Could the Feds Bigfoot California Over Water?

By Glen Martin

U.S. Attorney General Jeff Sessions’ recent lawsuit against the State of California over immigration isn’t just about immigration, of course. More fundamentally, it’s about the limits of states’ rights. The move could be a harbinger of other attempts by the Trump administration to muscle obstreperous states that don’t conform to its agenda. And that begs the question: in what other areas could the feds trump, so to speak, California policies?

Water is a strong candidate. The State of California is ingeniously plumbed with a vast array of reservoirs, canals and aqueducts, largely managed through one of two massive systems:  the federal Central Valley Project (CVP) and the State Water Project (SWP). Both suck water from the Sacramento/San Joaquin Delta and are often operated congruently to maximize efficiency. The main point of all this hydrological hardware is to move water from places where it’s abundant—mainly the north, which drains its rivers into the Delta—to the parched farms and cities of Southern California. Such transfers, however, have been somewhat constrained in recent decades by a number of state and federal accords that provide water for environmental purposes, e.g., to help sustain various imperiled species, particularly salmon.

Trump made it clear during his campaign that he was irritated by such fish-hugging folderol, siding instead with San Joaquin corporate farmers who were demanding more water.  In general, state water policy has been more responsive to environmental and urban stakeholders than to federal policy. So now, with California apparently sliding into a new drought, the question is percolating: could the feds bigfoot California over water, as is happening with immigration?

“Since the 19th Century, water law historically has been left to the states—the federal government typically has been deferential.”

Short answer: yes. And there was a recent legislative attempt to do just that. Last year the U.S. House of Representatives passed H.R. 23, a bill that would strip many of the environmental safeguards governing the operation of the CVP.

“It would preempt California water law, which is unusual in a number of respects,” said Holly Doremus, a Berkeley Law professor and environmental law authority. “Since the 19 th Century, water law historically has been left to the states—the federal government typically has been
deferential, and that includes the rights of western states to appropriate water, even from federal land.”

In fact, the National Reclamation Act of 1902—which laid the groundwork for water development in the American West—specifies that states generally are in charge of water rights, including those that pertain to federal reclamation projects within their borders. But while the U.S. Supreme Court confirmed that this statute applies broadly, it also ruled that there could be an exception of sorts:  state authority on any given project was only supreme to the extent that it didn’t conflict with a congressional directive. But, if Congress wants to change the ground rules for the CVP specifically, it can. And H.R. 23 would do just that. Doremus calls the bill the “anti-Central Valley Project Improvement Act,” a reference to a groundbreaking law passed in the 1990s that slapped tough environmental restrictions on the CVP.

“It would reverse the Central Valley Project Improvement Act, and in fact goes much farther than a reversal,” Doremus says. “It basically exempts the CVP from the U.S. Endangered Species Act and other federal environmental law.”

If enacted, then, H.R. 23 could have devastating environmental consequences, particularly for the already beleaguered salmon runs that utilize the Delta and its rivers.  But while H.R. 23 passed the House with a lot of momentum, it bogged down when introduced to the Senate, where it was referred to that body’s Energy and Natural Resources Committee. Opposed by California’s U.S. Senators Dianne Feinstein and Kamala Harris, it’s unlikely to go anywhere soon, says Doremus.

“The Senate is a more deliberative body than the House, and you’d need 60 Senators to get behind this legislation to get it passed,” Doremus says. “Given the upcoming election, I don’t see it going anywhere this year.”

That could change if Republicans manage to hang on to the House and keep, or slightly increase, their lead in the Senate—a possibility, despite all the talk of a “blue wave” building among the electorate. But the U.S. Congress isn’t the only potential impediment to the primacy of state water law, says Doremus. Trump has been remarkably successful in placing conservative judges in the federal judiciary, from the nomination of Supreme Court  justice Neil Gorsuch through the lower courts.

“The case demonstrates that irrigators are increasingly ready to file takings claims anytime they get less water due to environmental
restrictions.”

“As long as the Senate remains in Republican hands, that’s likely to continue,” observes Doremus. “Senators can filibuster Supreme Court nominations, but not nominations to the lower courts. Many conservative judges already have been confirmed, and more confirmations are likely.”

A potential consequence of this trend, says Doremus, is the broadened interpretation of property rights protection, particularly in regard to “takings” lawsuits. Such cases involve the federal government  appropriating a resource such as land while providing “just compensation.”  Most legal analysts thought such compensation didn’t apply to water rulings, but a 2005 case, Tulare Lake Basin Water Storage District v United States, may have tilted precedent toward water rights holders. A federal district court ruled that a northern California water storage district—essentially a proxy for agricultural irrigators—was entitled to compensation for water “taken” to protect endangered species. The decision stood when the George W. Bush administration decided not to appeal, indicating at least tacit support for the irrigators.

Another court case Doremus thinks could impact California water law is Casitas Municipal Water District v United States. That case involves a challenge by local irrigators to stop the federal government from sending water down a Ventura River fish passage to aid  imperiled steelhead trout. The farmers wanted compensation. They lost in their initial case and subsequent appeals to date, but the legal action demonstrates that resistance to water takings is growing, and likely is supported by federal lawmakers and conservative judges.

“I think [the Casitas case] demonstrates that irrigators are increasingly ready to file takings claims anytime they get less water due to environmental restrictions,” says Doremus.

But ultimately, California’s water resources—or rather, the lack  thereof—may overwhelm water law, either state or federal. Winter high pressure ridges that divert storms away from California have gone from intermittent to semi-regular, and that’s pretty scary, says Dennis Baldocchi, a professor with Berkeley’s Department of Environmental Science, Policy and Management.

“There’s been some recent research indicating arctic ice cap water melting into the Pacific Ocean could be playing a role in these ridges,” says Baldocchi,  “so we see more extremes—multiple dry years, followed by a very wet year, dry, wet, dry, wet—it makes water distribution planning very difficult.”

And that planning is all the more difficult when it must conform to antiquated statutes—that is, current state and federal law.

“We’re essentially using water rights adopted in the 19 th  century from English water law,” says Baldocchi. “We don’t have England’s climate. We have a Mediterranean climate, and our water laws should reflect that. Water is heavily subsidized—some farmers get it for $50 or $100 an acre foot, while cities have to pay $1,000 or more. We’re farming portions of the San Joaquin Valley that are desert. Water is way too cheap, and we waste it. We need to emphasize water conservation, water capture, and our prices for water should reflect its scarcity and the expense involved in delivering it. We can change our behavior and priorities – everyone used to have lawns, but now they’re fairly rare as people have switched to native, low-water landscaping. But to make those changes at the institutional level, you need the political will. And that’s lacking.”

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Nice article but omits that removing fish flow requirements/pumping restrictions from the CVP may effectively add those requirement to the State Water Project via California endangered species laws. I.E., necessary water restrictions for the delta smelt, etc. may need to be taken entirely out of the SWP rather than shared between SWP & CVP.
Professor Dennis Baldocchi is completely wrong in his attempt to describe farm water prices and the “subsidy” myth. Farm water is simply less expensive than the water urban residents receive because it’s a raw product. Farm water is not required to meet strict state and federal drinking water quality standards. Unlike the water from your tap at home, farm water is usually not available on demand, 24 hours a day. And farm water is mostly delivered through energy efficient, gravity-fed infrastructure unlike the energy-intensive pressurized facilities in urban water systems.  Baldocchi is also critical of irrigating crops in what he misleadingly calls the “San Joaquin Valley desert,” while missing the point that crops grow better, healthier and more productive using fewer pesticides than what might be required in soggy parts of the country. When he points out that “we don’t have England’s climate,” we ought to be thankful. California’s drier, sunnier Mediterranean climate is what makes our farms so productive and diverse, serving up more than 400 commodities and doing it with modern, efficient and sustainable practices. Mike Wade California Farm Water Coalition
Mike, Professor Dennis Baldocchi is completely right in his attempt to describe farm water prices and the “subsidy” myth. That was fact in 78 when I was a student and if anything it’s worse today. Water projects may result in less expensive food (if you want to include almonds and pistachios) but they are paid for disproportionately by taxpayers, not by the farmers who benefit from the SUBSIDIZED water. You look no further than the blatant abuse by Kern Water Bank or Westlands’ latest deal where in exchange for permanently excluding marginal land from production the District was forgiven a 300+ million dollar debt to the Federal Government. Large scale Bureau of Reclamation water recipients are nothing more than welfare queens in cowboy hats.
“Water is heavily subsidized—some farmers get it for $50 or $100 an acre foot, while cities have to pay $1,000 or more” —- Dennis Baldocci There are no state or federal water “subsidies” in California. Could Baldocci name one state or federal appropriation of funds to subsidize water rates? He can’t because there are none. However, there are differentials in water prices and rates. And that is because water is a Cost of Service commodity not priced by a market or by a water board. Water is free, it is the cost to capture it, store it, convey it and treat it that constitutes its price. So, if the Colorado River Aqueduct was built in the 1930’s and has all its bonds paid off, the Cost of Service is going to be very low. If, however, the same facility had to be built over again today the costs would be enormously higher. Or if a de-salting plant was built to produce potable water today, once again the costs would be greatly higher per acre foot of water produced. The disparity in cost between old and newer water facilities is not a subsidy. If you have an old mortgage at, say, 3% interest, and today’s cost of mortgage borrowing is, say, 5%, the difference is not a subsidy. Same with water prices. As for Federal crop subsidies, those have mostly been replaced with crop insurance that is paid for by farmers. Moreover, the globalization of agriculture has meant that farmers who have surplus crops can sell them into a global marketplace, thus obviating much need for subsidies. Baldocci apparently wants to live in a world where everything is equal for everyone. No one can have a more favorable mortgage rate. No one can have a cheaper water rate. To do this, however, would require totalitarian takeover and control of every water district, mutual water company and private regulated water company in the state. That would get rid of the British Common Law as the basis of how water disputes are resolved. But it would result in something like Venezuela nationalizing its oil industry.
It’s important to read more carefully what I wrote about water pricing as well as the excellent explanation by another commenter, Wayne Lusvardi. Like all water in California, farm water prices are based on the cost of delivery. Regarding your additional thoughts, the Kern Water Bank was ultimately transferred by the Department of Water Resources to the Kern Water Bank Authority in exchange for the permanent retirement of 45,000 acre-feet of State Water Project entitlements. Without the agreement, DWR would still be obligated to deliver that water today, which has a value of approximately $200 million. KWBA gave up that water as part of the exchange agreement for the water bank facilities. An important fact was also omitted in criticism of what you referred to as “Westlands’ latest deal.” In settling the federal government’s court-ordered drainage obligation, Westlands would agree to undertake all responsibilities for drainage services. The estimated cost for drainage service (to be paid for by taxpayers) is as much as $3.5 billion. In exchange, the federal government would forgive a $375 million debt, reduce Westlands’ contract to 75 percent and require full compliance with drainage management objectives. If Westlands failed to uphold its end of the agreement its water supply would be shut off. That’s quite an incentive.
So you doubt me… Check this out from today’s LA Times: “California doesn’t want this towering water project. Trump administration may build it anyway” By Evan Halper and Sarah D. Wire Mar 15, 2018 | 3:00 AM | Washington. Plans are afoot to raise Shasta Dam by about two stories and send the water south. Westlands’ doesn’t even have to pay a penny… 100% of its share will be paid by US taxpayers. That is subsidy, even if it’s not part of a farm bill to put a price support under commodity “X”. All engineered for a select few by Congressman McCarthy of Bakersfield to benefit south valley growers. Who’s the number two at Bureau of Reclamation right now and has Bureau oversight of this boondogle? Why none other than the former partner of Westlands’ primary law firm. You feel free to connect the dots… I’m sure Westlands’ bureaucratic benefactor will be counting $$$ when he returns to back to his partnership when this stint in Washington is complete.
Mark You contended that California farmers were receiving subsidies, meaning appropriations of fund outlays. They are not. Now you contend that this recent proposal to raise Shasta Dam to provide provide a yield of about 113,000 new acre feet of water per year is a subsidy. If that 113,000 acre feet of water was stored for, say, 3 years, it would provide water for about 4,068,000 urban persons for one year or 113,000 acres of farmland for 1 year. But we don’t know enough yet about this project if it even ever materializes. Look, if 113,000 acre feet of new water is developed it may very well be financed by bonds that the users of that water will have to pay off in their water rates. I would not call that a subsidy if the policy is “user pays”. Moreover, 113,000 acre feet of new water dedicated to farmers might free up an equivalent amount of water in WET YEARS that could go to urban users. Is that an indirect subsidy to cities or to farmers? Cup half full or half empty? You could contend that Central Valley farmers are receiving an indirect “subsidy” because they are still paying off the $1.3 billion of bonds (or debentures) for the original Federal Central Valley Project built in the 1930’s at zero interest (0%). But that was authorized by President Franklin D. Roosevelt under the New Deal and that is where you should be focusing your criticism. At the time the Project was built California was broke in the middle of the Great Depression. The Inspector General of the US Dept. of Interior issued an audit of the repayment on the bonds in 2008-2010, which stated: “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). In other words, water curtailments to farmers (diverted for fish) resulted in lagging repayments on the bonds. Some farmers thus could be left with a doubling of their water rate to make up for the lagging payments. Fish, or fish lobbyists, don’t have any money to pay back bonds or to “restore” the 60 mile dry spot in the San Joaquin River in DRY YEARS so that it can convey salmon to their habitats. It is only farmers who have the resources from crop sales to pay for such environmental projects. Farmers can fish, but fish can’t farm. Your article didn’t mention that in 2007 Westlands purchased 3,000 acres of land along the McCloud River to mitigate any environmental consequences of raising Shasta Dam. I think the things that annoys many is those who have a knee jerk antipathy for “corporate agriculture ” and “greedy farmers”. This is usually a sociological marker of social class envy and partisan political conflict rather than some rational policy argument. And such social class animus can’t be answered by me or anyone else with rational arguments. This same kind of class resentment is why the Russian Kulak farmers were mass murdered during the Russian Revolution.
Mark What you are talking about is not a “subsidy”; it is a benefit or positive externality of raising the height of Shasta Dam. Look, if the city where you live up-zones the lot on which your which is built from R-1 (1-unit) to, say, R-4 (4-units), you are the beneficiary of a positive externality of regulation. If, say, Caltrans builds a new offramp from one of its freeway right next to your vacant land, making its highest and best use change to “highway commercial”, that is a benefit not a subsidy. Now, in the case we are discussing, Westlands Water District has been planning since 2007 to get the Federal government to raise Shasta Dam so it could get a dedicated supply of water for DRY YEARS that would otherwise be curtailed. So is that a “subsidy”, “a benefit” or what? On balance, I am not hearing any argument against California taxpayers paying for new water service for illegal land subdivisions in the Central Valley for migrant trailer encampments; or that what caused Flint, Michigan’s water crisis was “subsidized” or effectively free water service because there was insufficient funds collected to fund water treatment facilities. But we are told we should be worried about Republicans raising the height of Shasta Dam to dedicate water to corporate farmers who are going to have to repay those costs in higher water rates?
RE: “You feel free to connect the dots…” Well, certainly you have connected the dots between Westlands having the No. 2 at Bureau of Reclamation and the proposal to raise Shasta Dam. That is no secret. In 2007 Westlands bought 3,000 acres of land on the McCloud River to mitigate the effects of raising the dam. So that has been well known for a long time. But this is called “confirmation bias” in social psychology (you find what you seek - a subsidy under every rock). Once again, what Westlands would receive is not a subsidy but a benefit from a dedicated supply of farm water. But the word “subsidy” sounds so much more nefarious doesn’t it? And your use of the term “subsidy” is based on the presumption that Westlands will somehow be getting free water. But all water is free; it is the cost to store and convey it that would have to be paid for by Westlands. Here is how the Redding Searchlight newspaper reports the so-called subsidy you describe: [start quote] Typically, Congress approves up-front funding for projects such as raising the dam, and then the costs are repaid over 40 or 50 years by selling water and hydropower, but the report states that scenario is “unrealistic” in this case because of budget constraints. That means non-federal agencies, including the current water agencies that buy water from the bureau and the state, would be left to work out how to pay for the cost of raising the dam, said Erin Curtis, a spokeswoman for the bureau [end quote]. So Westlands would have to buy the water at the Cost of Service, which is the storage and conveyance cost of RAW WATER (not treated water). The US Bureau of Reclamation 2018 COST OF SERVICE to convey water from Shasta Dam to the Central Valley is $20.94 per acre foot of water. Source: https://www.usbr.gov/mp/cvpwaterrates/ratebooks/special/2018/special-201...
New Sources of water are always more costly than old sources. Here is the California Public Utilities Commission’s cost comparison of new versus old sources of water as of 2016 on a cost per acre foot basis: Imported water - LOW: $25/AF; AVERAGE: $793/AF; HIGH $1,456/AF Conservation - LOW $137/SF; AVERAGE $1,335/AF; HIGH $4,580/AF Recycling - LOW: $396/AF; AVERAGE $2,869/AF; HIGH $5,800/AF Desalination - LOW $2,367/AF; AVERAGE $3,389/AF; HIGH $5,100/AF Source: CPUC, What Will Be the Cost of Future Sources of Water in California? (2016)

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