Storm Over Dust-Control Rule

San Joaquin Valley - Farmers, contractors and local governments are worried about EPA sanctions that could go into effect as soon as April that would cut off road money to the Valley if more stringent dust control measures are not put into place here.

While farmers are most vocal about proposed mandates to keep dust down on dirt roads, Tulare County - with hundred of miles of unpaved roads to worry about - says it doesn't have the funds to construct and maintain more asphalt. But now it faces the prospect of even less road money because of these sanctions. In fact it has been a big gripe in Tulare County that more roads would have to "revert" to unpaved status because the state nor federal government has been returning enough tax money to pay for road upkeep. It's just one irony that doesn't go unnoticed in the debate over dust.

The federal EPA has pressed the Valley Air District into a time table to adopt new dust control rules and in fact there are sanctions in place already (as of October 8) on any "new source" of pollution requiring businesses or industry to buy pollution credits at a 2 to 1 ratio before they can get their permit. Credits go over around $25,000 per ton annually costing some companies who would expand here $millions.

The EPA has held listening sessions in the Valley in recent weeks regarding what is being called Regulation 8 - to take testimony and explain proposed solutions but has given no indication whether they might consider a compromise over some of the proposed rules. A compromise is what farm advocates hope is eventually adopted.

"No way do we feel we should be exempt from the dust rules," says Manuel Cunha who heads the influential Nisei Farmers League. "But we don't feel we are the major source of the problem."

Cunha says the Clean Air Act doesn't focus on dust but on PM-10 (particulate matter of less than 10 microns) which is a cause of respiratory health problems. Cunha says a major $31 million study is underway that will soon identify the source of PM-10 scientifically but that for now sources of dust are just plain guess work, he feels.

Overall, those affected feel the government hasn't taken into consideration what is reasonable based on the economics of the situation.

"They want to cut the visible dust by one half," says Tulare County supervisor Bill Maze about the proposed rule, "But it's subjective because it depends on the observer."

A water short and money short Valley economy makes the proposed dust rule harder to swallow. Westside farmer and Kings supervisor Tony Oliveira says the proposed idling of 200,000 acres in the Westlands will be "the real dust problem" for the Valley - not a few tractors going down unpaved farm roads.

"They don't talk about all the interstate trucks that fly up and down 99 and Highway 5 spewing out particulates," notes Oliveira. These are trucks the Air Board can't regulate but contribute to the particulate problem.

The reality of the Valley is that if farms go out of business trying to comply with dust rules, the Valley will be getting a lot more dustier as our top soil goes airborne.

The Air District wants businesses, public agencies and farmers to use dust control measures including water to wet down roads and equipment yards. But Cunha says the threshold for when a farmer has to water down roads is being set too high. Estimates of the cost to comply with the proposed rules runs in the billions compared an Air District estimate of $4.6 million. Strong support does exist in the Valley to tighten particulate rules since science has connected bad air to asthma problems and even premature death. The question the farmers have is what scientifically can be attributed to their farm dust and what is the capacity financially for farmers to reasonably reduce the load, they say. Some farmers fear the coming of the "smog police" snooping around their vineyards.

Cunha says the new rule would require farmers to water roads used more than 50 trips a day. The tough rules would apply to equipment yards of more than ½ acre as well, he says. Cunha says they believe the threshold should be 150 trips. The plan affects some 150 irrigated districts as well that will have to use water to put down the dust. He says they are also pressing for a simple record keeping systems here than make this rule a major paper work headache for those affected.

The District is out of compliance from October to January and Cunha suggests farmers may be contributing to some of dust problems during this fall/winter including the nut harvests.

"But this is not the busy time for either agriculture or building activity," notes Bill Maze and so it's hard to see why these activities are the major source of the problem during this time.

Inversion and especially fog over these months keep the particulates from dispersing, notes Cunha. Working with almond farmers Cunha says there is an effort to see if the harvest can proceed without as much dust.

Cunha says the real dynamics going on here are political. The staff of Region 9 EPA (left over from the Clinton administration) promulgated these stringent rules based on the notion we are a high wind-blown dust area. Until recently the Bush administration did not have a top staffer at Region 9 reflecting perhaps a more moderate tone, he believes.

But now "we are in discussion at the highest level with EPA officials and others" to try to come up with compromise rules, says Cunha who has influence in Washington.

The Air District is set to adopt the new rule by October 31 but discussions among the stakeholders could mean the adoption doesn't come until November 15, believes Cunha.

While the Tulare County Board of Supervisors may well follow the lead of Kings County Board supporting Reg. 8. Maze says they will wait to hear the outcome of negotiations. "We expect the measure to be brought to us after the discussions are complete," says Maze.

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Sept. 11 Becomes Immigration
Wake-Up Call

San Joaquin Valley - Everything has changed after September 11th including debate over immigration reform. Congress had been seriously debating loosening of our borders including easing restrictions of foreign guest workers and/or "amnesty" for workers already in this country who are here illegally. Both positions - one supported by farm interests and the other by farm labor advocates appear to be dead for this year as Congress - heading as fast as it can in the other direction - seeks ways to tighten restrictions on immigration.

"Clearly we aren't going to be successful this year," says Manuel Cunha president of the Nisei Farmer League, who has labored mightily to come up with a new foreign worker program year after year. "It wouldn't be right given the climate in the country right now to push this issue," he says.

Improved vigilance at the border includes plans to hire more border patrol agents and uncertainty whether a Senate approved plan to restore the 245 (I) program would be brought in the House. If that law is not passed many spouses or children of US residents who were here illegally could be barred from leaving and then returning since they had been here illegally.

Only days before the September 11 terrorist attack carried out by foreign visitors to this country the Congress and the President seemed eager to come up with compromises that would bring more Mexican labors into the US legally. Bush and Mexican President Fox met in Washington earlier in September hoping but failing to reach a breakthrough on immigration reform.

But with the revelation that many of the terrorist attackers were here in this country on legal visas, the pressure on the INS is for tougher security measures including tracking visitors that come to the US legally.

While farmer advocates like Nisei Farmers League's Manuel Cunha hoped this would be a year farmers could count on more labor availability the reality is all this may very well mean the opposite.

"The border is essentially closed down right now," says Cunha as "coyotes know that if they try to smuggle anything across they might be wearing a bullet."

With the military closing the border, Cunha believes farmworkers won't try to return to the US now if they return to Mexico "because it's just too hard." The upshot is likely to be a much tighter labor market, he believes.

INS and Customs stepped up border inspections after Sept. 11 and the end result was that drug seizures fell by one half for the same period in 2000 along the entire US-Mexican border as smugglers clearly shipped fewer drugs. Also the step up in inspections resulted in 40% fewer illegal immigrants being apprehended - 97744 in Sept. 2000 to 59244 in Sept. 2001. For the entire year the number is down 25%.

But Cunha says his "continuing negotiations" with labor advocates like Congressman Howard Berman and we hope to have something worked out and ready to go by next February. That was the time line this past year when a delicate compromise fell apart between advocates of more foreign labor and proponents amnesty for illegals already here. Many conservatives could not swallow the idea that you simply forgave those that entered the US illegally.

Tighter scrutiny at the border and possible tracking within the US of foreigners could further alter the immigration patterns of the Valley. Already the US Census estimates Tulare County has some 75,000 foreign born residents and two thirds of them are not citizens.

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Will Smaller Orange Crop Mean Profits?

San Joaquin Valley - Mother Nature has dealt orange growers a smaller navel crop this fall, a recipe they hope translates into profits for the first time in years. "The extreme heat we had in May could mean the shortest season in 15 years," says Joel Nelsen, president of California Citrus Mutual.

The hot weather dropped fruit on the ground all over the citrus belt impacting some groves more than others. "I'm not sure the smaller crop will play that big a role," says Nelsen, "since the buyers are dictating the prices."

But grower-packer Brad Stark says "the industry must strategize a marketing plan to get better prices." This summer the Australians shipped summer navels into the US selling at $2 lb. He says consumers were willing to pay for a "good quality sweet tasting piece of fruit."

Tulare County orange growers have been getting an average of $8 to $9 a box for navels, but Stark believes prices above $12 could be in the offing if growers don't overpack early citrus to try to claim part of the Christmas market. That's where the citrus industry as a whole has failed in the past, something that Nelsen believes they recognize now and have put in place higher maturity standards before fruit can be shipped.

Stark says if the retailers will pay for high quality imported oranges after they make the trip on a boat from Australia, why wouldn't the consumer pay for a fresh orange right off the tree? Stark predicts that the orange supply could be 50% normal and that means growers have a unique opportunity if the quality of the fruit remains high.

The industry has been trying to get the ear of the retail industry - a highly consolidated grocery business - compared to a few years ago. "No wonder we can move fruit when they mark up the fruit by 200 to 300%," says Stark.

Stark says he is ready to ship an early Fukamota navel to market "right now" in mid October, but that the fruit pipeline remains full of this spring's Valencia oranges. "There is no doubt that we will see more Valencia trees being pulled this winter," says Nelsen. Stark's strategy is to market the highest quality fruit in fewer numbers instead of "not just moving lots of fruit."

Actually making a profit has been tough for many orange farmers since the freeze.

Nelsen says major factors that cuts profitability here is that our orange growers have to compete against European citrus farmers who are subsidized by the government to the tune of $1200 per acre in the case of Clementines coming from Spain. Nelsen says he supports the proposed Trade Promotion Authority being carried by Congressman Bill Thomas (also supported by Democrat Cal Dooley) in the House currently - an initiative he hopes gains President Bush and his trade negotiators authority to combat the subsidy problem. This despite the fact that agriculture in general has been disappointed with efforts over the years from Washington to try to level the trade playing field.

US agriculture faces tariffs in other nations at 62 percent of the product value, while foreign farmers only face an average rate of 12% in America.

Regarding the other big issue - retail consolidation - ag interests got two favorable reports issued recently pointing to the fact that a combination of fewer buyers and grocery stores and "slotting fees" - paying for shelf space - have hurt producers. But those two reports - one from the USDA and the other from the FTC may now just sit on the shelf for a while.

The heart of the eastside of the valley's ag economy - both citrus and olives - have been hit hard in recent years by this issue of foreign competition and low prices. Oranges are traditionally the County's number two crop.

The olive crop is also smaller this year with growers figuring they too may just make a profit. Cashing on both crops this season could help the local economy allowing farmers to buy that pick-up or tractor in town they've put off for a while.

Indicative of the trouble the California growers have felt is the price for California tangerines in recent years. The average price for California tangerines in 1996 was $16.39 per carton according to the national survey done by USDA. By 1998 that figure dropped to $9.48 per carton. Around the same time period European Union exports of tangerines into the US market exploded from 43,242 metric tons in 98/99 to 71,357 tons in 99/2000 arriving here during the same fall/winter period we sell our fruit.

Whatever pressures face the industry from without, Stark hopes citrus farmers work together with packers to sell their product - a move he says requires "discipline."

Since oranges hold well on the tree over the winter and even into spring (the fruit is just sweeter), Stark and others believe the best time for the industry and perhaps the best prices will be later in the season.

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Debate Over County Millennium Fund Continues

Tulare County - Tulare County League of Women Voters sponsored a presentation in Visalia by former Grand Jury member Glenn Wallace of Springville and Mr. Wallace minced no words regarding the County's investment instrument - the Millennium Fund. "It's losing money hand over fist," says Mr. Wallace who wrote the Grand Jury report in 2000 on the fund. "The Board of Supervisors bet money on the stock market - pure and simple," says Wallace using borrowed money based on COPs (Certificates of Participation). Now they lost about $2.2 million," says Wallace, based on information from an April 2001 report.

The chair of the Tulare County Board of Supervisors, Bill Maze, disagrees "that just isn't true," says Maze.

Assistant administrator Tom Sherry says the April report does reflect that the fund is $2.1 million below the $45 million "but that was the projection when we made the plan back in 1999." Sherry says there isn't a surprise that the fund is down now but what the County focuses on is whether projections are meeting the plan. "We're actually $141,000 above projections." Sherry explains that costs in the early years of the 30 year fund are higher and the County still expects to make money down the line.

Sherry notes that the poor stock market conditions haven't hurt the fund that bad since the fund is invested in bonds - not stocks and bonds tend to be less volatile than stocks.

Originally the County borrowed around $45 million based on expected payment from tobacco settlement monies given annually. The theory was to borrow on the anticipated revenues expected to continue to come to the County over the next 30 years. That is anticipated to total around $136 million by 2030 described in the original report to the County as an "unprecedented windfall to Tulare County." Borrowing ahead of time and investing what is expected to be the proceeds - the theory was you could earn interest on investment building the fund rather than spending it.

But Wallace says it was a bad idea. "The fees will eat you up," says Wallace who was a corporate financial advisor for companies. "You need a much larger amount to arbitrage than $45 million" in order for the fees not to overwhelm the profit possibilities, he believes. The Grand Jury was critical in their 2000 report that the County used COPs to finance the fund with bond money without a vote of the people.

"Nobody knew about this plan until it was a done deal," says Sally Winn a League member who says she is concerned about the investment. At the time tax collector Gerald Fields did not recommend the County do the investment.

Wallace suggests with losses mounting, the County consider backpedaling out of the deal - something the promoters said could be done when the sold the package to the County.

"That may cost another $2 million," suggests Wallace.

In order to set up the fund in January 2000, the County spent $650,000 and lost $200,000 in the first 106 days," says Wallace.

"Sure all of us have been hit by lower stock levels but a public entity has no business borrowing bond money to play the stock market, " suggests Wallace.

The League of Women Voters is expected to take the issue up again after the first of the year, says League president Denise Nelson.

The theory sold by the bond counsels to the board was that the County could set up this endowment that would be a stable source on long term funds that could build up over the years providing discretionary money the County would otherwise not have. Still the fund was a betting on the come.

In his Grand Jury 2000 analysis, Mr. Wallace noted that the cost of the investment of the tobacco revenues showed that over $114 million in debt service over the 30 year life of the fund would be spent out of the proceeds. The 30 year payment to the County - if the tobacco fund continued to pay - will be $136 million.

The Grand Jury report suggests that during the first 106 days of the Millennium Fund and the bond fund fell from $45 million to $44,172,996.

The findings of the 2000/01 report said:

"Finding 1: Early discussions concerning use of Tulare County share of the Tobacco Settlement Revenues that led to the development of the Millennium Fund involved three or four county officials and representatives of two financial firms. Even though the eventual recommendation involved projected cash flows of $160,000,000 and the sale of Bonds in the amount of $45,000,000 no other county officials were informed or consulted and did not include all members of the Tulare County Financial Advisory Committee."

"Finding 2: Tulare County has used a single firm for financial advice and investment management for several years. The same firm now serves as Program Administrator for the Millennium Fund."

"Finding 3: A reduction in tobacco Settlement Revenue Projections or adverse conditions in the bond Market could require the County General Fund to bear more of the cost of repayment of Millennium Fund."

One suggestion of the Grand Jury is that the annual report of the Millennium Funds be reviewed as an agenda item and the County retain an independent audit team to review the fund's progress.

But County officials say the nervousness over the market conditions shouldn't scare people that the Millennium Fund is in any kind of trouble.

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