13 Jul 2010

Beyond Chinatown -- A Guest Review

Wayne Lusvardi* sent this excellent review of Steven Erie's 2006 book Beyond Chinatown: The Metropolitan Water District, Growth, and the Environment in Southern California. I read that book and agree with most of this review. Some of it is new; I was VERY interested to see that Erie had consulted for Met, creating a potential conflict of interest in his evaluation of Met's history and behavior and perhaps giving critics an easy explanation for why Erie was so pro-Met in his book. I, btw, think that Met did great things for SD, but I also have issues with how Met has operated; see my dissertation and this article. So here's Wayne...

Not Beyond "Chinatown" Or Bureaucratic Welfare State Myths

"…the Metropolitan Water District of Southern California over its long history has not been a Chinatown-style ‘hidden government’ simply beholden to the interests of Los Angeles and private developers." - Steven Erie

"The concept of the ‘official secret’ is the specific invention of bureaucracy, and nothing is so fanatically defended by the bureaucracy as this attitude…" - Max Weber, Economy and Society

Rather than giving us a divining rod, political scientist Steven Erie has thrown hot water into acid in his new book Beyond Chinatown: The Metropolitan Water District, Growth, and the Environment in Southern California. Erie has written a panegyric recent history of The Metropolitan Water District of Southern California ("MWD") and its sister agency the Los Angeles Department of Water and Power ("DWP") and a polemic against San Diego County water agencies in the recent "water wars" of Southern California. The Metropolitan Water District (MWD) is the regional water wholesaler to 27 other water districts in urban Southern California, importing water through the Colorado River Aqueduct and the California Aqueduct (or State Water Project – "SWP") to a population base of 18 million people.

Chinatown and Hidden Government

The first two chapters of Erie’s book are dedicated to debunking the conspiracy theory put forth in the movie Chinatown that Los Angeles water agencies are "hidden government" reflecting the pro-private development interests of urban Los Angeles at the expense of rural areas a la the infamous Mono Lake-Owens Valley "water grab." To the contrary, Erie states that Los Angeles subsidizes the price of water for all of Southern California. Erie contends that the Owens Valley "water swindle" conspiracy theory evokes powerful symbolism that negatively affects today’s water wars and lawsuits, including the MWD water wheeling rate case which he describes later in the book.

Erie writes that MWD inherited the imagery of the "original sins" of the Los Angeles DWP.

Erie unconvincingly explains away everything Los Angeles-based water agencies did historically as reflecting "the public interest" and one-sidedly views nearly everything water agencies in politically conservative suburban districts did as secretive, irrational, and self-interested. For example, Erie states that Los Angeles conceived, parented and subsidized the regional Metropolitan Water District, which mainly serves the suburbs, so that it could also have backup water supplies available in a drought. Erie conveniently fails to mention that historically the urban-economic planning model was to develop bedroom communities feeding the job center of Los Angeles in rent seeking (self-serving) fashion.

But the regional MWD didn't just suffer from the spillover of LADWP’s sensationalized land and water schemes. It had some of its own muddy water that Erie somehow omits despite the 70-pages of seemingly exhaustive footnotes in his book.

MWD’s Ghost Plants

In 1981 the State of California Department of Water Resources (DWR) built two geothermal energy plants in Napa Valley during the era of environmentalist Governor Jerry "Moon-Beam" Brown following the OPEC-oil crisis. The Bottle Rock and South Geysers geothermal energy plants ostensibly were to supply power to the State Water Project (SWP), of which the MWD was its largest (80%) customer. These two plants soon ended up white elephants producing no energy. They will end up costing MWD’s ratepayers more than $450 million when the bonds are finally paid off in 2024. MWD’s share of the costs are paid through water rates charged by the State DWR and were never fully disclosed to Metropolitan’s ratepayers or perhaps even its ever-changing Board (see Virginia Ellis, "Ghost Plants are Legacy of State’s Geothermal Energy Fiasco: Haste Made Waste at Two Hurriedly-Built Sites. Steam Fields proved inadequate," Los Angeles Times, June 16, 1993, front page).

By burying the financing costs of the power plants in a budget line item for water purchases MWD at least gained non-opposition to any legislation from former pro-environmental Governor Jerry "Moonbeam" Brown. It is hard to deny this wasn't "hidden government." Professor Erie’s sin of omission of MWD’s "Ghost Plant" fiasco would seem to seriously call into question the balance and objectivity of his book.

MWD’s Box Springs Feeder "Paper" Pipeline

In the 1970’s, MWD purchased about a 25-mile right of way in fee-simple title and completed the construction drawings of a proposed 60-foot wide right of way for a future pipeline linking its Mills Filtration Plant on Alessandro Boulevard in Riverside to Lake Mathews in Riverside County. In the late 1980’s a 15-foot wide portion of the Box Springs Feeder right of way was transferred to Western Municipal Water District, a member agency of MWD, for a much smaller local water pipeline under an ostensible exchange for emergency water rights that were never reciprocated. In essence, a portion of the right of way was sold for free but on paper was reported as an "exchange" of land for water rights.

The effective purpose of this "paper pipeline" with no real pipe in the ground was just to keep Metropolitan’s engineers fully employed and to put a finger in the dike of any layoff of engineers. MWD’s ratepayers have thus been saddled with higher water rates and the County of Riverside has been burdened with no property tax revenues due to the tax exempt status of the pipeline right of way. MWD‘s member agency, the Western Municipal Water District, does not want to buy the unused pipeline right of way at market value. This potentially excess property never shows up as "surplus property" even though State law requires public agencies to turn unneeded property back to the tax rolls. This project stood on Metropolitan’s books for decades until recently where it has been proposed to sell the remaining 45-feet width of right of way it at a deep discount to Western Municipal Water District. The Box Springs Feeder is another example of MWD as hidden government.

MWD Sylmar Tunnel Disaster

About five months after the Sylmar Earthquake of 1971, an underground gas explosion related to MWD’s construction of its Foothill Feeder-Sylmar Tunnel killed seventeen construction workers. It was the worst tunnel disaster in California history. The purpose of the two-mile long Sylmar Tunnel was to transport billions of gallons of water from the State Water Project to San Gabriel Valley.

The portal where the tunnel would have day-lighted still remains with a concrete cap over it at the intersection of Fenton Avenue and Maclay Street in Sylmar. Neither the tunnel nor this segment of the Foothill Feeder Pipeline was ever used. Although the private sector construction contractor, the Lockheed Corporation, was demonized as the culprit in this disaster by opportunistic politicians, the ugly truth that the tunnel and pipeline were unnecessary was missed by the media. Today, San Gabriel Valley gets its back-up wholesale water from the Weymouth Filtration Plant in La Verne, built in 1940.

Despite that MWD has shifted from one-third to two-thirds reliance on imported water from the State Water Project over the past five years there are no plans to revive the use of the proposed Sylmar Tunnel-Foothill Feeder. A 30-acre parcel meant to serve as a water treatment plant was sold to the City of Pasadena in 2005 for a public park. The remainder of the tunnel, above-ground facilities, and tunnel rights have never been declared surplus property.

L.A.-San Diego Water War

Next let’s look at Erie’s treatment of the controversial L.A.-San Diego water war which resulted in a water deal between the San Diego County Water Authority (SDCWA) and the Imperial Irrigation District (IID – located adjacent to the Colorado River). The story of this water war deal is a Machiavellian-like political conspiracy reminiscent of that in Roger Masters book Fortune is a River: Leonardo da Vinci and Niccolo Machiavelli’s Magnificent Dream to Change the Course of History (1999) by diverting the River Arno from the Renaissance City of Pisa to Florence. But Erie doesn't see it that way.

Think of a movie plot involving the maverick financier Bass Brothers from Republican Texas covertly buying up 45,000 acres of farms and water rights in California’s Imperial Valley to "flip" to the Republican City of San Diego to secure their own independent source of water in an end-run around Democrat-controlled L.A. DWP and MWD. Imagine the manager of Bass’s Western Farms holdings eventually ending up as the General Manager of the local Imperial Irrigation District. Even the Imperial County Grand Jury found evidence of "undue influence by outside third parties" (Western Farms), but Professor Erie calls all this "camouflage" and not a conspiracy. Add some fictional sex and dumping of agricultural water to spike water prices into this story and presto you would have the makings of another Chinatown-like movie script worthy of capturing the media’s imagination.

But capitalist entrepreneurs and big business might end up the heroes of this story so you won't be seeing it soon in your local theaters or in academia.

Eventually, the Bass Brothers sold their Western Farms holdings to U.S. Filter Corporation for $250 million; U.S. Filter was subsequently purchased by French water giant Vivendi; and ultimately the Imperial Irrigation District (IID) ended up buying out Vivendi’s interest and trying to broker the water to San Diego. After eight years and a cast of at least hundreds, the water transfer between IID and San Diego was consummated in 2002 for roughly 104,000 acre feet of agricultural water (enough to serve 416,000 people per year or more). L.A. and San Diego eventually fought it out in court over the rate to charge to wheel this water through MWD’s Colorado River Aqueduct-San Diego Pipeline system to the County of San Diego. San Diego contended it shouldn't have to pay for the load factor of MWD’s entire six-county water system; while MWD claimed that San Diego would be getting a "free-ride" if it didn't pay full system freighting costs. Professor Erie was involved in this high profile court case but doesn't tell us so in his book.

Erie continually characterizes San Diego’s water decision-makers as raconteur buffoons in this deal, which created no added regional water supplies, came at a steep price for wholesale water, and included high transaction costs ($400,000 in public relations campaign, $1 million legal fees, etc.). Erie’s book incessantly pooh-poohs the perspective of San Diego water officials that what they were fighting for was equal priority "water rights" from MWD’s system in the event of a drought. As San Diego Water Authority General Manager Maureen Stapleton is aptly quoted in the book, a drought is defined as "when you find out who has the water rights and who doesn't."

San Diego’s efforts were all about changing MWD’s "preferential rights" policy which gave the Los Angeles first dibs to MWD’s water in a drought scenario. This wasn't conspiratorial paranoia on the part of San Diego as Erie contends. About 85% of San Diego’s water supplies came from MWD and Los Angeles’ need for backup water supplies in a drought could swell from 34% to 65% or more during a drought year even according to Erie. Although MWD’s Laguna Declaration in 1952 guaranteed to provide water to all the members of its water confederation, San Diego knew that this was merely a "trust me" policy. San Diego also knew they were buying one third of MWD’s water but only had one-sixth of the votes on its Board. Erie charges that San Diego water authorities "twisted" its historical relationship with MWD by spreading a "lie" that San Diego was dragged into a "shotgun wedding" with MWD as a customer in the 1940’s. Erie states San Diego was not coerced to join MWD, and that the Los Angeles DWP was subsidizing San Diego’s water rates.

But Erie’s thesis doesn't hold water because if this were so why would MWD fight San Diego’s attempt at water independence? Erie conveniently ignores that the All-American-Coachella Aqueducts used for agricultural irrigation converge almost at the same place as MWD’s Colorado River Aqueduct east of Palm Springs. The All American-Coachella system flows mostly by gravity flow while MWD’s aqueduct alignment requires expensive energy costs to pump water over the mountain chains of the California Mojave desert. What Erie fails to tell us is that originally San Diego was "forced" to join MWD’s system which had to, in turn, buy power from the WPA-era Hoover-Boulder Dam system to underwrite the cost of a hydroelectric system mainly serving urban Los Angeles. Erie also tries to explain away that President Roosevelt’s wartime executive order to construct the San Diego Aqueduct/Pipelines ended much of any practical possibility of San Diego building their own system. Moreover, San Diego may have had no eminent domain powers in other counties to acquire aqueduct and pipeline rights of ways while MWD was granted the land for the Colorado River Aqueduct by U.S. Congress for a nominal sum. San Diego correctly perceived during WWII that there was a cheaper alternate route than MWD’s bloated WPA-type hydropower and water system. It continues to explore a Tijuana-San Diego aqueduct option to this day, at minimum as a "guise" to hold in check the political leverage of Los Angeles and the State legislature.

Other backdrop factors in the L.A.-San Diego water war not discussed by Erie were the construction of the $2 billion Diamond Valley Lake (DVL) reservoir circa 1990-95; the 2 to 3 times market value prices typically paid by MWD for land acquisitions at the DVL Reservoir site; and the concurrent unnecessary construction of a 12-story, 436,500 square foot new headquarters building for $135 million to provide union jobs in L.A. at the bottom of an economic recession in the mid 1990’s.

Erie apparently has no comprehension that wholesale water could have been stored in Lake Mead (upstream), or in MWD’s Hayfield underground aquifer in the Mojave Desert (midstream), or could have been elastically multiplied by adopting "real-time" retail water pricing and conjunctive use (downstream), thus avoiding the cost of the new DVL reservoir altogether.

Additionally, MWD could also have rehabilitated its old headquarters or purchased near-new office facilities it was leasing during the 1990’s recession for a low fraction of the cost of its new headquarters. The reason these large capital projects were initiated by MWD had much to do with fending off incessant threats by the California legislature to take over MWD unless it financed a Keynesian-style stimulation of the economy during the bottom of the 1990’s recession to preserve the political status quo. MWD’s motto seems to have been "independence for me (MWD) but not for thee (San Diego)."

San Diego knew it was going to have to pay a large share of the bill for these anti-recessionary capital projects and sought reciprocation in the form of water transfers from Imperial County. This must have seemed to outsiders as a brash and self-interested attempt to bolt from the MWD confederation of water agencies. However, this "official secret" apparently escaped Erie who prefers to see San Diego’s actions as those of a bunch of irrational, politically-motivated, self-serving water officials that achieved "essentially nothing" (p. 123).

And Erie fails to mention the political leverage MWD’s "preferential rights" policy and "trust me" Laguna Declaration gave the Democratic-party statewide over Republicans on other unrelated political issues. It was like having the power to play the "political drought" wild card on almost any state political issue. In one sense, Erie is right in his assertion that water is "too much affected with a public purpose." However, Erie pretends to not know what the "public-utility/public purpose" model he espouses really entails. As described above, under the public purpose (i.e., welfare economics) model large water agencies and other public utilities are often used as piggy banks to create jobs and stimulate the construction and real estate industries during economic downturns.

For example, other economic stimulus capital projects occurring concurrently in Los Angeles with the MWD building of the DVL-Reservoir and new headquarters offices circa 1990-1995 were the MTA Wilshire Boulevard Metro Rail Project and the L.A. Unified School District Belmont Learning Center. Not coincidentally all these projects were fully completed, cutback and completed, or mothballed when the economic recession was declared over by the U.C.L.A. Business School. The Los Angeles Wilshire subway was not so much a transportation project as a redevelopment project. The Belmont Learning Center was a construction jobs program and an attempt to lure the middle class into downtown housing. Due to public reaction to building the Belmont Learning Center on an old natural gas field the project was scuttled and the buildings remain an unoccupied white elephant.

The Institutionalization of Myth

The bulk of Erie’s book is a straw man argument painting a caricature of maverick and secretive San Diego water agency officials and greedy private water entrepreneurs in Republican political strongholds in contrast with open "regional" water agencies serving the public good. The institutionalization of such an idealistic view of "public purpose" water agencies, which entails a large gap with reality, is what sociologist Philip Selznick calls the "institutionalization of myth" in his classic book TVA and the Grass Roots: A Study in the Sociology of Formal Organization (Harper, 1966). The Tennessee Valley Authority (TVA) was a Works Progress Administration (WPA) era water and power agency modeled after MWD. The TVA is no more a "grass roots" democratic organization than the regional MWD and the Los Angeles DWP are unselfish agencies only looking out for the public good in contrast with self-interested San Diego and Orange County water agencies and water marketeers.

As political scientist Erwin C. Hargrove states in his book Prisoner’s of Myth: Leadership of the Tennessee Valley Authority 1933-90: "Organizational myths aren't falsehoods but aspirations of purpose and ideals for action. They are reality insofar as they influence beliefs and actions in the organization and among its constituents. …Some institutions may use myths as propaganda for defense against external control, but a myth is more than a rationale. It is believed…Myth (is)…more of an invocation of legitimacy."

Erie has been taken captive by the myth that MWD is something other than what it really is – a politicized Works Progress Administration era bureaucracy formed as a jobs program and economic stimulator that has partly morphed into the role of being more than just a drought water agency. It is probably no coincidence that the bible which the MWD assistant CEO and the engineering project manager for the MWD DVL-Reservoir Project carried around with them at the time was no less than Selznick’s book.

Environmental Myths

Erie’s advocacy of the environmental mitigation of dam projects, global warming, and clean-ups of perchlorate from underground water supplies is indicative of the mythic proportions of his economic welfare model of water policy. Erie apparently has no comprehension that if MWD had merely "parked" dedicated water in Lake Mead instead of constructing its $2 billion DVL Reservoir in Riverside County that it would have avoided environmental impacts altogether.

Neither does Erie seem to understand the "gross-loss" calculus of the California Environmental Quality Act (CEQA). Under CEQA a dam project would have to mitigate the gross loss of natural habitat inundated by water storage without any consideration of the huge amount of urban vegetation and wildlife created by such projects. In reality, there is no environmental "net loss" from a dam project, only the creation of a new urban ecology "downstream."

Imagine any serious policy analyst describing global warming in Cecil B. Demille fashion as does Erie:
The planet’s average surface temperatures appear to be on a course for a rise (of temperature) between 2.5 to 10.4 degrees Fahrenheit, 1990 to 2100.
Once again, if Erie is correct in his highly speculative and hyperbolic assessment of the impact of global warming on Southern California water supplies, this possibly would have made a case to store Colorado River Water in the 8,000-acre underground Hayfield Aquifer instead of building the $2 billion DVL-Reservoir which has high evaporation losses, 29 times the cost, but equivalent water storage capacity (see: http://www.mwdh2o.com/mwdh2o/pages/yourwater/supply/conjunctive/hayfield.html).

Erie also points out public and private water suppliers have shut down about 350 water wells in Southern California and are paying 5 times the price for imported water supplies from the MWD Colorado River Aqueduct due to perchlorate contamination. However, he fails to point out that the water from the Colorado River Aqueduct has nearly the same concentration of perchlorate in it (6 parts per billion) as many of the so-called contaminated water wells (+/- 10 parts per billion). Perchlorate cleanups are an unwitting "scheme" (not a conspiracy) to expand the supply of perceived "clean" groundwater in California by cost-shifting the clean up costs onto a larger base of Federal taxpayers. Although the health benefits of perchlorate cleanups are specious, the myths of the environmental welfare state are nearly impossible to refute as bureaucratic jobs, professional careers, and the economy of some cities are now dependent on its institutionalization.

Muddied disclosures

Erie fails to disclose that he appeared as an expert witness for MWD in a water wheeling rate court case against the San Diego County Water Authority, which is one of the centerpieces of his new book (wheeling – to convey water through unused capacity in an aqueduct). However, Erie reveals that he wrote the book with the additional assistance of Dr. Harold Brackman, a historian at the Simon Wiesenthal Center of Tolerance in Los Angeles; and from Robert V. Phillips, the former general manager and chief engineer of the Los Angeles, DWP. It is thus no surprise that the underlying agenda of Erie’s book is to elevate a Los Angeles (i.e., economic welfare) water policy model over a "republican" San Diego County public utility and water markets policy model.

There are predictable accolades in the fly page of the book from members of the technocratic "New Class" of prestigious academicians at state-run universities, "official" state historians, and former MWD water agency managers. In his online curriculum vitae, not in his book, Erie discloses he also received a $49,728 grant to conduct research on MWD from the John Randolph and Dora Haynes Foundation, which is dedicated to "Christian socialism."

Water diversions

"A fool and water will go the way they are diverted." -African proverb

Regional water policy is typically made by cliques of politicians legitimated by intellectuals with claims of superior knowledge and selflessness. These claims are typically spurious and we should not believe any of them. With the public interest water policy model espoused in Beyond Chinatown the public often gets bloated and mythical social welfare and environmental programs secreted as water projects.

Under the public choice (market) policy model, regional water agencies would produce domestic water as a public good without most of the extraneous and mythical welfare and environmental public goods. Contrary to Steven Erie, we should not be fooled that only one of these water policy models is political, self-interested, and conspiratorial. As sociologist Peter L. Berger has written: "Every worldview is a conspiracy. The conspirators are those who construct a social situation in which the particular world view is taken for granted." And behind California’s water policy is the taken for granted worldview of the welfare state.

Unfortunately Beyond Chinatown doesn't get beyond politics and takes a side in Southern California’s water wars. Perhaps John W. Gardner summed it up best:
The society which scorns excellence in plumbing as a humble activity and tolerates shoddiness in philosophy because it is an exalted activity will have neither good plumbing nor good philosophy – neither its pipes nor its philosophy will hold water.

* Wayne Lusvardi is an independent researcher, Pasadena, California. He worked for twenty years for The Metropolitan Water District of Southern California. He does investigative journalism for CalWatchDog.com and writes occasionally on water issues for the L.A. Business Journal. His blog is Pasadena Sub Rosa. The views expressed are his own.