(LONG) Klamath water deal no bargain for U.S.

Daniel B. Wheeler dwheeler at ipns.com
Sat Mar 22 17:50:57 EST 2003


>From The Sunday Oregonian, Mar. 16, 2003, p A1

Klamath water deal no bargain for U.S.
Records show officials last year paid more than the going rate for
farmers' water and returned less to rivers than they bought

By MICHAEL MILSTEIN, The Oregonian
	When the Bush administration was scouring Southern Oregon last year
for water, James Root stepped forward to lend a hand.
	A Medford fruit processor with a second home north of Klamath Falls,
Root offered a deal that appeared to have benefits for all. In
exchange for payments from the federal government, he and some of his
neighbors would stop irrigating their pastures, leaving water in the
rivers for both fish and farmers.
	The deal was arranged with the help of Sen. Gordon Smith, R-Ore., and
touted by Interior Secretary Gale Norton, who said it would help solve
the water problems "this year and in future years." During the next
several months, federal officials paid nearly $1 million to a
nonprofit corporation set up by Root.
	Now some officials and observers question whether the money was well
spent.
	Documents show that Root and his fellow ranchers were paid many times
the market rate for water - and far more than the U.S. government paid
Klamath farmers in compensation for water that was cut off in 2001.
And a federal analysis concluded that the deal restored to rivers less
water than the government had negotiated and paid for.
	"We got desperate for water," said Dave Sabo, manager of the Klamath
Project for the U.S. Bureau of Reclamation. "We were going out to buy
it; we were looking under every rock without thinking what the
precedent will be."
	Root said the government got better-quality water than it could have
anywhere else. It's still early to assess how much water has filtered
into the complex Klamath system, he said. He said the payments were
part of an experiment and that costs will naturally run high until it
is fine-tuned.
	"We're not embarrassed that there are some improvements to be made,"
Root said. "I think we did a good job under the circumstances."
	But as the Klamath Basin enters another dry summer, and as Root
negotiates to extend his water contract, federal officials say they
will pay just one-third of what they did last year. This month they
offered hundreds of other Klamath Project farmers who agree to idle
their land a far lower rate than they paid Root last year.
	"We're only going to pay for the benefit we actually see this time
around," Sabo said.
	The government's water purchases have their roots in late 2001, an
anxious time in the fight over water in the Klamath. More than 1,000
local farms had been cut off from water the previous year, and federal
officials did not want to do it again.
	Root said he asked Sen. Smith to help in approaching the Bush
administration. According to Root, Smith arranged for him to meet in
Washington, D.C., in the fall of 2001 with John Keys, the
administration's commissioner of reclamation and water czar. There
they outlined a deal.
	Smith spokesman Chris Matthews said the meeting was a routine case of
helping a constituent navigate the Washington bureaucracy. Root has
given to Republican and Democratic candidates during the years and
donated $10,000 to Smith's 2002 re-election bid.
	"It had nothing to do with politics or campaigns," Matthews said. "We
set up meetings for constituents all the time. This was something
where everyone was looking for solutions. it was purely a federal deal
- (Smith) had nothing to do with it."

More businessman than rancher
	Root is more of a businessman than a rancher. Sabroso Co., his
family's Medford fruit-processing giant, projects annual revenues of
$40 million and operates in 26 countries. He's an avid trout
fisherman, and his second home in the north end of the Klamath Basin
sits on 700 acres along the Wood River.
	The Wood River, like all waterways throughout the Klamath, is a part
of the basin's overall water supply that supports endangered fish and
nourishes farms and ranches.
	Root locked up his deal with U.S. officials in the spring of 2002,
just as Norton and Agriculture Secretary Ann Veneman released water to
the Klamath farmers on March 29.
	Within days, Root and Keys signed their letter of intent. That
document said Root's nonprofit, the Klamath Basin Rangeland trust,
would sell the government an estimated 8,000 acre-feet of water. It
was a small amount - a few percent of what Klamath Project farms use
in a year - but the administration saw it as a start.
	"We wanted to show that if people were interested in coming up with
good ideas that support the president's goals out there, we stood
ready to give it a try," said Sue Ellen Wooldridge, deputy chief of
staff for Norton.
	The government wanted to pay $50 an acre-foot, a price reasonable for
the region, said Jack Garner, the Reclamation Bureau's deputy director
for operations. It's what the bureau paid for water from wells near
Tulelake, Calif., last year. The letter of intent set the same price,
promising Root a total of $400,000.
	Root, Keys and James Connaughton, the top White House environmental
official, announced the terms at the head gates in Klamath Falls on
April 2.

Pressing for more in deal
	But Root soon pressed for more.
	He and Kurt Thomas, a California rancher and neighbor of Root's who
also signed up for the deal, needed other ranches to join in if they
were going to come up with the 8,000 acre-feet they had promised the
government.
	On Root's behalf, attorney David Van't Hof of the Portland law firm
Stoel Rives negotiated a new deal with the bureau of Reclamation. it
pledged to pay Root and his partner landowners twice: first for not
diverting water from rivers and streams, and again for water their
fields did not soak up.
	Typically, a landowner is compensated for one or the other, not both,
said Clay Landry, a Wyoming-based consultant who previously worked for
Oregon's Water Resources Department and served as an economic
consultant to Oregon Water Trust.
	On May 28, with no public notice, Root and the U.S. government signed
a new contract, which meant the government would be paying $948,000.
	Van't Hof is now Gov. Ted Kulongoski's water policy adviser, having
left Stoel Rives. He declined The Oregonian's requests for an
interview.
	Root and some federal officials said the agreed price was a fair
exchange for the twin benefits of the deal, which helped Klamath
farmers and put clean, cool water in the river. "It's simply
innovative; it's nothing nefarious," Root said.

Officials question payment
	Kirk Rodgers, The Bureau of Reclamation's mid-Pacific regional
director, said he knows of no other cases where the government agreed
to such a payment formula.
	Del Sparks, who oversees and enforces water rights throughout the
Klamath basin for the Oregon Water Resources Department, sees it in
harsher light: "The government got taken," he said.
	The U.S. government's figures show each acre-foot of water saved in
Root's Rangeland Trust deal cost taxpayers $189. That's six times the
average regional value of water, according to studies of Western water
markets, and nearly 20 times what conservation groups have paid for
water from pastures elsewhere in Oregon.
	It also means the U.S. government paid Root's Rangeland Trust $300
for each of the 3,161 acres Root and his partners did not irrigate. By
contrast, it costs little more than $100 an acre to rent irrigated
pasture like theirs, said Rodney Todd, natural resources extension
agent for Oregon State University in Klamath Falls.
	Reed Benson, former director of WaterWatch of Oregon and now
professor of water law at the University of Wyoming, sees it starkly:
"That's an astonishing price. It's a good example of what happens when
you're desperate to do anything for a photo op, and you end up
breaking the bank for a project that has an undetermined payoff."

Issue of water received
	Questions persist about whether the U.S. government actually received
all the water it paid for.
	When a team of researchers from the Bureau of Reclamation measured
the water saved by not irrigating the 3,161 acres controlled by the
Rangeland Trust, it could identify only about two-thirds of the water
the government had contracted for, federal documents sow.
	Root disputes the government numbers. His Rangeland Trust spent
$150,000 of its federal funding on its own research. part of it went
to a Seattle consulting company employing Root's daughter, hydrologist
Chrysten Lambert.
	Lambert concluded the deal produced almost as much water as it was
supposed to and found that area streams carried slightly more water
than they had in earlier years.
	Her calculations assume Root and others gave up more water than they
had a legal right to take, however, documents show.
	The U.S.-Rangeland Trust deal showed several other features and
outcomes:
	- It paid for more than $100,000 for water that Thomas, the
California rancher, in 1991 had told the state he would never use.
	- It paid for water that occurs naturally and immediately below the
ground surface, nourishing surface vegetation. The sale of such water
is barred by Oregon law.
	- It spent $50,000 on travel for its board of directors, including
Root and Thomas. It dedicated another $100,000 for legal fees to Stoel
Rives and attorney Van't Hof.
	- Much of the land contracted by the Rangeland Trust remained so lush
that the landowners kept grazing cattle in reduced numbers. Root and
Thomas created a for-profit company called the K.C. Land and Cattle
Co., also based on Root's Medford offices, to manage grazing for what
may turn out to be a "modest profit," Root said.
	Federal officials said they paid the high rate for water in part to
fund ecological restoration. They and state officials had previously
given Root more than $250,000 to restore and construct trout streams
near his Wood River home, records show.
	Norton pledged in a speech that the Rangeland Trust would complete
"conservation and wetlands restoration measures on lands no longer
irrigated." But Root said there wasn't the time or money to undertake
costly stream repair or other rehabilitation in the course of the
trial project.

Water rights figure in
	In coming years, the deal could help Root and his partners cement
their water rights, which in the Klamath Basin can be more valuable
than land itself. By paying Root and Thomas for rights that remain
undecided, the federal government might give more weight to those
rights.
	Peter Mostrow, a Portland attorney representing the Rangeland Trust,
said that was never a purpose of the deal.
	Ranch John Ownes, however, said he joined the Rangeland Trust in part
for that reason.
	"If someone comes along and pays you for it, doesn't that mean you
have a right?" he asked.
	Other landowners complain the deal with Root slammed the door on
their chances to sell water at lower prices. That might keep water
rates inflated, they said, so taxpayer dollars will not go as far.
	"It's terribly unfair to us, and it's terribly unfair to the U.S.
taxpayer to ignore the fact that there are other people out here who
have water, too," said rancher Roger Nicholson, who has drafted his
own water sale proposal. He said Interior Department officials "will
not give us the time of day."

U.S. expects to pay less
	U.S. officials say they learned enough from their trial run with the
Rangeland trust that they will not strike the same terms again.
	They are now near an agreement that will pay the trust to expand its
project over twice as many acres this year. But they expect to pay
only $100 an acre this time, leaving it to wildlife agencies to fund
environmental benefits and restoration.
	The Bureau of Reclamation has offered farmers in the Klamath Project
$187.50 an acre to go this summer without irrigation, freeing added
water for other farmers and fish. Reclamation officials have $4
million to spend - enough to idle 12,000 acres and save 25,000
acre-feet or more. Farmers have offered twice that many, in part
because some fear another dry summer could leave them parched anyway.
	For their part, Root and his group hope to eventually get owners of
all the Wood River Valley's 31,000 acres to forgo water for cash. They
want to remove as many as 50,000 cattle and the pollution that follows
them, while reviving streams and wetlands that filter water. They say
such measures, over time, will bring Klamath's overtapped water supply
back into balance.
	But it will take at least another year to prove its promise, Root
said.
	"Nobody's going to walk in with a gift-wrapped solution that's going
to solve the whole problem," said Klamath County Commissioner Steve
West. "I'm willing to give them a chance to see if this works."

Posted as a courtesy by
Daniel B. Wheeler
www.oregonwhitetruffles.com



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