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Agency economist says water rule will cost millions


Posted June 7, 2012

Sequim, WA – A review of internal Department of Ecology e-mails shows there is contentious disagreement within the agency regarding the economic impact of the proposed Dungeness Water Management Rule.


Tryg Hoff, the agency economist first assigned to create the rule’s cost-benefit analysis, argued repeatedly that the costs of the rule would far outweigh the benefits. Under Washington law the benefits of any new rule must be greater than the costs.


Under current law those who purchase land within the area are allowed to draw up to 5,000 gallons per day for domestic use, plus 5,000 gallons per day for commercial or industrial use, plus water for a half acre of non-commercial irrigation.


The law also provides unlimited water for stock.


Under the new rule, those who drill a new well, and those who put the water from their existing well to a “new use,” will be required to pay a one-time fee to purchase water rights.


The debate centered on the economic impact that would result if the permit-exempt water uses are lost.


Official notice

On Monday, March 19, Hoff provided official notice to the rule’s writers that the draft rule failed to meet the legal requirements.


Hoff declared that eliminating the permit-exempt water uses now available to those moving into the area would push the rule’s costs far higher than its probable benefits. “The rule takes an extraordinarily valuable right from an estimated 2,000 new users once the basin is formally closed (over a 20-year rule period),” Hoff wrote.


“Secondly, in closing the basin it also takes an almost equal value from an estimated 5,250 existing users. The costs of this alone are far greater than 500 million dollars.”


Hoff wrote, “From an economic perspective … the legal right of the permit exemption is extraordinary.”


“Using standard economic valuation protocol of highest and best use, this cumulative right can easily be valued at over a million dollars.”


Hoff also called into question the rule’s benefits, noting the rule “will probably save less than 1 CFS of water from the rivers and streams throughout the watershed (over a 20-year period).”


In another e-mail Hoff provided more details, pointing out that Ecology hydrogeologist Dave Nazy had calculated that the build-out of the area would result in a total loss of “0.77 cubic feet per second across the basin.”


Public notice

In an e-mail to Robert Barwin, an environmental engineer in Ecology’s water department, Hoff also took the agency to task for failing to notify the public properly regarding the details of the rules. “If you were concerned about the habitat, you would be educating the current 99% of the users on how they would also need to mitigate usage changes. The message now is only future housing starts would be required to. If the citizens knew the truth and that this rule could be used to beat up on them in the future, they would come unglued.”


“In my opinion we have failed to adequately tell the citizens what the current rule truly does? This may be strategic on your part?”


Hoff also noted that the amount of water that is drawn from area streams has been declining.


“I have looked at irrigation and population numbers in the basin back to the 50s. There is no logical reason to close a basin with a trajectory of less water use every year.”


“I presented factual information yesterday regarding consumptive use on the Dungeness River yesterday that was blown off. My numbers showed that only 27% is consumed based on gauge data in the lowest month of the year. What we really know is that this is a losing river so that number is actually less. Then I presented that exempting in-house domestic use would only consume 2/10 of 1% of the river over a 100-year build out. This was also discounted?”


In another e-mail, Hoff wrote to Barwin, “You can disagree with me all you want but you better check with your attorneys!  It’s clearly bad policy to put millions of gallons of water for fish over a few gallons for people. Or god forbid, not protect the water for the people at all.


“Like I said this rule smacks of anti growth.”


What is the value?

Ecology officials, including Ecology Director Ted Sturdevant, insist the rule will have no impact on the value of the land, pointing to an opinion provided by Assistant Attorney General Stephen North. In an e-mail to Hoff, North said the rule, as drafted, would prevent new users from exercising currently available options for permit-exempt uses, but added, “because the value does not attach to the use until it is established … the rule is not taking away anything from people who have yet to use water other than a possibility.”

Following a series of progressively more contentious emails, in mid-March Hoff was relieved of his duties as economist working on the rule.

The e-mails discussing his departure stipulate the change was made at Hoff’s request.



Mass mailing

With assistance from Washington Realtors, the  Sequim Association of Realtors last week mailed postcards to more than 22,000 property owners within Water Resource Inventory Area 18.

The Realtors also put together a website with information on the rule. See

Marguerite Glover, a Realtor who has for years actively participated in discussions of the rule, said, “Our real concern was that this new water management rule would affect people’s property rights, their retirement expectations and the quality of their life here in Sequim. But the Department of Ecology wasn’t making an effort to let everyone know about the upcoming rule.

“We wanted to make sure, especially, that those property owners who lived out of the area found out about the rule. And we wanted to list resources and references, along with questions and answers, so that local people and out-of-area people could understand better what the rule really means.”

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