California with savings from
SWP privatization. 
Besides, most Californians know how well privatization
of public electric utilities went during 2000 and 2001, right?
The state’s electricity deregulation system was signed into
law by Governor Wilson in 1996. That mass mugging by
private energy companies cost California its state surplus
within a few months in 2001 when extortionate prices for
electricity here caused widespread recurring blackouts, panic
buying by the state, and one of the greatest and most rapid
transfers of economic wealth in modern memory.

CPR shows its solicitous but patronizing concern for the
SWP by recommending the project’s removal from DWR, “a
department which has other major missions including public
safety, local assistance, statewide planning for water
resources, and public education. Such a large mission and
variety of funding sources often creates conflicts for both
management and support organizations inside the
department.”16 
SWP, the Public’s Asset 
The trouble with CPR’s patronizing tone is that DWR
exists to operate the SWP, by law.
Never mind that a reasonable case could be made that
privatization of the SWP is illegal. In the mid-1950s under
Governor Goodwin Knight, the state Legislature created
DWR specifically to plan, construct, operate and maintain
the SWP. Under Governor Pat Brown, the state legislature
approved the Burns-Porter Act17, which was passed as a referendum in November 1960, and assigned DWR the responsibility for carrying out design, construction, and operation of the SWP. In the general obligation bonds and revenue bonds that provide the project with its ongoing sources of debt capital, DWR is responsible for operating and maintaining the SWP. In return bondholders receive secure streams of interest payments from the SWP as administered by DWR.
The Legislature and the People are given no role in CPR’s
recommendations, however. 
The CPR informs its readers that a white knight awaits the
careworn SWP, the State Water Contractors Joint Powers
Authority (SWCA) which “could provide a mechanism to
maximize the reliability of SWP by contracting with DWR to
undertake specified projects and services. The purpose of
[SWCA] is to help resolve significant challenges in the near
future, such as hiring freezes, budget constraints, and more
complex power operations.”18 
Major water contractors that make up the SWCA include
the Kern County Water Agency (KCWA) and the
Metropolitan Water District (MWD); combined they contract
for more than 80 percent of SWP deliveries year-in and year-
out. MWD and KCWA also were among the principal
signatories to the 1994 Monterey Agreement. Many other
SWP contractors are water districts formed to provide a
public district cover for private landowners and
agribusinesses in the southern San Joaquin Valley.19 
SWCA takeover of the SWP relies on a ridiculous
pretense, considering that maintenance of the state’s water
supply in the public interest hangs in the balance. Resolving
the state budget’s structural deficit20 could enable the state to
address budget constraints and hiring freezes directly; power
operations could be simplified by re-regulating utilities and
their power plants.
In California water law, the people—
the People—retain sovereign ownership of water within the state’s borders. 
The CPR’s recommendation to turn over operation of the SWP to
the SWCA would effectively cede this sovereign authority
from the state without a debate or a fight, as it urges the
Governor to issue an Executive Order separating the SWP
from DWR, to make the system its own administrative
authority. The state of California is supposed to regulate
water in trust for the public (for example, the public trust
doctrine protecting resources). 
“If any infrastructure project in California has proven to
be successful,” commented Mark Sheahan, president of
Professional Engineers in California Government, a union of
professional and technical state employees, “it is the State
Water Project. The safe, cost effective, and efficient delivery
of water and energy via the State Water Project—a state-
owned engineering marvel—is and must remain a
fundamental role of state government. 
“For that reason,” adds Sheahan, “the CPR
recommendations to contract with the State Water
Contractors Joint Power Authority to provide specialized
services and skills and to turn over portions of the aqueduct
system to State Water Contractors to operate and maintain is
a blueprint for disaster. Apparently, if it ain’t broke, the folks
who wrote this [recommendation] want to break it.”21 
ENDNOTES
1AReport of the California Performance Review,
August 2004, epigram quote preceding page i. Hereafter cited,
CPR. 
2Mark Baldassare, California Millenium: The Changing
Social and Political Landscape, Berkeley, CA: University of
California Press and the Public Policy Institute of California,
2000; and Mark Baldassare, A California State of Mind: The
Conflicted Voter in a Changing World, Berkeley, CA:
University of California Press and the Public Policy Institute
of California, 2002. 
3Caustin quoted in Alicia Robinson, “Watchdogs resist sea
change: State’s money-saving move to get rid of regional
boards dedicated to keeping water clean doesn’t thrill
environmental groups,”Daily Pilot(Orange County) 19
August 2004. 
4Alisha Deen, Environmental Justice Coalition for Water,
Written Testimony to the California Performance Review
Panel, 30 September 2004, author’s files. 
5Peter Nicholas and Robert Salladay, “Radical Revamp of
State Bureaucracy: Schwarzenegger’s panel says a
restructured government would save $32 billion in five
years,” Los Angeles Times 30 July 2004. 
6Quoted in Nicholas and Salladay,
ibid.. 
7See INF 07, “The State Needs to Restructure the
Administration Over the State Water Project,”
ibid. pp. 731-735. 
8For a review of attempts to privatize the State Water
Project in the 1990s, see Tim Stroshane, “Monterey
Agreement: A Bloodless Coup,”
SPILLWAY v1n2, Winter
2000. Available at
http://www.spillwaynews.net/BackIssues