CalCoast News: Eyes On Your Water- 3 part series on Paso Robles groundwater takeover by Resnicks

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News for the California Coast

Eyes On Your Water – A Three-Part Series

http://calcoastnews.com/2014/01/is-water-banking-in-slo-countys-future/

Is water banking in SLO County’s future?

January 27, 2014

© Eyes on your water: First in a series of reports on the North County’s festering water politics.

By DANIEL BLACKBURN

Little San Luis Obispo County is poised to become a major player in the West’s high-stakes water

future, even while local land-owning water users fret about declining supplies stressed by an increasingly

voracious agricultural thirst.

Meanwhile, strategies of a variety of county water users — their anxieties exacerbated by a deep

and persistent drought — are competing for control of the biggest component of this county’s water

storage capability, the Paso Robles water basin.

And now, the basin — the largest aquifer west of the Rockies — is being considered by some

powerful entities for utilization as a “water bank.”

It is an objective that cannot be realized without creation of a special water district, plans for

which are gaining a considerable head of political steam. A district’s formation would necessitate

enabling legislation, now being contemplated for sponsorship by Assemblyman Katcho Achadjian (R-San

Luis Obispo). Such a district is favored by two area groups which recently merged their objectives, the

Paso Robles Agricultural Alliance for Groundwater Solutions (PRAAGS) — representing the biggest

vineyards overlying the Paso Robles groundwater basin — and PRO Water Equity.

PRAAGS legal representation is being provided by Ernest Conant, a lawyer for the controversial

Kern Water Bank in the Central Valley.

Consensus on local water banking is thin; some North County landowners are balking at the idea

of establishing a water district, fearing that special interests are fast-tracking legislation to prevent any

future intervention in North County water-rights conflicts by the courts. Two local lawsuits have been

filed in an attempt to protect existing rights of current landowners, and to assure those rights carry into the

future.

A plaintiff in one of the lawsuits, Cindy Steinbeck, said in an email to members of an overlying

landowners group, Protect Our Water Rights (POWR), that representatives of the two bigger entities,

PRAAGS and PRO Water Equity, may not be revealing the whole story.

“What they are not disclosing [about plans for a district and the legislation] may seriously impact

your property rights, as well as the financial value of your property,” Steinbeck wrote. “We must stand

together to protect our groundwater rights.”

Steinbeck said in a later conversation with a reporter that leaders of PRAAGS and PRO Water

Equity “cannot seem to tell the truth” about plans for water banking in this county.

“I’m certain that at least one person in each group knows exactly what is going on,” she said, “and

many of the rest are completely naive.”

At a Pear Valley Vineyard meeting last week, members of PRAAGS admitted they seek in the

legislation “exporting” powers and plan to do “water exchanges” with a Central Valley water bank,

Semitropic Water Storage District.

Wider needs, less water

In concept, the idea of capturing water during wet years and saving it to use for homes, farms,

ranches, and businesses during a dry spell sounds like it makes fiscal sense.

In reality, a water bank can create circumstances jeopardizing unsuspecting landowners who

believe they have the rights to the water under their property.

Conservation measures of some sort are becoming increasingly important, because diminution of

the above-ground resource parallels statewide urban and rural population expansion, and agricultural and

industrial demands are increasing.

In prior decades, overland transfer was the preferred method of moving water from one location to

another. But dams, reservoirs, canals, pumping plants, and other delivery infrastructure now are mere

remnants of a past where “abundance” of the resource was a commonly-held misperception.

Even without a serious drought, evidence of a rapidly-shrinking water supply in the western

United States is abundant: the combined capacities of the Colorado River, the state’s northern watersheds,

the Central Valley Project, the Owens River and California aqueducts, cannot deliver one-fifth of the

promised, and contracted-for quantities.

With more eyes on less water, novel ways to develop, store, sell, and deliver water are sought.

Banking is a system that makes it possible for water-rights holders to store water underground in

aquifers for future use, but it also creates the potential of sale or lease of those water rights to distant

destinations.

Why would the North County water basin, already over-utilized, stir the lust of any outside

interest?

For advocates of a water banking future, it is simple: They perceive this county’s subterranean

water vault, though increasingly bereft of actual supply, like wizened old prospectors surveying an empty

moonscape mountainside and correctly concluding, “There’s gold in them thar hills.”

In this case, the “gold” is in storage capacity. Even if water in the Paso Robles basin continues to

decline, the basin essentially remains a priceless resource repository, the kind that is bound to attract

attention from beyond county borders.

It’s a snowballing profit potential that makes this basin the object of many covetous desires.

Evidence of outlying interest in the basin was suggested when the venerable Hardham Ranch,

located on the southeastern edge of the city of Paso Robles, was sold to Roll Global, the Southern-

California based holding company owned by Stewart and Lynda Resnick of Beverly Hills. The ranch has

for years been used for grazing and dry-farming.

But Stewart Resnick, 74, a UCLA law school alumni who has amassed an estimated personal

fortune of $2 billion, had other ideas for the land, and for the water rights under that land.

Resnick purchased the ranch in 2011 and began a massive vineyard planting and irrigation project

spanning its entire 750 acres, despite widely-recognized groundwater deficiencies in the region. Few

country residents, save those whose properties were close to the property, voiced much concern. Few, as it

happened, had ever heard of the Resnicks.

That probably won’t be the case in the near future.

A reckoning force

The Resnicks own a majority of the Kern Water Bank through their Paramount Farms, one of the

nation’s largest agribusiness corporations. As part of that enterprise, their Central Valley farms produce

huge harvests of pistachio nuts. They also own FIJI Water, Justin Winery, and other high-profile business

entities.

Resnicks’ stranglehold on the Kern Water Bank is the unintended consequence of several

historically-questionable decisions made by state water officials over the past 15 years. The bank was

acquired after the state transferred Californians’ ownership of the bank to a Central Valley joint powers

authority controlled, at least in part, by Resnick’s companies.

Among other fiscal benefits, according to a July 2011 article in the New York Times, the agreement

authorized, for the first time, “permanent sales of water by and between State Water Project contractors,

creating a new private water market.”

The notion of water banking in the past, reported The Times, “has been widely embraced as a tool

for making water supplies reliable, sustainable and marketable. Groups traditionally at odds –

environmentalists seeking full rivers for fish, and farmers tending pistachio or pomegranate trees — agree

that water banking is a useful strategy for managing a vital resource.”

But pristine as the intention might be, the business of water banking is not always conducted with

the resource’s highest and best use in mind.

The Times reported that “pumping out huge amounts of (Kern Water Bank’s) stored water in dry

years was thought to have little impact on the underground geology. But now engineers believe it reversed

the area’s underground hydraulic gradient, turning a hill-shaped water table, accessible by shallow wells,

into a valley. The trigger for the huge withdrawals was a drought that began in 2007. Kern County’s

allocation of water from Northern California was cut. Then, in the 40 months beginning in March 2007,

roughly half the banks’ capacity was pumped out to keep fruit and nut trees alive.”

Resnick’s farm company produces the world’s largest harvest of almonds and pistachios, both

water-intensive crops, both grown in the semi-arid but richly-irrigated soil of Central California.

Roll Global’s lawyers have been squaring off against a phalanx of lawsuits and ongoing water

bank-related legal problems, and have found the efforts of a San Francisco lawyer named Adam Keats to

be particularly nettlesome. Keats, senior counsel for the Center for Biological Diversity, heads the center’s

California Water Law Project, aimed at seeking long-term solutions to freshwater delivery in California.

Keats told The Times that the Kern Water Bank was the result of a “back room deal by a cabal” of

agricultural barons “that has produced an environmental nightmare, depleting fresh water in the Bay-Delta

region; contributing to over-irrigation, groundwater depletion, and the buildup of selenium in the soils of

the San Joaquin Valley; and threatening the habitats of endangered fish and wildlife.”

It all means, he told The Times, “All this to serve the god of profit rather than the public good.”

He predicted a similar fate for the San Luis Obispo County region if water banking is initiated.

“What will probably happen is that the entire water supply will end up controlled by a few

powerful people whose interests are not the same as those of most of your residents,” Keats told

CalCoastNews in a recent interview.

Disputing the premise of a degraded supply caused by heavy agricultural pumping, Conant, the

Kern Water Bank lawyer now locally involved with PRAAGS, told The Times he disagreed that the “rapid

pumping caused the well problems in west Bakersfield, or that environmental reviews, in failing to

anticipate the problem, were inadequate.”

Conant’s client Resnick rarely responds to media interview requests. But in November 2010 the

billionaire told Bloomberg Businessweek that he regarded those lawsuits plaguing his Kern Water Bank as

“a nuisance,” commenting, “If I think I’m right, I don’t care what people say. It’s their problem.”

(Next: ”Paper water” could “fill” the basin’s water bank, and some visionaries will be getting very rich.)

 

http://calcoastnews.com/2014/02/paso-water-group-wields-major-league-muscle/

Paso water group wields major-league muscle

February 9, 2014

© Eyes on your water: Second in a series of reports on the North County’s festering water politics.

Randy Record

By DANIEL BLACKBURN

Some of California’s biggest players in water politics have become influential figures in the

leadership of a group vigorously promoting formation of a management district for the Paso Robles

aquifer.

The heavy-hitting individuals possess a wide variety of legal and other professional connections to

the inner structure of this state’s water industry. Blended with several of the North County’s most

prominent vintners and ranchers, a unit has been formed that commands considerable political punch and

resources.

One of the most prominent is Randy Record, an early adviser to individuals who would eventually

form the Paso Robles Agricultural Alliance for Groundwater Solutions (PRAAGS). Record is first vicechair

of the Metropolitan Water District (MWD of Southern California), the world’s largest wholesaler of

water.

Record’s primary agricultural interests are located in San Jacinto, where he’s a fifth-generation

farmer, as well as vice-chairman of the Eastern Municipal Water District (EMWD) there. He’s a 1976

graduate of Cal Poly; his family purchased the 100-acre Record Family Farms in San Miguel in 2007.

Record told CalCoastNews, “I don’t consider myself to be an advisor, just a member of PRAAGS

and someone who has an interest in the area.”

Jerry Reaugh, owner of the 70-acre Sereno Vista Vineyard, is PRAAGS chairman, and he was

effusive in praising Record’s participation with the North County group.

“Randy has been very instrumental in advising us,” said Reaugh. “He is extremely well connected,

and we are lucky to have someone like that living among us.”

Part of Record’s current responsibility is to represent the Metropolitan Water District on the

Southern California Leadership Council, where, according to the EMWD website, he “helps establish

water policy.”

Record’s stint as president of the state’s most aggressive and potent water special interest group,

the Association of California Water Agencies (ACWA), ended in January. That association represents

more that 440 water districts selling 90 percent of all water delivered statewide. He’s co-chair of ACWA’s

Statewide Water Action Plan, which is “planning for California’s water future.”

During the formative stages of another local action group dubbed PRO Water Equity (PWE),

Record spent time “poking around” for information about PWE, according to several former PWE

members.

Reaugh said many of the current PRAAGS members also are members of a Paso basin “blue

ribbon” advisory committee now being phased out.

“It became clear that we needed to start taking action to deal with the area’s water issues, and I

think it also became clear that what we needed was a water district,” Reaugh said. “That’s the tried and

true way for rural areas to manage their water affairs.”

Asked how he came to be named chairman of PRAAGS, Reaugh laughed and said, “I’m probably

the idiot that stood up.”

A Bakersfield attorney, Ernest A. Conant, a partner in the firm Young Wooldridge, has been

appointed general counsel by PRAAGS. Conant represents water districts throughout the state, most

notably the Kern Water Bank, whose principal owner is Paramount Farms Inc., a company owned by

Beverly Hills billionaire Stewart Resnick.

Last year, Resnick added to his inventory the 740-acre Hardham Ranch on the outskirts of

southeastern Paso Robles, and has converted it from dry farming and cattle grazing to newly-planted and

well-irrigated wine grapes. Today, Resnick’s statewide agribusiness is among the richest in America, and

he is by far the world’s most prolific producer of pistachios and almonds.

Among Conant’s legal accomplishments mentioned on his website include the fact that he “has

served as general counsel for many different public agencies, including assisting with the development of

the Semitropic and Arvin-Edison Water Storage District’s water banking programs, which temporarily

store water for various agencies throughout the State.”

He was involved in the development and formation of the Kern Water Bank Authority and serves

as its general counsel. Conant was a key figure in the implementation several years ago of the so-called

Monterey Amendments, made among State Water Project contractors. That controversial move handed

over state water rights to private entities and for the first time opened the door for sales and transfers of

water supplies from state and federal conveyance projects.

“We’re very fortunate to have Ernie as counsel,” Record said.

Reaugh, asked if Conant’s experience with water banks and his subsequent engagement as general

counsel of PRAAGS caused him concern at the outset, said after a long pause, “I’d have to say no.”

Reaugh then dismissed the concerns of some local residents regarding the possibility of water

banking in the North County as “conspiracy thinking.”

“Those issues are almost silly when you think about them,” Reaugh said. “Folks can conjure up a

conspiracy all they want, but this is not an area that lends itself to water banking.”

Steve Sinton, treasurer of PRAAGS, owns with his family the 125-acre Shell Creek Vineyards. He

was raised on (and now runs) the family’s 12,000-acre Avenales Cattle Co. ranch, attending Shandon

schools before graduating from Stanford. He earned his law degree from the University of Colorado in

1972.

After service in the Army, Sinton took a staff attorney’s post with the California Department of

Water Resources for five years. He then returned to live at the Avenales Ranch but established a law

practice in Sacramento, specializing in water and environmental law. Now he primarily manages cattle

operations for Avenales. Until recently, he was chairman of the California Rangeland Trust.

Sinton’s extensive properties include the Shell Creek area, designated by a 2008 county study as

one of three “selected recharge alternatives” for state project water project.

According to the final report of the Paso Robles Groundwater Sub-basin Water Banking Feasibility

Study, “The locations of the (three) water banking alternatives evaluated in this study were identified

primarily based on information describing the local hydrogeologic conditions.”

Media and marketing matters for PRAAGS are being handled by one of the county’s most

recognized firms, Barnett Cox of San Luis Obispo.

Other PRAAGS board members are Dana Merrill, Mesa Vineyard Management; Kent Gilmore,

Golden Hills Farm; John Crossland, Vineyard Professional Services; Steve Lohr, J. Lohr Vineyards and

Wines; Matt Turrentine, Grapevine Land Management; and Kathleen Maas, Pear Valley Vineyards.

Next: A smaller citizens’ group, PRO Water Equity (PWE), finds common ground with PRAAGS, and a

fortuitous melding of objectives occurs.

 

http://calcoastnews.com/2014/05/crafted-perception-water-district-cooperation/

A crafted perception of water district

‘cooperation’

May 24, 2014

© Eyes On Your Water: Third in a series of reports on the North County’s festering water politics.

Sue Luft

By DANIEL BLACKBURN

A surprise voting maneuver — engineered by its leader — divided a local landowners’ group and

greased the skids for a plan to create a controversial water district regulating use of the Paso Robles basin.

Sue Luft’s gambit proved successful, and combined with a well-financed public relations

campaign has helped create an illusion of widespread community support for the water district’s

formation.

Luft, a onetime Bakersfield engineer, is chair of a small group of people dubbing themselves Paso

Robles Overliers for Water Equity (PRO Water Equity). It launched in March 2013 with the stated intent

of representing viewpoints and legal rights of owners of property atop the North County aquifer. Its

current membership numbers four.

Its website describes PRO Water Equity as “a diverse all-volunteer coalition of Paso Robles

groundwater basin users who believe in finding a fair way of sharing the groundwater that belongs to all

of us, (and we are) supported by winery and vineyard owners, olive growers, other agriculturalists and

many, many rural residents who overlie the basin.”

That does not reflect PRO Water Equity’s current actions and objectives, according to former

members.

Sheila Lyons was one of the group’s original members, all of whom shared a common goal, or so

Lyons thought:

“Our group worked on a lot of projects,” she said, “and I thought we were all on the same page in

that we all believed that water is a common resource. We thought management for the good of everyone

was the way we wanted to go. So we started out advocating for the kind of basin management that we

needed, and could support.”

Then last summer news surfaced of the formation of another North County water group calling

itself the Paso Robles Agricultural Alliance for Groundwater Solutions (PRAAGS). The emergence of this

small but mighty coalition,* representing large vineyard owners and ranchers, wine industry

professionals, water attorneys, and other politically-connected individuals, caused concern to the members

of PRO Water Equity.

Luft noted with alarm PRAAGS’s startup on PRO Water Equity’s website, and the two groups,

with diametrically opposing agendas, became overnight adversaries.

“We knew that a California water district was not what we wanted,” Lyons said, but “we also

worried that the whole thing (management of the basin) might have to be thrown into adjudication.”

Hoping to avoid a political confrontation jeopardizing the objectives of PRAAGS leadership, First

District County Supervisor Frank Mecham proposed a “summit meeting” between members of both

groups.

Lyons, Luft and Jan Seals attended the meeting in Mecham’s office and asked the PRAAGS

representatives to alter their emerging position calling for formation of a so-called “hybrid” water district

with power vested in the area’s largest landowners.

“We all knew that plan would not fly with our members. Not at all,” said Lyons.

Then, into this fermenting political brew stepped local vintner Cindy Steinbeck, filing a lawsuit

seeking to protect water rights under her 500-acre vineyard.

According to Lyons, “It was at that point that Luft decided that we needed to get ahead of this, that

we couldn’t let the lawsuit take over the discussion. It was that, and other reasons that we are yet unaware

of, that made her flip so quickly.”

The fledgling PRO Water Equity group was in the process of discussing selection of its board of

directors when members learned of Steinbeck’s lawsuit.

Luft called a meeting at her Templeton home of the “policy committee,” and she required that each

of the nine attendees deny any affiliation with Steinbeck, and attest that they had no part of Steinbeck’s

lawsuit.

One of the policy committee members, Sue Harvey, admitted to Luft that she had discussed the

lawsuit with Steinbeck. According to others present, Luft then demanded Harvey leave the meeting.

The remaining members were asked to consider cooperating with PRAAGS, even though a

majority disagreed its objectives, including the concept of the new district dominated by large

landowners.

The first vote of the policy committee on that question was five against the proposal, three for.

This irritated Luft, according to several of those present, and she then called for a vote involving only the

board members present at the time. This vote was three for cooperation, two against.

The two groups, PRAAGS and PRO Water Equity — with a total combined membership of about

one dozen — were thus joined at the hip, with access to deep pockets and influential backers.

After she subsequently said she couldn’t support the cooperative proposal, Lyons said she was

excluded from further meetings of PRO Water Equity.

“From that point on the other dissenters were totally shut out of discussions,” Lyons added.

Most of the members of the policy committee then resigned, among them Lyons, Harvey, Della

Barrett, Diane Jackson, and Maria Locha.

Luft said recently, “It was the wish of the board. It was a board decision, so that was what we went

with.”

The newly-formed partnership between of PRAAGS and PRO Water Equity has since bonded

behind support of proposed legislation to create just the kind of water district Luft, a short time ago, said

she vociferously opposed — an agency formed and controlled by the region’s largest landowners.

And it is the resulting perception of unified community support, according to Assemblyman

Katcho Achadijan, (R-San Luis Obispo), that prompted him to sponsor AB 2453, creating a hybrid water

district based on big acreage ownership.

He first said he would carry the bill only if county supervisors concurred, but eventually

introduced AB 2453 even after the board split 3-2 on backing the proposal. That bill barely passed its first

committee test May 7 after being scoured by the Legislative Counsel to determine its constitutionality. It

now heads for the Assembly floor, where a vote will take place before the end of this month.

Testimony by the bill’s promoters before the Assembly Local Government Committee keyed on

one particular unsubstantiated assertion — that Achadjian’s bill enjoys widespread support from the

thousands of residents living within the proposed district’s yet-to-be-determined boundaries.

Who is Sue Luft?

Luft, 53, partners with her husband Karl in managing a 10-acre Templeton vineyard, and in an

environmental engineering company the pair brought with them they moved from the Central Valley.

When she applied for the county’s Water Resources Advisory Committee in 2007, Luft described

herself as “semi-retired” and noted her membership in virtually every water related organization around:

president of North County Watch, and belonging to a variety of other groups, including the Central Coast

Vineyard Team; Central Coast Ag Network; Land Conservancy of San Luis Obispo County; Independent

Grape Growers of Paso Robles; Sierra Club; Nature Conservancy; Templeton Chamber of Commerce; and

Citizens Concerned For Templeton’s Future.

She also was appointed to, and remains on, the county’s Blue Ribbon Committee for the Paso

Robles Groundwater Management Plan.

But it is Luft’s associations in the Bakersfield area that has the resigned members of her PRO

Water Equity policy committee troubled.

Luft said her engineering company’s “many clients” have included “numerous” water districts, oil

companies and other entities — and the Kern Water Bank Authority. The Authority is steered by

Paramount Farms, one of the nation’s largest agricultural conglomerates, and in turn controls most of the

water supply for the Central Valley.

Paramount Farms is part of Roll Global, a holding company wholly owned by Beverly Hills

billionaire Stewart Resnick, who in turn recently purchased the 700-acre Hardham Ranch on the

southeastern outskirts of Paso Robles. That land, formerly dry-farmed, now hosts new grape plantings and

is heavily irrigated, and boasts two large above-ground lined reservoirs.

Luft said she “didn’t even know the Resnicks were going to buy it (the Hardham Ranch) until they

did. I don’t know why they bought that property. It’s crazy.”

Her work for the Kern Water Bank Authority consisted only of environmental assessments, she

said, adding that she found it “distressing” that onetime friends are viewing her professional affiliation

with a Resnick business with suspicion.

They have raised the possibility of a link between Resnick, Kern County Water Bank, water

transfers, and the yet-to-be-defined powers of the proposed Paso Robles water basin district.

“Those allegations are entirely false,” Luft said, her voice cracking. “No one can control the

[proposed] board as it is now described. I can’t believe it… those are people who used to be my friends.

I’ve known them for years. For them to suggest some kind of conspiracy is just bizarre. It’s been a lot of

work to reach a compromise,” she added, “but there are people who philosophically will never believe in

compromise.

“I cannot get across to these people that they have lost their sense of reality. They want to just

stand on the sidelines and yell. Their wish for a one-parcel, one-vote system is not fair. But the hybrid

board is fair to everyone.”

CalCoastNews Senior Correspondent Daniel Blackburn can be reached at blackburn.danielj@gmail.com

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