Water Archives · Dan Nelson second interview

Title

eng Dan Nelson second interview

Description

eng Former executive director of the Delta Mendota San Luis Joint Powers Authority operating the Delta Mendota Canal and the San Luis Reservoir. Talks a lot about changes in water allocations from the Central Valley Project for westside farmers.

Creator

eng Nelson, Dan

eng Holyoke, Thomas

Relation

eng Water Archive Oral Histories

Coverage

eng California State University, Fresno

Date

eng 6/30/2015

Format

eng Microsoft Word document, 21 pages

Identifier

eng SCMS_waoh_00005

extracted text

>> Thomas Holyoke: Okay, well, today we are joined by Dan Nelson, who's
back for a second interview. And to start off by talking about the
development of water on the west side of the valley, and I guess, post,
maybe first we should talk about what counts as the west side of the
valley?
>> Dan Nelson: I think we consider the west side of the valley now as
being from Tracy to the north, down to Kettleman City to the south, and
generally anything on the west side of the San Joaquin Kings River
overflow to the San Joaquin, and—and that would be considered the west
side. As far as water districts go, that would mean West lands to the
south, all the way up to Byron Bethany, Banta Carbona and those districts
up to the north.
>> Thomas Holyoke: And talk a little bit then about the development of
water and water systems out on the west side.
>> Dan Nelson: Yeah, actually it goes - actually it's a very interesting
history, and it goes back to the 1870's, and Henry Miller and Miller and
Lux Organization, there—they were part of an effort to build canals on
the west side of the valley, and it was actually initiated by some
entrepreneurs out of San Francisco. Isaac Freedlander [assumed spelling]
was a part of that, and they had this vision of sort of a Panama Canal,
going up and down the west side of the valley, and initially, they had
anticipated it would be mostly for transportation and the movement of
goods up and down the west side of the valley. The west side of the
valley was just beginning to see immigrants come into it, and the
development, Miller and Lux bought their first piece in 1863 as an
example, and they're immigrants, the first immigrants in the late 1850's,
and 1860's, so people started moving into the west side of the valley,
and really the only conduit that they had was the steam ships up and down
the San Joaquin River. And the steam ships - the San Joaquin River was so
volatile in its flow, it was either flooding or close to being dry, that
the transportation up and down with steam ships was unpredictable, and so
they were looking for, you know, more predictability in the
transportation, so they thought this canal system would do that. They—the
San Francisco entrepreneurs and investors looked at a spot where the
Fresno Slough meets the San Joaquin River as being a good diversion
point, and so they started dredging a canal. The canal had the gothrough, however, Henry Miller and Miller and Lux land, and essentially
they owned most of the land and had developed a rights to most of the
land on the west side of the valley and so they needed to go through the
Miller and Lux land and therefore Henry Miller had the ability to be able
to sort of leverage that into part ownership of the business. It's kind
of interesting because we think of Henry Miller as being sort of the
father of irrigation on the west side, and he certainly had most to do
than anyone else about the development of water, however initially he was

sort of, not apprehensive, but he didn't fully appreciate what the
company was undertaking and the value of that. But he was a minority,
owner of the San Joaquin and Kings River Irrigation Company, and—and—he—
he— the canal was built from the Mendota area to Los Banos Creek, and
essentially ran the contours - and it was about a foot per mile was the
contours, it was built with Fresno scrapers, and mule and horse drawn
Fresno scrapers, and they finished that in 1871, and the first water that
went down it, ironically was sort of actually a flood flows from Panoche
Creek, that ultimately they were able to start converting San Joaquin
River water. Henry Miller saw the value of it immediately. He saw
pastures on the upper plains that, you know, that—that—that wouldn't
normally, you know, be irrigated, or they weren't irrigated, but wouldn't
normally have any value as pasture. Most of his land was along the trough
of the San Joaquin River, that— that was, you know, pasture land pretty
much throughout the year. Well, with an irrigation, he was able to move
another 40-50,000 acres of pasture up on the planes. And so he
immediately saw the value. At the same time, it was obvious that it
wasn't going to work as transportation. They tried it for two or three
years to move goods up and down the canal system, but the stockholders
became disgruntled. They had continuous capital outflow, and really not a
lot of income, and so Henry Miller was able to pick up a lot of the
stock, you know, on dime – for—for—for much less, dimes on the dollar, of
what the original investment was. And by 1875, he was the major
stockholder. At that time, he immediately, pretty much replaced all of
the management of the company and put his own people in, and pretty much
took over control and management of—of the system, and from that he
developed the canal system, that served all of his lands. Pretty much
from the Mendota area up to Los Banos, and developed those in the 1870's
and 1880's, and then they expanded another canal, even further up toward
the foothills, and they called that the outside canal. And they also
extended the original main canal that ended at Las Banos Creek. In the
mid 1890's, they extended that to as far north as Patterson and Newman
area, and extended irrigation up to that region as well; and so he was Henry Miller was very - had –had the foresight of expanding the
irrigation from the San Joaquin River up on the plains of—of the west
side of the valley, and developed all of the water rights on the west
side of the valley as—as well. And that served him and generations behind
him very well. We still have heirs of Henry Miller farming on the west
side of the valley today and doing very well on the same land that he
perfected the water rights going back, in the, over 140 years ago, and >> Thomas Holyoke: Does any part of that canal structure still exist?
>> Dan Nelson: You know, it—it does. In fact, the two canals that he
built, the one in the 1870's, and the other one in the 1890's, are both
being used. They're identical canals. They're being used at what he
dredged going back in the 1870's, and mostly Chinese labor. Initially the

slopes, apparently, weren't correct, and I can't tell you what the slopes
were and what they improved them to, but after they initially dug the
channels in 1870's, by the mid 18—by the mid 1870's, they realized that
the slopes weren't correct and they were washing out, so they actually
hired 300 Chinese laborers to go in and manually change the slopes to
make them more gradual. So there was a lot of Chinese labor involved in
the dredging of those canals, as well as initially the Fresno scrapers
and the horse drawn teams. So that canal system, and plumbing system,
served the west side really well. And in the 1930's, the state was
looking to implement a program that had actually been contemplated going
way back in the 1880's, 1890's, and I think the initial drafts of the
program were from the 18 - 1890's, but it was a much more grandiose
project, and it essentially looked at irrigating the east side as well as
bringing water down from Northern California and expanding the use on the
west side as well. And this was the Central Valley Project, which was
originally a state project, but during the depression, the state couldn't
fund it and so the federal government stepped in and it became a federal
project, and essentially the notion was to build reservoirs in the
northern part of the state where we - where most of the precipitation
lies, and in the sierras, and to be able to build a canal structure to
move that water from where it is to where we wanted, where most of the
use and demand was. And so that was the development of the Central Valley
Project. One—One of the big hurdles, of course, was in the effort to
irrigate the east side, they needed San Joaquin River water to do that,
and of course, Miller and Lux had all the water rights for the San
Joaquin River, so the federal government went to Miller and Lux in the
late '30's, and essentially said look, if you let us put a reservoir up
on the San Joaquin River and take your water and deliver it to the east
side, in exchange for that, we will build a reservoir in Northern
California, Shasta, and strategically release that water down the
Sacramento River, and build a pumping plant from - in the delta, and
we'll build that— a canal form that pumping plant from the delta, to the
location on the San Joaquin River near Mendota where you divert your
water, and we'll replace your San Joaquin River water and exchange it for
northern California water as part of this project. And so that was the
initiation of what is now known as the exchange contracts. And
essentially that was Miller and Lux exchanging their water rights on the
San Joaquin River for water from the Central Valley Project. Those
contract - the original exchange contract was signed in 1938, and the—the
- I think the attorney's name was Mott, but I could be mistaken on that,
but he did a wonderful job in negotiating that contract, and in effect,
the first water that's delivered from the Central Valley Project south of
the delta, has to go to the exchange contractors. And the amount of water
that they negotiated to receive on an annual basis, was actually a little
bit higher than even what they had experienced delivering from the San
Joaquin River; and the reason for that, my understanding is, is it took
in consideration the higher salinity levels that they'd be receiving from

delta water as opposed to San Joaquin River water to sort of my
understanding, to sort of mitigate that, they increased the volume of
water. And so the exchange contracts actually provide a more reliable
supply from the CBP than they really had from the San Joaquin River.
>> Thomas Holyoke: Was that the main impetus to do it? I mean, I've
always kind of wondered what the great advantage to Miller was, to make
this deal, especially since the delta water might have a higher level of
salinity.
>> Dan Nelson: Yeah, and really - again, my understanding of the
contract, and—and when you compare the contract quantities versus what
they would have gotten from the San Joaquin River is free-flow.
Especially in the summer months, there's actually more water available to
them though—In their contract than otherwise would have been from the San
Joaquin River flow, and again, braving the federal government was willing
to do it. Was first of all, they had a lot of water in the CBP in those
days, certainly excess water, so—so in the beginning, you know, the
contracts were easy to right for that amount of water, but it took in
consideration what it was the exchange contractors were giving up and
that was water - the better water quality. So the point being, the
exchange contracts are very, very good contracts. They are in perpetuity,
there isn't an expiration to that contract, and so, essentially those
contracts are in place each and every year. And the other very important
component of that contract, is it's what—what we refer to, it's shortage
provision. And shortage provision, in central valley contracts,
essentially establish under which conditions you will be shorted your
full contract amount. And to what extent you'll be shorted from that
contract amount. And at least in those days, they anticipated the
shortage provision for drought years. And the shortage provision for the
exchange contract is based on what we refer to as the Shasta index, and
essentially what it says is that when there's a certain amount of inflow
coming into Shasta, coming down the Sacramento River into Shasta, when
there's a certain amount of inflow in each and every year, when it
reaches that inflow, then they will get 100% of their exchange contract.
If it's less than that inflow to Shasta, then the lowest amount they'll
ever get is 75%. And so they will never get below a 75% supply in the
worst of droughts, and it's very seldom— seldomly triggered, or it has
been at least historically. To give you an example, we started making
deliveries from the Central Valley Project in 1952, and it wasn't - from
'52 to '90 or '91, right in through there, there was only one year in
which the shortage provision was triggered. And that was the drought of
'77. So we had gone for almost 40 years with only there being one year of
triggering their shortage provision. Subsequently, we had a couple of
years in the '87 through '92 drought that it was triggered, and then it
was triggered last year and this year as well. But the point being is, is
that the exchange contract is a very, very good contract for the exchange

contractors, and ultimately Miller and Lux, when Henry Miller died in
1916, it was taken - the company was taken over by a son-in-law, J Leroy
Nickel, and—and—and as a result of sort of breaking up the company,
necessarily to pay off the heritage taxes and that sort of thing, they
began selling land in '26 and sort of splitting things up, and as a
result of that, some of the existing water districts that we now see
within the exchange contract area were formed. San Luis Canal Company was
one of those, and I believe it was 1914, when it was formed. The
Firebaugh Canal Company, which is now the Firebaugh Canal Water District,
formed in the teens—in the 19-teens, and likewise the Columbia Canal
Company was in the early 1900's. Miller and Lux hung onto a lot of the
land that is now made into the Central California Irrigation District,
and I believe it was the early 1950's when that district was ultimately
formed in the water rights sold from Miller and Lux to the new district,
so it was - so the Miller and Lux holdings were organized over time into
these four different water districts and it's these four different water
districts that actually hold the exchange contracts today. So that
actually takes you to - as part of the exchange contract, of course, was
the construction of the Central Valley Project, and what that did to the
west side of the San Joaquin Valley, in addition to replacing the
exchange contract water, was to expand the area that was - that could be
irrigated. And so we had stretches of land on the west side of the San
Joaquin, from say Las Banos, up north to the city of Tracy that entered
into contracts with the federal government for water supply. And they
included, you know, Byron Bethany, Banta Carbona, Patterson Irrigation
District; and then there was a flurry of 12 or 13 fairly small districts.
And that was the Mercy Springs Hospital, Sunset, Santa Nella, I'm not
going to remember all 13, but there was a whole bunch of them, say from,
you know, spread across to the west side of the San Joaquin River from
Patterson down to say, Santa Nella, where Santa Nella is today. And they
were—they were - they consolidated, I believe it was the early 90's, or
mid 90's into one district. The original manger was a fellow by the name
of Lodi Harrison, and he managed all of those districts up in the north,
and then ultimately his son, Bill Harrison, took that over. They
consolidated those districts. But the Central Valley Project provided
opportunities for those districts to be able to replace their - they had
been doing groundwater pumping, so there had been agriculture in that
area, but they were able to replace their groundwater pumping with
surface water and expand their irrigation to those lands.
>> Thomas Holyoke: So quick question might I ask. This explosion of
irrigation and water districts, over on the west side, was a lot of that
being driven because new land was being brought into production? Was it
the formation of these districts being driven by the bureau itself? I
understand the bureau is required to do contracts with irrigation
districts, rather than directly with farmers.

>> Dan Nelson: Yes, and so you saw as a result of that, you saw farmers
organizing themselves in the 40's and 50's to be able to take advantage
of the surface water coming to the area. It wasn't without controversy.
The initial contracts were $3.50 an acre-foot, and they were 40 year
contracts. And so - and even at that, there were a lot of farmers that
were apprehensive about signing those contracts. And - but nonetheless,
most of the area did, and there's very little unincorporated land out in
that area that decided not to enter into any water district. But yes, the
farmers had to organize themselves under water districts in order to be
able to contract with the federal government under the Central Valley
Projects, and so that was the initiation of a lot of the districts on the
west side of the valley. That was in the 40's and 50's, in order to take
advantage of, and be able to contract with the federal government for
Central Valley Project water. There was also a group of districts south
of what we refer to as the Northern Delta Mendota Canal, and they were the James Irrigation District, Tranquility Irrigation District, the
Broadview Irrigation District, the Panoche Water District, that also
contracted with the initial Central Valley Project, and at that time, the
Central Valley Project consisted of Shasta reservoir, what is known now
as the Jones Pumping Plant, back then it was referred to as the Tracy
Pumping Plant; and that's right around the south end of the delta, and
then the canal from the Tracy Pumping Plant that ended up dead-ending in
what's referred now to as the Mendota Pool on the San Joaquin River. And
it's noteworthy that the Mendota Pool of where the Delta Mendota Canal
ends, is in the exact location of where the Miller and Lux diversions
took off from the San Joaquin River. So essentially, what you have is,
you have the same diversion that Miller and Lux and the exchange
contractors had built to diver the San Joaquin River water, was still
being used to now divert the Central Valley Project water that was being
brought into the north, but essentially the Delta Mendota Canal deadended and delivered water to the San Joaquin River in the exact same
location as where the exchange contractors diverted. So we still have the
exact same diversion points, the diversion facilities, and even the dam
that was being used to divert San Joaquin River water going back prior to
Central Valley Project.
>> Thomas Holyoke: Something I've always kind of wondered. Is there a
particular reason why Delta Mendota Canal ends at Mendota Pool as opposed
to continuing further south to Kettleman City? I mean I guess a lot of
the land that's now Westlands water district was originally unserved by
the CVP.
>> Dan Nelson: Yeah, and that is correct. And that came a little bit
later and so you had the Central Valley Project in place, and—and the
pumping plant and the canal system was essentially designed to be an on
demand system. And what I mean by that is, you had certain demands by the
exchange contractors, mostly in the summer time; and you had demands -

and then they also expanded the irrigation capabilities to other areas of
the west side, outside of the exchange contract; but it was all built on
a demand system. So when these districts had demands, we moved the water
from Northern California through the pumping plant, to these districts.
But most of those demands were in the summer time of course, irrigation
demands. And so you had a fairly large canal and pumping plant that for a
good part of the year, weren't really active, and weren't pumping; and so
later on when they looked at developing some surface water further south
to what is now known as the San Luis Unit, my understanding is, that
initially it was anticipated that that would be part of the newly
envisioned state water contract - State Water Project. And that—that
project was, you know, being developed in the 1950's and '60's as far as
it being moving through the feasibility studies and that was all part of
the state wanting to expand water supply to Southern California, but also
in the current county and the Westlands— what is now the Westlands area
as well, to replace groundwater over drafting. And it was built on the
same concept as the Central Valley Project, and that is, you know, to
build reservoirs to where most of the precipitation is, and that is in
the northern part of the state, and essentially to build a plumbing
system, or canal system, to move that water from the northern part of the
state to where most of the demand is, and that is in the southern part of
the state. Either in the Central Valley or to Southern California. So you
had the State Water Project that was moving forward. I can't recall what
it was that caused the Westlands area and San Luis Water District area
and the upper reaches of the Panoche area to sort of to - not necessarily
break away, but to change from being part of the State Water Project to
the federal project, but I would imagine just opportunity, probably had a
lot to do with it. But what—what was done is, there was a reservoir that
was built - the San Luis Reservoir, and essentially it was what's
referred to as an off-stream reservoir, and the concept was that move
water from Northern California, south of the delta, in the winter months.
And essentially capture that water and to move it and to store it at San
Luis Reservoir and then have that water available in the summer months
for - to meet demand, you know, for—for - And it ultimately became a
joint facility. It serves the State Water Project as well as the
expansion of the Central Valley Project that included what's known as the
San Luis unit. And on the San Luis unit side, that would be Westlands
Water District San Luis Water District, and the upper regions of Panoche
Water District. And so it expanded irrigation to those areas to primarily
replace the over-drafting of groundwater or to address the over-drafting
of groundwater, a lot of that land had been developed Ag land by
groundwater, but they were over-drafting the groundwater table and the
quality was kind of spotty as well. But that is essentially the
development of the Central Valley Project, that was the com—the
completion of at least the development of the west side of the San
Joaquin Valley. Also, it—it - the Central Valley Project was expanded
once again in, I believe it was the late 80's, when they completed it,

the San Felipe Unit, and that serves Santa Clara, and San Benito
counties. Initially it was anticipated it would serve Pajaro Water
District, close to Monterey, and Santa Cruz, and so there's a pipeline
that now goes over the coastal range from San Luis Reservoir that serves
the San Felipe Unit as well; and that was the completion of the Central
Valley Project in our area. It's—it’s noteworthy that the Bureau of
Reclamation, which was the administrator of the Central Valley Project
and the operator - the constructor and the operator of the Central Valley
Project, that in the late 80's, when privatization of the federal
government was very much in vogue, they began looking at different ways
of potentially operating and maintaining the federal facilities. And at
the same time, we also had a questioning of how it is that we were
operating the Central Valley Project. Questioning probably is - a
critical look at how we were operating the Central Valley Project. And
ultimately, that all sort of evolved into a changing role of the Bureau
of Reclamation. And this sort of culminated in the early 90's, I still
recall very vividly, Dave Houston, who was the regional director of the
Bureau of Reclamation at the time, Dave, used to come out and talk to the
west side water districts quite a bit, and I can still recall a time at
Wool Growers Restaurant there in Las Banos in the back room, where Dave
gave a speech, and essentially he said “historically the Bureau of
Reclamation's role was to represent your interest to Washington. And I'm
here to tell you that our role is changing and has changed, and I'm here
representing Washington to you.” And when you think about it, that's
fundamental. The water users up 'till that point had been relying on the
Bureau of Reclamation literally for everything in representing their
interests. They relied on them to make sure that the facilities that
delivered them water were—was a good operating condition. They relied on
the bureau to represent their water rights and the public policy behind
it. And essentially what Dave Houston, the message he was delivering was
fundamental. We're no longer going to be able to do that. You need to
gear up and do that yourself. It was to a large extent that— that was
what motivated the development of the organization that I currently work
for and that is the San Luis and Delta Mendota Water Authority. And
essentially, we - although our roots go back to 1977, when a farmer out
in the Firebaugh area names Bill Jones Senior, you know, got together all
of the water districts on the west side of the valley, at that time, and
that's just when the San Luis Unit was kind of coming to its own, but
Bill thought it would be good for all of the water districts to sort of
get together and to compare notes if nothing else, and so he initiated
the organization in 1977, the San Luis and Delta Mendota Water Users
Association. Which was a loose net organization of the agricultural
districts on the west side of the valley. Met once a month, usually at
Wool Growers Restaurant. And—but they were administrated by San Luis
Water District. Didn't have any full time staff, as I recall, another
budget was in the $10,000 - $15,000 a year, type thing. And Cecil Carry,
who was the manager of San Luis Water District at the time, was sort of

the, if there was such a thing, the manager or the staff of this loose
net organization. Well when the federal government looked at trying to
maybe get out from under the operations and maintenance of the facility the federal facilities, the water districts in that area realized that no
one had more motivation than them to make sure that these facilities were
maintained properly and that there were maintained in such a way that
they were reliable. And maintained in a way that was economically
efficient, because essentially, whatever the Bureau of Reclamation was
spending on O&M, they were spending those bills to those districts as
part of their water contracts anyway. So those water districts realize
that they wanted to step forward and to take over the operations and
maintenance of those facilities, and so in order to do that, we needed to
formalize the San Luis and Delta Mendota Water Users Association into a
formal organization so that we could contract with the Bureau of
Reclamation to do that, and so that's what we did. In 1991 we formed - we
figured the best tool for us to organize ourselves to be able to do this
as a public entity was under the joint - a Joint Powers Authority. So we
formed a Joint Powers Authority and of all the CVP districts south of the
delta, and began. We opened our doors on January 1 of 1992, and began
taking over the operations and maintenance of the Delta Mendota Canal in
October of '92, and then in October of '93, we took over the operations
and maintenance of the Jones Pumping Plant and likewise the O'Neil
pumping plant there at the Forebay and San Luis Reservoir Complex. And
have sort of evolved. Again, we were motivated to take over the O&M,
because we wanted - we were a little worried that the facilities were
getting some 50 years old, and not as - we were a little weary about the
condition that they were in, and likewise, we also were paying for that,
and anyway, and so we figured we could do it frankly better and cheaper
than the federal government, and so that's what motivated. But in
addition to that, the second thing, the second component of the
organization, or the second role of the organization beside the O&M role,
a very separate role, and that is representing the interests of these
water users on water right issues, water policy issues, legal issues, and
essentially providing an umbrella organization for public policy issues,
and—and a unified voice for the west side of the valley. And so those
were the two roles, and—and again, those were roles that up until the
late 80's, early 90's, the Bureau of Reclamation actually provided those
services to us, but since that time, the water users have stepped up and
kind of taken over those roles.
>> Thomas Holyoke: Just to jump in with a couple questions there. First
off, this fundamental change in attitude, or change in the role of
Bureau, vis-a-vis the farmers, the bureau no longer representing the
agricultural interest of Washington, but representing Washington to
agricultural interests. What drove this - must have been a major cultural
change in the bureau, what caused that?

>> Dan Nelson: You know, in retrospect, when you look at it, the public
values were changing quite a bit, and when you look at that in the
context, you know, water development in the west and certainly with the
Bureau of Reclamation, my recollection is the bureau was started back in
1902, and it was started to, in part, for the purpose of developing
irrigated agriculture in the 17 western states, and essentially
developing a plumbing system to do that. And they did a good job at doing
that. They built some of the world's best dams, and some of the world's
best canals, and you know, had the leading engineers in the world, and
they developed a very good plumbing system, and—and that plumbing system
today still serves us very well. When you look back in the 60's and 70's,
we began recognizing the trade-offs of that plumbing system, in other and how that plumbing system was being operated. And essentially, you
know, we dried up rivers to be able to accomplish the goal of developing
the western states, and—and—and there were a lot of fishery issues and
society - the value of - the environmental - the value of environmental
resources, we first started recognizing that it seems in the 60's and
70's, and policies began to change as a result of that. You had the
endangered species act that was passed, I believe in the early 70's, and
other environmental statutes and—and certainly in October of 1992 was a
huge federal stature that was passed, huge in the sense of—of it's
implications to the Central Valley Project, and that was the Central
Valley Project Improvement Act. And it changed fundamentally the way that
we operate the—the Central Valley Project. And also, in the late 80's,
early 90's, we had the listing of a couple of different species under the
Endangered Species Act, that—that implicated the operations. Not
implicated, changed fundamentally the operations. And that was Winter-run
Salmon and the Delta Smelt. So you had, sort of, all of these things
culminating, but generally, I think it would come under the umbrella of
society, you know, valuing or changed—having changed values from just
pure development to maybe a regulated development; and we were—we were
starting now to reassess the way that we were operating this plumbing
system, this massive plumbing system. And society demanded that rededicate some of the water that had been, you know used primarily for
agriculture, but some [inaudible] - some urban as well, but to rededicate that water back to the environment. And I think all of that
culminated in the late 90's, I mean, excuse me, the late 80's and early
90's, and that's the bureau had mandated by congress, other things that
it had to accomplish other than just the development of water supply, it
now had to operate the system in a way that was more fish friendly, dealt
with water quality issues in a different way, and in general, they had
other services that they were providing that in some times came in
competition with the service they used to provide, and that is solely for
agriculture. And so it was, I think the change that we experienced with
the bureau was a combination of congressionally mandated changes, through
their role now as administrating the Central Valley Project Improvement
Act, but also in having to deal with the Endangered Species Act and in

general, just societal values. They were no longer solely an agency that
was developing water supply, primarily for agriculture, they were much
more - their roles were much broader than that. And therefore, the water
users— that had to step up and fill that void, and the water users have
done that, through their water districts, and so roles have fundamentally
changed for both the water districts and the Bureau of Reclamation,
especially on the west side of the valley.
>> Thomas Holyoke: When San Luis and Delta Mendota authority came into
existence and started to take over the O&M responsibilities - now the
federal government still owns the facilities.
>> Dan Nelson: Yes.
>> Thomas Holyoke: And [inaudible] does that give the federal government
then, the right to veto the things that your organization does?
>> Dan Nelson: Yeah, that's actually a very good question, and initially
our relationship with the federal government was sort of this triangular
relationship. So you had the federal government over here that still
owned all of the facilities, you had their contractual relationship of
delivering water to all of these water districts, and now you had this
sort of third party umbrella of all these water districts that was going
to essentially maintain, operate and maintain these facilities. And so
initially it was under contract. A very similar to, you know, any other
contract that you'd see, and that is the federal government contracted
with this new Joint Powers Authority, that was made up of all of the CVP
contractors, but they contracted with this Joint Powers Authority, and
then the Joint Powers Authority provided those services, and the federal
government, whatever it paid this Joint Powers Authority for that
contract, it subsequently just billed separately all the member agencies.
And it was awkward, for a couple of different reasons. Number one, the
federal government had to rely on congressional appropriations. And so and congressional appropriations are sort of quirky. They—they, you know,
they don't - they're not necessarily efficient. They are motivated for a
lot of different reasons, and so you might get a pet project that gets an
inordinate amount of funding where you have some real critical projects
that go unfunded. I don't want to overstate that, but generally it's not
an efficient way to fund a water project. So—so—so essentially, congress
was appropriating money to the bureau, the bureau was paying us under a
contract, and then the bureau was charging our member agencies. And that
went on for several years; and that evolved into what we call a selffunding arrangement, where we went to the federal government and said,
"Look, we don't need your funding for this. We'll fund this ourselves,"
and essentially, we will take on the operations and maintenance and the
funding of this, and we'll just fund it ourselves." And of course, our
only funding mechanism, and the authorities only funding mechanism is our

member districts, but essentially our member districts were willing to
self-fund this and not take any - not rely, have to rely on the
uncertainty of—of federal appropriations. And so, I believe that we
evolved into a self-funding organization instead of being funded through
bureau contracts, and then the bureau, federal government being
reimbursed by the districts, or charging the districts. We evolved from
that in, I think it was the late 90's is when we started self-funding.
And so now we self - all of the old went in, you know, entirely, we selffund all of that. We do still have a contractual relationship for what's
called “extraordinary O&M”, and these are major—major, you know, capital
items and the federal government still funds those and our contractors
pay them back in a - with a capital component of their water cost. But
the majority of the O&M is funded through the authority.
>> Thomas Holyoke: Is there a possibility out there of purchasing the
whole system from the bureau?
>> Dan Nelson: You know, we've made a run at that a few times, and there
have been a couple of different efforts. Some of them by us, and some of
them by the state; and not necessarily, I said a couple of runs at it,
there's—there’s been a couple of times where those opportunities seem to
surface. And I can't remember the timing, but I think it was the mid 90's
is when - is one of those times that I recall us meeting - the state
meeting with the feds, and they were looking at transferring the
facilities to the federal government. There was also a time when the
Central Valley Project - all of the water users, not just the west side,
not just our organization, but we partnered with the Friant Water
Authority, which is our sister agency to the east, and the Tehama Colusa
Canal Company in the northern Sac River settlement, all CVP contractors
got together, and were negotiating for a while, the transfer of the
project to those water districts, and the purchase of that. And for a
wide variety of reasons, none of those have come to pass. But I do think
that, you know, at some point, it does make a lot of sense for those
projects to be more locally controlled as opposed to the federal
government. Either locally controlled or maybe under the state umbrella.
I think it's inevitable, it's just a matter of the timing when that would
occur.
>> Thomas Holyoke: Okay, before we get into some more contemporary stuff,
any other part of the development of the west side or development of your
organization that you want to discuss?
>> Dan Nelson: You know, the only other thing that's probably noteworthy
is to note that the Joint Powers Authority is a great tool, and unique to
California; and—and—and I think our organization has taken full advantage
of some of the authorities that Joint Powers Authority provides you. And
one of the things it allows you to do is, we now have 29 member agencies,

but one of the things the Joint Powers Authority provides is the
opportunity for a subset of that group of agencies to be able to work
under that umbrella on a common interest, or a common project. And so as
an example, we have a drainage problem that several of our districts
experience, classic Ag drainage issues on the west side of the valley,
and for a variety of reasons, it became convenient for those districts to
sort of organize themselves, but organize themselves under our umbrella.
So we have what's referred to as an activity agreement, or probably more
commonly known as project agreements, within the authority that includes
subsets of our districts. In using the drainage example, we have 9
districts that have banned together called the Grassland Basin Drainers,
and essentially have their own project, their own plumbing system for
dealing with their drainage, and so they were able to organize under our
umbrella, so we administrate that for them and provide all the
administration for it and all the costs are exclusively directed to those
districts; and so it provides a great tool. And the reason I use drainage
is there's an interesting history there. Back in 1981 and '82, we were
still looking at completing the San Luis drain. And under our parent
organization, the San Luis and Delta Mendota Water Users Association,
they developed a drainage committee that was to work with the federal
government on the financing, the logistics, and just everything involved
in completing the drain, the feasibility studies, etc. And so we were
working toward doing that when the Kesterson issue surfaced, and we
became aware of the problem associated with that drainage water, and at
that time mostly in the context of selenium. So we realized that we were
not going to be able to complete the drain and be able to move this water
out to the delta. That we weren't going to be able to do it. And so that
committee actually formed a drainage organization to start, what is it
that we're going to do now that we aren't going to be able to complete
this drain, and so that committee formed an organization called the Land
Preservation Association, and the late Steve Hall was the first manager
of that organization and served that organization very well, and it
represented the drainage interest at a very volatile time. This was in
the 80's, and again, this was at the time that Kesterson - we were ack—we
were becoming aware that dealing with the drainage issue was now much
more complicated than just displacing salt from the soils. It was now,
you were dealing with a lot of other minerals that were hard to isolate
and could cause a lot of different problems. And so the Land Preservation
Association served us very well in the 90's under Steve Hall's
management. And then ultimately when we formed the San Luis Delta Mendota
Water Authority, the Land Preservation Association was actually one of
the first activity agreements that we had developed. And so, I raise that
only as to even today, we have now three different drainage activities agreements within the authority that deal with different drainage
aspects, and we have over 15 activity agreements of all different types,
within the authority. And it's a very important component of our
institution and the services that we're able to provide to our 29 member

agencies, having being able to do those activity agreements, and to share
the administration of all of those activities, I think has—has worked has served the region pretty well.
>> Thomas Holyoke: Okay, so I think the last time we interviewed you was
2012, which was a rough year. It's 2015, where things are probably much,
much worse. What kind of problems - well what have been your biggest
problems in these last few years? Operating—berating your authority.
>> Dan Nelson: Well—well certainly—certainly drought has exacerbated our
problems, but the underlying problems that we're currently having and—and
the causes of most of our water supply restrictions are regulatory
driven. And this goes back again to the history, you know, and the
beginning of our organization when we had talked about the—the listing of
a couple of species in 1991, the Winter-run Salmon and the Delta Smelt,
the passing of the Central Valley Project Improvement Act, and then
[inaudible] the third statute that affects our water supply is the Clean
Water Act, and essentially, it authorizes or mandates the State Water
Resource Control Board to do certain things, and the water quality
aspects of— of the Clean Water Act. So we have three federal statutes,
that—that were beginning to be implemented in the 90s, and in the 90's, I
recall it being mostly driven, most of the issues were driven by the
Central Valley Project Improvement Act. And there were three elements of
the Central Valley Project Improvement Act, one is that displaced water
from primarily agriculture to other uses, one is the restoration of the
Trinity River. The second is the dedication of 800,000 acre-feet of
Central Valley Project yield off the top for environmental purposes. And
the third is the dedication of some 400,000 acre-feet to wildlife
refuges, water fowl habitat. And so those three elements of the Central
Valley Project were being implemented in the 90's, and we fought about
that, and—and essentially the dust settled on the implementation and how
we were going to implement all of that. The dust settled on all of that
in the late 90's and early 2000, and when the dust settled, a very, very
stable water supply, or what was once a very stable and certain water
supply had been reduced in a range of about 25 to 30%, and what I mean by
that is prior to the—the—the early 90's, the Ag service contractors, or
reclamation law contractors of the CVP, could pretty much rely each and
every year on 100% supply. And in fact, they too got 100% of their
allocation from 1952 up to the late 80's, you know, except for the
drought year of '77, they could rely on 100% supply pretty much each and
every year. In the early 2000, as the dust settled with the
implementation of CVPIA, their water supply was, on average—in an average
year they could expect a 70-75% supply. And that changed things
fundamentally on the west side. It changed fundamentally the operations
of the west side. It changed the farming operations of the west side, and
the agricultural practices, and it changed it all fairly fundamentally.
But they figured out a niche, and in the tools they used to sort of

figure out their niche and to try to get some sustainability in all of
that, the tools they used was - first of all, they went out and invested
in high tech irrigation. And to where, they could spread the water as
thin as they could possibly spread it, and keep as much land in
production as they could. The second tool they used - and the second and
third tool they used was, they knew they were going to have to be out on
the transfer market each and every year, so they got very active in the
transfer market, which leads you to the third tool, which surprised the
heck out of us, and to this day is somewhat of a dilemma. No matter what
crop these folks were going to grow, they didn't have enough Central
Valley Project water to be able to do that. So they were going to have to
rely on the transfer market. They became very active on the transfer
market, but they were quick to realize, the only way they were going to
be able to compete on the transfer market is to grow a high cash value
crops. That - prior to that time, the bread and butter out in that area,
there was a lot of cotton, and a lot of grains, and you just couldn't
compete on the water market, growing cotton and grains, and so they
transitioned the crops they grew to a high value vegetable crops, and to
most of our surprise, to permanent crops.
>> Thomas Holyoke: This is just to afford the purchase price of the
water.
>> Dan Nelson: Absolutely, and again, to emphasize, it didn't matter what
crop they grew, they were always going to have to be on the market to
supplement that. So they were forced to grow those crops that allowed
them to compete on the market, and what has evolved is those crops, to a
large extent, are permanent crops. So here you have an area with an
uncertain water supply that essentially is investing in crops that you
cannot idle in any year, and which made us water managers nervous as
hell, and those are the dynamics that we live with today. But—But—but
certainly, you know, it's understandable that that's what allowed them to
be sustainable, and to be able to compete with metropolitan water
districts, and the other folks that were out there on the water market
was, they were able to compete by growing high—high cash perishable
vegetable crops, and also permanent crops. The fourth tool was— that they
use, was of course, groundwater pumping, and honing their groundwater use
to be able to maximize its use but still be sustainable. Meaning that
they weren’t overdrawing it. In the drier years, they were using more, in
the wetter years, they were using less, but they had figured out what
that sustainable amount was. And at the turn of the century, in 2000 and
2001, they actually figured out a good niche for themselves, and they had
adjusted to these cuts in their water supply, and really, the biggest
question for us in 2000 to 2006 was, what we were going to do in the next
prolonged drought. We had kind of figured things out in normal years, and
even cycles of where you'd have a wet year and a below normal year, but
we knew that in a prolonged drought it was going to get tense, and so we

were looking - that was the key issue at - during the early 2000. 2000 2008, the rug was pulled out from under these folks. And it came in the
form of a lawsuit by the National Resource of Defense Council, on the
federal government, the national fishery service, fish and wildlife
service in the bureau, on their operating plans, technically known as the
Biological Opinions, but their operating plans under the Endangered
Species Act. And they won the lawsuit. They challenged the operating
plans and the Biological Opinions as not being sufficient. And up to that
point, most of the Biological Opinions in water dedicated to ESA actually
fell under the umbrella of things we were doing for the Central Valley
Project - to meet the Central Valley Project Improvement Act requirements
anyway. The 800,000 acre-feet that we were dedicating to the environment
was enough to meet the ESA, so all of the ESA impacts at that time had
been sort of umbrella-ed by the Central Valley Project Improvement Act,
and so once we got the Central Valley Project Improvement Act kind of
settled, we had that time of sort of sustainability. Well, when these
lawsuits came out, 2008, they had to come out with additional measures to
protect the Winter-run Salmon and the Delta Smelt, new Biological
Opinions, or operating plans, and that took another 25% to 30% of the
allocation away from the Ag service - contractors on the west side of the
valley. So essentially, they've already invested in high tech irrigation,
they already pretty much maximized the transfer market, and in fact, not
only did these new endangered species requirements affect us, they
affected the state contractors, so now you have Kern and Metropolitan all
needing to be needing to be more active on the transfer market as well,
so you had more competition on the transfer market south of the delta.
And they'd already pretty much tapped out what they could on the
groundwater. So there were no tools left, yet a 25 to 30% reduction. On
top of that, we've had two - or actually, three or four, very dry years.
Especially the last two years. Kind of this culmination of the perfect
storm, and it's been incredibly challenging. Unprecedentedly, last year a
zero water allocation to the Ag service contractors south of the delta.
Probably even more relevant, or noteworthy historically speaking, within
the exchange contracts was a provision that if for whatever reason, the
federal government couldn't supply them Central Valley Project water from
Northern California, that they could revert back to their water rights on
the San Joaquin River, and the exchange contractors had to do that for
the first time in history - well, since 19 - they'd been taking
deliveries in 1952, so the first time in history they had to revert back
to water from the San Joaquin River to in part meet their demands, and we
will likely see that again this year. And so just unprecedented, zero
water supply for two years in a row, for folks that have invested quite a
bit in—in—in permanent crops, and then likewise, it's expanded now from
shortages that have really only been experienced on the west side of the
valley, now over to the east side of the valley. They're experiencing it
and for the east side of the valley, it's on top of their San Joaquin
River restoration program as well. So you have the combination right now

of some regulatory issues, all coming into play at the same time as some
dry years, and all of that is coming at the same time on both the east
side of the valley and the west side of the valley, and it's serious. I
mean, there are folks pulling out permanent crops and major investments
being lost. But probably, more concerning, I mean, certainly, you know,
we're trying to - we're in a survival mode, trying to figure out how to
make it through this, but even when the weather gets better, we're in a
mode that we haven't ever experienced before. We're in a mode on the west
side of the valley where we don't have any tools that we figured out yet
that would provide us sustainability over the long term. And so there's a
tremendous amount of uncertainty, I think there's a sense that once the
rains come, that everything is going to be okay again, but the numbers
don't reflect that. We just - with the current regulations that we have
in place, we just don't have the amount of water that will likely be
available to us even through transfers that will be sustainable.
>> Thomas Holyoke: Economically out on the west side, are you seeing a
lot of negative effects, like a lot of land being taken out of
production, farmers going bankrupt, large scale changes in land
ownership?
>> Dan Nelson: Yeah, and none of it makes any sense [laughs]. To me
anyway. What—what we're seeing on the west side of the valley is still
reflecting some incredible commodity prices that we're experiencing.
We're getting, you know, I think almonds are going at something like
$4.75 a pound, which is unheard of, and pistachios, and all the commod tomatoes, melons, I mean, we're going through a trend of where we have
unprecedented commodity prices, and so that is sort of masking I think
what's coming to the west side. Certainly we're seeing land that isn't in
production, we simply don't have enough water, and so almost every farmer
is leaving their - outside of the exchange contract area, but every
farmer and may Ag service areas, you have very little row crop. Excuse
me. You—Most of water that's available to anybody on the west side is
being used to keep the permanent crops alive, and so you're seeing a huge
reduction in acreage being planted for row crops throughout the valley.
Have not heard of mass bankruptcies, as a result of that, certainly there
are folks that are hurting, but I think again what has masked that, or
what has buffered those impacts has been the incredible commodity prices
that we're seeing. But you know, the impacts that we're observing, the
most on the west side, unfortunately, are at the farm labor level and at
the community level. I mean, you know, when you don't have a lot of you
know, row crops in production, there are not a lot of jobs out there, and
so what we're seeing is just incredible high unemployment rates, and the
communities, Mendota, Firebaugh, you know, Huron, all of those west side—
all of those west side communities are taking the brunt of this and the
farm labor is taking the brunt. There is just no jobs out there. Land
values are incredible. They haven't declined in the midst of all of this

uncertainty. Frankly, I think - they are reflecting the commodity values,
but I don't think they're yet reflecting the water realities, and so that
has—that has been mysterious to me, or puzzling to me. Because there's
huge, huge investments of fairly large outside organizations coming into
the west side and buying land and buying permanent crop land, and it just
baffles me because when you look at the long-term projections for the
water availability for that area, we certainly haven't figured it out
yet, of how we're going to serve that broad of an area.
>> Thomas Holyoke: Are we responding toward this extreme drought well?
Some say, you know, don't let good disasters go by without using the
opportunity to create solutions, never let a great crisis go to waste.
Are we responding to the drought well?
>> Dan Nelson: Yeah, actually that's a good question, and frankly, I
hadn't thought about it in those terms, but we are certainly learning. We
are certainly learning from the drought. Probably one of the more
interesting things that has surfaced during this particular drought is
the role of the State Water Resources Control Board. They are certainly
exerting themselves to have a lot of authority - to have authority in a
lot of areas that—that they haven't dared go to before. And certainly,
you know, challenging the underlying water rights that have been
established in the state. And so if there's one area that's been sort of
very interesting to watch evolve, it has been State Water Resource
Control Board, and it's willingness to exert sort of its will on how
things should be operating in the state. As far as “have we been
responding?” I think, you know, there's certainly tension between the
economic impacts that we're experiencing, especially in the valley, with
the regulatory implementation. And it's a tough one, I mean, certainly
we're having fish issues, temperature issues, and - but on the other
hand, we're having a lot of human suffering as well, so trying to figure
out that balance, you know - I mean, generally that's what things have
been about, right, over the last 30 years is figuring that balance
between environmental resources and the economic resources and trying to
figure out what an appropriate balance is there. That has certainly been
exacerbated or that tension has been exacerbated by the drought, and the
tension point between regulation and our environmental values versus our
economic and social values as well, and so it's highlighted those issues.
Probably has put a point on, I don't think anyone is - or not many, are
arguing the need to upgrade our infrastructure. We haven't built any
major infrastructure in a long time, including any storage facilities,
and so it certainly has highlighted the need for those.
>> Thomas Holyoke: Have you been involved with the proposals to develop
new conveyance, particularly the governor's idea of building tunnels
underneath the delta from the Sacramento River down to the pumping
plants.

>> Dan Nelson: Yeah, our organization has been front and center in those
discussions, and in fact, we have financed and been responsible for the
financing of a lot of that. The tunnels is a project that has evolved out
of frankly frustration, by both the Central Valley Project and the State
Water Project, and the State Water Project is mostly comprised of Kern
County Water Agency and Metropolitan Water Agency, but generally, once
the lawsuits and are—we had more restrictions, you know, in 2007, 2008,
once that surfaced essentially, you know, all of the folks, you know,
that we have flippantly referred to as exporters, the Central Valley
Project - us, and the State Water Project, that was a reality check for
us. How stable is our conveyance system through the delta, and if indeed,
you know, all of these issues are causing - our movement of water through
the delta is causing all of these problems, is there a better way of
doing that? We have - we banged our head against the wall for 20 years in
trying to make what's referred to as the Through-Delta System work. And
so we figured let's once and for all invest in, running down the issues,
of what it would take to come up with a new conveyance system, a better
conveyance system for wat—the fishery, for water quality and certainly
for water supply. And so we began partnering with the state water
contractors, and developed a formal partnership with them, on the
development of the environmental documentation for a new conveyance
system through the delta. The preferred alternative is the surface as
being two tunnels, 30 feet in diameter, large tunnels, underneath the
delta, starting generally in the vicinity of Clarksburg and coming down
to our pumping plants, and essentially bypassing the delta and the
fishery - you know, all of the fishery issues that are involved in that and moving the water directly - our water from Northern California,
moving it directly to the pumping plant as opposed to sort of meandering
through the maze of channels in the delta. The initial proposed cost for
those environmental docks was $120 million, and this was to be sort of
administered - this effort was administered through DWR, and we were to
share the cost 50/50 between the state contractors and the federal
contractors. And 6 months into the development of those docks, it became
obvious that 120 wasn't going to do it, and a fairly long story short, it
evolved into a $240 million project, just several months into it, and the
administration of it is still under DWR, but the management of it was we changed management, managers of the project, and to their credit, they
- and we figured this was going to be a two-year - two years to develop
this plan. We're now several years into it. To the credit of the
managers, who are still the same managers today, they've been able to
maintain the budget at $240 million, and we're looking at, we came out
with a record of decision, I believe it was last October, but we're
looking at now at all the comments of reissuing that, and taking some
more comments and readjusting things, you know, readjusting things as we
go. Initially, it was done as a way of addressing the Endangered Species
Act, and essentially the current way of implementing the Endangered

Species Act is under what's referred to as the Section 7 clause of the
Endangered Species Act, and that is when a species is listed, essentially
it's, you know, you have a federal agency that oversees the recovery of
that listed species, and essentially they come up with a plan of doing
that. So in the delta, we had two, right. We had the Winter-run Salmon,
which the federal agency dealing with that was the National Marines
Fishery Service, because they are in charge of the ocean fisheries, and
the salmon of course migrates in and out of the ocean; and then you have
the Delta Smelt, which the Fish and Wildlife Service was in charge of
administrating. So you had the - each one of their plans for
administrating the recovery of these fish. The Endangered Species Act
also has the ability to come up with a habitat conservation plan, which
is envisioned as being a much more comprehensive plan, and dealing with
habitat development in a much more comprehensive way, that would sort of
umbrella all of the different species that are listed in that
geographical area, and deal with them in a more comprehensive way instead
of a specie by specie approach. So that was the intent behind the initial
program is to come up with this comprehensive program, and it included
not only the tunnels, but included, like the restoration of 100,000 acres
of marsh land within the delta, and a lot of other fishery recovery
mechanisms that would provide for this habitat, this comprehensive
habitat approach with dealing with endangered species in the delta. And
it included two tunnels, as a part of that. Just recently, that approach
has been diverted once again as what, as part of a habitat conservation
program. You're looking at a 40 or 50 year permit for this program, and
the fishery agencies were never able to come up with an operating plan
for the tunnels that they were comfortable in committing to a 40 or 50
year permit, and so we'd been banging our heads against that wall for the
last several years and finally have come to the conclusion that we're not
going to get a 40 or 50 year permit; but it also means there's no reason
for us to invest in a huge comprehensive program if we can't get a 40 or
50 year - So essentially what we're looking at is focusing exclusively on
the tunnels themselves, in constructing the tunnels. The unfortunate
thing about it is, is that we'll still be governed or operated by the
Section 7 of the danger—Endangered Species Act instead of a more
comprehensive Section 10 habitat conservation plan. But yes, yes, a long
convoluted answer to your question. We—we are involved in it, I don't
know if we're going to be able to afford it, you know, at the end of the
day, we may get the permits, and - but we may find ourselves in a
situation where it just costs too much to build those tunnels, and with
the un - with Section 7, we have no guarantees on how much water we're
going to be able to get out of there, and it could change from year to
year on how they implement the Endangered Species Act, and so it's kind
of hard for the farming community to invest in such a project. On the
other hand, we had a couple of other opportunities historically to build
the Peripheral Canal and other facilities that would have helped, both us
and the fisheries, and we backed away from those primarily for cost

reasons as well, and so we're worried about being short-sighted here as
well. And so we're still looking at it very seriously, but it's going to
be a huge commitment for agriculture to be able to commit to so many
dollars to construct this with no guarantees to what their water supply
is going to be.
>> Thomas Holyoke: Okay, anything else?
>> Dan Nelson: No, no, I can't - I - you know >> Thomas Holyoke: Well, we'll bring you back in a few more years to see
where [inaudible] it’s all gone [laughs].
>> Dan Nelson: Yeah, yeah, exactly, exactly. Maybe in conclusion, you
know, the theme of the future, certainly the immediate future is going to
be constant tension without regulatory system; and the tension between
regulations and trying to provide water supply for agriculture in the
State of California. There's—there’s going to be ongoing tension about
that, I don't think that we've yet achieved a balance that folks are
willing to live with, and so I anticipate, you know, at least in the
short term, that will be the theme of California water, but I also see a
willingness and an openness to invest in additional infrastructure, which
will ultimately assist us, but—but all of that is 15, 20 years away
before we can come to closure on that construction. So unfortunately the
regulatory battles will continue. The last point is we still have one
regulatory hammer that is about to fall, and that is on our restriction
of groundwater, and it is - it was inevitable, because one way or
another, what we were taking out of the ground is not sustainable, and so
we were either going to figure out how to manage it ourselves, or
literally run out of water, run the wells dry. So it is inevitable that
we get our arms around it, but that is going to exacerbate the regulatory
tension, because one of the tools now that we have to try to replace our
displaced surface water, or restricted surface water, has been
groundwater. And so once we have to start weening ourselves from that,
that just, you know causes that tension on the regulatory side that much
more.
>> Thomas Holyoke: Thank you very much.
>> Dan Nelson: Yeah, thank you.

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