Erick Johnson interview
Item
Title
eng
Erick Johnson interview
Description
eng
President of one of the first water brokerage agencies in California, arranging water transfers and sales between irrigation districts and farmers.
Creator
eng
Johnson, Erick
eng
Holyoke, Thomas
Relation
eng
Water Archive Oral Histories
Coverage
eng
California State University, Fresno
Date
eng
7/7/2015
Format
eng
Microsoft Word document, 14 pages
Identifier
eng
SCMS_waoh_00052
extracted text
>> Thomas Holyoke: Okay, we are talking with Erick Johnson today. So why
don't you start off just by telling us a little bit about yourself, where
you're from, your education, how you got started in the working world
those sort of things.
>> Erick Johnson: Sure. Morning. I -- well let's see I was born and
raised in Jackson, Wyoming. And my mom had gone to UC Berkeley and met a
cowboy in Wyoming and decided to move to Wyoming and raise a family. And
they started a small business. It was -- my dad's a cabinetmaker, he
turned into a cabinetmaker after being a cowboy. And my mom and dad had a
picture framing business. So sort of a small town, small -- small
business kid. And but I did pretty well at school and got accepted to
Stanford University. So it -- that brought me to California, actually
back to where my mom was from. She was from the -- California. In fact,
my great-grandfather was in Tranquility, which is west of Fresno about 30
minutes or so. And I -- at Stanford I studied political science.
>> Thomas Holyoke: It’s a good major.
>> Erick Johnson: Yeah it's a good major, you know and didn't have to
take calculus, so it was a lot easier than economics. The –- the -- and I
thought I'd go into politics. I thought I'd probably go back to Wyoming
and go into politics. But I -- when I got out I went and worked in
Washington DC for, Senator from Wyoming. A guy named Malcolm Wallop.
Terrific guy. Was there for about a year, decided that I really didn't
like politics. And I didn't like all the big egos in Washington DC. Not
necessarily the, well the politicians certainly, but everyone else who
works in Washington also, really feels like they need to be really
important and I think I was starting to get some of that myself.
>> Thomas Holyoke: And about when did you work for Senator Wallop?
>> Erick Johnson: Ah, let's see it would have been '83, '84.
>> Thomas Holyoke: Okay, what kind of work were you doing for him?
>> Erick Johnson: I was legislative clerk. Which is a very fancy term for
opening the mail, sorting the mail [laughter]. And I -- but I also did
some -- some work on some projects. As part of my time there, I got to go
back to Wyoming and got to take a look at the USBRs early windmills. Got
to go up in one of the big, big windmills that they had built Wyoming.
And they were sort of testing that idea to see if that was going to be
something that would work for the US.
>> Thomas Holyoke: USBR was doing that?
>> Erick Johnson: Yeah, surprisingly. Well you know they were in the
energy generation business. I mean that was one of their primary focuses.
So it would make sense that they were trying to figure out if something
like that would work. So they had two huge windmills that were probably,
I don't know ten stories high or so. They were really the big ones. So -so I -- that was my first interaction with the USBR. And but then I
decided I didn't really like Washington and I left and came back to
California and went to work for a cousin's husband and her at Harris
Farms in Coalinga. And so I guess I started there in '84. And was there
mostly until about 2000. Took a couple years off to get an MBA at UC
Davis.
>> Thomas Holyoke: Okay what kind of work were you doing on Harris Farms?
>> Erick Johnson: Well, I started just as, on projects trying to, we were
looking at doing some acquisition work. So I knew how to, I had taken a
class in computers sort of early on, and so I knew how to use a
spreadsheet. And ->> Thomas Holyoke: And this is still back in the late '80s when that's
sort of a new technology.
>> Erick Johnson: It was brand-new technology. The electronic
spreadsheets at the time were changing the world. And I figured out how
to use them. I figured out how to use them to make graphs, and charts,
and so all a sudden I was in on all the big strategic projects that -and we were looking at major acquisition in Kern County and so I got to
do all that. That sort of got me interested in going back and getting my
MBA. And then by the time I left I was the chief operating officer and
general manager of the farming division, which is at the time was between
16 and 20,000 acres.
>> Thomas Holyoke: What kind of projects do you remember going on at
Harris Ranch back in those days? And what were they -- what were the big
things they were trying to do?
>> Erick Johnson: Well on the good side we were doing things like
transitioning some of our ground into organic ground. Actually created an
entity with three of our neighbors and created the largest organic farm
in the US at the time. Ground that still organic. So I feel happy that I
was the one who sort of brought that to the forefront and got on the
California Certified Organic Board. And -- but it was a culture shock for
the organic farmers at the time, because they were a bunch of raised bed
folks who were growing strawberries. And strawberries is sort of where it
started in the Santa Cruz area. So I went over as a guy from the Central
Valley from large organized agriculture and it was a bit of culture shock
for them to have me on that board. Because we did things in a big way and
a big enough way that we pretty well wrecked every market we entered,
because we grew so much that we'd go into these markets and just
overwhelm the market with broccoli or some of the other crops we grew.
>> Thomas Holyoke: I know it's maybe a little off topic, but what -- why
was Harris Farms so interested in getting into organic back in the late
'80s or '90s whenever.
>> Erick Johnson: I'm not sure everybody was. I was interested in it
because I saw that there was going to be a demand for that just in my
interactions with other people you know because I had gone to school in
the Bay Area, I sort of saw that as an emerging market I saw that the
market was growing 20% a year and -- and then as we got into it a little
bit deeper I found out that it made us better farmers as well. We learned
new techniques of farming, even our conventional fields. So and we also
had a lot of manure which helped a lot. Because we had our own our own
nitrogen source that we could compost and use on the fields because
Harris Farms Corporation owned the Harris Ranch Feedlot as well. And with
100,000 cattle producing manure, it really was a good sort of symbiotic
relationship for us. We even used the straw out of the horse racing barns
to mix with the manure to as a part of the compost process, so.
>> Thomas Holyoke: Back during that kind of time period do you remember
any major water issues that Harris Ranch was dealing with?
>> Erick Johnson: Oh yeah, that's what got me into water actually.
>> Thomas Holyoke: Oh.
>> Erick Johnson: I -- I had gone to business school and came back at the
tail end of the drought in the late '80s, early '90s and we, at the time,
were in a 6-year drought. It lasted 6 years. The first 3 years we got
100% allocations, the fourth year we had a 50% allocation and then it
went down to 25% and then 25 the next year too.
>> Thomas Holyoke: Actually just to interrupt you for a second, which
water system does Harris Ranch take water from?
>> Erick Johnson: Oh yeah. We got water from the CVP, Central Valley
Project which is a USBR project. And we specifically got water out of the
San Luis Canal, which is a joint use canal with the state water project
California Aqueduct, so. And so that was our water source that was
installed in I think it was opened up in '66, '67. Before that Harris
Farms got its water from deep-water wells that were initially drilled in
the, I think the late '30s early '40s, primarily. And that area of the
valley was farmed about one-quarter in a summer crop and about threequarters in winter wheat, those kinds of crops. But when the water came
in from the canals, all of sudden we could irrigate the whole farm in
summer crops. There was enough water -- surface water to really make that
part of the valley bloom. So that western part of Fresno County turned
from a relatively nonproductive farming area into one of the most
productive farming areas in the world. I mean it's one of the great
tragedies that we, as a society, don't recognize what a blessing we've
been given in Western Fresno County and in the San Joaquin Valley in
general. We've got this wonderful Mediterranean climate. We've got soils
that I was farming that were so deep that we didn't know how deep the
topsoil went. At times we'd take a backhoe and dig down to see how deep
the roots on some of the crops went and we'd go down 12, 15 feet and
still find roots, because the soils were that deep and that good.
Probably they'd go hundreds of feet deep. So it's not like the rest of
the country where we have water issues, or I mean issues with soil or -I mean our limiting issues was the water issue, which appeared in the to
me first in the late '80s, early '90s. And Harris Farms had to be 60%
fallow one year and I didn't want that to happen again, so I thought well
maybe we need to see if we can get some water from somewhere else to
bring in. And so that was my first interaction with having to try to find
water to keep that part of the valley up and running and going.
>> Thomas Holyoke: Just before we get into that, do you remember more or
less about what year the first serious cutbacks in water came?
>> Erick Johnson: Well, let's see it would have been about '90 I think
because we were -- we were 4 years into the drought and we got a 50%
allocation that year I think and then it was 25% the next year, so.
>> Thomas Holyoke: Were the cutbacks entirely due to the drought?
>> Erick Johnson: No not entirely due to the drought. Primarily due to
the drought, but also my recollection is that the winter run of the
Chinook salmon was just being listed as an endangered species. And it
lived in the upper Sacramento River. And that was our first interaction
with an endangered species issue creating a cutback of water. And then at
the same time, the Miller Bradley Bill, which later became the Central
Valley Project Improvement Act, which is a ironic name because it's
absolutely broken the Central Valley Project. But the Miller Bradley
Bill, which was drafted by George Miller from the Bay Area Contra Costa
County. He was a Congressman who just had a loathing for the Central
Valley. He must have thought that we should of turn this area back into a
desert. And Bill Bradley who was a congress -- senator from New Jersey
who didn't know anything about California, they got together and drafted
this bill to try to somehow improve upon the Central Valley Project. So - so those two things were happening at the same time. And I don't
remember the year that CBPIA was passed. I think it was '92. But so that
was all happening at the same time. And all the sudden the farm community
had to encounter this new draconian set of environmental regulations
they'd never had to deal with before. Before they'd had to deal with all
of the normal things that farmers would deal with whether it be weather
problems like, well a natural drought, or -- or a -- or hail, or
pestilence, or the kinds of things that farmers have to deal with. And
they did very well from the late '60s through the early '90s and had a
very productive period until these environmental regulations had kicked
in.
>> Thomas Holyoke: So with the new reality starting to dawn on farmers
out on the west side you were -- you mentioned you were starting to get
into a position where you had to look around for water.
>> Erick Johnson: Right. And actually the first transaction I did really
came knocking at our door. It was actually Dale Melville from Jim
Provost, Provost and Pritchard Firm. And they had some water in another
district, south of Westlands, and water that that farmer didn't need and
we were able to buy, I think it was 20,000-acre-feet that year.
>> Jim Provost: Are you talking about Dudley Ridge?
>> Erick Johnson: Yeah it would have been Dudley Ridge. I don't think I'm
violating any confidences with that. Yeah it was public record because it
would have gone through the state process. Unfortunately we got it done a
little late in the year and we hadn't prepared our farm for, for planting
cotton that year. So we had to very quickly prepare the beds and very
quickly, plant and we got a bad stand of cotton. And it was, if I
remember correctly, it was the year that we had like 15,000 acres of
cotton and maybe -- maybe 12,000. And we lost money on it because we -the farmer term is shotgunned it in. And but we used the water and it got
me into the water trading mode and thinking about those things. And did a
few more over the next few years. But then the rains came and we had good
water allocations again for a period of years. So.
>> Thomas Holyoke: With the water transfer, like that first one you did.
I mean the physical transfer of water is simply you were taking water out
of the San Luis Canal that otherwise would have continued to flow I
guess, Dudley Ridge is further south than Westlands. So physically that's
all that was required.
>> Erick Johnson: Physically all that's all that was required. The -- the
nature of water transfers however, is that the physical parts of the
water transfers is easy. It's the institutional things that drive you
nuts and prevent a lot of them from happening. That particular one the
State Water Resource Control Board had to approve a change of place of
use for that State Water Project Water in Dudley Ridge to move into
Westlands, which is in the CVP place of use. The dividing line between
the State Water Project generally and the Central Valley Project is the
Kings County line on the north side of Kings County. So Westlands
actually has a little bit of ground in the State Water Project place of
use in Kings County, but the -- where the water was going to go in
Westlands was in Fresno County. So we had to get this change of place of
use from the State Water Resource Control Board to move it from the State
Project, into the Central Valley Project place of use. I think we finally
got the approval sometime in August that year, for a crop that we had
planted in April, May. And it was so frustrating that we actually talked
to some, some folks in Sacramento at the time, meaning, I think he was a,
I don't even remember the name of the fellow, but the -- he was a state
senator I think. And he was saying, well what can we do to help? And we
said, well we need to shorten the window of these approvals, because that
it's just taking too long. And we actually got legislature to change the
approval process to shorten the amount of time the state board has to
consider one of those transfers from an unlimited period, as I recall, to
45 days. Which I thought oh boy this is really going to help because now
they can only think about it so long and they have to give us a decision
within 45 days. But as these things are uncovered, it's now that the -we find that the delay is even earlier than that. Because of if the
Department of Water Resources has to make the application to the State
Board, because it's their water in the state service area, they have to
make the application to the state board. And they don't have any
restriction on how long they can process an application before it goes to
the state board. So quite often these -- these transfers still take
months, and months, and months, or years to, to get approved. So -- so
that one little change we made, didn't really help very much. But we
tried you know because we saw a problem and said well if we encounter
this again, we're going to need to have a quicker regulatory environment
to get through.
>> Thomas Holyoke: Was some of these early water transfers were they
expensive, the price you were paying for water?
>> Erick Johnson: It was dreadful and I say that with an in jest now. At
the time we thought it was very expensive. It was like twice or three
times what we had been paying for water. I seem to remember when I
started at the farm, we were paying around 30, $38 an acre foot for our
water. And I seem to remember that transfer of water was 2 or 3 times as
much as that. So we thought that was just a dreadful thing. And with
hindsight that would have been one of the, that would have been cheap.
>> Thomas Holyoke: Bargain basement price.
>> Erick Johnson: Yeah.
>> Thomas Holyoke: Okay so you had said you'd done a few transfers and
the rains came again and everything was wonderful. And what starts to
happen after that?
>> Erick Johnson: Well the -- during those times, we in the farm
community focused on farming and focused on the other issues. We focused
on commodity issues, and we focused on you know just the farm issues. And
I know now that there was a lot of stuff going on in the background in
the water world that, I think you interviewed Dan Nelson and he was
working on the Delta Accord and a number of other issues. And the water
availability to the west side of Fresno County and Merced County, and
indeed the Kern County area, really the whole Southern Valley here, kept
getting nicked away by different rules and regulations. And mostly
environmentally driven. The big one though, was the Central Valley
Project Improvement Act that took 800,000 acre-feet away from the Central
Valley Project south of the Delta and then even more, because they took
another couple hundred thousand acre-feet at least away and gave it to
the refuges, the bird refuges. But there were other little nicks and cuts
along the way and so, but we were able to continue farming. We had enough
water to keep farming and.
>> Thomas Holyoke: Did you yourself have to get involved in any of the
political or policy work?
>> Erick Johnson: You know, I don't think so. I don't think I spent a lot
of time. I mean I'd go to some meetings, but I wasn't sort of right in
the middle of it. Sort of one of the reason, why I was a bit bemused that
I was doing this interview today. Because I felt like I was really on the
periphery of what was going on and sort of saw what was going on,
suffered from it, but wasn't in the middle of it like so many of your -your guys that you interviewed.
>> Thomas Holyoke: So did you get back really into the water transfer
business while you were still at Harris Farms after the rain stopped
coming?
>> Erick Johnson: Oh, I think we did a couple more during that period and
then the in 2000 I sort of had a major life change, my daughter was going
into kindergarten and we were thinking about moving into town. And I got
into this business really, it felt like more of a calling than anything.
I was meeting with some guys who I meet with every week, was meeting with
every week just to sort of live life with them, and it was sort of like a
bible study. And I was a little, I was trying to figure out what I was
going to do with if I commute, and stay at Harris Farms, I mean I was
thinking I'd stay at Harris Farms the rest of my life, when I’d been
there for that 16-year period.
>> Jim Provost: Good place to work?
>> Erick Johnson: Yeah, it was a great ride. It was really a terrific job
and terrific, terrific guy to work for, and John Harris and he has an
amazing team of folks who run that place. But I had one of my friends say
well if God has something else for you well I pray he'll open the door
and put flashing lights on it so you'll know that that's it. And the
crazy thing is -- is within an hour of my, it took me an hour to get home
and when I got home I told my wife, you know I think we're supposed to
start a water brokerage business. And so I went from having 600 to 1000
employees and went down to one almost overnight. Had a couple month
transition period. But, so the because water issues were continuing
problems in Westlands and they weren't just for our farm. That’s -Westlands is an area the size of about Rhode Island, roughly 600,000
acres. The areas to the north, a couple hundred thousand acres more that
have real problems with water. And folks in Kern County have problems
with water. So, and I'd seen that some of these water transfers might
help some folks stay in business. And so that's why I said it felt more
of a calling. It was that I maybe should be working on these issues more
on a global basis rather than just trying to figure out how to get my
farm through the situation. So I went to 10 of my neighbors and they
said, yeah you should. We think that's a good idea, you should do that.
>> Thomas Holyoke: And think you said this was around 2000?
>> Erick Johnson: Yeah. Yeah. Yeah, and so and.
>> Thomas Holyoke: Well, how do you get started in a business like this?
This is fairly new territory I would say.
>> Erick Johnson: Well I’d, I'd been, the water transfers that I had been
involved with up to that point had been primarily with Dale Melville with
Provost and Pritchard. And Dale sort of knew how to do these things. And
so I'd watched him do it and with a lot of hubris I thought maybe I could
do it too. And so I went out to, I went up to Northern California and met
some folks in water districts up there; I met folks in water districts
throughout the Valley. And realized how little I knew about this
business. So it was -- it was a bit of a wake-up call about how much
there was to learn. And how just having the buyers wasn't enough. And but
that year I sort of late in the year I was able to finally do a transfer.
I think I didn't get a paycheck for 8 months. And finally did a little
transfer and was able to make it through the first year, so. So how do
you do them? Well you -- you meet with people and you see what their
needs are and what they may have excess supplies or projects that they
maybe could do to create supplies that would be transferable. And it's a
real sort of trying to understand what people's needs are and what their
capabilities are and -- and if you know enough of those people maybe you
can figure out a way to put -- put needs and supplies together.
>> Thomas Holyoke: So you're working on not just cultivating buyers, but
also cultivating sellers, helping them create something so sell?
>> Erick Johnson: More importantly.
>> Thomas Holyoke: Okay.
>> Erick Johnson: There are lots of people who in the valley who need to
buy water. Pretty much everyone on the west side of the valley in an area
of you know as I say Rhode Island. So it's huge, huge need. And because
people were having to renovate wells and get groundwater wells going
again at the time and they didn't want to do that bringing in surface
supplies from other areas was really the, the thing we needed to be doing
here in the valley. So everybody needed water.
>> Thomas Holyoke: So your clients included both buyers and sellers I
suppose for a broker makes sense.
>> Erick Johnson: Yeah, so and I'm, I’m what I, the economic term is
honest broker. The role I play, where I don't take positions in water. I
strictly match buyers and sellers and let them know that you know as a
broker I'll be getting a commission, but they know what that is and -anyway somewhere I found that in a book about the honest broker term
[laughter]. But it's true, I mean you know about all I have is my
integrity and whether people can trust me or not to get put deals
together in a honest and safe way.
>> Thomas Holyoke: Okay so you start your business in 2000 here and
you're still doing it today I understand.
>> Erick Johnson: Yes.
>> Thomas Holyoke: And so any big stories, anecdotes over your career.
>> Erick Johnson. Oh, over 15 years? Well I have to guard the
confidentiality of my clients both buyers and sellers. I've always told
people that I'm not going tell anybody what their deals are. And I do
tell both sides of transactions what I've seen in the marketplace dollars
wise and what the what the transactional numbers are, but I -- but I
won't tell them who who’s doing the deals because quite often sellers
don't want people to know they're selling water, especially if they might
be selling it to their neighbor and they don't know it. And -- and
sometimes buyers don't want people to know that they're buying water
either because they, farmers are typically very humble and just don't
like to toot their own horn too much. As most, I shouldn't say all but
most, you know.
>> Thomas Holyoke: So it seems like this could put you in a tricky
situation where you know especially during these times of extreme
drought. I think there's a perception that it looks bad to be sending
water away from a region, selling water off anywhere. So have you had to
deal with problems of public relations, problems of politics?
>> Erick Johnson: I really haven't because almost all of my transfers
I've ever done have been agriculture to agriculture. And that takes the
evil water broker persona, at least that you read stuff in the press
about those water brokers, they're just taking water away and, but really
what I'm trying to do is I'm trying to find water for farmers primarily.
And I haven't had problems with people sort of claiming that somehow I'm
doing something wrong. Because most people, at least in this part of the
world don't think that's wrong. I mean if somehow we're finding water
that is a little, there's a little extra water in one area that will help
keep another farmer, or farm district alive in another area, that's a
positive. And the dollars typically that are used to buy the water are
then reinvested by the seller in conservation meth -- measures, or other
ways of creating more water for the future.
>> Thomas Holyoke: Do you have sort of I guess a range of operation that
is you're dealing with water sellers mainly the valley, or water sellers
up from northern California?
>> Erick Johnson: Yeah, I've worked from sort of Redding to Bakersfield
is sort of my territory, primary territory would be from Tracy to
Bakersfield though.
>> Thomas Holyoke: Okay and have there been significant changes in the
regulatory infrastructure regarding water transfers? Is it easier than it
used to be? Harder than it used to be?
>> Erick Johnson: The environmental community, which I, they're now
calling themselves NGOs, nongovernmental organizations, it's a wonderful
rebranding that they've done or themselves to try to get the
environmentalists label off of them. And it bugs me every time I hear
that. But they, over time have said that water transfers need to be
easier. That, that's the solution for California's water problems. The
ironic thing is that water transfers now are much, in many ways,
especially the larger scale ones, are much more difficult than they were
15 years ago. So the lip service has been, oh we need to make this
easier. The reality is there so many more people looking at them and
weighing in on them, and making them more difficult to happen and less
likely to happen. So the regulatory paradigm, yeah, it's gotten more
difficult and the.
>> Thomas Holyoke: Do you have to do anything like an environmental
impact report when you're transferring large amounts of water?
>> Erick Johnson: You know I have been involved in a few -- a few of
environmental assessments that the Bureau of Reclamation would do, which
is the level below being doing an EIR. And thankfully I haven't had to do
any EIRs. I've seen other people do EIRs, primarily districts that may
want to sell. And I haven't done a lot of the big scale transfers. That's
one of the reasons I was bemused to be here. Is that I sort of operate on
the periphery. I help people where I can. And it's really relatively
small-scale normally. The big transfers that I see really are the ones
from Northern California across the Delta and into the Western San
Joaquin Valley typically. And those are transfers that the districts or
their representatives, like the authorities have done. I've only been
involved in a couple transfers across the Delta from Northern California,
south. And mainly because unless Department of Water Resources and Bureau
of Reclamation sort of want those things to happen they don't happen. And
only the, it’s been my experience that only the -- the bigger districts
or the authorities representing districts can get those deals done. They
have the clout within with DWR Bureau of Reclamation to get those deals
moved through and to figure out ways to make them happen. So some of
those have required EIR's. But those would be you know to the people who
I look to who I see have really done some major transfers. San Luis Delta
Mendota Water Authority and represents Westlands and others. And they've
gotten some big ones done.
>> Thomas Holyoke: Okay. Now that we're sort of deep into this, I guess
extreme drought. Are you finding it harder to even find water?
>> Erick Johnson: Oh yes. Very painful. Very difficult to find water. I
went for months this year without finding any water for sale. Which for
me was a first. I'd always been able to find a little bit of water here
or there at some price. This year, there just wasn't any for a while. Now
that we're here, we're on July 7th we're actually getting past some of
the irrigation season. Some of the tomatoes crops are coming off at this
point. Some of the nut crops will be coming off shortly. Some farmers who
suffered through last year decided that there was no way they wanted to
get pinched again like they did last year where they got to mid-season
and then had to buy water at extremely high prices. And I saw prices has
high as 2500 an acre foot last year. You compare that to 38 when I
started in this deal in 1983. Not the water transfer deal, but when I
started farming in '83. And because they needed to finish their crops
last year. And if you don't get that last irrigation on a crop you lose
the crop. So that last irrigation is worth a lot, almost, almost the
value of the crop if you look at it strictly from an economic
perspective. Because if you don't put that last irrigation on you lose a
crop. So that's why people were willing to pay those prices. And I didn't
set that market, there was an auction at one of the districts that set
that market. But people this year didn't want to get in that same spot,
so they just didn't farm as many acres. I think in the Valley I've heard
that like 500,000 acres are fallow this year. So now that we're passed
the end of the season, we’re -- or we're getting past some of the
irrigation seasons, some small blocks of water are becoming available
from farmers who said, well okay now I've got a few hundred-acre-feet, or
50-acre-feet. So and then the big scheme of the water world, 50-acre-feet
or 100-acre-feet is background noise when you're talking about millions
of acre-feet would typically be used to irrigate the valley. But that 50acre-feet or 100-acre-feet for somebody who needs to finish a crop this
year is pretty darn important to that one person. So those are the kinds
of transactions I'm doing this year.
>> Thomas Holyoke: The -- finding that there's less and less water to
actually get is that because people, no one just, no one has any water,
or because a lot of potential sellers have decided they needed to hang on
to their water?
>> Erick Johnson: No it's just that there's so little water in the system
this year. Because the -- so much water was flushed out to the ocean
because of environmental regulations in the Delta. And the -- there were,
in the last 2 years, there've been 5 major pulses of water that I'd
consider flood flow type flows go through the Delta. Only one day of
those 2 years were the pumps operated even at their maximum pumping
capacity, let alone the pumping capacity is, is the, I should say
permitted capacity to the pumps, which is significantly less than the
actual built capacity. State water Resource Control Board has limited how
much those pumps can be pumped and because of environmental regulations
we were only able to hit that full pumping permit capacity one day out of
those two years. So literally hundreds of thousands of acre-feet,
probably approaching half million acre-feet were just flushed out to the
ocean because they, the regulators thought that the those pulses of water
turned the water in the Delta a little muddy and if they pulled the water
towards the pumps the muddy water coming down the river would somehow
bring Delta smelt with it to the pumps. And they didn't want to take any
Delta smelt, an endangered species into the pumps so they just didn't
pump. And so about the only way we're going to get, from my perspective,
good flows to the pumps and when I say the pumps I'm talking about the
State Water Project Pumps, named the Banks Pumping Plant and the Jones
Pumping Plant for the Central Valley Project, both near Tracy. About the
only way we're going to get good flows of water to the pumps and down
south of the pumps and into San Luis Reservoirs and farther south is if
the San Joaquin River is flooding for an extended period. So that's my
pray for this year is that the San Joaquin has a little flood, hopefully
not too much damage. It used to be in California that flood was a bad
word because of the damage that floods have done. But now without a flood
on the San Joaquin River we're probably never going to get good
allocations of water for the south of the Delta water users, maybe ever
again, unless we get some regulatory relief, or congressional relief.
>> Thomas Holyoke: Someone who probably, I imagine you talk to a lot of
farmers on a regular basis around the Valley, what's the mood out there
here in 2014, is it desperation, anger, both?
>> Erick Johnson: Well, people are in I think desperation mode is
accurate and rightly so, when you drive out on the west side of the
Valley and you go mile, after mile, after mile, after mile and it's just
dirt in an area that would have been completely cropped in other years.
Or yesterday I drove by a perfectly good orange orchard that's -- that’s
just toast. It's just dead because of lack of water. I've seen literally
sections of ground, which a section would be 1 mile by 1 mile of almonds
that have been pulled out. And almonds are a major export crop and
they're incredibly valuable right now and people have just taken them out
because they don't want to have to try to find water for them. They can't
find water for them now and so they've just pushed them out. And some of
the trees were only 8 years old. And almonds are a 25-year to 30-year
crop. So permanent planting so. So, when people start making those kinds
of decisions to just push out an asset that some of those assets that
I've seen knocked out were $10 million assets. And they're just back to
dirt. You don't make a decision like that unless you're really despairing
about the future. If you -- I think they just don't have hope for the
future that it's going to get better any time soon. And I probably agree
with them, it's not going to get any better any time soon without a major
legislative change really.
>> Thomas Holyoke: Just one thought that occurs to me. In the water that
you might be able to find, do you, is there any interest, or been any
movement on I guess should the right term would be recycled or reused
water, perhaps water that’s a municipality already used for its you know
for homes has now gone into sewers, been processed, can that water then
be resold for agriculture?
>> Erick Johnson: Well, a lot of that's already happening in the Valley
especially. The I know the Fresno Municipal, I forget what wastewater
treatment facility already, its excess water goes to farmers. In the
Modesto area and Turlock area they're talking about doing exactly what
you're asking. Where some of that water's going to be going to
agriculture to folks who need it. Water that would have been going into
the river after the plant, the treatment plant, the excess water goes
into the river. So they'll pick that up. But that's a two-edged sword,
because then there's less water in the river. And then you have river
flow issues. So but it's those kinds of things that people are having to
do.
>> Thomas Holyoke: Okay. Well what have I missed?
>> Jim Provost: Erick's done a good job.
>> Thomas Holyoke: He has [laughter]. Anything else? What's your? Well,
you've already given a little indication of it, but what are your
thoughts for the future? If there is one?
>> Erick Johnson: You know the -- my hope and my prayer is that at some
point the national political scene wakes up to what's going on in
California. We provide half of the fruits and vegetables to the nation.
And what I'd consider craziness in the environmental regulatory scheme is
causing the -- this amazing area that we've been blessed with to crumble.
The, and the things I was talking about with the Delta Smelt. We keep
throwing more water at the Delta smelt. We keep throwing more water at
the salmon. And when I say throwing water, the regulators just grab water
and say, oh we need more water in the rivers for these fish. More water
is not solving the problem. The fish populations keep going down. They're
not recovering even though we've thrown inordinate amounts of water at
those problems, but it's the only knob that regulators are using. We have
to get more, we have to get smarter about restoring those fish
populations. Whether it's in fisheries, or in fish hatcheries, or getting
rid of the predators, like the striped bass in the Delta are voracious
predators. They're an introduced species, gee they just might eat Delta
Smelt, and they just might eat Salmon Smelt, the little salmon
fingerlings. And indeed last year I heard that the winter run of the
Chinook Salmon, they raised some in the hatcheries and they put them in
the river, and they had 95% mortality before they got to the ocean. And
what kind of lunacy is that. Well it's the kind of lunacy that hopefully
when people hear about it they say, well we need to be, we need to be
smarter about this. We've got the economy not only of the Valley on the
bubble, but if have another 1 or 2 more years of this drought cycle that
we're in right now, the whole state is gonna be really suffering from the
weight of the drought. We're only in the fourth year of a drought right
now. The first year the Central Valley Project allocation was 40%. The
second year of the drought, it was 20% and the last 2 years it's been at
0% allocation for the south of Delta agriculture contractors. The last 6year drought I talked about that really woke me up to the water issues in
the late '80s and early '90s we got 100% allocation for the first 3
years, 50% the fourth year, and 25% the next 2 years. It's not the
drought that's the problem. It's all these environmental regulations that
are preventing water from moving where it needs to move. That's something
we as a society can address we can say look we need to be smarter about
our environmental regulations. I mean every farmer I know loves the
environment, loves being out in the environment on a daily basis. They
take care of their environment because they know if they don't take care
of their fields and their area, their farms are not gonna thrive. They
don't necessarily want to see the fish go extinct. But there has to be
smarter ways that we can address the environmental issues. And so that I
guess does give me some hope. That at some point people are going to wake
up and say look, we can't just keep doing the same things over, and over,
and over again. Meaning giving the fish more, and more, and more water
and expecting a different result. I mean that's the, I think Einstein
said that that's the definition of insanity. Doing the same thing over
and over and expecting different results. Well that's what our
government's doing right now. So at some point people will say look we
need to do other things here. And you know whether it be build the
tunnels under the Delta to get more water south of the Delta. That would
probably help. East Bay Municipal District, East Bay Mud Municipal
District, essentially did that. They built some intakes in Sacramento,
called the Freeport Diversion Project and in essence, built a peripheral
canal for themselves, or tube, about 10 years ago. And so now it's time
for the rest of the state to do the same thing, to take the water up out
of the river upstream near Sacramento and then so we can get away from
having to deal with the fish issues in the Delta, from crippling the
state. So, but that's something that those kinds of projects under the
current environmental regulatory paradigm of you have a project like that
you permit you say you want to move forward on it, you get environmental
lawsuits. That's probably not going to happen in my lifetime, so we need
to have some environmental relief before then, so. I don't know that's
not a very rosy picture of the future, but I think it’s that's the
reality. And that’s why farmers who I talk to on a daily basis are so
despondent that they don't see any hope coming anytime in the future
unless we get this El Nino that is supposedly we're going to get an El
Nino this year in 2015.
>> Thomas Holyoke: They said that last year.
>> Erick Johnson: Well right, but this year it's looking more like a
strong El Nino, unfortunately, only about half of the time El Nino's are
wet. But if it's wet, it will probably be really wet. And we may get that
flood on the San Joaquin River we need. Hopefully it's not going to be a
damaging flood, but it will be wet enough that we can fill San Luis
Reservoir and get an allocation for the farmers, get them to turn their
wells off and let the ground water recharge for a few years. So that
would be the best-case scenario for next year or two is to get it the
old-fashioned way, from the -- from nature.
>> Thomas Holyoke: Okay.
>> Erick Johnson: Thanks.
>> Thomas Holyoke: Thank you very much.
don't you start off just by telling us a little bit about yourself, where
you're from, your education, how you got started in the working world
those sort of things.
>> Erick Johnson: Sure. Morning. I -- well let's see I was born and
raised in Jackson, Wyoming. And my mom had gone to UC Berkeley and met a
cowboy in Wyoming and decided to move to Wyoming and raise a family. And
they started a small business. It was -- my dad's a cabinetmaker, he
turned into a cabinetmaker after being a cowboy. And my mom and dad had a
picture framing business. So sort of a small town, small -- small
business kid. And but I did pretty well at school and got accepted to
Stanford University. So it -- that brought me to California, actually
back to where my mom was from. She was from the -- California. In fact,
my great-grandfather was in Tranquility, which is west of Fresno about 30
minutes or so. And I -- at Stanford I studied political science.
>> Thomas Holyoke: It’s a good major.
>> Erick Johnson: Yeah it's a good major, you know and didn't have to
take calculus, so it was a lot easier than economics. The –- the -- and I
thought I'd go into politics. I thought I'd probably go back to Wyoming
and go into politics. But I -- when I got out I went and worked in
Washington DC for, Senator from Wyoming. A guy named Malcolm Wallop.
Terrific guy. Was there for about a year, decided that I really didn't
like politics. And I didn't like all the big egos in Washington DC. Not
necessarily the, well the politicians certainly, but everyone else who
works in Washington also, really feels like they need to be really
important and I think I was starting to get some of that myself.
>> Thomas Holyoke: And about when did you work for Senator Wallop?
>> Erick Johnson: Ah, let's see it would have been '83, '84.
>> Thomas Holyoke: Okay, what kind of work were you doing for him?
>> Erick Johnson: I was legislative clerk. Which is a very fancy term for
opening the mail, sorting the mail [laughter]. And I -- but I also did
some -- some work on some projects. As part of my time there, I got to go
back to Wyoming and got to take a look at the USBRs early windmills. Got
to go up in one of the big, big windmills that they had built Wyoming.
And they were sort of testing that idea to see if that was going to be
something that would work for the US.
>> Thomas Holyoke: USBR was doing that?
>> Erick Johnson: Yeah, surprisingly. Well you know they were in the
energy generation business. I mean that was one of their primary focuses.
So it would make sense that they were trying to figure out if something
like that would work. So they had two huge windmills that were probably,
I don't know ten stories high or so. They were really the big ones. So -so I -- that was my first interaction with the USBR. And but then I
decided I didn't really like Washington and I left and came back to
California and went to work for a cousin's husband and her at Harris
Farms in Coalinga. And so I guess I started there in '84. And was there
mostly until about 2000. Took a couple years off to get an MBA at UC
Davis.
>> Thomas Holyoke: Okay what kind of work were you doing on Harris Farms?
>> Erick Johnson: Well, I started just as, on projects trying to, we were
looking at doing some acquisition work. So I knew how to, I had taken a
class in computers sort of early on, and so I knew how to use a
spreadsheet. And ->> Thomas Holyoke: And this is still back in the late '80s when that's
sort of a new technology.
>> Erick Johnson: It was brand-new technology. The electronic
spreadsheets at the time were changing the world. And I figured out how
to use them. I figured out how to use them to make graphs, and charts,
and so all a sudden I was in on all the big strategic projects that -and we were looking at major acquisition in Kern County and so I got to
do all that. That sort of got me interested in going back and getting my
MBA. And then by the time I left I was the chief operating officer and
general manager of the farming division, which is at the time was between
16 and 20,000 acres.
>> Thomas Holyoke: What kind of projects do you remember going on at
Harris Ranch back in those days? And what were they -- what were the big
things they were trying to do?
>> Erick Johnson: Well on the good side we were doing things like
transitioning some of our ground into organic ground. Actually created an
entity with three of our neighbors and created the largest organic farm
in the US at the time. Ground that still organic. So I feel happy that I
was the one who sort of brought that to the forefront and got on the
California Certified Organic Board. And -- but it was a culture shock for
the organic farmers at the time, because they were a bunch of raised bed
folks who were growing strawberries. And strawberries is sort of where it
started in the Santa Cruz area. So I went over as a guy from the Central
Valley from large organized agriculture and it was a bit of culture shock
for them to have me on that board. Because we did things in a big way and
a big enough way that we pretty well wrecked every market we entered,
because we grew so much that we'd go into these markets and just
overwhelm the market with broccoli or some of the other crops we grew.
>> Thomas Holyoke: I know it's maybe a little off topic, but what -- why
was Harris Farms so interested in getting into organic back in the late
'80s or '90s whenever.
>> Erick Johnson: I'm not sure everybody was. I was interested in it
because I saw that there was going to be a demand for that just in my
interactions with other people you know because I had gone to school in
the Bay Area, I sort of saw that as an emerging market I saw that the
market was growing 20% a year and -- and then as we got into it a little
bit deeper I found out that it made us better farmers as well. We learned
new techniques of farming, even our conventional fields. So and we also
had a lot of manure which helped a lot. Because we had our own our own
nitrogen source that we could compost and use on the fields because
Harris Farms Corporation owned the Harris Ranch Feedlot as well. And with
100,000 cattle producing manure, it really was a good sort of symbiotic
relationship for us. We even used the straw out of the horse racing barns
to mix with the manure to as a part of the compost process, so.
>> Thomas Holyoke: Back during that kind of time period do you remember
any major water issues that Harris Ranch was dealing with?
>> Erick Johnson: Oh yeah, that's what got me into water actually.
>> Thomas Holyoke: Oh.
>> Erick Johnson: I -- I had gone to business school and came back at the
tail end of the drought in the late '80s, early '90s and we, at the time,
were in a 6-year drought. It lasted 6 years. The first 3 years we got
100% allocations, the fourth year we had a 50% allocation and then it
went down to 25% and then 25 the next year too.
>> Thomas Holyoke: Actually just to interrupt you for a second, which
water system does Harris Ranch take water from?
>> Erick Johnson: Oh yeah. We got water from the CVP, Central Valley
Project which is a USBR project. And we specifically got water out of the
San Luis Canal, which is a joint use canal with the state water project
California Aqueduct, so. And so that was our water source that was
installed in I think it was opened up in '66, '67. Before that Harris
Farms got its water from deep-water wells that were initially drilled in
the, I think the late '30s early '40s, primarily. And that area of the
valley was farmed about one-quarter in a summer crop and about threequarters in winter wheat, those kinds of crops. But when the water came
in from the canals, all of sudden we could irrigate the whole farm in
summer crops. There was enough water -- surface water to really make that
part of the valley bloom. So that western part of Fresno County turned
from a relatively nonproductive farming area into one of the most
productive farming areas in the world. I mean it's one of the great
tragedies that we, as a society, don't recognize what a blessing we've
been given in Western Fresno County and in the San Joaquin Valley in
general. We've got this wonderful Mediterranean climate. We've got soils
that I was farming that were so deep that we didn't know how deep the
topsoil went. At times we'd take a backhoe and dig down to see how deep
the roots on some of the crops went and we'd go down 12, 15 feet and
still find roots, because the soils were that deep and that good.
Probably they'd go hundreds of feet deep. So it's not like the rest of
the country where we have water issues, or I mean issues with soil or -I mean our limiting issues was the water issue, which appeared in the to
me first in the late '80s, early '90s. And Harris Farms had to be 60%
fallow one year and I didn't want that to happen again, so I thought well
maybe we need to see if we can get some water from somewhere else to
bring in. And so that was my first interaction with having to try to find
water to keep that part of the valley up and running and going.
>> Thomas Holyoke: Just before we get into that, do you remember more or
less about what year the first serious cutbacks in water came?
>> Erick Johnson: Well, let's see it would have been about '90 I think
because we were -- we were 4 years into the drought and we got a 50%
allocation that year I think and then it was 25% the next year, so.
>> Thomas Holyoke: Were the cutbacks entirely due to the drought?
>> Erick Johnson: No not entirely due to the drought. Primarily due to
the drought, but also my recollection is that the winter run of the
Chinook salmon was just being listed as an endangered species. And it
lived in the upper Sacramento River. And that was our first interaction
with an endangered species issue creating a cutback of water. And then at
the same time, the Miller Bradley Bill, which later became the Central
Valley Project Improvement Act, which is a ironic name because it's
absolutely broken the Central Valley Project. But the Miller Bradley
Bill, which was drafted by George Miller from the Bay Area Contra Costa
County. He was a Congressman who just had a loathing for the Central
Valley. He must have thought that we should of turn this area back into a
desert. And Bill Bradley who was a congress -- senator from New Jersey
who didn't know anything about California, they got together and drafted
this bill to try to somehow improve upon the Central Valley Project. So - so those two things were happening at the same time. And I don't
remember the year that CBPIA was passed. I think it was '92. But so that
was all happening at the same time. And all the sudden the farm community
had to encounter this new draconian set of environmental regulations
they'd never had to deal with before. Before they'd had to deal with all
of the normal things that farmers would deal with whether it be weather
problems like, well a natural drought, or -- or a -- or hail, or
pestilence, or the kinds of things that farmers have to deal with. And
they did very well from the late '60s through the early '90s and had a
very productive period until these environmental regulations had kicked
in.
>> Thomas Holyoke: So with the new reality starting to dawn on farmers
out on the west side you were -- you mentioned you were starting to get
into a position where you had to look around for water.
>> Erick Johnson: Right. And actually the first transaction I did really
came knocking at our door. It was actually Dale Melville from Jim
Provost, Provost and Pritchard Firm. And they had some water in another
district, south of Westlands, and water that that farmer didn't need and
we were able to buy, I think it was 20,000-acre-feet that year.
>> Jim Provost: Are you talking about Dudley Ridge?
>> Erick Johnson: Yeah it would have been Dudley Ridge. I don't think I'm
violating any confidences with that. Yeah it was public record because it
would have gone through the state process. Unfortunately we got it done a
little late in the year and we hadn't prepared our farm for, for planting
cotton that year. So we had to very quickly prepare the beds and very
quickly, plant and we got a bad stand of cotton. And it was, if I
remember correctly, it was the year that we had like 15,000 acres of
cotton and maybe -- maybe 12,000. And we lost money on it because we -the farmer term is shotgunned it in. And but we used the water and it got
me into the water trading mode and thinking about those things. And did a
few more over the next few years. But then the rains came and we had good
water allocations again for a period of years. So.
>> Thomas Holyoke: With the water transfer, like that first one you did.
I mean the physical transfer of water is simply you were taking water out
of the San Luis Canal that otherwise would have continued to flow I
guess, Dudley Ridge is further south than Westlands. So physically that's
all that was required.
>> Erick Johnson: Physically all that's all that was required. The -- the
nature of water transfers however, is that the physical parts of the
water transfers is easy. It's the institutional things that drive you
nuts and prevent a lot of them from happening. That particular one the
State Water Resource Control Board had to approve a change of place of
use for that State Water Project Water in Dudley Ridge to move into
Westlands, which is in the CVP place of use. The dividing line between
the State Water Project generally and the Central Valley Project is the
Kings County line on the north side of Kings County. So Westlands
actually has a little bit of ground in the State Water Project place of
use in Kings County, but the -- where the water was going to go in
Westlands was in Fresno County. So we had to get this change of place of
use from the State Water Resource Control Board to move it from the State
Project, into the Central Valley Project place of use. I think we finally
got the approval sometime in August that year, for a crop that we had
planted in April, May. And it was so frustrating that we actually talked
to some, some folks in Sacramento at the time, meaning, I think he was a,
I don't even remember the name of the fellow, but the -- he was a state
senator I think. And he was saying, well what can we do to help? And we
said, well we need to shorten the window of these approvals, because that
it's just taking too long. And we actually got legislature to change the
approval process to shorten the amount of time the state board has to
consider one of those transfers from an unlimited period, as I recall, to
45 days. Which I thought oh boy this is really going to help because now
they can only think about it so long and they have to give us a decision
within 45 days. But as these things are uncovered, it's now that the -we find that the delay is even earlier than that. Because of if the
Department of Water Resources has to make the application to the State
Board, because it's their water in the state service area, they have to
make the application to the state board. And they don't have any
restriction on how long they can process an application before it goes to
the state board. So quite often these -- these transfers still take
months, and months, and months, or years to, to get approved. So -- so
that one little change we made, didn't really help very much. But we
tried you know because we saw a problem and said well if we encounter
this again, we're going to need to have a quicker regulatory environment
to get through.
>> Thomas Holyoke: Was some of these early water transfers were they
expensive, the price you were paying for water?
>> Erick Johnson: It was dreadful and I say that with an in jest now. At
the time we thought it was very expensive. It was like twice or three
times what we had been paying for water. I seem to remember when I
started at the farm, we were paying around 30, $38 an acre foot for our
water. And I seem to remember that transfer of water was 2 or 3 times as
much as that. So we thought that was just a dreadful thing. And with
hindsight that would have been one of the, that would have been cheap.
>> Thomas Holyoke: Bargain basement price.
>> Erick Johnson: Yeah.
>> Thomas Holyoke: Okay so you had said you'd done a few transfers and
the rains came again and everything was wonderful. And what starts to
happen after that?
>> Erick Johnson: Well the -- during those times, we in the farm
community focused on farming and focused on the other issues. We focused
on commodity issues, and we focused on you know just the farm issues. And
I know now that there was a lot of stuff going on in the background in
the water world that, I think you interviewed Dan Nelson and he was
working on the Delta Accord and a number of other issues. And the water
availability to the west side of Fresno County and Merced County, and
indeed the Kern County area, really the whole Southern Valley here, kept
getting nicked away by different rules and regulations. And mostly
environmentally driven. The big one though, was the Central Valley
Project Improvement Act that took 800,000 acre-feet away from the Central
Valley Project south of the Delta and then even more, because they took
another couple hundred thousand acre-feet at least away and gave it to
the refuges, the bird refuges. But there were other little nicks and cuts
along the way and so, but we were able to continue farming. We had enough
water to keep farming and.
>> Thomas Holyoke: Did you yourself have to get involved in any of the
political or policy work?
>> Erick Johnson: You know, I don't think so. I don't think I spent a lot
of time. I mean I'd go to some meetings, but I wasn't sort of right in
the middle of it. Sort of one of the reason, why I was a bit bemused that
I was doing this interview today. Because I felt like I was really on the
periphery of what was going on and sort of saw what was going on,
suffered from it, but wasn't in the middle of it like so many of your -your guys that you interviewed.
>> Thomas Holyoke: So did you get back really into the water transfer
business while you were still at Harris Farms after the rain stopped
coming?
>> Erick Johnson: Oh, I think we did a couple more during that period and
then the in 2000 I sort of had a major life change, my daughter was going
into kindergarten and we were thinking about moving into town. And I got
into this business really, it felt like more of a calling than anything.
I was meeting with some guys who I meet with every week, was meeting with
every week just to sort of live life with them, and it was sort of like a
bible study. And I was a little, I was trying to figure out what I was
going to do with if I commute, and stay at Harris Farms, I mean I was
thinking I'd stay at Harris Farms the rest of my life, when I’d been
there for that 16-year period.
>> Jim Provost: Good place to work?
>> Erick Johnson: Yeah, it was a great ride. It was really a terrific job
and terrific, terrific guy to work for, and John Harris and he has an
amazing team of folks who run that place. But I had one of my friends say
well if God has something else for you well I pray he'll open the door
and put flashing lights on it so you'll know that that's it. And the
crazy thing is -- is within an hour of my, it took me an hour to get home
and when I got home I told my wife, you know I think we're supposed to
start a water brokerage business. And so I went from having 600 to 1000
employees and went down to one almost overnight. Had a couple month
transition period. But, so the because water issues were continuing
problems in Westlands and they weren't just for our farm. That’s -Westlands is an area the size of about Rhode Island, roughly 600,000
acres. The areas to the north, a couple hundred thousand acres more that
have real problems with water. And folks in Kern County have problems
with water. So, and I'd seen that some of these water transfers might
help some folks stay in business. And so that's why I said it felt more
of a calling. It was that I maybe should be working on these issues more
on a global basis rather than just trying to figure out how to get my
farm through the situation. So I went to 10 of my neighbors and they
said, yeah you should. We think that's a good idea, you should do that.
>> Thomas Holyoke: And think you said this was around 2000?
>> Erick Johnson: Yeah. Yeah. Yeah, and so and.
>> Thomas Holyoke: Well, how do you get started in a business like this?
This is fairly new territory I would say.
>> Erick Johnson: Well I’d, I'd been, the water transfers that I had been
involved with up to that point had been primarily with Dale Melville with
Provost and Pritchard. And Dale sort of knew how to do these things. And
so I'd watched him do it and with a lot of hubris I thought maybe I could
do it too. And so I went out to, I went up to Northern California and met
some folks in water districts up there; I met folks in water districts
throughout the Valley. And realized how little I knew about this
business. So it was -- it was a bit of a wake-up call about how much
there was to learn. And how just having the buyers wasn't enough. And but
that year I sort of late in the year I was able to finally do a transfer.
I think I didn't get a paycheck for 8 months. And finally did a little
transfer and was able to make it through the first year, so. So how do
you do them? Well you -- you meet with people and you see what their
needs are and what they may have excess supplies or projects that they
maybe could do to create supplies that would be transferable. And it's a
real sort of trying to understand what people's needs are and what their
capabilities are and -- and if you know enough of those people maybe you
can figure out a way to put -- put needs and supplies together.
>> Thomas Holyoke: So you're working on not just cultivating buyers, but
also cultivating sellers, helping them create something so sell?
>> Erick Johnson: More importantly.
>> Thomas Holyoke: Okay.
>> Erick Johnson: There are lots of people who in the valley who need to
buy water. Pretty much everyone on the west side of the valley in an area
of you know as I say Rhode Island. So it's huge, huge need. And because
people were having to renovate wells and get groundwater wells going
again at the time and they didn't want to do that bringing in surface
supplies from other areas was really the, the thing we needed to be doing
here in the valley. So everybody needed water.
>> Thomas Holyoke: So your clients included both buyers and sellers I
suppose for a broker makes sense.
>> Erick Johnson: Yeah, so and I'm, I’m what I, the economic term is
honest broker. The role I play, where I don't take positions in water. I
strictly match buyers and sellers and let them know that you know as a
broker I'll be getting a commission, but they know what that is and -anyway somewhere I found that in a book about the honest broker term
[laughter]. But it's true, I mean you know about all I have is my
integrity and whether people can trust me or not to get put deals
together in a honest and safe way.
>> Thomas Holyoke: Okay so you start your business in 2000 here and
you're still doing it today I understand.
>> Erick Johnson: Yes.
>> Thomas Holyoke: And so any big stories, anecdotes over your career.
>> Erick Johnson. Oh, over 15 years? Well I have to guard the
confidentiality of my clients both buyers and sellers. I've always told
people that I'm not going tell anybody what their deals are. And I do
tell both sides of transactions what I've seen in the marketplace dollars
wise and what the what the transactional numbers are, but I -- but I
won't tell them who who’s doing the deals because quite often sellers
don't want people to know they're selling water, especially if they might
be selling it to their neighbor and they don't know it. And -- and
sometimes buyers don't want people to know that they're buying water
either because they, farmers are typically very humble and just don't
like to toot their own horn too much. As most, I shouldn't say all but
most, you know.
>> Thomas Holyoke: So it seems like this could put you in a tricky
situation where you know especially during these times of extreme
drought. I think there's a perception that it looks bad to be sending
water away from a region, selling water off anywhere. So have you had to
deal with problems of public relations, problems of politics?
>> Erick Johnson: I really haven't because almost all of my transfers
I've ever done have been agriculture to agriculture. And that takes the
evil water broker persona, at least that you read stuff in the press
about those water brokers, they're just taking water away and, but really
what I'm trying to do is I'm trying to find water for farmers primarily.
And I haven't had problems with people sort of claiming that somehow I'm
doing something wrong. Because most people, at least in this part of the
world don't think that's wrong. I mean if somehow we're finding water
that is a little, there's a little extra water in one area that will help
keep another farmer, or farm district alive in another area, that's a
positive. And the dollars typically that are used to buy the water are
then reinvested by the seller in conservation meth -- measures, or other
ways of creating more water for the future.
>> Thomas Holyoke: Do you have sort of I guess a range of operation that
is you're dealing with water sellers mainly the valley, or water sellers
up from northern California?
>> Erick Johnson: Yeah, I've worked from sort of Redding to Bakersfield
is sort of my territory, primary territory would be from Tracy to
Bakersfield though.
>> Thomas Holyoke: Okay and have there been significant changes in the
regulatory infrastructure regarding water transfers? Is it easier than it
used to be? Harder than it used to be?
>> Erick Johnson: The environmental community, which I, they're now
calling themselves NGOs, nongovernmental organizations, it's a wonderful
rebranding that they've done or themselves to try to get the
environmentalists label off of them. And it bugs me every time I hear
that. But they, over time have said that water transfers need to be
easier. That, that's the solution for California's water problems. The
ironic thing is that water transfers now are much, in many ways,
especially the larger scale ones, are much more difficult than they were
15 years ago. So the lip service has been, oh we need to make this
easier. The reality is there so many more people looking at them and
weighing in on them, and making them more difficult to happen and less
likely to happen. So the regulatory paradigm, yeah, it's gotten more
difficult and the.
>> Thomas Holyoke: Do you have to do anything like an environmental
impact report when you're transferring large amounts of water?
>> Erick Johnson: You know I have been involved in a few -- a few of
environmental assessments that the Bureau of Reclamation would do, which
is the level below being doing an EIR. And thankfully I haven't had to do
any EIRs. I've seen other people do EIRs, primarily districts that may
want to sell. And I haven't done a lot of the big scale transfers. That's
one of the reasons I was bemused to be here. Is that I sort of operate on
the periphery. I help people where I can. And it's really relatively
small-scale normally. The big transfers that I see really are the ones
from Northern California across the Delta and into the Western San
Joaquin Valley typically. And those are transfers that the districts or
their representatives, like the authorities have done. I've only been
involved in a couple transfers across the Delta from Northern California,
south. And mainly because unless Department of Water Resources and Bureau
of Reclamation sort of want those things to happen they don't happen. And
only the, it’s been my experience that only the -- the bigger districts
or the authorities representing districts can get those deals done. They
have the clout within with DWR Bureau of Reclamation to get those deals
moved through and to figure out ways to make them happen. So some of
those have required EIR's. But those would be you know to the people who
I look to who I see have really done some major transfers. San Luis Delta
Mendota Water Authority and represents Westlands and others. And they've
gotten some big ones done.
>> Thomas Holyoke: Okay. Now that we're sort of deep into this, I guess
extreme drought. Are you finding it harder to even find water?
>> Erick Johnson: Oh yes. Very painful. Very difficult to find water. I
went for months this year without finding any water for sale. Which for
me was a first. I'd always been able to find a little bit of water here
or there at some price. This year, there just wasn't any for a while. Now
that we're here, we're on July 7th we're actually getting past some of
the irrigation season. Some of the tomatoes crops are coming off at this
point. Some of the nut crops will be coming off shortly. Some farmers who
suffered through last year decided that there was no way they wanted to
get pinched again like they did last year where they got to mid-season
and then had to buy water at extremely high prices. And I saw prices has
high as 2500 an acre foot last year. You compare that to 38 when I
started in this deal in 1983. Not the water transfer deal, but when I
started farming in '83. And because they needed to finish their crops
last year. And if you don't get that last irrigation on a crop you lose
the crop. So that last irrigation is worth a lot, almost, almost the
value of the crop if you look at it strictly from an economic
perspective. Because if you don't put that last irrigation on you lose a
crop. So that's why people were willing to pay those prices. And I didn't
set that market, there was an auction at one of the districts that set
that market. But people this year didn't want to get in that same spot,
so they just didn't farm as many acres. I think in the Valley I've heard
that like 500,000 acres are fallow this year. So now that we're passed
the end of the season, we’re -- or we're getting past some of the
irrigation seasons, some small blocks of water are becoming available
from farmers who said, well okay now I've got a few hundred-acre-feet, or
50-acre-feet. So and then the big scheme of the water world, 50-acre-feet
or 100-acre-feet is background noise when you're talking about millions
of acre-feet would typically be used to irrigate the valley. But that 50acre-feet or 100-acre-feet for somebody who needs to finish a crop this
year is pretty darn important to that one person. So those are the kinds
of transactions I'm doing this year.
>> Thomas Holyoke: The -- finding that there's less and less water to
actually get is that because people, no one just, no one has any water,
or because a lot of potential sellers have decided they needed to hang on
to their water?
>> Erick Johnson: No it's just that there's so little water in the system
this year. Because the -- so much water was flushed out to the ocean
because of environmental regulations in the Delta. And the -- there were,
in the last 2 years, there've been 5 major pulses of water that I'd
consider flood flow type flows go through the Delta. Only one day of
those 2 years were the pumps operated even at their maximum pumping
capacity, let alone the pumping capacity is, is the, I should say
permitted capacity to the pumps, which is significantly less than the
actual built capacity. State water Resource Control Board has limited how
much those pumps can be pumped and because of environmental regulations
we were only able to hit that full pumping permit capacity one day out of
those two years. So literally hundreds of thousands of acre-feet,
probably approaching half million acre-feet were just flushed out to the
ocean because they, the regulators thought that the those pulses of water
turned the water in the Delta a little muddy and if they pulled the water
towards the pumps the muddy water coming down the river would somehow
bring Delta smelt with it to the pumps. And they didn't want to take any
Delta smelt, an endangered species into the pumps so they just didn't
pump. And so about the only way we're going to get, from my perspective,
good flows to the pumps and when I say the pumps I'm talking about the
State Water Project Pumps, named the Banks Pumping Plant and the Jones
Pumping Plant for the Central Valley Project, both near Tracy. About the
only way we're going to get good flows of water to the pumps and down
south of the pumps and into San Luis Reservoirs and farther south is if
the San Joaquin River is flooding for an extended period. So that's my
pray for this year is that the San Joaquin has a little flood, hopefully
not too much damage. It used to be in California that flood was a bad
word because of the damage that floods have done. But now without a flood
on the San Joaquin River we're probably never going to get good
allocations of water for the south of the Delta water users, maybe ever
again, unless we get some regulatory relief, or congressional relief.
>> Thomas Holyoke: Someone who probably, I imagine you talk to a lot of
farmers on a regular basis around the Valley, what's the mood out there
here in 2014, is it desperation, anger, both?
>> Erick Johnson: Well, people are in I think desperation mode is
accurate and rightly so, when you drive out on the west side of the
Valley and you go mile, after mile, after mile, after mile and it's just
dirt in an area that would have been completely cropped in other years.
Or yesterday I drove by a perfectly good orange orchard that's -- that’s
just toast. It's just dead because of lack of water. I've seen literally
sections of ground, which a section would be 1 mile by 1 mile of almonds
that have been pulled out. And almonds are a major export crop and
they're incredibly valuable right now and people have just taken them out
because they don't want to have to try to find water for them. They can't
find water for them now and so they've just pushed them out. And some of
the trees were only 8 years old. And almonds are a 25-year to 30-year
crop. So permanent planting so. So, when people start making those kinds
of decisions to just push out an asset that some of those assets that
I've seen knocked out were $10 million assets. And they're just back to
dirt. You don't make a decision like that unless you're really despairing
about the future. If you -- I think they just don't have hope for the
future that it's going to get better any time soon. And I probably agree
with them, it's not going to get any better any time soon without a major
legislative change really.
>> Thomas Holyoke: Just one thought that occurs to me. In the water that
you might be able to find, do you, is there any interest, or been any
movement on I guess should the right term would be recycled or reused
water, perhaps water that’s a municipality already used for its you know
for homes has now gone into sewers, been processed, can that water then
be resold for agriculture?
>> Erick Johnson: Well, a lot of that's already happening in the Valley
especially. The I know the Fresno Municipal, I forget what wastewater
treatment facility already, its excess water goes to farmers. In the
Modesto area and Turlock area they're talking about doing exactly what
you're asking. Where some of that water's going to be going to
agriculture to folks who need it. Water that would have been going into
the river after the plant, the treatment plant, the excess water goes
into the river. So they'll pick that up. But that's a two-edged sword,
because then there's less water in the river. And then you have river
flow issues. So but it's those kinds of things that people are having to
do.
>> Thomas Holyoke: Okay. Well what have I missed?
>> Jim Provost: Erick's done a good job.
>> Thomas Holyoke: He has [laughter]. Anything else? What's your? Well,
you've already given a little indication of it, but what are your
thoughts for the future? If there is one?
>> Erick Johnson: You know the -- my hope and my prayer is that at some
point the national political scene wakes up to what's going on in
California. We provide half of the fruits and vegetables to the nation.
And what I'd consider craziness in the environmental regulatory scheme is
causing the -- this amazing area that we've been blessed with to crumble.
The, and the things I was talking about with the Delta Smelt. We keep
throwing more water at the Delta smelt. We keep throwing more water at
the salmon. And when I say throwing water, the regulators just grab water
and say, oh we need more water in the rivers for these fish. More water
is not solving the problem. The fish populations keep going down. They're
not recovering even though we've thrown inordinate amounts of water at
those problems, but it's the only knob that regulators are using. We have
to get more, we have to get smarter about restoring those fish
populations. Whether it's in fisheries, or in fish hatcheries, or getting
rid of the predators, like the striped bass in the Delta are voracious
predators. They're an introduced species, gee they just might eat Delta
Smelt, and they just might eat Salmon Smelt, the little salmon
fingerlings. And indeed last year I heard that the winter run of the
Chinook Salmon, they raised some in the hatcheries and they put them in
the river, and they had 95% mortality before they got to the ocean. And
what kind of lunacy is that. Well it's the kind of lunacy that hopefully
when people hear about it they say, well we need to be, we need to be
smarter about this. We've got the economy not only of the Valley on the
bubble, but if have another 1 or 2 more years of this drought cycle that
we're in right now, the whole state is gonna be really suffering from the
weight of the drought. We're only in the fourth year of a drought right
now. The first year the Central Valley Project allocation was 40%. The
second year of the drought, it was 20% and the last 2 years it's been at
0% allocation for the south of Delta agriculture contractors. The last 6year drought I talked about that really woke me up to the water issues in
the late '80s and early '90s we got 100% allocation for the first 3
years, 50% the fourth year, and 25% the next 2 years. It's not the
drought that's the problem. It's all these environmental regulations that
are preventing water from moving where it needs to move. That's something
we as a society can address we can say look we need to be smarter about
our environmental regulations. I mean every farmer I know loves the
environment, loves being out in the environment on a daily basis. They
take care of their environment because they know if they don't take care
of their fields and their area, their farms are not gonna thrive. They
don't necessarily want to see the fish go extinct. But there has to be
smarter ways that we can address the environmental issues. And so that I
guess does give me some hope. That at some point people are going to wake
up and say look, we can't just keep doing the same things over, and over,
and over again. Meaning giving the fish more, and more, and more water
and expecting a different result. I mean that's the, I think Einstein
said that that's the definition of insanity. Doing the same thing over
and over and expecting different results. Well that's what our
government's doing right now. So at some point people will say look we
need to do other things here. And you know whether it be build the
tunnels under the Delta to get more water south of the Delta. That would
probably help. East Bay Municipal District, East Bay Mud Municipal
District, essentially did that. They built some intakes in Sacramento,
called the Freeport Diversion Project and in essence, built a peripheral
canal for themselves, or tube, about 10 years ago. And so now it's time
for the rest of the state to do the same thing, to take the water up out
of the river upstream near Sacramento and then so we can get away from
having to deal with the fish issues in the Delta, from crippling the
state. So, but that's something that those kinds of projects under the
current environmental regulatory paradigm of you have a project like that
you permit you say you want to move forward on it, you get environmental
lawsuits. That's probably not going to happen in my lifetime, so we need
to have some environmental relief before then, so. I don't know that's
not a very rosy picture of the future, but I think it’s that's the
reality. And that’s why farmers who I talk to on a daily basis are so
despondent that they don't see any hope coming anytime in the future
unless we get this El Nino that is supposedly we're going to get an El
Nino this year in 2015.
>> Thomas Holyoke: They said that last year.
>> Erick Johnson: Well right, but this year it's looking more like a
strong El Nino, unfortunately, only about half of the time El Nino's are
wet. But if it's wet, it will probably be really wet. And we may get that
flood on the San Joaquin River we need. Hopefully it's not going to be a
damaging flood, but it will be wet enough that we can fill San Luis
Reservoir and get an allocation for the farmers, get them to turn their
wells off and let the ground water recharge for a few years. So that
would be the best-case scenario for next year or two is to get it the
old-fashioned way, from the -- from nature.
>> Thomas Holyoke: Okay.
>> Erick Johnson: Thanks.
>> Thomas Holyoke: Thank you very much.
>> Thomas Holyoke: Okay, we are talking with Erick Johnson today. So why
don't you start off just by telling us a little bit about yourself, where
you're from, your education, how you got started in the working world
those sort of things.
>> Erick Johnson: Sure. Morning. I -- well let's see I was born and
raised in Jackson, Wyoming. And my mom had gone to UC Berkeley and met a
cowboy in Wyoming and decided to move to Wyoming and raise a family. And
they started a small business. It was -- my dad's a cabinetmaker, he
turned into a cabinetmaker after being a cowboy. And my mom and dad had a
picture framing business. So sort of a small town, small -- small
business kid. And but I did pretty well at school and got accepted to
Stanford University. So it -- that brought me to California, actually
back to where my mom was from. She was from the -- California. In fact,
my great-grandfather was in Tranquility, which is west of Fresno about 30
minutes or so. And I -- at Stanford I studied political science.
>> Thomas Holyoke: It’s a good major.
>> Erick Johnson: Yeah it's a good major, you know and didn't have to
take calculus, so it was a lot easier than economics. The –- the -- and I
thought I'd go into politics. I thought I'd probably go back to Wyoming
and go into politics. But I -- when I got out I went and worked in
Washington DC for, Senator from Wyoming. A guy named Malcolm Wallop.
Terrific guy. Was there for about a year, decided that I really didn't
like politics. And I didn't like all the big egos in Washington DC. Not
necessarily the, well the politicians certainly, but everyone else who
works in Washington also, really feels like they need to be really
important and I think I was starting to get some of that myself.
>> Thomas Holyoke: And about when did you work for Senator Wallop?
>> Erick Johnson: Ah, let's see it would have been '83, '84.
>> Thomas Holyoke: Okay, what kind of work were you doing for him?
>> Erick Johnson: I was legislative clerk. Which is a very fancy term for
opening the mail, sorting the mail [laughter]. And I -- but I also did
some -- some work on some projects. As part of my time there, I got to go
back to Wyoming and got to take a look at the USBRs early windmills. Got
to go up in one of the big, big windmills that they had built Wyoming.
And they were sort of testing that idea to see if that was going to be
something that would work for the US.
>> Thomas Holyoke: USBR was doing that?
>> Erick Johnson: Yeah, surprisingly. Well you know they were in the
energy generation business. I mean that was one of their primary focuses.
So it would make sense that they were trying to figure out if something
like that would work. So they had two huge windmills that were probably,
I don't know ten stories high or so. They were really the big ones. So -so I -- that was my first interaction with the USBR. And but then I
decided I didn't really like Washington and I left and came back to
California and went to work for a cousin's husband and her at Harris
Farms in Coalinga. And so I guess I started there in '84. And was there
mostly until about 2000. Took a couple years off to get an MBA at UC
Davis.
>> Thomas Holyoke: Okay what kind of work were you doing on Harris Farms?
>> Erick Johnson: Well, I started just as, on projects trying to, we were
looking at doing some acquisition work. So I knew how to, I had taken a
class in computers sort of early on, and so I knew how to use a
spreadsheet. And ->> Thomas Holyoke: And this is still back in the late '80s when that's
sort of a new technology.
>> Erick Johnson: It was brand-new technology. The electronic
spreadsheets at the time were changing the world. And I figured out how
to use them. I figured out how to use them to make graphs, and charts,
and so all a sudden I was in on all the big strategic projects that -and we were looking at major acquisition in Kern County and so I got to
do all that. That sort of got me interested in going back and getting my
MBA. And then by the time I left I was the chief operating officer and
general manager of the farming division, which is at the time was between
16 and 20,000 acres.
>> Thomas Holyoke: What kind of projects do you remember going on at
Harris Ranch back in those days? And what were they -- what were the big
things they were trying to do?
>> Erick Johnson: Well on the good side we were doing things like
transitioning some of our ground into organic ground. Actually created an
entity with three of our neighbors and created the largest organic farm
in the US at the time. Ground that still organic. So I feel happy that I
was the one who sort of brought that to the forefront and got on the
California Certified Organic Board. And -- but it was a culture shock for
the organic farmers at the time, because they were a bunch of raised bed
folks who were growing strawberries. And strawberries is sort of where it
started in the Santa Cruz area. So I went over as a guy from the Central
Valley from large organized agriculture and it was a bit of culture shock
for them to have me on that board. Because we did things in a big way and
a big enough way that we pretty well wrecked every market we entered,
because we grew so much that we'd go into these markets and just
overwhelm the market with broccoli or some of the other crops we grew.
>> Thomas Holyoke: I know it's maybe a little off topic, but what -- why
was Harris Farms so interested in getting into organic back in the late
'80s or '90s whenever.
>> Erick Johnson: I'm not sure everybody was. I was interested in it
because I saw that there was going to be a demand for that just in my
interactions with other people you know because I had gone to school in
the Bay Area, I sort of saw that as an emerging market I saw that the
market was growing 20% a year and -- and then as we got into it a little
bit deeper I found out that it made us better farmers as well. We learned
new techniques of farming, even our conventional fields. So and we also
had a lot of manure which helped a lot. Because we had our own our own
nitrogen source that we could compost and use on the fields because
Harris Farms Corporation owned the Harris Ranch Feedlot as well. And with
100,000 cattle producing manure, it really was a good sort of symbiotic
relationship for us. We even used the straw out of the horse racing barns
to mix with the manure to as a part of the compost process, so.
>> Thomas Holyoke: Back during that kind of time period do you remember
any major water issues that Harris Ranch was dealing with?
>> Erick Johnson: Oh yeah, that's what got me into water actually.
>> Thomas Holyoke: Oh.
>> Erick Johnson: I -- I had gone to business school and came back at the
tail end of the drought in the late '80s, early '90s and we, at the time,
were in a 6-year drought. It lasted 6 years. The first 3 years we got
100% allocations, the fourth year we had a 50% allocation and then it
went down to 25% and then 25 the next year too.
>> Thomas Holyoke: Actually just to interrupt you for a second, which
water system does Harris Ranch take water from?
>> Erick Johnson: Oh yeah. We got water from the CVP, Central Valley
Project which is a USBR project. And we specifically got water out of the
San Luis Canal, which is a joint use canal with the state water project
California Aqueduct, so. And so that was our water source that was
installed in I think it was opened up in '66, '67. Before that Harris
Farms got its water from deep-water wells that were initially drilled in
the, I think the late '30s early '40s, primarily. And that area of the
valley was farmed about one-quarter in a summer crop and about threequarters in winter wheat, those kinds of crops. But when the water came
in from the canals, all of sudden we could irrigate the whole farm in
summer crops. There was enough water -- surface water to really make that
part of the valley bloom. So that western part of Fresno County turned
from a relatively nonproductive farming area into one of the most
productive farming areas in the world. I mean it's one of the great
tragedies that we, as a society, don't recognize what a blessing we've
been given in Western Fresno County and in the San Joaquin Valley in
general. We've got this wonderful Mediterranean climate. We've got soils
that I was farming that were so deep that we didn't know how deep the
topsoil went. At times we'd take a backhoe and dig down to see how deep
the roots on some of the crops went and we'd go down 12, 15 feet and
still find roots, because the soils were that deep and that good.
Probably they'd go hundreds of feet deep. So it's not like the rest of
the country where we have water issues, or I mean issues with soil or -I mean our limiting issues was the water issue, which appeared in the to
me first in the late '80s, early '90s. And Harris Farms had to be 60%
fallow one year and I didn't want that to happen again, so I thought well
maybe we need to see if we can get some water from somewhere else to
bring in. And so that was my first interaction with having to try to find
water to keep that part of the valley up and running and going.
>> Thomas Holyoke: Just before we get into that, do you remember more or
less about what year the first serious cutbacks in water came?
>> Erick Johnson: Well, let's see it would have been about '90 I think
because we were -- we were 4 years into the drought and we got a 50%
allocation that year I think and then it was 25% the next year, so.
>> Thomas Holyoke: Were the cutbacks entirely due to the drought?
>> Erick Johnson: No not entirely due to the drought. Primarily due to
the drought, but also my recollection is that the winter run of the
Chinook salmon was just being listed as an endangered species. And it
lived in the upper Sacramento River. And that was our first interaction
with an endangered species issue creating a cutback of water. And then at
the same time, the Miller Bradley Bill, which later became the Central
Valley Project Improvement Act, which is a ironic name because it's
absolutely broken the Central Valley Project. But the Miller Bradley
Bill, which was drafted by George Miller from the Bay Area Contra Costa
County. He was a Congressman who just had a loathing for the Central
Valley. He must have thought that we should of turn this area back into a
desert. And Bill Bradley who was a congress -- senator from New Jersey
who didn't know anything about California, they got together and drafted
this bill to try to somehow improve upon the Central Valley Project. So - so those two things were happening at the same time. And I don't
remember the year that CBPIA was passed. I think it was '92. But so that
was all happening at the same time. And all the sudden the farm community
had to encounter this new draconian set of environmental regulations
they'd never had to deal with before. Before they'd had to deal with all
of the normal things that farmers would deal with whether it be weather
problems like, well a natural drought, or -- or a -- or hail, or
pestilence, or the kinds of things that farmers have to deal with. And
they did very well from the late '60s through the early '90s and had a
very productive period until these environmental regulations had kicked
in.
>> Thomas Holyoke: So with the new reality starting to dawn on farmers
out on the west side you were -- you mentioned you were starting to get
into a position where you had to look around for water.
>> Erick Johnson: Right. And actually the first transaction I did really
came knocking at our door. It was actually Dale Melville from Jim
Provost, Provost and Pritchard Firm. And they had some water in another
district, south of Westlands, and water that that farmer didn't need and
we were able to buy, I think it was 20,000-acre-feet that year.
>> Jim Provost: Are you talking about Dudley Ridge?
>> Erick Johnson: Yeah it would have been Dudley Ridge. I don't think I'm
violating any confidences with that. Yeah it was public record because it
would have gone through the state process. Unfortunately we got it done a
little late in the year and we hadn't prepared our farm for, for planting
cotton that year. So we had to very quickly prepare the beds and very
quickly, plant and we got a bad stand of cotton. And it was, if I
remember correctly, it was the year that we had like 15,000 acres of
cotton and maybe -- maybe 12,000. And we lost money on it because we -the farmer term is shotgunned it in. And but we used the water and it got
me into the water trading mode and thinking about those things. And did a
few more over the next few years. But then the rains came and we had good
water allocations again for a period of years. So.
>> Thomas Holyoke: With the water transfer, like that first one you did.
I mean the physical transfer of water is simply you were taking water out
of the San Luis Canal that otherwise would have continued to flow I
guess, Dudley Ridge is further south than Westlands. So physically that's
all that was required.
>> Erick Johnson: Physically all that's all that was required. The -- the
nature of water transfers however, is that the physical parts of the
water transfers is easy. It's the institutional things that drive you
nuts and prevent a lot of them from happening. That particular one the
State Water Resource Control Board had to approve a change of place of
use for that State Water Project Water in Dudley Ridge to move into
Westlands, which is in the CVP place of use. The dividing line between
the State Water Project generally and the Central Valley Project is the
Kings County line on the north side of Kings County. So Westlands
actually has a little bit of ground in the State Water Project place of
use in Kings County, but the -- where the water was going to go in
Westlands was in Fresno County. So we had to get this change of place of
use from the State Water Resource Control Board to move it from the State
Project, into the Central Valley Project place of use. I think we finally
got the approval sometime in August that year, for a crop that we had
planted in April, May. And it was so frustrating that we actually talked
to some, some folks in Sacramento at the time, meaning, I think he was a,
I don't even remember the name of the fellow, but the -- he was a state
senator I think. And he was saying, well what can we do to help? And we
said, well we need to shorten the window of these approvals, because that
it's just taking too long. And we actually got legislature to change the
approval process to shorten the amount of time the state board has to
consider one of those transfers from an unlimited period, as I recall, to
45 days. Which I thought oh boy this is really going to help because now
they can only think about it so long and they have to give us a decision
within 45 days. But as these things are uncovered, it's now that the -we find that the delay is even earlier than that. Because of if the
Department of Water Resources has to make the application to the State
Board, because it's their water in the state service area, they have to
make the application to the state board. And they don't have any
restriction on how long they can process an application before it goes to
the state board. So quite often these -- these transfers still take
months, and months, and months, or years to, to get approved. So -- so
that one little change we made, didn't really help very much. But we
tried you know because we saw a problem and said well if we encounter
this again, we're going to need to have a quicker regulatory environment
to get through.
>> Thomas Holyoke: Was some of these early water transfers were they
expensive, the price you were paying for water?
>> Erick Johnson: It was dreadful and I say that with an in jest now. At
the time we thought it was very expensive. It was like twice or three
times what we had been paying for water. I seem to remember when I
started at the farm, we were paying around 30, $38 an acre foot for our
water. And I seem to remember that transfer of water was 2 or 3 times as
much as that. So we thought that was just a dreadful thing. And with
hindsight that would have been one of the, that would have been cheap.
>> Thomas Holyoke: Bargain basement price.
>> Erick Johnson: Yeah.
>> Thomas Holyoke: Okay so you had said you'd done a few transfers and
the rains came again and everything was wonderful. And what starts to
happen after that?
>> Erick Johnson: Well the -- during those times, we in the farm
community focused on farming and focused on the other issues. We focused
on commodity issues, and we focused on you know just the farm issues. And
I know now that there was a lot of stuff going on in the background in
the water world that, I think you interviewed Dan Nelson and he was
working on the Delta Accord and a number of other issues. And the water
availability to the west side of Fresno County and Merced County, and
indeed the Kern County area, really the whole Southern Valley here, kept
getting nicked away by different rules and regulations. And mostly
environmentally driven. The big one though, was the Central Valley
Project Improvement Act that took 800,000 acre-feet away from the Central
Valley Project south of the Delta and then even more, because they took
another couple hundred thousand acre-feet at least away and gave it to
the refuges, the bird refuges. But there were other little nicks and cuts
along the way and so, but we were able to continue farming. We had enough
water to keep farming and.
>> Thomas Holyoke: Did you yourself have to get involved in any of the
political or policy work?
>> Erick Johnson: You know, I don't think so. I don't think I spent a lot
of time. I mean I'd go to some meetings, but I wasn't sort of right in
the middle of it. Sort of one of the reason, why I was a bit bemused that
I was doing this interview today. Because I felt like I was really on the
periphery of what was going on and sort of saw what was going on,
suffered from it, but wasn't in the middle of it like so many of your -your guys that you interviewed.
>> Thomas Holyoke: So did you get back really into the water transfer
business while you were still at Harris Farms after the rain stopped
coming?
>> Erick Johnson: Oh, I think we did a couple more during that period and
then the in 2000 I sort of had a major life change, my daughter was going
into kindergarten and we were thinking about moving into town. And I got
into this business really, it felt like more of a calling than anything.
I was meeting with some guys who I meet with every week, was meeting with
every week just to sort of live life with them, and it was sort of like a
bible study. And I was a little, I was trying to figure out what I was
going to do with if I commute, and stay at Harris Farms, I mean I was
thinking I'd stay at Harris Farms the rest of my life, when I’d been
there for that 16-year period.
>> Jim Provost: Good place to work?
>> Erick Johnson: Yeah, it was a great ride. It was really a terrific job
and terrific, terrific guy to work for, and John Harris and he has an
amazing team of folks who run that place. But I had one of my friends say
well if God has something else for you well I pray he'll open the door
and put flashing lights on it so you'll know that that's it. And the
crazy thing is -- is within an hour of my, it took me an hour to get home
and when I got home I told my wife, you know I think we're supposed to
start a water brokerage business. And so I went from having 600 to 1000
employees and went down to one almost overnight. Had a couple month
transition period. But, so the because water issues were continuing
problems in Westlands and they weren't just for our farm. That’s -Westlands is an area the size of about Rhode Island, roughly 600,000
acres. The areas to the north, a couple hundred thousand acres more that
have real problems with water. And folks in Kern County have problems
with water. So, and I'd seen that some of these water transfers might
help some folks stay in business. And so that's why I said it felt more
of a calling. It was that I maybe should be working on these issues more
on a global basis rather than just trying to figure out how to get my
farm through the situation. So I went to 10 of my neighbors and they
said, yeah you should. We think that's a good idea, you should do that.
>> Thomas Holyoke: And think you said this was around 2000?
>> Erick Johnson: Yeah. Yeah. Yeah, and so and.
>> Thomas Holyoke: Well, how do you get started in a business like this?
This is fairly new territory I would say.
>> Erick Johnson: Well I’d, I'd been, the water transfers that I had been
involved with up to that point had been primarily with Dale Melville with
Provost and Pritchard. And Dale sort of knew how to do these things. And
so I'd watched him do it and with a lot of hubris I thought maybe I could
do it too. And so I went out to, I went up to Northern California and met
some folks in water districts up there; I met folks in water districts
throughout the Valley. And realized how little I knew about this
business. So it was -- it was a bit of a wake-up call about how much
there was to learn. And how just having the buyers wasn't enough. And but
that year I sort of late in the year I was able to finally do a transfer.
I think I didn't get a paycheck for 8 months. And finally did a little
transfer and was able to make it through the first year, so. So how do
you do them? Well you -- you meet with people and you see what their
needs are and what they may have excess supplies or projects that they
maybe could do to create supplies that would be transferable. And it's a
real sort of trying to understand what people's needs are and what their
capabilities are and -- and if you know enough of those people maybe you
can figure out a way to put -- put needs and supplies together.
>> Thomas Holyoke: So you're working on not just cultivating buyers, but
also cultivating sellers, helping them create something so sell?
>> Erick Johnson: More importantly.
>> Thomas Holyoke: Okay.
>> Erick Johnson: There are lots of people who in the valley who need to
buy water. Pretty much everyone on the west side of the valley in an area
of you know as I say Rhode Island. So it's huge, huge need. And because
people were having to renovate wells and get groundwater wells going
again at the time and they didn't want to do that bringing in surface
supplies from other areas was really the, the thing we needed to be doing
here in the valley. So everybody needed water.
>> Thomas Holyoke: So your clients included both buyers and sellers I
suppose for a broker makes sense.
>> Erick Johnson: Yeah, so and I'm, I’m what I, the economic term is
honest broker. The role I play, where I don't take positions in water. I
strictly match buyers and sellers and let them know that you know as a
broker I'll be getting a commission, but they know what that is and -anyway somewhere I found that in a book about the honest broker term
[laughter]. But it's true, I mean you know about all I have is my
integrity and whether people can trust me or not to get put deals
together in a honest and safe way.
>> Thomas Holyoke: Okay so you start your business in 2000 here and
you're still doing it today I understand.
>> Erick Johnson: Yes.
>> Thomas Holyoke: And so any big stories, anecdotes over your career.
>> Erick Johnson. Oh, over 15 years? Well I have to guard the
confidentiality of my clients both buyers and sellers. I've always told
people that I'm not going tell anybody what their deals are. And I do
tell both sides of transactions what I've seen in the marketplace dollars
wise and what the what the transactional numbers are, but I -- but I
won't tell them who who’s doing the deals because quite often sellers
don't want people to know they're selling water, especially if they might
be selling it to their neighbor and they don't know it. And -- and
sometimes buyers don't want people to know that they're buying water
either because they, farmers are typically very humble and just don't
like to toot their own horn too much. As most, I shouldn't say all but
most, you know.
>> Thomas Holyoke: So it seems like this could put you in a tricky
situation where you know especially during these times of extreme
drought. I think there's a perception that it looks bad to be sending
water away from a region, selling water off anywhere. So have you had to
deal with problems of public relations, problems of politics?
>> Erick Johnson: I really haven't because almost all of my transfers
I've ever done have been agriculture to agriculture. And that takes the
evil water broker persona, at least that you read stuff in the press
about those water brokers, they're just taking water away and, but really
what I'm trying to do is I'm trying to find water for farmers primarily.
And I haven't had problems with people sort of claiming that somehow I'm
doing something wrong. Because most people, at least in this part of the
world don't think that's wrong. I mean if somehow we're finding water
that is a little, there's a little extra water in one area that will help
keep another farmer, or farm district alive in another area, that's a
positive. And the dollars typically that are used to buy the water are
then reinvested by the seller in conservation meth -- measures, or other
ways of creating more water for the future.
>> Thomas Holyoke: Do you have sort of I guess a range of operation that
is you're dealing with water sellers mainly the valley, or water sellers
up from northern California?
>> Erick Johnson: Yeah, I've worked from sort of Redding to Bakersfield
is sort of my territory, primary territory would be from Tracy to
Bakersfield though.
>> Thomas Holyoke: Okay and have there been significant changes in the
regulatory infrastructure regarding water transfers? Is it easier than it
used to be? Harder than it used to be?
>> Erick Johnson: The environmental community, which I, they're now
calling themselves NGOs, nongovernmental organizations, it's a wonderful
rebranding that they've done or themselves to try to get the
environmentalists label off of them. And it bugs me every time I hear
that. But they, over time have said that water transfers need to be
easier. That, that's the solution for California's water problems. The
ironic thing is that water transfers now are much, in many ways,
especially the larger scale ones, are much more difficult than they were
15 years ago. So the lip service has been, oh we need to make this
easier. The reality is there so many more people looking at them and
weighing in on them, and making them more difficult to happen and less
likely to happen. So the regulatory paradigm, yeah, it's gotten more
difficult and the.
>> Thomas Holyoke: Do you have to do anything like an environmental
impact report when you're transferring large amounts of water?
>> Erick Johnson: You know I have been involved in a few -- a few of
environmental assessments that the Bureau of Reclamation would do, which
is the level below being doing an EIR. And thankfully I haven't had to do
any EIRs. I've seen other people do EIRs, primarily districts that may
want to sell. And I haven't done a lot of the big scale transfers. That's
one of the reasons I was bemused to be here. Is that I sort of operate on
the periphery. I help people where I can. And it's really relatively
small-scale normally. The big transfers that I see really are the ones
from Northern California across the Delta and into the Western San
Joaquin Valley typically. And those are transfers that the districts or
their representatives, like the authorities have done. I've only been
involved in a couple transfers across the Delta from Northern California,
south. And mainly because unless Department of Water Resources and Bureau
of Reclamation sort of want those things to happen they don't happen. And
only the, it’s been my experience that only the -- the bigger districts
or the authorities representing districts can get those deals done. They
have the clout within with DWR Bureau of Reclamation to get those deals
moved through and to figure out ways to make them happen. So some of
those have required EIR's. But those would be you know to the people who
I look to who I see have really done some major transfers. San Luis Delta
Mendota Water Authority and represents Westlands and others. And they've
gotten some big ones done.
>> Thomas Holyoke: Okay. Now that we're sort of deep into this, I guess
extreme drought. Are you finding it harder to even find water?
>> Erick Johnson: Oh yes. Very painful. Very difficult to find water. I
went for months this year without finding any water for sale. Which for
me was a first. I'd always been able to find a little bit of water here
or there at some price. This year, there just wasn't any for a while. Now
that we're here, we're on July 7th we're actually getting past some of
the irrigation season. Some of the tomatoes crops are coming off at this
point. Some of the nut crops will be coming off shortly. Some farmers who
suffered through last year decided that there was no way they wanted to
get pinched again like they did last year where they got to mid-season
and then had to buy water at extremely high prices. And I saw prices has
high as 2500 an acre foot last year. You compare that to 38 when I
started in this deal in 1983. Not the water transfer deal, but when I
started farming in '83. And because they needed to finish their crops
last year. And if you don't get that last irrigation on a crop you lose
the crop. So that last irrigation is worth a lot, almost, almost the
value of the crop if you look at it strictly from an economic
perspective. Because if you don't put that last irrigation on you lose a
crop. So that's why people were willing to pay those prices. And I didn't
set that market, there was an auction at one of the districts that set
that market. But people this year didn't want to get in that same spot,
so they just didn't farm as many acres. I think in the Valley I've heard
that like 500,000 acres are fallow this year. So now that we're passed
the end of the season, we’re -- or we're getting past some of the
irrigation seasons, some small blocks of water are becoming available
from farmers who said, well okay now I've got a few hundred-acre-feet, or
50-acre-feet. So and then the big scheme of the water world, 50-acre-feet
or 100-acre-feet is background noise when you're talking about millions
of acre-feet would typically be used to irrigate the valley. But that 50acre-feet or 100-acre-feet for somebody who needs to finish a crop this
year is pretty darn important to that one person. So those are the kinds
of transactions I'm doing this year.
>> Thomas Holyoke: The -- finding that there's less and less water to
actually get is that because people, no one just, no one has any water,
or because a lot of potential sellers have decided they needed to hang on
to their water?
>> Erick Johnson: No it's just that there's so little water in the system
this year. Because the -- so much water was flushed out to the ocean
because of environmental regulations in the Delta. And the -- there were,
in the last 2 years, there've been 5 major pulses of water that I'd
consider flood flow type flows go through the Delta. Only one day of
those 2 years were the pumps operated even at their maximum pumping
capacity, let alone the pumping capacity is, is the, I should say
permitted capacity to the pumps, which is significantly less than the
actual built capacity. State water Resource Control Board has limited how
much those pumps can be pumped and because of environmental regulations
we were only able to hit that full pumping permit capacity one day out of
those two years. So literally hundreds of thousands of acre-feet,
probably approaching half million acre-feet were just flushed out to the
ocean because they, the regulators thought that the those pulses of water
turned the water in the Delta a little muddy and if they pulled the water
towards the pumps the muddy water coming down the river would somehow
bring Delta smelt with it to the pumps. And they didn't want to take any
Delta smelt, an endangered species into the pumps so they just didn't
pump. And so about the only way we're going to get, from my perspective,
good flows to the pumps and when I say the pumps I'm talking about the
State Water Project Pumps, named the Banks Pumping Plant and the Jones
Pumping Plant for the Central Valley Project, both near Tracy. About the
only way we're going to get good flows of water to the pumps and down
south of the pumps and into San Luis Reservoirs and farther south is if
the San Joaquin River is flooding for an extended period. So that's my
pray for this year is that the San Joaquin has a little flood, hopefully
not too much damage. It used to be in California that flood was a bad
word because of the damage that floods have done. But now without a flood
on the San Joaquin River we're probably never going to get good
allocations of water for the south of the Delta water users, maybe ever
again, unless we get some regulatory relief, or congressional relief.
>> Thomas Holyoke: Someone who probably, I imagine you talk to a lot of
farmers on a regular basis around the Valley, what's the mood out there
here in 2014, is it desperation, anger, both?
>> Erick Johnson: Well, people are in I think desperation mode is
accurate and rightly so, when you drive out on the west side of the
Valley and you go mile, after mile, after mile, after mile and it's just
dirt in an area that would have been completely cropped in other years.
Or yesterday I drove by a perfectly good orange orchard that's -- that’s
just toast. It's just dead because of lack of water. I've seen literally
sections of ground, which a section would be 1 mile by 1 mile of almonds
that have been pulled out. And almonds are a major export crop and
they're incredibly valuable right now and people have just taken them out
because they don't want to have to try to find water for them. They can't
find water for them now and so they've just pushed them out. And some of
the trees were only 8 years old. And almonds are a 25-year to 30-year
crop. So permanent planting so. So, when people start making those kinds
of decisions to just push out an asset that some of those assets that
I've seen knocked out were $10 million assets. And they're just back to
dirt. You don't make a decision like that unless you're really despairing
about the future. If you -- I think they just don't have hope for the
future that it's going to get better any time soon. And I probably agree
with them, it's not going to get any better any time soon without a major
legislative change really.
>> Thomas Holyoke: Just one thought that occurs to me. In the water that
you might be able to find, do you, is there any interest, or been any
movement on I guess should the right term would be recycled or reused
water, perhaps water that’s a municipality already used for its you know
for homes has now gone into sewers, been processed, can that water then
be resold for agriculture?
>> Erick Johnson: Well, a lot of that's already happening in the Valley
especially. The I know the Fresno Municipal, I forget what wastewater
treatment facility already, its excess water goes to farmers. In the
Modesto area and Turlock area they're talking about doing exactly what
you're asking. Where some of that water's going to be going to
agriculture to folks who need it. Water that would have been going into
the river after the plant, the treatment plant, the excess water goes
into the river. So they'll pick that up. But that's a two-edged sword,
because then there's less water in the river. And then you have river
flow issues. So but it's those kinds of things that people are having to
do.
>> Thomas Holyoke: Okay. Well what have I missed?
>> Jim Provost: Erick's done a good job.
>> Thomas Holyoke: He has [laughter]. Anything else? What's your? Well,
you've already given a little indication of it, but what are your
thoughts for the future? If there is one?
>> Erick Johnson: You know the -- my hope and my prayer is that at some
point the national political scene wakes up to what's going on in
California. We provide half of the fruits and vegetables to the nation.
And what I'd consider craziness in the environmental regulatory scheme is
causing the -- this amazing area that we've been blessed with to crumble.
The, and the things I was talking about with the Delta Smelt. We keep
throwing more water at the Delta smelt. We keep throwing more water at
the salmon. And when I say throwing water, the regulators just grab water
and say, oh we need more water in the rivers for these fish. More water
is not solving the problem. The fish populations keep going down. They're
not recovering even though we've thrown inordinate amounts of water at
those problems, but it's the only knob that regulators are using. We have
to get more, we have to get smarter about restoring those fish
populations. Whether it's in fisheries, or in fish hatcheries, or getting
rid of the predators, like the striped bass in the Delta are voracious
predators. They're an introduced species, gee they just might eat Delta
Smelt, and they just might eat Salmon Smelt, the little salmon
fingerlings. And indeed last year I heard that the winter run of the
Chinook Salmon, they raised some in the hatcheries and they put them in
the river, and they had 95% mortality before they got to the ocean. And
what kind of lunacy is that. Well it's the kind of lunacy that hopefully
when people hear about it they say, well we need to be, we need to be
smarter about this. We've got the economy not only of the Valley on the
bubble, but if have another 1 or 2 more years of this drought cycle that
we're in right now, the whole state is gonna be really suffering from the
weight of the drought. We're only in the fourth year of a drought right
now. The first year the Central Valley Project allocation was 40%. The
second year of the drought, it was 20% and the last 2 years it's been at
0% allocation for the south of Delta agriculture contractors. The last 6year drought I talked about that really woke me up to the water issues in
the late '80s and early '90s we got 100% allocation for the first 3
years, 50% the fourth year, and 25% the next 2 years. It's not the
drought that's the problem. It's all these environmental regulations that
are preventing water from moving where it needs to move. That's something
we as a society can address we can say look we need to be smarter about
our environmental regulations. I mean every farmer I know loves the
environment, loves being out in the environment on a daily basis. They
take care of their environment because they know if they don't take care
of their fields and their area, their farms are not gonna thrive. They
don't necessarily want to see the fish go extinct. But there has to be
smarter ways that we can address the environmental issues. And so that I
guess does give me some hope. That at some point people are going to wake
up and say look, we can't just keep doing the same things over, and over,
and over again. Meaning giving the fish more, and more, and more water
and expecting a different result. I mean that's the, I think Einstein
said that that's the definition of insanity. Doing the same thing over
and over and expecting different results. Well that's what our
government's doing right now. So at some point people will say look we
need to do other things here. And you know whether it be build the
tunnels under the Delta to get more water south of the Delta. That would
probably help. East Bay Municipal District, East Bay Mud Municipal
District, essentially did that. They built some intakes in Sacramento,
called the Freeport Diversion Project and in essence, built a peripheral
canal for themselves, or tube, about 10 years ago. And so now it's time
for the rest of the state to do the same thing, to take the water up out
of the river upstream near Sacramento and then so we can get away from
having to deal with the fish issues in the Delta, from crippling the
state. So, but that's something that those kinds of projects under the
current environmental regulatory paradigm of you have a project like that
you permit you say you want to move forward on it, you get environmental
lawsuits. That's probably not going to happen in my lifetime, so we need
to have some environmental relief before then, so. I don't know that's
not a very rosy picture of the future, but I think it’s that's the
reality. And that’s why farmers who I talk to on a daily basis are so
despondent that they don't see any hope coming anytime in the future
unless we get this El Nino that is supposedly we're going to get an El
Nino this year in 2015.
>> Thomas Holyoke: They said that last year.
>> Erick Johnson: Well right, but this year it's looking more like a
strong El Nino, unfortunately, only about half of the time El Nino's are
wet. But if it's wet, it will probably be really wet. And we may get that
flood on the San Joaquin River we need. Hopefully it's not going to be a
damaging flood, but it will be wet enough that we can fill San Luis
Reservoir and get an allocation for the farmers, get them to turn their
wells off and let the ground water recharge for a few years. So that
would be the best-case scenario for next year or two is to get it the
old-fashioned way, from the -- from nature.
>> Thomas Holyoke: Okay.
>> Erick Johnson: Thanks.
>> Thomas Holyoke: Thank you very much.
don't you start off just by telling us a little bit about yourself, where
you're from, your education, how you got started in the working world
those sort of things.
>> Erick Johnson: Sure. Morning. I -- well let's see I was born and
raised in Jackson, Wyoming. And my mom had gone to UC Berkeley and met a
cowboy in Wyoming and decided to move to Wyoming and raise a family. And
they started a small business. It was -- my dad's a cabinetmaker, he
turned into a cabinetmaker after being a cowboy. And my mom and dad had a
picture framing business. So sort of a small town, small -- small
business kid. And but I did pretty well at school and got accepted to
Stanford University. So it -- that brought me to California, actually
back to where my mom was from. She was from the -- California. In fact,
my great-grandfather was in Tranquility, which is west of Fresno about 30
minutes or so. And I -- at Stanford I studied political science.
>> Thomas Holyoke: It’s a good major.
>> Erick Johnson: Yeah it's a good major, you know and didn't have to
take calculus, so it was a lot easier than economics. The –- the -- and I
thought I'd go into politics. I thought I'd probably go back to Wyoming
and go into politics. But I -- when I got out I went and worked in
Washington DC for, Senator from Wyoming. A guy named Malcolm Wallop.
Terrific guy. Was there for about a year, decided that I really didn't
like politics. And I didn't like all the big egos in Washington DC. Not
necessarily the, well the politicians certainly, but everyone else who
works in Washington also, really feels like they need to be really
important and I think I was starting to get some of that myself.
>> Thomas Holyoke: And about when did you work for Senator Wallop?
>> Erick Johnson: Ah, let's see it would have been '83, '84.
>> Thomas Holyoke: Okay, what kind of work were you doing for him?
>> Erick Johnson: I was legislative clerk. Which is a very fancy term for
opening the mail, sorting the mail [laughter]. And I -- but I also did
some -- some work on some projects. As part of my time there, I got to go
back to Wyoming and got to take a look at the USBRs early windmills. Got
to go up in one of the big, big windmills that they had built Wyoming.
And they were sort of testing that idea to see if that was going to be
something that would work for the US.
>> Thomas Holyoke: USBR was doing that?
>> Erick Johnson: Yeah, surprisingly. Well you know they were in the
energy generation business. I mean that was one of their primary focuses.
So it would make sense that they were trying to figure out if something
like that would work. So they had two huge windmills that were probably,
I don't know ten stories high or so. They were really the big ones. So -so I -- that was my first interaction with the USBR. And but then I
decided I didn't really like Washington and I left and came back to
California and went to work for a cousin's husband and her at Harris
Farms in Coalinga. And so I guess I started there in '84. And was there
mostly until about 2000. Took a couple years off to get an MBA at UC
Davis.
>> Thomas Holyoke: Okay what kind of work were you doing on Harris Farms?
>> Erick Johnson: Well, I started just as, on projects trying to, we were
looking at doing some acquisition work. So I knew how to, I had taken a
class in computers sort of early on, and so I knew how to use a
spreadsheet. And ->> Thomas Holyoke: And this is still back in the late '80s when that's
sort of a new technology.
>> Erick Johnson: It was brand-new technology. The electronic
spreadsheets at the time were changing the world. And I figured out how
to use them. I figured out how to use them to make graphs, and charts,
and so all a sudden I was in on all the big strategic projects that -and we were looking at major acquisition in Kern County and so I got to
do all that. That sort of got me interested in going back and getting my
MBA. And then by the time I left I was the chief operating officer and
general manager of the farming division, which is at the time was between
16 and 20,000 acres.
>> Thomas Holyoke: What kind of projects do you remember going on at
Harris Ranch back in those days? And what were they -- what were the big
things they were trying to do?
>> Erick Johnson: Well on the good side we were doing things like
transitioning some of our ground into organic ground. Actually created an
entity with three of our neighbors and created the largest organic farm
in the US at the time. Ground that still organic. So I feel happy that I
was the one who sort of brought that to the forefront and got on the
California Certified Organic Board. And -- but it was a culture shock for
the organic farmers at the time, because they were a bunch of raised bed
folks who were growing strawberries. And strawberries is sort of where it
started in the Santa Cruz area. So I went over as a guy from the Central
Valley from large organized agriculture and it was a bit of culture shock
for them to have me on that board. Because we did things in a big way and
a big enough way that we pretty well wrecked every market we entered,
because we grew so much that we'd go into these markets and just
overwhelm the market with broccoli or some of the other crops we grew.
>> Thomas Holyoke: I know it's maybe a little off topic, but what -- why
was Harris Farms so interested in getting into organic back in the late
'80s or '90s whenever.
>> Erick Johnson: I'm not sure everybody was. I was interested in it
because I saw that there was going to be a demand for that just in my
interactions with other people you know because I had gone to school in
the Bay Area, I sort of saw that as an emerging market I saw that the
market was growing 20% a year and -- and then as we got into it a little
bit deeper I found out that it made us better farmers as well. We learned
new techniques of farming, even our conventional fields. So and we also
had a lot of manure which helped a lot. Because we had our own our own
nitrogen source that we could compost and use on the fields because
Harris Farms Corporation owned the Harris Ranch Feedlot as well. And with
100,000 cattle producing manure, it really was a good sort of symbiotic
relationship for us. We even used the straw out of the horse racing barns
to mix with the manure to as a part of the compost process, so.
>> Thomas Holyoke: Back during that kind of time period do you remember
any major water issues that Harris Ranch was dealing with?
>> Erick Johnson: Oh yeah, that's what got me into water actually.
>> Thomas Holyoke: Oh.
>> Erick Johnson: I -- I had gone to business school and came back at the
tail end of the drought in the late '80s, early '90s and we, at the time,
were in a 6-year drought. It lasted 6 years. The first 3 years we got
100% allocations, the fourth year we had a 50% allocation and then it
went down to 25% and then 25 the next year too.
>> Thomas Holyoke: Actually just to interrupt you for a second, which
water system does Harris Ranch take water from?
>> Erick Johnson: Oh yeah. We got water from the CVP, Central Valley
Project which is a USBR project. And we specifically got water out of the
San Luis Canal, which is a joint use canal with the state water project
California Aqueduct, so. And so that was our water source that was
installed in I think it was opened up in '66, '67. Before that Harris
Farms got its water from deep-water wells that were initially drilled in
the, I think the late '30s early '40s, primarily. And that area of the
valley was farmed about one-quarter in a summer crop and about threequarters in winter wheat, those kinds of crops. But when the water came
in from the canals, all of sudden we could irrigate the whole farm in
summer crops. There was enough water -- surface water to really make that
part of the valley bloom. So that western part of Fresno County turned
from a relatively nonproductive farming area into one of the most
productive farming areas in the world. I mean it's one of the great
tragedies that we, as a society, don't recognize what a blessing we've
been given in Western Fresno County and in the San Joaquin Valley in
general. We've got this wonderful Mediterranean climate. We've got soils
that I was farming that were so deep that we didn't know how deep the
topsoil went. At times we'd take a backhoe and dig down to see how deep
the roots on some of the crops went and we'd go down 12, 15 feet and
still find roots, because the soils were that deep and that good.
Probably they'd go hundreds of feet deep. So it's not like the rest of
the country where we have water issues, or I mean issues with soil or -I mean our limiting issues was the water issue, which appeared in the to
me first in the late '80s, early '90s. And Harris Farms had to be 60%
fallow one year and I didn't want that to happen again, so I thought well
maybe we need to see if we can get some water from somewhere else to
bring in. And so that was my first interaction with having to try to find
water to keep that part of the valley up and running and going.
>> Thomas Holyoke: Just before we get into that, do you remember more or
less about what year the first serious cutbacks in water came?
>> Erick Johnson: Well, let's see it would have been about '90 I think
because we were -- we were 4 years into the drought and we got a 50%
allocation that year I think and then it was 25% the next year, so.
>> Thomas Holyoke: Were the cutbacks entirely due to the drought?
>> Erick Johnson: No not entirely due to the drought. Primarily due to
the drought, but also my recollection is that the winter run of the
Chinook salmon was just being listed as an endangered species. And it
lived in the upper Sacramento River. And that was our first interaction
with an endangered species issue creating a cutback of water. And then at
the same time, the Miller Bradley Bill, which later became the Central
Valley Project Improvement Act, which is a ironic name because it's
absolutely broken the Central Valley Project. But the Miller Bradley
Bill, which was drafted by George Miller from the Bay Area Contra Costa
County. He was a Congressman who just had a loathing for the Central
Valley. He must have thought that we should of turn this area back into a
desert. And Bill Bradley who was a congress -- senator from New Jersey
who didn't know anything about California, they got together and drafted
this bill to try to somehow improve upon the Central Valley Project. So - so those two things were happening at the same time. And I don't
remember the year that CBPIA was passed. I think it was '92. But so that
was all happening at the same time. And all the sudden the farm community
had to encounter this new draconian set of environmental regulations
they'd never had to deal with before. Before they'd had to deal with all
of the normal things that farmers would deal with whether it be weather
problems like, well a natural drought, or -- or a -- or hail, or
pestilence, or the kinds of things that farmers have to deal with. And
they did very well from the late '60s through the early '90s and had a
very productive period until these environmental regulations had kicked
in.
>> Thomas Holyoke: So with the new reality starting to dawn on farmers
out on the west side you were -- you mentioned you were starting to get
into a position where you had to look around for water.
>> Erick Johnson: Right. And actually the first transaction I did really
came knocking at our door. It was actually Dale Melville from Jim
Provost, Provost and Pritchard Firm. And they had some water in another
district, south of Westlands, and water that that farmer didn't need and
we were able to buy, I think it was 20,000-acre-feet that year.
>> Jim Provost: Are you talking about Dudley Ridge?
>> Erick Johnson: Yeah it would have been Dudley Ridge. I don't think I'm
violating any confidences with that. Yeah it was public record because it
would have gone through the state process. Unfortunately we got it done a
little late in the year and we hadn't prepared our farm for, for planting
cotton that year. So we had to very quickly prepare the beds and very
quickly, plant and we got a bad stand of cotton. And it was, if I
remember correctly, it was the year that we had like 15,000 acres of
cotton and maybe -- maybe 12,000. And we lost money on it because we -the farmer term is shotgunned it in. And but we used the water and it got
me into the water trading mode and thinking about those things. And did a
few more over the next few years. But then the rains came and we had good
water allocations again for a period of years. So.
>> Thomas Holyoke: With the water transfer, like that first one you did.
I mean the physical transfer of water is simply you were taking water out
of the San Luis Canal that otherwise would have continued to flow I
guess, Dudley Ridge is further south than Westlands. So physically that's
all that was required.
>> Erick Johnson: Physically all that's all that was required. The -- the
nature of water transfers however, is that the physical parts of the
water transfers is easy. It's the institutional things that drive you
nuts and prevent a lot of them from happening. That particular one the
State Water Resource Control Board had to approve a change of place of
use for that State Water Project Water in Dudley Ridge to move into
Westlands, which is in the CVP place of use. The dividing line between
the State Water Project generally and the Central Valley Project is the
Kings County line on the north side of Kings County. So Westlands
actually has a little bit of ground in the State Water Project place of
use in Kings County, but the -- where the water was going to go in
Westlands was in Fresno County. So we had to get this change of place of
use from the State Water Resource Control Board to move it from the State
Project, into the Central Valley Project place of use. I think we finally
got the approval sometime in August that year, for a crop that we had
planted in April, May. And it was so frustrating that we actually talked
to some, some folks in Sacramento at the time, meaning, I think he was a,
I don't even remember the name of the fellow, but the -- he was a state
senator I think. And he was saying, well what can we do to help? And we
said, well we need to shorten the window of these approvals, because that
it's just taking too long. And we actually got legislature to change the
approval process to shorten the amount of time the state board has to
consider one of those transfers from an unlimited period, as I recall, to
45 days. Which I thought oh boy this is really going to help because now
they can only think about it so long and they have to give us a decision
within 45 days. But as these things are uncovered, it's now that the -we find that the delay is even earlier than that. Because of if the
Department of Water Resources has to make the application to the State
Board, because it's their water in the state service area, they have to
make the application to the state board. And they don't have any
restriction on how long they can process an application before it goes to
the state board. So quite often these -- these transfers still take
months, and months, and months, or years to, to get approved. So -- so
that one little change we made, didn't really help very much. But we
tried you know because we saw a problem and said well if we encounter
this again, we're going to need to have a quicker regulatory environment
to get through.
>> Thomas Holyoke: Was some of these early water transfers were they
expensive, the price you were paying for water?
>> Erick Johnson: It was dreadful and I say that with an in jest now. At
the time we thought it was very expensive. It was like twice or three
times what we had been paying for water. I seem to remember when I
started at the farm, we were paying around 30, $38 an acre foot for our
water. And I seem to remember that transfer of water was 2 or 3 times as
much as that. So we thought that was just a dreadful thing. And with
hindsight that would have been one of the, that would have been cheap.
>> Thomas Holyoke: Bargain basement price.
>> Erick Johnson: Yeah.
>> Thomas Holyoke: Okay so you had said you'd done a few transfers and
the rains came again and everything was wonderful. And what starts to
happen after that?
>> Erick Johnson: Well the -- during those times, we in the farm
community focused on farming and focused on the other issues. We focused
on commodity issues, and we focused on you know just the farm issues. And
I know now that there was a lot of stuff going on in the background in
the water world that, I think you interviewed Dan Nelson and he was
working on the Delta Accord and a number of other issues. And the water
availability to the west side of Fresno County and Merced County, and
indeed the Kern County area, really the whole Southern Valley here, kept
getting nicked away by different rules and regulations. And mostly
environmentally driven. The big one though, was the Central Valley
Project Improvement Act that took 800,000 acre-feet away from the Central
Valley Project south of the Delta and then even more, because they took
another couple hundred thousand acre-feet at least away and gave it to
the refuges, the bird refuges. But there were other little nicks and cuts
along the way and so, but we were able to continue farming. We had enough
water to keep farming and.
>> Thomas Holyoke: Did you yourself have to get involved in any of the
political or policy work?
>> Erick Johnson: You know, I don't think so. I don't think I spent a lot
of time. I mean I'd go to some meetings, but I wasn't sort of right in
the middle of it. Sort of one of the reason, why I was a bit bemused that
I was doing this interview today. Because I felt like I was really on the
periphery of what was going on and sort of saw what was going on,
suffered from it, but wasn't in the middle of it like so many of your -your guys that you interviewed.
>> Thomas Holyoke: So did you get back really into the water transfer
business while you were still at Harris Farms after the rain stopped
coming?
>> Erick Johnson: Oh, I think we did a couple more during that period and
then the in 2000 I sort of had a major life change, my daughter was going
into kindergarten and we were thinking about moving into town. And I got
into this business really, it felt like more of a calling than anything.
I was meeting with some guys who I meet with every week, was meeting with
every week just to sort of live life with them, and it was sort of like a
bible study. And I was a little, I was trying to figure out what I was
going to do with if I commute, and stay at Harris Farms, I mean I was
thinking I'd stay at Harris Farms the rest of my life, when I’d been
there for that 16-year period.
>> Jim Provost: Good place to work?
>> Erick Johnson: Yeah, it was a great ride. It was really a terrific job
and terrific, terrific guy to work for, and John Harris and he has an
amazing team of folks who run that place. But I had one of my friends say
well if God has something else for you well I pray he'll open the door
and put flashing lights on it so you'll know that that's it. And the
crazy thing is -- is within an hour of my, it took me an hour to get home
and when I got home I told my wife, you know I think we're supposed to
start a water brokerage business. And so I went from having 600 to 1000
employees and went down to one almost overnight. Had a couple month
transition period. But, so the because water issues were continuing
problems in Westlands and they weren't just for our farm. That’s -Westlands is an area the size of about Rhode Island, roughly 600,000
acres. The areas to the north, a couple hundred thousand acres more that
have real problems with water. And folks in Kern County have problems
with water. So, and I'd seen that some of these water transfers might
help some folks stay in business. And so that's why I said it felt more
of a calling. It was that I maybe should be working on these issues more
on a global basis rather than just trying to figure out how to get my
farm through the situation. So I went to 10 of my neighbors and they
said, yeah you should. We think that's a good idea, you should do that.
>> Thomas Holyoke: And think you said this was around 2000?
>> Erick Johnson: Yeah. Yeah. Yeah, and so and.
>> Thomas Holyoke: Well, how do you get started in a business like this?
This is fairly new territory I would say.
>> Erick Johnson: Well I’d, I'd been, the water transfers that I had been
involved with up to that point had been primarily with Dale Melville with
Provost and Pritchard. And Dale sort of knew how to do these things. And
so I'd watched him do it and with a lot of hubris I thought maybe I could
do it too. And so I went out to, I went up to Northern California and met
some folks in water districts up there; I met folks in water districts
throughout the Valley. And realized how little I knew about this
business. So it was -- it was a bit of a wake-up call about how much
there was to learn. And how just having the buyers wasn't enough. And but
that year I sort of late in the year I was able to finally do a transfer.
I think I didn't get a paycheck for 8 months. And finally did a little
transfer and was able to make it through the first year, so. So how do
you do them? Well you -- you meet with people and you see what their
needs are and what they may have excess supplies or projects that they
maybe could do to create supplies that would be transferable. And it's a
real sort of trying to understand what people's needs are and what their
capabilities are and -- and if you know enough of those people maybe you
can figure out a way to put -- put needs and supplies together.
>> Thomas Holyoke: So you're working on not just cultivating buyers, but
also cultivating sellers, helping them create something so sell?
>> Erick Johnson: More importantly.
>> Thomas Holyoke: Okay.
>> Erick Johnson: There are lots of people who in the valley who need to
buy water. Pretty much everyone on the west side of the valley in an area
of you know as I say Rhode Island. So it's huge, huge need. And because
people were having to renovate wells and get groundwater wells going
again at the time and they didn't want to do that bringing in surface
supplies from other areas was really the, the thing we needed to be doing
here in the valley. So everybody needed water.
>> Thomas Holyoke: So your clients included both buyers and sellers I
suppose for a broker makes sense.
>> Erick Johnson: Yeah, so and I'm, I’m what I, the economic term is
honest broker. The role I play, where I don't take positions in water. I
strictly match buyers and sellers and let them know that you know as a
broker I'll be getting a commission, but they know what that is and -anyway somewhere I found that in a book about the honest broker term
[laughter]. But it's true, I mean you know about all I have is my
integrity and whether people can trust me or not to get put deals
together in a honest and safe way.
>> Thomas Holyoke: Okay so you start your business in 2000 here and
you're still doing it today I understand.
>> Erick Johnson: Yes.
>> Thomas Holyoke: And so any big stories, anecdotes over your career.
>> Erick Johnson. Oh, over 15 years? Well I have to guard the
confidentiality of my clients both buyers and sellers. I've always told
people that I'm not going tell anybody what their deals are. And I do
tell both sides of transactions what I've seen in the marketplace dollars
wise and what the what the transactional numbers are, but I -- but I
won't tell them who who’s doing the deals because quite often sellers
don't want people to know they're selling water, especially if they might
be selling it to their neighbor and they don't know it. And -- and
sometimes buyers don't want people to know that they're buying water
either because they, farmers are typically very humble and just don't
like to toot their own horn too much. As most, I shouldn't say all but
most, you know.
>> Thomas Holyoke: So it seems like this could put you in a tricky
situation where you know especially during these times of extreme
drought. I think there's a perception that it looks bad to be sending
water away from a region, selling water off anywhere. So have you had to
deal with problems of public relations, problems of politics?
>> Erick Johnson: I really haven't because almost all of my transfers
I've ever done have been agriculture to agriculture. And that takes the
evil water broker persona, at least that you read stuff in the press
about those water brokers, they're just taking water away and, but really
what I'm trying to do is I'm trying to find water for farmers primarily.
And I haven't had problems with people sort of claiming that somehow I'm
doing something wrong. Because most people, at least in this part of the
world don't think that's wrong. I mean if somehow we're finding water
that is a little, there's a little extra water in one area that will help
keep another farmer, or farm district alive in another area, that's a
positive. And the dollars typically that are used to buy the water are
then reinvested by the seller in conservation meth -- measures, or other
ways of creating more water for the future.
>> Thomas Holyoke: Do you have sort of I guess a range of operation that
is you're dealing with water sellers mainly the valley, or water sellers
up from northern California?
>> Erick Johnson: Yeah, I've worked from sort of Redding to Bakersfield
is sort of my territory, primary territory would be from Tracy to
Bakersfield though.
>> Thomas Holyoke: Okay and have there been significant changes in the
regulatory infrastructure regarding water transfers? Is it easier than it
used to be? Harder than it used to be?
>> Erick Johnson: The environmental community, which I, they're now
calling themselves NGOs, nongovernmental organizations, it's a wonderful
rebranding that they've done or themselves to try to get the
environmentalists label off of them. And it bugs me every time I hear
that. But they, over time have said that water transfers need to be
easier. That, that's the solution for California's water problems. The
ironic thing is that water transfers now are much, in many ways,
especially the larger scale ones, are much more difficult than they were
15 years ago. So the lip service has been, oh we need to make this
easier. The reality is there so many more people looking at them and
weighing in on them, and making them more difficult to happen and less
likely to happen. So the regulatory paradigm, yeah, it's gotten more
difficult and the.
>> Thomas Holyoke: Do you have to do anything like an environmental
impact report when you're transferring large amounts of water?
>> Erick Johnson: You know I have been involved in a few -- a few of
environmental assessments that the Bureau of Reclamation would do, which
is the level below being doing an EIR. And thankfully I haven't had to do
any EIRs. I've seen other people do EIRs, primarily districts that may
want to sell. And I haven't done a lot of the big scale transfers. That's
one of the reasons I was bemused to be here. Is that I sort of operate on
the periphery. I help people where I can. And it's really relatively
small-scale normally. The big transfers that I see really are the ones
from Northern California across the Delta and into the Western San
Joaquin Valley typically. And those are transfers that the districts or
their representatives, like the authorities have done. I've only been
involved in a couple transfers across the Delta from Northern California,
south. And mainly because unless Department of Water Resources and Bureau
of Reclamation sort of want those things to happen they don't happen. And
only the, it’s been my experience that only the -- the bigger districts
or the authorities representing districts can get those deals done. They
have the clout within with DWR Bureau of Reclamation to get those deals
moved through and to figure out ways to make them happen. So some of
those have required EIR's. But those would be you know to the people who
I look to who I see have really done some major transfers. San Luis Delta
Mendota Water Authority and represents Westlands and others. And they've
gotten some big ones done.
>> Thomas Holyoke: Okay. Now that we're sort of deep into this, I guess
extreme drought. Are you finding it harder to even find water?
>> Erick Johnson: Oh yes. Very painful. Very difficult to find water. I
went for months this year without finding any water for sale. Which for
me was a first. I'd always been able to find a little bit of water here
or there at some price. This year, there just wasn't any for a while. Now
that we're here, we're on July 7th we're actually getting past some of
the irrigation season. Some of the tomatoes crops are coming off at this
point. Some of the nut crops will be coming off shortly. Some farmers who
suffered through last year decided that there was no way they wanted to
get pinched again like they did last year where they got to mid-season
and then had to buy water at extremely high prices. And I saw prices has
high as 2500 an acre foot last year. You compare that to 38 when I
started in this deal in 1983. Not the water transfer deal, but when I
started farming in '83. And because they needed to finish their crops
last year. And if you don't get that last irrigation on a crop you lose
the crop. So that last irrigation is worth a lot, almost, almost the
value of the crop if you look at it strictly from an economic
perspective. Because if you don't put that last irrigation on you lose a
crop. So that's why people were willing to pay those prices. And I didn't
set that market, there was an auction at one of the districts that set
that market. But people this year didn't want to get in that same spot,
so they just didn't farm as many acres. I think in the Valley I've heard
that like 500,000 acres are fallow this year. So now that we're passed
the end of the season, we’re -- or we're getting past some of the
irrigation seasons, some small blocks of water are becoming available
from farmers who said, well okay now I've got a few hundred-acre-feet, or
50-acre-feet. So and then the big scheme of the water world, 50-acre-feet
or 100-acre-feet is background noise when you're talking about millions
of acre-feet would typically be used to irrigate the valley. But that 50acre-feet or 100-acre-feet for somebody who needs to finish a crop this
year is pretty darn important to that one person. So those are the kinds
of transactions I'm doing this year.
>> Thomas Holyoke: The -- finding that there's less and less water to
actually get is that because people, no one just, no one has any water,
or because a lot of potential sellers have decided they needed to hang on
to their water?
>> Erick Johnson: No it's just that there's so little water in the system
this year. Because the -- so much water was flushed out to the ocean
because of environmental regulations in the Delta. And the -- there were,
in the last 2 years, there've been 5 major pulses of water that I'd
consider flood flow type flows go through the Delta. Only one day of
those 2 years were the pumps operated even at their maximum pumping
capacity, let alone the pumping capacity is, is the, I should say
permitted capacity to the pumps, which is significantly less than the
actual built capacity. State water Resource Control Board has limited how
much those pumps can be pumped and because of environmental regulations
we were only able to hit that full pumping permit capacity one day out of
those two years. So literally hundreds of thousands of acre-feet,
probably approaching half million acre-feet were just flushed out to the
ocean because they, the regulators thought that the those pulses of water
turned the water in the Delta a little muddy and if they pulled the water
towards the pumps the muddy water coming down the river would somehow
bring Delta smelt with it to the pumps. And they didn't want to take any
Delta smelt, an endangered species into the pumps so they just didn't
pump. And so about the only way we're going to get, from my perspective,
good flows to the pumps and when I say the pumps I'm talking about the
State Water Project Pumps, named the Banks Pumping Plant and the Jones
Pumping Plant for the Central Valley Project, both near Tracy. About the
only way we're going to get good flows of water to the pumps and down
south of the pumps and into San Luis Reservoirs and farther south is if
the San Joaquin River is flooding for an extended period. So that's my
pray for this year is that the San Joaquin has a little flood, hopefully
not too much damage. It used to be in California that flood was a bad
word because of the damage that floods have done. But now without a flood
on the San Joaquin River we're probably never going to get good
allocations of water for the south of the Delta water users, maybe ever
again, unless we get some regulatory relief, or congressional relief.
>> Thomas Holyoke: Someone who probably, I imagine you talk to a lot of
farmers on a regular basis around the Valley, what's the mood out there
here in 2014, is it desperation, anger, both?
>> Erick Johnson: Well, people are in I think desperation mode is
accurate and rightly so, when you drive out on the west side of the
Valley and you go mile, after mile, after mile, after mile and it's just
dirt in an area that would have been completely cropped in other years.
Or yesterday I drove by a perfectly good orange orchard that's -- that’s
just toast. It's just dead because of lack of water. I've seen literally
sections of ground, which a section would be 1 mile by 1 mile of almonds
that have been pulled out. And almonds are a major export crop and
they're incredibly valuable right now and people have just taken them out
because they don't want to have to try to find water for them. They can't
find water for them now and so they've just pushed them out. And some of
the trees were only 8 years old. And almonds are a 25-year to 30-year
crop. So permanent planting so. So, when people start making those kinds
of decisions to just push out an asset that some of those assets that
I've seen knocked out were $10 million assets. And they're just back to
dirt. You don't make a decision like that unless you're really despairing
about the future. If you -- I think they just don't have hope for the
future that it's going to get better any time soon. And I probably agree
with them, it's not going to get any better any time soon without a major
legislative change really.
>> Thomas Holyoke: Just one thought that occurs to me. In the water that
you might be able to find, do you, is there any interest, or been any
movement on I guess should the right term would be recycled or reused
water, perhaps water that’s a municipality already used for its you know
for homes has now gone into sewers, been processed, can that water then
be resold for agriculture?
>> Erick Johnson: Well, a lot of that's already happening in the Valley
especially. The I know the Fresno Municipal, I forget what wastewater
treatment facility already, its excess water goes to farmers. In the
Modesto area and Turlock area they're talking about doing exactly what
you're asking. Where some of that water's going to be going to
agriculture to folks who need it. Water that would have been going into
the river after the plant, the treatment plant, the excess water goes
into the river. So they'll pick that up. But that's a two-edged sword,
because then there's less water in the river. And then you have river
flow issues. So but it's those kinds of things that people are having to
do.
>> Thomas Holyoke: Okay. Well what have I missed?
>> Jim Provost: Erick's done a good job.
>> Thomas Holyoke: He has [laughter]. Anything else? What's your? Well,
you've already given a little indication of it, but what are your
thoughts for the future? If there is one?
>> Erick Johnson: You know the -- my hope and my prayer is that at some
point the national political scene wakes up to what's going on in
California. We provide half of the fruits and vegetables to the nation.
And what I'd consider craziness in the environmental regulatory scheme is
causing the -- this amazing area that we've been blessed with to crumble.
The, and the things I was talking about with the Delta Smelt. We keep
throwing more water at the Delta smelt. We keep throwing more water at
the salmon. And when I say throwing water, the regulators just grab water
and say, oh we need more water in the rivers for these fish. More water
is not solving the problem. The fish populations keep going down. They're
not recovering even though we've thrown inordinate amounts of water at
those problems, but it's the only knob that regulators are using. We have
to get more, we have to get smarter about restoring those fish
populations. Whether it's in fisheries, or in fish hatcheries, or getting
rid of the predators, like the striped bass in the Delta are voracious
predators. They're an introduced species, gee they just might eat Delta
Smelt, and they just might eat Salmon Smelt, the little salmon
fingerlings. And indeed last year I heard that the winter run of the
Chinook Salmon, they raised some in the hatcheries and they put them in
the river, and they had 95% mortality before they got to the ocean. And
what kind of lunacy is that. Well it's the kind of lunacy that hopefully
when people hear about it they say, well we need to be, we need to be
smarter about this. We've got the economy not only of the Valley on the
bubble, but if have another 1 or 2 more years of this drought cycle that
we're in right now, the whole state is gonna be really suffering from the
weight of the drought. We're only in the fourth year of a drought right
now. The first year the Central Valley Project allocation was 40%. The
second year of the drought, it was 20% and the last 2 years it's been at
0% allocation for the south of Delta agriculture contractors. The last 6year drought I talked about that really woke me up to the water issues in
the late '80s and early '90s we got 100% allocation for the first 3
years, 50% the fourth year, and 25% the next 2 years. It's not the
drought that's the problem. It's all these environmental regulations that
are preventing water from moving where it needs to move. That's something
we as a society can address we can say look we need to be smarter about
our environmental regulations. I mean every farmer I know loves the
environment, loves being out in the environment on a daily basis. They
take care of their environment because they know if they don't take care
of their fields and their area, their farms are not gonna thrive. They
don't necessarily want to see the fish go extinct. But there has to be
smarter ways that we can address the environmental issues. And so that I
guess does give me some hope. That at some point people are going to wake
up and say look, we can't just keep doing the same things over, and over,
and over again. Meaning giving the fish more, and more, and more water
and expecting a different result. I mean that's the, I think Einstein
said that that's the definition of insanity. Doing the same thing over
and over and expecting different results. Well that's what our
government's doing right now. So at some point people will say look we
need to do other things here. And you know whether it be build the
tunnels under the Delta to get more water south of the Delta. That would
probably help. East Bay Municipal District, East Bay Mud Municipal
District, essentially did that. They built some intakes in Sacramento,
called the Freeport Diversion Project and in essence, built a peripheral
canal for themselves, or tube, about 10 years ago. And so now it's time
for the rest of the state to do the same thing, to take the water up out
of the river upstream near Sacramento and then so we can get away from
having to deal with the fish issues in the Delta, from crippling the
state. So, but that's something that those kinds of projects under the
current environmental regulatory paradigm of you have a project like that
you permit you say you want to move forward on it, you get environmental
lawsuits. That's probably not going to happen in my lifetime, so we need
to have some environmental relief before then, so. I don't know that's
not a very rosy picture of the future, but I think it’s that's the
reality. And that’s why farmers who I talk to on a daily basis are so
despondent that they don't see any hope coming anytime in the future
unless we get this El Nino that is supposedly we're going to get an El
Nino this year in 2015.
>> Thomas Holyoke: They said that last year.
>> Erick Johnson: Well right, but this year it's looking more like a
strong El Nino, unfortunately, only about half of the time El Nino's are
wet. But if it's wet, it will probably be really wet. And we may get that
flood on the San Joaquin River we need. Hopefully it's not going to be a
damaging flood, but it will be wet enough that we can fill San Luis
Reservoir and get an allocation for the farmers, get them to turn their
wells off and let the ground water recharge for a few years. So that
would be the best-case scenario for next year or two is to get it the
old-fashioned way, from the -- from nature.
>> Thomas Holyoke: Okay.
>> Erick Johnson: Thanks.
>> Thomas Holyoke: Thank you very much.