Delta Stewardship Council receives a briefing on financing the Bay Delta Conservation Plan

DSC 1024At their October 24 meeting, the Delta Stewardship Council heard a briefing from Department of Water Resources Laura King Moon and consultant ICF International’s David Zippin on the financing and regulatory assurances of the Bay Delta Conservation Plan (BDCP).  While the regulatory assurances discussion would have to wait until after the release of the public draft of the Plan in December, the discussion on financing gave some new details, along with some very interesting dialog between Chair Phil Isenberg and Mr. Zippin.

The agenda item began with Chief Deputy Executive Officer Dan Ray saying that today’s briefing is one in a series that has been organized for the Council because of the important role the Council plays in the BDCP’s completion and approval.  He reminded them that the Council is a responsible agency for the review of environmental documents, the Department of Water Resources is required by the Delta Reform Act to consult with the Council as the Plan is developed, and if the BDCP is approved by the Department of Fish and Wildlife, that decision can be appealed to the Council for the review of whether it conforms with applicable law. Once it is approved, it’s to be incorporated in the Delta Plan and it will play a key role in achieving the coequal goals.

Laura King Moon, Chief Deputy Director of the Department of Water Resources, and David Zippin from ICF International are here today to discuss how implementation of the BDCP will be funded, as well as the regulatory assurances that will be provided to the BDCP, said Mr. Ray.

“The NCCP Act and similar language in the federal ESA requires that there be a funding plan that can ensure adequate funding to carry out the conservation measures of the plan,” said Mr. Ray.  “That’s a hard challenge to meet when you’ve got a 50-year plan in the face of the sort of uncertainties that the BDCP faces.  The BDCP includes an extensive funding plan that identifies potential funding sources likely to be available, and one of the challenges that they face is being able to meet the standard at least that’s been applied by judges in reviewing some federal cases that the funding plan needs to move beyond just speculative sources of funds that can’t be necessarily relied on for future actions.”

Allocation of costs is another important issue, Mr. Ray said.  “The Reform Act contains a particular provision that the water contractors are responsible for the costs among other things constructing, operating and mitigating the conveyance facilities, including fully mitigating the loss of property tax revenues that local governments receive,” he said.  “Other language in water code dating back to SWP in the 1960s, the Davis Dolwig Act, relieves the contractors from the responsibility for repaying the costs of enhancement of fish and wildlife or of recreation, but assigns to them the cost of preserving fish and wildlife.  Back in the day, that probably meant the contractors paid for the fish screens and other related facilities at the pumps, but the state paid for the costs of planting bass in the reservoir.  Trying to apply it in today’s situation is a challenge.”

Mr. Ray said that the BDCP does reference the beneficiary pays principle.  “Obviously the willingness and ability of folks to pay is also important,” he said. “These plans are voluntary agreements between the participating entities and the state Department of Fish and Wildlife and at the federal level, US Fish and Wildlife Service and National Marine Fisheries Service.  There is no ability to require someone to pay costs if they are unwilling to or if they can’t.  Cost is certainly an issue in the ultimate decision about this project.

The funding plan does include an expectation that some funds that would have typically been part of the Delta Stewardship Council’s budget would count towards the overall funding package, Mr. Ray said.  About $90 million in research grants and funding from the Delta Stewardship Council would be credited towards the costs of implementing the BDCP, he said.  “That’s primarily with the expectation that we would have an ongoing research grant making function, and that about half of those research grants would be relevant to the priorities that were identified through the BDCP.”


Moon DSC 1024Laura King Moon began the presentation by saying they were on the verge of publishing the public draft and the EIR/EIS, and that today they would like to focus primarily on the funding.  There hasn’t been a lot of changes in the numbers since the administrative draft, but with regards to the assurances issues, there have been a number of changes, so the presentation will need to be rescheduled.  “We don’t want to get ahead of the public draft in terms of giving you the details of that,” she said.

She then introduced Dr. David Zippin, the chief author of the funding chapter of the plan and program manager for the BDCP for ICF, the primary consultant.  “David is really a leader in the conservation planning community,” said Ms. Moon.  “He’s been involved in the development of many of these plans at both the state and federal level in California and elsewhere.”


David Zippin began by saying he give a fairly broad overview of the costs, categories, and how they were estimated as well as the major funding sources.

The purpose of Chapter 8 is to provide planning level cost estimates over the 50 year term.  The chapter identifies and quantifies likely funding sources and describes the likelihood of those funding sources based on the history of funding similar kinds of actions that BDCP proposes, describes contingencies, and demonstrates that all of the costs are at least covered by potential or expected funding sources, he said.

“Chapter 8 is not a financing plan for any of the funding agencies; it’s also not an annual operating budget,” he said.  “Certainly those will be coming later and there’s a provision for preparing those in Chapter 6 of the plan which talks about implementation.  It’s also not a funding agreement; those will have certainly more details.  There will be funding agreements prepared and signed as part of the final approval process of BDCP, so there will be more documents to address some of these details and perhaps address some of the questions you might have today.”

The BDCP anticipates or at least contemplates that there may need to be additional funding authority approved by Congress; this is something that they will be exploring with the federal agency partners over the coming year before the plan is approved, he said.

The BDCP’s costs are estimated over 5 year periods, cost ranges are used, and there are robust cost contingencies, up to 50% in some cases.  “Many of our conservation measures are designed at a very programmatic level so we don’t have a lot of detail yet on exact costs, so as a result, we use relatively large contingencies,” he said.

The costs are reported in undiscounted 2012 dollars, but will be updated to 2013 dollars next year.  Summary costs at the end of the section are also reported in present value.  The discount rate is being changed to 3% for the public draft, he said.  Land values are based on 2009 data that are applied in five different categories of land uses across each of the counties that are spanned by BDCP.

Acquisition of easements is also an important component of our conservation strategy, Mr. Zippin said.  “We assume a 80% cost of fee title for surface easements, and 40% for subsurface.  Fee title costs do include property tax revenue replacement,” he said, noting that this is a requirement of the Delta Reform Act.

“I believe the proposal goes beyond the requirements of the law which would only require only replacing revenue lost for the acquisitions for the conveyance facility,” said Mr. Ray.  “It’s my understanding that you’ve gone beyond the legal requirement to fully compensate for even the lands that are required in other restoration actions.”

That’s correct,” replied Mr. Zippin.  “We actually have a substantial amount of land acquired beyond the land required for the footprint of the facility.  That acreage is 4000-5000 acres but we’ll be acquiring 8 or 9 times more land than that in fee title for other uses in the reserve system, either for preservation of habitat for enhancement purposes, or restoration of tidal wetlands and other natural communities.”

The rationale was that we are trying to be responsive to the concerns of the Delta counties, the local reclamation districts that depend on that revenue and because – probably on the order of 90% of the land that we would be acquiring is unrelated to the footprint of the facility,” he continued.  “That’s by far the greatest impacts from a tax revenue standpoint, so we felt it was prudent to go beyond what the Delta Reform Act.”

Are those payments to come from the publicly funded portion of the Plan?” asked Phil Isenberg.

Not entirely,” responded Mr. Zippin.  “Just over 40% of that funding would come from the state and federal contractors.”

Why 40% if you plan to go 9 times the amount of acreage beyond what’s needed for the tunnel facilities?” asked Mr. Isenberg.

Two reasons: They are responsible not just for the footprint of the water facility and also mitigation, and the mitigation does include fee title acquisition.”

The estimated total capital costs are just under $15.4 billion in net present dollars, or $19.9 billion in undiscounted 2012 dollars, he said.  “Many of those costs wouldn’t be expended for a number of years, so that’s why we have the discounting,” noting that 80% of the total is related to the water conveyance facility.  The land acquisition costs for the natural community restoration and protection are also significant at $2.5 billion.

The vast majority of the capital expenditures would occur in the first 10 years of the plan during construction of the water facilities, after which some costs would be needed for habitat restoration, he said.

Projected operational costs are $2.3 billion in net present value over the 50-year permit term, or $4.9 billion in undiscounted 2012 dollars, he said.  These costs include monitoring and research, plan administration, and conservation measures that address other stressors.

The standard we’re trying to meet with the plan and actually with any habitat conservation plan or natural community conservation plan is assured funding,” he said.  “That’s what the state and federal regulations require.  There isn’t a lot of guidance on what that means.  The kinds of funding sources we’ve identified in BDCP are consistent with other approved plans around the state and in some cases, we’ve even gone beyond that.”

The public funding – the state and federal portion – we consider to be expected funding, he said.  “We can’t guarantee public funding, certainly, either at the state or the federal level.  No one can.  Many plans have been approved with the kinds of projections and anticipated or expected funding that we’re identifying as well.”

Isenberg DSC 1024So when you use the phrase “assured funding”, you mean expected funding for public benefits,” said Chair Phil Isenberg.

That’s correct,” replied Mr. Zippin.

You also use in BDCP the word “assured” or “assurances” for water delivery.  Is it the same word?” said Mr. Isenberg.

It is not the same word.  Those are the regulatory assurances,” replies Mr. Zippin.

And that is legally enforceable, is it not?” asked Mr. Isenberg.

We’d have to get into what you mean by that to … “ responded Mr. Zippin.

“The material distributed today included the shorthand three page summary from BDCP on financing and one of the sentences jumped out at me on the document,” said Mr. Isenberg. “ (quoting)  ‘Both the ESA and the NCCPA require the assurance of adequate funding making those funding provisions definite and enforceable.’  Now I assume that’s what you intend to mean but you have defined enforceable as expected, I think.”

“To clarify, we expect certain funding sources,” said Mr. Zippin.  “The funding plan is a menu of options of funding sources that we believe are very likely based on historic funding trends, funding very similar actions to BDCP.  So as a whole, we believe that complete funding to offset all the costs of BDCP are very likely to occur.  Now, the permittees, the state DWR and the participating state and federal water contractors will be signing an implementation agreement committing to implementing the plan with the menu of funding options that we’ve identified.  It doesn’t mean we must provide every funding option at the level we’ve described in Chapter 8, but it does mean, based on their commitments to the Plan that the plan will be implemented.”

By plan, you mean the entire BDCP,” said Mr. Isenberg.

Zippin DSC 1024That’s correct,” said Mr. Zippin.

You’re not, however, saying that if public agencies fail to deliver the expected revenue, the contractors will pay for it, or are you?” said Mr. Isenberg.

No I’m not, and the public draft will make clear that the state and federal water contractors are not responsible for making up a shortfall in public funding; however they may choose to do so in order to ensure that the plan is being implemented properly,” said Mr. Zippin.  “We have a lot of options.  First of all, there’s a lot of flexibility in when these actions need to be implemented, so if a water bond doesn’t pass next year, we can wait for passage later.  If federal appropriations …

We can wait or we should wait … ?” prompted Mr. Isenberg.

We can,” said Mr. Zippin.  “The Plan does not depend on the water bond passing next year.

“You understand that at the Council, we’re governed by the coequal goals,” said Mr. Isenberg.  “It’s hard to anticipate coequal goals being achieved if water reliability is guaranteed funding, or whatever words we’re using, and ecosystem is ‘hoped for’ funding, particularly since they are both part of the same composite effort described as a conservation plan.”

Absolutely,” said Mr. Zippin.

By the way, the point was raised in 2010 in our very first agency comment on BDCP, and if I remember the sentence correctly, it said: coequal goals strongly suggest that the spending should be concurrent, comparable in scope, and funded.  Not hoped for, or expect for, or prayed for – isn’t that a really serious practical problem?,” asked Mr. Isenberg.

“It certainly is a serious question, and it’s one that the Plan addresses very well in and that the regulatory assurances you mention about water supply are only available as long as the plan is being properly implemented,” said Mr. Zippin.

Mr. Isenberg: “But if the financing of the ecosystem portion of the plan can be delayed for a very long period of time …

Mr. Zippin: “I didn’t say a very long time.”

Mr. Isenberg: “Is 30 years too long?

Mr. Zippin: “Yes, that’s too long?

Mr. Isenberg: “For all of the spending or part of the spending?

Mr. Zippin: “For all of the spending, that’s too long.”

Mr. Isenberg: “So all of the spending must be concluded by when under the Plan.  I didn’t see that in the financing chapter.”

We have a schedule of many of our restoration measures and habitat protection measures outlined in chapter 6,” said Mr. Zippin.  “That’s a 5-year increment schedule; we have to achieve a certain number of acres of restoration, a variety of different natural communities in each 5 year time period.  So that is our requirement.  And if we fall behind there’s a provision that we can fall behind by a certain amount, but if we fall behind too much, than the Plan is no longer being implemented properly and the federal and state …

Automatically the entire thing comes to halt, or no … ?” said Mr. Isenberg.

“Then what happens is the federal and state agencies assess what is not being implemented properly, and they have the ability to suspend or revoke either the entirety of the permits or portions of the permits that might be related to specific covered species, specific covered activities,” said Mr. Zippin.

To your knowledge, has the California DFW ever terminated a contract for non-compliance?” asked Mr. Isenberg.

No, they have not ever suspended or revoked an NCCP … “ said Mr. Zippin.

How about the federal agencies, to your knowledge … ?” asked Mr. Isenberg.

They have come very close in the Natomas Basin – they threatened to revoke the Natomas Basin permit which was sufficient to get them back into compliance,” replied Mr. Zippin.

Laura King Moon then said that the public draft coming out in December would have more answers to the questions Mr. Isenberg was raising.  “The questions that you raise in terms of timing and coequal assurances and those kinds of things, I think you’ll see more in the public draft than we’re prepared to say in detail anything about.  We’d like to come back and have a more in-depth discussion with you because I think you are raising very important questions.”

And I encourage you to ask these same questions of the state and federal regulators, they’re the ones ultimately who need to decide … “ added Mr. Zippin.

Let me ask you a question.  Are all the state and federal regulatory agencies, are they currently checked off with this procedure on financing, indicating that they are willing to accept expected money?,” asked Mr. Isenberg.

All the indications that we’ve heard from them are yes, they have reviewed earlier drafts of this chapter and they have not provided substantial comments on it, and as I’ve said, I’ve been working on these conservation plans for over 20 years,” said Mr. Zippin.  “This is very consistent with the kinds of funding programs put together for approved plans that are working very successfully.”

The funding that we are anticipating would be coming from three different sources, the state and federal water contractors who would be paying for both the construction and operation of the water conveyance facility as well as mitigation, two state water bonds- the one that is on the ballot for next year and then a second one – and then continuing and expanded federal appropriations,” said Mr. Zippin.

The state and federal funding would be for the conservation part of the conservation plan,” said Mr. Zippin.  “The NCCP Act requires that we go beyond mitigation and contribute to species recovery and help prevent the listing of our non-listed covered species and the state and federal funding would be used for that.

About 2/3rds of the costs will be funded by participating state and federal water contractors, state funding is about 17%, and federal funding is about 14%, said Mr. Zippin.

Chapter 8 includes a short discussion about the willingness of the state and federal water contractors to pay those costs based on the benefits to water supply improvement and reliability, water quality improvement and seismic risk reduction, he said, noting that there’s a lot more detail about this in Chapter 9, an entire economic analysis in Appendix 9-A, and a brief summary in Chapter 8.

There are certainly some things still to be determined, including the split between the state and federal water contractors and the allocation within each of those groups, said Mr. Zippin.

In terms of state public funding sources, the chapter does describe the history of water bonds passing in California.  “There have been 10 of them since 1984, most of which passed with wide margins, so that’s one of the main reasons we are expecting passage of another one,” said Mr. Zippin.  “But what if it doesn’t pass in 2014? That is certainly a valid question.  We are able to rely on other public funding sources, sources that exist today that would simply be shifted to BDCP program that include federal appropriations, grants that BDCP would be very competitive for, and state grants in small amounts from existing bonds.  We also have the ability to rely on the contractor funding obligations for their mitigation share.  That’s upwards of $900 million that we estimate right now, and that could fund our entire program for six or seven years.  At least by my calculations, so we have the ability to wait for public, either state or federal funding sources, for quite a number of years.”

Zippin clarified that the mitigation obligation still remains, so the money would ultimately need to be spent on mitigation. “This would essentially be a loan to the program until the public funding came along.”  A lot of the mitigation activities of the contractors are actually the very same activities that are needed to fulfill the NCCP Act requirements.  It’s a portion of restoration, it’s a portion of habitat preservation, it’s the same activities, so it’s really just a question of doing more of some of them early in the program, more tidal wetland restoration, for example, and then activities needed for mitigation later would then be done later when the additional funding arrives.”

Other state funding would include existing bonds that have some funding left, the Council’s funding sources, IEP’s research and monitoring, he said.  “BDCP assumes that some portion of those would be supporting the restoration goals, the ecosystem goals of BDCP.”

It’s actually expecting that money will be around in these pots for something that can be explained or justifiably attributed to BDCP-related conservation obligations,” said Mr. Isenberg.

“That’s right, and this is very consistent with the NCCP program as a whole,” said Mr. Zippin.  “Many plans essentially bundle existing programs that have already been occurring and expand them with additional funding.  So we don’t want to be duplicating effort; we want to be building on all of the work that people have been doing for decades.  BDCP complements these existing activities; it really is part of a larger program and that’s why we say that some of these existing programs essentially are contributing to the goals of BDCP.”

Existing federal funding sources include CVPIA restoration funds as well as the Bay-Delta restoration appropriations that go to a number of federal agencies.  “We do expect continued appropriations under existing authority as well as the expectation of expanded appropriations potentially through new federal authorities,” said Mr. Zippin.

Federal grants are certainly important,” said Mr. Zippin.  “One is the Cooperative Endangered Species Act grant program which provides funding to states for land acquisition to approved Habitat Conservation Plans.  BDCP would be very competitive for those grants, most of which have come to plans in California.”

There was a question at some point about BDCP and the potential at least to take away funding from existing programs, maybe a shift in priorities, and I hope I’ve convinced you that we have a lot of new funding sources identified, some unique to the fact that we’re an NCCP, we’re a regional HCP, that addresses a lot of different listed species,” he said.

He then presented a slide (sorry, was unable to obtain power point before posting time) which displayed statistics for other HCPs and NCCPs that have been approved in California.  “They are similar in scale in terms of area covered, number of species covered, but not necessarily an overall cost, because they don’t’ include large construction projects like BDCP does, but you can see the percent of state and federal funding varies considerably and BDCP is about in the middle,” said Mr. Zippin.  “Some don’t rely on it at all and rely entirely on local public funding; down in Riverside County, their two plans do that, although the Western Riverside County Plan has actually received some federal funding.  The big difference with those other more development focused plans is that they rely heavily on private development fees.  So you can see that far right column over 50% of those plans funding comes from private developer fees. We don’t have that ability so we’re relying on both the local public, which is the public water agencies as well as the state and federal.

“You do have benefitted parties from the BDCP,” said Mr. Isenberg.  “Is it not more correct to say you believe you should not impose additional financial duties upon them that go beyond the narrow parameters of the facilities itself, the mitigation related to that, and the more expansive view of local agency reimbursements?

We think that our estimate in Chapter 8 of the state and federal contractor’s responsibility for mitigation is accurate,” said Mr. Zippin.  “It’s all spelled out in a single table and it’s that $900 million figure that we talked about earlier.    No, I’m not saying that that should be expanded or shrunk; we think that it accurately reflects the mitigation responsibilities of the contractors.”

Is there any state or federal law that flatly prohibits the BDCP from having a financing package where the contractors pay a larger share than you currently propose?” asked Mr. Isenberg.

No,” said Mr. Zippin.

I understand.   It’s a matter of preference, calculation and strategy and approach.  That’s fine,” said Mr. Isenberg.

The reason I raise this is that in a different but related setting, the contract renewal discussion for the water contracts for the SWP, there were some public statements made that the contractors were insisting on having a better understanding and control over DWR’s operations and maintenance charges because they did not wish to pay more money,” said Mr. Isenberg.  “Now we know the Department is contemplating in short order expanding operations and maintenance from $200 million a year to $400 million a year and I suspect that’s what caught their attention.  If they are resisting the operations and maintenance payments of the existing facility covering the cost, according to DWR, I assume they have the same concerns here which have led to this proposal in its configuration.  Doesn’t that just shift more and more of the costs to the public side of the equation?  I’m not saying that’s wrong, by the way, but …

The assumptions that we used to calculate the mitigation share of the contractors is spelled out pretty clearly in that table so it’s a different proportion for each conservation measure depending on the biological impacts and the effects of the water conveyance facility construction and operation,” said Mr. Zippin.

There have been questions raised about the cost estimates, said Mr. Zippin.  “We certainly heard comments at other meetings about whether we’ve estimated costs accurately and concern about cost of public projects increasing.  We do think we have very conservative cost assumptions.  I mentioned the cost contingencies.  There are a diverse set of funding sources, a menu, if you will.  And as I mentioned, the timing of many of these actions is somewhat flexible so that we can implement them when that funding becomes available.”

“We have very clear direction in the Plan to be working closely with federal fish and wildlife agencies and the state wildlife agency to develop a plan of action if we fall behind in any of our acreage requirements or our funding needs,” said Mr. Zippin.  “Certainly we wouldn’t want to have a permit suspension or revocation, that’s not in anybody’s interest to do, but if our Plan is unable to meet its commitments to implement these conservation actions, we may need to scale it back, and scaling it back means reducing the conservation strategy to be consistent with the level of funding that we would expect in the future.”

The phrase on your chart says ‘and take allowance’ and I assume that’s the endangered species that the project would be taking, so an alternative is also reducing exports of water,” said Mr. Isenberg.

The alternative would be reducing take allowance for whichever species is affected,” said Mr. Zippin.

Isenberg: “That doesn’t lead to reduction of exports?”

Zippin: “It may or may not.  It’s not a guarantee that that would be the outcome because it depends on what is reduced.

Isenberg: “Is the decision to scale back conservation strategy or change the take allowance solely within the jurisdiction of federal or state agencies?

Zippin: “It would be a joint process with the applicants, the permittees, and the state and federal wildlife agencies.”

Isenberg: “So the state and federal agencies do not have the ability on their own to oppose these changes.”

Zippin: “No. It would have to be an application for a plan amendment.”

Isenberg: “Should the benefitted parties, the contractors object, could you proceed with these alternatives?

Zippin:  “If they object, if they refuse to submit a Plan amendment, then the state and federal wildlife agencies could suspend or revoke the permit.  They always have that ability.”

Isenberg: “Which has never been done in whole on any project, your earlier comments were.”

Zippin: “It doesn’t mean it never can be done.   It hasn’t been done because there’s a big incentive for everyone to implement the plan properly.  There’s been a huge effort on all parties to prepare and there’s a lot of provisions in the plan to work collaboratively to avoid the kind of worst case scenario that you’re describing.  Just as there are in every other plan.”

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]“The thing that disturbs me about the assurance and guarantees is not that the ecosystem is at risk, because it’s at risk today under the current law.  It’s that the magic of a solution depends upon both sides of the equation, water reliability and ecosystem being equally at risk or equally benefitted to make it work … the conservation plan brings both of them together, but there is not a comparability of likelihood of completion as long as the financing questions are unanswered. –-Phil Isenberg [/pullquote]

I was going to give a non-legal answer,” said Ms. Moon.  “And that has to do with the role of adaptive management in the success of the conservation plan.  There are a lot of questions about how some of the conservation measures will work.  There’s going to need to be a lot of design and additional planning work going forward to implement this plan, and we’ve been talking quite a bit with your science program staff on how to engage and involve the Stewardship Council’s science program.  We don’t see it as possible without very active involvement, but it’s going to be critical to the success of BDCP, I believe.  I think we’ll have to have some additional interagency agreements to spell out how that will work.  It’s not the legal answer, but I think as a practical matter, what do we do if we have or don’t have money to do one thing is also related to the question of do we really need to do this or do we need to do something else, do we need to do a little more here, a little less there, so there’s going to be a lot of aspects of this that we’re going to have to figure out as we go,  and I think that the Council needs to be involved in that through the science program and through your implementation committee, presumably.”

There are currently 84 restoration projects underway in the Delta in some form or fashion,” said Mr. Fiorini.  “As those are successfully completed, does that reduce the obligation of BDCP?  Or does it not reduce the scope of the restoration activity of BDCP?

The plan, in chapter 6, has a provision called interim conservation actions, and that’s actually an allowance of the NCCP Act,” said Mr. Zippin.  “From the date the planning agreement was signed, which was several years ago, and anytime after that, if a restoration project is built, and that project is not otherwise obligated to mitigate for something else, if the intentions of the restoration project, the goals of that restoration project overlap with BDCP requirements, we do have the ability to essentially count that restoration project, and that’s consistent with other plans.”

Mr. Isenberg then referred to Governor Brown’s July 2012 announcement that said that there were no guarantees and that science would guide exports and ecosystem activity, and said: “The thing that disturbs me about the assurance and guarantees is not that the ecosystem is at risk, because it’s at risk today under the current law.  It’s that the magic of a solution depends upon both sides of the equation, water reliability and ecosystem being equally at risk or equally benefitted to make it work, and that’s why the question of enforceability and predictability and timing of projects becomes crucially important there – the conservation plan brings both of them together, but there is not a comparability of likelihood of completion as long as the financing questions are unanswered.  Maybe I’m just seared by 30 years of financial ups and downs in the state economy and the national economy, but my experience has been that the availability of funds requires a fairly prudent judgment of what’s going to be available on both sides of the equation and requires matching it up.”

“I agree with the general statement, you have to have trust on this issue,” said Mr. Isenberg.  “But trust is possible only if the risks are borne equally and only if the alternative solutions in the event of lack of success are real.  The death penalty provisions that everyone talks about – the Constitution of the U.S. calls for equal treatment and prohibits cruel and unusual punishment, and our prison health care system is now under federal court receivership because the politics did not permit of encourage the spending of the money that everybody knew ought to be spent … you can’t have that situation in a BDCP which is water reliability and substantial ecosystem restoration and have it work.  You just can’t.  It’s asking the courts to do what they are not well set up to do, and it just seems to me that this requires very high level attention and additional work.

“I think the questions you are asking are really important,” said Ms. Moon.  “I think you’ll see some partial answers in the new draft that we have not talked about today, but I wouldn’t say that we have the complete answer and we still need to be talking about that and thinking about that.  I would just add that I think it’s not just a matter of equal enforceability, but how incentives are structured and how the funding strategy is established, so you can do things by enforcing and you can do things with incentives, or you can do a combination.  I think that’s something we need to look at further.


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