Assembly oversight hearing on the funding structure and economic impacts of the Bay Delta Conservation Plan (part 4): Delta stakeholders have their say

On February 12th, the Assembly Committee on Accountability and Administrative Review held an oversight hearing on the funding structure and economic impacts of the Bay Delta Conservation Plan.

In this fourth and final installment of coverage of the hearing, the committee members hear from Melinda Terry from the North Delta Water Agency and the California Central Vally Flood Control Association, Larry Ruhstaller from the Delta Protection Commission speaking on behalf of the five Delta counties, Charles Gardiner from the Delta Vision Foundation, and Bill Wells from the California Delta Chambers & Visitors Bureau.

Melinda Terry, North Delta Water Agency and Central Valley Flood Control Association

Melinda Terry is Manager of the North Delta Water Agency as well as Executive Director of the Central Valley Flood Control Association. The Flood Control Association has been in existence since 1926 and includes more than 75 reclamation district cities and counties that have flood management responsibilities, from Redding to Tracy, including the Delta, she explained.

The EIR/EIS contains 750 impacts, 48 or 52 of which have been classified as unavoidable (depending on whose list you look at) which means that those will not be mitigated, said Ms. Terry.  “Those include impacts to agriculture, even for the lands that are not converted under this plan,” she said.  “It’s a ten-year construction and so for that period, it’s an unavoidable impact that agricultural production will not be able to occur because of all the impacts they have to soils, water availability, water quality and some other things.”

750 impacts with 52 of them unavoidable leave 698 impacts still yet to mitigated, she said.  These include impacts such as four Delta communities that are on groundwater, not County water.  “During construction, you have to dewater, and that will lower the groundwater 10 to 20 feet, which means homes and businesses may not have water for at least six to nine years,” she said.  “So those are the kinds of mitigations I’m talking about when I say 698, and as you can imagine, something like that gets left to be absorbed by the local communities, in this case it would be Sacramento County, and there’s a high cost associated over that long term.”

BDCP Melinda 1So as a state project, there are two levels of BDCP mitigation accountability for the legislature to consider: whether the full cost of each mitigation measure is properly accounted for in the BDCP budget with a secure funding source identified, and whether all of the 698 mitigations are in fact being funded, implemented, and effective in reducing severity per CEQA,” said Ms. Terry.  She pointed out that a lot of the financial burden will be left to the counties to absorb, such as transportation, water, health costs and other extra costs that are unavoidable, and therefore absorbed.  “It also includes lost sales tax and other things, because one of the things it talks about is the abandonment of buildings, homes and businesses, because of conditions of not having water, the ground shaking, the noise – all of these things over a ten-year construction, they will have a lot of blight occurring and it becomes very costly.”

It’s unknown what the actual costs of these mitigations are because as far as I can see, they’ve lumped in the costs of these 698 mitigations into the conservation measure costs,” she said, noting that the EIR/EIS identifies impacts by topic, such as air quality, agriculture, or water quality, so it’s difficult to know which portion of the conservation measures are to mitigate the 698 impacts.  It is important because to determine the amount of the public portion because there’s still a lot of work that is being deferred to later, she said.  “One of the mitigations is a 34-page list of environmental commitments,” she said.  “When you read this document, it talks about all these mitigation plans that they still have yet to develop.  I don’t even know what the costs are they have associated with this document, let alone those 698, so just from an accountability standpoint, it might be really good to have that.”

There are zero benefits in this plan,” said Ms. Terry.  “Normally HCPs benefit the region where the project is occurring, but in this case, it’s the only HCP that I know where it goes into another region, all of the benefits are accruing somewhere else, and all of the adverse impacts to another area that doesn’t receive benefits, so it’s very difficult.”  She noted that the implementing agreement which has more details on the mitigation has yet to be released for public review.

The project may be exposing the state to inverse condemnation liability, Ms. Terry said.  She explained that the Sacramento flood control system is the largest in the state, protecting 1.7 million acres with more than 1000 miles of levees and other facilities.  It was built by the Army Corps of Engineers and in 1953, transferred over to the state, and the state has committed in an MOU to the federal government to do the maintenance and upkeep of all those systems, she said, noting that the Central Valley Flood Protection Board is the specific state agency with responsibility and liability for flood control.

The levees were originally built to reclaim land for farming, to provide flood protection, and to improve navigation, she said.  It became a convenient water conveyance system because it already existed once the reservoirs were built.

Ms. Terry explained that it was the Paterno decision that determined the state had liability for a 1986 project levee failure which cost the state over $400 million to settle the case.  “It was an inverse condemnation so it’s a different standard than they have in simple tort liability,” said Ms. Terry.  “Some of the liability issues raised in the Paterno decision include [reading from the decision]: 1) the public should pay the costs inherent in public works, including damages, foreseeable or not; 2) whether the system, as designed, constructed, operated, and maintained, exposed plaintiff to an “unreasonable” risk of harm; 3) whether the location and configuration of the system, and its purpose to divert the natural flow for flood protection, reclamation, and navigation were themselves “reasonable”; 4) whether damage was “proximately caused” by the public improvement as designed and constructed; and 5) State failed to undertake any studies to determine its adequacy to meet the waters the State proposed to route against it.’ That’s essentially what happened in Paterno.  They knew it had problems and they didn’t.”

This is important because the BDCP proposes to make the largest modification to this state flood system that has ever been done since it was built, but this time it’s for a non-flood purpose, she said.  “It is essentially making a public improvement that was described in that Paterno case to the location and configuration, because 10 out of the 22 conservation measures propose to either remove, breach, move, inundate, plant on, and/or build on flood project facilities,” Ms. Terry pointed out.  “The Paterno decision specifically states that ‘the public agency is an entity a proper defendant in an action for inverse condemnation if the entity substantially participated in planning, approval, construction or operation of a public project or improvement that proximately caused injury to private property.  So long as the plaintiffs can show that substantial participation, it is immaterial which sovereign holds title or has the responsibility for operation of the project.  Approval and acceptance by the public agency may be implied by official acts of dominion or control over the property and by continued use of the improvement by that agency for many years.’”  This may mean extra exposure to both the state and the Central Valley Flood Protection Board who already has the responsibility, but potentially the CVP and the SWP itself, she noted.

A public entity is a proper defendant in a claim of inverse condemnation if it has power to control the direct aspect of the public improvement that has alleged to have caused the injury, she said.  “Conservation Measure 2 includes installing an operable gate on the Fremont Weir (which is part of this project system), to divert water into the Yolo Bypass (which is also part of the project system, and it’s also the major workhorse that protects millions of people in Sacramento) for a seasonal fish farm in order to comply with federal endangered species jeopardy findings and the biological opinions, which allows them to continue operations of the existing south Delta pumps,” she said.  “The new gate on the Fremont Weir flood facility will be managed as part of the SWP/CVP water project operations under BDCP permits.  Therefore, both the state and federal water projects as well as individual water districts who will be the BDCP authorized entities and signatories to the BDCP implementation agreement and other agreements may unknowingly be exposing their ratepayers to future flood liability damages under inverse condemnation due to their substantial participation in planning, approval, construction, operation and of course funding of this most critically important portion of the Sacramento River flood control project.”

After Katrina, the Army Corps has increased its enforcement, so over the last 3 years, 60% of the State Plan of Flood Control levees have been removed from eligibility from the federal recovery program, which means that the state will be 100% responsible for fixing those levees if we have a flood event, whereas previously, the federal government would have paid for that, she said.  “Over the next couple of years, we could lose 100% because the levees are failing to meet the standards,” she said.  “The state hasn’t kept up, so if we make modifications to that system, the largest modification, how will that change?

The BDCP talks about flows in the rivers for fish, water quality, and water supply, but interestingly enough, they do not talk about flood flows, she said.  “It wasn’t analyzed at all,” she said.  “Conservation Measure 1 proposes to have ten cofferdams in the Sacramento River and other channels at the same time.  It’s a 9 year construction period.  I’ve looked back 110 years.  The thing I can guarantee you based on the historical record is we have one major flood event every decade.  They did not factor that in whatsoever or analyze that they are modifying a state facility for which another entity has responsibility for.  They didn’t analyze any of the flood flow capacities or how it changes any of our eligibility – none of it.  They didn’t’ even recognize that the state owns and is responsible for it.

The project will be making a lot of modifications to the road systems and there’s no evacuation plan.  “Evacuation of this area during their ten year construction is not even described,” said Ms. Terry.  “Currently Highway 160 is on top of a levee, so you are on high ground if you have to evacuate in a flood event.  They are moving the Highway 160 into the island which now means you’re under water.  I don’t how people are going to egress.”

The legislature may want to consider having a review of the implementing agreement or otherwise ensuring an oversight body for the mitigation measures because there currently isn’t, she said.  Also, the legislature should consider if the BDCP projects will increase the state’s liability for increasing vulnerability to the Paterno inverse condemnation and who will have accountability, she said.

If a future failure is determined by a court to be related to BDCP construction modifications to the configuration of the system, who is then responsible to pay?” she said.  “We know who did it last time, but is it going to be now the ratepayers of SWP and CVP?  If the state pays, is it a general fund?  I think those are things from an accountability standpoint you might want to look at.”

Larry Ruhstaller, San Joaquin County Board of Supervisors, Chair of the Delta Protection Commission, and Delta Stewardship Councilmember

I’m here to represent Delta Protection and the five Delta counties – the local voices of the Delta,” began Larry Ruhstaller.  “We work, live, play in the Delta.  What happens there is not some abstract study but very immediate and very personal.  What has been lacking from the beginning in this debate is a true local representation and involvement.  ‘Nothing about us without us’ is a phrase coined by my former colleague from Solano County Mike Reagan.  Not only is this a matter of good manners to involve the locals in this massive undertaking, in the long term, you really can’t succeed without us.”

Mr. Ruhstaller then ran down the impacts to each of the Delta counties, beginning with Contra Costa County.  “The BDCP will have serious economic consequences for Contra Costa County.  Contra Costa County’s western, northern, and eastern boundaries are all defined by the Sacramento San-Joaquin Delta, and these natural features are the basis for not only the county’s identity and quality of life, but also it’s economic vitality,” he said.  “The BDCP would degrade water quality, impact the municipal, industrial, and agricultural water supplies and harm recreational boating and fishing which generates over $250 million annually in visitor spending alone in the Delta.”

BDCP Larry 1For Sacramento County, Conservation Measure 1, CM1, as proposed in the BDCP draft, will result in significant and irreversible economic impacts on Sacramento County, he said.  “CM1 is basically the tunnels.  I don’t understand how the tunnels can be a conservation measure, but they are,” he said, noting that they were each 40 feet in diameter, which is about the same as a four story building.  He pointed out that the three intakes will each take 3000 cfs per second, which is equivalent to 3 structures that are ten times as big as the Freeport structure.  “I’ve been told that each one will have an intake that will run approximately a mile along the Sacramento River, which,  with the 10 year period of construction, there will be barge landings and cofferdams and other things, so if you think this is good for your town of Freeport, Hood, or Courtland, you can probably buy property there fairly inexpensively.”

For Solano County, the protection in conservation of large areas and acreages of current agricultural land will inhibit basically the Cache Slough and the Suisun Marsh areas from what they are presently doing,” he said.  “Water quality impacts will necessitate moving the North Bay Aqueduct at an estimated cost of $600 million, and I don’t believe that is mitigated for in anything that I’ve seen or heard of.”  He added that Solano County is at the bottom of the Yolo Bypass, so they have concerns about flood issues.

For Yolo County, the more frequent and longer duration of flooding in the Yolo Bypass to provide fish habitat could potentially cut out the rice farmers if the water stays in the bypass too late in the season, he pointed out.  “If you cut the rice farmers out, you basically cut out the people who are actually doing the work to maintain that area,” he said.  “If you want to see what happens when it is managed or mis-managed or not managed, all you have to do is go up and look at some of the other more northern areas of this system where the overgrowth of trees and brush cuts back on the carrying capacity of the system.  Also, Yolo County did a study with UC Davis which they call the Agricultural and Economic Impacts of the Yolo Bypass Fish Proposals.  What they came out with is that it could cost Yolo County up to $8 or $9 million in loss of income.”

More than half of the Delta is in San Joaquin County, and this will have impact our ag economy, he said.  “We have an ag economy of over $2 billion and $500 million to $600 million of that comes from the Delta.”  The plan is proposing a lot of habitat in the south Delta and the reason they are proposing habitat there is because Roberts and Union Island are above sea level, he pointed out.

Summing it up, he said: “It’s ironic … the water quality in the south Delta has been an issue for the earliest days of the State Water Project.  We were promised even before it was built that we would all drink from the common pool and that only water surplus to the area would be exported and that our water rights would be respected and honored.  … what it boils down to is that we’re not too trusting.  To solve the state’s water problems requires cooperation and trust, trust between the state and the local government, trust between the north and the south, trust between the farmers and the urban dwellers, trust between the coast and the other California, as a local from the northern, other California, with his feet on the farm and in the city, I would ask us to work to solve these problems once and for all.”

I would like to acknowledge that San Diego has done an excellent job,” Mr. Ruhstaller added.  “That is what should be being replicated throughout the state, not only south of the pumps, but all of us here in Northern California should be much better stewards of this resource and actually figure out that that’s the only way we’re going to survive this is we need to create new water.  The tunnels do not create any new water.  We, as individuals in each one of our areas, that’s what we have to do.”

Charles Gardiner, Executive Director of the Delta Vision Foundation

Charles Gardiner began by giving some background information on the Delta Vision Foundation.  “The Foundation was formed by the members of the Delta Blue Ribbon Task Force at the completion of their work to monitor, encourage, and cajole the implementation of the Delta Vision Strategic Plan, the long-term sustainable plan for the Delta, and that is working with stakeholders, the state, and the federal agencies to move these ambitious complicated plans into implementation and completion,” he said.  “The core of the Delta Vision Strategic Plan is that the fix of the Delta depends on an integrated linked set of solutions, and those solutions are guided by the two coequal goals that fish need more water at the right time and the right temperature, and families, farms, and factories need water on a reliable basis for future growth and development, and all of that has to be implemented in a way that protects and enhances the cultural and economic values of the Delta.”

BDCP Gardiner 1We need a water management system that is efficient, and that changes the timing of how we use water to reduce those conflicts between the human uses and the environmental uses, and the BDCP evaluates two important pieces of this: water conveyance and habitat restoration, he said.

However, BDCP alone is not sufficient to solve the Delta problem,” he said.  “There are several other critical components.  First is a strategic levee system to improve and protect how we move water now through the Delta and to increase flood protection and seismic resiliency.  Increased surface and groundwater storage, both above and below the Delta so we can capture more water when it is truly abundant, and leave more water in the system for the ecosystem when it really needs it.  And underlying all of this is the efficient water use … and creating more flexibility in the system through that.”

It will take commitment and assurances for action and funding from water users and the state, and for the BDCP, the concept of linking and integrating and assuring action and accountability is critical to achieving the coequal goals, he said.  “However, our read of BDCP is that is not yet sufficiently accountable for the two coequal goals – that is, that the linkage between conveyance and habitat is inadequate,” he said.

First, the BDCP has all the elements successfully defined for the conveyance facilities such as funding, competent organizations to implement, and organized and motivated interests to support and drive actions, as well as specific performance outcomes, he said.  However, these same elements for successful implementation are missing for the ecosystem restoration, he pointed out.  The environmental review is program-level rather than project-specific, the funding sources are uncertain, and no existing organization that can take on this responsibility, he said, noting that there’s a proposed organization, but its authorities and competence are uncertain.  There is diffuse and unorganized support for implementation of habitat restoration and there are uncertain performance measures and outcomes for accountability of implementation, he said.

So we don’t see the level of accountability through the linkage of these two things moving forward in parallel as they need to do,” said Mr. Gardiner.

Second, the BDCP appears to establish a primacy for BDCP in considering future actions or changes that affect the Delta or other areas of the state,” he continued.  “The BDCP acknowledges that future actions such as State Water Board proceedings or new storage may affect BDCP conservation measures.  The implementation office will work with regulatory agencies and project proponents to ensure that the project or new regulatory requirements are consistent with the BDCP.  Given that the water facilities and operations are part of BDCP conservation measures, this establishes that potentially any regulatory actions or project in the Delta watershed and the CVP and SWP service areas, that is more than half of the state, would have to consider consistency with operations of the state and federal water projects.  That puts the operations of the state and federal water projects in a position of primacy in looking at potential developments or investments or habitat restoration actions in a broad swath of the state.  This approach appears to be inconsistent with the legislative intent of the Delta Reform Act which envisions BDCP, if it is approved by the DFW, would be folded into the Delta Plan, overseen by the Delta Stewardship Council – the Delta Plan is the overall plan of how these pieces fit together.  And the BDCP currently appears to put the water operations and facilities ahead of that kind of review.”

Third, the BDCP establishes a new and undefined dispute resolution procedure that could potentially delay state or federal agencies ability to enforce corrective action if ecosystem actions are not implemented at the same pace as water facilities,” said Mr. Gardiner.  “So again, linking those things together, the dispute resolution procedures could be a vehicle for delay that would further delay ecosystem implementation.”

He also noted that the state has a poor track record of funding mitigation for lost property tax revenues, which is an area for particular attention.

Lastly, the efficiency and accountability of state expenditures for ecosystem restoration is fundamental for successful implementation,” he said, noting that the legislature should establish performance accountability mechanisms, efficiency targets, and public reporting for each bond or spending account for the expenditures of state resources for the BDCP. “Let’s make sure we minimize the administrative and planning overhead and maximize the dollars that actually go to implementing ecosystem restoration.  And performance review by a Board or Commission subject to the Bagley Keene Act,” Mr. Gardiner concluded.

Bill Wells, Executive Director of the Delta Chambers & Visitor’s Bureau

Being the last one to testify, Bill Wells didn’t waste any time getting to his points.  “Number one point is these twin tunnels,  the BDCP, is not going to create any new water,” said Mr. Wells.  “It’s going to be reallocating water from one place to another.  The other thing is diverting rivers on a scale like that has never worked without destroying the existing waterways,” he said, saying there were numerous examples of that around.  “It will be an unmitigated disaster, I think anybody would know that, and I get letters as far away as Australia warning me about what’s going to happen with the Murray-Darling basin problems they have had down there. Delta farms are the most productive in California, if not the world.”

BDCP Wells 1The earthquake risk is the biggest red herring I’ve heard around,” he said.  “The active earthquake fault in the area is the Hayward fault which does skirt the far western edge of the Delta.  If there’s a major earthquake on that, the major water supply in Delta is going to be the least of the concerns because it’s going to wipe out half the Bay Area.  These tunnels are going to be cobbled together with, using their own figures, dowels and gaskets, so I question how they are going to hold up in an earthquake better than the levees do,” he said, pointing out that there’s never been an levee failure due to an earthquake.

There are technological breakthroughs all the time, and desalination is constantly getting cheaper, he said.  “I cannot believe that over 50 years, there’s going to be some massive breakthroughs in technology that will make the BDCP obsolete,” he said.

Recreation brings a little over a half a billion dollars by my numbers, he said, as well as 7 million visitors and 14 million visitor days.  “One of the things about having a nice Delta with wildlands and things is the psychological value of it,” he said.  “People like to get out of the town,they like to get out of the Bay Area and Sacramento and Stockton, and it’s nice having a place like that.  If you take ten years of construction and running trucks up and down there, it’s not going to be as nice as it was, and likewise, the boating traffic with cofferdams and barges competing for boating areas, it’s going to be bad.”

Committee Chair Jim Frazier wrapped up the hearing with some final thoughts

BDCP Frazier 2As I’ve studied this issue and listened to testimony today, I’ve developed a significant concern,” said Mr. Frazier.  “BDCP is a mega project with potential mega-costs.  The projected costs do not contain sufficient contingency funding.  Nearly $8 billion of state and federal funding is uncertain with no alternative funding source.  What the cost of water will be to water contractors and what ratepayers will pay is extremely unclear.  If costs significantly increase as I believe they will, water contractors and ratepayers may not be able to carry the financial burden.  This puts us, the taxpayers, at risk.

As a result of the inadequate financing plan and the considerable uncertainty contained in the BDCP, I have introduced legislation AB 1671 that will require the legislative approval for tunnel water conveyance in the Sacramento-San Joaquin Delta.  This will not only allow the legislature to participate in the process, but the people of the state of California as well.”

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