Federal Water Tap, March 14: California District Fined for Accounting Deception

The Rundown

A California irrigation district is fined by the Securities and Exchange Commission. Central Asian countries are concerned about water supply but doing little about it. Nitrogen is decreasing in Long Island Sound, while chloride from road salts is rising. A solar power project in Nevada will lease water from an Indian tribe. A Washington senator wants to require coal companies to put real money behind promises to clean up retired mines. Two water hearings in Congress are on the schedule this week.

“The situation has to change. We need a national conversation to make sure this never happens again,” Gina McCarthy, administrator of the Environmental Protection Agency, talking about the Flint lead scandal. The EPA will meet with state regulators to review water sampling procedures and how to prevent corrosion.

By the Numbers

$US 195,000: Fine levied against Westlands Water District, one of the country’s largest irrigation districts, and two of its executives for illegal accounting tricks. Westlands, in California’s Central Valley, did not sell enough water in 2010 to meet its debt payment obligations. (Securities and Exchange Commission)

100 megawatts: Capacity of Aiya Solar Project in Nevada. The photovoltaic project will use almost no water to generate electricity. The water needed for construction and to wash panels will be leased from the Moapa Band of Paiutes. (Bureau of Indian Affairs)

23.9 percent: Reduction in total nitrogen load flowing into Long Island Sound between 1974 and 2013. The reason: better sewage treatment, less fertilizer use on farms, and fewer farm animals. Chloride loads, however, increased 112 percent, largely because of salts used to melt ice from roads. (U.S. Geological Survey)

News Briefs

Water Divides Central Asia
Water supply is a top-line political issue in Central Asia, but the region’s leaders do not trust each other enough to do much about it, according to a senior U.S. State Department official.

“The five of them are not ready to sit together around a table and talk about water. It’s too highly charged politically,” Daniel Rosenblum, deputy assistant secretary of state for Central Asia, said while speaking at the University of Washington. There are a number of divisive developments in the region: namely, Tajikistan’s desire to dam rivers upstream of Uzbekistan and the disappearance of the Aral Sea, dried up for irrigation.

Rosenblum said that the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan are in something of a Catch-22: they are concerned about climate change, but addressing water — the primary change brought by global warming — is still politically taboo.

“They are ready to do projects to respond to climate change but have to find a way to discuss it without mentioning water,” Rosenblum said, noting discussions that took place last November in Samarkand, Uzbekistan.

When Promises Aren’t Strong Enough
Sen. Maria Cantwell (D-WA) asked the Interior secretary to ban the practice of self-bonding in the coal industry. When a company self-bonds it promises to clean up the mess after its mines stop producing coal. The catch: the company does not offer any collateral to back up the claim. If the company goes bankrupt, taxpayers often are on the hook for the cleanup costs. According to Cantwell’s office, coal companies have posted $US 3.6 billion worth of self-bonds in the United States.

Studies and Reports

California Water District Fined for Misleading Investors
Westlands Water District, one of the country’s largest irrigation districts, and a current and former executive were fined a total of $US 195,000 for illegal accounting tricks that the district used in 2010 to cover up inadequate revenues.

Westlands had a reduced water supply because of drought conditions and it did not increase water rates, which led to a revenue shortfall. The district used “extraordinary transactions” to move money between accounts, to cover its losses.

The Securities and Exchange Commission said that the ploy benefitted the district’s farming customers but left investors in the dark about the state of its finances.

The settlement led ratings agencies to warn that they might downgrade the district’s credit rating, which would mean higher borrowing costs.

Paying for Flood Insurance
Federal regulators do not have enough data to subsidize flood insurance policies based on income, according to the Government Accountability Office. As federal flood insurance premiums rise to reflect the real risk to property, affordability and subsidies are relevant questions.

On the Radar

Flint Hearing
On March 15, the House Oversight Committee will hold its second hearing on the Flint lead scandal. Expected to testify are Susan Hedman, former EPA regional administrator, and Darnell Earley, former Flint emergency manager.

Water Infrastructure Hearing
On March 16, the Senate Environment and Public Works Committee will discuss the Water Resources Development Act, the main federal funding source for ports, levees, and river locks. Last December, Sen. Jim Inhofe, the committee chair, said that the committee would begin working on a new bill this spring.

Federal Water Tap is a weekly digest spotting trends in U.S. government water policy. To get more water news, follow Circle of Blue on Twitter and sign up for our newsletter.

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