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<p class=MsoNormal><b><span style='font-family:"Tahoma","sans-serif"'>Something's
not right about this California water deal<o:p></o:p></span></b></p>
<p class=MsoNormal><b><span style='font-family:"Tahoma","sans-serif"'>L.A.
Times-8/18/10<o:p></o:p></span></b></p>
<p class=MsoNormal><b><span style='font-family:"Tahoma","sans-serif"'>By
Michael Hiltzik <o:p></o:p></span></b></p>
<p class=MsoNormal><b><span style='font-family:"Tahoma","sans-serif"'>Commentary<o:p></o:p></span></b></p>
<p class=MsoNormal><span style='font-family:"Times New Roman","serif"'><o:p> </o:p></span></p>
<p class=MsoNormal>Students of California's history of gold and oil rushes know
it's filled with examples of profiteering, conspiracy, influence-peddling and
other chicanery.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>So there's no reason the story should be any different with
that liquid gold of the 21st century, water.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>That's the theme of a lawsuit filed a few weeks ago alleging
there's something smelly about how a group of private interests — notably
a huge agribusiness owned by the wealthy Southern California couple Stewart and
Lynda Resnick — got control of an underground water storage project the
state had already spent $75 million to develop.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>The lawsuit was filed by a group of water agencies and
environmental groups contending that the transaction was essentially a gift of
public property to private interests and therefore violates the state
constitution.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>They're asking a judge to reverse the deal. That way, they
contend, the storage facility can be integrated into the state's water
management plan, so a precious and dwindling natural resource can serve
everyone in the state, not just a few powerful farm companies and real estate
developers.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>"By giving this resource away, not only have we lost
money on the deal, but we've lost a mechanism to use this water for the most
beneficial purposes," Adam Keats of the Tucson-based Center for Biological
Diversity, the lead attorney on the lawsuit, told me recently.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>The storage facility is the Kern Water Bank, a complex of
wells, pumps and pipelines on a 20,000-acre parcel of abandoned farmland
southwest of Bakersfield. The water bank was initially part of the
$1.75-billion bond-funded State Water Project, which provides water for 25
million Californians and irrigates 750,000 acres.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>For reasons that still seem murky, in 1995 the state gave up
on the bank and turned it over to Kern County water authorities. They promptly
ceded it to a local consortium of public and private entities, the largest of
which was Westside Mutual Water Co.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>The lawsuit observes that Westside is a subsidiary of the
Resnick-owned Paramount Farms, the largest grower and processor of pistachios
and almonds in the world.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Paramount and the other users pay for the water put into the
bank, but the storage capacity assures a steady irrigation supply even in dry
years. Paramount acknowledges that without the water bank, it probably wouldn't
have planted the nut trees, which can't survive without regular watering.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>The second-biggest player in the water bank is Tejon Ranch
Co., which is planning a 26,000-acre resort community in the nearby Tehachapi
Mountains.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>What did the state get for the bank in 1995? The buyers gave
up the right to 45,000 acre-feet of water annually from the State Water
Project, an entitlement some value at $30 million.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>But the lawsuit says that in real terms, the state got
almost nothing. The water, it contends, was "paper water," a phantom
allocation from a portion of the State Water Project that will never be built
and therefore has no value.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>In fact, the lawsuit says, because the annual fees paid to
the State Water Project by the bank's owners had been partially based on the
allocation, they actually saved money by giving up the rights. (One acre-foot
of water is about 326,000 gallons, or a year's supply for two families of
four.)<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Officers of the Kern Water Bank say the lawsuit is simply a
case of sour grapes, and note that the new owners have invested more than $30
million to turn the state's pipe dream into reality.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>"This wasn't perceived to be a gift at the time,"
says William D. Phillimore, chairman of the Kern Water Bank Authority, chairman
of Westside Mutual Water Co., and executive vice president of Paramount Farms.
"It was considered a fairly risky proposition."<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Westside and the other new owners overcame bureaucratic
roadblocks that had flummoxed the state, he says. They completed the design,
installed all the necessary equipment and maintain the facility today.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>"This is something that people paid for 15 years ago,
and because of the money they've invested it's perceived at the moment to be a
relative success. I don't think any of the participants would look kindly at
someone saying it should not have happened."<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Now we come to the direct beneficiaries of the deal. The
owner of Paramount and the Westside water company is Roll International Corp.,
one of America's largest private companies. It's owed by the multimillionaire
Resnicks.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>You may know Roll better as the former owner of the
collectibles firm Franklin Mint and as the purveyor today of Fiji Water. That's
the paragon of conspicuous consumption marketed on the theme that it's socially
responsible to import your bottled drinking water from an idyllic Pacific
island where only about half the population has access to protected water
sources, and where the government is a military junta whose disdain for civil
liberties wouldn't raise eyebrows at a conference of Mideast oil sheikdoms. The
Resnicks hang with green activists such as Barbra Streisand and Laurie David,
so no one examines their marketing too closely.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Roll International hasn't played an entirely positive role
on water issues in the Central Valley. Back in September, Stewart Resnick
insinuated himself into the question of whether the severe drought in the
region should be blamed on environmental restrictions designed to help revive
fisheries and river habitats.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>This fatuous fish-vs.-people controversy had been ginned up
with the help of experts like TV commentator Sean Hannity and Rep. Tom
McClintock (R- Thousand Oaks), whose goal was to pin the drought not on Mother
Nature but on the "environmental left."<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>In a letter to Sen. Dianne Feinstein (D-Calif.), Resnick
accused federal agencies of "sloppy science" in imposing those
restrictions. He demanded a new scientific study.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Feinstein, possibly aware that Resnick and his wife had made
political donations of nearly $500,000 over the previous four years, mostly to
Democrats, calculated how high she needed to jump. She pushed the government to
fund a study by the National Academy of Sciences, which as it turned out
reported in March that the restrictions were, indeed, "scientifically
justified."<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Phillimore, the Paramount executive, says that "the
water bank enabled us to plant permanent crops," because Paramount knew it
could water its trees even in droughts. That sounds like an acknowledgement
that the water bank has encouraged business decisions that wouldn't otherwise
be smart for a semiarid region.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>As water becomes even more precious, it will soon be obvious
that such usage isn't smart under any circumstances.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>If one is forced to choose between devoting water to
sustaining nut trees permanently in a near-desert, or finding the most
efficient use for it among all possible options, what would be the right way to
go — that is, if the choice weren't already made via an ill-considered
decision now 15 years old?#<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal><i>Michael Hiltzik's column appears Sundays and Wednesdays. <o:p></o:p></i></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal><a
href="http://www.latimes.com/business/la-fi-hiltzik-20100818-1,0,381499.column">http://www.latimes.com/business/la-fi-hiltzik-20100818-1,0,381499.column</a><o:p></o:p></p>
<p class=MsoNormal><b><span style='font-size:12.0pt;font-family:"Times New Roman","serif"'><o:p> </o:p></span></b></p>
<p class=MsoNormal><b><span style='font-size:12.0pt;font-family:"Times New Roman","serif"'><o:p> </o:p></span></b></p>
<p class=MsoNormal><i><span style='font-size:12.0pt;color:gray'>Byron
Leydecker, JcT</span></i><span style='font-size:12.0pt;font-family:"Times New Roman","serif"'><o:p></o:p></span></p>
<p class=MsoNormal><i><span style='font-size:12.0pt;color:gray'>Chair, Friends
of Trinity River</span></i><span style='font-size:12.0pt;font-family:"Times New Roman","serif"'><o:p></o:p></span></p>
<p class=MsoNormal><i><span style='font-size:12.0pt;color:gray'>PO Box 2327</span></i><span
style='font-size:12.0pt;font-family:"Times New Roman","serif"'><o:p></o:p></span></p>
<p class=MsoNormal><i><span style='font-size:12.0pt;color:gray'>Mill Valley, CA
94942-2327</span></i><span style='font-size:12.0pt;font-family:"Times New Roman","serif"'><o:p></o:p></span></p>
<p class=MsoNormal><i><span style='font-size:12.0pt;color:gray'>415 383 4810
land/fax</span></i><span style='font-size:12.0pt;font-family:"Times New Roman","serif"'><o:p></o:p></span></p>
<p class=MsoNormal><i><span style='font-size:12.0pt;color:gray'>415 519 4810
mobile</span></i><span style='font-size:12.0pt;font-family:"Times New Roman","serif"'><o:p></o:p></span></p>
<p class=MsoNormal><a href="mailto:bwl3@comcast.net"><b><i><span
style='font-size:12.0pt;color:blue'>bwl3@comcast.net</span></i></b></a><b><span
style='font-size:12.0pt;font-family:"Times New Roman","serif"'><o:p></o:p></span></b></p>
<p class=MsoNormal><a href="mailto:bleydecker@stanfordalumni.org"><b><i><span
style='font-size:12.0pt;color:blue'>bleydecker@stanfordalumni.org</span></i></b></a><b><i><span
style='font-size:12.0pt;color:gray'> </span></i></b><i><span style='font-size:
12.0pt;color:gray'>(secondary)</span></i><b><span style='font-size:12.0pt;
font-family:"Times New Roman","serif"'><o:p></o:p></span></b></p>
<p class=MsoNormal><a href="http://fotr.org/"><b><i><span style='font-size:
12.0pt;color:blue'>http://www.fotr.org</span></i></b></a><b><i><span
style='font-size:12.0pt;color:gray'> </span></i></b><b><span style='font-size:
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