Reading this superbly researched and presented long article on the latest writhings of a monster from the west side, Westlands Water District, we were struck with our great good fortune to have Lloyd Carter, his dedication, hard work and great experience in following this story wherever it leads and telling it clearly. The latest twist is the involvement of the Brownstein law firm of Denver, a story Badlands touched on briefly in connection with the Oboma administration's selection of Ken Salazar (former Colorado state Attorney General and US Senator) over Rep. Raul Grijalva, D-AZ, for secretary of the Department of Interior.
Colorado and California water law, although it went in different directions, has common origins in gold mining. As water and all natural resources diminish, origins start protruding.
Once again, we are grateful to Carter for his huge and growing contribution to our understanding of our place.
Badlands Journal editorial board
Chronicles of the Hydraulic Brotherhood
How the West(lands) Was Won, a two-part series
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
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.
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.
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.