20 Years Later, Judge Questions State Transfer of Water Bank to Private Hands

Friday, March 07, 2014

Billionaire Stewart Resnick’s idea to grow nuts in dry Kern County might not have gotten far if California’s Department of Water Resources (DWR) hadn’t signed off on an agreement to transfer control of the state’s largest underground water bank to a private, local water agency in 1994.

On Wednesday, Sacramento County Superior Court Judge Timothy Frawley issued two rulings (here and here) that the transfer was a mistake because the state had failed to properly assess the environmental impacts of the move. Critics say those effects have been harsh.

The Kern County Water Agency got control of the bank in the 1990s when the State Water Project, a key source of water since the early 1960s, redid its contracts to satisfy rural and agricultural complaints—and legal threats. The Monterey Amendments to the State Water Project changed who controlled the water and how allocations were determined between competitors for sometimes-scant resources. 

The Kern Water Bank is a 32-square-mile aquifer that was developed as a reservoir after the state acquired the land in 1988. It holds enough water to supply the city of Los Angeles for 1.7 years. Decisions the water agency makes have an effect on the entire State Water Project.

Water contracts refer to the “ag-first deficiency” in times of shortages. It is also known as the “urban preference” in some quarters. The Monterey Amendment eliminated it, leaving a mostly proportionate responsibility in dry years. It also made other changes that favored agricultural interests and enhanced the agency’s control of surplus water allocations locally.

Environmentalists and other critics of the Monterey Amendment, a deal reached between the DWR and five water contractors behind closed doors, have been fighting to overturn it ever since. The Environmental Impact Report (EIR) was challenged in 1995 and eight years later a judge ordered a new one. The state certified the EIR in 2010 and got sued over it. Judge Frawley found it deficient in both lawsuits he decided.

The judge’s decision was greeted enthusiastically by Center for Biological Diversity lawyer Adam Keats, a key protagonist in one of the lawsuits, although many of the claims he made were rejected, as they had been in previous suits.

But Keats prevailed on what may prove to be one big point. “There is essentially no analysis of potential future operational impacts,” Judge Frawley wrote.

The EIR used to approve the water bank transfer made its projection using only DWR’s experience from 1995-2004. That calculation ignored that those years were historically wet and that the seven preceding years had been so dry they set off the agricultural uprising that resulted in the amendment.      

Keats said the judge should shut down the bank. That eventuality could be a blow to Resnick and his vast central valley holdings. The Los Angeles-based entrepreneur owns Roll International, parent company to Teleflora, Fiji Water, Pom Wonderful, Suterra and Paramount Agribusiness.

That last one is America’s largest farming company. Paramount Farms in the San Joaquin Valley is the No. 1 pistachio and almond producer in the world. The company farms 125,000 acres, producing 450 million pounds of nuts.

And it has a one-sixth interest in the water bank, along with five water districts.

In 2011, Keats told Bill Blum at California Lawyer, “The original State Water Project was a masterpiece of balance, taking into account the needs of agriculture, cities, and the environment. The new agreement subverted that balance.”

It remains to be seen what mitigation measures the judge will order and what he might do in the interim if his solution takes awhile to implement.

–Ken Broder


To Learn More:

Judge: California Didn't Weigh Water Bank's Impact (by Garance Burke, Associated Press)

State Failed to Analyze Effects of Water Bank, Judge Rules (by Bettina Boxall, Los Angeles Times)

Resnick’s Water Bank Takes Big Judicial Hit (Cal Coast News)

Court Strikes Down Environmental Review of Controversial Kern Water Bank (Center for Biological Diversity)

$11 Million in Farm Subsidies Paid to 50 Billionaires, as Food Stamp Program is Cut by $5 Billion (by Noel Brinkerhoff, AllGov)

A Run on the Water Bank (by Bill Blum, The Daily Journal)

Central Delta Water Agency et al v. California Department of Water Resources (Sacramento County Superior Court)

Rosedale-Rio Bravo Water Storage District and Buena Vista Water Storage District v. California Department of Water Resources) (Sacramento County Superior Court)

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