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Exchange Contractors November 3, 2017

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The Exchange Contractors board of directors met at its headquarters in Los Banos on Friday, November 3, 2017. The meeting started at 8:30 am instead of the usual 8:00 am due to holding a GSA meeting first. The Ex Con GSA is now an officially formed entity. ECGSA already held a flag salute so the meeting got off to a start with President Jim O’Banion clearing the way by establishing the agenda was in order and the minutes approved. There was no public participation but there were some new folks or at least folks who don’t usually show up.

Executive Director Steve Chedester gave the board some financial news. The manner the money has been allocated to various accounts; water resources and general fund reserves were mentioned has ended up putting about $150,000 in question. I wasn’t completely clear on the machinations of how this works but if I understood correctly no one got worked up over the situation as it was a matter of moving the money from one account to another. The other financial matter was the 2018 budget. Columbia Canal Company’s Director Chris Cardella had a concern he wanted to raise in closed session. Attorney Paul Minasian said this is a rare topic for closed session and he asked Cardella to be a bit more clear. Cardella said to go ahead with the open session in that case. CCC General Manager Randy Houk said his home board has yet to get comfortable with spending the money on Temperance Flat Dam MOU seat that costs $100,000. Minasian said approval by the home boards and the Ex Con board doesn’t require the money be spent, just budgeted. The Temp Flat fee was under water resource expense and will renew for three consecutive years.

Water Master Adam Hoffman gave the water report and said 174 cfs of San Joaquin River water is reaching Mendota Pool. He said almost all the reservoirs across the state are holding above average storage. The federal Jones Pumping Plant has been running at full capacity during October and the federal side of the San Luis Reservoir is in good shape. Storage on the SJR is in good shape. Shasta is holding more than a million a/f. Delta exports have dropped due to the X2 line getting tighter. Jones cut back by two pumps. The short-term weather has snow and rain with more occurring in the Northern Sierra Nevada Range. The long-term forecast has colder and wetter weather for the end of 2017.

Chris White, GM Central California ID gave a handout from consultant Dan Steiner concerning Central Valley Project operations. The Cooperative Operations Agreement between the feds and the state has the fed side in balance. COA works well for the feds in wet years and the state in the more frequent dry years. He explained the National Marine Fishery Service has a much larger role in determining allocations than ever before. Allocations of contract delivery has always been the biggest guessing game. The US Bureau of Reclamation controls the CVP while the Department of Water Resources control the State Water Project allocations. But White explained NMFS wants temperatures on the Sacramento River lower than normal, they claim to benefit salmon. That means holding water behind Shasta Dam longer and the pumps have to cut way back. I think they should toss very large chunks of dry ice into the river.

Chedester gave his report and said Bay Delta issues have had no movement on a settlement for Phase One. The California Fish & Wildlife will not move on its draconian demands. Phase Two is the science report. The comments were not given credence and the draft document was accepted by the State Board. This requires more through Delta flows to help dilute the pollution in the San Francisco Bay otherwise the discharges in that area would have to rehab their waste water systems and that would cost a lot of money. Much cheaper for them to flush the system. Additional flows also help cut the costs of water treatment.

Chedester said the COA negotiations have been blocked because the state says it will interfere with the California Water Fix. The state folks are pushing this. The Bureau’s Mid Pacific Director David Murillo has been meeting with CVP contractors on ways to keep the feds open for CWF. This has proven a touchy proposal with some folks getting down right angry. The feds aren’t committing and why should they? The cost and yield are not clearly defined. There are some Friant contractors who would like to participate in a “toll road” arrangement where the districts can opt in for some conveyance when needed. Sarah Wolff, a director at Westlands WD was in attendance and she said Murillo will not solve the problem. He needs to be given some options and see if they can be implemented. She is concerned about the state leaving the federal side behind. Friant may well be a very good partner with Westlands and Ex Con for a sit down and strategize session. There was optimism in the room Friant CEO Jason Phillips and his board would be game for this.

The next item was the SJR restoration and after a recent meeting with Senator Diane Feinstein and a CEQA lawsuit interactions between the Bureau and stakeholders was spurred forward. There’s been more interaction since then than in the past three years combined. The problem has been after spending millions and millions of dollars on the SJR restoration not a single piece of infrastructure like fish screens has been constructed. Natural Resource Defense Council, Friant and Ex Con have been meeting with the Bureau in the same room. Ex Con developed a statement of support for good projects and NRDC has its name implies Naturally opposed. Despite provisions to protect third parties, such as Ex Con, the NRDC wants local funding and won’t support the restoration as planned at this time. The big block is the NRDC, it just won’t cooperate. If it doesn’t there will be another meeting with Feinstein and there is a real chance the funding will be frozen.

Friant has moved forward on an MOU with Temperance Flat Dam project. Chedester said the current JPA wanted Friant to work with them but the current Friant proposal isn’t 100 percent acceptable. The initial MOU started out as Friant centric and wasn’t well received outside of Friant. It was marked up sent back to find out if Friant really wants partners. He is looking for a MOU Ex Con and San Luis Delta Mendota can support. It’s possible to partner on a $100,000 per seat. Ex Con and SLDM could have one seat but it would only get one vote. The purpose is to secure storage by paying for the dam. Entities can purchase storage space to partially fund the project. Houk was pretty upset with this and said Friant shouldn’t have the power to demand the existing JPA bend to its will. Ex Con is more interested in flood control than additional storage. Minasian said in a perfect world Ex Con could sit back and let everyone else pay for it with the benefit of excellent flexibility in operations. He said that isn’t going to happen. No body see the counties in the current JPA stepping up with any money. White said Friant is saying it wants to work with others so send the MOU with comments back and find out. Jeff Bryant, GM Firebaugh Canal WD said the bottom line is cost to his growers. Minasian said Friant would be smart to realize Ex Con and SLDM could pay for the same consultant and share the data for less. Bryant said that hits a nerve because Ex Con is also paying for SLDM. Minasian said this is a redline version of the MOU. Director Jim Nickel, San Luis Canal Company said he’d really like to see a copy of this. Minasian said it may be bigger savings to work out an agreement with Friant that both can live with than either killing the project or having a fight in the future. He advocated to try. Ex Con will send Friant the marked-up MOU and see what happens.

Next the board approved the recommendations by the Water Transfer Committee. This assumes a normal, non-critical year. The committee wants to expand the current 25-year EIR/EIS to include neighboring districts. There are new water districts formed or revitalized since SGMA. The board sounded positive to this. This will require input from the Bureau. Chedester also said the Bureau doesn’t accept fallowing as the removal of an orchard. The Bureau’s reasoning is very rickety. Since the productive life of a tree is 25-years you’re going to pull them anyway. Same can be said for cotton. You pick it and the next year you don’t replant, it’s fallowed land. Bryant said that applies to everything but pomegranates. He said they live forever and according to Wonderful Orchards Adam and Eve were involved in some pomegranate related scandal.

White reported on subsidence in the area. He said a pipeline originally constructed has a leak that is being fixed. He estimates delivering 700-800 a/f by the end of this month and that is being either directly applied or placed in recharge. Wolff reported Triangle T WD is looking at how to annex and a big consideration is the ability to provide conveyance and good recharge locations. White said there is some emergency declaration money for recharge for flood flows from the California Office of Emergency Services. This grant is ideal for the Red Top region as SJR and Kings River flood flows from the river, slough and bypass are all accessible.

Provost & Pritchard Consulting engineer Rick Iger spoke about the water resources plan. White said Iger has been working by visiting with the home boards and putting together information. The WRP includes Los Banos Creek Reservoir and Orestemba Creek recharge projects. Iger said there are comments from the Bureau pending on the Los Banos Creek portion. Once they are received it is possible the USBR itself might be the lead agency on the NEPA CEQA studies. Iger said recharge tests to the north side of the LBC project are underway and it looks like there are good possibilities for the south side of the project. This could be a good banking site for Ex Con and recovered water could be pumped into the Delta Mendota Canal. White reported there is now an option to purchase at ag appraisal rates 80-acres for the Orestemba Creek project. He said the various considerations have been thought through. This will go before the CCID board this month as well.

Consulting attorney David Cory gave his report on the Regional and State Water Boards. He said the East San Joaquin amended basin plan has been released by the State Board last month. There will be a workshop in December and the State Board is looking at a late January approval. Cory sees a great deal of push back by ag and thinks there’s a good chance of that late January date not being met. He said any parcel enrolled in the Irrigated Lands program that has a drinking water well will have to have it inspected for nitrates. Cardella asked what if it’s a well at your own home. Cory told him he’d have to notice himself, test the water and report to himself and the State Board. The government wants to expand things with an “expert” panel to make recommendations for surface water monitoring statewide. Cory commented that the increasing complexity of state regulations are expanding to the point it could collapse on itself. Cory did name a couple of board staff saying they are the best to work there in years. He said they try very hard to listen, but they are constrained by the board and institutional culture. Still Cory recommends managers and landowners continue to make their concerns known. One other bright spot is the Coalitions won’t have to directly identify well owners but instead will provide coded numbers to parcels.

Chedester gave the legislative reports; state and federal. He said the bill that would take away the power of judge, jury and executioner from the State Board didn’t pass. On the fed side SJR restoration funding is getting sucked into tax reform, but there’s word $25 million could be approved for that program.

Minasian gave the attorney report and said the discussions with the Bureau about the State’s Land Commission legal status should be delayed at this point to save some money. The board said 90-days would work. Next Minasian said sometimes an attorney must suck it up. He said no matter how many meetings and money spent on flood control hearings pertaining to the area things won’t get better. The CWF’s tunnel through the Delta needs to be approached from the danger the tunnels will be undersized for ag conveyance. But he doesn’t see any benefit for putting up testimony on the CWF and would rather spend money on fighting the State Board’s unimpaired flows. He said there are clear signs the State Board will issue the tunnel permits will be issued before Governor Jerry Brown goes away, so should there be any further legal involvement? No, says Minasian. He said it’s much more dangerous the State Board could issue orders banning the planting of certain crops like cotton during dry years or prohibiting flood irrigation. He said it’s going for the San Joaquin Valley first to force 45 percent unimpaired flows through the Delta as beneficial use without even a public hearing. He said right now the State Board staff is riding high. Minasian said it’s an axiom that bureaucracies will always go too far. The State Board is getting a great deal of push back from urban areas claiming they’ve purchased the water for their needs and now the state wants to flush it out to sea. Minasian said the comments won’t do much good but will set up the legal basis for hearings. There is a $300 million claim for damages against the Bureau filed by Friant since it didn’t get any deliveries in 2014. Ex Con has filed with the Bureau to back the position Friant doesn’t have a water right even though it has a contract. Minasian said it’s possible the judge will dismiss.

The four-managers’ reports were next and they’re not the same as the five-families’ reports. Houk went first and I missed what he said. White said demands have picked up a bit as winter prices are lower. Construction and rehab on the gates is coming along. Bryant said he’s working around construction projects to get pre-irrigation in December. He said new legislation has added an onus to public works not there before. There are two vacancies filled on the board with an incumbent and a new appointment from the county. There will be a growers’ meeting next week and the district is in the midst of a Prop 218 election. Minasian FCWD has a list of pros and cons of what it would be to become a mutual water company. He said as a public entity one must double check the background of the contractors to be sure they are on the state registry, so the state can check to be sure prevailing wage is being paid. He said the Brown administration has allowed the special interests of the environmental and union bunch to run wild.

The December board meeting will be moved to the 8th. The ACWA conference is coming up and the meeting went into closed session. Minasian said it would be short.

DISCLAIMER OF RESPONSIBILITY; strives to provide his clients with the most complete, up-to-date, and accurate information available. Nevertheless, does not serve as a guarantor of the accuracy or completeness of the information provided, and specifically disclaims any and all responsibility for information that is not accurate, up-to-date, or complete.’s clients therefore rely on the accuracy, completeness and timeliness of information from DAW entirely at their own risk. The opinions expressed in this report are those of the author and do not represent any advertisers or third parties.

ALL RIGHTS RESERVED.  Copyright 2017 by Don A. Wright   No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of DAW.


Main Office: 541 H Street, P.O. Box 2115 Los Banos, CA 93653 Office 209/827-8616 Email:

The Exchange Contractors cover almost a quarter of a million acres in Fresno, Madera, Merced and Stanislaus Counties.

Mission Statement

The Exchange Contractors Water Authority mission is to effectively protect the Exchange Contract and maximize local water supply, flexibility and redundancy in order to maintain local control over the members’ water supply.


James O’Banion-Chair Central California Irrigation District, Chris Cardella-Vice Chair Columbia Canal Company, James L. Nickel-Treasurer San Luis Canal Company, Mike Stearns-Director Firebaugh Canal Water District


Steve Chedester-Executive Director, Adam Hoffman-Water Master, Joann White-Administrative Assistant, Patty Baldini-Office Assistant, Paul Minasian-Attorney


The San Joaquin River Exchange Contractors hold some of the oldest water rights in the state, dating back to the late 1800s. The rights were established by Henry Miller of the legendary Miller and Lux cattle empire. In 1871, Henry Miller constructed canals to divert water from the San Joaquin and North Fork of the Kings Rivers for irrigation of his vast acreage. Today, several of the original Miller and Lux canals are operated by the Exchange Contractors.

Although Henry Miller’s canals served the irrigation needs of his estate in the western portion of Fresno, Madera, Merced, and Stanislaus counties, in order for more growth on the east side of the San Joaquin Valley to occur, more water was needed. In 1933, the United States Department of Interior undertook the Central Valley Project, a vast undertaking to build dams throughout the great Central Valley including the Sacramento, American and San Joaquin Rivers. When construction of the Friant Dam (north of Fresno) was under consideration, feasibility studies showed that irrigation development of the Friant Project between Chowchilla and Bakersfield depended upon water being diverted from the San Joaquin River at Friant Dam and brought to the east side of the valley, via the Friant-Kern Canal.

To accomplish this, the government asked the heirs of Miller and Lux to agree to “exchange” where they receive their pre-1914 appropriative and riparian water from the San Joaquin and Kings Rivers for guaranteed deliveries of “substitute” water from the Sacramento River by means of the Delta-Mendota Canal and other facilities of the United States. This agreement, known as the “Exchange Contract,” along with the accompanying “Purchase Contract,” were reached in 1939 and that led to the name “San Joaquin River Exchange Contractors.” In normal years, the Exchange Contractors are guaranteed 100% of their contractual water allotment (840,000 acre feet) and in critical years the amount is 75% (650,000 a/f).

The Exchange Contractors, however, did not abandon their San Joaquin River water rights. Instead, they agreed not to exercise those San Joaquin and Kings Rivers’ water rights if guaranteed water deliveries continued through the Delta-Mendota Canal or other facilities of the United States. In the event that the Bureau is unable to make its contracted deliveries of substitute water to the Exchange Contractors, the Exchange Contractors have

The Groundwater Resources Association of California’s San Joaquin Chapter will be meeting at

Ovidio’s Italian Restaurant 3097 West Bullard in Fresno

on Tuesday November 7th at 6:00 pm.

Dr. Daniel Mountjoy will speak on

The Role of Farmland in Managing Ground and Surface Water.

For more information contact Amer Hussain at 559/228-9086


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