[env-trinity] Sacramento Bee LTE on tunnels "take" permit/Fitch Ratings Downgrades Westlands' Next Bond Sale/Reclamation charged with wasting $32 million on Klamath irrigators

[Dan Bacher]

Good Morning

Here are my latest three pieces. The first is today's LTE in the  
Sacramento Bee about the Department of Water Resources applying for an  
"incidental take" permit to kill endangered species. The second is a  
fishsniffer.com article about the Westands Water District bond ratings  
being downgraded by Fitch Ratings. The third is a daily kos piece on  
the Inspector General's report about Reclamation wasting $32 million  
on Klamath irrigator subsidies.
Thanks
Dan


http://www.sacbee.com/opinion/letters-to-the-editor/article109232707.html
State applies for tunnels permit

Re “Brown’s projects doomed?” (Capitol & California, Dan Walters, Oct.  
16): Gov. Jerry Brown’s legacy project, the controversial California  
WaterFix, is becoming increasingly unpopular among Californians, since  
it could be one of the most environmentally destructive public works  
projects in state history.

Brown and other state officials have constantly claimed the Delta  
tunnels project will “restore” the Delta ecosystem, but they revealed  
their real plans Oct. 7 when the administration applied for a permit  
to kill Sacramento River winter-run Chinook salmon, Central Valley  
steelhead, Delta smelt and other endangered and threatened species  
with the project.

The Department of Water Resources submitted an “incidental intake”  
application for the California Department of Fish and Wildlife in  
alleged “compliance” with the California Endangered Species Act in  
order to build and operate the tunnels.

The tunnels project won’t restore the Delta, but will only drive these  
struggling fish populations into extinction while costing the  
ratepayers and taxpayers nearly $16 billion.

DAN BACHER, SACRAMENTO



2. http://fishsniffer.com/index.php/2016/10/19/fitch-ratings-downgrades-westland-water-districts-next-bond-sale/


Photo of Hoopa Valley Tribe protest against Westlands Water District's  
attacks on the Trinity River by Dan Bacher.

Fitch Ratings Downgrades Westland Water District's Next Bond Sale

by Dan Bacher

It looks like the politically powerful Westlands Water District, one  
of the main backers of Governor Jerry Brown's Delta Tunnels and  
Congressional legislation to eviscerate protections for Sacramento  
River Chinook salmon and Delta smelt, is in more financial trouble.

Fitch Ratings downgraded the scheduled October 26 bond sale by  
Westlands from 'AA-' to 'A+'.

Among the issues facing Westlands Water District, Fitch cites  
shrinking irrigated acreage, previous financial obligations, and the  
potential for increased “leveraging” to pay for the Delta Tunnels,"  
according to Restore the Delta (RTD).

The downgrade reflects Fitch's view that district operations face  
increased pressure over time," reported Business Wire, a Berkshire  
Hathaway Company, on October 17. "Despite improvements to the  
district's debt profile following this transaction and potentially  
lower leveraging related to a drainage settlement with the U.S. than  
previous estimates, the prospect of ongoing escalation in district  
charges coupled with probable declines in irrigated acreage heightens  
concentration risk and affordability concern."

The statement includes a warning that overcommitting to the California  
WaterFix could push the rating even lower.

“Public reports now estimate the district's share of future costs of  
the California Fix at $2.5 billion… Significant further leverage by  
the district in support of the California Fix could apply downward  
pressure to the ratings," the Business Wire reported.

Barbara Barrigan-Parrilla, Restore the Delta executive director,  
quipped, “Bond ratings agencies are like Mom and Dad. Westlands is  
asking to raise the limit on their credit card again, despite  
questionable earnings potential. At some point Mom and Dad get out the  
scissors."

“Tunnel proponents cannot demonstrate how $17 billion, before cost  
overruns, will be raised to build the Delta Tunnels. The public does  
not have a completed and vetted finance plan for the project to  
examine. When asked who commits to paying the bill, all the water  
districts point to someone else," she said.

"What is clear is that ‘someone else’ includes federal taxpayers,  
California taxpayers, Southern California and Silicon Valley property  
taxpayers, and urban water ratepayers. These folks will end up  
subsidizing large agricultural interests like Westlands growers,"  
Barrigan-Parrilla concluded.

The downgrading follows a huge financial scandal that Westlands has  
been enmeshed in. The federal Securities and Exchange Commission (SEC)  
on March 10, 2016 charged Westlands, California’s largest agricultural  
water district, with “misleading investors about its financial  
condition as it issued a $77 million bond offering."

In addition to charging the district, the SEC also charged its general  
manager Thomas Birmingham and former assistant general manager Louie  
David Ciapponi with misleading investors about its financial condition.

“Birmingham jokingly referred to these transactions as ‘a little Enron  
accounting’ when describing them to the board of directors, which is  
comprised of Westlands customers,” the SEC reported.

The SEC said Westlands agreed to pay $125,000 to settle the charges,  
making it only the second municipal issuer to pay a financial penalty  
in an SEC enforcement action.

Birmingham agreed to pay a penalty of $50,000 and Ciapponi agreed to  
pay a penalty of $20,000 to settle the charges against them.

“The undisclosed accounting transactions, which a manager referred to  
as ‘a little Enron accounting,’ benefited customers but left investors  
in the dark about Westlands Water District’s true financial  
condition,” said Andrew J. Ceresney, Director of the SEC Enforcement  
Division. “Issuers must be truthful with investors and we will seek to  
deter such misconduct through sanctions, including penalties against  
municipal issuers in appropriate circumstances.”

For more information, go to: http://www.dailykos.com/story/2016/3/10/1499271/-Federal-SEC-Charges-Westlands-Water-District-for-Enron-Accounting



3. http://www.dailykos.com/stories/2016/10/16/1583352/-Klamath-Irrigators-Illegal-Piggy-Bank-Broken-Up


Photo of Iron Gate Dam on the Klamath River by Dan Bacher.

Inspector General charges Reclamation with "wasting" $32 million on  
Klamath irrigators

by Dan Bacher

Federal auditors have found that the U.S. Bureau of Reclamation (USBR)  
wasted $32 million intended for fish and wildlife and drought relief  
in the Klamath Basin on subsidies for irrigators.


This scandal takes place as the Yurok, Karuk and Hoopa Valley Tribes,  
recreational anglers, commercial fishing families and river and  
coastal communities are suffering from the big cultural and economic  
loss caused by low numbers of returning salmon on the Klamath River  
this year, the result of  decades of mismanagement by the state and  
federal governments.

The misspending is a revealed in a new audit report that confirms  
charges leveled last year by the Public Employees for Environmental  
Responsibility (PEER).

“We found that USBR did not have the legal authority to enter into the  
cooperative agreement, resulting in $32.2 million in wasted funds  
spent by KWAPA (Klamath Water and Power Agency )under the agreement,”  
wrote Mary L. Kendall, Deputy Inspector General for the  Office of  
Inspector General, in the audit report dated October 11, 2016.

The report found that the program had done little to restore  
endangered coho salmon, Lost River suckers and shortnose suckers, as  
it was intended to do.

Reclamation disputes the Inspector General’s findings. “Reclamation  
maintains that the reimbursement program has been an important tool in  
dealing with water issues in an over-allocated basin,”  Reclamation  
claimed in a written statement.

In a news release, PEER described the arrangement between Reclamation  
and KWAPA as the “Klamath Irrigators’ Illegal Piggy Bank.”

“While the payments have ended, Reclamation refuses to change its  
practices to prevent future abuse or to recoup moneys illegally  
spent,” according to PEER,    (www.peer.org/...)

The Klamath Water and Power Agency was a water and power authority in  
Klamath Falls, Oregon that received water from federal water projects  
in northern California and southern Oregon. KWAPA was forced to close  
its doors on March 31, 2006 due to “disorganization” and complaints  
filed by PEER. (ktvl.com/...)

The Klamath River watershed — and its precious salmon and steelhead  
populations — have been devastated by a series of droughts in recent  
years.  Over the past several years, Reclamation, under pressure from  
Tribes, fishermen and environmentalists, has released supplemental  
cold water flows from Trinity Reservoir into the Trinity River to stop  
a massive fish kill on the lower Klamath like the one that ravaged the  
river in September 2002. During that fish kill, the largest of its  
kind in U.S. history, an estimated 35,000 to 68,000 salmon perished.

PEER said the IG report details how Reclamation diverted $32 million  
in federal funds intended for drought contingency planning and helping  
struggling fish populations:

In a “waste of funds” wholly lacking in any legal authority;
Paying for KWAPA salaries, fringe benefits, rent, travel and other  
expenses whose benefits flowed “primarily to irrigator contractors  
rather than fish and wildlife,” including $4.2 million for uses that  
could not be supported with documentation or were outright  
“unallowable”; and
By modifying the KWAPA contract “19 times to expand the scope of  
activities” and extend the original payment program from 2008 through  
September 30, 2015.
The Bureau  rejects these findings — so the IG is “kicking this intra- 
agency dispute upstairs” in Interior to  the Assistant Secretary for  
Policy, Management and Budget for resolution, according to PEER.

“Basically, the Bureau of Reclamation became an illicit ATM for  
favored special interests,” stated PEER Senior Counsel Paula  
Dinerstein. “To add injury to insult, these improper subsidies were  
used to aggravate environmental damage by draining shrinking  
groundwater supplies to benefit irrigators.”

Dinerstein emphasized that these illegal payments would be continuing  
if Reclamation employees had not blown the whistle.

The whistleblower complaint from two Reclamation biologists filed  
through PEER prodded the U.S. Office of Special Counsel to order  
Secretary of Interior Sally Jewell to address the illegal diversion of  
funds and how her agency would remedy identified violations.  “That  
answer to the Special Counsel was due back in August of 2015 but  
Reclamation, on the Secretary’s behalf, has obtained extensions  
totaling 15 months,” said Dinerstein.

“Reclamation is circling its wagons to defend the potentially criminal  
conduct by its own managers,”said Dinerstein, pointing to the Anti- 
Deficiency Act that forbids expenditures not authorized by any  
appropriation and is enforced by criminal fines and/or imprisonment  
for up to two years.  “We will keep pressing for some accountability  
to taxpayers from Reclamation’s multi-year, multi-million dollar  
illegal money-laundering operation.”

Jim McCarthy, Communications Director & Southern Oregon Program  
Manager for WaterWatch, pointed out that not only was this program  
apparently illegal and wasted millions,but the resulting lack of water  
on the Klamath’s wildlife refuges, which the program in question was  
created to provide, “actually killed huge numbers of wildlife in  
recent years.”

In fact, seventeen conservation groups sent a letter to Interior  
Secretary Jewell on October 13 asking for emergency water deliveries  
for the Klamath refuges to reduce the risk of yet another waterfowl  
die-off, said McCarthy.

The letter states, “As you are aware, since 2012, tens of thousands of  
birds on these refuges have died for lack of water resulting from  
allocation decisions made within the Department of the Interior. When  
few wetland acres are available on these refuges due to lack of water,  
large numbers of waterfowl pack together during migration periods,  
leading to lethal disease outbreaks. Refuge staff estimated that some  
20,000 birds perished this way in 2014. Similar conditions on these  
refuges sparked massive waterfowl die-offs in 2012 and 2013."

Mike Orcutt, Fisheries Director of the Hoopa Valley Tribe,  said the  
water bank created under the agreement between Reclamation and KWAPA  
was supposed to improve water quality and the fishery in the Klamath  
Basin, but that didn’t happen, according to the IG report.

“Looking to the future, the Tribe receives their money for fish  
restoration from the same budget and the budget has been flatlined. We  
get the aftermath of that flatlined budget,” he said.

Another potential impact is that this scandal could impact the trust  
in the Bureau by Congress and make it harder for similar future  
agreements to be funded.

“You’re going to be hard-pressed to get the money if you don’t use the  
funds for what you were supposed to,” Orcutt told the Eureka Times- 
Standard. (www.times-standard.com/...)

On July 29, the Hoopa Valley Tribe filed a lawsuit against the federal  
government for violations of the Endangered Species Act (ESA) over  
management actions that have imperiled Coho salmon on the Klamath River.

The Tribe filed the litigation against the Bureau of Reclamation, the  
same agency involved in the wasting of $32 million, and the National  
Marine Fisheries Service in the U.S. District Court for the Northern  
District of California, Oakland Division, to protect the Coho salmon,  
listed as an endangered species under the ESA. The Trinity River, the  
largest tributary of the Klamath, runs through the Hoopa Valley Indian  
Reservation.

The Hoopa lawsuit is expected to be followed by several other  
lawsuits, including litigation by the Yurok Tribe, Karuk Tribe and  
Pacific Coast Federation of Fishermen’s Associations (PCFFA),  
Institute for Fisheries Resources, Klamath Riverkeeper and  
Earthjustice. (www.dailykos.com/...)

Hopefully, this illegal spending of $32 million in federal funds to  
further subsidize already heavily-subsidized agribusiness interests  
will result in criminal convictions if the allegations by PEER are  
proven true.

This is not the first time that state and government officials have  
diverted millions of dollars designed to restore fish and wildlife for  
other purposes. For example, the Department of Interior’s Inspector  
General earlier this year opened an investigation into the possible  
illegal use of millions of dollars by the California Department of  
Water Resources (DWR) in preparing the Environmental Impact Statement  
(EIS) for Governor Jerry Brown’s controversial Delta Tunnels Plan. (www.counterpunch.org/...)

The investigation resulted from a complaint PEER filed on the behalf  
of a Bureau of Reclamation employee on February 19, 2016.  The  
complaint, made public in a statement from PEER on April 11, details  
how a funding agreement with DWR is “illegally siphoning off funds  
that are supposed to benefit fish and wildlife to a project that will  
principally benefit irrigators” under the California Water Fix, the  
newest name for the Delta Tunnels plan.

The Delta Tunnels project is deeply connected to the Klamath River  
watershed. The two 35-mile long tunnels under the Delta would hasten  
the extinction of Central Valley steelhead, Sacramento River winter- 
run Chinook salmon, Delta and longfin smelt, green sturgeon and other  
fish species. The project would also imperil the salmon and steelhead  
populations on the Trinity and Klamath rivers, a fishery that for  
thousands of years has played an integral part in the culture,  
religion and food supply of the Yurok, Karuk and Hoopa Valley Tribes.

Read the IG audit report

Look at still pending probe from the Office of Special Counsel



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