<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
<HTML xmlns:o = "urn:schemas-microsoft-com:office:office" xmlns:st1 =
"urn:schemas-microsoft-com:office:smarttags"><HEAD>
<META http-equiv=Content-Type content="text/html; charset=utf-8">
<META content="MSHTML 6.00.6000.16674" name=GENERATOR>
<STYLE></STYLE>
</HEAD>
<BODY bgColor=#ffffff>
<DIV><FONT face=Arial size=2>
<H1 style="MARGIN: 0in 0in 0pt"><B><FONT face=Tahoma size=4><SPAN
style="FONT-SIZE: 14pt; FONT-FAMILY: Tahoma"><o:p>My apologies for the tardiness
of this article to you, but I've been on vacation for a couple of weeks.
The article is still quite relevant. </o:p></SPAN></FONT></B></H1>
<H1 style="MARGIN: 0in 0in 0pt"><B><FONT face=Tahoma size=4><SPAN
style="FONT-SIZE: 14pt; FONT-FAMILY: Tahoma"><o:p>I once asked David Fullerton,
architect of the Environmental Water Account, what would happen when funds for
the EWA ran out. His response was "the fish will die." It seems to
have come to pass with decline of the Central Valley salmon stocks, as well as
the Delta's Pelagic Organism Decline (Delta smelt,
etc.).</o:p></SPAN></FONT></B></H1>
<H1 style="MARGIN: 0in 0in 0pt"><B><FONT face=Tahoma size=4><SPAN
style="FONT-SIZE: 14pt; FONT-FAMILY: Tahoma"><o:p>This article is relevant to
the Trinity River because it is my understanding that some of the EWA funds came
from the CVPIA Restoration Fund, which water and power sales from the Trinity
River contribute to, and sometimes come back to the Trinity River Restoration
Program.</o:p></SPAN></FONT></B></H1>
<H1 style="MARGIN: 0in 0in 0pt"><B><FONT face=Tahoma size=4><SPAN
style="FONT-SIZE: 14pt; FONT-FAMILY: Tahoma"><o:p>Tom
Stokely</o:p></SPAN></FONT></B></H1>
<H1 style="MARGIN: 0in 0in 0pt"><B><FONT face=Tahoma size=4><SPAN
style="FONT-SIZE: 14pt; FONT-FAMILY: Tahoma"><o:p></o:p></SPAN></FONT></B> </H1>
<H1 style="MARGIN: 0in 0in 0pt"><B><FONT face=Tahoma size=4><SPAN
style="FONT-SIZE: 14pt; FONT-FAMILY: Tahoma">Harvest of cash: <st1:place
w:st="on"><st1:PlaceName w:st="on">Kern</st1:PlaceName> <st1:PlaceType
w:st="on">County</st1:PlaceType></st1:place> agency buys public water low, sells
high</SPAN></FONT></B><FONT face=Tahoma size=4><SPAN
style="FONT-SIZE: 14pt; FONT-FAMILY: Tahoma"><o:p></o:p></SPAN></FONT></H1>
<P class=MsoNormal><B><FONT face=Tahoma size=4><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 14pt; FONT-FAMILY: Tahoma">Contra Costa
Times- 8/9/08<o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal><B><FONT face=Tahoma size=4><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 14pt; FONT-FAMILY: Tahoma"><A href=""><!--subtitle--><!--byline--><FONT color=black><SPAN
style="COLOR: windowtext; TEXT-DECORATION: none">By Mike Taugher
</SPAN></FONT></A><o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><BR><!--date-->Delta fish suffered a crippling decline
while taxpayers paid nearly $100 million to a <st1:place
w:st="on"><st1:PlaceName w:st="on">Kern</st1:PlaceName> <st1:PlaceType
w:st="on">County</st1:PlaceType></st1:place> water wholesaler for an
environmental protection program that was largely ineffective, a Contra Costa
Times investigation has found.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">In the process, the wholesaler sold water to the state
for as much as $200 an acre-foot and last year bought water from the state for
as little as $28 an acre-foot.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The Kern County Water Agency was the biggest buyer in a
program that delivered discounted Delta water in a way that now appears to have
been particularly harmful to the environment. It also was the biggest seller of
water to an ill-fated, publicly-financed state program meant to protect the same
environment, the investigation found.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The Kern agency collected $96 million in taxpayer money
— nearly all of it borrowed on the bond market — for sales to an "environmental
water account" that was shelved after seven years at the end of 2007, records
show.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">While state water officials took steps to ensure they
did not directly repurchase the discount water, the exchanges amounted to
"classic arbitrage," where investors exploit price differences in financial
instruments, said Barry Nelson, a water policy analyst at the Natural Resources
Defense Council.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">"What makes this arbitrage so remarkable is they're
buying the water and selling the water to the same entity, using water that
should never have been pumped in the first place," Nelson said.
<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The newspaper's investigation, which spanned six months
and involved dozens of interviews and reviews of hundreds of pages of documents,
some of which were obtained through the California Public Records Act, reveals:
<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"> Regulators were kept in the dark as the
California Department of Water Resources delivered far more discounted Delta
water than was specified in its environmental permit — more than four times as
much in 2005. The permit contained restrictions that were supposed to protect
Delta smelt, a tiny fish whose population has collapsed along with a large part
of the Delta's ecosystem. <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"> Although state water officials took steps to
keep the discount water sales to <st1:place w:st="on"><st1:PlaceName
w:st="on">Kern</st1:PlaceName> <st1:PlaceType
w:st="on">County</st1:PlaceType></st1:place> and the purchases of environmental
water separate, those safeguards may have been compromised. Documents show
<st1:place w:st="on"><st1:PlaceName w:st="on">Kern</st1:PlaceName>
<st1:PlaceType w:st="on">County</st1:PlaceType></st1:place> water managers
discussed trading water that was ineligible for sale to the environmental water
account for water that was eligible in order to facilitate sales.
<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"> Some researchers believe that increased pumping
of Delta water at times when the discount water deliveries were occurring — far
in excess of permit limits in the past few years — may have contributed
significantly to the ongoing collapse of Delta smelt, which triggered a court
order last year sharply restricting Delta water deliveries and tightening water
supplies in parts of the state. <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"> The Kern water agency wrested control of the
Kern Water Bank from the state in the 1990s by withholding needed local approval
and eventually trading a small portion of its contractual water rights for the
20,000-acre site. The bank enhanced the region's ability to buy and sell water.
<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"> Proceeds from the taxpayer-financed water sales
were distributed to <st1:place w:st="on"><st1:PlaceName
w:st="on">Kern</st1:PlaceName> <st1:PlaceType
w:st="on">County</st1:PlaceType></st1:place> landowners in some cases. In 2003,
for example, the sales brought $1.4 million in net revenue to one of the water
districts within the <st1:place w:st="on"><st1:PlaceName
w:st="on">Kern</st1:PlaceName> <st1:PlaceType
w:st="on">County</st1:PlaceType></st1:place> agency. That money, "a return on
the substantial investment of the district in the acquisition and development of
the Kern Water Bank," was distributed to landowners, according to meeting
minutes from the Wheeler Ridge-Maricopa Water Storage District. The two water
districts the newspaper has identified to date that distributed proceeds to
landowners are controlled, at least partly, by some of the wealthiest land
companies in <st1:place w:st="on"><st1:State
w:st="on">California</st1:State></st1:place> <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The story of how a powerful water agency was able to
gain advantage in state water initiatives developed during the 1990s is coming
to light as California's top political leaders once again try to deal with a
broken water delivery system.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">After a punishing drought that ended in the early 1990s,
a series of deals were negotiated to stabilize water supplies and protect the
environment. Rather than impose cutbacks on water users or accept some
environmental degradation, the deals promised all sides' interests would be
served by programs paid for with taxpayer-backed bond
funds.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">It didn't work. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Instead, the spigot to the state's biggest water users
flowed with record amounts of water from the Delta beginning in
2000.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">And as Delta water pumping reached new highs — boosted
in part by the new discount water program, especially in the past few years —
several fish populations crashed, including Delta smelt, longfin smelt, striped
bass and threadfin shad.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Pollution, invasive species and other factors are likely
also to blame for the collapse, but Delta pumping was a major factor, biologists
say.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The ecological crisis became severe enough that last
year a federal judge stepped in and ordered sharp restrictions on Delta pumping.
<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The result: Despite at least $3 billion spent since 2000
to improve Delta water supplies and the environment, the West Coast's largest
estuary is experiencing an ecological collapse and Californians appear to be
faced with years of uncertainty about the reliability of future water
supplies.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The programs set up by the state to sell surplus water
in wet years and to buy water for the environment were never directly
linked.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">But both were among the many initiatives that grew out
of attempts to resolve water problems in <st1:State w:st="on"><st1:place
w:st="on">California</st1:place></st1:State>. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The Kern County Water Agency was the largest participant
in both, thanks in part to its takeover in 1995 of a 20,000-acre groundwater
bank that the state purchased seven years earlier. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">It was in the bank that the Kern water agency stored
about one-third of its purchases from the discount water program and from which
it delivered about 60 percent of its sales to the environmental water account,
according to the agency. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">At the same time, the new discount water program known
as Article 21 was set up to encourage water agencies like Kern and the
Metropolitan Water District of Southern California to buy surplus water during
wet periods and store it in local reservoirs. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Under Article 21, the agencies buy the water for the
cost of pumping it. The idea was that once the water was stored in the southern
part of the state, it could be used in dry years when less Delta water is
available.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">But in recent years the water districts took far more
Article 21 water than was authorized by the U.S. Fish and Wildlife Service, and
some researchers now think that an increase in Delta pumping during winter — the
same months when Article 21 water is delivered — might have contributed
significantly to the ongoing Delta smelt collapse.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">"It really looks like that was a hit on the head," said
Bruce Herbold, a fisheries biologist at the U.S. Environmental Protection
Agency.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Separately, the environmental water account was supposed
to provide supplemental protection for the Delta without restricting water
users.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The Delta is home to hundreds of species and a crucial
link in the migratory paths of birds and salmon. It is also an unrecognizable
version of its former self, badly degraded by pesticides, pollution and invasive
species. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">But the water deliveries from the Delta command the most
attention. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Inevitably, especially at the high levels of recent
years, pumping water to more than 23 million Californians and 2 million acres of
farmland degrades habitat and kills fish, larvae and
eggs.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The environmental water account was set up to counter
that problem by giving regulators greater flexibility to slow Delta pumping to
prevent fish from being sucked into the pumps. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">But the water account also put regulators on a budget.
If they wanted to decrease pumping rates, they had to keep water users whole by
delivering water from the account.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Despite the bond funds, the environmental water account
never had enough money or provided as much water as planners promised. In
addition, the original plan was to use the environmental water account to
supplement existing environmental water assets. But a key court ruling reduced
the other assets, forcing the environmental water account to make up the
difference.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">In other words, the account was not as big as promised
and it had to buy more than was expected.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">After spending nearly $200 million in public funds, the
environmental water account expired at the end of 2007.
<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Despite the expense to taxpayers and the continued
decline in environmental conditions, both programs worked well for <st1:place
w:st="on"><st1:PlaceName w:st="on">Kern</st1:PlaceName> <st1:PlaceType
w:st="on">County</st1:PlaceType></st1:place>.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The $96 million in sales to the environmental water
account since 2001 was more than twice as much as sold by any other water agency
in the state, records show. Half of all the money spent by the environmental
water account went to the Kern agency.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">And the bulk of the purchases were financed with the
proceeds from environmental bonds authorized in 1996 by Proposition 204 and in
2002 by Proposition 50, meaning taxpayers will be paying for those purchases for
years to come, with interest.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The price taxpayers paid for environmental water, before
interest: typically between $170 and $200 per acre-foot.
<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Kern paid much less.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The price for Article 21 water varies, but last year
Kern paid $28 per acre-foot. And, in 2007, the average price it paid for all
Delta water — both Article 21 and its standard contractual water — was $86 per
acre-foot, according to the Department of Water
Resources.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><st1:place w:st="on"><st1:PlaceName
w:st="on"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Kern</SPAN></FONT></st1:PlaceName><FONT size=4><SPAN
style="FONT-SIZE: 14pt"> <st1:PlaceType
w:st="on">County</st1:PlaceType></SPAN></FONT></st1:place><FONT size=4><SPAN
style="FONT-SIZE: 14pt"> water officials said the $170 to $200 per acre-foot
they charged the environmental water account was appropriate to cover the cost
of their water plus the expense of building, maintaining and operating the
infrastructure to store the water and deliver it back to
canals.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">They also said a portion of the proceeds was set aside
to buy replacement water in dry years. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">And state water officials could not get water to thirsty
parts of the state at a better price, they said.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">"We were the most economical game in town," said James
Beck, general manager of the Kern County Water
Agency.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The state Department of Water Resources, meanwhile, only
bought "previously stored" water — basically, Delta water that was injected into
<st1:place w:st="on"><st1:PlaceName w:st="on">Kern</st1:PlaceName>
<st1:PlaceType w:st="on">County</st1:PlaceType></st1:place> aquifers during the
wet years of the late 1990s.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">But minutes of meetings show <st1:place
w:st="on"><st1:PlaceName w:st="on">Kern</st1:PlaceName> <st1:PlaceType
w:st="on">County</st1:PlaceType></st1:place> water managers discussed and
performed trades to accommodate sales to the environmental water account — and
to save the expense of actually pumping the water out of the
ground.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">In other words, although a lot of water was sold to the
environmental water account from the aquifers beneath <st1:place
w:st="on"><st1:PlaceName w:st="on">Kern</st1:PlaceName> <st1:PlaceType
w:st="on">County</st1:PlaceType></st1:place>, those transactions were often
paper trades that resulted in relatively little water actually being pumped out
of the ground. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">During a May 2003 meeting, for example, water managers
made note of the fact that despite "substantial" sales of water from Kern County
to the environmental water account, the region's groundwater had not been drawn
down much because most of the sales were achieved through trades and other
exchanges, "rather than outright sales and extractions," according to minutes
from a meeting of the Wheeler Ridge-Maricopa Water Storage
District.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Beck, meanwhile, said that in some cases his agency sold
Article 21 water directly back to taxpayers. At least 3 percent of the water
sold to the environmental water account came directly from Article 21, according
to figures provided by the agency. That water would have been eligible for sale
to the environmental account so long as it was stored in the late
1990s.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">"It's a little bit of a shell game," said Jim White, an
environmental specialist at the California Department of Fish and Game.
<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">"It's not as if they (the state Department of Water
Resources) were selling Article 21 in 2006 (and buying it back the same year).
But you could say, what difference does it make?"<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">It was "water laundering," said a critic at an
environmental group that sued over the agreements that resulted in Kern getting
the water bank and the water discount.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">"People ask how we could spend billions of dollars and
still have the fish crash. This is the type of thing we were setting up," said
Mindy McIntyre, a water policy analyst at the Planning and Conservation
League.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">"In the end, the public ends up paying," she said. "Not
just with loss of species, but then bond funding and, of course, a water
crisis."<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Since 1995, the Kern County Water Agency bought 1.2
million acre-feet of water under Article 21, making it the biggest purchaser of
that category of water, according to a tally of annual purchase records compiled
by the Times. The next biggest purchaser was the Metropolitan Water District of
Southern California, which bought about 830,000
acre-feet.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Those numbers are higher than environmental regulators
expected, and the Department of Water Resources in recent years delivered far
more Article 21 water than was approved in the endangered species permit that
was meant to protect Delta smelt.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The U.S. Fish and Wildlife Service permit called for
168,000 acre-feet of Article 21 deliveries in an average year. In 2005, state
water managers delivered a record 730,000 acre-feet in a year that was only
slightly wetter than average.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><st1:place w:st="on"><st1:PlaceName
w:st="on"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Kern</SPAN></FONT></st1:PlaceName><FONT size=4><SPAN
style="FONT-SIZE: 14pt"> <st1:PlaceType
w:st="on">County</st1:PlaceType></SPAN></FONT></st1:place><FONT size=4><SPAN
style="FONT-SIZE: 14pt"> alone took a record amount that year, 453,000
acre-feet. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">An acre-foot is enough water to cover a football field
with 1 foot of water, or enough generally for two families of four for a year,
meaning Kern's share of discounted water that year was enough for 3.6 million
people or enough to irrigate 150,000 acres of farmland with 3 feet of
water.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The higher Article 21 deliveries were the result of
<st1:place w:st="on"><st1:PlaceName w:st="on">Kern</st1:PlaceName>
<st1:PlaceType w:st="on">County</st1:PlaceType></st1:place> water officials
becoming more sophisticated about how to schedule their water deliveries, said
one top state water official.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">"A lot of this was a cost saving mechanism," said Jerry
Johns, deputy director of the Department of Water Resources.
<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">"They got smarter about how to request this stuff,
rather than us changing the rules. These guys are not
stupid."<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Normally, when an endangered species permit is violated,
the agency holding the permit — in this case the Department of Water Resources —
would be expected to ask regulators to reopen the permit for new analysis and
modifications.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">That did not happen.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Instead, the U.S. Bureau of Reclamation, a federal water
agency that was also a party to the same Delta water permit, asked for a new
permit in July 2006. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Its request did not mention the state's Article 21
deliveries. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Rather, the federal agency requested a new permit
because Delta smelt numbers were falling
drastically.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The overdeliveries, meanwhile, went unnoticed by federal
regulators because they never expected the Article 21 program to be a
significant source of water.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">"There wasn't a great focus on how much it was because
it was supposed to be infrequent," said Fish and Wildlife Service spokesman Al
Donner.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">Because the permit is being rewritten to correct other
legal and biological deficiencies, nothing is expected to be done about past
over-deliveries of Article 21, Donner said.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">The environmental toll of what happened is
unknown.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">But one leading theory about what may have contributed
to the Delta fish crash suggests that pumping out of the Delta during the early
months of the year could have been particularly damaging to Delta smelt and
other fish.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">It is during those periods that genetically superior
smelt spawn, some researchers now believe. If pumping in those months killed the
early-spawning fish and their offspring, it might have removed the fish that had
the best chance of survival. <o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">If correct, the theory would place a finger of blame on
the State Water Project, and in particular the increased water deliveries that
coincide with Article 21 deliveries.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">In retrospect, the possibility of a link between
increased deliveries of Delta water to places like <st1:place
w:st="on"><st1:PlaceName w:st="on">Kern</st1:PlaceName> <st1:PlaceType
w:st="on">County</st1:PlaceType></st1:place> and the collapse of the Delta's
environment appears foreseeable.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">In 1991 — two years before Delta smelt were listed for
protection under the Endangered Species Act — a U.S. Fish and Wildlife Service
regulator warned that if the Kern Water Bank, which at the time was owned by the
state, were opened, it would lead to increased pumping out of the Delta and harm
to fish, specifically Delta smelt and winter-run chinook
salmon.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">"The reason for this concern is that water storage
capacity within the Kern Water Bank would be filled through additional water
exports from the Delta averaging approximately 90,000 acre-feet per year," said
the 1991 letter from the agency.<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt">That prediction, which was at least roughly on target,
appears to have gone ignored.#<o:p></o:p></SPAN></FONT></P>
<P style="MARGIN: 0in 0in 0pt"><U><FONT face="Times New Roman" color=blue
size=4><SPAN style="FONT-SIZE: 14pt; COLOR: blue"><A
href="">http://www.contracostatimes.com/ci_10152127?nclick_check=1&forced=true</A><o:p></o:p></SPAN></FONT></U></P>
<P class=MsoNormal><FONT face="Times New Roman" size=4><SPAN
style="FONT-SIZE: 14pt"><o:p> </o:p></SPAN></FONT></P></FONT></DIV></BODY></HTML>