A Pistachio Tycoon Picks a Fight With the U.S. Navy
(Bloomberg) -- John Conaway has lived in and around the town of Ridgecrest since before it was much of a town. In 1967, when he moved his young family to the remote Southern California community, Ridgecrest had been incorporated for only a few years. “It was all dirt roads,” he says. “No stop signs, no nothing.” Mostly, the town was there to support the Naval Air Weapons Station China Lake, an arms-testing base built nearby during World War II. The military contractor Grumman, which employed Conaway as an engineer, had given him a bonus to relocate from New York. Like many of his colleagues and their families, he and his lived on base.
A handful of years later, the Navy decided China Lake contractors would have to find their own housing. The Conaways bought 4 acres and built a house in the adjacent town of Inyokern, which like Ridgecrest is nestled in the Indian Wells Valley, a roughly 11,000-square-mile stretch of desert in the eastern Sierra Nevada about three hours north of Los Angeles. When Conaway learned there were tax incentives for farmers, he started planting. By the early 1980s he’d settled on pistachios as his crop of choice.
That was the right call. California’s pistachio industry, which comprised only a few thousand acres then, today spans 300,000 acres and takes in about $1.6 billion a year. Conaway’s business grew, too. He gave up engineering and now, at age 83, owns 175 acres’ worth of nuts. A decade ago, that was enough to make him one of the more serious farmers around. Successes like his attracted the attention of a Bakersfield pistachio magnate named Rod Stiefvater. In 2011, Stiefvater’s company, Mojave Pistachios LLC, acquired about 1,600 acres near Conaway and planted more than 100,000 trees.
Mojave sells most of its nuts to the Wonderful Co., one of America’s most powerful agricultural enterprises and the reason pistachios now rank among the country’s bestselling salty snacks. Mojave has established a farming operation on a scale unprecedented for the area. If they’re well-tended, its trees will be fully mature by 2025, turning the once-barren land into a fertile realm worth an estimated $25 million a year.
That’s a bigger “if” than it might seem. In the arid, isolated Indian Wells Valley, underground aquifers are the only reliable sources of fresh water. To make its trees grow big and strong, Mojave says, it will need almost as much groundwater as the entire Ridgecrest area uses today.
China Lake has grown at a pace faster than that of Conaway’s and other small farmers’ pistachio trees. The naval base now encompasses 1.1 million acres, an area larger than the state of Rhode Island. Ridgecrest, home to about 30,000 people, remains a sort of company town for the naval installation, which employs about 10,000 active-duty military, civilians, and contractors. The base contributes $36 million in state and local taxes each year, representing about 90% of the town’s economy. In 2019, China Lake said one of its top concerns was encroachment on its groundwater supply, based on a recent assessment of the aquifer’s use, and implied that water shortages could mean the base would have to shut down permanently.
Local officials have taken steps to assuage the Navy. The government of Kern County, where Ridgecrest is located, banned new development of farmland in the valley in 2015, against Stiefvater’s protests. This past September, Ridgecrest announced that, as part of a groundwater sustainability plan set to take effect in January in compliance with state law, all farmers would have to pay costly new fees to pump water from the Indian Wells Valley basin. The idea is to offset the expense of importing sufficient water for the area’s future needs.
Since then, Conaway and other locals have found themselves aligned with Stiefvater in suits against the valley’s groundwater regulator. Small and big farmers alike are pushing for much lower pumping fees. Stiefvater, who declined to be interviewed for this story, is demanding that the sustainability plan be struck down and that the town fork over more than $255 million in damages. “My client has made a huge investment in the valley,” says Anthony Brown, a Mojave hydrological consultant. “Why rush to put him out of business?”
Climate change, comes the answer. Global warming has exacerbated the region’s droughts and their consequences, up to and including the record-breaking wildfires that have become California’s nightmare. In Ridgecrest, rainwater and melting snow aren’t recharging the valley’s aquifer the way they used to, and with the local population growing along with the naval base, thirsty crops such as pistachios make a more noticeable dent in the water supply every year. A state review of the valley rated the aquifer as critically overdrafted and called it one of California’s worst-managed. Ridgecrest’s hydrological consultant, Steve Johnson, estimates that 60% of the outflow goes to farming, the most “upside down” he says he’s ever seen.
In California, agricultural interests tend to win the usual battles between long-term community needs and short-term sales targets, but the Navy’s influence has given the Ridgecrest area a fighting chance. Some 18% of the state’s water now flows into vineyards, orchards, and fields, giving life to most of America’s pistachios, almonds, avocados, oranges, grapes, tomatoes, and lettuce. The tree nuts have emerged as California’s reigning cash crop, their acreage almost doubling over the past decade as demand has soared. The costs to local water tables are obvious, and perhaps unsustainable. In potentially precedent-setting places like Kern County, the question is whether the stakes are finally high enough to force people to farm less—in some cases, much less.
California is a desert disguised as a mass of fertile fields. The state’s vast water transport grid, developed after World War II, brings rainwater and melted snow from the misty northwest to inland farms and parched southern population centers. This is the chief reason California can function as Earth’s fifth-largest economy, the world’s technology capital, and the nation’s most productive farming state. It’s also why, really, the state can function at all.
For that reason, little divides Californians more sharply than water rights. The state receives close to 63 trillion gallons of water a year in rain and snow, the vast majority of it in the north, far from thirsty farms and cities downstate. A century’s worth of legal battles over redirecting that precipitation have yielded, among other things, the Los Angeles Aqueduct, which carries water far south through often-parched farmland. Agricultural interests in the dry south have turned to litigation and hoarding to get more water. The Wonderful Co., which declined to comment for this story, has proven particularly adept at such maneuvers. In the 1990s, the company led a successful effort to privatize the Kern County Water Bank, a massive groundwater reserve. It now controls a majority of the water bank and sells some unused water back to the state at a profit. It’s also consistently repelled environmentalists’ lawsuits seeking wider sharing of the scarce natural resource.
Given how many Californians style themselves as hippies, futurists, or hippie futurists, it’s weird that the state still settles the question of water rights based on who called dibs. Much as it was in frontier times, the first person to access a source of California water receives the right of first refusal on its use forever, a legacy of gold rushes and might-makes-right ranching. America’s other Western states have long since recognized that modern economies require much broader and more secure access to water and regulate their residents’ water rights accordingly.
California began trying to tackle its growing water problems in 2014, just as Stiefvater was planting his pistachio trees and digging his wells in Inyokern. That year, then-Governor Jerry Brown signed into law the Sustainable Groundwater Management Act (SGMA), which for the first time required each county to determine how much groundwater it had, figure out whether that total was rising or falling, and phase in detailed plans to make sure it didn’t run out. In 2021 counties and local water authorities have to begin implementing new groundwater sustainability plans and meet locally determined targets. By 2040, the law says, they must be fully sustainable. Putting the sustainability plans into practice is complicated, because SGMA hasn’t overturned the dibs-based system of groundwater rights.
In Kern County, the site of the highest-profile SGMA lawsuits to date, the job of accounting for the water falls to a board of five publicly elected supervisors. Mick Gleason is the supervisor for District 1, which includes Ridgecrest and much of the Indian Wells Valley. He’s also the chair of the valley’s groundwater authority.
Gleason, like Conaway, is an engineer originally from the East Coast who moved to the area to work at China Lake. Unlike the pistachio farmer, Gleason was a captain in the Navy when he arrived, a fighter pilot who moved to Ridgecrest in 2004 to become the commanding officer of the naval base. He won election as supervisor in 2012, a few years after he retired from the military.
Gleason has big hands, a big nose, a big presence, and until January to enact the sustainability plan and start getting the valley’s water consumption under control. If not, SGMA stipulates that he’ll have to turn water use over to the state Department of Water Resources, the agency that rated the Indian Wells Valley basin as critically overdrafted. Gleason says the state agency would likely take a more draconian approach than the ban on new agriculture and the pumping fees for farmers. “Their main tool is going to be how many showers I take a week,” he says.
Elected officials and the Navy have both said they’re basing their assessment of the area’s needs on a study of the local aquifer conducted by the Desert Research Institute, the research arm of the University of Nevada at Reno. Neither party has released the institute’s baseline numbers on groundwater reserves. Brown, the Mojave Pistachios consultant, says that based on the published data, he estimates the aquifer holds more than 67 million acre-feet or 21.8 trillion gallons, of which about 2.9 trillion gallons are in shallow, easily reached areas. Gleason doesn’t dispute those figures. He does, however, dispute the conclusion reached by Brown, Stiefvater, and the local farmers that the problem isn’t urgent. The town uses 10.8 billion gallons of water each year and replenishes only 2.5 billion gallons, leaving an 8.3 billion gallon annual deficit—a paltry amount compared with the area’s vast reserves, they say. “Why rush to start the pumping reductions?” Brown asks. “Why rush with huge fees?”
One reason to rush is that, as it stands now, the town can’t afford to import water into the valley, a key long-term component of its sustainability plan. Such a pipeline will require tens of millions of dollars in funding by 2035, which Gleason calls a “tremendous challenge” and says he hopes the fees will offset.
For the pistachio farmers, who’ve been careful not to pick a fight with the Navy directly, the county supervisor has become the scapegoat. “I take Gleason to talk out of both sides of his mouth,” Conaway says. “I believe his intention is to get rid of farming and to strengthen the Navy any way he can.” In a statement, Stiefvater, too, stressed that his lawsuit against the groundwater authority seeks no relief from the Navy. “It is made necessary by the madness and arrogance of former Navy Base Commander Mick Gleason and his intention to destroy agriculture and specifically us,” Stiefvater said.
Gleason doesn’t seem intimidated by the outcry. One afternoon in October, he listens dispassionately while locals call in to a socially distanced meeting of the groundwater authority and complain about the forthcoming pumping fees, $2,130 per acre-foot (about two-thirds of a penny per gallon). Farming in the valley, he says, will eventually require the groundwater authority to import water from elsewhere, so best to start financing pipeline construction now with fees from the people using most of the water. The farmers say that would drive them out of business.
“I hope that you all hear lots and lots of seriously irate comments from all kinds of people in this valley in the coming days and weeks,” says local Mike Neel. “Just know that when you hear it, you’re getting what you deserve.”
Later, in his dull, brown office on China Lake Boulevard—former Navy land—Gleason says he wasn’t swayed by Neel’s argument, but he appreciates the civic engagement. “He’s a concerned citizen,” Gleason says, dressed in a checkered jacket and yellow tie. “I wish all citizens were as concerned as he is.”
The legal disputes under way in the Indian Wells Valley offer an early taste of what might happen throughout California as various local authorities turn SGMA’s broad principles into actionable demands. As one of the U.S.’s farthest-reaching and most aggressive climate-mitigation efforts to date, SGMA also offers a preview of what backlash to a similar national policy might look like.
The water-pumping fees lie at the heart of the lawsuits Stiefvater, Conaway, and others have filed against the groundwater authority, none of which have set court dates yet. If these are proxy fights between the Navy and the Wonderful Co., both parties have stayed pretty quiet so far. Margo Allen, a public-affairs officer at China Lake, says, “The Navy is engaged in consistent, proactive, and cooperative participation” with the local groundwater authority. The company, owned by billionaire couple Stewart and Lynda Resnick, also sells almonds, grapefruit, mandarin oranges, wine, Fiji Water, flowers, pest control products, and its namesake pomegranate juice.
Within Indian Wells Valley, the face of the farming interests is Paul Nugent, a local consultant for Stiefvater who previously spent decades working for a farm credit bank. Toward the end of an October afternoon, he drives through Stiefvater’s pistachio orchards in his white Denali pickup truck, its front license plate framed by a Wonderful Co. decal that reads “Get Crackin’. ”
Out of the truck, Nugent strolls through rows of pistachio trees and black irrigation lines stretching out in every direction, his red-checkered button-down tucked into bluejeans that taper into handsome leather boots. The fields are only now turning out quality harvests. “It takes seven years to get your first decent crop,” he says, touching an unpicked clump of pinkish pistachios as crows flit about. “Love those big old fruiting buds.”
After leaving the orchard, Nugent motors west into the Sierra, up a dirt road to a lookout point above the valley. The ascent takes him past the Los Angeles Aqueduct, which was also once a source of consternation to farmers. At the lookout point, Nugent stops and walks outside into a cool wind. He says SGMA’s 20-year sustainability targets give farmers plenty of time to adapt without having to take stronger measures that put people out of work. “See, it’s a big valley,” he says, gazing out across the vista as the sunset tints his face orange. “There’s a lot of water here.” Below, the landscape is a slate of dull brown with bright patches of pistachio fields that look, from a distance, like great globs of green paint.
Across California, a half-dozen lawsuits similar to the Indian Wells cases are making their way through the courts, and a decision on Ridgecrest’s water could prove a key precedent. Although the farmers have a chance to prevail—water law is notoriously tricky—the Navy’s interest makes their odds look worse. “The farming community in general is very troubled by what it sees in Indian Wells Valley, and people are watching closely,” says Brown, the Stiefvater consultant.
Whatever happens in the valley, California farmers have reason to worry. To comply with SGMA, at least 535,000 acres of irrigated farmland, about 6% of the state’s total, will need to stop producing crops by 2040, according to the Public Policy Institute of California, a think tank created by Hewlett-Packard Co. co-founder Bill Hewlett. At today’s prices, that translates to billions of dollars in lost annual revenue. It’s a considerable challenge that will require farmers and farming communities to rethink how they do business and, likely, grow less.
Conaway and other farmers say they’re worried about today, not 2040. The octogenarian is paunchy and battling kidney cancer. Seated in a small office on his farm, the door left open to a warm breeze, he says that concern about sustainability in the valley is overblown, that the situation is “not as critical as they’re making it out to be,” and that the old dibs-based groundwater laws leave him plenty of room to play hardball. “If they shut me down, I still own the land and I still own the water,” he says. “I will go to heaven or hell and will not sell one goddamn gallon of water to the bastards for the next hundred years.”
That’s a bit of an oversell; the county doesn’t need Conaway to sell them the water, only to make him stop pumping it. But it’s also a reminder that in many communities throughout California, the stakes of the next water wars will probably be even higher than they are in Ridgecrest. After all, this is still very much a company town. As Gleason says in his office, there is no Ridgecrest without China Lake, and he’s betting on a future that puts the base’s water needs first, including any future expansions. “My vision is, by 2035, we have a Navy that is content and growing at the rate that they want to grow,” the county supervisor says. “So the economy of this community is also moving in the same direction as the Navy.” If he prevails in court, it will likely be a community where farming isn’t worth the tax breaks.
This story was produced in collaboration with the Food & Environment Reporting Network, a nonprofit investigative news organization.
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