Modoc Water War Boils Over

On the outskirts of town, where tumbleweeds strain against barbed wire and sagebrush sprouts on the roadside, a sign reads, “Where the West still lives.” One member of the Modoc County board of supervisors shoes horses for a living. Cowboy hats, boots and Wrangler jeans are the get-up of choice.

But a dust-up in this high desert town of 3,200 has revived the Old West’s mean side, with death threats, fistfights and a sheriff confiscating guns.

At the heart of the nasty dispute is water -- in this case, Rattlesnake Creek.

For more than a dozen years, the stream meant a good life for ranchers Lawrence and Sandi Ray. It ran across their land, watering their cattle and the hay grown to feed them. They had moved from the Sacramento Valley seeking cheap water, and they found plenty of it at their Rattlesnake Creek Ranch.

The trouble started Thanksgiving 2000, when the Rays came upon two of their cows struggling in mud. They got one to safety, but the other animal didn’t fare so well.

After investigating, Lawrence Ray blamed the local water master for opening their dam without their permission, letting water flow downstream and leaving treacherous muddy banks.

The Rays nursed the pregnant cow for 10 days, then, realizing it wouldn’t survive, called the sheriff to take photographs and shot the animal in the head. They demanded $800 in compensation.

The Hot Spring Valley Irrigation District wouldn’t pay, saying it was simply preparing the Rays’ dam for winter when the flow was changed. When the Rays threatened to sue, the district struck first, going to court and claiming ownership of the dam. The Rays countersued.

In the course of their suit, the Rays discovered the district was selling water to a hydroelectric plant and they found canceled checks showing district officials got paid by the power company.

The three-year fight over the small stream has sadly illustrated the West’s bitter water wars. As it progressed, the irrigation district’s reservoir nearly ran dry, a grand jury found the district rife with problems, and emotions have been worn raw in Modoc County.

“I wasn’t a very hateful person ‘til I moved up here,” Lawrence Ray says now. “But Modoc is a tough, tough place.”

As California copes with growth expected to bloat the state from 35 million to 50 million people in 20 years, the population in its third-smallest county has shrunk to fewer than 10,000.

Changes in federal logging policies wiped out the local timber industry, closing several sawmills. One railroad pulled up tracks leading to town.

As in much of the Golden State’s interior, the land is dry and dusty much of the year. But precious spring runoff flows from Devil’s Garden into Rattlesnake Creek.

Around the turn of the last century, local ranchers who watched Rattlesnake Creek go dry in the summer recognized the value of storing spring rain. They pooled resources to form Hot Spring Valley Irrigation District, and the state let them create the Big Sage Reservoir; the dam was completed in 1921.

The district was licensed to store water from October through April and to release it for irrigation, stock and wildlife from May through September.

But the Rays noticed something odd. Each fall for three years, large quantities of water mysteriously flowed down the Rattlesnake from the Big Sage and swamped their pasture. This was after the irrigation season, when nothing was being grown.

When the Rays asked about it, they were told the district was making good on a settlement with Pacific Gas & Electric, which ran a power plant 75 miles downstream on the Pit River. PG&E; had filed a claim against several water districts, contending they crippled power plants on the lower Pit River by holding too much water upstream.

A Solution in Water

The drawn-out dispute, finally settled with the fall-release compromise, left Hot Spring with $50,000 in legal and engineering bills and just $5.16 in the bank, according to court papers.

The district needed to raise cash -- and it found a way.

Down the Pit River between Hot Spring Valley and PG&E;’s powerhouses, the Muck Valley Hydroelectric Project churns about 30 megawatts of power. District water master Joseph Battram arranged a deal between the district and Muck Valley’s owner, Idaho-based Malacha Hydro Limited Partnership.

Malacha would pay for use of the water en route to PG&E.; Hot Spring board members “could not believe the district’s good fortune,” Battram said in court papers. Battram and Malacha did not return several phone calls seeking further comment.

The water-sharing had grown complex, and this led to questions, especially as locals learned that checks totaling about $560,000 were paid to the district in 1998 and 1999. Malacha, through a subsidiary called Big Valley Ranches, also paid three Hot Spring board members to work on dam improvements or release water from their own dams.

The payments to the district permitted water-rate reductions, and the payments to individuals represented “a great little windfall ... for the ranchers who were struggling to make ends meet,” said Willy Hagge, board president at the time.

Hagge was paid $15,000, and two other board members received a total of $25,000. Battram received at least $41,000, according to canceled checks from Big Valley Ranches.

But not everyone was happy. The Rays, through their lawyer, said water belonging to all district members was being released from the Big Sage reservoir -- and all should be compensated, not a few individual ranchers.

Water has dominated Western politics and commerce since the first settlers rolled across the Great Plains.

Dams went up to capture water, prevent floods and provide power. Farmers fought to keep their water as cities’ demand grew. Enormous diversions keep metropolises such as Los Angeles from going thirsty. Indian tribes, environmentalists, farmers and the federal government have battled over rivers.

The complex water code boils down to a few basic principles. Among them: You can’t steal someone’s water, and you can’t easily sell it downriver.

“When I was a kid I remember the old-timers saying you just don’t sell water,” said Modoc County rancher John Gilstrap. “It’s not something you can take to the bank. When they started selling water it started snowballing, and here we are.”

Lawsuits, Charges Fly

Besides filing countersuits over the cow and the dam in state court, the Rays accused Battram, Malacha and Big Valley Ranches in federal court of racketeering for allegedly conspiring to take water from the district for power generation.

All the parties have denied the charges.

The Rays’ complaints prompted investigations by the State Water Resources Control Board and the Modoc County grand jury.

“The Rays feel that by going the route that they’re taking perhaps they can weaken the resolve of the irrigation board, and all it has done is strengthen our resolve,” Hagge said.

Sandi Ray said she and her husband will not give up. “There’s a time when you have to make a stand and this is ours,” she said. “Until we lose our ranch we’re fighting it.”

Lawrence Ray, a short, stocky, balding man with a ruddy face, beefy hands and a hot temper, said he has threatened to kill Battram if he comes on his property and was charged last year with three counts of making terrorist threats. The sheriff ordered Ray to get rid of his collection of guns and confiscated two remaining weapons.

Battram left his job on a workers’ compensation claim because of the stress, Hagge said.

At the district’s annual meeting last year, Ray stood up to denounce the board and was shouted down by Pete Carey, a rancher paid by Big Valley Ranches for releasing water.

Ray suggested they go outside to settle things. Before he could get to the door, Ray says, he was on the floor being kicked and punched. He ended up in the hospital.

Ray and Carey were both put on probation for disturbing the peace. Ray has since filed a personal injury lawsuit against Carey.

The State Water Resources Control Board recently ended a 2 1/2-year investigation by ordering the Hot Spring Valley Irrigation District to stop the releases to PG&E; and Malacha.

The district water storage license permitted releases only for irrigation, wildlife or stock water. The fall releases to the power companies may have depleted the reservoir, the board concluded.

The state found no evidence to support the district’s contention that it owned the Rays’ dam, the claim that started the legal spat.

The Modoc County grand jury, meanwhile, concluded that the district breached state and county competitive bidding policies and that board members violated conflict-of-interest laws.

Meanwhile, California Atty. Gen. Bill Lockyer ruled that a complaint by the Rays against Hagge for simultaneously holding two public offices -- county supervisor and water district member -- could go ahead. Hagge resigned from the water district board three days later.

Since then, Hagge lost his seat on the board of supervisors to a rancher who made a campaign issue of Hagge’s water district dealings.

Pyrrhic Victories

There was a time when Lawrence Ray taunted Hagge by saying, “That $800 cow looks pretty cheap now.”

That time has long passed.

In December, the Rays sold their 973 head of cattle to help pay their legal bills, which exceed $150,000.

Cows continue to graze on the pasture surrounding the creek, but they belong to someone leasing the land while the Rays try to sell Rattlesnake Creek Ranch.

So far, the only interested buyer shied away when he learned of the water dispute.