Ga. Comp. R. & Regs. R. 391-3-28-.07 - Irrigated Acreage Reduction Auction

(a) Upon determination of 391-3-28-.06 above, the Division may conduct an irrigation reduction auction whereby a withdrawal permit holder with an irrigation system located within the affected areas is given an opportunity to enter into an irrigation agreement with the Division. The nature of the agreement is that in exchange for a certain sum of money per acre of irrigated land serviced by the irrigation system, the Permittee will not irrigate those particular acres for the remainder of that calendar year. The Authority shall pay the sum so agreed upon when so directed by the Director from the unexpended balance of the drought protection funds.

(1) Participation in the irrigated acreage reduction auction shall be open to all eligible agricultural permit holders or their representatives, defined in 391-3-28-.05 above.

(2) The Director shall determine the amount of acreage which should be removed from irrigation that particular announced severe drought and auction year.

(3) The money offered from the drought protection fund shall be for a permit holder's suspension of irrigation, from the particular irrigation system and associated particular agricultural withdrawal permit, for the duration of the announced severe drought and auction year. Acceptance by the Division of an offer to sell shall only relate to that acreage in that severe drought and auction calendar year and shall not impact the ability of the permit holder to continue to farm this acreage without irrigation during that year.

(4) The Director, at the outset of the auction process, may determine a maximum offer to sell price per acre level acceptable to the Division for payment from the drought protection fund. Even if insufficient acreage is offered up once that maximum offer to sell price level is reached, no further increases in offers to sell can be accepted. To assure an efficient auction, this maximum dollar figure does not need to be announced prior to the auction itself.

(b) Since the ultimate purpose of the auction is to protect flows in the Flint River, strong consideration shall be given by the Division to the different and recognizable impacts caused by the type of withdrawal and the water source for the various Permittees.

(c) Auction Process;

The Director shall determine the auction process by which irrigation offers to sell and the associated irrigation acreage amounts are tendered to the Division and then selected by the Division. This may be a process by which:

(1) An interactive, computerized offer to sell, bid-improvement process shall be established with an actual auction to be held.

(2) Other auction methodologies acceptable to the Director.

(d) If the auction selection is defined Rule 391-3-28-.07(c)(1) above, then the eligible permittees, holders of an auction certificate, shall be able to submit offers to sell through telecommunications equipment set up by the Division or its agents in multiple locations throughout the Flint River basin. This system shall allow the eligible permittee or their designated representative to make any number of modifications to their offers to sell throughout the select day of the auction. A "bid-improvement" auction format shall be established wherein:

(1) Auction offers to sell must apply for all acreage served by a permit-specific auction certificate. For example, consider a farmer with two certificates related to two specific water use permits. Suppose each certificate provides for the irrigation of the following certified number of acres: certificate A for 1,000 acres; certificate B for 1,100 acres. If the farmer wishes to offer to remove from irrigation lands permitted under one or both of these certificates, the farmer must submit offer prices for each individual auction certificate A and B. If offers are submitted for both certificates, the offer price for one certificate can be the same or different from the offer price rendered for a different certificate. However, the farmer cannot offer to retire 500 acres from certificate A and 250 acres from certificate B unless the smaller acreages are irrigated by the same fixed irrigation system that irrigates the remaining acres. Offer prices apply to all acreage intended for irrigation suspension and served by the certificate for which the offer is made. Once the auction process has begun, the number of acres offered by the permittee for irrigation suspension cannot change.

(2) Irrigation reduction prices offered by permittees for their auction offers shall be on a price per acre basis; in other words, a price offered by a permittee is the price per acre required for removing from irrigation all acreage for a specific certificate, or a portion of certificate acreage irrigated by a fixed irrigation system, during the balance of the calendar year. If the permittee's offer is accepted by the Division, the permittee will receive this offered price-per-acre times the certified number of acres the permitee has agreed to not irrigate.

(3) An "auction day" will be announced by the Director. On the auction day interested auction certificate holders or their representatives may go to the designated facilities for the auction. The auction process may last several hours.

(4) At the same designated time in all the auction facilities an initial auction "round" is opened. Previously determined auction certificate holders, permittees or their representatives will have some set amount of time to submit their price per acre offers on forms provided by the Division. These offers will be entered into a telecommunications system, which will allow all offers to be gathered from the separate auction facilities, and then ordered by bid offer price from low to high. These offers will be made available to the Director. The Director will use these offers to identify potential "candidate sellers". Candidate sellers are auction certificate holders whose offer prices have been provisionally accepted.

(5) The Auction Certificate numbers for all candidate sellers will be announced at all auction facilities, and a second "round" of the auction may then be opened. Any auction certificate holder or their representative who wishes to revise their initial offer price for any certificate has some time announced by the Division from the opening of this second auction round to do so. If a certificate holder or their representative does not wish to revise their first-round offer, no additional action is required on their part. The first-round offer is maintained for the second and all subsequent rounds, until the offer is revoked or modified by the certificate holder or their representative.

(6) At the close of round 2, the Director again identifies "candidate sellers" in the manner described above. The new set of potential "candidate sellers" is announced. Because of potential bid modifications, the candidate sellers at the end of the first round may or may not be included in the set of candidate sellers chosen at the end of the second round on the basis or lowest revised offer prices. A new round, may then be announced and auction certificate holders or their representatives may again have the opportunity to revise offer prices for any certificate during the following time period.

(7) This iterative auction process continues until:

(i) no certificate holder or their representative revises an offer price, in which case the auction closes and the latest set of candidate sellers become the final sellers, and will receive their offer price per acre for accepted auction certificates; or

(ii) the Director chooses to end the auction, in which case the latest set of candidate sellers automatically become final sellers, and will receive their offer price per acre for accepted auction certificates.

(e) Based on considerations related to the available drought protection funds and desired levels of acreage reduction, the Director will determine the number of certificates whose offer price will be accepted, beginning with the lowest ordered offer price and continuing then to each higher offer price. The Division shall tabulate the offers received by price per acre and the cumulative suspension of irrigation acreage amounts tendered to the Division. When this cumulative acreage equals the targeted amount of acreage reduction (RA) established by the Division, the auction process is complete. If money is available from the drought protection fund, all offers below this determined offer to sell amount shall be accepted, and all offers above this offer to sell amount shall be rejected. If there is more than one offer at that particular select offer to sell price, the offers to sell at that price shall be prioritized for acceptance based on the acreage amount from greatest to smallest. To maximize the acreage suspended from irrigation, acceptable selections shall start at the greatest amount of acreage offered at that offer to sell price and proceed to lesser amounts until the required actual acreage amount is reached. In case of ties at any determining offer to sell price and acreage amount, acceptable selections shall be chosen at random until the cumulative amount of suspended acreage is reached or no further offers are available.

(f) If insufficient acreage amounts are offered during the auction to meet the required acreage reduction total set in above, the Director may then implement the measures for Non-voluntary Irrigation Acreage Reductions below.

(g) Regardless of the auction process used, the Division shall complete the entire auction process for voluntarily determining the acreage required to suspend irrigation prior to March 22 of any announced severe drought and auction year.

Notes

Ga. Comp. R. & Regs. R. 391-3-28-.07

O.C.G.A. § 12-5-540 et seq.

Original Rule entitled "Irrigated Acreage Determination" adopted. F. Jan. 20, 2006; eff. Feb. 9, 2006. Repealed: New Rule entitled "Irrigated Acreage Reduction Auction" adopted. F. June 23, 2006; eff. July 13, 2006. Amended: F. May 18, 2015; eff. April 3, 2015, as specified by the Agency.