For Clients & Friends of The Gualco Group, Inc.
IN THIS ISSUE – “…the fish are the senior right holders of the water. Remember that. Not humans.”
Karuk tribal elder on water rights
- Newsom’s Road Trip – Governor Breaks Tradition with Traveling State of the State Speech
- Legislature Dives Into Water Rights Inquiry: “Not An Easy Conversation”
- Open the Floodgates – Serial Atmospheric Rivers Challenge California’s Complex Water Management
- Recharging Groundwater Essential for Farmers…and Food
- Leading California Bank Teeters; Tech Start-Ups Panic
Capital News & Notes (CN&N) harvests California policy, legislative and regulatory insights from dozens of media and official sources for the past week. Please feel free to forward this unique client service.
FOR THE WEEK ENDING MAR. 10, 2023
Newsom’s Road Trip – Governor Breaks Tradition with Traveling State of the State Speech
Politico’s California Playbook
Breaking with decades of tradition, Newsom will forgo a formal State of the State address in Sacramento and instead embark on a multi-day tour of California next week to unveil his policy agenda for the year, according to his office.
Rather than the usual remarks before elected leaders at the Capitol, Newsom plans to subsequently submit to the Legislature a letter summarizing his announcements from the tour, which is scheduled for March 16-19. The governor’s office declined to provide a detailed itinerary.
Anthony York, Newsom’s senior advisor for communications and strategy, in a statement: “Building on his inaugural address and January budget, the Governor looks forward to fulfilling his constitutional obligation to update the Legislature on the state of the state — and joining lawmakers across California to outline transformative policy proposals that will strengthen our communities.”
The State of the State address developed from a requirement in the California Constitution that “the Governor shall report to the Legislature each calendar year on the condition of the State and may make recommendations.”
For a long time, this was accomplished through a written report, according to Alex Vassar, communications manager for the California State Library.
Then in the 1940s, news reports indicate that then-Gov. Earl Warren began accompanying the report with a speech.
Depending on the governor, the State of the State address has been a high-profile platform to launch major new endeavors or a bothersome afterthought. Sometimes both.
Newsom’s first two State of the State addresses, in the Assembly chamber, featured pronouncements about the high-speed rail and homelessness. Then he went even bigger, delivering slickly produced remarks from Dodger Stadium that served as the kickoff to his recall defense campaign. Last year, he spoke for an uncharacteristically brief 18 minutes in the auditorium of the state natural resources agency headquarters.
Former Gov. Gray Davis praised Newsom for taking his message out of the Capitol and directly to Californians. With technology changing how citizens engage with their government and people less likely to tune in for a speech, Davis added, the tour gives Newsom a better opportunity to connect with his constituents — as long as he listens as much as he speaks.
Davis: “Bringing the dialogue to communities up and down the state is wise. It engages the communities.”
Legislature Dives Into Water Rights Inquiry: “Not An Easy Conversation”
LA Times
It’s an arcane system of water law that dates back to the birth of California — an era when 49ers used sluice boxes and water cannons to scour gold from Sierra Nevada foothills and when the state government promoted the extermination of Native people to make way for white settlers.
Today, this antiquated system of water rights still governs the use of the state’s supplies, but it is now drawing scrutiny like never before.
In the face of global warming and worsening cycles of drought, a growing number of water experts, lawmakers, environmental groups and tribes say the time has finally come for change. Some are pushing for a variety of reforms, while others are calling for the outright dismantling of California’s contentious water rights system.
Calls for reform were heightened recently when the environmental group Restore the Delta released an analysis that concluded that the people who make decisions about California’s water are overwhelmingly white and male.
“The whole water rights system sits on a foundation of racism and violence,” said Max Gomberg, a former State Water Resources Control Board staffer who has sharply criticized the Newsom administration and now works with the environmental group. “It needs to be abolished.”
The report was released as state lawmakers held a hearing on several reform proposals that would address longstanding problems within the water rights system.
“This is not an easy conversation, but I think it’s long overdue,” said Assemblymember Rebecca Bauer-Kahan (D-Orinda), who chairs the Water, Parks and Wildlife Committee.
Bauer-Kahan said there are many signs the existing system is “not functioning well and equitably,” including the “inability to halt illegal diversions.”
During the hearing, experts such as Richard Frank, a UC Davis law professor, argued for a “more nimble system,” while Ellen Hanak, director of water policy for the Public Policy Institute of California, said the changing climate is stressing the water rights system.
“We’re confronting 21st century climate change, drought and water supply problems with a 20th century system of California water infrastructure and a 19th century system of water rights, and that’s a problem,” said Frank, director of the California Environmental Law and Policy Center.
Hanak and other researchers urged the Legislature to clarify that the State Water Board has the authority to enforce and curtail all water rights, including the oldest “senior” water rights, called riparian rights and pre-1914 rights. They also called for enabling the board to respond more quickly to dry conditions by relaxing requirements that limit when the agency can curtail diversions from rivers and streams.
The researchers recommended renegotiating senior water users’ contracts for supplies from the Central Valley Project and the State Water Project, California’s two main systems that transport water from the Sacramento-San Joaquin River Delta. They said the current contracts promise larger water deliveries than the delta can support in dry years.
Felicia Marcus, a researcher at Stanford University and former chair of the State Water Board, warned that “the crises ahead will make our crises today look like a picnic. So we need to invest in a system that will work for everyone.”
For example, she noted, senior water rights holders do not have to obtain a permit and do not pay any fees to administer the system, while others with more junior rights are required to do both. She said enforcement is complex and unwieldy, and the state needs a system that is “more transparent and implementable.”
Bauer-Kahan has introduced a bill that she says would help the State Water Board effectively enforce water rights and curb illegal water diversions. The legislation, AB 460, would authorize the board to issue larger fines of up to $10,000 per day for violations, plus additional amounts for water illegally diverted.
Other recently introduced bills would expand the State Water Board’s enforcement authority or its authority to investigate whether water is being legally diverted under a valid right.
Environmental advocates and tribal leaders have supported the proposals but are also calling for deeper changes, citing entrenched inequities.
Recently, two Department of Water Resources employees used software that analyzes people’s surnames in an attempt to determine their race and applied it to state water records in an analysis titled “Who makes decisions about California’s water?”
They analyzed the names of about 1,500 directors of local water agencies, and estimated — for those whose names could be classified — that approximately 86% were white and 78% were male. They found lack of diversity was especially pronounced for agricultural water districts, estimating that 92% of the directors are white and 92% are male.
They also analyzed state water rights data. Although the rights to much of the state’s water are controlled by institutions, such as agricultural irrigation districts and urban water districts, an estimated 1% to 2% of water diversions are listed under the names of individuals. Of nearly 14,000 water rights holders, an estimated 91% are probably white, they said.
They posted the analysis and data online on a state server, and the information was circulated on LinkedIn. The Department of Water Resources later removed the data.
Margaret Mohr, a DWR spokesperson, said the department removed the demographic data on water rights and local water agencies “because it was analyzed using predictive racial and gender modeling that can misidentify people and the data included a collection of personal information that should not have been posted publicly in that manner.”
“DWR is working to develop and determine a more appropriate method of collecting and reporting equity data as part of the 2023 update to the California Water Plan,” Mohr said in an email.
Barbara Barrigan-Parrilla, executive director of Restore the Delta, said the agency’s decision to suppress the analysis was alarming.
“California water rights were created by taking away land and water from tribes. And as the water rights system developed, you had a parallel set of laws, customs and practices in California that redlined people of color out of land ownership near water,” Barrigan-Parrilla said. “It is just a continuation of the discriminatory practices that began in the creation of a system that was racist, and now it’s institutionalized discrimination that continues.”
During the 1800s, as white settlers staked their water claims, they sometimes simply nailed a notice to a tree. California still recognizes water rights based on those old claims, as well as riparian rights based on land ownership next to rivers and streams. Rights to surface water under the state’s prior-appropriation system follow a “first-in-time, first-in-right” order. And rights since 1914 fall under a state permit process.
Groundwater remained unregulated until 2014, when the state passed the Sustainable Groundwater Management Act, which is intended to combat widespread problems of overpumping.
Restore the Delta is part of a coalition of tribes and environmental groups that in December filed a federal civil rights complaint against the State Water Board, alleging discriminatory water management practices. They have called for overhauling the rights system, pointing to a legacy of racism that long prevented tribes and people of color from securing water rights.
Malissa Tayaba, vice chair of the Shingle Springs Band of Miwok Indians, said the findings of the data analysis reflect California’s history of removing tribes from their homelands through colonization and state-supported genocide.
Tayaba said that although the current water rights system “excluded us and continues to do so to this day, we know that tribes have inherent and sovereign water rights that we will continue to fight for.”
During last week’s legislative hearing, some argued that reexamining the system must address the effects of systemic racism.
“The system is deeply flawed in addressing equity. We need to examine the degree to which water rights are linked with wealth, power and privilege,” said Elizabeth Salomone, manager of the Russian River Flood Control and Water Conservation Improvement District.
Others discussed the difficulty of enforcing rules under such an antiquated system.
Last summer, one agricultural irrigation district defied drought regulations and drained water from the Shasta River, violating flow requirements intended to protect salmon. The State Water Board fined the Shasta River Water Assn. the maximum amount for the violation: $4,000.
“The maximum total penalty that the state board could impose for these violations, these intentional violations of their curtailment regulations, was clearly not a deterrent,” said Yvonne West, director of the board’s office of enforcement. “It demonstrated a lot of the enforcement challenges that we face.”
The illegal taking of water from the Shasta River was devastating for struggling fish species in the Klamath River and its tributaries, where ash-filled runoff from the McKinney fire had just recently killed tens of thousands of fish, said Arron “Troy” Hockaday, a Karuk Tribe council member.
“I cried. I’m so emotional right now,” Hockaday said. “Seeing what they did is devastating. It’s our future. It’s our future for our children, our culture, our way of life.”
He said the Karuk Tribe supports the measures to strengthen enforcement in Bauer-Kahan’s bill.
“We’re not against the farmers,” Hockaday said. “But at the same time, the fish are the senior right holders of the water. Remember that. Not humans. The fish are the senior right holders.”
Open the Floodgates – Serial Atmospheric Rivers Challenge California’s Complex Water Management
CalMatters
Two winters’ worth of snow has already fallen in the Sierra Nevada since Christmas, pulling California from the depths of extreme drought into one of its wettest winters in memory.
But as a series of tropical storms slams the state, that bounty has become a flood risk as warm rains fall on the state’s record snowpack, causing rapid melting and jeopardizing Central Valley towns still soggy from January’s deluges.
The expected surge of mountain runoff forced state officials today to open wider the “floodgates” of Lake Oroville and other large reservoirs that store water for millions of Southern Californians and Central Valley farms. Releasing the water will make room for the storm’s water and melted snow, prevent the reservoirs from flooding local communities — and send more water downstream, into San Francisco Bay.
The increased flows in the Sacramento-San Joaquin Delta could help endangered salmon migrate to the ocean.
So what’s the downside? These same storms are prematurely melting a deep and valuable snowpack that ideally would last later into the spring and summer, when farmers and cities need water the most.
The storms have created a tricky situation for officials who manage state and federal reservoirs in California, since they have to juggle the risk of flooding Central Valley communities with the risk of letting too much water go from reservoirs. They must strike a balance between holding as much water in storage, as long as they can, while maintaining room in reservoirs for more water later in the season.
“Water management in California is complicated, and it’s made even more complex during these challenging climate conditions where we see swings between very, very dry, very, very wet, back to dry. We’re now back into wet,” said Karla Nemeth, director of the Department of Water Resources.
Rivers in the San Joaquin Valley are forecast to flood today or Saturday. Eleven locations are expected to reach the flood stage, although no “danger stage” flooding is anticipated, according to Jeremy Arrich, deputy director of the Division of Flood Management with the Department of Water Resources.
To make room for more water, state and federal officials who manage California’s major dams and reservoirs are releasing water. Some will flow into the ocean — which aggravates many water managers, Central Valley legislators and growers, who often say freshwater that reaches the bay or ocean is wasted. However, efforts are underway to divert much of the released water into depleted groundwater storage basins.
On Wednesday, the Department of Water Resources increased outflow of water from Oroville from about 1,000 cubic feet per second to 3,500 cubic feet per second. By today, total releases could be as high as 15,000 cubic feet per second, according to Ted Craddock, deputy director of the State Water Project.
Oroville is now more than 75% full, containing 2.7 million acre-feet of water — up from less than one million in the beginning of December. In spite of releases, the reservoir’s level will keep rising. Craddock said inflow in the next five days could hit 70,000 cubic feet per second. That’s about half a million gallons of water per second.
Satellite images show how January storms boosted water levels in parched Lake Oroville, one of the state’s largest reservoirs. State officials released water from the reservoir this week in anticipation of another major storm. Photos via NASA Earth Observatory
In 2017 Oroville’s levels reached so high that the overflow water damaged its spillway. An emergency spillway had to be used, eroding a hillside and triggering evacuation of about 200,000 people in nearby communities.
The U.S. Bureau of Reclamation announced a similar operational move for Millerton Lake, the reservoir behind Friant Dam on the San Joaquin River, which supplies water to growers throughout the Central Valley.
The two-day rainfall totals will be “quite astounding” and “will lead to some really significant runoff,” said State Climatologist Michael Anderson. More storms are expected next week and later in March.
Today’s storm is creating what watershed scientists and weather watchers call a “rain on snow” event. Earlier this winter, freezing elevations hovered as low as 3,000 feet, meaning precipitation above that fell as snow.
That has changed, Anderson said. Freezing levels have risen to as high as 7,000 feet in the southern and central Sierra Nevada, where the bulk of the snowpack has accumulated. A National Weather Service forecast shows freezing elevations even higher, at 9,000 feet, and warned that “snow will melt easily below 5,000 feet,” since it is already approaching the melting point of 32 degrees Fahrenheit.
State officials say the premature snowmelt from this storm likely won’t have much effect on supplies this spring and summer.
“This winter, there has been an accumulation of snow at lower to mid-level elevations, which will experience melt during this storm and will generate runoff into foothill and valley communities,” said David Rizzardo, manager of the state water agency’s hydrology section.
“However, at higher elevations, where the vast majority of the snowpack is, we will not experience significant melt. Even with higher snow levels above 8,000 feet in these storms, we still anticipate seeing additional snow accumulation at the higher elevations that will add to our snowpack totals, especially in the Southern Sierra.”
John Abatzoglou, a UC Merced professor of climatology, said deep, soft snow has the physical capacity to absorb a great deal of rain. The snow may even freeze the rain, rather than vice-versa, effectively increasing the snowpack volume, at least for a while.
“As you add liquid to the snowpack, it gets denser, it gets warm, and it gets more apt to melt when the next storm comes,” he said, noting that more atmospheric river events are coming next week.
While the latest storms flood river valleys, state regulators have taken action to capture as much stormwater as possible before it flows into the ocean and use it to recharge groundwater basins.
On Wednesday, the State Water Resources Control Board approved a petition from the Bureau of Reclamation to divert 600,000 acre-feet of San Joaquin Valley flood waters into wildlife refuges and groundwater recharge basins. Diversions can begin on March 15 and continue until July.
“Given the time it takes for water to reach the downstream point of diversion at Mendota Dam, the approval period will allow for floodwater capture following storms expected this weekend,” the water board explained in a news release.
The action is intended in part to help meet Gov. Gavin Newsom’s goal of increasing groundwater storage by over 500,000 acre-feet per year, spelled out in his Water Supply Strategy released last summer.
But environmental groups protested the water board’s action.
Greg Reis, a hydrologist with The Bay Institute, said it will allow the bureau to divert all of the San Joaquin River except for 300 cubic feet per second — what he calls “a very, very small” amount of water. Floodwaters, he said, are important for ecosystem function and survival of fish, including threatened spring-run Chinook salmon.
He compared floodwaters in a river to a person’s increased pulse when they exercise.
“If you don’t get your heart rate up when you exercise, you don’t get the health benefits,” he said. “Same thing for a river. You’ve got to get the flows up, and the 300 cubic feet per second is certainly not adequate for a river like the San Joaquin.”
Recharging Groundwater Essential for Farmers…and Food
Sacramento Bee
Jennifer Peters signed on to have her Madera ranch become the site of an experiment in replenishing groundwater in California’s Central Valley. Though this pilot program led by a subdivision of the United States Department of Agriculture is far from the first effort to address the depletion of groundwater stores, it offers farmers like Peters hope for the future of agriculture in the region. “If the generation that’s running the ranch now, my son, doesn’t buy into this and start improving the water quality, we’re all going to be in a world of hurt by the time the sixth generation wants to come up,” Peters said. “There’ll be no farming.” Peters is a fourth-generation farmer who operates Markarian Family LP with her father and son. They cultivate wine grapes and almonds, crops that require irrigation to grow in the Central Valley.
Their farm is among more than 35,000 in the nation’s fruit-and-nut hub that has suffered through a megadrought. The resulting conditions have required Peters and many others to pay a premium for water and live with the looming threat that one day, not that far off, their fields will be fallowed.
Many have seen it already. A report by UC Merced estimated that 696,000 acres of Central Valley farmland idled between 2019 and 2022. Those years coincided with severe drought in the region. The search for water has led growers to dig deep into underground water supplies. Many aquifers, geological structures that hold groundwater, are so depleted in the Central Valley that they are considered at an “all time low” or “much below normal,” according to California’s Department of Water Resources’ live monitoring system. Scientists found last year, before the past few months’ extreme weather, that groundwater depletion in the Central Valley had been accelerating. In parts of the Central Valley, land has been sinking about a foot a year because of diminishing water, which also reduces the aquifer’s storage capacity. The depletion of water is a daunting problem that lawmakers and governmental agencies have tried to address for years. What is different about the project being piloted on Peters’ land under the so-called Environmental Quality Incentives Program is that a federal agency is involved directly with local landowners rather than funding aquifer-recharge projects administered primarily by state or local irrigation districts.
This pilot lets the Natural Resources Conservation Service (NRCS) be surgical in the way that groundwater-recharge projects get built and tested, and encourages private farmers to get involved by covering a significant portion of the construction costs. “It’s nothing new,” said Greg Norris, the state conservation engineer for NRCS. “But what this is doing is we’re evaluating how we can do it through our programs.”
This winter has brought significant rain and snow to northern California, which has boosted hope that the region may see some relief from the drought. Despite recent storms, major reservoirs that collect the water sent down to the Central Valley had below-average levels.
State and local agencies have long worked to mitigate the over-pumping of California aquifers. In 2014, then-Gov. Jerry Brown signed the Sustainable Groundwater Management Act to ensure local agencies oversee and reduce overdrafting groundwater, primarily from basins across the Central Valley, with the goal of stabilizing levels in most areas by 2040. While this effort has put into focus the need to stabilize groundwater supplies, the state has struggled to deliver results. State rules on who can use what water and balancing environmental concerns often leave Central Valley farmers feeling left out, according to previous reporting by The Sacramento Bee. Local, state and federal officials from the community on both sides of the aisle continually lobby to get and keep more water.
Peters, who is a member of the local farm bureau board, said it is important to come together — and pitch in where they can. She dedicated a sandy stretch of land to the NRCS project in hopes of recharging the aquifer below for herself and her neighbors. “We have to start collecting water, even if it’s in smaller basins throughout the state,” she said. “We have to start doing it.”
California has been artificially recharging groundwater since the turn of the 20th century. This recharging is often done by injecting water into wells that are connected to the aquifers or adding surface water to an area that is absorbed through the ground. The projects that NRCS is funding in its pilot program, Norris said, involve adding surface water to the Central Valley. The participating farmers will flood their fields and build trenches that can hold water until it is absorbed into the ground; they are referred to as on-farm recharge and basins respectively.
One challenge of replenishing aquifers through adding surface water is tracking its complex movement through the ground, said Wendy Rash, a NRCS water quality specialist. Another is the risk of pesticides and other fertilizers being absorbed and, therefore, contaminating clean water. “We’re also working with farmers, looking at their nutrient and pest management practices, to try to do some risk control,” Rash said, “because as we’re putting water back into the aquifer, we don’t want to be degrading the quality of that water.” Dave Krietemeyer, the lead NRCS engineer for the Central Valley, said that the agency has more than a dozen of these pilot projects going on around Madera County. NRCS is also working on a few projects in Tulare County and is expanding to Fresno.
https://www.sacbee.com/news/politics-government/capitol-alert/article272639257.html#storylink=cpy
Leading California Bank Teeters; Tech Start-Ups Panic
NY Times
Panic swept through the start-up industry on Thursday as investors at some venture capital firms urged portfolio companies to move their money from Silicon Valley Bank over concerns about the tech industry stalwart’s financial stability.
Silicon Valley Bank’s spiral was set off by its surprise announcement Wednesday that it would take extraordinary and immediate steps to shore up its finances amid a dimming economic environment for the start-ups and other technology companies that dominate its client base. The bank disclosed that it had sold off $21 billion of its most liquid, or easily tradable, investments; borrowed $15 billion; and organized an emergency sale of its stock to raise cash.
Banks are loath to take any of those steps — let alone all three at once — and when they do, the moves are typically carefully choreographed. Silicon Valley Bank’s stock price plummeted 60 percent on Thursday as investors rushed to sell shares after the announcement.
A bank spokeswoman did not respond to a request for comment.
If Silicon Valley Bank failed, it would be the second-largest such unraveling in U.S. history, smaller only than the run on Washington Mutual during the 2008 financial crisis, when that bank had roughly $300 billion in customer deposits. At the end of last year, Silicon Valley Bank reported $212 billion in customer assets.
Founded in 1983, Silicon Valley Bank is small compared with Wall Street banks but has an outsize footprint among tech start-ups. It calls itself the “financial partner of the innovation economy.” In addition to its other banking services for start-ups, it is known for providing them loans and private wealth management to tech workers.
Mark Suster, an investor at Upfront Ventures, wrote that he believed the only financial risk to Silicon Valley Bank’s customers was a panic that led to a run on the bank.
“Think about how many companies would be wiped out overnight if SVB went bankrupt,” he said in an interview. “This would be catastrophic, and people shouldn’t be making jokes of it.”
Villi Iltchev, an investor at Two Sigma Ventures, urged the industry to “support” the bank by not withdrawing money. Roseanne Wincek, an investor at Renegade Partners, wrote that a bank run caused merely by panic would be a “self own” for the industry.
“There are two things in life that only exist if you believe in them: God and bank runs,” said Anshu Sharma, chief executive of Skyflow, a data privacy start-up. He is also an investor in 65 other start-ups, and he urged his portfolio companies to sit tight.
Sunny Juneja, founder of Canopy Analytics, a Bay Area start-up focused on real estate technology, said that he had tried to move his start-up’s cash — a few million dollars — out of Silicon Valley Bank after his advisers and investors told him to do so on Thursday, but that the bank’s online portal was down. He spent the afternoon trying to set up an account at another bank.
MORE: