How the Westlands Was Won a two part series
Breaking
News May 10, 2012
http://www.stewwebb.com/breaking_news.htm
Norman
Brownstein Former CIA Council to George HW Bush when Bush was CIA Director
More
on Norman Brownstein in link below from Stew Webb
How the West(lands) Was Won, a two-part series
http://www.lloydgcarter.com/content/120329554_how-westlands-was-won-a-two-part-series
The Chronicles of the Hydraulic Brotherhood
Lloyd G. Carter, former UPI and Fresno Bee reporter, has been writing about
California water issues for more than 35 years. He is President of the
California Save Our Streams Council. He is also a board member of the
Underground Gardens Conservancy and host of a monthly radio show on KFCF, 88.1
FM in Fresno. This is his personal blog site and contains archives of his news career as well as current articles, radio
commentaries, and random thoughts.
By
Lloyd 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.
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.
---------------
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.
How the West
(lands) was won, Part Two
http://www.lloydgcarter.com/content/120509560_how-westlands-was-won-part-two
By
Lloyd Carter
If there are unwritten charter memberships in
the Hydraulic Brotherhood, the Westlands Water
District and the Denver, Colorado law firm of Brownstein Hyatt Farber Schreck
undoubtedly have honored places. It's not just that Westlands,
a public agency, owns a $31 million world class trout fishing resort, which it
makes available to its growers at $4,200 to $7,000 a week. It's more the fact
that Westlands, the largest (in acres not farmers)
and most politically connected federal irrigation district in America, and
Brownstein, one of the largest and most politically connected water
law/lobbying firms in the nation, are partnering in Westlands'
billion dollar lawsuit against the government.
And that bodes ill for the American taxpayers
and the environment.
In the Brotherhood, who you know and who you
pay is more important than what you know. And the lawyers, like undertakers,
always get paid, no matter which side they represent. Westlands'
600 growers are hoping the legendary clout of Brownstein will lead
them to the promised land of guaranteed water supplies, even if it overturns
state water law and senior water rights, allows Westlands
to shove its way to the front of the bucket line, and costs California its
priceless San Francisco Bay-Delta.
Over the last two presidential administrations,
Brownstein has played a pivotal "fixer" role in guiding
local, state, and national water policy. George W. Bush's Interior Secretary,
Gale Norton, was a partner at Brownstein. Ken Salazar, the current
Interior Secretary, owes his political career to Brownstein, which
managed his campaigns for Colorado State Attorney General and the U.S. Senate.
While it is ostensibly a Democratic
Party-leaning law/lobbying firm (Norman Brownstein and named partner Steve
Farber are Democrat activists), Brownstein does not hesitate to hire
and promote conservative Republican lawyers/lobbyists, occasionally backs
Republican candidates (for example, Republican Sen. Richard Lugar of Indiana),
and gladly represents Republican clients.
The firm recently hired long-time Republican
lobbyist Marc Lampkin, who was deputy campaign
manager for the Bush/Cheney campaign in 2000 and prior to that was general
counsel to then-House Republican Conference Chairman (and now Speaker) John
Boehner. Lampkin is still a member of "Team
Boehner," which advises the Speaker on Republican Party issues. The Hill,
the congressional newspaper, has named Lampkin as one
of the top 50 lobbyists in America. In making the announcement of Lampkin's hire, Brownstein spokesman said "As
a bipartisan firm [emphasis added] we are committed to adding talent to our
team across the political spectrum." Lobbyists, you see, do not
necessarily have party loyalty.
Another Brownstein partner, David L.
Bernhardt, was Interior's top attorney, the Solicitor, during the latter Bush
years. What is Bernhardt doing now? He is lobbying in Congress and at Interior
for, among other clients, Westlands, which has
shelled out $220,000 recently to Brownstein in lobbying fees alone. The legal
bills are expected to be astronomical. Bernhardt is also one of the
Brownstein attorneys who brought a lawsuit for Westlands
in January, 2012, in the U.S. Court of Claims in Washington, D.C., claiming the
failure of the U.S. Bureau of Reclamation to provide drainage for Westlands growers has cost the water district $1 billion in
damages.
NORMAN BROWNSTEIN
All discussion of the Brownstein law
firm begins with Norman Brownstein, who arrived in Denver with his mother as a
boy, according to Denver magazine 5280. HIs mother died from breast cancer in
1957, when Norman was 13, and he moved in with a Jewish family named Kamlet. The Kamlets' son, Jay,
was born in 1963. Jay Kamlet would later grow up like
his big "brother" to become a lawyer and work for the Brownstein firm
before launching his own law firm. It was in the fifth grade when Brownstein
met Steve Farber. They both attended the University of Colorado law school and
when they graduated in 1968. With another boyhood friend, Jack Hyatt, they
formed the law firm of Brownstein Hyatt and Farber. The naming order in the
firm title was determined by drawing straws.
According to the Brownstein website,
the firm merged with Las Vegas-based Schreck Brignone (picking up clients including Hotel magnate Steve
Winn and other major casinos) to form Brownstein Hyatt Farber Schreck in 2007. In January 2008 Brownstein also absorbed
California-based Hatch and Parent, which specialized in public agency and water
law. This merger gave Brownstein new clients such as Nestle Waters North
America, the San Diego County Water Authority, and the cities of Fresno and
Oxnard. The Brownstein website claims it is now the "premier
water law and policy practice in the West." The Brownstein website says in
the mid 1990s Brownstein attorneys Steve Amerikaner,
Susan Petrovich, and Gary Kvistad
joined Stanley Hatch of Hatch and Parent in pushing through major changes in
the State Water Project and that Hatch, now retired, "was the lead urban
negotiator in a process that resulted in the 'Monterey Amendments' to the State
Water contract, which in turn, resulted in a potential reduction in future
State Water Project costs to California's urban users of over $1.5
billion." The website did not say California environmentalists think the
Monterey settlement privatized public water supplies and allowed
"farmers" like Beverly Hills billionaire Stewart Resnick
to gain private control of a former public water bank. Regarding the alleged
$1.5 billion in savings, the altered State Water Project contracts gave up the
urban ratepayer guarantee to water during times of shortage. For years Los
Angeles ratepayers paid water rates to guarantee this water during times of
shortage benefiting Kern County agricultural interests with cheap water. Now
that guarantee is gone, negotiated away without public notification or input.
The Brownstein firm continues to
grow. Forty-four years from the firm's founding, which saw it grow nationwide
and branch into congressional lobbying, Brownstein now employs 260
lawyers in several states and is ranked fifth by Roll Call in Washington, D.C.
lobbying groups, raking in $22 million last year. The firm jumped from 18th to
5th in the Roll Call ranking between 2006 and 2009, during the Bush years, when
former firm partner Gale Norton was running the Interior Department.
The National Law Journal named Norman
Brownstein, who is chairman of the Brownstein board of directors, one
of the “100 Most Influential Lawyers in America” in 1997. Heavily involved in
community affairs, Brownstein is involved in many activities on behalf of the
University of Colorado and the American Israel Public Affairs Committee
(AIPAC), where he is currently vice president. He is a director of National
Jewish Health and a trustee of the Simon Wiesenthal Center. Brownstein is a
past presidential appointee of the U.S. Holocaust Memorial Council (1996-2006).
He serves on the board of directors of several corporations.
The late Sen. Ted Kennedy, who provided an
internship for Brownstein's younger son Drew (nicknamed Bo), called Norman
Brownstein the Senate's "101st senator." The Brownstein firm
now has offices in Denver, Washington DC, New Mexico, Nevada, Arizona, and five
California cities. The Denver Post calls Norman Brownstein a "Washington
power broker."
Despite the enormous influence of his law
firm, the political and courtroom successes over four plus decades, and his
considerable wealth, Norman Brownstein has undoubtedly been disheartened
recently over scandals involving his two sons.
On January 11, 2012, Brownstein's younger
son, Drew K. "Bo" Brownstein, 36, was sentenced in New York City to a
sentence of a year and a day in prison for making a $5 million profit off of
insider trading information. The 88-year-old federal judge, Robert Patterson, a
1988 Ronald Reagan appointee who went on senior status 14 years ago, chastised
the defendant for succumbing to greed but imposed only five percent of the
maximum penalty. The defense had asked for probation.
Bo Brownstein entered a guilty plea following
a plea bargain last October for making illegal trades on confidential information
acquired in April 2010 about a pending purchase of Mariner Energy by Apache
Corporation. Brownstein had been tipped by a close friend, Drew Peterson, who
learned about the pending Mariner acquisition from his father, H. Clayton
Peterson, a prominent Denver accountant and Mariner director. Both Petersons
were charged with insider trading and pled out, implicating Brownstein.
The elder Peterson received three months
house arrest and probation for his plea and ordered to repay $400,000. The
younger Peterson also received probation and was ordered to repay $150,000.
Bo Brownstein also was ordered to serve three
years probation following his arrest, including six months' home confinement,
and 500 hours of community service. The Securities and Exchange Commission will
be seeking restitution of the $5 million in profits Brownstein, operating
through his Big 5 Asset Management Firm, a hedge fund, allegedly made on the
insider trading. The federal complaint against him said he used accounts in the
name of relatives to purchase Mariner stock and options before the stock value
jumped when the Apache acquisition became public.
The plea bargain called for no more than 43
months in prison for a crime which carries a maximum penalty of 20 years. Commenters on the article at the New York and Denver
newspaper websites said he received the extra day on the one year sentence
because it would make him eligible for early release. Had he been sentenced to
one year exactly he would have had to serve the full year.
The Big 5 hedge fund, which included a Cayman Islands account, since has been
dissolved.
The Denver Post, quoting an unnamed source,
said Norman Brownstein was unaware his son had made a major purchase of stock
in the father's name without his knowledge. The New York Times, without
reference to any source, simply reported that Bo Brownstein "bought stock
for his family, including his father, without their knowledge." How does
the New York Times know this? Why didn't the Denver Post report how its source
knew the stock purchases were made "without the knowledge of family members." Was it an official source? Were Norman
Brownstein and other family numbers questioned by the FBI and federal
prosecutors and then cleared of possible suspicion? How else, then, could the
feds know Norman Brownstein was not involved? When a son makes very large
purchases in his wealthy father's name isn't he likely to inform his father in
advance. Did Bo Brownstein keep secret from his father that he had made a quick
five million for himself, family members, and his clients?
But in fairness, under the arrangement with
Big 5, Norman Brownstein and other family members gave Bo Brownstein
discretionary authority to make stock purchases without their knowledge, and Bo
was under no duty to inform them in advance of such purchases. Since he
obviously knew he was breaking the law he may very well have kept the deal
secret from his father and other family members. It is undetermined how he
explained the fat profits to his father.
Norman Brownstein had no comment to the media
at the time of his son's plea or sentencing on whether he was aware of his
son's Mariner stock purchases or that Bo was operating on illegal insider
information in making stock purchases under his father's account. There were
press reports that Norman Brownstein wanted his son Bo to do his community
service at the Jewish Hospital in Denver. Bo was represented at sentencing by
well known Wall Street defense attorney Gary P. Naftalis.
It was not reported if Bo or his father paid Naftalis'
fee.
There were lots of angry comments at the two
newspapers' websites about how a rich boy can steal five million dollars, claim
he was remorseful, and get away with a slap on the wrist of probably only a few
months prison time.
Then, in late April, Norman Brownstein's
other son, Chad, further tarnished the family name. Chad had auctioned off a
month-long paid internship in the office of Arkansas U.S. Senator Mark Pryor, a
Democrat, as part of a fundraising campaign for a synagogue in Los Angeles. The
only problem was that Chad had never received approval from Sen. Pryor for the
internship. And the successful bidder in the charity auction was none other
than Joe Francis, founder of the Girls Gone Wild mail order videotapes that became
part of America's soft porn culture. Francis, thinking he had won the auction,
said he would use the Senate internship as a prize on his TV reality show, The
Search for the Hottest Girl in America.
When word got back to Sen. Pryor, who thought
it was all a hoax or a scam by Joe Francis, Chad
Brownstein stepped forward and publicly apologized to the Senator. According to
www.TheWashingtonian.com (Where you can read
Chad's apology letter to Senator Pryor), the Synagogue returned the money to
Joe Francis. The apology letter said Norman Brownstein had nothing to do with
his son's stunt.
However, at a Denver community website, www.blogs.westword.com, which ran a jocular
article on the Brownstein sons' shenanigans, a commentater
named John Balzar stated:
"Brownstein is Pryor's favorite bagman.
Pryor received millions from him. Pryor himself visited the charity temple with
Brownstein before the
seedy deal was known. There has been nothing but
obfuscation, lies and cover-ups from Pryor since the story broke about the
pornography
aspect. The smell of guilt is leaking out of Washington and
stinking up the country."
Norman Brownstein was involved in another
ethical dilemma a decade ago when he served on the board of directors of Global
Crossing, a telecommunications company that went bankrupt. Brownstein's older
son Chad had become involved as a partner in a company heavily financed by
Global Crossing's chairman Gary Winick. In newspaper
articles, corporate ethics experts said Global Crossing's board members had
several conflicts of interest and board member Norman Brownstein, who had a
fiduciary duty to Global Crossing, should not have been involved in business
dealings with a company in which his son was a partner.
STEVE FARBER
In stark contrast to Norman Brownstein's
misfortunes with his sons, the oldest of Steve Farber's three sons, Gregg, literally
saved his father's life when he donated a kidney in 2003 to the older Farber,
who was facing certain death from kidney failure.
Blacktie is a national company headquartered in Denver,
Colorado, that, according to its website, www.blacktie-colorado.com, provides its
members with "proven solutions for raising money, lowering costs and
bringing people together."
According to the Blacktie
website, Brownstein founding partner and president
Steve Farber was co-chair and a member of the executive committee of the Host
Committee for the 2008 Democratic National Convention and was key in bringing
the convention back to Denver after 100 years. (Denver hosted
the 1908 Democratic Convention.) He is active in Denver and Colorado
civic affairs and non-profit affairs.
The Blacktie
website gushes:
"Voted one of the most influential men
in Denver year after year, with plenty of nice guy charm and charisma, Steve
Farber has a sense of fair play and dependability,
and he has found his own rhythm that has exalted him in
his industry for many successful years. Steve Farber is a man with the Midas
touch who has his finger on the
pulse of Denver. What Farber touches, seems to turn to
gold. Steve says part of his success is always staying focused on what needs to
be done."
In an interview with the Blacktie
website, Farber said Norm Brownstein was the most influential person in his
professional life.
Not everyone sees Farber in such glowing
terms.
Alison "Sunny" Maynard is a
Colorado attorney who ran for the Colorado Attorney General's post in 2002 on
the Green Party ticket against current Interior Secretary Ken Salazar.
Salazar's campaign for state attorney general and his 2004 campaign for
Colorado U.S. Senator were managed by Farber. This is what Maynard says about
Salazar and Farber on her website:
"Salazar's willingness to be controlled
by the powerful interests, and susceptibility to flattery, led to the law firm
Brownstein, Hyatt, Farber, Schreck adopting
him as its favorite son. It ran Ken Salazar's campaigns
for Attorney General in 2002, as well as the Senate in 2004. I mean, it ran
them. So its attorneys got
their salaries to perform functions in the campaigns which
one would think should be filled by volunteers. There was never any financial
disclosure about the
value of the services provided by this law firm to these
campaigns, however. A partner in this firm, Steve Farber, is responsible for
bringing the Democratic
National Convention to
Denver in 2008, where Obama received the nomination of his party (anointment,
really). My take is that Obama
repaid the favor by
letting Farber fill the top slots in Interior, since they are
all Coloradans. Naturally, he picked Ken Salazar, who has spent his life in
public office doing favors
for this law firm and its developer clients, to be
Secretary. Farber picked his former law partner Tom Strickland (who was,
conveniently, U.S. Attorney when
the Summitville [Mine] case was in court, more insurance
that there would be no prosecutions) as the Deputy Interior Secretary, and
picked the managing
partner of Holland & Hart--and formerly Shell Oil's water
attorney--Anne Castle as Assistant Secretary of Interior for Water and Science.
And now Alan Gilbert
is also, once again, at Salazar's side. Ken did nothing
but flack for real estate developers in the official positions he held in
Colorado--and always, always was
using his powers to do favors for the Brownstein, Hyatt,
Farber law firm and its clients. Steve Farber even bragged, when Salazar was a
Senator, about calling
Ken up on his cell phone to discuss stuff.
How many people have a U.S. senator's cell phone number?"
Maynard is highly critical of the New York Times,
Washington Post, and Denver Post, along with major environmental groups, which
she says have given Salazar an environmental patina he does not deserve. She
quotes the Post as simplifying Salazar's web of connections and political debts
by bare bones reporting that before he became Interior Secretary he spent
"several decades of work in government, where he focused on land-use,
water, and natural-resources issues." She contends Salazar has never
actually litigated a case through trial.
Brownstein attorney Tom Strickland was Salazar's chief of staff
until February of 2011 when, according to the Denver Post, he "resigned
from Interior in February after presiding over one of the worst environmental
disasters in U.S. history after the Deepwater Horizon oil rig exploded April
20, 2010, killing 11 people and spewing about 200 million gallons of crude into
the Gulf of Mexico." This was the BP oil spill.
A few months later, Strickland went to work
for a law firm defending BP but said he would not participate in the Gulf spill
litigation.
Farber's clout with
Salazar, and Brownstein's label as the "101st Senator," are
exactly the kind of influence peddling that the Westlands
Water District is looking for, of course.
In its billion dollar lawsuit against the
U.S. Bureau of Reclamation for failure to provide drainage for the
selenium-laced soils in western Fresno and Kings County in the San Joaquin
Valley where the 617,000 irrigation district is located, Westlands
officials are hoping the two "power broker" attorneys will justify
the hundreds of thousands of dollars the water district is paying them for
lobbying and legal representation.
Despite two decades of attempting to overturn
superior water rights held by older California irrigation districts, Westlands has had little luck in Fresno's U.S. District
Court in getting to the front of the bucket line.
The litigious water district has also had an
off and on relationship with Sen. Dianne Feinstein, a seeming San Francisco
liberal with pro-environmental leanings but in fact all too willing to aid Westlands in its insatiable thirst for water. Feinstein,
who just coincidentally owns a home in Colorado, purportedly has known
Brownstein and Farber for decades.
The Brownstein firm is expected to
smooth out the Westlands-Feinstein relationship and
make both sides happy. On April 19, the law firm held a breakfast with Sen.
Feinstein at the firm's Washington, D.C. office. There was no press coverage of
the event. Attendance cost $1,000 with "co-hosts" shelling out $2,500
and "hosts" paying $5,000. Presumably, Feinstein carted off a pile of
cash and firm lobbyists got to pitch their causes to her. Earlier that week,
Feinstein was feted at two agribusiness fundraisers in Fresno, one hosted by Westlands, generating another pile of cash. At those
events, she pledged support for raising Shasta Dam, even though such an action
would flood out a world class trout fishery (including the trout club Westlands owns) as well as Native American sacred grounds.
She also announced, for the first time in American history, that she supported
removing Wild and Scenic protections for the Merced River to allow the raising
of the Exchequer Dam and flooding of the river. This is what they call
democracy in action in Washington, D.C.
During the same time period she was filling
her pockets at the Brownstein firm breakfast fund-raiser, Sen.
Feinstein was floating an amendment rider to a Senate appropriations bill
which, in theory, would permit Westlands to get more
water from the already overdrafted Delta.
But Westlands' real
hopes in the billion dollar drainage suit is a repeat of what Brownstein
attorneys in the Bush Administration worked out for a small group of individual
Westlands farmers a decade ago. Those individual
growers, including some of the biggest family names in San Joaquin Valley
farming (Russell Giffens' descendants, the Wolfsen family and the family of former California
Secretary of State Bill Jones, had sued Westlands, as
well as the Bureau of Reclamation, for failure to provide a drainage system for
its problematic soils that had accumulated salts and selenium.
Former federal Judge Oliver Wanger, who presided over an October, 24, 2002 pre-trial
order for partial summary judgment in the growers’ suit, noted that there was
no dispute the growers continued to irrigate their lands knowing “that their
lands would be damaged without drainage.”
Wanger noted multiple issues to be addressed at trial,
including "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."
Given the exorbitant amounts of money
American taxpayers spent over the decades to deliver water to a handful of
growers farming an alkali desert laced with the trace element selenium
(two-headed fish deformed by selenium dumping from a fertilizer mine in Idaho
comes to mind) the Westlands would have had a very
hard time finding a sympathetic jury. 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 Gale Norton came to the rescue of the Westlands district when she had Assistant Secretary for
Water and Science Bennett Raley nix the deal and
settle. Raley also gained the support of former
Interior Solicitor and Deputy Solicitor (and Brownstein alumni) David
Bernhardt who signed off on the $140 million deal in which Westlands
acquired some salted up lands and the Interior Department (i.e. the taxpayers)
footed most of the bill. And, of course, Bernhard is now lobbying for Westlands. Bernhardt was also a Bush administration point
man for oil drilling in the Arctic National Wildlife Refuge. In 2001, he
prepared congressional testimony on Arctic drilling that dismissed warnings
from the government's own scientists and relied on reports funded by BP. In his
work at Brownstein, before he joined Interior, Bernhardt lobbied Congress and
federal administrative agencies on behalf of Delta Petroleum Corp.,
TIMET-Titanium Metals Corp., NL Industries (an international chemical company)
and the Shaw Group (maker of piping for oil companies and power plants),
according to a Mother Jones report, ''The Ungreening
of America.''
During this period, Bernhardt worked with
Interior Assistant Secretary for Water and Science Jason Peltier,
who now just happens to serve as Deputy General Manager of the Westlands Water District. A March 3, 2006, New York Times
article questioned whether Peltier, who had
previously served as a lobbyist for California federal water project
contractors, had a conflict of interest in delving into matters involving Westlands.
The Times reported:
Mr. Peltier, in an
interview, said that when he first came to the Bush administration in 2001, he recused himself from some decisions involving the
landowners he used to represent, but he said he was granted an
exemption because of his expertise in California water issues. "I was
given dispensation
early on because of my knowledge of these issues," he
said. He added, "I have not had the strict bar of separation on certain
issues, but I've been very
mindful of the appearance of a conflict and operated
accordingly." Interior Department officials said Mr. Peltier,
who is the chief policy adviser on California
water issues, had cleared his activities with the ethics
office.
Now, Peltier and
Bernhardt are openly operating on the same team again.
The judge assigned to the Westlands
case in the U.S. Court of Federal Claims, is Chief Judge Emily C. Hewitt, a
Harvard graduate appointee of former President Bill Clinton and an openly gay
woman. She was appointed Chief Judge by President Obama in 2009. She is also an
Episcopalian minister. She might not be as sympathetic to Westlands
as the growers and Brownstein lobbyists would like.
Thus, a settlement, like the one engineered
in 2002, would be much more preferable to Westlands.
The water district, in negotiations with the Bureau of Reclamation over a $2.7
billion "solution" to the Westlands
drainage problem, has understandably refused to sign off on the plan, which
makes no economic sense at all: $2.7 billion for 600 growers?
At one point Westlands,
bolstered by the 2002 settlement and its implications, said that in exchange
for taking over resolution of drainage problem, the U.S. should forgive over
$450 million the water district still owes the federal taxpayers for
construction of the Westlands water delivery system,
including San Luis Reservoir. In addition, Westlands'
600 growers would also like a settlement that guarantees them an annual water supply
sufficient to meet the needs of a city of 10 million people - 1 million
acre-feet.
If Westlands can't
solve the drainage problem and just salts up the rest of the irrigible acreage, it could simply sell its water supply to
Los Angeles, although it denies any current intention to do so. Westlands' current annual contracts make water available to
the district only after the needs of senior water rights holders are met.
It remains to be seen if a settlement will be
reached. Congress is probably not going to appropriate $1 billion to pay the Westlands growers the damages they claim they suffered.
However, debt forgiveness might be more manageable. These lobbyists are
endlessly creative. Brownstein, Farber, Bernhardt and Salazar, along with
timely congressional aid from Feinstein and others, could make it happen.
Whether President Obama has a clue about what goes on at Interior and Westlands is dependent upon whether Secretary Salazar is
more loyal to the president or to Brownstein. It would be nice if Salazar
could explain to the president why continued irrigation of a farming district
located on alkali soils with no drainage solution is good public policy.
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