As debate over rising cost estimates for the proposed Alkali Creek Dam continues, one critic asserts that the sponsoring water district is entangled in a conflict of interest after paying a board member $1.6 million.
A neighbor to the proposed dam site is upset that the Nowood Watershed Improvement District paid the Paint Rock Angus Ranch — owned by the Martin Mercer family — the hefty sum for land and easements while Martin Mercer sat on the district board.
Tim Gardiner, owner of the Twisted Tippet Ranch that lies just below the proposed dam site, called the payment “a massive conflict of interest,” involving “good old boy” politicking.
“We’ve got the president and vice president [of the Nowood district] crafting their own deal,” Gardiner said. “It’s a lot of money without the light-of-day overview.”
Mercer and Nowood District President John Joyce rejected the allegation, saying the 35-member association is small, doesn’t have a lot of board candidates and is following its charter.
“Nobody has run against me,” Mercer said of board elections. He signed up for board duty because, “I always felt I could bring something to the table.”
“We followed all the rules”
martin Mercer
Irrigators anticipated spending the state funds to buy reservoir property, and studies determined that Mercer’s land was the bestideal site.
“We followed all the rules,” Mercer said. “Everything was voted on by our peers. It’s been transparent. It’s been democratic.
“I don’t know there’s any conflict of interest.”
Joyce agreed with Mercer but said he realizes the optics are bad.
Despite public perception, he said, “it’s been done correctly and above board.”
Five times more
As Wyoming advances plans to construct the dam, lawmakers are increasingly alarmed by cost estimates that have climbed from $20 million to more than $100 million even before a spade of dirt has been turned.
The state of Wyoming would pay for all but about $2 million of the 100-foot-high, half-mile-long earth embankment. The dam would hold a 9,000-acre-foot reservoir to provide 6,000 acre-feet of supplemental irrigation to 35 irrigating families.
Some of the anticipated expenses are understandable for a reservoir that would cover 312 acres. A contract for just some of the required dirt carries a nearly $900,000 price tag.
As engineers worked on the project, they discovered the dirt, or fill, they had counted on for the structure would not meet the specifications. So they would need more, would have to truck it farther and would have to make the dam larger than originally planned.
Engineers also found another costly problem.
A porous geologic formation under the dam site proved to be an issue. It would require grouting — injection of cement underground — to seal off any potential leaks.
Another hiccup came when some neighbors questioned why they should provide easements for an undertaking they didn’t consider a benefit. To bring them on board, water developers may have to spend more than anticipated to upgrade a principal feeder canal, and even bury it in a pipeline.
Wyoming may also buy pivot irrigation systems for neighbors, a conservation expense that’s an exception to state policy.
Then there is inflation, supply-chain challenges and other unseen developments in a shifting economic environment.
And the expense of relocating a private airstrip.
A private airstrip
The dam and reservoir would make a private airstrip on Mercer’s ranch inoperable. So plans call for relocating it, along with “an existing metal building … used as an aircraft hangar.”
Water developers “will accommodate the proposed [replacement] airstrip in the Project design and construction, including performing rough grading for 1,200 feet of airstrip,” according to a legal agreement between the Mercer ranch and the Nowood district. The water district will also pay Mercer and the ranch $140,400 to build a replacement hangar and supply it with a water line.
The Wyoming Water Development Office looked at 41 sites before settling on the Mercer ranch. Developers believed that locating a new reservoir on the nearby Bighorn National Forest or even property managed by the Bureau of Land Management “is not something that would be successful,” Joyce told WyoFile.
Consultants compared the fees, delays and other aspects of dealing with federal agencies to buying Mercer property and easements, moving the airstrip and more, Joyce said.
“All that was put on paper,” he said. “It was just math at that point.”
Mercer added that the project “wound up landing here as far as being cost-effective.”
Gardiner is also upset because the Water Development Commission and the Nowood district paid for the Mercer property before they had all the necessary easements secured. Wyoming officials have said they would not condemn private property for the dam, only secure easements on a willing-seller basis.
But some landowners, Gardiner included, are holding out for assurances that will protect their property. Gardiner, for example, wants the reservoir flows moved away from his house, other design improvements and insurance against a potential flood.
Others want an enlarged Anita Ditch, which would feed the reservoir, buried in a pipe, a costly proposition. The Water Development Office would install pivot irrigation sprinklers to aid those who won’t directly benefit from reservoir flows.
The Mercer purchase was putting the cart before the horse and putting taxpayer funds at risk, Gardiner said. The proper course would have been to secure options — legal agreements for easements and land purchases that are contingent upon first securing all necessary project elements. Only then should money have been spent, he said.
Now, state funds are in danger of being stranded if the project collapses, Gardiner said.
He also accused the state of “poor financial management,” arguing that money that’s now sitting idle should instead have been accruing interest.
Over-adjudicated
A fifth-generation rancher, Mercer said the Nowood drainage has been “over-adjudicated” — that the state allocated rights to more water than was available. “We learned how to live being short of water,” he said.
“They always figured on a reservoir,” he said of area settlers. Instead, ranchers and farmers now watch spring runoff flow by, then scratch what they can out of Alkali, Paint Rock and Medicine Lodge creeks.
“As much water as goes by in the spring, you just dream of a chance like this,” Mercer said.
When first envisioned by a steering committee, a reservoir was estimated to cost as little as $15 million to $20 million, Joyce said. Now, legislators say a $100-million-plus price tag puts the acre-foot cost in the stratosphere.
It’s unfair to compare today’s dam projects with those in the heyday of water development decades ago, Water Development Office Director Jason Mead told water officials in November. Major on-channel dams that block rivers, “you just can’t build those anymore,” he said.
As a result, “you really don’t get the economy of scale … like you did back in the ’50s and earlier,” he said.
Also, storage projects now consider needs on a watershed scale, Mead said, which means addressing wildlife, irrigation efficiency, water quality, fisheries, recreation and other factors. The reservoir would always have at least a 132-acre pool for recreation.
The 6,000 acre-feet of stored water would be used as “supplemental irrigation” to ensure and boost crop yields, Joyce said.
“This area has very little rain — five to six inches [of] moisture all year,” he said. “Everything we grow is irrigated. When the snow melts, we’re done.”
That limits the types of crops that ranchers and farmers can grow. With more water, crops that are more valuable than livestock grass can be cultivated. “Corn, beets and alfalfa are more profitable,” Joyce said.
The dam fits with Wyoming’s overall plan to take earnings from the one-time extraction of resources like coal and invest them in renewable endeavors like water storage, ranching and farming, Joyce has said.
Heart of the ranch
For Mercer, the decision to sell part of his family ranch was wrenching. Homesteading family members in the late 1800s “sacrificed to own this piece of ground,” he said.
“It’s not easy to sell the heart of your operation,” he said. “Not everybody is excited in the Mercer family.”
The next generation of Mercers who are involved in the Paint Rock Ranch business gives him hope, he said.
“That sums up Wyoming,” he said. “Any kid you can keep in the state is a plus.”
The Twisted Tippet Ranch, my home, lies ½ mile downstream from the proposed Alkalai dam embankment. I find it appalling that the sponsors of this dam are asking me to put my property and life savings at risk for their personal financial benefit. This is unacceptable. Good people do not put their neighbors at risk for the sake of their own financial gain. Why should I be asked to put myself at risk of catastrophic dam failure for the benefit of so few? I am a proponent of storing water…. but the water storage should benefit more than a few people (33 irrigators) and those people should not expect their neighbors to put their property at risk for such a marginal public benefit.
• Before even a shovel of dirt has been moved, the designated engineers for Wyoming Water Development Office have already classified the proposed project as a “high hazard dam”.
o A “high hazard dam” is defined as a dam whose failure or mis-operation is likely to result in the loss of human life or impact property.
• Those same engineers also admit to seismic risk in our area.
Am I the only one concerned about the potential for dam failure? What happens in the event of a heavy run off, or an earthquake or a microburst? Do we not remember the damages from the microburst in Shell Wyoming just two summers ago? What about the flooding that devastated Yellowstone and Red Lodge, Montana in recent years? Do we learn nothing from history?
I personally witnessed the Teton Dam disaster. To refresh your memory:
The Teton Dam was built in the 1970’s in eastern Idaho on the Teton River.
It too was an earth fill dam.
It was designed by the US Govt Bureau of Reclamation… among the most competent engineers in the world.
The Dam site was subject to complex underlying geology, and the Bureau opted to seal these fissures in the rock by injecting cement under high pressure to create a “grout curtain” in the rock…. just like the proposed Alkalai Dam.
When the dam was under construction, the Bureau of Reclamation encountered a number of unexpected fissures in the underlying rock.
• This necessitated using twice as much grouting as originally budgeted…..this fact alone skewed the original construction budget resulting in massive cost overruns.
On June 5, 1976, while the dam was being filled to capacity, the dam breached causing:
Damages of over $2 billion
11 people dead
16 thousand Livestock killed
Thousands of homes destroyed.
80% of existing structures and businesses were damaged for a span of 20 miles downstream.
The land downstream was scoured. Tens of thousands of acres were stripped of fertile topsoil.
The force of the failure washed away riparian zones and damaged the native trout population.
The sediment dis-charge ravaged stream habitat for 90
miles downstream.
The Federal government paid out claims of $322 million.
The list of failed dam projects does not stop with the Teton Dam. In Wyoming alone, failing dam projects include:
• Fiddleback Ranch Dam
• Anchor Dam
• LaPrele Dam
• Middle Piney Reservoir
Considering Wyoming’s litany of dam failures, why should my property be put at risk of a catastrophic dam failure for the benefit of so few? Any economic returns from this project are illusory at best.
• When Wyoming sought but failed to get a federal grant to fund part of this development, the Bureau of Reclamation rejected the request “because of concerns with the economics” (Derrick Thompson, Tri Hydro)
• Initial estimated costs soared from $15 million to $113 million, an increase of nearly 753% attributed to an unexpected complex underlying geology and poor borrow material (and these numbers are only a guess because nobody knows the true cost of the cement “grouting” needed to shore up the underlying geology). Despite the unprecedented increase in construction costs, not one of the 33 irrigators who benefit from this project, have offered to fund any portion of the increased cost.
From day one, the irrigators agreed to pay $24 per acre foot for water storage…. a figure that has remained fixed despite the massive increase in construction costs (753%).
• If the impounded water is for the irrigators’ benefit, why won’t they step up to participate in the increased costs? Why are the taxpayers expended to fund the gap, particularly when the public expenditure benefits so few?
To quote John Joyce, president of the Nowood Water Improvement District (“NOWID”), the sponsor of the dam, “It is just math”. Well, John, it is time to dust off your calculator. Here is the math:
• At today’s construction estimates (which are highly questionable in light of the need for concrete grouting), the dam would impound water to be used by 33 irrigators at a taxpayer subsidy of $3,424,242 per irrigator.
• With 33 irrigators each contributing $24 to impound 1 acre foot of water, at full capacity (6,000 acre feet) the irrigators’ collective annual obligation to support the dam is $144,000 or 1.2 thousandths (.0012) of the cost of the dam!
The reality is that this whole project is predicated on what the irrigators “feel” they can afford to pay (without any regard to calculating a “return on capital”, market conditions or competitive bidding.) This is a case of the tail wagging the dog …
As Dave Haire commented, the Alkalai Dam is a perfect example of “ Typical ag welfare in the west…Paid for by all and only benefitting a few.” The math bears this out. The whole venture is an exercise in pork barrel politics. At a subsidy of $3,424,242 per irrigator, the dam makes no economic sense. Jeff Olsen presciently states that it’s “irrational to give 100 million dollars to 35 families, when Rawlins water supply, that supplies 8,000 people, needs rebuilding”.
On a stand-alone business basis, the dam is not an economically sound or viable business venture. The return on equity is negligible. At a time when Wyoming is looking to cut expenses, I am surprised that this venture is even in the public forum. The dam is emblematic of what average citizens hate about politics. Taxes should fund essential functions of government, and not make a handful of people rich. With a negligible return on investment, this project would never pass the capital allocation test in the private sector
Why should a dam be paid for by all, when it only benefits a few? Never once has this venture been based on an economically sound or viable business model. Simply put, this is a taxpayer subsidy masquerading as a “public works” project. Even the irrigator’s “equity” is being funded by the Wyoming taxpayer.
• 33 irrigation shareholders would be on the hook for $2.1 million or 3.6% of actual development costs, whichever is less. This $2.1 million “equity” (down payment) is in fact a loan to the irrigators from the Wyoming treasury…. or 100% financing… so to date the irrigators have limited, if any real “skin in the game”.
Nevertheless, the dam promoters are asking downstream property owners (who are not participating in the water storage) to put significant skin in the game by risking their properties and life savings to benefit 33 irrigators. (Remember… this is a “high risk” dam”. A dam failure won’t differentiate between the few shareholders and the remaining land owners.)
To address the putative flood risk, I approached the board of the Nowood Water Improvement District, the sponsors of the Alkalai Dam Project) to inquire whether NOWID was planning to provide downstream property owners with flood insurance. I specifically asked if the $24 assessment (per acre foot) included a line item to pay for the insurance. I explained that construction of a “high hazard dam” could unleash the law of unintended consequences. Not only did the prospect of a dam failure present property risks, it could compromise downstream property owners’ access to credit.
A “high hazard dam”, by definition, places downstream persons and property at risk of loss. The negative ramifications for those downstream, are that their properties be classified a “flood zone” once the dam was constructed. I explained the impact for those of us downstream, should we need to offer our property as collateral for a bank loan. (Posting collateral in flood zone …due to the presence of a “high hazard” dam…is not acceptable to most Banks without adequate flood insurance. This means that any downstream rancher, operating on a line of credit could lose access to financing without the appropriate insurance.) I was told that the Board had no intention of changing their $24 assessment. They also felt no obligation to provide flood insurance to protect downstream property owners. As an alternative, I then asked the Board, if the 33 “anointed” irrigators would put their property up as collateral for a bond issue to insure downstream neighbors against property damage;
• This seemed to me to be a fair solution…. If the irrigators expected to put my property at risk, why not ask them to offset my risk, in the event of loss or life or damage to my property as a result of their water storage?
• I also asked them if they would be willing to pay for the underwriting and issuance of a bond to assuage downstream landowners’ risks?
Despite my membership in NOWID (statutorily required due to the location of my home) I was brushed aside and accused of extortion. This caught me by surprise, because NOWID’s officers are elected representatives, who as fiduciaries, are obligated to represent the best interests of all members of the Improvement District (including me!). The hostile reception left me dumbfounded.
Having served on a number of Boards, I expect Board members to operate at the highest standard of care, insuring no conflicts of interest in performing their duties. Yet, the operation of the NOWID Board (as comprised today) are not consistent with the highest standards of business ethics. The optics of the Board’s actions are opaque at best. Where else in America do you find two board officers executing a multi-million dollar contract, whereby the Seller of goods and services under the contract (the “Contract”), is an officer of the Board, and the purchaser of those goods and services is another officer of the Board?
• Further clouding the breach of ethics is the fact that one officer, denied executing the “Contract” in a public forum, despite the fact that the Contract was signed, notarized and recorded at the County Recorder’s Office 3 years prior to the public meeting.
Considering the dollar amounts involved, the optics are horrible. In my opinion, any board member, who expects to enter into contract negotiations for personal gain…. with an organization which he is supposed to represent impartially, should resign from the Board due to the blatant conflict of interest.
The Nowood Watershed Improvement District needs to improve its governance and its transparency. Their opaque optics, and intolerance of opposing views have only served to increase our community’s animosity towards this project… If we want to unite this community and bring this story to a final chapter, the board needs to:
• Improve its transparency,
• Eliminate the prospect of hidden agendas;
• Address the project’s perils and pitfalls;
• Review the economics of this project, and determine whether or not this is the best use of Wyoming’s limited public treasury;
• And use our collective capital wisely, where it benefits the entire community, and not a chosen few…. This project portends a “high hazard” facility, and as such, its impacts on downstream land owners need to be addressed.
In a nutshell….should the state be prioritizing water subsidies over other crucial needs amid an ongoing budget crisis? The reality is … this project is of marginal benefit to the state as a whole as it benefits only a small handful of irrigators. It also puts a number of downstream property owners at unnecessary risk.
From my perspective, a taxpayer subsidy of $3,424,242 per irrigator is a misappropriation of the public purse. (A cost benefit analysis will never justify this expenditure.) $113 million is better spent repairing our state’s aging infrastructure and funding schools.
For the anointed “33” irrigators, please abide by the old adage…. “Put your money where your mouth is.” I find it unconscionable that you think the Wyoming taxpayer should pay 100% of such an ill advised project. As Arne Johnson commented, “At a time when Wyoming is looking for ways to cut expenses, this project has to come to the top of the list”.
“ Typical ag welfare in the west…Paid for by all and only benefitting a few.” It is time to sober up, and use our public resources wisely…. This proposed project needs to disappear.
Just another example of the Ag industry getting preferential treatment . The State of Wyoming legislature is over loaded with Agriculture people and they do things for there own industry that are not beneficial to the rest of the people in state. Its been this way for years, can think of other situations involving biased legislature with Ag projects. This expenditure will benefit a small group of local people who have been ranching for years raising cattle and other marketable crops with what they presently have. To me it makes 0 since to spend that kind of money on a small group of beneficiary folks for there monetary gain. Where do the rest of us taxpayers and voters fit in ? We dont ! What are the chances that at some point they all sell out to a ranching conglomerate like is happening all over the state Usually all public access is denied unless you pay a large trespass fee. In my opinion we are getting screwed again by our Ag legislature. These folks can pay for it themselves, or sell out for a bundle and new owners can pay for it, or apply for a federal grant ?? Wyoming tax payers should never have to fund any special interest projects state wide unless safety or the large public interest are a big part of the project ! Its we the people of Wonder Wyoming not we the Ag industry !
Agree 100%
Nice smokey backroom deal there, Mr. Mercer. $100,000 x 16 worth! Did you give Mr. Joyce a nice finders fee? 10% would be fair. Meanwhile, WTH, it looks like Mr. Mead and the Water Development people must of turned the other way. Not WTH, it should be WTF!?
3 million per ranch might seem like a lot of money for irrigation – only because it is. At a time when Wyoming is looking for ways to cut expenses, this project has to come to the top of the list.
Mr. Joyce wants to lecture us about math so, ok, let’s do some math. $100,000,000 dam that would serve 35 ranchers = $2,857,142.85 (add $1.6 million for Mercer and that’s $4,412,142.85), all off the backs of Wyoming taxpayers. I thought those cow folk were anti govt anti handout rugged individualism believers? The only thing missing on Mercer’s smiling face and mounted on his horse is a satchel full of taxpayers $$$. You’d have a shit eating grin too if the evil gubberment gave you a huge sum
100 Million dollars to subsidize 35 ranchers, so they can grow crops on land that was never meant for row crops . Quote “This area has very little rain — five to six inches [of] moisture all year,” he said. “Everything we grow is irrigated. When the snow melts, we’re done.”
That limits the types of crops that ranchers and farmers can grow. With more water, crops that are more valuable than livestock grass can be cultivated. “Corn, beets and alfalfa are more profitable,” Joyce said.”
Sure, lets let Wyoming spend a small fortune to supply these 35 ranchers enough money so that they can produce crops that are more profitable to them. We are in the year 2026, my question to these ranchers is how have you been able to survive all these years?
Renewable endeavors? There are no new sources of water on this planet, it’s high time people understand that.
One more comment, this project, on the surface smacks of poor planning, engineering and oversight. From 20 million to 100 million and it hasn’t even begun yet…….seriously…cost vs benefit. Oh well, it’s only money……and I’m told time and time again how fiscally responsible Wyoming Republicans are. LOL
Wow, the State wants to cancel the Wyoming Business Council yet allows a rancher to cut himself a check for $1.6 million of taxpayers money? Are you kidding me?
“Benefits 35 families that irrigate.”
The article points out the economic climate has changed, and what could be done with dams in the 1950s and before can’t be done now. The world has changed.
What’s absurd is the sense of entitlement these irrigators have – “we’ve been here five generations depending on the public maintenance of our water supply and this means the state owes us continued support of our businesses.” What about living on a piece of property for five generations means a family deserves millions in economic support when a family who moved here to start a small business doesn’t? Which helps Wyoming develop a viable economic climate and marketplace?
Without every taxpayer putting out hard earned money out of their pockets, these businesses would go up in smoke. They are feeding at the public trough.
Doesn’t it seem irrational to give 100 million dollars to 35 families when Rawlins water supply that supplies 8000 people needs rebuilding and there are countless similar projects in small towns that need financial help.
Granted Wyoming will leverage federal funds for 98% of the work, but how does that support Wyoming’s disdain for federal purse strings and controls that come with them. No to Medicaid – a couple thousand of our family members suffer directly – yes to dams.
Seems irrational to me…
The Mercer’s didn’t sell any land, they sold easements and still own the land. With $1,600,000 spent by the State, are these easement parcels accessible by the public? I bet not. Win, lose or draw, The Mercer’s are $1.6 Mil richer and still have access and use of these lands
So they are going to have to grout the underlying strata. Will that work? They won’t know until the dam is completed. Not exactly the same issue but Anchor dam anyone?
That lingering thought (Anchor Dam), after I read the article!
so…if the dam is built, Mercer sits on the $1.6 million? If it isn’t built, Mercer still pockets the $1.6 million? Optics aren’t bad, they’re horrible! The State allowed a good ole’ boys committee to do this? Another thought – shouldn’t that land under the $1.6 million easement be deemed public accessible? Worst case scenario Mercer is that he’s $1.6 million richer, however this turns out. To Tim Gardiner’s point, the creek, Paint Rock Creek that runs through his property downstream of dam site would become a irrigation ditch vs a natural freestone stream. The State needs to look hard at what’s gone on with this massive money exchange
Healthcare? Nah
Roads? Nah
University to educate our children? Nah
Schools? Nah
100+ million for a reservoir for 35 people? Sure
Why not let them pay for it themselves? Or are all of these irrigators socialists?
These are boondoggle projects that ALWAYS have huge cost overruns. They only enrich a very few welfare farmers and ranchers. It sounds like this dam is almost guaranteed to leak. Just say no.
Is this a story of the cattle barron’s still being alive and thriving?
Very informative but not everyone knows where this is at. What county? How close to a town?? Who else is affected? More than 35 families? Is recreation and tourism planning discussion being given to the experts in the area??
Corn? Does a real farmer have to explain why we already don’t look like Iowa?
The citizens of Wyoming need to avoid the political movement, if they are for the Dam then the tax payers will pay the price. The citizens need to read the History of the Teton Dam Disaster, that is an example of Any Government involvement. Don’t let them move a shovel of Dirt, it reeks of Fraudulent agendas.