USDA hints loan for groundwater could jeopardize federal funds

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The federal government is warning irrigation districts in Pinal County that using a $20 million state loan to drill new wells to replace Colorado River water they are losing as part of the drought contingency plan could cost them.

In a July 17 letter to Gov. Doug Ducey and legislative leaders, Department of Water Resources Director Tom Buschatzke said U.S. Department of Agriculture officials have indicated that the federal government may not count the $20 million of state money toward cost-sharing calculations if it’s spent before they select which projects to fund.

The USDA program, called the Regional Conservation Partnership Program, has not updated its rules or released an application yet for 2019, making it difficult for irrigation districts to know if the projects qualify.

Buschatzke said in his letter that, even if the USDA approves a district’s project, that district may not get reimbursed prior to USDA contracting with that district for reimbursement.

The $20 million, approved as part of the fiscal-year 2020 budget, is due back to the state in 2021, when it was assumed that a federal grant program would kick in and the districts would be able to repay the money.

And that’s not the only deadline. The project must be completed by 2023, when farmers intend to convert solely to groundwater in compliance with the drought contingency plan, which allocates Colorado River water.

Sen. Sine Kerr, R-Buckeye, said the clock is ticking for the program to release its rules for this year.

“Everything hinges on approval of the federal application,” Kerr said. “It’s very concerning. We put a deadline on them (irrigation districts) to have their infrastructure in place by 2023 and to pay us back by 2021.”

But despite her worries about timing, she believes everything will be completed on time.

“I think it’s realistic,” Kerr said of the deadlines. “We will get it resolved.”

Doug MacEachern, spokesman for the Arizona Department of Water Resources, said the department would not comment because of ongoing negotiations.

Buschatzke said in the letter the agreement between the Department of Water Resources and the irrigation districts is “in concept form and under discussion,” but did not elaborate further to the governor or Legislature, besides his warnings about the federal program.

Kerr said in the meantime, officials in Pinal County are scouting locations for wells and drafting lease agreements so that when the money can be spent, whether state or federal, everything is ready to go.

Under the Drought Contingency Plan, farmers in Pinal County agreed to give up their share of Colorado River water as long as they could pump more groundwater.

But to access that groundwater, farmers need better wells and pipelines. Without access to the groundwater, there is no way to mitigate the loss of the Colorado River.

That deal included $9 million for groundwater infrastructure, but Rep. David Cook, R-Globe, said the project could exceed a total of $50 million, and convinced lawmakers to include the $20 million in the budget.

Cook, who pushed for the money throughout the Legislative session, did not respond to multiple calls seeking comment.

A 2018 University of Arizona study found that on-farm agriculture and agribusiness combine for more than $2.3 billion in sales, add $611 million in value and contribute more that 7,500 jobs in Pinal County alone.

Patrick Bray, executive vice president of the Arizona Farm and Ranch Group, said that ADWR should be allocating the money to irrigation districts now, not waiting or advising districts not to spend the money because of the USDA.

Bray said it is the irrigation districts’ and farmers’ jobs to figure out how to pay the money back to the state by 2021, and the department’s job to allocate the money so the project can be completed on time.

“It (the legislation) never gave authority to ADWR to see if this federal program worked,” Bray said, adding that the need for the $20 million is “rapidly approaching.”

Bray said because the rules for the Regional Conservation Partnership Program have not yet been released, they are forced to use old RCPP rules to see if their projects will be approved.

He said talks with the RCPP director in Arizona have gone well and they are helping look for money through other federal programs, but that ultimately the groundwater project “doesn’t fit nicely in the box.”

“We are in the fiscal year in which this money was appropriated, whether this federal program works should not be the discussion,” Bray said. “The discussion now should be how the money flows from the state to the irrigation districts.”