By Wayne Lusvardi

For some time environmentalists and have been telling fish stories that Central Valley farmers are dodging timely repayment of the costs to build the massive Central Valley Project.  But it is the fish, not the farmers, that are not paying their fair share of the costs of the massive Central Valley Water Project.

The CVP was built in the 1930’s at a cost of $1.3 billion. The CVP is not the same as the California State Water Project, which was built five decades ago through state bonds.

To give an idea of the magnitude of the CVP, it delivers about 6 million acre-feet of irrigation water to about 3 million acres of farmland in the central San Joaquin Valley.  By comparison, the State Water Project supplies only about 1 million acre-feet of water to farmers.

The CVP also delivers water to cities and for wildlife refuges.

CVP was Depression Era Project

In the 1930s Great Depression Era, the federal government built the Central Valley Project when California was broke.  The federal government had to take over the state water plan to stimulate the agricultural economy and bail out California.  The federal government built the separate CVP water system mostly to supply water to farmers, and to reduce disputes between farms and cities.

But with the rise of environmentalism in the 1990s, farm water began to be diverted to “wildlife refuges.” The U.S. Bureau of Reclamation reports that there were no deficiencies in water deliveries for farms until the 1990s.  The CVP carries water to the Sacramento Delta, which is pending a massive re-engineering called the Bay Delta Conservation Plan. 

The enacting Reclamation Law for the CVP required farmers to repay only the principal amount of the bonds, not interest, as long as they met the 960-acre limitation (1.2 square miles). Large corporations don’t get most of the water subsidies from the CVP. Individuals or families own 80 percent of California’s 64,000 farms.

The only water subsidy small farmers receive is the foregone interest on the bonds. Large corporate farms must pay their share of the full cost of the CVP, including interest, to receive their CVP water allocations.

CVP repayment audit

Congress ordered an audit of repayment for the costs of the CVP by farmers, which was completed in March 2013.  The audit, titled Central Valley Project California: Repayment Status and Payoff, indicated the bonds have 18 years remaining until repayment in 2030. But repayments are not keeping up with the repayment schedule due to the variability of water deliveries needed to generate agricultural product sales to meet contractual payments.

In 2011, CVP water diverted for wildlife refuges only amounted to 6.5 percent of total CVP water deliveries (388,488 out of 5,886,610 acre-feet of water). But it is apparently large water users that are being disproportionately hit with reductions in water deliveries, resulting in repayments lagging behind schedule.  As the audit report of the Office of the U.S. Inspector General of the U.S. Department of Interior states:

“To identify why repayment progress was not satisfactory, we reviewed water rate calculations and payment information for four irrigation contractors. We determined that for the 3-year period from 2008 to 2010, actual water delivered to these contractors was only 41 percent of estimated water deliveries used to calculate their contract water rate. The variance in water deliveries resulted in a $45 million shortfall in the contractors’ repayment of capital costs that USBR must recover in future years through rate increases. In the case of one contractor, we estimated that by 2030, their CVP water rate could more than double if current trends continue” (last paragraph on page 6). 

Contrary to the notion that large corporate farms are receiving larger farm water subsidies, their CVP payments face the prospect of doubling.

Farmers can fish, but fish can’t farm

In 2009, U.S. Senators Dianne Feinstein and Barbara Boxer, both California Democrats, snuck their $1 billion San Joaquin River Restoration Project bill through Congress as a rider to the larger Omnibus Public Lands Bill (H.R. 146).  However, this rider bill only funded initial research costs and not implementation.  To fund implementation, the Feinstein-Boxer bill proposed to partly fund the costs of the river restoration project by accelerating the repayment of CVP project costs on the backs of Friant water users.

The Friant Water Authority depends on CVP water from the Friant Dam near Fresno and Madera Counties.

However, since coming back into the majority in 2011, Republicans in the House of Representatives have blocked Congressional funding of the San Joaquin River Restoration Project.

The bottom line to the fish story about farmers reneging on timely repayment of CVP costs is that fish don’t have any money to make payments, but farmers do.  If Congress wants farmers to pay more to repay CVP costs on schedule, all it has to do is to quit reducing water deliveries to Central Valley farmers. Then farmers will pay for river restoration projects jobs programs.

Congress created this problem and also has the solutions in its own hands. To solve the problem of slow CVP payments, politicians and environmentalists first need to stop making up fish stories about how farmers are reneging on their CVP payments.

By Wayne Lusvardi

Mark Twain once wrote: “Don’t tell fish stories where people know you; but particularly, don’t tell them where they know the fish.”

The farmers in the California Central Valley know that environmentalists have been making up a big fish story for quite some time about agricultural water contracts negatively impacting the purportedly endangered Delta smelt fish.

The farmers know the fish better than the environmentalists.  You can’t tell any big whopper fish stories around farmers.  But you can try to get away with them in court.   But even a liberal court didn’t fall for such yarns.

The liberal U.S. 9th Circuit Court of Appeals ruled Tuesday that 41 federal water contracts in the Central Valley Water Project did not violate the Endangered Species Act.  Chief Judge Procter Hug ruled in the case, National Resources Defense Council vs. Ken Salazar, Secretary of the U.S. Department of the Interior, that the U.S. Bureau of Reclamation did not have to consult with the Fish and Wildlife Service over any alleged negative impacts to the purported endangered Delta smelt fish in renewals of agricultural water contracts.

According to Brandon Middleton, attorney for the Pacific Legal Foundation, Section 7 of the Endangered Species Act requires federal agencies to consult with the Fish and Wildlife Service before undertaking an action that may negatively affect a protected species.  Relying on legal precedent, Hug ruled that Section 7 only applies to discretionary federal actions.  Because prevailing law mandates the renewals of water contracts, the bureau had no obligation to consult with the Fish and Wildlife Agency.

To further squash this big fish tale, the court also ruled the environmentalists had no legal standing to even challenged the water contracts on such grounds.  Standing is defined as: “the ability of a party to demonstrate to the court sufficient connection to and harm from the law of action challenged to support that party’s participation in the case.” The water contracts in question even contained a “shortage” clause that provided for the Bureau of Reclamation to provide more water for the smelt.

Middleton said, “The farmers had much to lose even though they didn’t gain that much in this ruling.”  If the ruling had gone against the water contractors, farmers might have had to give up water already under contract and on which agricultural production loans and other financial obligations had been made without any re-compensation.  Middleton elaborated that, what the environmentalists were trying to do was go beyond challenging any physical impacts on the smelt by large pumps in the Delta as part of the Federal Central Valley Project.  The environmentalists wanted to penetrate to the legal contracts that lay behind the water pumping.

No Bearing on Repealing Feinstein’s Water Grab Act

However, Middleton doubted this ruling would have any bearing on the provision in Democratic Calif. Sen. Dianne Feinstein’s H.R. 146, the San Joaquin River Restoration Act of 2009, to “mandate” agricultural water contractors to go through an environmental clearance process as a condition of renewing their long-term water contracts.  Such a clearance could permit the environmental mitigation shakedowns of farmers.

Feinstein’s act was a grab of water from Central Valley farmers for commercial fishing, recreational and real estate development interests in the San Joaquin Valley area.  Feinstein’s Democratic Party controlled both houses of Congress and the presidency in 2009.  Nevertheless, she could not overcome the farm lobby in Congress in her own party to get the San Joaquin River Restoration Act passed.  Eventually, Feinstein’s bill was attached as a “rider” on the Omnibus Lands Act of 2009 and ramrodded over opposition in her own party.

Recently, Rep. Devin Nunes, R-Tulare, authored H.R. 1837, the San Joaquin Valley Water Reliability Act, to repeal Feinstein’s one-sided law. The bill is still sitting in the U.S. Senate, where it has been blocked by Feinstein and Sen. Barbara Boxer, D-Calif., and opposed by Pres. Obama.

Farmers know that, if it weren’t for the Central Valley Water Project providing water to agricultural water districts, the Delta smelt fish wouldn’t have as much reliable water or habitat.  And that is no fish story.