DNR Focused on Protecting Water Right Assets

irrigated cropsThe Washington State Department of Natural Resources (DNR) manages more than 300 water right certificates and permits that it holds in addition to water right claims in many cases. These water rights are used primarily for irrigation on state trust lands leased for agriculture uses.

As stewards of these water rights, DNR is responsible to effectively manage these rights to produce revenue for public schools and other state trust beneficiaries. We also are responsible to protect these rights from relinquishment. DNR is moving toward using the Washington State Trust Water Rights program to protect these rights for future uses on state lands and to allow increased flexibility in water management on agriculture leases.

“The Washington State Trust Water Rights program provides a way to legally hold water rights for future uses without the water right relinquishing. Water is held in trust to benefit groundwater and instream flows, and other beneficial uses.” (Department of Ecology website, 2014)

irrigation system-Water rights can be held in trust permanently or for short periods of time as temporary donations. With the added ability to donate groundwater rights, as well as surface water rights, to the program, DNR gains flexibility and options for protecting water rights that rely exclusively on wells for withdrawing irrigation water. As an example of this flexibility, DNR can choose to donate its water rights, in whole or in part, to the Trust Water Rights program for a specified period of time when it anticipates using less water. By temporarily donating the water right to the program, DNR is able to protect the State’s water assets and, at the same time, provide benefits to surface water and groundwater resources.

The program is a particularly useful tool for DNR to consider in protecting its water rights during periods when irrigation infrastructure is under development, crop types and water demand are changing, or in other periods of transition that may reduce water use. For example, on one of DNR’s large agriculture leases a farm-scale transition of crop type and irrigation system was planned. During the development period, the old crop and irrigation infrastructure had to be removed and new system installed and crop planted. It took a considerable amount of time for the lessee and DNR to successfully complete the project. In the interim, DNR wanted to ensure that its water rights remained intact so the agency temporarily donated the water to the Trust Water Program to protect the water right during the project’s development. Once the project is completed or as the crops are incrementally planted, DNR will have the ability to remove the water from the Trust Water Rights program and begin using it again for irrigation.

Columbia Basin Project Greens Up Trust Lands for Revenue

The Columbia Basin Project is an example of how a large public investment into a tangible project can spur the growth of the nation’s economic wellbeing for generations to come.

Columbia Basin Project map

Columbia Basin Project map, courtesy of Bureau of Reclamation (CLICK image to enlarge)

The Washington State Department of Natural Resources (DNR) participates in the Columbia Basin Project by providing leases to lessees who irrigate the lands primarily for agriculture within Adams, Franklin, and Grant counties. The project, which provides irrigation to 671,000 acres, is managed by three irrigation districts: the Quincy Columbia Irrigation District, the East Columbia Irrigation District, and the South Columbia Irrigation District.

It is DNR’s good fortune to have irrigated acres within the project’s area. Agricultural uses include crops such as grain, hay, beans, fruit, grapes, sugar beets, potatoes, sweet corn, seed and other specialty crops.

The ability to irrigate these lands is more evidence of how the nation’s investment in the Columbia Basin Project continues to benefit Washington’s K-12 education programs, as the majority of revenue produced by DNR through its agriculture leasing program supports the construction of public schools statewide.

A Short History of the Columbia Basin Project

The original vision of the Columbia Basin Project was much larger than what we see today. The Bureau of Reclamation’s history of the project notes:

In mid-April 1933, supporters of the project met with President Roosevelt to outline the project and recommend he allocate the $400,000,000 needed for construction. The President balked at the suggestion and suggested a smaller dam that could be enlarged at a later date. The President advised that the project be constructed in stages using relief money and encouraged them to seek the assistance of the Bureau of Reclamation in designing and building the dam. Supporters of the irrigation scheme were disappointed: a low dam could be used to generate power, but would not allow water to be pumped for irrigation. Still, the drive to get the dam built continued.”

Efforts to expand the Columbia Basic Project continue today, more than 80 years after its proposal.

The Columbia Basin Project (CBP) is located in east central Washington and currently serves about 671,000 acres, or just over 65 percent of the approximately 1 million acres originally authorized by Congress. Principal project features include Grand Coulee Dam, Franklin D. Roosevelt Lake, and the Grand Coulee Powerplant Complex.

Happy 125th Birthday to Washington State Trust Lands

new high school in Ellensburg was built with aid of state trust land funds

In Fiscal Year 2013, DNR agricultural trust land leases grossed more than $20 million for Common School construction in Washington State. Recent projects include a new high school in Ellensburg.

This year, 2014, is the 125th anniversary of Washington’s joining the Union as the 42nd state. It’s a good time to reflect on the gift our state received from the federal government back in 1889: more than three million acres of trust lands – truly, a gift that keeps on giving!

Providing gifts of land to support institutions is a practice that dates back to the Middle Ages.

In the United States, as far back as 1785, every Section 16 in each township was reserved as a “school section” to provide funding and a central location for schools, so no child would have to travel too far to school.

As new states joined the union, Congress provided land grants to each state, with the western states granted large numbers of acres. The federal Enabling Act of 1889 granted Washington State lands in Section 16 and 36 of every township, except where that section was already settled or encumbered. In addition to designating that lands in those sections be managed to benefit common schools, the Act granted the State additional lands to be managed for colleges, universities, prisons, and other institutions.

Each state could sell its granted lands, but Washington state chose to keep most of its 3 million acres of trust lands. Over the decades, the state further enhanced its trust land holdings by blocking up lands, developing irrigation for agricultural uses, and other steps to enhance the ability of these lands to generate revenue for trust beneficiaries.

Responsibilities and relationships

As trust land managers, DNR has a fiduciary duty to manage these lands with undivided loyalty to the trust beneficiaries, considering both current and future generations of beneficiaries. We also have a fiduciary duty to act prudently. For the agriculture and grazing leasing program, this means generating fair market value rents for land uses, while assuring the productivity of the land is protected and enhanced so benefits are provided in perpetuity.

Our leasing procedures define the relationship between DNR as trustee, and our lessees, who are the on-the-ground managers producing agricultural commodities that are the source of revenue for the trusts. We encourage progressive, ecologically sustainable agriculture and recognize the value and interconnectedness of the many systems on our lands including water, fish and wildlife habitat, and agricultural production. We work to create, maintain, and improve these systems in a way that assures the long term sustenance of both revenue for the trusts and healthy ecosystems.

DNR works to optimize income from land assets for trust beneficiaries consistent with acceptable risk and good management practices. We may change the land use of property to the “highest and best use” when the expected net lease revenues and asset values are substantially greater than those of the current use. We also may make or authorize capital investments on lands to enhance the income stream and asset value when those investments meet acceptable financial and risk criteria. Above all, we keep the beneficiaries’ interests in mind at all times by maintaining a broad and diversified land base and, when the transaction will benefit the trust, replacing the properties we dispose of.

It’s exciting to be part of the century-plus legacy of state trust land management.

For more information on trust lands, read State Trust Lands: History, Management, & Sustainable Use, Jon A. Souder and Sally K. Fairfax (1996). Lawrence, KS: University of Kansas Press.

DNR SE Region Reorganization to Improve Service Delivery

map: SE Region reorganizationThe Washington State Department of Natural Resources (DNR) continually pursues opportunities to improve program delivery and achieve management efficiencies. In 2014, we’ve carried that effort forward by reorganizing the responsibilities of our Land Managers and consolidating work centers within DNR’s Southeast Region. More specifically, these changes include:

  • Appointing Emma Barnett to manage nearly all rangeland and grazing agreements in the Southeast Region. Emma’s educational background, coupled with her land management expertise, will improve consistency in the Southeast Region’s grazing program. She’s looking forward to collaborating with everyone in supporting the sustainable management of DNR rangelands and grazeable woodlands.
  • Redistributing agricultural land management responsibilities for the region among five unit Land Manager positions as depicted in the area map with this article. The reconfiguration of the six (including grazing) unit Land Manager positions creates internal efficiencies while providing the same or better customer service to our stakeholders. If a DNR-managed property is used for both grazing and agricultural uses, leases will be managed by the agricultural Land Manager in most cases.
  • Closing DNR’s Ephrata and Ritzville offices so that all Land Manager positions are located either in the Tri-Cities or Ellensburg. This move will allow greater collaboration and consistency between management units and programs. The Unit Land Managers will be able to more effectively rely on each other as workload shifts between units, providing more timely and improved staff work, and better service to our many leasees.

We’re working to make these transitions as seamless as possible. If you have any questions about the reorganization you can either direct them to the Unit Land Manager in your area or call the Southeast Region office: (509) 925-8510.

Bailand Farms: Western Washington Farm Diversification

Bailand Farms, Snohomish County.

Bailand Farms, Snohomish County.

DNR lessee, Bailand Farms, has diversified into composting and road-side u-pick vegetable marketing in their effort to protect water quality and fisheries habitat and maintain the economic viability of their family farm.

The Bailey family has farmed in the Snohomish River Valley since 1918 and has leased State trust land for 46 years. Their fifth-generation family dairy and crop farm has grown a variety of vegetable and seed crops over the years for local processors.

Bailey Farm tractor in pumpkin patch.

Bailey Farm tractor in pumpkin patch. Photo: Bailand Farms.

The Bailey family initially diversified their operations by expanding into a u-pick garden endeavor in 1986. Over the years, the customer base has gradually expanded as have the offerings. Today, Bailey Vegetables sells strawberries, lettuce, raspberries, snap peas, green beans, potatoes, cucumbers, corn, beets, carrots, onions, leeks, Swiss chard, kale, flowers, pumpkins, gourds, squash, and herbs. Customers from the surrounding area, including nearby urban Everett, enjoy the opportunity to get out and enjoy the fresh air, harvest their own produce, and show their kids where food really comes from.

In 1995, the Bailey family further diversified into composting by forming Bailey Compost to use manure waste from the farm’s dairy operation. Initially, they used the compost on their own crops to cut down the use of commercial fertilizers. They continued researching composting science, hired an on-farm compost expert, and then obtained permits to expand into compost yard debris, which is a regulated material defined as a solid waste. Soon, they began accepting clean green yard waste such as leaves, small branches, grass clippings, plant material, and brush to add to their own dairy waste. And before long, they were selling compost to the public, building a strong following of loyal customers, many of whom attribute their own gorgeous flower and vegetable gardens to the well-aged, high quality compost produced by Baily Compost.

DNR has leased farm land to the Bailey family since 1968. We have cooperated on a stream riparian buffer fencing project and approved the application of shredded yard debris on the DNR lease. Commitment to the environment and commitment to the community make Bailand Farms a valued lessee.

Columbia County Public Lease Auctions

DNR has three upcoming lease auctions in Columbia County. Two are scheduled for April 25, 2014. For more information, contact Palouse Unit Land Manager Ryan Cloud at (509) 545-2025; Lease Marketing Manager Kathleen Beach at (509) 925-0912; or view lease auction documents about each offering.

Columbia County dryland

Columbia County dryland in production. Photo: WSU

Dryland Agriculture and Grazing Lease No. 12-C60502:  The Territorial Road 36 lease public auction is for a nine (9) year eleven (11) month lease containing approximately 325.8 dryland crop acres and 314.2 grazing acres, all located in Section 36, Township 12 North, Range 38 East, W.M., containing 640 acres, more or less. This auction offers bidders an option to select one of two rental structure options associated with the dryland crop acres. (Under both lease options, annual grazing rent is $395.89.)

Lease Option 1: Annual cash rent for dryland agriculture of $16,775.44, plus leasehold tax at a rate of 12.84% of the rent paid. Total annual rent for dryland agriculture, including leasehold tax is $18,929.41.

Lease Option 2: Crop share division rent for dryland agriculture where the State’s share is 28% of crop, plus 8.6% leasehold tax (28 x 1.086). The total share of crop due to the State, including leasehold tax, is 30.41%.

Grazing Lease No. 10-A80788: The Kellogg Hollow 36 lease public auction is for a two (2) year, five (5) month lease described as that portion of Section 36 lying northeasterly of Kellogg Creek Road, Township 12 North, Range 37 East, W.M., Columbia County, containing five (5) grazing acres. Rent for the entire term of the lease is $500.10.

These sealed bid lease auctions will be held at the DNR’s Southeast Region Office on April 25, 2014. Auction of Lease No. 12-C60502 will be at 2:00 p.m. Auction of Lease No. 10-A80788 will be at 2:30 p.m. For bidder’s qualification packets, call (509) 925-0912.

Other Upcoming Lease Opportunities

Another Columbia County dryland agriculture lease that will be offered soon is the Crawl Hollow 36 lease. This lease, No. 12-B72535, is for a ten-year term and includes 251.48 acres of dryland crop land, and 54.5 acres in CRP. This lease is located in the W1/2 of Section 36, Township 10 North, Range 39 East, W.M. The auction date is yet to be determined.

Meet our Southeast Region Agriculture Administration Staff

Most lessees interact with their local Land Manager on a regular basis; however, there are three people behind the scenes who provide critical functions in managing agricultural trust properties in the Southeast Region. They also are the first line of contact when members of the public have questions about trust properties.

DNR Southeast Region agriculture administrative staff

From left to right: Linda Hazlett, Becky Kennedy, and Claudia Haddon. Photo: DNR.

Linda Hazlett, Claudia Haddon, and Becky Kennedy (photo) comprise our agriculture administrative staff. They have more than 60 years of combined experience at DNR. They are responsible for producing the documents that Land Managers need to keep leases up to date. This group processes thousands of documents annually; including new leases, assignments, and improvement authorizations. Additionally, they set up every new lease in our billing system to ensure that the lessee’s information is up to date in our system and that invoices are correct before they are mailed.

In addition to agricultural documents, the administrative staff processes the lease documents for gravel pits and other special uses such as wind power and communication sites. They also are responsible for managing all the data in SAP, which is our business software for tracking lease information.

This group is kept very busy all year long, and the field staff would like to thank our professional and competent administrative staff for all they do for us.