[env-trinity] Washington Post 4 11 10

Sun Apr 11 15:41:32 PDT 2010

LA billionaires sued over Calif. water sales

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PHOTOS

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In this March 30, 2010 photo, pistachio nuts are displayed at the
headquarters of Primex International Trading Corp. in Los Angeles. Ali Amin,
a Persian immigrant who owns a processing plant, filed a suit last week in
Fresno County Superior Court against Stewart and Lynda Resnick, claiming
that they violated California public utilities laws because they turned a
profit by selling water to farmers who weren't members of their
Bakersfield-based water company, Westside Mutual Water Co. (AP Photo/Damian
Dovarganes)

In this March 30, 2010 photo, pistachio nuts are displayed at the
headquarters of Primex International Trading Corp. in Los Angeles. Ali Amin,
a Persian immigrant who owns a processing plant, filed a suit last week in
Fresno County Superior Court against Stewart and Lynda Resnick, claiming
that they violated California public utilities laws because they turned a
profit by selling water to farmers who weren't members of their
Bakersfield-based water company, Westside Mutual Water Co. (AP Photo/Damian
Dovarganes) (Damian Dovarganes - AP) 

In this March. 30, 2010 photo, Primex International Trading Corp. owner, Ali
Amin, poses at his international nut trading company headquarters in Los
Angeles. Amin, a Persian immigrant who owns a processing plant, filed a suit
last week in Fresno County Superior Court claiming that Stewart and Lynda
Resnick violated California public utilities laws because they turned a
profit by selling water to farmers who weren't members of their
Bakersfield-based water company, Westside Mutual Water Co. (AP Photo/Damian
Dovarganes)

In this March. 30, 2010 photo, Primex International Trading Corp. owner, Ali
Amin, poses at his international nut trading company headquarters in Los
Angeles. Amin, a Persian immigrant who owns a processing plant, filed a suit
last week in Fresno County Superior Court claiming that Stewart and Lynda
Resnick violated California public utilities laws because they turned a
profit by selling water to farmers who weren't members of their
Bakersfield-based water company, Westside Mutual Water Co. (AP Photo/Damian
Dovarganes) (Damian Dovarganes - AP) 

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By GARANCE BURKE

The Associated Press 
Sunday, April 11, 2010; 12:43 AM 

FRESNO, Calif. -- They grew their fortune in the California sun, turning
pedestrian fruits and nuts into a vast and varied empire that secured their
place in Hollywood. 

Stewart and Lynda Resnick's flashy bottles of Fiji Water and POM Wonderful
are now coveted across the globe. Their donations keep the lights on in art
museums across the country. And Gov.
<http://www.whorunsgov.com/Profiles/Arnold_Schwarzenegger> Arnold
Schwarzenegger and Arianna Huffington count them among their dearest
friends. 

But as their marketshare rises worldwide, one of the billionaires'
competitors is fighting back, accusing the Western power couple of profiting
at the public's expense, court records and interviews show. 

Now, as drought-stricken California weighs whether to give private companies
more control in managing its scarce water supplies, a new lawsuit claiming
the Resnicks violated utilities law by making money from a vast,
taxpayer-funded underground reservoir is causing a stir in the state
Capitol. 

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"Water is a public resource, owned by the people," said Democratic
Assemblyman Jared Huffman of San Rafael. "We shouldn't be giving away public
funds to private sector interests, let alone choosing winners and losers in
the business world." 

The Resnicks, who live in a Beverly Hills mansion and have a second home in
Aspen, Colo., are among the nation's largest corporate farmers and are
generous philanthropists and political donors, giving $536,000 to Democratic
and Republican California governors in the last decade. 

The Los Angeles Business Journal estimates the couple's empire is worth $1.5
billion. It includes about 120,000 acres in California's Central Valley -
where they say they own more fresh citrus, almond and pistachio trees than
anyone else in the country - and a facility akin to the Fort Knox of water. 

That kind of success, Lynda Resnick said in a telephone interview, can
inspire jealousy, and likely motivated this most recent "nuisance" lawsuit.
Her husband declined to be interviewed. 

After growing up working class in Highland Park, N.J., Stewart Resnick
started a business waxing floors while in law school at the University of
California, Los Angeles. The couple bought farmland in the 1980s as a hedge
against inflation, gaining access to water contracts attached to those
parcels. 

As drought has hammered the region, leading farmers to abandon their dry
fields, the Resnicks' 48 percent stake in the Kern Water Bank, an
underground pool that stores billions of gallons of freshwater, has become
increasingly valuable. 

Court records show that in early 2007, the Resnicks' companies' combined
water holdings reached 755,868 acre feet - more than twice the size of San
Francisco's Hetch Hetchy reservoir. In 2007, that volume would have
qualified as California's 11th largest reservoir, but the firms' water
holdings have diminished significantly since, company officials said. 

That cache provided enough to nourish the Resnicks' orchards, but it also
offered another benefit. From 2000 to 2007, records show the state paid the
Resnicks an additional $30.6 million for water previously stored there as
part of a program to protect fish native to the ecologically fragile
Sacramento-San Joaquin Delta. 

Lynda Resnick's marketing savvy helped build cachet around her otherwise
obscure brands, such as POM Wonderful pomegranate juice, Cuties mandarins
and Teleflora floral bouquets. 

Revered among advertisers as the "Pom Queen," she has hired medical
scientists to bear out health claims that their fruits and nuts help fight
disease and extend life expectancy. Last year, following a nationwide recall
of pistachios over salmonella fears, she hired Levi Johnston, the teen
father of  <http://www.whorunsgov.com/Profiles/Sarah_Palin> Sarah Palin's
grandson, to promote the snack nuts. The domestic business grew by 40
percent over the last crop year. 

"We've done more for the pistachio than anyone ever since it was planted in
the Garden of Eden," she said in the phone interview. "My husband should be
canonized for all the work he's done." 

Others in agribusiness see it differently. 

Ali Amin, a Persian immigrant who owns a competing processing plant, filed a
lawsuit in late March in Fresno County Superior Court claiming the Resnicks
violated California public utilities laws because they turned a profit by
selling water to farmers who weren't members of their Bakersfield-based
water company, Westside Mutual Water Co. 

"You feel like David fighting Goliath," Amin said. "If they're allowed to
keep doing this, the rest of the independents and small growers won't be
able to compete." 

Amin's lawsuit alleges he lost $5.5 million in revenue when growers lured by
water supplies sold their nuts to the Resnicks' plant, which processes
almost two-thirds of the nation's pistachios. Amin controls about 5 percent
of the market. 

Resnick and other water users in agricultural Kern County gained control of
the Kern bank - the largest underground water storage facility in the nation
- in the mid 1990s, following a round of negotiations with the state
Department of Water Resources. Their position was that the state had shorted
rural areas in allotting water in a previous drought. 

To avoid potential litigation from unhappy water users, state officials
ceded ownership of the Kern Water Bank - developed with $74 million from the
department and $23 million in taxpayer-approved bonds - to a local water
agency. In return, water users gave back 45,000 acre feet from the amount
they contracted to receive each year. 

The deal was a pivotal moment in the rise of the Resnicks' business
interests. Ownership of the bank ultimately was transferred to a joint
powers authority including the local water agency, the Resnicks' Westside
Mutual Water Co. and four water districts. 

Westside distributes water stored there to its members, the operations that
grow Resnick's fruits and nuts, according to court records. 

To prevent price-gouging, the California Public Utilities Commission
requires most mutual water companies to register as public utilities and
subject their rates to state regulation if they sell water to nonmembers for
profit. There are some exceptions, such as a "water emergency," but the PUC
rules require those sales to nonmembers to be at cost. 

PUC staff attorney Fred Harris said Westside had not registered with the
PUC. If the company skirted the law, by selling water to nonmembers at a
profit - as the Amin suit alleges - Harris said Westside could be required
to register and set up rates with the commission. 

Assemblyman Huffman and Sen. Dean Florez, D-Shafter, said those allegations
in the Amin lawsuit touch on a broader debate about whether companies should
be able to profit from taxpayer-funded waterworks amid a drought. 

An $11.1 billion water bond signed last year by Schwarzenegger would allow
private companies to partially own, operate and profit from dams, reservoirs
and water banks built with billions in public funds. It won't become law
unless voters approve it on the November ballot, and it's unclear how the
bond proposal would interact with current laws on public-private
partnerships. 

"I don't think anyone wants to see this become a gift of public funds to
private corporations," said Huffman, who is considering introducing a bond
amendment to remove or clarify the language. 

Bill Phillimore, who directs Resnick's water company, said the company has
managed scarce water supplies responsibly, and he and his bosses have spent
"a considerable amount of time to make sure we get value out of the last
drop." 

Rob Six, a spokesman for the couple's private holding company, Roll
International Corp., said the Amin suit was "frivolous," and said the
company would seek sanctions against Amin's processing business. 

Both sides claim victory in a previous suit in which many of the same claims
were raised. A jury awarded Amin $3.46 million late last month after
deciding a pistachio grower who had supplied his plant breached his contract
by later sending his nuts to the Resnicks. A Fresno County Superior Court
judge granted the Resnicks' request to be dismissed from the suit. 

After Amin's first suit was filed, two of Resnick's companies filed a
federal suit in Los Angeles against Amin, his processing plant and his
agricultural consultant, alleging Amin's plant engaged in false advertising
that Resnick's companies to suffer up to $15 million in damages. 

"There are very jealous people out there," Lynda Resnick said. "But we
usually win because we have such good in-house counsel." 

The Resnicks, who have had legal tangles with everyone from Tiger Woods to
the Diana, Princess of Wales Memorial Fund, have a good track record at
winning. 

Their suit to kill the California Pistachio Commission, a board farmers paid
to do generic marketing for the snack nut, proved so expensive that after
spending more than $2 million in legal fees, farmers gave up and voted to
disband the commission three years ago. 

"Here you had one man who had the money and thought he knew what was best,
and didn't want to take part in a democratic organization," said Brian
Blackwell, president of the Western Pistachio Association, which now
represents smaller growers. "Whatever he's doing, he's going to try to run
the show." 

Byron Leydecker, JcT

Chair, Friends of Trinity River

PO Box 2327

Mill Valley, CA 94942-2327

415 383 4810 land/fax 

415 519 4810 mobile

http://www.fotr.org 

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