[Fwd: THE AGRIBUSINESS EXAMINER # 386]

[michael perelman <michael@xxxxxxxxxxxxxxxxx>]

*
This is long but the collection of articles will give you an idea of the 
extraordinary political economy and commodification of California water.

THE*
*AGRIBUSINESS*
*EXAMINER*
December 29, 2004, Issue #386
/Monitoring Corporate Agribusiness/
/From a Public Interest Perspective/

*EDITOR\PUBLISHER*; A.V. Krebs
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*SCHWARZENEGGER SEEKS*
*TO TURN OVER PART OF*
*CALIFORNIA STATE WATER*
*PROJECT TO WATER WHOLESALERS*

*DARYL KELLEY, LOS ANGELES TIMES*: Environmental groups are rallying 
against a plan to cede some operations of the massive State Water 
Project to local water wholesalers as part of a broad restructuring of 
state government being considered by Gov. Arnold Schwarzenegger.

The governor is expected to signal next month his support, or rejection, 
of many of the 1,200 recommendations in a proposed top-to-bottom 
overhaul of the California bureaucracy.

The Environmental Water Caucus, a coalition of 20 environmental groups, 
has opposed a recommendation buried deep within the California 
Performance Review that officials allow water contractors to run part of 
the vast state aqueduct and reservoir system and to buy and sell water 
and water rights.

Environmental groups say some of those water agencies, including the 
giant Metropolitan Water District of Southern California, are dominated 
by development or farming interests and cannot be trusted to protect the 
environment.

"Environmental groups from throughout California oppose turning the 
State Water Project over to special interests, because it would take the 
public's water and put it in the hands of a few districts to serve urban 
sprawl and polluting corporate agribusiness," said David Nesmith, 
spokesman for the water caucus.

But water contractors said environmental groups are overreacting to 
plans for strictly operational changes in the nation's largest state 
water system. Key policy decisions on when water would be released from 
Northern California storage facilities and pumped south through the 
California Aqueduct would still be made by state officials, they said.

"We're pretty sensitive to everybody's concerns," said Terry Erlewine, 
general manager of State Water Contractors, 29 water agencies that 
helped finance construction of the water project in the 1960s and '70s, 
and that pay its operational costs and receive its water. "Environmental 
factors are regulated already [by law] and by fishery agencies through 
the Endangered Species Act."

Contractors support changes in operating the State Water Project because 
they believe they can run aqueducts and reservoirs more efficiently and 
maintain them better, while saving money when buying huge amounts of 
electricity needed to move water. Overall, the project costs the water 
contractors $800 million a year to operate, money that comes from 
customer fees and local property taxes.

"We're spending $200 million a year on just regular operations and 
maintenance costs," Erlewine said. "And if we're going to be paying all 
these costs, we should have a say in how to operate efficiently."

Tim Quinn, an MWD vice president, said his agency is interested only in 
efficiency.
"We're not looking to devastate the environment; we're looking for 
opportunities to bring down project costs," Quinn said.

The MWD, which receives half the project's water and serves 18 million 
Southern Californians, has not yet endorsed the performance review's 
recommendations, he said.

The plan recommends that Schwarzenegger issue an executive order 
restructuring administration of the State Water Project, which runs 
nearly the length of California, serves 23 million people, irrigates 
750,000 acres of farmland and supplies wildlife refuges and recreational 
facilities. In Southern California, the Pyramid, Castaic, Silverwood and 
Perris reservoirs are part of the system.

It recommends that a joint powers authority of the water contractors 
help resolve bureaucratic problems related to a state hiring freeze, 
budget cuts and power purchases.

"Potential activities could include providing contractual services, 
operating and maintaining portions of the project facilities, and 
acquiring water and water rights," the performance review said.

State hiring freezes have left vacancies at critical water facilities 
and led to more than 40,000 hours of employee overtime, the report said. 
In addition, the state cannot pay workers enough under its Civil Service 
system to hire highly skilled consultants to purchase electricity and 
schedule its use and to coordinate water deliveries, the plan said.

The water project, which uses more electricity than any other customer 
in California, could save $10 million to $50 million a year if 
contractors' consultants purchase power, the report said. By comparison, 
the project spent $570 million for electricity in 2001.

The plan noted that contracting agencies already run some parts of the 
State Water Project, the Coastal Aqueduct and an aqueduct extension in 
the San Bernardino Valley. In addition, since 1995, the federal Central 
Valley Project has successfully allowed three water contractors to 
operate canals, according to the performance review.

Environmentalists acknowledge bureaucratic problems with state 
operations. And independent analysts say the state freeze on hiring 
project workers is illogical because workforce costs are underwritten by 
the water contractors, not the state general fund.

But environmental groups say they cannot trust the water contractors 
with more responsibility, because they've cut questionable closed-door 
deals with state officials on the transfer of water rights and increased 
pumping of the Sacramento-San Joaquin Delta while excluding 
environmentalists and the general public from those meetings.

"State oversight of the project should be strengthened, not weakened," 
said John Gibler of Public Citizen, a Washington-based nonprofit 
organization founded by Ralph Nader. The State Water Project "should not 
be pitched over to agencies dominated by the state's largest 
agribusinesses and developers."

Gibler said one self-serving deal cut by water agencies was the transfer 
of control of the Kern Water Bank from the state to five Kern County 
water agencies and a Los Angeles businessman in the 1990s after the 
state spent $74 million on the project.
The Kern Water Bank --- which was intended to help balance the state's 
water supply to cities, farms and fish in times of drought — has instead 
allowed a large farming company to double its acres of nuts and fruits 
since 1994, he said.

The water bank's operators have argued, however, that the underground 
reservoir was an inoperable "white elephant" until the water agencies 
spent millions of dollars to improve its plumbing.

They say it now provides water reserves to a variety of users, including 
residents of Bakersfield.

Jonas Minton, an analyst for the Planning and Conservation League in 
Sacramento, said he is concerned that if water contractors begin to 
purchase energy, they could use that authority to direct when water is 
released from Northern California reservoirs and pumped south, draining 
water from the ecosystems of northern rivers and the delta.

"These decisions should be made" by the state, Minton said. "It has a 
broader responsibility to protect the public trust."

Erlewine said the environmental groups are trying to confuse the issue. 
The results of contractors' private, but legal, meetings with state 
water bureaucrats in Monterey in 1994 and in Napa last year were made 
public in accordance with state law, he said. Contractors agree that 
management of facilities that affect the delta should remain under state 
control, he said.

"What we're saying is that it makes sense for the State Water Project to 
operate like most other utilities operate," he said. "The state 
bureaucracy is not set up for managing a utility. They're having a hard 
time. And there's a lot of taxpayers' and water users' money at stake." 
[ December 26, 2004 ]

*BUSH TO PAY CALIFORNIA*
*CENTRAL VALLEY FARMERS $16.7*
*MILLION FOR CUT WATER DELIVERIES*
*TO PROTECT ENDANGERED FISH*

*BETTINA BOXALL, LOS ANGELES TIMES*: The Bush administration announced 
Tuesday that it has agreed to pay $16.7 million to a group of Central 
Valley farmers and irrigation districts whose water deliveries were cut 
to protect endangered fish.
State officials had strongly urged the administration not to settle the 
farmers' claims, arguing that such a precedent could make it 
prohibitively expensive to protect endangered species.

But the payment was immediately hailed as a significant victory by 
property rights advocates and critics of the Endangered Species Act.

"This is a very strong precedent," said Brian Kennedy, a spokesman for 
the House Resources Committee, which is headed by one of the act's most 
vocal detractors, Richard W. Pombo (Rep.-Tracy). "This should really 
fire a shot across the bow of federal regulators, reminding them that 
their actions have consequences and their actions cost money.

The U.S. Department of Justice settled the case despite widespread 
warnings that it would lead to a flood of similar claims. The California 
attorney general's office, the Schwarzenegger administration and 
attorneys for the National Oceanic and Atmospheric Administration all 
wrote the Justice Department in the last year, asking the Bush 
administration to appeal a U.S. Court of Claims ruling in favor of the 
farmers.

Justice officials had little comment on their decision not to heed those 
recommendations. "This settlement is the result of careful and 
deliberate negotiations between the parties," said department spokesman 
Blain Rethmeier.

The Claims Court ruling came in a lawsuit filed by Roger Marzulla, a 
former Justice Department official in the Reagan administration who is 
pursuing similar claims in three other cases. Although the settlement 
contains language stating that it establishes no legal precedent, 
Marzulla said the case "establishes the fundamental principal that the 
government is free to protect the fish; it simply has to pay for the 
water it takes to do so.

"The federal government," he added, "has recognized it can't come on 
like a bull in a china shop and seize all the water it wishes without 
paying for it."

Calling the ruling "ill-conceived and poorly reasoned," state Chief 
Deputy Atty. Gen. Richard Frank said the Bush administration's decision 
to settle the case was disappointing. "I'm not going to say it will 
produce a sea change in federal law and policy, but it will generate 
additional claims and controversy."

In a statement, Sen. Dianne Feinstein (Dem.-California) said the 
settlement was a "mistake that will establish a precedent that could 
require the public to pay tens of millions of dollars to water users in 
many cases where even a small portion of their anticipated deliveries 
are needed to protect endangered salmon or other fish."

The case grew out of a drought in the early 1990s, when the State Water 
Project reduced deliveries to irrigation contractors to aid two fish 
species protected by the federal Endangered Species Act, the delta smelt 
and the Chinook salmon.

Marzulla, a leader in the property rights movement, argued that the 
farmers had a property right to the water and that when federal 
environmental protections forced a reduction in deliveries, that 
amounted to a taking under the U.S. Constitution. U.S. Claims Court 
Judge John Paul Wiese agreed, awarding the plaintiffs $14 million, plus 
attorneys fees and interest. Attorneys in the case expected that to 
total $26 million.

The settlement leaves it up to plaintiffs and attorneys to decide how to 
divvy up the $16.7 million. The plaintiffs include the Kern County Water 
Agency, several farm operations and the Tulare Lake Basin Water Storage 
District, which serves mega-farmer J.G. Boswell.

Sue Ellen Wooldridge, solicitor for the U.S. Interior Department, which 
oversees the Endangered Species Act, said she didn't think the case 
would have a broad effect because federal water contracts have shortage 
provisions that effectively insulate them from takings claims.

"I think the ramifications are limited," she said. "The federal 
contracts contain the shortage provisions which the courts have 
interpreted as allowing [the U.S. Bureau of Reclamation] to protect the 
species without causing a taking."

In urging an appeal of Wiese's decision, state officials said it 
undermined state law by finding that the end user of the water, the 
irrigation districts, held a property right to the water. Under 
California law, they said, the Department of Water Resources holds the 
rights to the water it diverts for farm and municipal use.

Environmentalists condemned the settlement, saying it amounted to an 
invitation for more claims.

"By settling rather than fighting this case, the Bush administration is 
simply encouraging more of these legal attacks against our water quality 
laws and other public safeguards," said Hal Candee, senior attorney for 
the Natural Resources Defense Council. "That hurts the taxpayers as well 
as the environment."

Marzulla has filed similar takings claims for $1 billion in the Klamath 
Basin, where fish protections forced irrigation cutbacks on the 
Oregon-California border, and for the city of Stockton and irrigators 
who lost deliveries from the New Melones Dam in the Central Valley. He 
said he is preparing another case in Ventura County.
"I think it is helpful to have this case resolved so we can pursue 
resolution of the other cases," Marzulla said.

Interior Secretary Gale Norton previously served as a legal advisor to a 
property rights group founded by Marzulla's wife, Nancie. But Marzulla 
said Norton recused herself from the Tulare case and played no role in 
it. "She has had nothing to do with the prosecution of the Tulare case," 
he said. [ December 22, 2004 ]

*RENEWAL OF CALIFORNIA CVP*
*WATER CONTRACTS CENTER OF*
*DEBATE ON HOW MUCH STATE*
*WATER SHOULD BE USED FOR CROPS*

*DEAN E. MURPHY, NEW YORK TIMES*: The time has come for thousands of 
farmers in California to renew their water contracts with the federally 
run Central Valley Project, the country's largest irrigation system and 
for many years a major source of friction between the state's powerful 
agricultural and environmental interests.

The farms served by the Central Valley Project cover nearly 4,700 square 
miles and get about 20% of California's water supply. That has made the 
new contracts, some for 25 years and some for 40 years with options to 
renew, the center of a debate over how much water in the state should be 
dedicated to growing crops and at what price.

When construction of the Central Water Project began in 1937, the idea 
was to protect the state's farmland from water shortages and floods and 
provide cheap water for family farmers. But as the state has grown in 
population, there has been a growing push by cities and 
environmentalists to break the farmers' grip on the water, or at least 
make them pay more for it.

A report to be released on Wednesday by the Environmental Working Group, 
an advocacy group that has tracked federal subsidies in agriculture, 
estimates that the subsidies in the Central Valley Project are worth up 
to $416 million a year at market rates for replacing the water. The 
calculation, based on data collected by the group over 16 months, shows 
that the median subsidy for a Central Valley farmer in 2002 was $7,076 a 
year and for the largest ten percent of the farms, the average subsidy 
was worth up to $349,000 a year.

Five years ago, the United States Bureau of Reclamation, which runs the 
Central Valley Project, began negotiations on 223 water-supply contracts 
with individual farmers and big irrigation districts, serving farmers 
from Redding to Bakersfield. Those negotiations are expected to be 
wrapped up early next year, and many critics of the bureau, including 
the Environmental Working Group, are not happy that they will apparently 
continue supplies of federally subsidized water for farms.

"Reforms to make details of water subsidies public, limit the amount and 
value of water subsidies to large farms and encourage conservation by 
pricing water at rates closer to market value are needed to end the 
disaster for taxpayers and the environment wrought by the Central Valley 
Project," the Environmental Working Group report states.

Many farmers reject that analysis, including the president of Woolf 
Enterprises, a family-owned farming business based in Huron, near 
Fresno, which was identified by the group as the recipient of $4.2 
million in subsidies. Woolf Enterprises grows almonds, cotton, tomatoes 
and other crops on about 20,000 acres in the area served by Central 
Valley Project.

The president, Stuart Woolf, said the land was a collection of farms 
owned by members of his family, each 960 acres, the maximum allowed 
under federal rules. Mr. Woolf said the family business had survived by 
adding more acreage and by introducing savings through economies of 
scale - including large savings on its water use.

Though he had not seen the Environmental Working Group's full 
calculations, he scoffed at the suggestion that his farm had received 
such a huge benefit, saying, "The numbers just don't add up."

"They would indicate the purpose of the Central Valley Project is to 
have small family farms," Mr. Woolf said. "I would contend the small 
family farm won't be able to survive in today's ag environment. A small 
family farm can't make the investments that are needed."

Representative George Miller, a California Democrat who has long been at 
odds with the state's agricultural interests over water, has accused the 
Bureau of Reclamation of "rushing to put these contracts in place" at a 
time when the reliability of the state's water supplies is in question. 
Mr. Miller said the contracts would amount to a huge windfall for some 
farmers, who under a law he helped write in the early 1990's would be 
entitled to sell the water to urban water districts at marked-up prices.

"What these guys are doing is freezing in time the massive subsidies 
that go to the largest and wealthiest farmers in the state, and who are 
then going to sell it back to the taxpayers," he said in a phone 
interview from Washington. "It is a great gig if you can get it."

Officials with the Department of Interior, which oversees the 
reclamation bureau, defend the new contracts as keeping with the 
bureau's mission since 1902 of encouraging agricultural development in 
the West. Though the costs of water supplies will remain below market 
value, the new rates will be high enough, the officials say, to recover 
the costs of building the Central Valley Project by 2030. Diversions for 
environmental purposes will continue.

"This is a big and important effort by the bureau to have contracts in 
place and ensure orderly operations for the project," said Jason 
Peltier, a deputy assistant secretary for water and science. As for the 
bureau's critics, Mr. Peltier said, "I suppose we will have to agree to 
disagree." [ December 15, 2004 ]

*CALIFORNIA'S FRESNO COUNTY*
*REAPS $24 MILLION IN FEDERAL*
*WATER SUBSIDY PAYMENTS IN 2002*

*MARK ARAX, LOS ANGELES TIMES*: This is a valley that wears its mistrust 
of the federal government proudly.

From Bakersfield to Modesto, handmade signs planted firmly in San 
Joaquin Valley farm soil call for the death of activist federal judges. 
Bumper stickers shout the primacy of private property and gun rights.

But the payments that flow into the valley from Washington, D.C. --- 
those are a different matter. Nearly a third of the population in this 
farm belt relies on some form of federal public assistance, figures 
show, one of the highest such dependency rates in the nation.

And then there is the federal support that few locals like to talk 
about: the water and crop subsidies that keep the wealthiest citizens in 
tall cotton.

Each year, a score of big farmers on Fresno County's west side receive 
millions of dollars in price supports and subsidized water for their 
cotton, nut, tomato, garlic, onion and grape crops.

A report by the Environmental Working Group, a Washington, D.C.-based 
nonprofit trying to reform the agricultural subsidy system, shows that 
farms in Huron and the surrounding area received, by the most 
conservative measure, $24 million in water subsidies in 2002. That 
figure does not include millions more in cotton and wheat subsidies.

The report comes as the federal Bureau of Reclamation is renegotiating 
its long-term contracts with agricultural users in the Central Valley 
Project, the nation's largest irrigation system.

The negotiations have raised concerns among environmentalists, who say 
that the U.S. government is about to give farmers another sweetheart 
deal. Farmers respond that the inexpensive water allows them to compete 
in a global market flooded with cheap foreign crops.

The report, released today, measures the water use of each farm tied to 
the Central Valley Project. The biggest farming operation in Fresno 
County, run by the Woolf family, used 29,000 acre-feet of water to 
irrigate 19,000 acres of crops. That is enough water to fill more than 
37,000 Olympic-sized swimming pools, the report said.

"The figures show very clearly that despite the fact that the CVP was 
conceived as a way to support small family farmers, that subsidy today 
is overwhelmingly going to the largest and richest farms," said Bill 
Walker, one of the report's authors.

The amount of water that each farm draws from the project is a matter of 
public record. The watchdog group, which each year assesses crop 
subsidies to farms nationwide, calculated the value of the water by 
using three different formulas. Farmers who saw only excerpts of the 
report didn't take issue with the most conservative formula, which 
yielded the $24-million-a-year subsidy figure.

But one formula, which based the water's value on what it would cost to 
replace it in today's market, was criticized by farmers. That formula 
calculated the total yearly subsidy to farmers on Fresno County's west 
side at $110 million. For farmers throughout the Central Valley Project, 
the figure was $416 million.

"This is a supposed analysis that is based upon false assumptions and 
some hypothetical fair market value for water that doesn't exist," said 
Tom Birmingham, general manager of the Westlands Water District, the 
biggest irrigator in the California Valley Project. " A lot of our 
farmers are using drip irrigation. They are among the most efficient 
water users in the world, right up there with farmers in Israel."

The debate is hardly new. Over the decades, as the San Joaquin Valley 
has grown into the most productive agricultural region in the world, 
politicians and bureaucrats have grappled with the issues of water and 
the size of farms. The old Jeffersonian ideal held that cheap water was 
a means to develop the West with small and mid-sized farms. The Central 
Valley Project, which began construction in the mid-1930s, grew out of 
that ideal.

But the economies of scale --- efficient big farms swallowing up 
inefficient small ones --- have dictated otherwise. Reclamation law no 
longer prohibits cheap federal water from going to farms larger than 160 
acres. Farms up to 960 acres can qualify.
Even so, prominent farm families in western Fresno County have found a 
way to obtain subsidies for even larger holdings. By dividing their 
10,000- and 15,000-acre operations into 960-acre chunks, many growers in 
the Westlands district have managed to receive a lion's share of the 
project's water --- more than 25% in many years, the report said.

The Britz family, for example, has divided its Westlands holdings into 
nine separate entities, each one receiving crop and water subsidies. In 
2002 and 2003, the Britzes received more than $1 million in crop 
supports and nearly $300,000 in water subsidies. The Britzes could not 
be reached for comment.

The Woolf family has weaned itself from crop subsidies by replacing 
cotton and wheat --- crops that receive price supports --- with 
vegetables, almonds, pistachios and grapes. But the family's water 
subsidy in 2002 was at least $710,000, the report found.

Stuart Woolf, president and chief executive of Woolf Enterprises, said 
his family has spent millions of dollars to convert from flood 
irrigation to more efficient drip irrigation.

"This study gives the impression that we're big water wasters," Woolf 
said. "The reality is, we don't have enough water to use, and we have to 
manage every drop."
"The Environmental Working Group is raising some good questions, but I 
would encourage them to come visit our farm and learn a little bit about 
the careful way we manage water resources. We're good stewards." [ 
December 15, 2004 ]

*SAN FRANCISCO CHRONICLE*
*EDITORIAL ASKS "WHO OWNS*
*CALIFORNIA WATER ???"*

*SAN FRANCISCO CHRONICEL EDITORIAL*:Who owns California's water? That 
issue, which has shaped California's history, is at the heart of a legal 
battle that could gut implementation of the Endangered Species Act in 
California and place insurmountable hurdles in the state's ability to 
manage its water.

The controversy dates back to the extended California drought in the 
early 1990s, when the federal government held back water from two San 
Joaquin Valley irrigation districts to protect the Chinook salmon and 
delta smelt populations in the Sacramento-San Joaquin River Delta.

A private law firm, Marzulla & Marzulla, sued the federal government on 
behalf of the irrigation districts --- which in turn represent 285 
growers in the area. The suit claimed that withholding the water 
represented an illegal ''taking'' of property, prohibited by the U.S. 
Constitution.

In 2001, John Wiese, a judge in the U.S. Court of Federal Claims in 
Washington, D.C., ruled in the grower's favor. The ruling effectively 
overturned decades of California law. For years, it had been accepted 
that our water is owned by the people of California, and not by those 
who have signed contracts to use it.

''You can acquire rights to use water, but you can never acquire 
ownership of water in the same way you can a piece of land, or an 
automobile,'' said Joseph Sax, a UC Berkeley Boalt Hall School of Law 
professor who helped prepare a brief against the water districts' claims.

Wiese in effect ruled that the users of the water, through their local 
water districts, owned the water. He ordered the federal government to 
pay the growers $14 million in damages, which, with interest and 
attorneys' fees, has grown to $26 million. ''This could have a 
devastating impact on regulating water in the public interest in 
California,'' Sax told us.

But instead of appealing the case to a higher court --- which the 
federal government typically does when it has to pay out large sums of 
money --- the Bush administration is reportedly on the verge of reaching 
a settlement with the growers, to the alarm of state officials.

On December 1, California's Water Resources Control Board, representing 
the Schwarzenegger administration, urged the Bush administration to 
appeal Wiese's decision and to consider having the case transferred to 
the California Supreme Court. In a letter to three Bush cabinet 
secretaries, water board chairman Arthur Baggett Jr. wrote that Wiese's 
ruling could ''fundamentally change the way water resources are managed 
in California.''

State Attorney General Bill Lockyer has made a similar request. Even the 
National Oceanic and Atmospheric Administration, charged with managing 
the nation's fisheries, has urged the administration to appeal the 
ruling, arguing that ''liability was wrongly decided.''

All Californians should be concerned about the Justice Department's 
apparent eagerness to go along with a flawed ruling in a single court 
that could have a disastrous impact on the environment, as well as 
determine who controls water in California for decades to come..

Urge Attorney General John Ashcroft to stand up for taxpayers and the 
environment by appealing this ruling. E-mail him at askdoj@xxxxxxxxxx [ 
December 13, 2004 ]

*CALIFORNIA'S GIANT TEJON*
*RANCH CLAIMS ADEQUATE*
*WATER SUPPLY FOR THREE*
*MAJOR URBAN PROJECTS*

*DARYL KELLEY, LOS ANGELES TIMES*: Plans to develop the rugged Tejon 
Ranch, a vast stretch of mountains and desert valleys 50 miles north of 
Los Angeles, have swirled for nearly a century. But one roadblock 
persisted: the lack of a reliable water supply.

Then state officials routed the river-sized California Aqueduct through 
the ranch. And with the arrival of melted snow from the north in the 
1970s, water concerns began to fade.

Now, Tejon Ranch executives plan to build three major projects along 
Interstate 5 in southern Kern and northern Los Angeles counties: a 
sprawling mountain resort with thousands of houses, a huge industrial 
park and the 70,000-resident city of Centennial.

Despite new laws and court rulings requiring developers to prove firm 
water supplies even during drought, ranch officials say water is no 
longer an obstacle.
"Even when the rest of the state is shut down and rationing, we're still 
going to be in good shape," said Dennis Mullins, the ranch's general 
counsel.

Critics say they don't have enough information yet to challenge such 
assertions, because Centennial's water plan has not been released and 
Tejon Mountain Resort is still in the planning stages.

Yet, critics believe the ranch may be overstating groundwater supplies 
while relying too much on rights to water imported from the State Water 
Project through the California Aqueduct, despite delivery of only about 
20% of such "paper water" during a drought in the early 1990s.

"I'm continually skeptical of the way developers count State Water 
Project entitlements. Our history is one of floods and drought, and 
they're pretty hard to predict," said John Gibler, of Public Citizen, a 
Washington, D.C.-based nonprofit organization founded by Ralph Nader.

Jan de Leeuw, a UCLA statistics professor who lives near Tejon Ranch, 
said he has studied ranch water issues for five years and doubts its 
supplies are reliable.
"The basic problem is that everything they say about groundwater is 
speculative, because there's been no comprehensive groundwater study of 
that area," De Leeuw said. "Previous plans to develop Tejon Ranch did 
not happen because a judge thought a comprehensive groundwater study was 
needed."

Tejon Ranch officials said a detailed 2003 water analysis should answer 
all questions about supplies for the ranch's Kern County projects: the 
mountain resort near Tejon Lake and the warehouse complex near Grapevine 
at the foot of the Tehachapi Mountains.

"There's no weakness in this water plan," Mullins said of the Kern 
County projections. "It will withstand any scrutiny."

Centennial developers, Tejon Ranch and three home-building companies say 
preliminary studies show there is also plenty of water for that 
community of 23,000 dwellings and its 14-million-square-foot business 
park, the largest such project in Los Angeles County history.

That's because Tejon Ranch owns the rights to enough water from Northern 
California to provide for a medium-sized city, can store even more in 
underground basins for dry periods and can pump from deep wells and 
natural springs when necessary, officials say. Their plans also include 
extensive use of reclaimed water for landscaping as well as water 
conservation through irrigation systems shut off by satellite when it 
rains.

"We can put a spigot right in there," ranch President Robert Stine said 
recently, pointing to the California Aqueduct, which slices more than 20 
miles through Tejon Ranch as it climbs 3,000 feet from the San Joaquin 
Valley floor and tunnels south through the Tehachapi Mountains. Indeed, 
the California Aqueduct runs through the emerging industrial complex, 
lies on the eastern edge of the planned mountain resort and bisects the 
proposed town of Centennial in the western Antelope Valley.
Centennial developers say they can pull surplus water from the concrete 
river in wet years and store it below ground, so the project would not 
need a drop of imported water in dry years.

"In the worst-case scenario, we would not take any water from the State 
Water Project," said Centennial project manager Greg Mederios. "We would 
rely on groundwater."

Overall, Tejon Ranch has a right to about 21,000 acre feet of state 
water for urban and agricultural use each year, but would receive just 
72% of that on average and far less in a dry year, according to the 
state. An acre foot is enough water for two families of four for a year.

With imported water alone, the ranch could theoretically provide for 
about 120,000 residents in a typical year, and about 85,000 residents in 
the one year out of five when supplies are only half of state 
entitlements or less.

But about three-fourths of the ranch's imported water is designated for 
farm use in Kern County. And while farm water could potentially be used 
in urban development — Tejon Ranch has already transferred about 4,000 
acre feet --- Kern County water officials generally discourage moving 
water to another county.

So Centennial is not relying on the ranch's Kern County entitlements. 
However, in a typical year, Medeiros said Centennial would buy between 
2,700 and 5,000 acre feet of imported water from an Antelope Valley 
water agency that contracts with the State Water Project.

Russell Fuller, manager of the Antelope Valley East Kern Water Agency, 
said the agency can provide Centennial some water but cannot guarantee 
an amount.
"There isn't any way of predicting what the number will be for each 
customer," he said. "In very dry years, we're going to have very little 
water. So they're going to have to take advantage of wet years and bank 
that water."

This year, for example, the Antelope Valley agency didn't use 30,000 
acre feet of available water, Fuller said. And last year the surplus was 
twice as much.
And there's plenty of room for storage in Antelope Valley aquifers, 
because 100 years of farming have depleted them, Fuller said. One 
potential water bank is at Centennial, he said.

"They'll be able to get the water readily from the aqueduct because of 
its close proximity," he said. "That's a real benefit."

Centennial is still doing studies to see how quickly underlying water 
basins refill, Mederios said. But early numbers show that the 
development's demand for drinking water would eventually be 7,710 acre 
feet, plus 4,846 acre feet of recycled water for landscaping, two golf 
courses and 18 parks.

Up to 7,000 acre feet of drinking water supplies could come from wells 
and storage basins at Centennial, he said. More water could come from 
ranch wells nearby and, in an extreme drought, storage basins elsewhere, 
he said.

Mullins said the same multi-pronged water supply strategy is planned for 
the Tejon Mountain Resort, a golf course community of perhaps 3,500 to 
4,000 small ranches northeast of Tejon Lake.

"We call it the five legs of the [supply] stool," Mullins said. "You can 
kick out any of the legs and the stool still stands."

Last year's study of the water needs of a theoretical 5,100-unit 
subdivision near Tejon Lake and of the Tejon Industrial Complex found 
future water supplies of 11,640 acre feet in a normal year, compared 
with demand of about 7,000 acre feet when the projects are completed.

In multiple dry years, water supplies would remain reliable, the study 
found, partly because of Tejon Ranch's two percent share in the 
subterranean Kern Water Bank, the largest in California with stores of 
about 730,000 acre feet.

Lynne Plambeck, a community activist and water board member in the Santa 
Clarita area, said she's certain Tejon Ranch's water plans will be 
scrutinized. "There are problems with these water management plans 
throughout the state: Supplies are being overstated," she said. "And if 
you overstate your water supplies, you can't solve your water problems." 
[ December 12, 2004 ]

*WHILE FARM INCOME*
*DOUBLED IN TWO YEARS*
*FEDERAL FARM SUBSIDIES*
*SHOWED 40% INCREASE*

*TIMOTHY EGAN, NEW YORK TIMES*: The roadside sign welcoming people into 
this state reads: "Nebraska, the Good Life." And for farmers closing out 
their books at the end of a year when they earned more money than at any 
time in the history of American agriculture, it certainly looks like 
happy days.

But at a time when big harvests and record farm income should mean that 
Champagne corks are popping across the prairie, the prosperity has 
brought with it the kind of nervousness seen in headlines like the one 
that ran in _The Omaha World-Herald_ in early December: "Income boom has 
farmers on edge."

For despite the fact that farm income has doubled in two years, federal 
subsidies have also gone up nearly 40% over the same period --- 
projected at $15.7 billion this year, and $130 billion over the last 
nine years. And that bounty is drawing fire from people who say that at 
this moment of farm prosperity, the nation's subsidy system has never 
made less sense.

Even those deeply steeped in the system acknowledge it seems 
counterintuitive. "I struggle with the same question: how the hell can 
you have such high government payments if farmers had such a great 
year?" said Keith Collins, the chief economist for the Agriculture 
Department.

The answer lies in the quirks of the federal farm subsidy system as well 
as in the way savvy farmers sell their crops. Mr. Collins said farmers 
use the peculiar world of agriculture market timing to get both high 
commodity prices and high subsidies.

"The biggest reason is with record crops, prices have fallen," he said. 
"And farmers are taking advantage of that."

A farmer can sell his crop early at a high price, say, in a futures 
contract, and still collect a subsidy check after the harvest from the 
government if prices are down over all. The money is not tied to what 
the farmer actually received for his crop. The farmer does not even have 
to sell the crop to get the check, only prove that the market has 
dropped below a certain set rate.

"For those who can milk the system, it's been a great year," said Kent 
Miller, whose German great-grandparents were pioneers near this tiny 
town. Mr. Miller is a small operator who says he barely made a profit 
this year on his 3,000 acres of wheat and millet.

Still, while Mr. Miller is a critic of the system, he is not forgoing 
aid. Here in Cheyenne County, in the wind-raked western edge of 
Nebraska, the fields are slumbering for the winter. Most of the harvest 
is in. Mr. Miller was one of the farmers going into the federal 
agricultural office to register for fresh checks from recent swings in 
the market.

"I just signed up for new government payments today," Mr. Miller said, 
standing inside the federal agriculture office for this county. He 
described the subsidies as little help for ailing family farmers. "It's 
a Band-Aid on a large wound."

Farm groups say the subsidies provide for a stable food supply, and 
ensure that major sectors of American agriculture will be competitive on 
the global market.

"When people ask me what the justification for this is, I point out that 
in nearly every country in the world you find government involved in the 
food supply," said Bob Young, an economist at the American Farm Bureau 
Federation, the powerful trade group for major agricultural producers.

But because nearly 70% of the subsidies go to the top ten percent of 
agricultural producers, the recent prosperity is not seen or felt among 
many small to medium-size growers who keep the struggling counties of 
the Great Plains alive.

Though some retailers in places like Iowa and Kansas say that the boost 
in farm income promises a good Christmas season, merchants here say they 
are not feeling any uptick. All around western Nebraska, in places like 
Chappell or Lorenzo, storefronts are boarded and the merchants who 
remain complain of the difficulties of surviving.

Even though Cheyenne County is one of the few bright spots in the 
economic desert of the rural Plains, its recent job boom has nothing to 
do with agriculture. A major outdoor goods company, Cabela's, has its 
world headquarters in Sidney, and its giant retail store is a draw off 
of Interstate 80.

"It's been real slow, and usually December is a good month for us," said 
Brian Thacker, who sells new trucks and cars in Sidney, the biggest town 
in the county. But he said farmers complain about not having enough 
money even in good years.

"If it's raining, they complain; if the wind is blowing too much, they 
complain," Mr. Thacker said. "It just seems like they're never happy."

Ed Miller, who owns a family feed and seed store in Sidney that caters 
to small farmers, said his business was not up despite the increase in 
farm income because most of the big corporate farms that are doing 
particularly well do not buy from the local seed dealers.

So it is not surprising that the current subsidy system is drawing 
home-grown criticism from people like Senator Chuck Hagel, Republican of 
Nebraska, who says it is only widening the gap between large and smaller 
farmers, while not helping rural America.

The subsidies have also drawn criticism from farmers who grow fruits, 
vegetables and nuts --- nearly half of American agriculture --- but have 
nothing like the elaborate safety net in place for corn, cattle, wheat 
and hog producers.

"We don't get payments, and we don't want them," said Tom Nassif, 
president of the Western Growers Association, which represents farmers 
in the nation's biggest agricultural state, California. "We believe the 
marketplace should decide who stays and who goes. And we certainly 
shouldn't be paying people not to grow."

Farm production has doubled over the last 50 years, while the number of 
farms has fallen by two-thirds. Economists say about 150,000 of 
America's 2.1 million farms produce 70 percent of the major food crops. 
But only certain crops --- wheat, corn, cotton, soybeans and sunflowers 
among them --- qualify for subsidies.

Every subsidy payment in the country can be found on a Web site put 
together by the Environmental Working Group, which advocates an overhaul 
of the farm payment system. The site has become a must-read for farmers, 
and receives about a million hits a day, the group says.

According to those records, which are supplied by the Agriculture 
Department, Mr. Miller, the small wheat and millet farmer, received 
$18,449 in subsidies last year, and a total of $189,254 over the last 
nine years.

His neighbor down the road, a wheat farmer named Ronald Jessen, was paid 
$424,387 over the last nine years, according to the database. Mr. 
Jessen's father, Raymond, got $485,096 in government money, and his 
brother, Michael Jessen, got $356,769. They are among the ten biggest 
recipients of wheat subsidies here in Cheyenne County, which is the 
state's top wheat county.

Over all, Nebraska got $7.5 billion in government farm payments over the 
last nine years.

The Jessen family wheat farm, despite getting more than $1 million in 
subsidies in that time, is not a gold mine, Ronald Jessen said in an 
interview. "You've got to look at all the expenses," he said. "A new 
combine can cost $200,000. When I do my taxes, the crop breaks even. My 
profit is what I get from the government."

Still, Mr. Jessen said he was not proud to be harvesting so much from 
taxpayers.

"Most farmers will tell you they would rather get paid for what's in the 
elevator rather than from the government," he said.

Other farmers and some critics say that corporations, extended families 
and partnerships are taking advantage of a system that has little 
relationship to the ebbs and flows of food supply, and rewards them most 
in times like now, when farmers should seemingly be able to get by 
without government help.

"It's shocking the extent to which taxpayers subsidize this select group 
of people whether they're having a good year or bad," said Ken Cook, 
director of the Environmental Working Group. "I call them the red ink 
states."

Any farm entity --- often a corporation --- can collect up to $360,000 
per year. Some of the biggest checks are direct payments to farmers who 
can show a "historic pattern" of having grown one of the big commodity 
crops. In a system that supporters say is intended to ensure economic 
stability from year to year, farmers do not actually have to grow the 
crop to get the money. For other payments, a farmer is required to show 
involvement helping to run or manage the operation.

Mr. Miller, who is struggling to run his family farm on his own, says 
that big farms will line their subsidy payroll with family members who 
have minimal involvement.

"Typically, you get ten relatives who all get the payments, but maybe 
for six of them, the only time they come out to the farm is for 
Christmas," Mr. Miller said.

While the big farms are having record years, much of rural America is 
continuing to decline.

Senator Hagel voted against the 2002 farm bill that is the framework for 
the current subsidy system. At the time, he said, "these lopsided 
payments encourage and subsidize overproduction" and would "only widen 
the disparity gaps between large and small farmers."

In a hearing last August, Mr. Hagel said the Great Plains was in a 
continued downward spiral, even with record farm income.

"Half the rural counties in America lost population in the 2000 census," 
Senator Hagel said in the hearing. "And three out of four rural counties 
experienced below-average economic growth, despite the record level of 
farm subsidies."

The highest single year for subsidies was 2000, when farmers got $22 
billion in payments. But their income was only $47 billion that year. 
This year, with farm income at $73 billion, is the first year when 
farmers set a record for earnings, while subsidies were still among the 
highest in recent years.

This record year raises the question of what would happen to American 
agriculture if government stopped making such large payments. Mr. 
Collins, the chief economist at the Agriculture Department, said it was 
possible that farmers would produce the same amount of food in a pure 
free market.

Some farmers say they could go cold turkey, and make it on their own. 
Others say they would go under. But the thing many agree on is that 
working the land, even in good times, is not something they would 
recommend to their children.

"Out here, the joke is that anyone who tries to get their kid to go into 
farming is encouraging a form of child abuse," Mr. Miller said. [ 
December 26, 2004 ]

*COMMENTARY:*
*FAMILY FARM AGRICULTURE NOW*
*REAPING AN AGBIZ ENGINEERED PUBLIC*
*PERCEPTION AND POLITICAL BACKLASH*

*JOHN HANSEN, PRESIDENT, NEBRASKA FARMERS UNION*: As this New York Times 
article (see above) clearly shows, family farm agriculture is now 
reaping the public perception and political backlash that the American 
Farm Bureau Federation, the National Corn Growers Association, National 
Soybean Growers, National Association of Wheat Growers, and the U.S. 
based grain traders set us up for and created in 1996.

They transformed traditional farm programs from price supporting 
programs that forced the grain traders to pay up for grain commodities, 
which caused the cost of farm programs to be relatively low, and the 
majority of farm income to be realized through the cash market into 
income transfer programs that look, feel, and taste like welfare 
programs to most observers.

The fact that the actual structure is a "make up allowance" of sorts for 
lost market place value lost is seldom if ever recognized. The common 
perception becomes the reality, which is the current structure of farm 
programs is politically indefensible and fiscally vulnerable, just as 
Farmers Union said it was in the 1996 Farm Bill battle.

When we compare the 1996 value of the national production of six crops: 
Corn, Wheat, Soybeans, Grain Sorghum, Rice, and Cotton for the years 
1997 through 2003, farmers were paid an average of $14.6 billion less 
for their crops. That amounts to $102.45 billion less money the raw 
material processors paid farmers for
their crops during the 1997-2003 period.

So, who are the primary beneficiaries of the "farm subsidies"? Not the 
family farmers who lost more market place value than they got in income 
transfers--and produced most of their crops most years at below the 
USDA's Economic Research Service estimated cost of production. Not the 
consumers who did not pay proportionally less for the processed food 
products they bought. The food processors and food retailers.

They continue to steal raw material food production from farmers and 
ranchers for below full cost of production, with the help of our 
national farm and trade policy, which continues to be driven and 
supported by the food industry conglomerates with the political support 
of the very organizations that are supposed to be representing America's 
family farmers and ranchers.

What is worse, the very same set of big agribusiness players and their 
political supporters are now positioned to use the growing federal 
deficit and the direction of WTO negotiations to further carry out their 
self serving economic agenda to reduce and eliminate domestic income 
supports which are now called "subsidies". The new Congress leadership 
and the White House both support this agenda.

American farmers and ranchers are being fed to the U.S. based 
international corporate sharks by their own public officials, commodity 
organizations, and the American Farm Bureau Federation. Our traditional 
system of independent, farmer and rancher owned food and fiber 
production is being destroyed and dismantled in favor of the 
industrialized, top down corporate owned and controlled version of the 
failed former Soviet model.

In the last election, rural voters, just as the low self esteem victims 
of prolonged domestic abuse often do, once again helped their own 
abusers further beat and humiliate them.[ December 28, 2004 ]

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--

Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901