Water politics fuel San Diego election

by Denise Zapata | inewsource

In a state where water wars are legendary, the Imperial Valley’s irrigation district is among its most formidable players. It is the largest irrigation district in the nation, and it receives the biggest portion of the Colorado River that is divided among California, Nevada and Arizona.

While the Imperial Irrigation District may be an obscure agency to most of San Diego County, the decisions it makes play out far beyond its borders. The San Diego County Water Authority gets about 26 percent of its water supply in transfers and conserved water from the Imperial district, totaling 164,536 acre-feet this year. That’s more than enough water to supply households in the city of Chula Vista for a year.

On June 8, a majority of the district’s five-member board is up for election. That means as many as three new members will join a board that will steer litigation and negotiations over water transfers to the San Diego, Los Angeles and Coachella Valley regions.

Just as water transformed the Imperial Valley from a desert into the ninth-largest producing agricultural county in California, it also divides the valley, fueling suspicions and conspiracy theories. People whose community roots run deep advocate, argue and litigate over how to make sure the water keeps flowing, a political undercurrent that surfaces during board elections.

“It’s very hard to get consensus in this valley,” said John Pierre Menvielle, a longtime farmer who was elected to the Imperial Irrigation District board in 2004. “Even in the farm community you can’t get consensus.”

The Imperial Irrigation District is by far the largest government agency in Imperial County. Its energy and water divisions have a combined budget of about $791 million, more than twice the size of the county budget. Over the years critics have doubted the district’s ability to manage its sizable resources and have questioned district managers’ loyalties and motives.

Perhaps no board decision has been as contentious as its approval of the Quantification Settlement Agreement (QSA), a document that spells out Colorado River water transfers from the Imperial Irrigation District to much of Southern California.

After years of negotiation, the Imperial irrigation board approved the agreement in October 2003 with a 3-2 vote. The agreement set off a flurry of lawsuits that are still unresolved.

When the QSA was signed, critics said it gave too much water to the urban districts too cheaply. Some were angry the district was transferring water at all.

In 2002 several influential farmers formed the Imperial Group and sued over the agreement. One of its more outspoken members, Mike Morgan, calls the attorneys who negotiated on the district’s behalf “corrupt.”

Others are suspicious of the Imperial Group, claiming it wants to gain control of the district board, get rid of the QSA and ultimately obtain the water rights that are held in trust by the district.

“There is some thinking here, by the Imperial Group and others, that water belongs to the land,” Menvielle said. “That’s what the fight is about – who owns the water.”

None of the board candidates say they are interested in scrapping the QSA. But they do say all the parties need to negotiate — specifically, they need to figure out who will pay for mitigation of the environmentally sensitive Salton Sea, which is sustained by agricultural runoff and is a key in birds’ north-south migration patterns. Cost estimates vary but a state plan released in 2007 put the price at $8.9 billion.

“The lynch pin to all of this was the Salton Sea,” said Jim Hanks, who was elected to the board in 2006 and is running for re-election. “Without that protection it will be financial ruin for this district.”

Board member Mike Abatti, a longtime farmer, is not seeking re-election, and his seat is the most competitive of the three openings. The race has prompted speculation about the political influence of valley farmers.

Some say the Imperial Group already has a foothold in the district with board members Abatti and Hanks, who is also part of a prominent farm family. Abatti was elected to the board in 2006 while he was a named party or affiliated with groups suing the district; he removed his name from the lawsuits after the district’s lawyer, Jeff Garber, advised him he had a conflict of interest. Abatti’s brother, James Abatti, remains a party in several suits. Several times Hanks and Abatti have been on the losing side of 3-2 board votes, fueling the perception they work in concert to promote farmers’ interests.

Hanks said he isn’t beholden to the Imperial Group and that farmers aren’t trying to get rich off water.

“There is a fear that landowners are going to take this water and sell it and the last guy turns out the lights,” Hanks said. “That is a myth.”

Abatti did not respond to requests for interviews.

Three candidates are vying for Abatti’s seat: Matt Dessert, 48, an administrative analyst for the Imperial County Air Pollution Control District who Abatti appointed to the district’s Energy Consumers Advisory Committee; David Ouzan, 43, mayor of Calexico; and Rudy Maldonado, 57, a former board member who voted for the Quantification Settlement Agreement in 2003.

Abatti’s decision to not seek re-election has prompted speculation about whether the Imperial Group is backing Dessert. Dessert’s father was Archibald Dessert, who founded West-Gro Farms, which was one of several farm companies that joined the Imperial Group in a lawsuit it filed against the district in July 2003.

Menvielle is one of those who believe the Imperial Group wants control of the district. “These elections are their last shot at getting control of this board,” he contended. “Dessert is one of their boys.”

Morgan said his organization isn’t backing any of the board candidates.

“There’s no organized political effort,” said Morgan, who declined to say who he personally is supporting because it could alienate voters. “I can’t say who I’m backing or it would kill them.”

Dessert has raised the most money of the seven board candidates: $22,464 since January, according to campaign statements filed by the May 27 deadline. Donors include members of the Imperial Group: Jack Bros., Clifford Strahm, Fred Hawk, Mark McBroom and Benson Farms. Ben and Loretta Abatti also donated to Dessert’s campaign.

Dessert has heard the rumors Abatti hand-picked him to take his spot on the board. He points out Abatti hasn’t endorsed any candidates, including him.

“As far as a connection goes he appointed me to the ECAC four years ago,” Dessert said. “I probably talk to him once a year or so. He’s his own man and so am I.”

Hanks is running against Ruben Casarez, 49, a district employee who filed a discrimination lawsuit against the district after he was denied promotions or job transfers. Anthony Sanchez, 32, the other incumbent, is running against Norma Sierra Galindo, 58, a Calexico teacher, member of the Imperial Community College District board and former member of the district’s Energy Consumers Advisory Committee.

Hanks’ opponent, Casarez, said the district has “been catering to special interest groups,” particularly large farm companies. He said they want to control water rights and try to control board members. Hanks and Abatti represent those interests, he said.

Others are more circumspect.

“There is an economically powerful faction that believes ownership of the water belongs to those who own the land and farm it,” Sierra Galindo said.

However, she said the board needs to consider all viewpoints, including those of the Imperial Group.

“I don’t know what their intentions are,” she said. “But they are in the community, they are stakeholders.”

Hanks said Morgan is a “very bright man.”

“But I can go so far on the issue of water and then we separate,” Hanks said. “He has never pressured me to vote one way or the other.”

Hanks points out that farmers in the valley don’t agree among themselves.

“People say he represents the farming community,” Hanks said of Abatti. “Well, which one?”

Hanks brother, Orbia Hanks, runs Rolling R Enterprises in Brawley. Hanks says he and his brother don’t always agree on farm and water issues so the accusation he is promoting his brother’s interests is groundless.

Still, it’s a perception that is hard to shake. Orbia Hanks received $422,884 through the district’s Local Entity program, which compensates businesses affected by the fallowing program. That was the third-highest amount of the 36 recipients for the 2005-08 period. Hanks’ campaign treasurer, Glenn Sampson, is one of two coordinators for the program, which divides up the pool of money to the companies that qualify. Hanks said he stays out of any appeals to the board involving his brother.

“For someone to make it sound like I’m doing him a favor – it’s not fair,” Hanks said.

The candidates say the district faces a number of important issues, ranging from improving energy and water efficiency to tightening control of the agency’s finances. But nearly all –Ouzan wouldn’t comment for this story – say one of the top priorities is resolving the legal disputes over the QSA.

In December 2009 Judge Roland Candee issued a tentative ruling – finalized in February – that invalidated a provision stipulating who would pay for environmental mitigation, including impacts on the Salton Sea. The agreement stated the Imperial Irrigation District, San Diego County Water Authority and the Coachella Valley Water Districts would pay up to $133 million and the state – also a party to the agreement – would pay any costs beyond that.

However, Candee ruled the state couldn’t commit to issuing a “blank check” for environmental costs because it needed a legislative appropriation under the state Constitution. His ruling also invalidated 11 related contracts. The Imperial district got a stay of the ruling on May 7 to continue the water transfers.

So far, the district has spent more than $10 million on litigation stemming from the agreement. Most of the costs have been paid by the district’s insurance, said Imperial Irrigation District attorney Garber.

The district’s partnering agencies are also working to defend the agreement. Dennis Cushman, assistant general manager for the San Diego County Water Authority, said the Imperial district’s water is a “vital” part of the authority’s supply.

The San Diego County Water Authority pays $405 per acre-foot of water to the district, an amount that increases every year until 2015. The price San Diego pays for Imperial’s water was a contentious issue during negotiations over the agreement, and some farmers still believe the price is too low.

Cushman said he is aware of the complaints from valley farmers that San Diego is “stealing” their water.

“But we’re also shipping over the mountains billions of dollars,” he said. “That’s a tremendous economic opportunity. Trust me, we haven’t stolen anything.”

It wasn’t just the price that angered valley farmers. The deal also required them to fallow parts of their fields. The Imperial Group has been vocal in its opposition, with Morgan attacking the attorneys who negotiated for the district.

According to correspondence in September 2000 between district chief counsel John Carter and Rodney Smith, one of the Imperial Irrigation attorneys, Carter granted permission for Smith to work for the San Diego County Water Authority while he was negotiating the water transfer agreement between the two agencies. In 1996 another contracted attorney, David Osias, sent a letter to the district detailing employment terms that included a list of his firm’s other clients, which included Western Farms.

Western Farms is one of the parties suing the district over the QSA. In the mid-1990s the company – then owned by Sid, Edward, Robert and Lee Bass of Texas – bought about 42,000 acres of farmland in the Imperial Valley that Western Farms officials said was for cattle grazing. Emails between Western Farms and the San Diego County Water Authority lawyer were later leaked, detailing the Basses’ plan to fallow the land and sell the water to the San Diego agency. The company would have been paid nearly $100 million a year. The Bass brothers scrapped their plans and the Imperial district later bought the land for fallowing.

Candee addressed the alleged conflicts of interest in his decision. “The Court does not find that the contracts must be invalidated because of some claimed violation of Government Code section 1090 because of actions by IID’s retained outside counsel, David Osias, IID’s retained outside consultant, Dr. Rodney Smith, or IID’s former Chief Counsel, John Carter,” Candee wrote.

For some that hasn’t dispelled the ethical allegations.

“This makes ‘Chinatown’ look like high school,” Morgan said.

During a board meeting on March 16, district general counsel Garber responded to a public comment questioning whether Carter had a conflict of interest because of his work for the Vista Irrigation District, which included attending a closed session meeting of that board Jan. 20 regarding the QSA. Garber said Carter had no conflict and pointed out the Imperial Group’s attorneys – Patrick Maloney and Thomas Virsik – were suspended by the state bar after they “lied” to the court in a case regarding the Round Valley Indian Tribes. According to a ruling issued Jan 14, 2005, both were suspended for committing “moral turpitude” and “misleading a judge or judicial officer.”

“Yet they have the audacity to send consistent letters questioning the ethics of other attorneys,” Garber said. “Frankly, that blows my mind.”

The QSA is an issue for all the candidates, but a particularly thorny one for Maldonado. In March he made a legal declaration (hyperlink to Maldonado declaration) stating he “would not have voted for the QSA” knowing what he does now about the attorneys’ other clients. In a later interview, he said the issues regarding the attorneys are “water under the bridge.” The district needs to resolve the environmental issues raised in the lawsuits, Maldonado said.

Concerns about the district’s management have been fed by some serious lapses in oversight:

-Internal audits last year found cost overruns on electric substation projects. One dated June 25, 2009 showed the Shields substation project had a cost overrun of $1,564,127. An audit dated Sept. 23, 2009 showed the Jackson substation project had a cost overrun of $2,579,830. District officials were unable to provide copies of the audits and a subsequent report.

In November 2009 the Coachella Valley Mosquito and Vector Control District sent the district a letter saying it had not received an energy bill in more than two years. Imperial district officials explained that when the vector district installed a solar system in June 2007 it became part of a new metering and billing system but the bills were not being processed. Vector district officials said they called nine times and still didn’t receive a bill. In October 2009 they received 27 invoices totaling $109,188.45. There were 31 commercial accounts that experienced similar billing problems. They ranged from six to 44 months behind in billing for a total unbilled amount of $612, 223.
An energy-hedging program implemented in 2005 was supposed to save the district money by locking in prices in advance on natural gas purchases. Instead, the district lost an estimated $53 million when employees in charge of purchases ignored policies on dollar limits and circumvented other oversight procedures. A subsequent investigation found they were engaged in market speculation that backfired when Hurricane Katrina made the market extremely volatile. An audit conducted by the firm KPMG in 2005 flagged those problems early on but administrators in charge of the hedging program never gave it to the board.
In 2005 the district board replaced its outside legal counsel with in-house attorneys. One of the new attorneys discovered that two of the outside attorneys –Carter and Orlando Foote – had been on the district’s health plan since 1969. Although executive staff members were aware of the arrangement, board members said they were not. The board removed them from the plan in January 2006. It’s not clear how much the district paid for their insurance coverage or how much in health expenses were paid for Foote, Carter and their wives over the years.

After the hedging problems became public, the district brought in new managers, including General Manager Brian Brady. The district also instituted a whistleblower policy in February of this year.

“We’re righting the ship,” Sanchez said.

In the coming months the board will be under pressure to resolve the QSA’s legal challenges. If the water transfers stop so will the revenue from those partnering agencies.

“That would put us in a real crunch,” Menvielle said. “Some people would like to see that happen. The Imperial Group would like to see the IID go belly up.”

While critics insist the district should negotiate a better deal, others are doubtful.

“There can be downsides to re-opening the deal – for everyone,” Sanchez said. “Every partner would like to see improvements to their part of the deal, but what would you have to give up?”