By Wayne Lusvardi

Mark Twain wrote, “History doesn’t repeat itself, but it does rhyme.” California is replaying its original political power struggle for passage of the State Water Project that had to be resolved by the Burns-Porter Act of 1955 and the Delta Protection Act of 1959.

The recent reaction by Northern California against California’s proposed Bay-Delta Conservation Plan might be called a “Delta revuelta.”  A revuelta is organized opposition or a conflict in which one faction tries to wrest control from another.

The current revuelta, however, is odd since no vote of the electorate or Legislature is needed to proceed with the Twin Tunnels component of the Delta Plan.  Without a vote, there is no political legitimacy to undertake the Plan.  A statewide vote for the California Water Bond on the 2014 ballot is only needed to fund the fish habitat restoration component of the plan.

Engineering fix for regulatory problem

The Bay Delta Conservation Plan would bring no extra water for Central Valley farmers or Southern California cities.  As Steven Greenhut describes the project, it is an engineering fix for a political and regulatory problem.  Water deliveries to farmers and cities have been shut down for frivolous lawsuits to protect freshwater fish.  Ninety-three percent of these fish end up eaten by predator fish anyway.  Instead of fixing this regulatory overkill problem, a $25 billion entire re-engineering of the Delta is being sought.  Thus, there is no public legitimacy for the project based on either cost or fish habitat restoration.

The unacknowledged problem is one of political legitimacy — the justification of authority not by coercion, but by consent — that is, consent by the people, or by a substitute consensus of legislators, the governor and the courts.  The central problem of the Bay Delta Plan is that it has vainly sought legitimacy by regulatory, scientific, legislative and judicial authority.

How did original State Water Project gain legitimacy?  

Since history is repetitive, how did the original construction of the State Water Project in the late 1950s find sufficient political legitimacy to proceed?

Just as today, the costs and engineering feasibility were contentious.  Dividing lines were drawn between North and South. Both opposed the project.  Northerners felt the State Water Project was a water grab despite the County of Origin Statute of 1931 protecting their water demands.  Delta and Bay area communities wanted their waterways, levees and sunken Delta islands protected.

Southerners didn’t want to pay the greatest share of the cost without guarantees of a certain allocation of water and controls over costs. Delta farmers were the clearest supporters of the project. Unions and engineers joined them. But small farmers wanted an acreage irrigation limit to protect family farms.

An attempt at an amendment to the California Constitution to protect every major stakeholder interest failed.  Finally, the state legislature came up with the Burns-Porter Act as a way to reconcile the differences.  The Act was named after Fresno Assemblyman Hugh Burns and Compton Assemblyman Carley Porter, who chaired the Assembly’s water committee at the time.  Both were Democrats.

A part of the package of laws that made up the Burns-Porter Act was the Davis-Grunsky Act that assured Northern counties the water and money to build future projects.  The Burns-Porter Act confirmed the County of Origin and Watershed of Origin Acts.  Northerners were concerned that the contractual amount of water the Southern part of the state would get would be open-ended.  Southerners got the assurances they wanted of a firm water allocation enshrined in the state constitution and funds specified only for projects in the Act.

The Delta Protection Act of 1959 promised adequate water and water quality for Delta users.

To increase public legitimacy, an engineering firm and a financial firm were brought in to review the feasibility of the project.  They cut costs because of a concern that future monetary inflation would reduce the purchasing power of the bonds.

The Burns-Porter Act, Proposition 1, was placed on the ballot and narrowly passed in 1959 by 3 percentage points of the voters.  It not only found political legitimacy but it maintained it by controlling costs.

State Water Project had NO cost overruns

According to the Department of Water Resources Financial Statements for 2012, of the $1.75 billion of general obligation bonding authorized for the State Water Project, only $1.58 billion were issued up to 2012.  Only $362 million remained unpaid as of the end of the 2012 fiscal year.  Despite the public’s current outcry that a doubling of costs are inevitable for the new Bay-Delta Plan, there were no cost overruns in the initial State Water Project.  And there was only $2,427,356 in unpaid revenue bonds for State Water Project hydropower plants as of 2012. 

Do Burns-Porter and Rendon-Bigelow Rhyme?

The modern-day counterparts to former Assemblymen Burns and Porter are Assemblymen Anthony Rendon, D-Lakewood, and Franklin E. Bigelow, R-Madera County, who respectively are chair and vice-chair of the Assembly Water, Parks and Wildlife Committee. Rendon has a PhD from U.C. Riverside.  Bigelow is a former Vice-President of Ponderosa Telephone Company and was a Madera County Supervisor.

California will be lucky if history not only repeats itself with no cost overruns for the proposed Bay-Delta Twin Tunnels project.  But it will be really lucky if the project finds any political legitimacy even if Assemblymen Rendon and Bigelow change their names to rhyme with Burns and Porter.  Otherwise, Delta will still rhyme with revuelta.

By Wayne Lusvardi

Call it “thin water.” A small private company called Cadiz Inc. in Los Angeles is in the process of creating water in California’s Mojave Desert — like a magician, literally out of thin air.

By selling that water wholesale, water agencies will be able nearly to double the amount of water sold because of an administrative mechanism called an “Intentionally Created Surplus” as part of the Lower Colorado River Basin Operating Agreement.

ICS water will contribute toward avoiding the construction of new costly water-storage reservoirs anywhere in California, even though the new water “produced” will be in the Mojave Desert.

New Cadiz Plan Endorsed by Environmentalists

If this sounds too good to be true to environmental skeptics, it isn’t.  Cadiz Water’s plan to capture evaporation water losses has been endorsed by some of the most eminent conservationists, water scientists and engineers in the world.  And ICS credits have been in operation since 2007.

The Cadiz Company has many skeptics due to a failed proposal 10 years ago to sell Cadiz Valley groundwater to the Metropolitan Water District of Southern California.  Critics at that time believed that Cadiz would deplete the groundwater table and would destroy the desert ecology.  But Cadiz CEO Scott Slater says recently, “They learned from that process.”

Cadiz’s new water development concept is to capture downstream groundwater before it gets to desert dry lakebeds in the Cadiz Valley.  Nature uses dry lakebeds as evaporation ponds to allow groundwater to escape back into the atmosphere.  Thus, Cadiz will take water from no one, not even the environment.  It will take water from the ground before it evaporates into thin air.

Water Conservation Credits Double Water Supply

And through a novel new administrative process called an “Intentionally Created Surplus,” it will be able to sell water conservation credits to the MWD or its member agencies.  Under the Colorado River Interim Guidelines for Lower Basin Shortages and Coordinated Operationsfor Lake Powell and Lake Mead of 2007, the U.S. Bureau of Reclamation will allow the MWD to store almost an equal amount of conserved water in Lake Mead.  Thus, conserved water will produce double the potential water supplies. As as long as low water capacity conditions prevail along the Colorado River, water storage system water can be stored in Lake Mead.

Former U.S. Bureau of Reclamation water consultant Bob Johnson called ICS water a “huge breakthrough” that will mainly benefit Southern California water users.

Johnson says that prior to the creation of water conservation credits, the water in Lake Mead was held in common ownership by all the Lower Colorado River Basin states.  Water conservation credits have created a sort of water right within the common pool of water in Lake Mead. These water rights could disappear if greater rainfall eventually fills the reservoirs along the Colorado River system.

Johnson says an ICS water conservation credit is defined as a portion of any water conserved through farmland fallowing, lining of canals, increased system efficiency or other measures taken by Lower Basin users of the Colorado River that will result in new additional sources of water.  There is a cap on how much water surplus each Lower Basin Colorado River water user can store in Lake Mead.  Thus, there is a future risk of losing the surplus water parked in Lake Mead if high water conditions return.  But as long as low rainfall conditions prevail, there is potential water storage capacity in Lake Mead.

Categories of Water Conservation Credits

Lake Mead has four statutory priorities for storing water, in this order: flood control, water storage and hydropower.

Under the 2007 guidelines, there are four categories of ICS:

1. Tributary conservation: allows a water user to fallow water rights in tributaries of the Colorado River that were in use prior to the effective date of the 1928 Boulder Canyon Project Act and transport this water to the Colorado River for credit.  An example would be MWD fallowing 16,000 acres of farmland it owns in the Palo Verde Irrigation District along the Colorado River.

2. Groundwater-imported ICS: allows a Colorado River contract holder to convey non-Colorado River water to the Colorado River for credit. Cadiz’s plans to capture evaporative groundwater losses — or “thin water” — would fall into this category.

3.  System efficiency: allows a user to fund a system efficiency project that would conserve Colorado River water. The project must increase the amount of water in the United States and a portion of the saved water would be credited to the user funding the project.  The Drop 2 Storage Reservoir Project — also called the Brock Reservoir — will capture about 70,000 acre feet of water on average that is released from Lake Mead, but is no longer needed because of changed weather conditions.  The Drop 2 Storage Reservoir is located north of the All American Canal in Southern California and about 30 miles west of Yuma, Ariz.

4. Extraordinary conservation: Allows a water user to implement a project, such as land fallowing or canal lining, to conserve water through extraordinary measures, which would increase Lake Mead levels. Unlike other forms of ICS, extraordinary-conservation ICS is not available during declared shortages.  The Imperial Irrigation District plans to conserve 12,000 acre-feet of water for example by a main canal lining and seepage interception project.  Likewise, MWD is planning a water desalting facility that will save 56,300 acre-feet of water as part of its Palo Verde Irrigation District project.

Before the creation of ICS credits, Johnson says there was no incentive for Lower Basin users to conserve their water allocation.  It was a system of “use it or lose it.”  The new incentive system allows Lower Colorado River Basin users to now nearly double their water resources.

California Can Only Weather a Half-Year Drought

Colorado River water consultant Bob Johnson says that California “has the toughest water problems of all 17 western states.”  He pointed out that the ratio of average annual water flows to water storage on the Lower Colorado River system is about 4.0.  In other words, the Lower Colorado River has four years of storage and thus can weather a four-year drought.

The entire Colorado River system could withstand a 10-year drought according to Johnson.

Using rough numbers by comparison, Johnson said the flows-to-storage ratio for California’s State Water Project and the federally operated Central Valley Project is about 0.5.  Stated differently, California can only weather a drought for about half a year. On its own, the California State Water Project cannot manage a drought of nearly any duration.

This makes a three-to-five year drought unmanageable in California. It forces emergency conservation measures instead of water planning and management.  Thus, not only is more water storage in California needed, but the existing water system needs to be able to be managed more flexibly to make it more efficient.  ICS water credits go a long way to adding system flexibility and more efficient management of existing water supplies until more water storage can be added.

The new proposed Cadiz Water project will go one step further by creating a 100 percent multiplier effect of creating a new water supply from almost nothing.

California Voters Squandered Water Bonds

California voters have squandered about $18.7 billion in five water bonds since the year 2000, without creating any new significant water storage. (Propositions 12, 13, 40, 50 and 84.)  Most of that bond funding went to land acquisitions for open-space preservation.

A $11 billion water bond is scheduled to go before voters this November, called the Safe, Clean, and Reliable Drinking Water Supply Act of 2012.

It would provide for construction of two new water reservoirs, if they can withstand legal opposition by environmentalists. But the bond may be pulled from the ballot due to low voter support. Voters apparently are tired of paying for water bonds that are nothing more than expensive jobs programs for environmentalists. New opinion polls show voters are tiring of the Green Agenda.

If that’s the case, maybe the state finally can move on and solve its water problems with real solutions, as in the 1950s and 1960s. If not, then prepare for future droughts complete with much higher water prices, brown lawns, shuttered car washes, dirty cars and more national jokes about Californians’ incompetence.

By JOHN SEILER

The history of California practically is the history of water. So it’s not surprising that the recent history of the state involves a shift from government facilitating growth to government sharply restricting growth — in water and the rest of the economy.

The older model must be restored for California to again become an engine of economic growth, Rep. Tom McClintock told the Fourth Annual Orange County Water Summit in Anaheim, which I attended. In January, he became the chairman of the House Water and Power Subcommittee. He said that the situation in California is much like that throughout the country, but worse here because of our unique situation.

Recalling the era before the 1970s, he said, “It was an era when vast reservoirs produced a cornucopia of clean and plentiful water and power on a scale so vast that many communities didn’t even bother metering the stuff.

“That generation of builders clearly understood the benefits that water and power development brought not only to the economy but to the environment as well. Nothing is more environmentally devastating than a flood or a drought.”

By contrast,  he warned, today “the principal purpose of government water policy is not to produce abundant water, but rather to ration shortages that government has caused by abandoning abundance as its objective. The result is increasingly scarce and expensive water that is now affecting our prosperity as a nation.”

Cost-Benefit

In any business, a key aspect of planning is cost-benefit analysis. If something costs too much, you don’t do it. But if costs can be contained, then a profit is possible.

McClintock said that, when he took over the chairmanship, that cost-benefit analysis no longer is done on American water projects. “Instead, practicality was replaced by an entirely new ideological filter,” he said. “Those projects that ration or manage shortage are considered worthy regardless of feasibility or cost — and projects that produce abundance are to be discouraged regardless of their economic benefits or simple common sense.”

At the national level, he said, the new Republican majority on his subcommittee will institute two reforms: First, all projects coming before the subcommittee will be subject to cost-benefit analysis. That will replace “the current process, which I can only describe as throwing money at any water project that is ideologically pleasing to the committee, regardless of cost considerations.”

Second, he said, was that “beneficiary pays” will be the basis of projects initiated with federal funds. “There is no excuse for taxpayers to bear the cost of any water project,” he said. “Every project must be cost-effective and it must be financed by the beneficiaries of the project in proportion to their use of its benefits. Once capital costs have been repaid, such projects can then provide a revenue stream for the participating governments for the life of the project.”

McClintock, a former state senator and assemblyman, especially excoriated California for switching from a “beneficiary pays” model to one funded with tax dollars. He pointed out that, in the last decade, California voters approved six water bonds totaling $17 billion that was supposed to solve our water needs, but didn’t.

$11 Billion in New Water Bonds

I would add that, on the 2012 ballot is another water bond, for $11 billion. It was postponed from last year because of its immense cost and its vast spending on pork. According to Ballotpedia:

The $11 billion water bond bill includes about $2 billion in earmarks for projects that “lawmakers candidly acknowledge were included in the proposal to win the votes that were needed to pass the plan out of the Legislature.”^[7]

Examples of projects that would be funded if the proposition passes are:

• * $40 million to educate the public about California’s water.^[7]
• * $100 million for a Lake Tahoe Environmental Improvement Program for watershed restoration, bike trails and public access and recreation projects.
• * $75 million for the Sierra Nevada Conservancy, for public access, education and interpretive projects.
• * $20 million for the Baldwin Hills Conservancy to be used to buy more land. The conservancy is near the home of Assembly Speaker Karen Bass.
• * $20 million for the Bolsa Chica Wetlands in Huntington Beach for interpretive projects for visitors.^[7]
• .

McClintock pointed out that the debt service ratio, for not just water bonds but school, parks and even stem-cell research bonds, now stands at 7.7 percent of the general fund. It’s a major reason the state is having trouble just balancing its budget.

By contrast, at the end of the building era of Gov. Pat Brown (Jerry’s father) in 1966, the debt servicing ratio stood at just 2.2 percent.

McClintock brought up the Burns-Porter Act of 1959, which “financed construction of the entire state water project. It was a total of $1.75 billion approved in 1960. That’s the equivalent of $12.3 billion in today’s money. That’s substantially less than the water bonds we’ve approved during the last 10 years and about the size of the bond pending voter approval.

“The Burns-Porter Act paid for the entire State Water Project. In the last 10 years we’ve approved a significantly larger sum of money, promising the public it would solve our water needs. And once again I must ask, where is our generation’s State Water Project?“

Four Water Lessons

To get back on track, McClintock said, several lessons need to be learned:

Lesson 1. “Project first — then financing.” If you go for a private or business loan, the bank first is going to ask what it’s for, and what your capacity to repay is. But in recent decades, government has started projects with a bond issue that only vaguely outlines what is supposed to be built, a prescription for fiscal disaster.

I would add that a good example is the Los Angeles Community College’s local $5.7 billion boondoggle bond act. As the Los Angeles Times reported in February:

The money would ease classroom crowding. It would make college buildings safer. New technology would enhance learning. And financial oversight would be stringent.

That is what was promised to Los Angeles voters.

The reality? Tens of millions of dollars have gone to waste because of poor planning, frivolous spending and shoddy workmanship….

McClintock insisted, “Today, we revel in ‘mega-bonds’ that borrow billions of dollars for vague notions like ‘water’ or ‘parks’ or ‘stem cell research’ or ‘economic recovery,’ with no specific projects in mind and at the end of the day all we have accomplished is to create a gigantic grab bag of money for local pork projects.

“That’s the first lesson: we have to get back to the classic California constitutional concept of approving bonds only for a ‘single object or work’.”

Lesson 2. “Don’t rob St. Petersburg to pay St. Paul. If a project exclusively benefits a local community, it should be exclusively paid for by that local community.”

Lesson 3. “Beneficiaries should pay. Federal funds for future water projects should not be doled out as gifts to the lucky beneficiaries, but rather fronted as loans to be repaid with interest by the project’s beneficiaries….”

“With respect to state or local funds, unless it’s a self-liquidating general obligation bond like those used in the Burns-Porter Act, there’s no excuse for using a general obligation. bond for a water project — it should be a revenue bond repaid by the actual users of the actual water and electricity produced by the actual project.”

Lesson 4. “Don’t rob our children. Whatever is purchased with a 30-year bond ought to be there 30 years from now when our children are still paying off that debt. Yet the bonds adopted in recent years include billions of dollars for cleanup and conservation projects that will be obsolete long before these bonds are repaid.

“Our children are going to have their own pollution to clean up and conservation programs to promote without paying for programs from 30 years ago.”

Water is a Commodity

In the question and answer period after his talk, McClintock pointed out that water is a commodity, like oil, corn, beef, eggs or frozen concentrated orange juice. There’s nothing mysterious about it.

“California’s water problem controversies could be solved simply by treating it as a commodity,” he said. “If you’ve got a willing buyer and a willing seller, the it’s OK.”

Although he previously represented Southern California’s Simi Valley in the state Legislature, McClintock’s current seat in Congress represents the area just northeast of Sacramento in Northern California. So he has had to learn the water politics of both areas.

He said, “What I hear in Northern California is, ‘Don’t steal our water.’ But if you sell it, that’s not a problem.”

He also attacked Gov. Jerry Brown’s “era of limits” policies of the 1970s and 1980s, which shut down vital infrastructure projects.

During that time, I would add, the state’s population burgeoned from 20 million in 1970 to 30 million in 1990 — a 50 percent increase. And it’s kept on growing.

Yet Brown himself has not learned that lesson. He has proposed no sensible solutions to the state’s water problems. And last month he signed into law a bill that mandates energy suppliers must get 33 percent of their electricity production from renewable sources by 2020, a utopian policy that will greatly increase state electricity costs.

This shows how Brown still holds to his outdated “era of limits” philosophy from almost 40 years ago. The only “limit” he doesn’t endorse is for taxation, as he keeps pushing tax increases to cover the new spending he proposed in his May Revise to his fiscal 2011-12 budget.

It’s unfortunate that the initiative for real reform has to come from the federal level. But given the tight connection between between federal and state water policies and projects, nowadays that’s inevitable.

Moreover, with state, federal and local budgets deeply in the red, some realism has got to return to resource policies. The proposed $11 billion California water bond already was postponed last year to 2012 because everyone knew it would fail on a November 2010 ballot. It likely will fail, also, if it’s on the 2012 ballot.

When government tax-and-waste policies fail, it’s inevitable that people will wise up and return to cost-benefit analyses, pay-as-you go and user-pays policies.

McClintock concluded his Q&A remarks by saying that “the American people are turning this back. In the House, we’re returning to a policy of abundance.”