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Eyes On Your Water - A Three-Part Series

Is water banking in SLO Countys future?

January 27, 2014

Eyes on your water: First in a series of reports on the North Countys festering water politics.

By DANIEL BLACKBURN
Little San Luis Obispo County is poised to become a major player in the Wests high-stakes water
future, even while local land-owning water users fret about declining supplies stressed by an increasingly
voracious agricultural thirst.
Meanwhile, strategies of a variety of county water users their anxieties exacerbated by a deep
and persistent drought are competing for control of the biggest component of this countys water
storage capability, the Paso Robles water basin.
And now, the basin the largest aquifer west of the Rockies is being considered by some
powerful entities for utilization as a water bank.
It is an objective that cannot be realized without creation of a special water district, plans for
which are gaining a considerable head of political steam. A districts formation would necessitate
enabling legislation, now being contemplated for sponsorship by Assemblyman Katcho Achadjian (R-San
Luis Obispo). Such a district is favored by two area groups which recently merged their objectives, the
Paso Robles Agricultural Alliance for Groundwater Solutions (PRAAGS) representing the biggest
vineyards overlying the Paso Robles groundwater basin and PRO Water Equity.

PRAAGS legal representation is being provided by Ernest Conant, a lawyer for the controversial
Kern Water Bank in the Central Valley.
Consensus on local water banking is thin; some North County landowners are balking at the idea
of establishing a water district, fearing that special interests are fast-tracking legislation to prevent any
future intervention in North County water-rights conflicts by the courts. Two local lawsuits have been
filed in an attempt to protect existing rights of current landowners, and to assure those rights carry into the
future.
A plaintiff in one of the lawsuits, Cindy Steinbeck, said in an email to members of an overlying
landowners group, Protect Our Water Rights (POWR), that representatives of the two bigger entities,
PRAAGS and PRO Water Equity, may not be revealing the whole story.
What they are not disclosing [about plans for a district and the legislation] may seriously impact
your property rights, as well as the financial value of your property, Steinbeck wrote. We must stand
together to protect our groundwater rights.
Steinbeck said in a later conversation with a reporter that leaders of PRAAGS and PRO Water
Equity cannot seem to tell the truth about plans for water banking in this county.
Im certain that at least one person in each group knows exactly what is going on, she said, and
many of the rest are completely naive.
At a Pear Valley Vineyard meeting last week, members of PRAAGS admitted they seek in the
legislation exporting powers and plan to do water exchanges with a Central Valley water bank,
Semitropic Water Storage District.
Wider needs, less water
In concept, the idea of capturing water during wet years and saving it to use for homes, farms,
ranches, and businesses during a dry spell sounds like it makes fiscal sense.
In reality, a water bank can create circumstances jeopardizing unsuspecting landowners who
believe they have the rights to the water under their property.
Conservation measures of some sort are becoming increasingly important, because diminution of
the above-ground resource parallels statewide urban and rural population expansion, and agricultural and
industrial demands are increasing.
In prior decades, overland transfer was the preferred method of moving water from one location to
another. But dams, reservoirs, canals, pumping plants, and other delivery infrastructure now are mere
remnants of a past where abundance of the resource was a commonly-held misperception.
Even without a serious drought, evidence of a rapidly-shrinking water supply in the western
United States is abundant: the combined capacities of the Colorado River, the states northern watersheds,
the Central Valley Project, the Owens River and California aqueducts, cannot deliver one-fifth of the
promised, and contracted-for quantities.

With more eyes on less water, novel ways to develop, store, sell, and deliver water are sought.
Banking is a system that makes it possible for water-rights holders to store water underground in
aquifers for future use, but it also creates the potential of sale or lease of those water rights to distant
destinations.
Why would the North County water basin, already over-utilized, stir the lust of any outside
interest?
For advocates of a water banking future, it is simple: They perceive this countys subterranean
water vault, though increasingly bereft of actual supply, like wizened old prospectors surveying an empty
moonscape mountainside and correctly concluding, Theres gold in them thar hills.
In this case, the gold is in storage capacity. Even if water in the Paso Robles basin continues to
decline, the basin essentially remains a priceless resource repository, the kind that is bound to attract
attention from beyond county borders.
Its a snowballing profit potential that makes this basin the object of many covetous desires.
Evidence of outlying interest in the basin was suggested when the venerable Hardham Ranch,
located on the southeastern edge of the city of Paso Robles, was sold to Roll Global, the SouthernCalifornia based holding company owned by Stewart and Lynda Resnick of Beverly Hills. The ranch has
for years been used for grazing and dry-farming.
But Stewart Resnick, 74, a UCLA law school alumni who has amassed an estimated personal
fortune of $2 billion, had other ideas for the land, and for the water rights under that land.
Resnick purchased the ranch in 2011 and began a massive vineyard planting and irrigation project
spanning its entire 750 acres, despite widely-recognized groundwater deficiencies in the region. Few
country residents, save those whose properties were close to the property, voiced much concern. Few, as it
happened, had ever heard of the Resnicks.
That probably wont be the case in the near future.
A reckoning force
The Resnicks own a majority of the Kern Water Bank through their Paramount Farms, one of the
nations largest agribusiness corporations. As part of that enterprise, their Central Valley farms produce
huge harvests of pistachio nuts. They also own FIJI Water, Justin Winery, and other high-profile business
entities.
Resnicks stranglehold on the Kern Water Bank is the unintended consequence of several
historically-questionable decisions made by state water officials over the past 15 years. The bank was
acquired after the state transferred Californians ownership of the bank to a Central Valley joint powers
authority controlled, at least in part, by Resnicks companies.
Among other fiscal benefits, according to a July 2011 article in the New York Times, the agreement
authorized, for the first time, permanent sales of water by and between State Water Project contractors,

creating a new private water market.

The notion of water banking in the past, reported The Times, has been widely embraced as a tool
for making water supplies reliable, sustainable and marketable. Groups traditionally at odds
environmentalists seeking full rivers for fish, and farmers tending pistachio or pomegranate trees agree
that water banking is a useful strategy for managing a vital resource.
But pristine as the intention might be, the business of water banking is not always conducted with
the resources highest and best use in mind.
The Times reported that pumping out huge amounts of (Kern Water Banks) stored water in dry
years was thought to have little impact on the underground geology. But now engineers believe it reversed
the areas underground hydraulic gradient, turning a hill-shaped water table, accessible by shallow wells,
into a valley. The trigger for the huge withdrawals was a drought that began in 2007. Kern Countys
allocation of water from Northern California was cut. Then, in the 40 months beginning in March 2007,
roughly half the banks capacity was pumped out to keep fruit and nut trees alive.
Resnicks farm company produces the worlds largest harvest of almonds and pistachios, both
water-intensive crops, both grown in the semi-arid but richly-irrigated soil of Central California.
Roll Globals lawyers have been squaring off against a phalanx of lawsuits and ongoing water
bank-related legal problems, and have found the efforts of a San Francisco lawyer named Adam Keats to
be particularly nettlesome. Keats, senior counsel for the Center for Biological Diversity, heads the centers
California Water Law Project, aimed at seeking long-term solutions to freshwater delivery in California.
Keats told The Times that the Kern Water Bank was the result of a back room deal by a cabal of
agricultural barons that has produced an environmental nightmare, depleting fresh water in the Bay-Delta
region; contributing to over-irrigation, groundwater depletion, and the buildup of selenium in the soils of
the San Joaquin Valley; and threatening the habitats of endangered fish and wildlife.
It all means, he told The Times, All this to serve the god of profit rather than the public good.
He predicted a similar fate for the San Luis Obispo County region if water banking is initiated.
What will probably happen is that the entire water supply will end up controlled by a few
powerful people whose interests are not the same as those of most of your residents, Keats told
CalCoastNews in a recent interview.
Disputing the premise of a degraded supply caused by heavy agricultural pumping, Conant, the
Kern Water Bank lawyer now locally involved with PRAAGS, told The Times he disagreed that the rapid
pumping caused the well problems in west Bakersfield, or that environmental reviews, in failing to
anticipate the problem, were inadequate.
Conants client Resnick rarely responds to media interview requests. But in November 2010 the
billionaire told Bloomberg Businessweek that he regarded those lawsuits plaguing his Kern Water Bank as
a nuisance, commenting, If I think Im right, I dont care what people say. Its their problem.
(Next: Paper water could fill the basins water bank, and some visionaries will be getting very rich.)

Paso water group wields major-league muscle

February 9, 2014

Eyes on your water: Second in a series of reports on the North Countys festering water politics.

Randy Record
By DANIEL BLACKBURN
Some of Californias biggest players in water politics have become influential figures in the
leadership of a group vigorously promoting formation of a management district for the Paso Robles
aquifer.
The heavy-hitting individuals possess a wide variety of legal and other professional connections to
the inner structure of this states water industry. Blended with several of the North Countys most
prominent vintners and ranchers, a unit has been formed that commands considerable political punch and
resources.
One of the most prominent is Randy Record, an early adviser to individuals who would eventually
form the Paso Robles Agricultural Alliance for Groundwater Solutions (PRAAGS). Record is first vicechair of the Metropolitan Water District (MWD of Southern California), the worlds largest wholesaler of
water.
Records primary agricultural interests are located in San Jacinto, where hes a fifth-generation
farmer, as well as vice-chairman of the Eastern Municipal Water District (EMWD) there. Hes a 1976
graduate of Cal Poly; his family purchased the 100-acre Record Family Farms in San Miguel in 2007.
Record told CalCoastNews, I dont consider myself to be an advisor, just a member of PRAAGS
and someone who has an interest in the area.
Jerry Reaugh, owner of the 70-acre Sereno Vista Vineyard, is PRAAGS chairman, and he was
effusive in praising Records participation with the North County group.
Randy has been very instrumental in advising us, said Reaugh. He is extremely well connected,
and we are lucky to have someone like that living among us.
Part of Records current responsibility is to represent the Metropolitan Water District on the
Southern California Leadership Council, where, according to the EMWD website, he helps establish

water policy.
Records stint as president of the states most aggressive and potent water special interest group,
the Association of California Water Agencies (ACWA), ended in January. That association represents
more that 440 water districts selling 90 percent of all water delivered statewide. Hes co-chair of ACWAs
Statewide Water Action Plan, which is planning for Californias water future.
During the formative stages of another local action group dubbed PRO Water Equity (PWE),
Record spent time poking around for information about PWE, according to several former PWE
members.
Reaugh said many of the current PRAAGS members also are members of a Paso basin blue
ribbon advisory committee now being phased out.
It became clear that we needed to start taking action to deal with the areas water issues, and I
think it also became clear that what we needed was a water district, Reaugh said. Thats the tried and
true way for rural areas to manage their water affairs.
Asked how he came to be named chairman of PRAAGS, Reaugh laughed and said, Im probably
the idiot that stood up.
A Bakersfield attorney, Ernest A. Conant, a partner in the firm Young Wooldridge, has been
appointed general counsel by PRAAGS. Conant represents water districts throughout the state, most
notably the Kern Water Bank, whose principal owner is Paramount Farms Inc., a company owned by
Beverly Hills billionaire Stewart Resnick.
Last year, Resnick added to his inventory the 740-acre Hardham Ranch on the outskirts of
southeastern Paso Robles, and has converted it from dry farming and cattle grazing to newly-planted and
well-irrigated wine grapes. Today, Resnicks statewide agribusiness is among the richest in America, and
he is by far the worlds most prolific producer of pistachios and almonds.
Among Conants legal accomplishments mentioned on his website include the fact that he has
served as general counsel for many different public agencies, including assisting with the development of
the Semitropic and Arvin-Edison Water Storage Districts water banking programs, which temporarily
store water for various agencies throughout the State.
He was involved in the development and formation of the Kern Water Bank Authority and serves
as its general counsel. Conant was a key figure in the implementation several years ago of the so-called
Monterey Amendments, made among State Water Project contractors. That controversial move handed
over state water rights to private entities and for the first time opened the door for sales and transfers of
water supplies from state and federal conveyance projects.
Were very fortunate to have Ernie as counsel, Record said.
Reaugh, asked if Conants experience with water banks and his subsequent engagement as general
counsel of PRAAGS caused him concern at the outset, said after a long pause, Id have to say no.
Reaugh then dismissed the concerns of some local residents regarding the possibility of water

banking in the North County as conspiracy thinking.

Those issues are almost silly when you think about them, Reaugh said. Folks can conjure up a
conspiracy all they want, but this is not an area that lends itself to water banking.
Steve Sinton, treasurer of PRAAGS, owns with his family the 125-acre Shell Creek Vineyards. He
was raised on (and now runs) the familys 12,000-acre Avenales Cattle Co. ranch, attending Shandon
schools before graduating from Stanford. He earned his law degree from the University of Colorado in
1972.
After service in the Army, Sinton took a staff attorneys post with the California Department of
Water Resources for five years. He then returned to live at the Avenales Ranch but established a law
practice in Sacramento, specializing in water and environmental law. Now he primarily manages cattle
operations for Avenales. Until recently, he was chairman of the California Rangeland Trust.
Sintons extensive properties include the Shell Creek area, designated by a 2008 county study as
one of three selected recharge alternatives for state project water project.
According to the final report of the Paso Robles Groundwater Sub-basin Water Banking Feasibility
Study, The locations of the (three) water banking alternatives evaluated in this study were identified
primarily based on information describing the local hydrogeologic conditions.
Media and marketing matters for PRAAGS are being handled by one of the countys most
recognized firms, Barnett Cox of San Luis Obispo.
Other PRAAGS board members are Dana Merrill, Mesa Vineyard Management; Kent Gilmore,
Golden Hills Farm; John Crossland, Vineyard Professional Services; Steve Lohr, J. Lohr Vineyards and
Wines; Matt Turrentine, Grapevine Land Management; and Kathleen Maas, Pear Valley Vineyards.
Next: A smaller citizens group, PRO Water Equity (PWE), finds common ground with PRAAGS, and a
fortuitous melding of objectives occurs.

A crafted perception of water district

cooperation
May 24, 2014

Eyes On Your Water: Third in a series of reports on the North Countys festering water politics.

Sue Luft
By DANIEL BLACKBURN
A surprise voting maneuver engineered by its leader divided a local landowners group and
greased the skids for a plan to create a controversial water district regulating use of the Paso Robles basin.
Sue Lufts gambit proved successful, and combined with a well-financed public relations
campaign has helped create an illusion of widespread community support for the water districts
formation.
Luft, a onetime Bakersfield engineer, is chair of a small group of people dubbing themselves Paso
Robles Overliers for Water Equity (PRO Water Equity). It launched in March 2013 with the stated intent
of representing viewpoints and legal rights of owners of property atop the North County aquifer. Its
current membership numbers four.
Its website describes PRO Water Equity as a diverse all-volunteer coalition of Paso Robles
groundwater basin users who believe in finding a fair way of sharing the groundwater that belongs to all
of us, (and we are) supported by winery and vineyard owners, olive growers, other agriculturalists and
many, many rural residents who overlie the basin.
That does not reflect PRO Water Equitys current actions and objectives, according to former
members.
Sheila Lyons was one of the groups original members, all of whom shared a common goal, or so
Lyons thought:
Our group worked on a lot of projects, she said, and I thought we were all on the same page in

that we all believed that water is a common resource. We thought management for the good of everyone
was the way we wanted to go. So we started out advocating for the kind of basin management that we
needed, and could support.
Then last summer news surfaced of the formation of another North County water group calling
itself the Paso Robles Agricultural Alliance for Groundwater Solutions (PRAAGS). The emergence of this
small but mighty coalition,* representing large vineyard owners and ranchers, wine industry
professionals, water attorneys, and other politically-connected individuals, caused concern to the members
of PRO Water Equity.
Luft noted with alarm PRAAGSs startup on PRO Water Equitys website, and the two groups,
with diametrically opposing agendas, became overnight adversaries.
We knew that a California water district was not what we wanted, Lyons said, but we also
worried that the whole thing (management of the basin) might have to be thrown into adjudication.
Hoping to avoid a political confrontation jeopardizing the objectives of PRAAGS leadership, First
District County Supervisor Frank Mecham proposed a summit meeting between members of both
groups.
Lyons, Luft and Jan Seals attended the meeting in Mechams office and asked the PRAAGS
representatives to alter their emerging position calling for formation of a so-called hybrid water district
with power vested in the areas largest landowners.
We all knew that plan would not fly with our members. Not at all, said Lyons.
Then, into this fermenting political brew stepped local vintner Cindy Steinbeck, filing a lawsuit
seeking to protect water rights under her 500-acre vineyard.
According to Lyons, It was at that point that Luft decided that we needed to get ahead of this, that
we couldnt let the lawsuit take over the discussion. It was that, and other reasons that we are yet unaware
of, that made her flip so quickly.
The fledgling PRO Water Equity group was in the process of discussing selection of its board of
directors when members learned of Steinbecks lawsuit.
Luft called a meeting at her Templeton home of the policy committee, and she required that each
of the nine attendees deny any affiliation with Steinbeck, and attest that they had no part of Steinbecks
lawsuit.
One of the policy committee members, Sue Harvey, admitted to Luft that she had discussed the
lawsuit with Steinbeck. According to others present, Luft then demanded Harvey leave the meeting.
The remaining members were asked to consider cooperating with PRAAGS, even though a
majority disagreed its objectives, including the concept of the new district dominated by large
landowners.
The first vote of the policy committee on that question was five against the proposal, three for.
This irritated Luft, according to several of those present, and she then called for a vote involving only the

board members present at the time. This vote was three for cooperation, two against.
The two groups, PRAAGS and PRO Water Equity with a total combined membership of about
one dozen were thus joined at the hip, with access to deep pockets and influential backers.
After she subsequently said she couldnt support the cooperative proposal, Lyons said she was
excluded from further meetings of PRO Water Equity.
From that point on the other dissenters were totally shut out of discussions, Lyons added.
Most of the members of the policy committee then resigned, among them Lyons, Harvey, Della
Barrett, Diane Jackson, and Maria Locha.
Luft said recently, It was the wish of the board. It was a board decision, so that was what we went
with.
The newly-formed partnership between of PRAAGS and PRO Water Equity has since bonded
behind support of proposed legislation to create just the kind of water district Luft, a short time ago, said
she vociferously opposed an agency formed and controlled by the regions largest landowners.
And it is the resulting perception of unified community support, according to Assemblyman
Katcho Achadijan, (R-San Luis Obispo), that prompted him to sponsor AB 2453, creating a hybrid water
district based on big acreage ownership.
He first said he would carry the bill only if county supervisors concurred, but eventually
introduced AB 2453 even after the board split 3-2 on backing the proposal. That bill barely passed its first
committee test May 7 after being scoured by the Legislative Counsel to determine its constitutionality. It
now heads for the Assembly floor, where a vote will take place before the end of this month.
Testimony by the bills promoters before the Assembly Local Government Committee keyed on
one particular unsubstantiated assertion that Achadjians bill enjoys widespread support from the
thousands of residents living within the proposed districts yet-to-be-determined boundaries.
Who is Sue Luft?
Luft, 53, partners with her husband Karl in managing a 10-acre Templeton vineyard, and in an
environmental engineering company the pair brought with them they moved from the Central Valley.
When she applied for the countys Water Resources Advisory Committee in 2007, Luft described
herself as semi-retired and noted her membership in virtually every water related organization around:
president of North County Watch, and belonging to a variety of other groups, including the Central Coast
Vineyard Team; Central Coast Ag Network; Land Conservancy of San Luis Obispo County; Independent
Grape Growers of Paso Robles; Sierra Club; Nature Conservancy; Templeton Chamber of Commerce; and
Citizens Concerned For Templetons Future.
She also was appointed to, and remains on, the countys Blue Ribbon Committee for the Paso
Robles Groundwater Management Plan.
But it is Lufts associations in the Bakersfield area that has the resigned members of her PRO

Water Equity policy committee troubled.

Luft said her engineering companys many clients have included numerous water districts, oil
companies and other entities and the Kern Water Bank Authority. The Authority is steered by
Paramount Farms, one of the nations largest agricultural conglomerates, and in turn controls most of the
water supply for the Central Valley.
Paramount Farms is part of Roll Global, a holding company wholly owned by Beverly Hills
billionaire Stewart Resnick, who in turn recently purchased the 700-acre Hardham Ranch on the
southeastern outskirts of Paso Robles. That land, formerly dry-farmed, now hosts new grape plantings and
is heavily irrigated, and boasts two large above-ground lined reservoirs.
Luft said she didnt even know the Resnicks were going to buy it (the Hardham Ranch) until they
did. I dont know why they bought that property. Its crazy.
Her work for the Kern Water Bank Authority consisted only of environmental assessments, she
said, adding that she found it distressing that onetime friends are viewing her professional affiliation
with a Resnick business with suspicion.
They have raised the possibility of a link between Resnick, Kern County Water Bank, water
transfers, and the yet-to-be-defined powers of the proposed Paso Robles water basin district.
Those allegations are entirely false, Luft said, her voice cracking. No one can control the
[proposed] board as it is now described. I cant believe it those are people who used to be my friends.
Ive known them for years. For them to suggest some kind of conspiracy is just bizarre. Its been a lot of
work to reach a compromise, she added, but there are people who philosophically will never believe in
compromise.
I cannot get across to these people that they have lost their sense of reality. They want to just
stand on the sidelines and yell. Their wish for a one-parcel, one-vote system is not fair. But the hybrid
board is fair to everyone.
CalCoastNews Senior Correspondent Daniel Blackburn can be reached at blackburn.danielj@gmail.com
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