Tapping Into the Heartland : San Joaquin Farm’s Deal to Sell Liquid Assets to Southland Raises Fears of Another Water Grab

This is where Southern California has come to quench its unquenchable thirst--300 miles north of Los Angeles, straight over the Tehachapis and up the gut of the San Joaquin Valley to the dairy farm of John, Jess and Rusty Areias.

In the first of many water transfers from north to south under a 1992 federal reform law, the Metropolitan Water District has secured historic San Joaquin River rights from the Areias Dairy--32,000 acre-feet over the next 15 years, enough water to sustain 17,000 customers from Ventura to San Diego.

The $5.6-million deal--a windfall for Assemblyman Rusty Areias (D-San Jose) and his father, John, and uncle Jess--has stirred passions in this heartland, leaving many to cry “water grab” and “traitors among us.”

Once Southern California plants its spigot here, critics say, it is only a matter of time before more farmers and irrigation districts sell their water, and tumbleweeds and gopher snakes reclaim the land.

“MWD has swaggered in with their cash and political power and told us it’s either their way or the highway,” said Dee Swearingen, executive director of the San Joaquin River exchange contractors, of which Areias Dairy is a member. “They’re going to suck this valley dry so Los Angeles can grow more suburbs and swimming pools and golf courses all the way out to Palm Springs.”

The Areias deal has pitted cousin against cousin and farmer against farmer and raised the specter of the Owens Valley plunder--Los Angeles’ turn-of-the-century water grab that milked dry the fruit orchards of a distant plain and turned a cabal of San Fernando Valley developers into very rich men.

MWD officials confirm that the Areias transfer, which is expected to receive federal approval later this year, is the first of many water sales that they are negotiating in the Central Valley. The MWD needs a dozen similar transfers to reach its 15-year, 400,000-acre-foot goal for drought years and has committed $80 million for such purchases.

Since word broke this year of the Areias Dairy selling its $8-an-acre-foot water for $175 an acre-foot, the phone has not stopped ringing at the MWD. Farmers and water districts are lining up for a piece of the pie.

Even so, this is no replay of history, MWD officials argue. For one, the 1992 Central Valley Project Improvement Act, which paved the way for water marketing, prohibits wholesale transfers from one region to the other.

“This is not another Owens Valley,” said Ed Thornhill, the MWD’s official in charge of buying agricultural water. “We’re looking for a modest swing supply during drought years. We don’t want to own the Central Valley.”

Dan Beard, head of the U.S. Bureau of Reclamation, which must authorize the Areias transfer, supports water marketing as a way to add flexibility to a fixed state supply. But even he is concerned that water transfers could harm the economy of the Central Valley and promote more urban sprawl in Los Angeles that burdens the infrastructure.

“These are issues that (we) struggled with at the time the (Central Valley Project) reform was written,” said Beard, a former congressional staffer who shaped much of the 1992 law. “There was a sense of unease and a feeling that ‘well, let’s see how water marketing works.’ If it gets out of hand, we’ll put on the brakes.”

Hard feelings over divvying up California water were inevitable, perhaps. South of the Tehachapis it is argued that farmers hog 80% of the state’s developed water, much of it wasted on marginal land sprouting subsidized crops. North of the divide, growers argue that a farm economy responsible for one out of every 10 state jobs has been given short shrift. Because the valley sits exiled between Los Angeles and San Francisco, urban dwellers tend to forget where their food comes from.

The Central Valley Project reform was intended to fallow the marginal, salty farmland on the San Joaquin Valley’s vast westside and distribute the water savings to fish, wildlife and cities. It was a clear victory for Southern California. So much so that when the law was signed by President George Bush in November, 1992, Carl Boronkay, the MWD’s then-general manager, called farm-to-city water transfers a new reservoir for Los Angeles.

“It’s a new source of water,” he gushed. “We haven’t seen anything like it for a long time.”

It has taken nearly two years to complete the first transfer under the new law, which Areias, as a state legislator, had opposed. “When George Bush signed the bill, which came as a complete surprise to all of us, I took off my public policy hat and put on my family hat,” Areias said. “Milk prices have dropped 30% and it’s been darn tough for our family dairy the last three years.”

A 25% cut in the water supply because of drought did not help matters, Areias said, forcing the dairy to lay off 20 seasonal employees. One option was to sell the farm, which had been in the family for 70 years. In the end, Areias said, they decided to sell the water rights instead.

The water, instead of being delivered to the Areias Dairy, will be conveyed by the State Water Project to the MWD. Areias has received a $560,000 down payment from the MWD with the balance coming on delivery next year and in subsequent years.

“I know this transfer has ruffled some feathers,” he said. “But we’re going to use a lot of the money to construct a new dairy. This will keep my family in business. This will keep dollars in the community.”

Steve Sloan, who farms 3,000 acres nearby, is another grower who is talking to the MWD. Although he does not foresee selling anywhere near his entire supply to the big city, he favors small transfers during drought years.

“I think we can share some with the urban interests, but a lot of my fellow farmers don’t see it that way. You could get me killed saying I am meeting with MWD,” he chuckled. “You’ve heard the old adage--whiskey is for drinking and water is for fighting over.”

What irks some farmers, tractor dealers and agricultural chemical salesmen is the perception that the MWD has engaged in a divide-and-conquer campaign--the same tactics Los Angeles used 90 years ago in Owens Valley.

Rather than bargain upfront with the irrigation districts, they charge, the MWD negotiated with the Areias family and other farmers experiencing tough times.

“MWD knows the irrigation districts aren’t desperate to sell and can keep a throttle on the situation,” said John Fawcett, a farmer who sits on the board of the Central California Irrigation District. “So they go around our backs and pick off the weak and those who are going broke.

“Farmers are no different than anybody else. The almighty dollar speaks: ‘Geez, if I can make a buck like Areias, why not cash in.’ Once a few break from the pack, it’s over. We’ve lost control.”

The MWD’s Thornhill said the irrigation districts were unwilling to deal with him until the Areias transfer became known. In recent months he has met with Central California Irrigation District officials and other districts to negotiate 20% transfers from the entire district supply rather than from individual farmers selling out 100%.

“We’re not trying to target the weak. ‘Hi, we understand you’re having a tough time. Do you want to sell your water?,’ ” he said. “That’s not the way we operate. We’re waiting for people to come to us.”

One of the concerns over the Areias transfer is that the dairy and 1,800 acres of surrounding cotton and alfalfa fields are good land--not the marginal kind targeted by the reform law.

Areias plans to continue growing crops by pumping ground water. Critics say this will speed up the depletion of the aquifer, which took centuries of snowmelt to build. And it will add deadly salts to the land because the water beneath the Areias Dairy is much saltier than the Central Valley Project river water he is selling to the MWD.

In recent months, according to irrigation districts, scores of wells have been drilled in the valley by farmers hoping to sell water to the MWD and other urban interests. Irrigation district officials believe that the farmers may be trying to circumvent a provision in the new law that prohibits selling Central Valley Project river water and then using ground water to make up the difference.

The law allows farmers selling surface water to irrigate crops with only the amount of ground water they have taken in years past. By punching new wells and pumping furiously over the next year or two, these farmers are inflating their needs.

Los Banos dairy farmer David Silva, a distant cousin of Areias, said he and other farmers opposed to the transfer will be watching closely to make sure that Areias and other farmers do not deplete the aquifer.

“Neighbors will be spying on neighbors and cousins on cousins. I know it sounds crazy, but that’s what MWD has forced us to do.”

MWD’s Thornhill said such fear is unwarranted. “We’re going to put together a ground water monitoring plan. . . . We will not allow an overdraft.”

How much water will be transferred in the end is anyone’s guess. Although the law seems to set a 20% cap on the amount of water that can be sold from a single irrigation district’s supply, the ceiling is soft. The law states that no more than 20% of the district’s water supply can be sold by individual farmers without the district’s approval. But the 20% figure is not a ceiling because a district can agree to sell its entire supply. At least one district is negotiating with the MWD to do just that.

And the MWD is not the only hungry buyer beating tracks to the San Joaquin Valley. Northern California cities have been here to negotiate their own drought-year transfers.

“We don’t want to sell to the city, but we’ve been confronted by a situation that’s outside our control,” said Mike Porter, general manager of the Central California Irrigation District. “So we’ve decided to meet with MWD and others and bargain on behalf of our farmers.

“This way, we can keep a big farmer from selling out his entire supply. The farmer still gets the money. But we as a district decide how much he sells and where it should end.”

Richard Cotta, head of the local dairymen’s cooperative, understands this logic, but he still wants the water to stay here. If agricultural water must go to urban interests, he said, why not cities within the San Joaquin Valley?

“What happens is the region with the biggest checkbook--and not the biggest need--ends up with the water,” Cotta said. “And right now, no one has a bigger checkbook than MWD.”