Arrests may roil feds’ deal on water runoff
WASHINGTON — The manager of a San Joaquin Valley water district seen as a model for how to manage toxic agricultural runoff was jailed last week in Fresno on charges of embezzlement and burying 86 drums of toxic waste on the water district’s property.
The arrests of former Panoche Water District General Manager Dennis Falaschi and four others on Thursday could further muddy congressional passage of a multimilliondollar settlement between the federal government and the nearby Westlands Water District over seleniumtainted irrigation runoff that led to an environmental disaster at the Kesterson National Wildlife Refuge in 1983.
San Joaquin Valley Republicans, led by Rep. David Valadao of Hanford (Kings County), have been trying to push the settlement through Congress for two years, over opposition by Bay Area Democrats who call the deal a taxpayer giveaway. Their last
attempt, in December, included a similar deal for the smaller Panoche, Pacheco and San Luis water districts north of Westlands known as “the northerly districts.”
Rep. Jim Costa, a Fresno Democrat allied with Republicans on water issues, had introduced the legislation for a settlement for the smaller districts. Water districts are public agencies that distribute public water, and in farming areas, they are typically controlled by farmers.
California Attorney General Xavier Becerra filed felony charges against Panoche district officials, including Falaschi’s son, Atomic Falaschi, alleging their embezzlement of more than $100,000 in public money for slot machines, landscaping, home remodeling, loans, car repairs and other personal expenses. Of the 10 felony counts, eight were related to embezzlement allegations and two to the charges involving hazardous waste disposal.
The investigation into the district’s finances began after the California Department of Toxic Substances Control found the drums of hazardous waste buried on the district’s property.
The Panoche water district’s drainage program “was held up as the model for the Westlands settlement and the architects of that model now have their mug shots in the post office,” said Rep. Jared Huffman, D-San Rafael, who has battled congressional approval of the deal. The criminal charges “touch on the management of federal drainage funds,” he said, “and just added another huge waving red flag that hopefully will cause Congress to slow down.”
Johnny Amaral, deputy general manager for Westlands, said the Panoche arrests should have no effect on the legislation before Congress because Panoche is independent of the Westlands settlement.
“We do not anticipate that actions involving agencies that are not party to the settlement will affect the settlement’s chances of approval,” Amaral said.
The proposed settlement was negotiated by the Obama administration after years of litigation, and has been endorsed by the Trump administration. The agreement relieves the federal government of its obligation to provide $2.7 billion to drain selenium-polluted runoff from Westlands, a district that waters 600,000 acres of cropland on the arid west side of the San Joaquin Valley.
That obligation stemmed from the government’s decision in 1960 to extend the Central Valley Project to the arid west side of the San Joaquin Valley, despite the knowledge that the soils are laden with salts and selenium, a mineral lethal to wildlife and humans.
Under the settlement terms, Westlands would be forgiven the $375 million it still owes the federal government for the construction of the 1960s-era extension of the Central Valley Project that delivers water to the district, which runs along Interstate 5 from Mendota in Fresno County to Kettleman City in Kings County. The district also promises to deal with the drainage problem on its own.
Although federal agencies have recommended that Westlands retire up to half its cropland to prevent further drainage problems, the settlement requires the retirement of only 100,000 acres where farming has already been abandoned because of drainage problems.
Late last year, House Majority Leader Kevin McCarthy of Bakersfield attempted to attach the Westlands settlement, along with one for Panoche and the other northerly districts, as a rider to a big military authorization bill.
But the effort was blocked by Senate Armed Services Committee Chairman John McCain, R-Ariz., after the Interior Department’s inspector general raised alarms about “significant questionable costs” in a Panoche demonstration water treatment plant intended to show that irrigation runoff can be treated.
Critics draw a parallel with Westlands’ history of internal accounting problems in 2016, paying a $125,000 fine to the Securities and Exchange Committee for misleading investors in a bond offering, which its general manager, Tom Birmingham, had conceded was “a little Enron accounting.”
“The justification for the Westlands mega-deal has been that local districts manage toxic drainage more effectively and with some federal help ... they can solve the problem,” said Hal Candee, a San Francisco attorney for environmental groups in pending drainage litigation. “Yet now current and former leaders of the ‘model district’ for this local approach are charged with crimes directly related to the management of toxic wastes and the management of public funds.”
Observers expect that the next opportunity for the drainage settlement to pass Congress will be as a rider to giant spending bill set for consideration next month.