How the West(lands) Was Won, a two-part series - Part One

By Lloyd G. Carter

Editor’s note: Part one of this series addresses the merits of Westlands Water District’s breach of contract claim in the U.S. Claims Court in Washington, D.C. Part Two addresses the Denver law firm hired to represent Westlands and its far flung political connections.

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     In the wake of the public relations debacle over the brief hiring of former federal judge Oliver Wanger, the Westlands Water District has now hired a high-powered Denver, Colorado law firm with close ties to Interior Secretary Kenneth Salazar and political tentacles reaching to the highest levels of both the Democratic and Republican parties.

     Westlands, on January 6, 2012, quietly filed a complaint in the U.S. Court of Claims in Washington, D.C. claiming the U.S. Bureau of Reclamation breached its 1963 contract with Westlands by failing for decades to build a drainage system to carry away Westlands’ toxic waste waters to the Sacramento-San Joaquin Delta. There was no Westlands press release on the Court of Claims suit and no mainstream media picked up the story for almost a month.

     The complaint was filed by Lawrence Treece and four other attorneys of the Denver firm of Brownstein, Hyatt, Farber and Schreck, a major lobbying firm in Colorado and Washington, D.C., as well as a powerhouse law firm with a California branch. It was a Brownstein named partner, Steve Farber, who raised $50 million to land the 2008 Democratic Convention at Mile High Stadium in Denver where President Obama gave his nomination acceptance speech in October of 2008. The purported payback for Farber’s efforts was the naming of Salazar as Interior Secretary. The Brownstein firm had conducted Secretary Salazar’s earlier successful campaigns for Colorado Attorney General and for the U.S. Senate.

     Westlands paid the Brownstein firm $160,000 in 2011 to lobby in the House of Representatives on Reclamation and Endangered Species Act issues. A former Brownstein partner, Tom Strickland, was Chief of Staff to Secretary Salazar until he resigned in late September 2011 to work for the law firm representing the BP oil company in the Gulf oil spill litigation. One of Salazar’s predecessors as Interior Secretary, Gale Norton, formerly was a partner at the Brownstein law firm. In 2006, she was driven from office in disgrace following a scandal at the Minerals Management Service, an Interior agency.

     As Secretary of Interior, Salazar oversees the Bureau of Reclamation, and would have to sign off on any settlement of the lawsuit. At stake may be nearly half a billion dollars Westlands still owes the American taxpayers on the water delivery system known as the San Luis Unit (the final unit in the grand Central Valley project commenced in the 1930s) that transports Northern California water to Westlands’ 620,000 acres of farmlands in western Fresno and Kings Counties. Although the lawsuit does not name a damage figure, Westlands General Manager Thomas Birmingham told the Fresno Bee the water district will seek $1 billion in damages.

     Treece’s complaint filed for the Westlands runs 176 paragraphs and 52 pages, in addition to an attachment of five pages, which is a September 1, 2010 letter to Sen. Dianne Feinstein from Reclamation Commissioner Mike Connor.

     The Treece complaint, which starts with a theatrical flourish by comparing Charles Dickens’ Bleak House (about an endless probate lawsuit) to the Westlands’ half century search for a drainage solution, segues into a Swiss cheese account of Westlands’ drainage history. It is not so much what the complaint alleges, as what it fails to mention, that is important. The purpose of the complaint is designed to convince the Claims Court the insoluble drainage mess is all the Bureau of Reclamation’s fault and that the Westlands growers are mere innocent victims, who were powerless to influence the course of events over the past five plus decades.

     “The long and short of it is that in those fifty years, the Government has provided drainage only episodically and for a short period of time” the complaint alleges, adding Westlands believes “enough is enough. Treece added, “Westlands brings this suit to begin what will hopefully be a process of closure and accountability, and a judgment of reckoning for the Government.” That is to say, Government is Big Bad Wolf for bringing water to a nearly lifeless salt-laden desert and the 5,000- to 10,000-acre mega farms of Westlands are Little Red Riding Hoods.

     Wanger, who retired from the federal bench last year and worked briefly for the Westlands in a state court matter, is named frequently in the Treece complaint. Treece contends foot-dragging by the government “has provoked expressions of frustration, disappointment and incredulity bordering on outrage” by Wanger during the protracted Fresno federal district court litigation over the drainage mess brought against the Bureau and the Westlands by downslope federal irrigation districts (Firebaugh Canal Co. et al.) in what is known as the Delta-Mendota Unit of the Central Valley Project. Those Delta-Mendota districts have senior water rights to Westlands and are being impacted by polluted shallow groundwater in Westlands migrating downgradient to farmland north of Westlands. (This migration of tainted groundwater from Westlands to the downslope Delta-Mendota Service area of older federal irrigation districts, is, ironically, denied by the government. Apparently, the law of gravity doesn’t apply in government circles.)

     What Treece fails to produce, however, is documentary evidence that during the first two decades of the San Luis Unit, Westlands complained about, or legally challenged, Reclamation’s manner of constructing and operating the San Luis Unit.

     What follows is some of the history Treece left out of his account, history that explains why the Bureau was not an out-of control rogue federal agency but a bureaucracy highly attuned to the needs and desires of its biggest client water district.

     The 1960 Congressional authorizing legislation for the San Luis Unit required that construction of the project to bring Northern California water to Westlands “shall not be commenced until the [Secretary of the Interior] . . . has received satisfactory assurances from the State of California that it will make provision for a master drainage outlet and disposal channel for the San Joaquin Valley . . . or has made provision for constructing the San Luis interceptor to the delta . . .”

     A joint federal-state master drain for the Western San Joaquin Valley was nixed by California as early as 1961, leaving the Bureau of Reclamation to “make provision” for an alternate federal-only drain from Westlands to the Delta.

     On July 15, 1963, federal judge M.D. Crocker, responding to an injunction request from the Central California Irrigation District (north of the Westlands in the Delta-Mendota Unit), ruled “that the evidence now before this Court indicates that the Secretary of Interior has made provision for constructing the interceptor drain required by the Act of June 3, 1960, and will have it completed by the time water is furnished to the Federal San Luis Unit.” [Italics added.] Crocker said the plaintiffs could refile their lawsuit (which they did) if the federal government did not follow through (which it didn’t.)

     In 1963, the Westlands and the Bureau negotiated a water delivery contract while, behind the scenes, Southern Pacific Railroad and other large landholders along the corridor of present day Interstate 5, in the West Plains Water Storage District, began maneuvering to join Westlands which was about to be transformed from a desert with a depleted aquifer to a land of plenty with lots of cheap public water. A critical 1964 Interior Solicitor’s memorandum with no force of law concluded that merger of West Plains and West lands water district might be a good idea. By 1965, the California Legislature had approved the merger creating Area 1 (the original project boundaries) and Area 2 (the West Plains District). No one seemed concerned that some of the land annexed to Westlands had been earlier classified as non-irrigible, or unsuitable for agriculture.

     The problem was that Congress had not appropriated money to build a water delivery and drainage system for the 200,000 acres of West Plains desert annexed to the Westlands. But Bureau officials had a suggestion. Because all parties involved believed there was plenty of time to work out a drainage solution, monies appropriated for drainage could instead be diverted to build an expanded water distribution system for the West Plains annexed land. If Westlands complained about this, there is no indication in the legal record.

     When Jimmy Carter became president, legislation was passed to create a congressional task force to look at the San Luis Project, including the merger and whether or not the large landholdings in the district were being broken up to comply with the 160-acre limitation for the cheap, subsidized water (320 acres for husband and wife).

     The 1978 San Luis Unit Congressional Task Force concluded:

     “The Task Force finds that the size of the distribution system within the Westlands Water District has been substantially increased and that completion of the distribution system will totally consume the authorized spending limit for both the distribution and drainage system even though very little of the necessary drainage system has been constructed. In this regard, the Task Force believes that the Bureau knew for many years that the amount designated for these purposes would be insufficient to build both the expanded distribution system and the contemplated drainage system but never informed Congress of this fact and never required that the originally contemplated facilities such as the drains, receive priority over the expanded works.”

     If the Bureau “knew for many years” it seems highly possible, indeed, probable, that Westlands officials knew too. Westlands certainly could have blocked construction of the new distribution system for the West Plains annexed land by filing a lawsuit. Instead, they stood by.

     The Task Force also found that the Bureau had dropped plans for an earthen master drainage canal (which can leak badly) to the Delta and instead were now pushing a cement-lined canal, which would cost astronomically more than a dirt canal. No congressional authority for this massive design change and boost in cost was ever obtained. The 1955 feasibility report pegged the cost of a dirt drainage canal at $7.2 million. By 1977, the cost of a cement-lined drainage canal was estimated at $185 million. The Task Force noted that under terms of the 1963 drainage repayment contract (50 cents an acre-foot to dispose of drainage water) Westlands would have 270 years to pay off its drainage contract.

     In his September 10, 2010 letter to Sen. Dianne Feinstein (attached to the Westlands complaint), Reclamation Commissioner Connor said the current estimated cost of finishing the drainage system is now estimated at $2.7 billion for 600 growers, which is “economically and financially infeasible because the costs exceed the national economic benefits and is beyond the ability of the beneficiaries to repay. In the Court of Claims suit, Westlands still insists its only obligation is to pay for drainage under the 1963 contract is 50 cents an acre-foot. An acre-foot is 325,851 gallons or enough water to cover an acre of land a foot deep.

     On the heels of the highly critical Task Force report came the Kesterson National Wildlife Refuge debacle of the early 1980s. Stalled by state and federal requirements to show drainage into the Delta would be safe for the receiving waters, the Bureau, in the late 1970s and early 1980s, used a stopgap holding pond (1,300 acres in size) at the wildlife refuge in western Merced County to hold increasing amounts of drain water. In 1982, all the fish in the Kesterson ponds – which had also been foolishly declared a national wildlife refuge - died and scientists began to notice a die-off of birds. In 1983, there was near total bird reproductivity failure in birds nesting at Kesterson and graphic and disturbing deformities in bird embryos found in nests at the Kesterson site.

     The killing agent was selenium, a trace element that can be toxic to animals, fish and humans. The Westlands soil is full of it. Dissolved in the drainage it quickly poisoned the Kesterson food chain.

     In February of 1985, the California State Water Resources Control Board ordered the poisoned Kesterson ponds cleaned up or closed. The story gained national attention, including a segment on CBS’ “60 Minutes” and on March 15, 1985, then Interior Secretary Donald Hodel ordered the Kesterson ponds closed because of possible violations of the Migratory Bird Treaty Act, which was supposed to protect birds at Kesterson. Hodel also said water deliveries would be shut off to Westlands, triggering near panic among growers, as well as banks and investors holding considerable interest in Westlands farmland.

     Westlands officials travelled to Washington, D.C. to hammer out a deal whereby the water district would assume responsibility for drainage and Reclamation would keep fresh irrigation water flowing to the embattled district. On April 3, 1985, an agreement was signed between Westlands directors and Secretary Hodel.

     The document stated the purposes of the Agreement were five-fold:

1. To halt drainage flows to Kesterson.

2. To continue delivery of fresh water to Westlands “while at the same time Westlands, in compliance with the mandate of the federal government, designs and installs alternative means for disposal of drain water in an efficient and environmentally sound manner.”

3. Encourage development of environmentally sound means of disposing of the drain water from lands in Westlands presently draining into the San Luis Drain.

4. Provide “conditions under which irrigation water delivered to Westlands may be used throughout Westlands in future years.”

5. Encourage western San Joaquin Valley farming interests to employ sound water conservation measures to reduce drainage problems.

      The 1985 Agreement also stated “Westlands shall hold the United States free and harmless from and indemnify it against any and all losses, damages, claims and liabilities arising from Westlands’ performance or non-performance of this Agreement and from any performance by the United States of Westlands’ obligations hereunder, and from any other exercise by the United States of its rights and remedies hereunder.” Despite the severity of the Agreement provisions, Westlands reserved the right to legally challenge the obligation of Reclamation to provide adequate drainage service “for all lands within Westlands” needing drainage.

     In 1991, some growers in a 42,000-acre area of Westlands who had originally drained their wastes to Kesterson filed suit against Westlands and the Bureau of Reclamation for damages caused when the drainage system was closed and plugged. The suit was placed on the back burner during the Clinton years, as Reclamation officials plodded along spending tens of millions of dollars on drainage studies, including a $50 million, five-year investigation by a state-federal team. Their report, issued in 1990, concluded the cheapest solution was to take the high selenium lands out of production and drastically reduce the amount of drainage produced.

     When George W. Bush came to office, the growers who had filed the lawsuit a decade earlier began pushing it again. A career Justice Department attorney, Yoshinori H.T. Himel, representing the Department of Interior and the Bureau in the grower suit, filed a motion in August of 2002 to get it dismissed. Himel pointed out that Westlands, in the 1985 agreement, had agreed “to design, install, and operate alternative means for disposal of drain water in an efficient and environmentally sound manner” and thus Westlands, not the federal government, had the “obligation” to resolve the drainage problem by alternative means, including evaporation ponds, salt tolerant crops and drain water recycling.

     While Himel acknowledged it could be argued the 1985 agreement may not have required Westlands to assume long-term responsibility for drainage for the entire San Luis Unit he said Westlands assumed, at the minimum, responsibility for solving the drainage problems of the 49,000 acres that had been draining to Kesterson.

     Himel added “One thing the Agreement did alter, however, was Westlands’ obligation to indemnify the United States for, among other things, ‘losses, damages, claims and liabilities’ arising from Westlands’ performance or non-performance of the Agreement. The language ‘losses, damages, claims and liabilities’ indicates money claims, such as Plaintiffs’ money claims in this lawsuit . . . Westlands thus undertook at a minimum to indemnify the United States for lawsuits by those who might be dissatisfied with the results of Westlands’ ‘alternative means’ for drainage.”

     Judge Wanger, who was hearing the case, rejected this argument but critical issues of apportionment of liability for the drainage mess remained. Of course, we will never know what would have happened had the apportionment of fault issues been decided by a jury or a judge. Bennett Raley, a Denver, Colorado (what coincidence!) attorney who represented irrigation districts and was appointed Assistant Secretary for Water and Science by his Interior Secretary Gale Norton in 2001, made sure that a trial on the merits did not happen.

     Raley, undoubtedly with the support of Norton and the Bush White House, undercut Himel and other Justice Department career attorneys defending the suit, agreeing to a $139 million settlement in December of 2002, with most of the money coming from U.S. taxpayers, not Westlands.

     Raley, of course, gained fame in 2002 for allotting water from Oregon’s Klamath River to irrigators rather than to endangered fish, leading to a massive salmon die-off. News reports later indicated Vice President Dick Cheney masterminded the Klamath decision. It is unknown if Cheney or former White House advisor mastermind Karl Rove were consulted or involved in the decision to concede victory to the Westlands growers without a court fight.

     In an October, 24, 2002 pre-trial order for partial summary judgment in the growers’ suit, Wanger noted that there was no dispute the growers continued to irrigate their lands knowing “that their lands would be damaged without drainage.”

     Wanger added, “There are multiple issues to address at trial, however, regarding the operative ‘cause’ of damage to plaintiffs’ land, whether that damage constitutes a public or private nuisance, whether federal defendants and Westlands are concurrent tortfeasors, apportionment of any comparative fault of plaintiffs, and whether plaintiffs[] consented to or assumed the risk of a nuisance or trespass by demanding water deliveries to their farmlands, despite the knowledge that no drainage facility existed.” (Emphasis added.)

     In other words, a jury or a judge may have found that Westlands growers knowingly ruined their own lands and might not have awarded them a cent in damages. But Raley, as already noted, pre-empted any jury determination of those issues and, contrary to the Justice Department attorneys’ written arguments, settled.

     Under the settlement, the federal government was to pay $107 million to have the farmers’ lawsuit dismissed. Westlands had to spend $32 million to settle its part of the case, buying 34,000 acres of the plaintiff’s ruined land and retiring it.

     “We weren’t batting a thousand with this court,” Raley claimed in a 2002 interview with the Sacramento Bee. “They were claiming that we had damaged them, damages in excess of $400 million.” Raley did not mention that his own government attorneys thought they had a good case and could win in court.

     This may be the approach Westlands and the Brownstein law firm are looking at in the pending Court of Claims litigation. If they can get Interior officials/Congress/Feinstein to cut a deal without a protracted court fight, they can still walk away winners leaving behind one of the biggest toxic waste messes in American history.

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     Part 2 of this series will look at the powerful and far flung connections of Brownstein, Farber, Hyatt and Schreck law firm, arguably the nation’s most powerful water law/water lobbying firm, and how they may pressure Interior Secretary Kenneth Salazar and the White House into making a deal that will reward the polluters and screw the taxpayers.