Mr Ted Arman

(Mr. Ted Arman, circa. 1976)

MR. ARMAN: So how in the heck do you - pardon me?

How am I expected to run my business with EPA stopping me on every move that I make?

Pardon me?

THE COURT: All right. That sounds more like a

rhetorical question and one directed more towards the plaintiffs.

I don't need to hear anything further. I've made my rulings.







Mr. Arman, you realize that Mr. Hutchens is not an attorney; correct?

MR. ARMAN: Yes, I do.

THE COURT: You recognize that he can't represent the

corporation, and he can't represent you in a court of law.

Do you understand that?

MR. ARMAN: No, I do not.

THE COURT: Do you understand, Mr. Hutchens, that --

MR. ARMAN: He's representing me, your Honor,


THE COURT: Well, you understand he's not a lawyer;


MR. ARMAN: I do know he's not a lawyer, but he should

have been one a long time ago.

Evidence that merely “presents probabilities rather than proof,” “relies upon a collection of facts that could be summarized as 'if it is there, it must be theirs,'” or is “vague and imprecise, of questionable reliability, and therefore not sufficiently probative to create an issue for trial” is insufficient to hold a party liable under CERCLA


A. Real Injury or Wrong.

B. Jurisdiction.

C. Statute of Limitations.

D. Immunity.

E. Facts and Evidence.


MR. CORCORAN: Your Honor, let me give you the docket

numbers. First, docket number 1261, the original notice of

joinder, that was only Mr. Hutchens. The one spot signed by

Mr. Arman included 1266 which is actually three documents.

It consists of a petition to reopen, a counterclaimants' memo

or memorandum --

THE COURT: I have that in front of me.

MR. CORCORAN: -- and an interpleader. All those were

filed I believe under single docket number of 1266. Of those

two, the petition and the interpleader, were signed by

Mr. Arman. Another was 1270 which are objections. 1269,

also objections. 1271, preconference statement. We are not

alleging that all those were not signed by Mr. Arman.

THE COURT: Say that again. Which ones?

MR. CORCORAN: There's a document that was filed this

morning by Mr. Hutchens. It was served on us last Friday,

the 15th. The title of it is "Petitioners' Preconference

Responses and Reply to Order of Honorable Judge John A.

Mendez," and then it goes on.


MR. CORCORAN: That document, it has about 12 pages,

maybe 10 pages of case citations. At page 13, it begins

narrative. And in the first few paragraphs of that,

Mr. Hutchens acknowledges that he was signing Mr. Arman's

name, but he indicates that it was with various forms of


THE COURT: Okay. For the record, Mr. Hutchens, you

are not an attorney; is that correct?

MR. HUTCHENS: That's correct.


MR. CORCORAN: The subsequent filings by Mr. Hutchens

and Mr. Arman collectively I think evidence his presumption

of having joined or intervened in this case.

THE COURT: They do. Mr. Corcoran, give me the docket

number again.

MR. CORCORAN: Your Honor, it's docket 1261.


MR. CORCORAN: The date is March 10th that it was filed.

THE COURT: Got it.

MR. CORCORAN: Excuse me. It was entered on

March 11th. It was dated March 10th.

THE COURT: And that's the first sort of appearance

made by Mr. Hutchens; is that correct?

MR. CORCORAN: Yes. And I should add one thing, your

Honor. The plaintiffs actually received some documents that

are styled as filings that never actually appeared to end up

in the record. So we have been dealing with some additional

documents, and you should be aware that that's part of the

confusion and prejudice that we're claiming.

THE COURT: When is the first time that you got notice

that Mr. Hutchens was attempting to get involved in this


MS. PADILLA: I think when he filed these pleadings

styled notice of joinder. We did file an opposition jointly

with the United States to that.


MR. CORCORAN: Your Honor, if I could add one thing

about his involvement. In the various filings we've seen,

his claim of authority derives from two sources. One is a

joint venture which he has never produced and never

evidenced. But the other is a power of attorney which we do

have. I believe if I'm recalling correctly, and I can check

if you'd like, that that was dated March 13th of this year, 2008.

To demonstrate injury in fact, a plaintiff "must show that [it] is under threat of suffering `injury in fact' that is concrete and particularized" and "actual and imminent, not conjectural or hypothetical." Summers v. Earth Island Inst., 129 S.Ct. 1142 , 1149 (2009). Put another way, "Art[icle] III requires the party who invokes the court's authority to `show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant.'" Valley Forge Christian Coll. v. Ams. United for Separation of Church & State, Inc., 454 U.S. 464 , 472 (1982) (quoting Gladstone, Realtors v. Vill. of Bellwood, 441 U.S. 91 , 99 (1979)) (emphasis added). If the plaintiff is not the target of the challenged government action or inaction, "standing is not precluded, but it is ordinarily `substantially more difficult' to establish." Lujan, 504 U.S. at 562 (quoting Allen v. Wright, 468 U.S. 737 , 758 (1984)). U.S. v. CITY OF ARCATA No. 09-16780.

"[F]ederal jurisdiction exists only when a federal question is presented on the face of a properly pleaded complaint." JustMed, Inc. v. Byce, 600 F.3d 1118 , 1124 (9th Cir. 2010) (internal quotation marks omitted). The mere existence of a federal defense to a state law claim is insufficient to create federal jurisdiction over a case. Louisville & Nat'l R.R. v. Mottley, 211 U.S. 149 , 152 (1908).

The district court also had federal question jurisdiction over the case pursuant to 28 U.S.C. § 1331, which provides the district courts with "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." The government's complaint posed a federal question in its own right because it sought invalidation of the ordinances under federal law. See Shaw v. Delta Air Lines, Inc., 463 U.S. 85 , 96 n.14 (1983).

The Constitution expressly provides Congress with the power to "raise and support Armies" and to "make Rules for the Government and Regulation of the land and naval Forces." U.S. Const. art. I, § 8, cls. 12, 14. And the Supreme Court has made clear that the federal government "can determine, without question from any State authority, how the armies shall be raised." Perpich v. Dep't of Def., 496 U.S. 334 , 353 n.27 (1990) (quoting Tarble's Case, 80 U.S. (13 Wall.) 397, 408 (1872)); see also New York v. United States, 505 U.S. 144 , 156 1992) ("If a power is delegated to Congress in the Constitution, the Tenth Amendment expressly disclaims any reservation of that power to the States . . . ."). U.S. v. CITY OF ARCATA No. 09-16780. United States Court of Appeals, Ninth Circuit. Submitted November 4, 2010 * San Francisco, California. Filed December 17, 2010.

TO:       Members of the 112 th Congress

            Committee Staff Directors and Counsels; Member Staff

FR:       Speaker-Designate Boehner, Majority Leader-Elect Eric Cantor, Rules Committee Chairman-Elect David Dreier, Transition Team Chairman Greg Walden

DT:       December 17, 2010

RE:       New Constitutional Authority Requirement for Legislation

The new rule will be a new paragraph of clause 7 of rule XII:

            "(c) A bill or joint resolution may not be introduced unless the sponsor has submitted for printing in the Congressional Record a statement citing as specifically as practicable the power or powers granted to Congress in the Constitution to enact the bill or joint resolution. The statement shall appear in a portion of the Record designated for that purpose and be made publicly available in electronic form by the Clerk.”

CERCLA's BFPP Protections in Question

In what might be considered one of the most important superfund cases of the year, a federal district court for the first time has interpreted the requirements for the bona fide prospective purchaser defense and found several were not met, a New York City attorney told BNA Dec. 7. Referring to the decision in Ashley II of Charleston LLC v. PCS Nitrogen Inc. (D.S.C., No. 2:05-cv-2782, 9/30/10), Lawrence Schnapf, principal of Schnapf Environmental Law Offices, said the decision, which for the first time scrutinized the appropriate care requirement, has widespread implications for whether the self-implementing nature of the bona fide prospective purchaser (BFPP) defense is sufficient for liability protection under the federal superfund law. "After the 2002 amendments to CERCLA, EPA basically took the position that it was getting out of the prospective purchaser agreement business because the BFPP was self-implementing. 

Reported in BNA's Environmental Due Diligence Memo on December 15th, this case raises questions about the reliability of the statute's landowner protections," Schnapf said. The case stems from a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) action to recover costs incurred to remediate approximately 34 acres of land in Charleston, S.C., with contamination related to the historic operations of a fertilizer manufacturing plant. Ashley II had purchased the site for redevelopment. It argued it was not liable for the contamination because it was a protected by CERCLA's BFPP defense. The court disagreed and found Ashley responsible for 5 percent of the allocated cleanup costs.

Environmental Bankers Association (EBA) is a non-profit trade association that represents the financial services industry, including bank and non-bank financial institutions, insurers, asset management firms and those who provide services to them. Its members include lending institutions, property & casualty and life insurers, the environmental consulting and appraisal community, and attorneys. The EBA was established in 1994 in response to heightened sensitivity to environmental risk issues, and the need for environmental risk management, sustainable development,  and due diligence policies and procedures in financial institutions.

Membership in the EBA is not limited to financial institutions. Currently, our membership includes property & casualty insurers and brokers, environmental consultants, appraisers and environmental information management firms, and environmental, real estate and trust attorneys in addition to the financial sector.

The EBA meets formally twice a year at a location hosted by one of its members. The meetings provide not only a forum to promote the exchange of environmental risk management and sustainable development lending information and technical expertise but also provides the opportunity for our members to network.

Committee Descriptions

PRESIDENT & Policy Beth Gray Wachovia Bank
VICE PRESIDENT & Programs Rick Ferguson U.S. Bank
SECRETARY & Communication Rick Plewa Comerica Bank
TREASUrer & Finance Steven Katzenstein National City Bank
Risk Management Dennis P. Firestone Wells Fargo Bank
Technical Development Georgina Dannatt Bank of the West
Business Development
Global Issues Jennifer Farley Wells Fargo
Trust Issues Glenn R. Brown JP Morgan/Chase
Legal & ASTM J. Scott Beckerman Comerica Bank
General Counsel Dan Richardson Lewis, Longman & Walker, P.A.
Executive Co-director D. Jeff Telego Environmental Bankers Association
Executive co-director Tacy Telego Environmental Bankers Association


THE COURT: Okay. Mr. Arman, you are a party to this

case. Is there anything you want to say?

MR. ARMAN: Yes, your Honor.

THE COURT: Go ahead.

MR. ARMAN: If I'm permitted.

THE COURT: You are permitted.

MR. ARMAN: I'd like to raise a complaint.

THE COURT: Go ahead.

MR. ARMAN: I've been restricted from using my

property since March of last year. I have to go through two

gates. I have to get permission to go through these gates.

I have to -- I am monitored over 30 different locations on my

property. And if I'm not reported in, there is some record

kept of that. I can't use my property. I can't use it. I

cannot enjoy it. I cannot spend a weekend up there. I've

had different contractors help me on different projects.

They have to be off the property at 3:00 o'clock. They

cannot come up there on a weekend. It is a total absolute

disaster of owning a property, a beautiful property like Iron

Mountain Mines, and I cannot use it because the people

sitting right over there are keeping me from using it. And I

think that that is terrible. And I'd like to have you know

this, that I am being treated horribly as an owner of

property, and I asked -- I have lawyers, and I asked one of

them, he said well, Ted, they're just penalizing you. The

whole issue is penalizing you. Penalizing me over some

incident that occurred back in March where this group, AIG,

and that group are utilizing all of my buildings and they're

not paying me any rent. And I figured anything that's left

in my buildings belongs to me, and I will treat it that way.

And there's so many other issues,

THE COURT: Okay. Mr. Arman, go ahead.

MR. ARMAN: Yes, your Honor. The government put a

lien on my property which makes it almost impossible for me

to raise money. I've had all kinds of opportunities for

money to come in, but that lien is blocking it. And,

secondly, we have enough projects going up there to where we

could make enough money to pay off anything that we need to

pay off, and yet EPA interferes with my business where I

cannot operate. And some of the people are sitting right

here who are doing that interference.







White House issues scientific integrity memo

Guidelines are intended to help increase public trust in science
President Obama's science and technology advisor issued a memo to federal science agencies Friday to guide them in making rules to ensure scientific integrity.
The memo, which applies to executive branch departments and agencies such as the Department of Agriculture and the National Science Foundation, is “several steps in the right direction,” said Al Teich, the director of science policy at the American Association for the Advancement of Science (AAAS).
Director of the White House Office of Science and Technology Policy John Holdren sent out the guidelines after a March 2009 memo by Obama emphasized the need for public trust in science. In that memo, Obama highlighted principles of scientific integrity that he said would be at the core of his administration's approach to science policy.
New guidelines

The new memo is meant to provide further guidance to the heads of federal scientific departments and agencies, the White House announced Friday.
Scientific integrity in government. The memo outlines guidelines for open communication among federal scientists and the public, including making data available online.? 
Public communications. Agencies are required to offer “articulate and knowledgeable” spokespersons to explain scientific findings to the media and public. The memo requires that agencies put mechanisms in place to resolve disputes about decisions to proceed with or refuse media interviews.
Federal advisory committees. These committees, or FACs, are tasked with providing scientific advice for policy decisions. The memo requires transparency in recruiting committee members. It also requires that any conflict of interest information be publicly available. Finally, agencies are to be prohibited from revising committee recommendations, protecting the independence of FACs.
Professional development for federal scientists. Agencies and departments must encourage scientists to publish and present freely. Scientists should also be allowed to participate in professional enrichment activities like sitting on journal editorial boards.
Some of the changes are significant, said AAAS's Teich, including a rule that federal scientists must put their results into context by highlighting uncertainties and including best- and worse-case scenarios. [Read: White House Wonders if Climate Will Be Hostage to Politics ]
“There's a natural tendency on the part of people to want to put their research results in the most favorable light,” Teich told LiveScience. The requirements will force federal researchers to “take a different perspective, and a much more open and balanced perspective, if in fact it's implemented the way it's written,” Teich said.
In the memo, Holdren gave department and agency heads 120 days to report their progress in setting rules to meet the guidelines.
“All in all, we're pleased, but the word ‘appropriate' appears a half a dozen times in this document, and that means there's a lot of discretion for these agencies as to how they implement it,” Teich said, adding, “They've talked the talk, now we'll see if they walk the walk, and we hope they do.”
Politics and scienceThese guidelines may help prevent situations where political ideology interferes with the communication of scientific information, according to Neal Lane, a professor of public policy at Rice University. These incidents included the editing of an Environmental Protection Agency report to the point where it glossed over the risks of climate change .
“Those are the kinds of things that should not ever happen in any administration, whatever the party is,” he told LiveScience. “These agencies are large complex organizations with many layers and sometimes you can find people who don't know the science in a position to influence what the agency puts out about the science.”
Hopefully, these guidelines will prevent this from happening in the future, according to Lane.
Wendy Wagner, a professor at the University of Texas School of Law and a member scholar at the Center for Progressive reform had some reservations about the lack of guidance in the memo for how agencies should use non-federal science data in setting regulations.
“On the whole, however, the new policy is an important step forward,” Wagner said in a statement. “Hopefully it will be followed by many more positive directives on science-policy in the not too distant future.”
Michael McPhaden, president of the American Geophysical Union and a National Oceanic and Atmospheric Adminsitration scientist, lauded the guidelines emphasis on peer review, transparency, and the lifting of restrictions on government scientists' activities in professional societies.
“This is really a revolutionary document,” McPhaden told LiveScience.
LiveScience Senior Writer Wynne Parry contributed reporting to this article.


A Watershed Moment for the Clean Water Act

(1)   Looking 20 years ahead, what systemic risks will the emergency management community face?

(2)   What transformational events could shape emergency management's future?

(3)   What should the emergency management community be doing now to have the right future capacity and capabilities to serve those who depend on us?

The Fifth Circuit erred in according absolute priority to the subject-matter jurisdiction requirement on the ground that it is nonwaivable and delimits federal-court power, while restrictions on a court's jurisdiction over the person are waivable and protect individual rights. Although the character of the two jurisdictional bedrocks unquestionably differs, the distinctions do not mean that subject-matter jurisdiction is ever and always the more “fundamental.” Personal jurisdiction, too, is an essential element of district court jurisdiction, without which the court is powerless to proceed to an adjudication. Employers Reinsurance Corp. v. Bryant, 299 U.S. 374 , 382. In this case, indeed, the impediment to subject-matter jurisdiction on which Marathon relies–lack of complete diversity–rests on statutory interpretation, not constitutional command. Marathon joined an alien plaintiff (Norge) as well as an alien defendant (Ruhrgas). If the joinder of Norge is legitimate, the complete diversity required by §1332, but not by Article III of the Constitution, see State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523 , 530—531, is absent. In contrast, Ruhrgas relies on the constitutional due process safeguard to stop the court from proceeding to the merits of the case. See Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694 , 702. The Steel Co. jurisdiction-before-merits principle does not dictate a sequencing of jurisdictional issues. A court that dismisses for want of personal jurisdiction, without first ruling on subject-matter jurisdiction, makes no assumption of law-declaring power that violates the separation of powers principles underlying Steel Co. Pp. 8—10. RUHRGAS AG v. MARATHON OIL

In most instances, subject-matter jurisdiction will involve no arduous inquiry, and both expedition and sensitivity to state courts' coequal stature should impel the federal court to dispose of that issue first. Where, as here, however, a district court has before it a straightforward personal jurisdiction issue presenting no complex state-law question, and the alleged defect in subject-matter jurisdiction raises a difficult and novel question, the court does not abuse its discretion by turning directly to personal jurisdiction.

145 F.3d 211, reversed and remanded.


Ginsburg, J., delivered the opinion for a unanimous Court.   





The ongoing environmental calamity at Iron Mountain Mine has created new major and modified existing stationary sources that would require air permits prior to beginning emissions that becomes an enforceable part of the new process for determining the required emission control technology - criteria pollutants  such as sulfur dioxide, nitrogen dioxide, carbon dioxide, carbon monoxide, particulate and volatile organic compounds exceed a “significance” threshold, the permittee is required to analyze available and technically feasible control technology with the goal of selecting the best available control technology (BACT) for new or modified emissions.


CERCLA EPCRA Administrative Reporting Exemption For Air Releases

Travelin' in Time: Iron Mountain has rich history

Ah ... the good old days

A major health and environmental hazard because of the huge volumes of poisonous sulphurous dioxide gases released into the air. The company made token attempts to prevent the spread of the poisonous gases, resulting in Superior Court lawsuits that closed the smelter by court order in 1907. ...

No one lives on the mountain today. There is only one remaining privately owned piece of property on the mountain — Iron Mountain Mine, and that is owned by Ted Arman. All the rest of the mountain property is owned by an agency of the federal government — the Bureau of Reclamation, the U.S. Forest Service, or the Department of Reclamation. 

Iron Mountains Mines, Inc. purchased the property in 1976. In 1983, Iron Mountain Mine was placed on the Environmental Protection Agency's National Priority List, making it eligible as a Superfund cleanup site. Cleanup investigative work by the federal government began that year.

General Docket
United States Court of Appeals for the Ninth Circuit
Court of Appeals Docket #: 09-17411 Docketed: 10/29/2009
Nature of Suit: 1893 Environmental Matters
USA, et al v. T.W. Arman, et al
Appeal From: U.S. District Court for Eastern California, Sacramento
Fee Status: Paid
Case Type Information:
     1) civil
     2) united states
     3) null
Originating Court Information:
District: 0972-2 : 2:91-cv-00768-JAM-JFM
Court Reporter: Kelly Ann O'Halloran
Trial Judge: John A. Mendez, District Judge
     Date Filed: 06/12/1991
     Date Order/Judgment:      Date Order/Judgment EOD:      Date NOA Filed:      Date Rec'd COA:
     09/29/2009      09/29/2009      10/23/2009      10/29/2009

06/30/2010  19  Filed (ECF) Appellee State of California Correspondence: Letter to Clerk. Date of service: 06/30/2010 [7389577] (MP)
07/23/2010  21  Submitted (ECF) Answering brief for review. Submitted by Appellee USA. Date of service: 07/23/2010. [7415725] (JMP)
07/26/2010  22  Filed clerk order: The answering brief [ 21 ] submitted by USA is filed. Within 7 days of the filing of this order, filer is ordered to file 7 copies of the brief in paper format, with a red cover, accompanied by certification, attached to the end of each copy of the brief, that the brief is identical to the version submitted electronically. [7417446] (WP)
07/26/2010  23  Filed Appellee USA excerpts of record in 1 volume. Served on 07/23/2010. [7417457] (WP)
07/29/2010  24  Received 7 paper copies of Answering brief [ 21 ] filed by USA. [7422418] (SD)
08/05/2010  25  Oral extension of time granted to appellants T. W. Arman, William A. Logan, Jr. and Logan & Giles LLP. The reply brief is due 8/23/2010. [7435466] (LB)
08/23/2010  26  Submitted (ECF) Reply brief for review. Submitted by Appellants William A. Logan, Jr. and Logan & Giles LLP. Date of service: 08/23/2010. [7449230] (WAL)
08/24/2010  27  Filed clerk order: The reply brief [ 26 ] submitted by William A. Logan, Jr. and Logan & Giles LLP is filed. Within 7 days of the filing of this order, filer is ordered to file 7 copies of the brief in paper format, with a gray cover, accompanied by certification, attached to the end of each copy of the brief, that the brief is identical to the version submitted electronically. [7450466] (WP)
08/26/2010  28  Received 7 paper copies of Reply brief [ 26 ] filed by William A. Logan, Jr.. [7454559] (SD)
12/14/2010  29  Filed order MOATT: (EC) The court has received the June 9, 2010 filing of John F. Hutchens. Because Mr. Hutchens in not a party to this appeal, the Clerk shall return the June 9, 2010 filing to him. No further submissions made by Mr. Hutchens in this appeal shall be addressed by the court. Principal briefing is complete. [7580049] (KD)



The last reforestation was attempted on the mountain after World War II to replace the trees that had been killed from the smelter fumes. Even though 2.6 million seedlings were planted, the acidic soil and slope instability rendered the project a failure. Nature had largely healed itself since then until the Motion fires 2 years ago destroyed thousands of acres.

Now we have irrigation available, we should try again.

The cartel "is the most pervasive and harmful criminal antitrust conspiracy ever uncovered," declared Joel Klein, chief of the Justice Department's antitrust division. The price-fixing ring "hurt the pocketbook of virtually every American consumer, anyone who took a vitamin, drank a glass of milk, or had a bowl of cereal," he said.

Fulfilling the Promise of Earth Day (continued)

MEETING THE CHALLENGE Today, Superfund is more flexible, more effective, more sensible, and more affordable -- seeking to achieve the best environmental results for the least cost.

But the proof of Superfund's success is found in our backyards.


Because of innovative thinking and flexibility, a site that was once the subject of community unrest has been transformed into a center of community pride. When the Federal government settled with the PRPs ..., two Trusts were formed... current and former landowners. The Trusts facilitated the cleanup of the site and its eventual redevelopment.

CONTACT: Dale Kemery (News Media Only) 202-564-7839 202-564-4355


December 21, 2010

EPA Forms New Group to Increase Tribes' Role in Chemical Management and Pollution Prevention Activities

WASHINGTON – The U.S. Environmental Protection Agency is forming a new tribal committee to provide tribes with an opportunity for greater input on issues related to toxic chemicals and pollution prevention. The move is part of Administrator Lisa P. Jackson's priority to build strong tribal partnerships and expand the conversation on environmental justice.

EPA is establishing a National Tribal Toxics Committee (NTTC) that will give tribes a forum for providing advice on the development of EPA's chemical management and pollution prevention programs that affect tribes. Given the uniqueness of tribal cultures, communities and environmental problems, the forum will help EPA better tailor and more efficiently address a variety of issues, including preventing poisoning from lead paint, expanding pollution prevention and safer chemical initiatives in Indian country, and better evaluating unique chemical exposures on tribal lands.

“This new committee will help increase our already close collaboration and communication with federally recognized tribes and intertribal organizations on critical issues relating to chemical safety and pollution prevention that affect Native peoples,” said Steve Owens, assistant administrator for EPA's Office of Chemical Safety and Pollution Prevention. “We are committed to reducing toxic exposures and increasing pollution prevention among tribal communities, and to respecting tribal sovereignty, culture and heritage.”

A charter for the new NTTC is being developed and the membership of the council will be formed over the next several months. The first meeting of the NTTC will be held in the spring of 2011.

More information: /

More information on EPA's partnership with tribes: /

Note: If a link above doesn't work, please copy and paste the URL into a browser.

View all news releases related to pesticides and toxic chemicals

1892 Illinois Central Railroad v. Illinois , 146 U.S. 387 (1892) established the scope of the public trust doctrine in America . The issue was whether the Illinois legislature could grant nearly the entire waterfront area of Chicago to the Illinois Central Railroad. The Supreme Court of the United States held that Illinois had title to the land underneath the navigable waters of Lake Michigan and that it held this title in trust for the public's use. Illinois was not allowed to convey this land if the effect would be to destroy the public's right of navigation and fishing. However, the Court also held that Illinois could convey parcels of trust land to private individuals so long as the overall effect was to improve the public's ability to exercise its trust rights. The conveyance to Illinois Central did not meet this criterion and was therefore void.

1926 December 24: California Supreme Court rules in Herminghaus v. Southern California Edison that riparian water right holders are not bound by existing California law to use water reasonably with respect to appropriative water right holders.

The decision proves controversial throughout California .

July 30: California Department of Finance files water rights applications for 7.3 million acre-feet of water rights on the Feather River and in the Delta, as well as millions more on many other rivers and streams throughout the Central Valley watershed in anticipation of design and construction of statewide water systems. The states requested water rights exceed by many times the amount of annual runoff in the rivers subject to the state's applications.

1928 November: California voters pass Proposition 7, a constitutional amendment banning waste and unreasonable use, and unreasonable methods of diversion of water statewide by nearly a 4-to-1 margin. The constitutional amendment requires that all uses and diversions, and methods of diversions of water in California must be reasonable, including riparian rights, thereby addressing the issues raised by Herminghaus .

1933 December: California voters narrowly pass the Central Valley Project Act by a margin of 33,603 votes statewide, authorizing the state to build its first coordinated water system. Because of the Great Depression, the state could not finance the project, however.

1928 -


First lengthy statewide drought of the 20th century results in runoff from all rivers and streams tributary to the Delta that was less than 60 percent of average conditions.

1937 US Bureau of Reclamation takes over ownership, design, construction, and operation of the Central Valley Project from the state of California .

1940s Shasta Dam completed on upper Sacramento River in 1944; Friant Dam completed on upper San Joaquin River in 1949.

On the San Joaquin River , fall-run Chinook salmon go extinct in late 1940s and spring-run Chinook salmon go extinct in early 1950s.

1969 · Clean Water - - The Porter-Cologne Water Quality Control Act is adopted as one of the nation's strongest anti-pollution laws and becomes a model for the federal Clean Water Act of 1972.

1977 · Alternative Energy -- Governor Brown and the Legislature enact the nation's largest tax-incentive program for encouraging development of solar energy. The following year, the state sets a goal of meeting 10 percent of its electrical needs with wind power by the year 2000.

1986 May: Appellate Judge John Racanelli issues the first public trust and water quality planning decision on the Delta cases originally filed in 1978, United States v. State Water Resources Control Board . California Supreme Court declines to hear the case on appeal in July, letting Judge Racanelli's decision stand. Racanelli stated that the State Water Resources Control Board must take a global view of the Delta and Sacramento and San Joaquin River tributary watersheds, and must by law protect beneficial uses of water (including fish and wildlife) not merely water rights.

1988 California Legislature adopts the Salmon, Steelhead Trout, and Anadromous Fisheries Program Act , setting as state policy a goal to double the production of salmon and steelhead fish in California .

October: After more than a year of evidentiary hearings into public trust resource and water supply issues, State Water Resources Control Board issues Draft Bay-Delta WQCP calling for a new “water ethic,” new flow objectives for Delta channels, and pre-State Water Project export rates [but split between Central Valley Project and State Water Project pumps] as a “reasonable interim goal until a safe level of exports is found.” After water contractors strenuously object to the draft plan, it is withdrawn.

1914   Tax Exemption for Universities -- Nonprofit colleges and universities are exempted from property taxation. (Constitutional amendment, proposed by the Legislature, approved by 53 percent of voters.) A 100-acre cap on their tax-exempt property is expanded in 1962 to include all lands used for higher education.

1995 · Incompetent Judges --Voters endorse a constitutional amendment offered by the Legislature to permit greater public oversight in disciplining corrupt, biased or incompetent judges. The Commission on Judicial Performance is given authority to remove or censure judges and its disciplinary hearings will be open to the public. (Approved by 63.7 percent of voters.)

Its an awfully long time since

Christmas on Iron Mountain


No one lives on the mountain today and all of the mines have ceased to operate. A massive ore body still exists inside the mountain and instead of mining the ore, people are now employed by the federal government to clean up the massive amount of [non] toxic materials created by the earlier mining.


[No. S071728. Aug. 21, 2000.]

CITY OF BARSTOW et al., Plaintiffs and Respondents, v. MOJAVE WATER AGENCY et al., Defendants, Cross-complainants and Respondents; JESS RANCH WATER COMPANY, Cross-defendant and Appellant.

[Nos. E018023, E018681.

Aug. 21, 2000.]

MOJAVE WATER AGENCY et al., Cross-complainants and Respondents, v. MANUEL CARDOZO et al., Cross-defendants and Appellants.

(Superior Court of Riverside County, No. 208568, Erik Michael Kaiser, Judge.)

(Opinion by Chin, J., with George, C.J., Mosk, J., Kennard, J., Baxter, J., Brown, J., and Johnson, J. fn. * , concurring.)



We granted review to determine whether a trial court may definitively resolve water right priorities in an overdrafted basin with a "physical solution" that relies on the equitable apportionment doctrine but does not consider the affected owners' legal water rights in the basin. fn. 1 We conclude it may not, and affirm the Court of Appeal judgment in that respect. In the second part of this opinion, we address whether the Court of Appeal erred in concluding that the trial court abused its discretion when it determined that a water producer who desired to stipulate to the physical solution was fairly apportioned its share of water. We conclude the Court of Appeal erred on this point. We therefore affirm in part and reverse in part the Court of Appeal judgment. fn. 2


The Mojave River originates in the San Bernardino Mountains, where rain and snow runoff give rise to the West Fork of the Mojave River and Deep Creek. These tributaries join at the mountain foothills in an area called The Forks to form the Mojave River. From The Forks, the Mojave River flows approximately 90 miles north to Victorville and Helendale, northeast to Barstow, east to Afton, and finally to its terminus in Soda Lake.

The Mojave River Basin area extends approximately 3,600 square miles and encompasses several cities, including Victorville, Hesperia, Apple Valley, Adelanto, and Barstow. fn. 3 The Mojave River Basin is divided into five hydrologic subareas: The Helendale Fault separates the Alto and Centro Basin subareas; the Waterman Fault separates the Centro and Baja Basin subareas; the Oeste Basin subarea is west of the Alto Basin subarea; and the Este Basin subarea is east of the Alto Basin subarea and south of the Centro Basin subarea. Because these basins are interconnected, some of the surface in-flow to one basin is out-flow from another. The ground and surface water within the entire Mojave River Basin constitute a single interrelated source.

The Mojave River, cyclically replenished from rainfall in the San Bernardino Mountains, is the main water source for the Mojave River Basin. The river's flow in the downstream area, however, has decreased in recent years. Groundwater extractions in the Alto Basin have lowered the water table, increasing the Alto Basin's storm flow absorption. As more water is absorbed in the Alto Basin, less water reaches the downstream area.

Before the 1950's, the Mojave River Basin economy primarily relied on transportation, mining, military, and agriculture. The economy and investment in the area soon grew and, by the mid-1950's, demand for water in the basin exceeded the natural supply, resulting in an overdraft condition. Development continued, particularly during the 1970's and 1980's. By 1990, the basin's population was approximately 235,000, more than 10 times the population in 1950. The largest increase in overdraft in the basin occurred between 1970 and 1980. During that time, well levels and water quality experienced a steady and significant decline. If overdraft conditions continue, the basin's water supply will experience significant depletion.


In 1990, the City of Barstow and the Southern California Water Company (plaintiffs) filed this action against the City of Adelanto, the Mojave Water Agency (MWA), fn. 4 and other upstream water producers, claiming that their groundwater production was adversely impacting plaintiffs' water supply, and that they contributed to the entire Mojave River Basin overdraft. fn. 5 Plaintiffs sought an average annual flow of 30,000 acre-feet of water to the Barstow area and a writ of mandate to compel the MWA to import supplemental water from the State Water Project.

In 1991, the MWA served over 1,000 persons with an amended cross-complaint that joined substantially all water producers within the Mojave River Basin, except for certain small producers. The cross-complaint requested a declaration that the available native water supply was inadequate to meet producer demands within the Mojave River Basin and asked the court to apportion water rights among the various water producers.

The trial court stayed the litigation while a committee, composed of attorneys and engineers representing numerous water producers throughout the Mojave River Basin, met to negotiate settlement terms and to develop a physical solution to the water shortage problem. After negotiating for two years, the committee submitted a draft physical solution to the trial court.

The physical solution's stated purposes are (1) to ensure that downstream producers are not adversely affected by upstream use, (2) to raise money to purchase supplemental water for the area, and (3) to encourage local water conservation.

Regionally, the physical solution requires each subarea within the basin to provide a specific quantity of water to the adjoining downstream subarea. The solution places no limits on the amount of water a party can withdraw. Instead, each party is allotted a certain quantity of water-a "free production allowance" based on its prior use-which it can use at no cost. When a party uses water in excess of its free production allowance, it is charged a fee to purchase "replacement" water for that subarea.

The physical solution also sets a "base annual production" amount for each party, determined by the producer's maximum annual production for the five-year period from 1986 to 1990. The solution defines a producer's base annual production right as "the relative right of each producer to the free production allowance within a given subarea, as a percentage of the aggregate of all producers' base annual production in the subarea." The higher the base annual production right, the more water a producer can sell under transfer provisions and produce free of a replacement assessment.

Significantly, the physical solution did not apportion production rights on the basis of preexisting legal water rights. The drafters of the physical solution believed such apportionment would lead to inequitable water allocation. In fact, the trial court expressly held that the parties were "estopped and barred from asserting special priorities or preferences." The court further concluded that allocating water based on asserted legal priorities would be "extremely difficult, if not impossible."

The trial court ordered all parties either to stipulate to the physical solution, file an answer to the cross-complaint, or suffer default. Over 200 parties stipulated to the physical solution. Minimal producers within the Mojave River Basin3/4those who produced 10 acre-feet of water or less annually3/4were exempt from the physical solution's terms, and instead were subject to administration under the MWA. The trial court entered an interlocutory judgment imposing the physical solution on the stipulating parties. It then held a trial to adjudicate the individual rights of the nonstipulating parties, including the City of Adelanto, the Cardozo appellants, who were generally described as alfalfa and dairy farmers with legal water rights, and appellants Jess Ranch Water Company (Jess Ranch), property owners who raised trout and engaged in some agricultural pursuits. In contrast to the Cardozo appellants, Jess Ranch wanted to participate in the physical solution and interlocutory judgment. Jess Ranch challenged only the judgment's allocation of acre-feet of water to it, not the physical solution's legality.

The trial court identified the following issues for determination during the nonstipulating parties' trial: (1) characterization of water rights; (2) priority, if any; (3) uses of the water; (4) whether those uses were reasonable; and (5) the amount of reasonable and beneficial use. Other trial issues included identification of the subareas, whether the physical solution created an equitable apportionment of water, and whether it satisfied the requirements of article X, section 2 of the California Constitution, which mandates that water be put to reasonable and beneficial use. fn. 6

Trial was lengthy, with numerous witnesses testifying. The stipulating parties presented evidence of the Mojave River Basin's hydrogeology and established that the overdraft existed. The stipulating parties also presented evidence regarding the Mojave River Basin's economic development during the overdraft period.

The Cardozo appellants demonstrated they owned land in the basin and that they had been pumping water from wells on that land. Although the Cardozo appellants initially claimed that they held riparian water rights, they did not produce evidence in their properties' chain of title to support that claim. Therefore, they relied on their overlying rights based on the groundwater underneath their property. fn. 7

In its statement of decision, the trial court recited the case's procedural history and the facts in detail. The court concluded that the constitutional mandate of reasonable and beneficial use dictates an equitable apportionment of all water rights when a river basin is in overdraft. The court found it unnecessary to adjudicate individual legal water rights and instead concluded that the proposed physical solution, incorporating a free production allowance without regard to overlying and riparian water rights holders, would be fair and equitable to nonstipulating farmers and would best satisfy the use policy set forth in Water Code section 106 (domestic use has highest priority, followed by irrigation).

Several factors influenced the trial court's decision to enforce the physical solution. For example, the court noted the overdraft had existed for several years, the parties disputed the asserted water rights priorities, and a mechanical allocation of legal water rights could lead to an inequitable apportionment and impose undue hardship on many parties. For these reasons and more, the trial court enjoined all parties from asserting special priorities or preferences.

The trial court concluded that in the face of severe overdraft of an inter-related water source, all use was unreasonable, whether or not a user held riparian or overlying rights. The court reasoned that several factors justified the water right allotment on a nonpriority basis, including the climate, the impact of overdraft on interrelated surface and groundwater basins, and the importance of protecting the economy. The court concluded that the doctrine of reasonable and beneficial use, as established by article X, section 2 of the California Constitution, required an equitable apportionment of all rights when a basin is in overdraft. The City of Adelanto stipulated to the judgment following trial.

The Cardozo appellants fn. 8 appealed the trial court judgment. They argued that the physical solution was invalid because it failed to recognize their preexisting and paramount legal water rights under California water law and therefore amounted to a taking without due process. Specifically, they attacked the physical solution on grounds that: "(1) it fails to recognize and protect their water rights; (2) it imposes a burdensome expense on them, with the intention to reduce or eliminate agricultural uses; (3) it encourages waste of water; (4) it encourages unlawful transfer of water; (5) it fails to bind all producers in the basin; (6) it has other harmful and inequitable effects."

The City of Barstow, the MWA, and other parties to the stipulation responded that the Cardozo appellants had failed to prove they had any water rights that the judgment adversely affected. They further argued that any water rights the Cardozo appellants did possess were limited by the principle of reasonable and beneficial use under article X, section 2 of the California Constitution, which, they argued, required the court to apportion water equitably among users in the overdrafted area. They also asserted that the trial court had properly considered the relevant factors before imposing a physical solution.

The Court of Appeal disagreed with these arguments and reversed the trial court judgment against the Cardozo appellants, directing the trial court to enter its order excluding them from its judgment and granting them injunctive relief to protect their water rights. The court concluded that the trial court erred in failing to consider the farmers' potential riparian or overlying water rights when adjudicating water allocation in the overdrafted basin. The court held that it was not required to reverse the entire judgment or in any way to disturb the physical solution as to the stipulating parties, despite the trial court's error. As the Court of Appeal correctly observed, "We see no reason why the parties cannot stipulate to a judgment incorporating the physical solution, nor do we see any reason why a stipulated [solution] entered into by a large number of water producers in the Mojave Basin should be totally reversed when the rights of the Cardozo Appellants can be fully protected by appropriate trial court orders on remand. [Citations.] . . . [] Thus, we protect the rights of the Cardozo Appellants while also respecting the rights of the stipulating parties to agree to a [solution that] waives or alters their water rights in a manner which they believe to be in their best interest." ( Fn. omitted. )

The Jess Ranch matter presents different issues. At trial, Jess Ranch introduced evidence to show it pumped over 18,000 acre-feet of water per year from 1986-1990 to support its trout-raising operation and ancillary agricultural properties. The stipulating parties contested the amount of water Jess Ranch put to beneficial use. The trial court found that Jess Ranch failed to establish that its substantial use of water was reasonable and beneficial. The court therefore calculated Jess Ranch's base annual production at a lesser quantity. The court concluded that for purposes of Jess Ranch's joining the stipulated physical solution, it would calculate the amount used annually at 7,480 acre-feet, an amount Jess Ranch challenged.

On appeal, Jess Ranch argued that its water allocation should be increased, because its annual production rights were not calculated on the same basis as those of other producers. The Court of Appeal agreed and reversed the judgment as it applied to Jess Ranch. The court found that Jess Ranch was not given a base annual production amount based on its actual production. The court further stated that the doctrine of reasonable and beneficial use did not justify treating Jess Ranch differently from other producers.

We granted petitions for review filed by the City of Barstow, the Southern California Water Company, the MWA, and other participants in the physical solution and judgment (collectively respondents). fn. 9 The principal question we address is whether the trial court could disregard legal water rights in order to apportion on an equitable basis water rights to all producers in an overdrafted groundwater basin. We also address respondents' contention that the Court of Appeal erred in concluding the trial court treated Jess Ranch inequitably in its water allocation under the proposed solution and judgment.

A. Principles and Policies of California Water Law

1. Water Rights

Courts typically classify water rights in an underground basin as overlying, appropriative, and prescriptive. (California Water Service Co., supra, "224 Cal.App.2d at p. 725.) fn. 10 An overlying right, "analogous to that of the riparian owner in a surface stream, is the owner's right to take water from the ground underneath for use on his land within the basin or watershed; it is based on the ownership of the land and is appurtenant thereto." (California Water Service Co., supra, 224 Cal.App.2d at p. 725.) One with overlying rights has rights superior to that of other persons who lack legal priority, but is nonetheless restricted to a reasonable beneficial use. Thus, after first considering this priority, courts may limit it to present and prospective reasonable beneficial uses, consonant with article X, section 2 of the California Constitution. (Jordan v. City of Santa Barbara (1996) 46 Cal.App.4th 1245, 1268.)

In contrast to owners' legal priorities, we observe that "[t]he right of an appropriator . . . depends upon the actual taking of water. Where the taking is wrongful, it may ripen into a prescriptive right. Any person having a legal right to surface or ground water may take only such amount as he reasonably needs for beneficial purposes . . . . Any water not needed for the reasonable beneficial use of those having prior rights is excess or surplus water and may rightly be appropriated on privately owned land for non-overlying use, such as devotion to public use or exportation beyond the basin or watershed [citation]. When there is a surplus, the holder of prior rights may not enjoin its appropriation [citation]. Proper overlying use, however, is paramount and the rights of an appropriator, being limited to the amount of the surplus [citation], must yield to that of the overlying owner in the event of a shortage, unless the appropriator has gained prescriptive rights through the [adverse, open and hostile] taking of nonsurplus waters. As between overlying owners, the rights, like those of riparians, are correlative; [i.e.,] each may use only his reasonable share when water is insufficient to meet the needs of all [citation]. As between appropriators, however, the one first in time is the first in right, and a prior appropriator is entitled to all the water he needs, up to the amount he has taken in the past, before a subsequent appropriator may take any [citation].

"Prescriptive rights are not acquired by the taking of surplus or excess water. [But] [a]n appropriative taking of water which is not surplus is wrongful and may ripen into a prescriptive right where the use is actual, open and notorious, hostile and adverse to the original owner, continuous and uninterrupted for the statutory period of five years, and under claim of right." (California Water Service Co., supra, "224 Cal.App.2d at pp. 725-726.) Even these acquired rights, however, may be interrupted without resort to the legal process if the owners engage in self-help and retain their rights by continuing to pump nonsurplus waters. (See Hi-Desert County Water Dist. v. Blue Skies Country Club, Inc. (1994) 23 Cal.App.4th 1723, 1731 (Hi-Desert County Water Dist.).) In the present action it is important to note that no parties have claimed prescriptive rights, and the parties who stipulated to the physical solution did not seek findings under the prescriptive rights doctrine.

2. 1928 Constitutional Amendment

Article X, section 2 was added to the California Constitution in 1928 as former article XIV, section 3. The provision limits water rights to reasonable and beneficial uses. (Cal. Const., art. X, § 2.) "[T]he rule of reasonable use as enjoined by . . . the Constitution applies to all water rights enjoyed or asserted in this state, whether the same be grounded on the riparian right or the right, analogous to the riparian right, of the overlying land owner, or the percolating water right, or the appropriative right." (Peabody v. City of Vallejo (1935) 2 Cal.2d 351, 383 (Peabody).) "Under this new doctrine, it is clear that when a riparian or overlying owner brings an action against an appropriator, it is no longer sufficient to find that the plaintiffs in such action are riparian or overlying owners, and, on the basis of such finding, issue the injunction. It is now necessary for the trial court to determine whether such owners, considering all the needs of those in the particular water field, are putting the waters to any reasonable beneficial uses, giving consideration to all factors involved, including reasonable methods of use and reasonable methods of diversion. From a consideration of such uses, the trial court must then determine whether there is a surplus in the water field subject to appropriation." (Tulare Dist. v. Lindsay-Strathmore Dist. (1935) 3 Cal.2d 489, 524-525 (Tulare).) We reiterated these principles in subsequent cases, observing that although "what is a reasonable use of water depends on the circumstances of each case, such an inquiry cannot be resolved in vacuo isolated from statewide considerations of transcendent importance. Paramount among these we see the ever increasing need for the conservation of water in this state, an inescapable reality of life quite apart from its express recognition in the 1928 amendment." (Joslin v. Marin Mun. Water Dist. (1967) 67 Cal.2d 132, 140, fn. omitted .)

The constitutional amendment therefore dictates the basic principles defining water rights: that no one can have a protectible interest in the unreasonable use of water, and that holders of water rights must use water reasonably and beneficially. Crucial to our own determination here is the fact that the amendment carefully preserves riparian and overlying rights, while abolishing "that aspect of the common law doctrine which entitled a riparian, as against an upstream appropriator, to enforce his right to the entire natural flow of a stream even if his use of the water was wasteful or unreasonable." (Pleasant Valley Canal Co. v. Borror (1998) 61 Cal.App.4th 742, 754 (Pleasant Valley); see also Gin S. Chow v. City of Santa Barbara (1933) 217 Cal. 673, 699-700.)

B. Equitable Apportionment

1. Past Cases

In previous cases resolving regional water uses, courts allocated water according to preexisting legal rights and relationships. For example, in Fleming v. Bennett (1941) 18 Cal.2d 518, 520, over 200 parties asserted rights to the Susan River's waters. The trial court referred the matter to the State Water Commission, which prepared a comprehensive report with individual findings regarding 259 claimed rights of users affecting the watershed. (Id. at pp. 525, 527.) We affirmed the trial court's decree, based on the report and additional evidence introduced at an open court hearing. (Id. at pp. 526-527, 530.)

As noted ante, at pages 14-15, in Tulare, we outlined a water allocation method in a case in which plaintiffs' water rights had different priorities. We also observed that "[t]he trial court . . . must fix the quantity required by each [right holder] for his actual reasonable beneficial uses, the same as it would do in the case of an appropriator." (Tulare, supra, 3 Cal.2d at p. 525.) This court determined that "[w]hat is a beneficial use at one time may, because of changed conditions, become a waste of water at a later time." (Id. at p. 567.) Because the court cannot fix or absolutely ascertain the quantity of water required for future use at any given time, a trial court should declare prospective uses paramount to the appropriator's rights, so the appropriator cannot gain prescriptive rights in the use. Until the paramount right holder needs it, the appropriator may continue to take water. (Ibid.)

Thus, water right priority has long been the central principle in California water law. The corollary of this rule is that an equitable physical solution must preserve water right priorities to the extent those priorities do not lead to unreasonable use. In the case of an overdraft, riparian and overlying use is paramount, and the rights of the appropriator must yield to the rights of the riparian or overlying owner. (Burr v. Maclay Rancho Water Co. (1908) 154 Cal. 428, 435; Katz v. Walkinshaw (1903) 141 Cal. 116, 135.)

2. Equitable Apportionment in Cases Involving Correlative Rights or Rights Established by Mutual Prescription

Respondents rely on two cases to support their contention that article X, section 2 of the California Constitution requires the courts to apportion all water rights equitably, regardless of preexisting priorities: City of Pasadena v. City of Alhambra (1949) 33 Cal.2d 908 (City of Pasadena), and City of Los Angeles v. City of San Fernando (1975) 14 Cal.3d 199 (City of San Fernando). We conclude these cases support the Cardozo appellants' position.

In City of Pasadena, extractors had been taking nonsurplus groundwater for over 30 years, creating an overdraft condition in the basin on which Pasadena relied as a water source. (City of Pasadena, supra, 33 Cal.2d at pp. 921-922.) Even after the overdraft occurred, all parties continued to pump the groundwater, creating a greater overdraft and interfering with everyone's ability to pump in the future. (Id. at p. 922.)

The plaintiff city and its chief water producer sued to determine the ground water rights in the area and to enjoin the alleged overdraft to prevent the water supply's depletion. (City of Pasadena, supra, 33 Cal.2d at p. 916.) The trial court referred the action to the state Division of Water Resources of the Department of Public Works, which produced a report on area-wide water rights. (Ibid.) All parties except the defendant water company, a public utility, stipulated to a judgment that allocated water and restricted total production to achieve safe yield in the basin. Because the stipulation was not binding on the utility, the issue in this court was how to determine its rights in relation to the stipulating producers in the same manner as if there had been no agreement. (Id. at pp. 916, 924.)

Without mentioning equitable apportionment, Chief Justice Gibson's majority opinion affirmed the trial court's judgment, enforcing the stipulation's terms against all parties, including the utility. (City of Pasadena, supra, 33 Cal.2d at pp. 916, 933.) This court discussed the nature of prescriptive groundwater rights in which adverse users do not completely overtake owners' rights. It concluded that the pumpers had established prescriptive rights in part of the water supply. The court observed "that such rights were acquired against both overlying owners and prior appropriators, [and] that the overlying owners and prior appropriators also obtained, or preserved, rights by reason of the water which they pumped . . . ." (Id. at p. 933.) Applying the mutual prescription doctrine, this court concluded that all claimants had equal priority and agreed the trial court had appropriately reduced each party's production to achieve safe yield. (Ibid.)

In reaching its conclusion, City of Pasadena observed: "Although the law at one time was otherwise, it is now clear that an overlying owner or any other person having a legal right to surface or ground water may take only such amount as he reasonably needs for beneficial purposes. [Citations.] Public interest requires that there be the greatest number of beneficial uses which the supply can yield, and water may be appropriated for beneficial uses subject to the rights of those who have a lawful priority. [Citation.] Any water not needed for the reasonable beneficial uses of those having prior rights is excess or surplus water. In California surplus water may rightfully be appropriated on privately owned land for nonoverlying uses, such as devotion to a public use or exportation beyond the basin or watershed. [Citations.]

"It is the policy of the state to foster the beneficial use of water and discourage waste, and when there is a surplus, whether of surface or ground water, the holder of prior rights may not enjoin its appropriation. [Citations.] Proper overlying use, however, is paramount, and the right of an appropriator, being limited to the amount of the surplus, must yield to that of the overlying owner in the event of a shortage, unless the appropriator has gained prescriptive rights through the taking of nonsurplus waters." (City of Pasadena, supra, 33 Cal.2d at pp. 925-926.)

Several decades later, Los Angeles sued to establish a prior right to groundwater in the upper Los Angeles River area in City of San Fernando, supra, 14 Cal.3d at page 207. The plaintiff city relied on its historic pueblo water rights, fn. 11 while the defendants argued that City of Pasadena supported their mutual prescriptive rights claim to a proportionate share of the groundwater supply. (City of San Fernando, supra, 14 Cal.3d at pp. 210-211, 214.) This court upheld the plaintiff's pueblo rights and overturned the trial court's award of prescriptive rights against the plaintiff. This court held that Civil Code section 1007 precluded the defendants from obtaining prescriptive water rights against the plaintiff. (City of San Fernando, supra, 14 Cal.3d at pp. 274-277.)

This court reasoned: "The pueblo right gives the city holding it a paramount claim to particular waters only to the extent that they are required for satisfying its municipal needs and those of its inhabitants. 'It thus insures a water supply for an expanding city [citation] with a minimum of waste by leaving the water accessible to others until such time as the city needs it.' [Citation.]" (City of San Fernando, supra, 14 Cal.3d at p. 252, italics added by City of San Fernando.)

This court rejected the defendants' contention that the mutual prescription doctrine developed in City of Pasadena was a "beneficent instrument for conservation and equitable apportionment of water in ground basins which are subjected to extractions in excess of the replenishment supply." (City of San Fernando, supra, 14 Cal.3d at p. 265.) In so doing, this court stated: "[T]he allocation of water in accordance with prescriptive rights mechanically based on the amounts beneficially used by each party for a continuous five-year period after commencement of the prescriptive period and before the filing of the complaint, does not necessarily result in the most equitable apportionment of water according to need. A true equitable apportionment would take into account many more factors." (Ibid.) In a footnote accompanying this sentence, this court observed: "The principles by which the United States Supreme Court equitably apportions water among states are illustrated in Nebraska v. Wyoming (1945) 325 U.S. 589, 618 [89 L.Ed. 1815, 1831-1832, 65 S.Ct. 1332].[ fn. 12 ] After observing that apportionment between states whose laws base water rights on priority of appropriation should primarily accord with that principle, the court said: 'But if an allocation between appropriation States is to be just and equitable, strict adherence to the priority rule may not be possible. For example, the economy of a region may have been established on the basis of junior appropriations. So far as possible those established uses should be protected, though strict application of the priority rule might jeopardize them. Apportionment calls for the exercise of an informed judgment on a consideration of many factors. Priority of appropriation is the guiding principle. But physical and climatic conditions, the consumptive use of water in the several sections of the river, the character and rate of return flows, the extent of established uses, the availability of storage water, the practical effect of wasteful uses on downstream areas, the damage to upstream areas as compared to the benefits to downstream areas if a limitation is imposed on the former-these are all relevant factors. They are merely illustrative, not an exhaustive catalogue. They indicate the nature of the problem of apportionment and the delicate adjustment of interests which must be made.' " (City of San Fernando, supra, 14 Cal.3d at pp. 265-266, fn. 61.)

Respondents claim this footnote provides the basis for the trial court's use of equitable apportionment to allocate water in an overdraft basin without regard to the owners' water priorities. (See Hi-Desert County Water Dist., supra, 23 Cal.App.4th at p. 1734, fn. 11 ; Wright v. Goleta Water Dist. (1985) 174 Cal.App.3d 74, 93 (Wright).) Respondents further assert that by ignoring equitable considerations, the Court of Appeal's opinion conflicts with City of San Fernando, and that it leads to an unjust result by which the Cardozo appellants are free to produce any amount of water on a priority basis, while all others pay to import water to protect the resource.

We find no conflict. City of San Fernando distinguished City of Pasadena, supra, 33 Cal.2d 908, where a "restriction to safe yield on a strict priority basis might have deprived parties who had been using substantial quantities of ground water for many years of all further access to such water." (City of San Fernando, supra, 14 Cal.3d at p. 266.) By contrast, City of San Fernando correctly found that the same condition was not present in the Los Angeles River basin, and "the effect of the trial court's judgment in the present case was to eliminate [the] plaintiff's priorities based not on the timing of its appropriations but on its importation of . . . water and on its pueblo right." (Id. at p. 267.) In other words, in City of San Fernando, applying the mutual prescription doctrine would still have led to completely eliminating appropriative rights stemming from recent uses in favor of earlier uses, because the defendants began pumping while there was still a surplus. (Id. at pp. 266-267.) In contrast, appropriative rights were protected through the doctrine's application in City of Pasadena.

As the City of San Fernando court itself observed, "[P]rinciples governing appropriative and prescriptive water rights will be relevant to the determination on remand of the conflicting interests of the parties in the water of the [overdrafted] Sylmar basin." (City of San Fernando, supra, 14 Cal.3d at p. 278.) This court then observed that because the defendants' rights were subordinate to the plaintiff's rights, the plaintiff was "entitled to have the private defendants' extractions enjoined insofar as they would constitute an overdraft on the basin supply." (Id. at p. 291.) This court also noted that on remand the private defendants could show "overlying rights to native ground water for reasonable beneficial uses on their overlying land, subject to any prescriptive rights of another party." (Id. at p. 293.) This court reiterated: "Overlying rights take priority over appropriative rights in that if the amounts of water devoted to overlying uses were to consume all the basin's native supply, the overlying rights would supersede any appropriative claims by any party to the basin's native ground water [citation] except insofar as the appropriative claims ripened into prescriptive rights [citation]. Such prescriptive rights would not necessarily impair the private defendants' rights to ground water for new overlying uses for which the need had not yet come into existence during the prescriptive period. [Citation.]" (Id. at p. 293, fn. 100.) Accordingly, overlying defendants "should be awarded the full amount of their overlying rights, less any amounts of such rights lost by prescription, from the part of the supply shown to constitute native ground water." (Id. at p. 294.)

Thus, one could read footnote 61 in City of San Fernando to suggest that if prioritization of rights results in denying recent appropriative users the right to produce water, some type of equitable appropriation may be implemented in intrastate water matters. But the case is not precedent for wholly disregarding the priorities of existing water rights in favor of equitable apportionment in this state, where water allocation has been based on an initial consideration of owners' legal water rights. Case law simply does not support applying an equitable apportionment to water use claims unless all claimants have correlative rights; for example, when parties establish mutual prescription. Otherwise, cases like City of San Fernando require that courts making water allocations adequately consider and reflect the priority of water rights in the basin. (City of San Fernando, supra, 14 Cal.3d at p. 293, fn. 100.) The Court of Appeal's reasoning is consistent with this principle. As the Court of Appeal aptly observed, we have never endorsed a pure equitable apportionment that completely disregards overlying owners' existing legal rights. Thus, to the extent footnote 61 in City of San Fernando could be understood to allow a court to completely disregard California landowners' water priorities, we disapprove it.

3. Equitable Apportionment After City of San Fernando

Respondents claim that after City of San Fernando, supra, 14 Cal.3d 199, and relying on the dicta stated in footnote 61 of that case, courts approved the use of equitable apportionment as the basis to allocate water among users in an overdraft basin. But the cases on which respondents rely do not support the contention.

For example, in Hi-Desert County Water Dist., the Court of Appeal stated: "Left unresolved in [City of ] Pasadena, however, was whether by continuing to pump, an overlying user in an overdrafted basin retained its original overlying rights or obtained new ones by prescription. [Citations.] In 1975, in its most comprehensive statement of water law, our Supreme Court in [City of San Fernando, supra, 14 Cal.3d 199] finally clarified the proposition that overlying owners 'retain their rights [to nonsurplus water without judicial assistance] by using them.' [Citation.]" (Hi-Desert County Water Dist., supra, 23 Cal.App.4th at p. 1731.) As against potential appropriators, the court noted that the five-year period for establishing prescriptive rights to nonsurplus water may be interrupted by the overlying owners' pumping of their nonsurplus water. (Ibid.) The court also observed that City of San Fernando rejected a mechanical application of the mutual prescription doctrine after noting it often fails to lead to an equitable water apportionment according to need. (Hi-Desert County Water Dist., supra, 23 Cal.App.4th at p. 1734.) As Hi-Desert County Water Dist. observed, City of San Fernando required courts to consider many more factors than the amount the parties pumped during the prescriptive period in order to make a truly equitable apportionment. (Hi-Desert County Water Dist., supra, 23 Cal.App.4th at p. 1734, fn. 11 .)

In Wright, overlying owners in a groundwater basin sued to determine relative water rights in that basin. The Court of Appeal found the trial court erred in holding that a water district's appropriative rights had a higher priority than the overlying owners' unexercised rights. (Wright, supra, 174 Cal.App.3d at pp. 78, 82.) The court also held that the trial court could not define or otherwise limit an overlying owner's future unexercised groundwater rights, in contrast to this court's limitation of unexercised riparian rights. (In re Waters of Long Valley Creek Stream System (1979) 25 Cal.3d 339, 358-359 (Long Valley). fn. 13 (The Wright court remanded the matter for reconsideration in light of Tulare, which held that former article XIV, section 3 [now article X, section 2] of the California Constitution protected the reasonable beneficial uses of the riparian or overlying owner, whose water could be used by an appropriator only when that owner elected not to use it. [Tulare, supra, 3 Cal.2d at p. 525].) Contrary to respondents' contention, no appellate court has endorsed an equitable apportionment solution that disregards overlying owners' existing rights.

C. The Physical Solution

Respondents argue that article X, section 2 of the California Constitution mandates that we accept the trial court's proposed physical solution. The trial court found as follows: "Having found that all rights are correlative, a just and fair result is achieved by establishing a physical solution which limits each user to a proportionate equitable share of the total amount available." The court estopped all parties from asserting special priorities or preferences. It concluded it had "the authority to draft and impose a physical solution which requires all users to share equitably in the cost and reduction of use, to safe yield."

We agree that, within limits, a trial court may use its equitable powers to implement a physical solution. (See, e.g., Peabody, supra, "2 Cal.2d at pp. 383-384 [court has power to make reasonable regulations for water use, provided they protect the one enjoying paramount rights].) In City of Lodi v. East Bay Mun. Utility Dist. (1936) 7 Cal.2d 316, 341, this court recognized a trial court's power to enforce an equitable solution even if all parties do not agree to it, but cautioned against unreasonably burdening any party. The court observed that a physical solution is generally a practical remedy that does not affect vested rights. "Under such circumstances the 1928 constitutional amendment, as applied by this court in the cases cited, compels the trial court, before issuing a decree entailing such waste of water, to ascertain whether there exists a physical solution of the problem presented that will avoid the waste, and that will at the same time not unreasonably and adversely affect the prior appropriator's vested property right. In attempting to work out such a solution the policy which is now part of the fundamental law of the state must be adhered to." (Id. at pp. 339-340.) In other words, "a prior appropriator . . . cannot be compelled to incur any material expense in order to accommodate the subsequent appropriator." (Id. at p. 341.)

Other cases hold that a physical solution may not violate the constitutional principle that requires water to be put to beneficial use to the fullest extent possible. (Hillside Water Co. v. Los Angeles (1938) 10 Cal.2d 677, 685-686.) In Rancho Santa Margarita v. Vail (1938) 11 Cal.2d 501, 561 (Vail), this court held that a trial court may not demand that any one party spend large sums of money in order to satisfy a physical solution. (See Allen v. California Water & Tel. Co. (1946) 29 Cal.2d 466, 483-484 [rejecting proposed physical solution and finding overlying owners entitled to make reasonable use of water without incurring substantial costs].)

Thus, although it is clear that a trial court may impose a physical solution to achieve a practical allocation of water to competing interests, the solution's general purpose cannot simply ignore the priority rights of the parties asserting them. (See City of San Fernando, supra, 14 Cal.3d at p. 290.) In ordering a physical solution, therefore, a court may neither change priorities among the water rights holders nor eliminate vested rights in applying the solution without first considering them in relation to the reasonable use doctrine. (See 1 Rogers & Nichols, Water for California (1967) § 404, p. 549, and cases cited.)

Respondents unpersuasively argue for imposition of an equitable physical solution that disregards prior legal water rights. They cite the principle that the Constitution requires the greatest number of beneficial users that the water supply can support, but they omit the requirement that this use be subject to the rights of those with lawful priority to the water. In addition, respondents rely on Vail to support their contention that a physical solution should be based on the trial court's broad equitable powers. But Vail concerned a conflict between riparian right holders, not a situation where one party's rights were paramount to the other's. (Vail, supra, 11 Cal.2d at p. 508.)

Respondents also rely on Imperial Irrigation Dist. v. State Wat. Resources Control Bd. (1990) 225 Cal.App.3d 548, 572. But in that case the court had to decide whether an unconstitutional misuse of water occurred, and did not adjudicate rights among competing water users, as here. Respondents simply fail to produce compelling authority for their argument that courts can avoid prioritizing water rights and instead allocate water based entirely on "equitable" principles.

D. Appellants' Water Rights

In the trial court, respondents contended that neither the Cardozo appellants nor Jess Ranch sustained their burden of proving they possessed any water rights. The trial court agreed as to the Cardozo appellants. The court acknowledged that Jess Ranch testified as to its riparian, overlying, and appropriative rights, and, as the Court of Appeal observed, the evidence showed overlying rights, but the trial court found it unnecessary to determine the effect of those rights on its decision. The Court of Appeal concluded that Jess Ranch need not rely on those rights in order to participate in the physical solution and judgment.

1. Cardozo Appellants

After concluding that several Cardozo deeds had not reserved riparian rights on behalf of the Cardozo appellants, the Court of Appeal nevertheless disputed the trial court's finding that they had no overlying rights. Here, the Court of Appeal reasoned, "overlying rights are a property right appurtenant to the land, and are based on ownership. [Citations.] Although limited to the amount needed for beneficial use, irrigation for agriculture is clearly such a use, and respondents did not claim otherwise. [Citations.]"

After pointing out that overlying rights are dependent on land ownership over groundwater, and are exercised by extracting and using that water, the Court of Appeal concluded: "Having shown ownership, extraction and beneficial use of the underground water here, the Cardozo Appellants established overlying rights, and the contrary finding of the trial court is without evidentiary or legal support. [] . . . [] We repeat the guiding principle: 'Under California law, "[p]roper overlying use, . . . is paramount, and the right of an appropriator, being limited to the amount of the surplus, must yield to that of the overlying owner in the event of a shortage unless the appropriator has gained prescriptive rights through the taking of nonsurplus waters." [Citation.]' (Hi-Desert County Water Dist. v. Blue Skies Country Club, Inc., supra, 23 Cal.App.4th 1723, 1730-1731, original italics omitted.) Thus, while the rights of all overlying owners in a groundwater basin are correlative, and subject to cutbacks when the basin is overdrafted, overlying rights are superior to appropriative rights. Here, the trial court did not attempt to determine the priority of water rights, and merely allocated pumping rights based on prior production. This approach elevates the rights of appropriators and those producing without any claim of right to the same status as the rights of riparians and overlying owners. The trial court erred in doing so."

Although the Court of Appeal agreed with the Cardozo appellants in doubting the legal propriety of some aspects of the physical solution, the court did not agree that it should reverse the entire judgment without regard to the rights of the stipulating parties. The Court of Appeal explained, "While we share the Cardozo Appellants' doubts as to the legal propriety of various aspects of the trial court's physical solution, such as allowing transfer of water produced in accordance with riparian or overlying rights to nonriparian or nonoverlying lands, we do not need to consider those aspects of the physical solution. We see no reason why the parties cannot stipulate to a judgment incorporating the physical solution, nor do we see any reason why a stipulated judgment entered into by a large number of water producers in the Mojave Basin should be totally reversed when the rights of the Cardozo Appellants can be fully protected by appropriate trial court orders on remand. [Citations.] . . . [] Thus, we protect the rights of the Cardozo Appellants while also respecting the rights of the stipulating parties to agree to a judgment which waives or alters their water rights in a manner which they believe to be in their best interest." ( Fns. omitted. )

Accordingly, the Court of Appeal reversed the trial court judgment against the Cardozo appellants, concluding that the trial court could not ignore their preexisting legal water rights. The court did recognize, however, that the stipulating parties could agree to be bound by the physical solution regardless of any water rights they may have had. At the same time, the Court of Appeal concluded: "[A]ny person or entity that produced more than a minimal amount of water in the 1986-1990 period was allowed to stipulate to the judgment, regardless of whether they had any provable water rights. Essentially, they could waive their existing water rights and agree to be bound by the terms of the stipulated judgment, so long as the rights of the nonstipulating parties were respected. [Citation.]" The Court of Appeal directed the trial court to exclude the Cardozo appellants from the judgment and to grant them injunctive relief protecting their overlying water rights to the current and prospective reasonable and beneficial need for water on their respective properties.

The Court of Appeal also reversed the trial court's May 6, 1996, award of costs to the respondents as the prevailing parties against the Cardozo appellants. The court reasoned that because the Cardozo appellants should have been excluded from the judgment, respondents are no longer prevailing parties. It also directed the trial court to order a refund of any assessments the Cardozo appellants paid under the judgment pending appeal. fn. 14 In all other respects, the court affirmed the trial court judgment as to those appellants.

Respondents principally disagree with the Court of Appeal's conclusion that the trial court erred in ignoring the Cardozo appellants' legal water rights in its equitable physical solution and judgment. They initially contend that the Court of Appeal's resolution of the Cardozo appellants' appeal gives those parties the right to extract an unlimited amount of water from the basin. We disagree. When the water is insufficient, overlying owners are limited to their "proportionate fair share of the total amount available based upon [their] reasonable need[s]." (Tehachapi-Cummings County Water Dist. v. Armstrong (1975) 49 Cal.App.3d 992, 1001.)

Respondents also argue that overlying pumpers in an overdrafted basin should be required to file an action to adjudicate groundwater rights at the first indication of substantial growth in the area. However, overlying pumpers are not under an affirmative duty to adjudicate their groundwater rights, because they retain them by pumping. (City of San Fernando, supra, 14 Cal.3d at p. 293, fn. 100; Hi-Desert County Water Dist., supra, 23 Cal.App.4th at pp. 1731-1732.)

As overlying owners, the Cardozo appellants have the right to pump water from the ground underneath their respective lands for use on their lands. The overlying right is correlative and is therefore defined in relation to other overlying water right holders in the basin. In the event of water supply shortage, overlying users have priority over appropriative users. (City of Pasadena, supra, 33 Cal.2d at p. 926.) The Court of Appeal properly recognized that the Cardozo appellants retained their overlying rights by pumping, and that no claim of prescription had been asserted to reduce those retained overlying rights.

Likewise, no precedent exists for requiring an overlying user to file an action to protect its right to pump groundwater. The laches doctrine did not bar a plaintiff's action, for example, even where defendant cities increased their pumping of an overdrafted water supply long before the action commenced, and development relied on the new water production in the interval. (Orange County Water District v. City of Riverside (1959) 173 Cal.App.2d 137, 219-220.)

2. Jess Ranch

Although the Court of Appeal was careful not to endorse the physical solution or trial court judgment, it considered whether Jess Ranch had the right to be included in the physical solution on the same terms as some other stipulating parties. The trial court judgment specified free production allowances for the basin's water producers. For most, this value was set at the producer's maximum production during the years 1986-1990. Jess Ranch's free production allowance was calculated differently, and it appealed, contending that it should be allowed to participate in the stipulated judgment on the same terms offered to other producers. Thus, the Jess Ranch appeal presents different issues than does that of the Cardozo appellants. Jess Ranch wishes to participate in the physical solution, but contends it has been prevented from doing so on the same terms offered the other water producers in the Mojave Basin. fn. 15 The Court of Appeal agreed with Jess Ranch, and respondents seek reversal of that judgment.

Specifically, the trial court examined Jess Ranch's water use and concluded it failed to establish that the use was reasonable and beneficial. During the period for which water production was reviewed, Jess Ranch had been involved in aquaculture (trout production). Aquaculture requires recirculating water through fishponds, and there is little consumptive use or surface evaporation. Leftover water flows out the other end of the ponds and is applied to irrigation. From a gross annual production of 18,625 acre-feet, the trial court estimated Jess Ranch's total consumptive use at 7,480 acre-feet. The court used this value to set Jess Ranch's free production allowance. The judgment allowed Jess Ranch to continue to produce recirculated water for aquaculture, but required it to discharge the water directly to the Mojave River after this use.

In our view, the trial court's estimate of Jess Ranch's free production allowance was based on reasonable assumptions. Although Jess Ranch practiced agriculture and aquaculture during the period used for calculating free production allowances, it is in the process of changing its property use to commercial and residential. The trial court estimated its future consumptive use at 1,300 acre-feet per year. It concluded that evidence did not establish the amount of land Jess Ranch had in agriculture. On the basis of expert testimony, the court multiplied an upward estimate, 600 acres, by 10 acre-feet per acre, with the product representing the agricultural water use. This product was added to the estimated amount of water lost from lake evaporation and the amounts needed for home use and greenbelt irrigation. The sum is Jess Ranch's consumptive use. The court used this value as its free production allowance.

Jess Ranch was not the only party whose free production allowance was set equal to its estimated consumptive use. Twenty-five other parties, including the California Department of Fish and Game, maintained fish hatcheries or recreational lakes; their free production allowances were also set at the level of their consumptive use (total production less recirculated water). fn. 16 Some other recreational lakes were given base production rights based on actual production, with the contingency that if they ever ceased production, they could only transfer their consumptive use portion of those rights. fn. 17

The trial court exercised its equitable powers in approving the proposed physical solution and entering the judgment, and the Court of Appeal properly reviewed the judgment under the abuse of discretion standard of review. (In re Marriage of Doud (1986) 181 Cal.App.3d 510, 524-525.) But where the Court of Appeal found an abuse of discretion as to Jess Ranch, we do not. Equity demands that similarly situated parties be treated similarly. Jess Ranch was one of 26 producers that recirculated water. It seems reasonable to differentiate these users from others who did not recirculate water, but who put their full gross production amount to use. It is difficult to fathom what reasonable, beneficial purpose is served by allowing Jess Ranch to retain both the amount of water used and the amount recirculated.


We affirm the Court of Appeal judgment in all respects except that we reverse its judgment as to the Jess Ranch appeal. We therefore remand the matter to the Court of Appeal for further proceedings consistent with this conclusion.

George, C.J., Mosk, J., Kennard, J., Baxter, J., Brown, J., and Johnson, J. fn. * , concurred.



Since early 2000, American International Group Inc., took part in what the Securities and Exchange Commission called "reckless" financial behavior. Much of it centered on hiding financial risk from investors and regulators. Then came its very public downfall. Some landmark dates:

Nov. 30, 2004: U.S. deputy attorney general James Comey announces that AIG and its subsidiary, AIG Financial Products Corp., entered a deferred prosecution agreement for securities fraud. The company accepts responsibility for setting up so-called special-purpose entities from 2000 to 2002 in which other public companies could, in effect, hide troubled assets off their balance sheets. Under the terms of the 13-month deal, the U.S. Department of Justice would not criminally prosecute AIG if the company implemented a series of reforms, established a transaction review committee, paid $126 million, and hired an independent monitor.

January 2005: AIG, after consulting with Justice and the SEC, hires James Cole, a former federal prosecutor and now a partner at Bryan Cave in Washington, D.C., as monitor. A government press release says his duties include conducting "a retrospective review of certain transactions effected by a third party with AIG" and reviewing "the policies and procedures of the transaction review committee." Cole reports jointly to Justice, the SEC, and AIG. As of press time, his reports have not been made public.

Oct. 6, 2005: A managing director at AIG is one of three men indicted by the U.S. attorney in Manhattan on charges related to a scheme to bribe senior Azerbaijan government officials. The three sought an advantage for their investment consortium in the anticipated privatization of that country's national oil company. AIG, part of the consortium, is not charged.

Feb. 7, 2006: AIG, Justice, and the SEC reach a $1.6 billion settlement involving securities fraud committed by AIG between 2000 and 2004. This time Justice, which again agreed not to prosecute the company, says AIG booked fake reinsurance deals to bolster its bottom line and to hide losses. In the scandal's fallout, AIG ousts chief executive Maurice "Hank" Greenberg, fires a vice president who was later convicted and sentenced to four years in prison, and sends general counsel Ernest Patrikis into retirement. The company agrees to expand the role of its corporate monitor to include accurate financial reporting and corporate governance.

September 2006: The company hires Anastasia Kelly, formerly of MCI WorldCom, to replace Patrikis as general counsel.

December 2007: Although AIG finishes the year with a net income of $6.2 billion, it is already feeling the impact of its risky credit default swap business. The last quarter of 2007 sees a $5.3 billion fourth-quarter loss, largely because of the $11.2 billion in write-downs of credit default swaps. It would get worse.

Sept. 12-14, 2008: Drowning in red ink, AIG meets with federal banking officials and regulators. Their talks eventually lead to U.S. bailouts of nearly $180 billion, and to the government installing its own chief executive and taking over 80 percent ownership.

October-December 2008: Congress approves the bailout plan, and federal officials move in to supervise AIG's restructuring. For the fourth quarter of 2008, AIG reported a net loss of $61.7 billion-the worst fourth- quarter loss in U.S. corporate history. It finishes 2008 some $99 billion in the red.


Yesterday, A.M. Best Co. affirmed the credit and debt ratings of American International Group Inc. ( AIG ) and its US property-casualty and life-health subsidiaries namely, Chartis US Insurance Group, AIU Insurance Co., American General Property Insurance Co. and SunAmerica Financial Group.

The rating agency has affirmed issuer credit ratings (ICR) of “bbb” and debt ratings for AIG , reflecting a negative outlook. Alongside, the financial strength rating ( FSR ) of “A” (Excellent) and ICR of “a” has been asserted on Chartis and its associates, SunAmerica Financial Group and AIU Insurance Co. These ratings also reflect a negative outlook.

Further, A.M. Best maintained FSR of “B+” (Good) and ICR of “bbb-” ratings on American General Property Insurance Co.

The negative outlook is based on AIG's persistently weak pricing across all core operations along with declining underwriting growth (year over year) and unfavourable development in prior years' loss reserves. Moreover, the intense risk associated with the implementation and successful completion of AIG's recapitalization plan sufficiently offsets the company's supportive level of risk-adjusted capitalization.

The rating agency, however, believes that SunAmerica Financial Group should improve its top line growth in the medium to long term, given the reduced volatility in operating performance, strong capital position and positive synergies stemming from enhancing product development initiatives and distribution capabilities.

Besides, ICR rating of AIG evaluates the company's exorbitant debt status and the acceptance of the recapitalization program, charted out by the US Federal Reserve, in late September. The company is yet to pay a huge chunk of the $182.5 billion government bailout loan taken in September 2008.

According to the proposed plan, the U.S. Federal Reserve Bank New York has agreed to divert AIG's TARP loan obligations toward the U.S. Treasury. In turn, the Treasury will convert $49.1 billion of preferred shares held with the government to about 1.7 billion shares of AIG's common stock, at a discounted price.

However, the Treasury is still expected to hold about 92% of AIG's common stock, the complete offload of which is not expected before the first quarter of 2011, after converting its preferred interests. This holding will be sold over time depending on the performance of AIG's shares in the market.

Moreover, A.M. Best cited AIG's restructuring initiatives, particularly, the comprehensive asset dispositions, focus on core operations and the liquidity support from the US government as prospects for future improvement. The reduced catastrophe losses and strong operational history should also pave way for growth in the upcoming quarters.

However, as of now, the rating agency remains cautious of the final execution of the growth prospects and stable liquidity, going forward, thereby justifying the current negative outlook. Several non-recurring charges, associated with the intense restructuring, are even expected to mar the desired upside in the upcoming quarters. Hence, we also recommend an Underperform rating, with a Zacks Rank #5, on the stock.

Read more:

FEMA and FEMA programs.

Voluntary Private Sector Preparedness Program (PS-Prep)
The small business preparedness plan is part of the Private Sector Preparedness Accreditation and Certification Program (PS-Prep) - a 9/11 Commission-recommended voluntary partnership between DHS and the private sector to improve businesses' preparedness and resilience for disasters and emergencies. PS-Prep enables private sector entities to receive emergency preparedness certification from a DHS program created in coordination with the private sector.

Homeland Security Presidential Directive-7 December 17, 2003

(800) 621-FEMA / TTY (800) 462-7585
3 Step Guide for Assistance

Office of Management and Budget: Open Government

OMB assists the President in overseeing the preparation of the Federal budget and evaluates the effectiveness of agency programs, policies, and procedures, and works to make sure that agency reports, rules, testimony, and proposed legislation are consistent with the President's Budget and with Administration policies. In addition,  OMB oversees and coordinates the Administration's regulatory, procurement, financial management, information technology, and information management policies.”

In the Memorandum on Transparency and Open Government , issued on January 21, 2009, the President directed the Office of Management and Budget (OMB) to issue an Open Government Directive, emphasizing the importance of disclosing information that “the public can readily find and use.”  Responding to that instruction, on December 8th, 2009, OMB issued the Open Government Directive , which instructed executive departments and agencies to take specific actions to implement the principles of transparency, participation, and collaboration, as set forth in the President's Memorandum. This Directive was informed by recommendations from the Federal Chief Technology Officer, who solicited public comment through the White House Open Government Initiative.  The Directive set deadlines for both short-term actions to achieve immediate results and long-term goals to institutionalize the principles of openness in Federal agencies.  

OMB's main role has been drafting, issuing, and helping to implement this Directive.  OMB is also fully complying with the mandates in the Directive.

On Tuesday, February 16th, OMB launched the OIRA dashboard , an easy-to-use website that will allow people to track the progress of Federal rules and regulations that have been submitted for interagency review and find other relevant information about the Office of Information and Regulatory Affairs (OIRA).

An Enabling Policy Framework for Open Government

The Open Government Directive asked the Administrator of the Office of Information and Regulatory Affairs (OIRA), in consultation with the Chief Information and Technology Officers, to review existing OMB guidance by April 7, 2010.  Specifically, Section 4 asked the OIRA Administrator to “review existing OMB policies, such as Paperwork Reduction Act (PRA) guidance and privacy guidance, to identify impediments to open government and to the use of new technologies and, where necessary, issue clarifying guidance and/or propose revisions to such policies, to promote greater openness in government.”   In response to this instruction, OMB has issued the following eight guidance memoranda:

  1. PRA “Primer” :  This memorandum provides a primer to agencies and the public with respect to the Paperwork Reduction Act (PRA), in order to specify its central requirements and to increase transparency and openness.  The memorandum answers questions such as: What does and does not count as information under the PRA?  What are the public notice and comment requirements for information collection requests?  What does OMB evaluate during its review of proposed collections? 
  2. Social Media and the PRA :  To advance the goal of promoting greater openness in government, this memorandum explains that agencies can, consistent with the PRA, use social media and web-based interactive technologies to engage with the public in multiple ways.  Among other things, it explains that the PRA does not apply to general solicitations of public views and feedback; that certain types of contests and prizes are not subject to PRA; and that the PRA does not apply to ratings and rankings of posts and comments by website users.  This guidance addresses questions frequently asked both by the public and by agencies seeking to use social media to promote participation and collaboration.
  3. Increasing Openness in the Rulemaking Process – Use of the Regulation Identifier Number (RIN) :  Regulatory information online is currently difficult to access and navigate, in part because several websites publish portions of that information at different stages in the rulemaking process.  To promote transparency and to help aggregate information, this memorandum provides that agencies should use the Regulation Identifier Number (RIN) on all relevant documents throughout the entire “lifecycle” of a rule.  We expect that this requirement will help members of the public to find regulatory information at each stage of the process and will promote informed participation.
  4. Paperwork Reduction Act - Generic Clearances :  This memorandum provides guidance to agencies with respect to the use of “generic” clearances, which provide a streamlined process by which agencies may obtain OMB's approval for particular information collections—usually voluntary, low-burden, and uncontroversial collections.  As a way to avoid redundant and lengthy approvals, generic ICRs are a useful way to meet the obligations of the Paperwork Reduction Act while eliminating unnecessary burdens and delays. 
  5. Improving Electronic Rulemaking Dockets :  This memorandum titled “Increasing Openness in the Rulemaking Process – Improving Electronic Dockets” promotes greater openness in the regulatory process.  More specifically, this provides guidance to agencies in compiling and maintaining comprehensive electronic regulatory dockets on , in order to give members of the public improved access to information on which agencies rely in making decisions relevant to rulemaking. This guidance is consistent with the purposes and requirements of the Electronic Government Act of 2002, Section 206.
  6. M-10-22, Guidance for Online Use of Web Measurement and Customization Technologies :  This memorandum allows agencies to use web measurement and customization technologies to improve the Federal government's services online while also safeguarding the privacy of the American public visiting government websites.  The new policy makes clear that there are only two uses for which agencies may employ these technologies: (1) to conduct measurement and analysis of usage, or (2) to customize the user's experience.  The memorandum allows agencies to collect personally identifiable information during the use of such technologies only when the user “opts in” and provides voluntary consent.  Before such consent can be given, however, agencies must undergo a 30-day notice and comment period on their proposed use of the information.
  7. M-10-23, Guidance for Agency Use of Third-Party Websites and Applications :  This memorandum requires agencies to take specific steps to protect privacy when using third-party websites and applications to engage with the public.  These steps include (1) examining the third party's privacy policies to evaluate the risks and determine whether the website or application is appropriate for the agency's use; (2) performing a Privacy Impact Assessment to evaluate privacy implications and identify appropriate safeguards; and (3) updating the agency's Privacy Policy to inform the public about its practices with respect to any personally identifiable information that will be available to the agency.
  8. Disclosure and Simplification as Regulatory Tools :  The memorandum provides guidance on the use of disclosure and simplification in the regulatory process. The guidance is meant to assist agencies in their efforts to use information disclosure and simplification to achieve regulatory objectives.  It distinguishes between (1) summary disclosure, as (for example) in nutritional and MPG labels, and (2) full disclosure, as in comprehensive website disclosures (which can be adapted and repackaged by those in the private sector).  The guidance sets out specific principles to inform disclosure policies and separate principles to inform measures (including default rules and automatic enrollment) designed to reduce complexity, ambiguity, and paperwork burdens.

The review that led to the issuance of these eight memoranda proved invaluable, resulting in improved understandings, important clarifications, and new policies that will help agencies achieve greater openness.  Over the next year, the OIRA Administrator will continue his collaborative review and consider a number of new steps to protect privacy and promote open government, including issuing appropriate guidance as necessary.

Federal Spending Transparency

The Open Government Directive detailed transparency as a cornerstone of an open government. Full and easy access to information on government spending promotes accountability by allowing detailed tracking and analysis of the deployment of government resources.  Such tracking and analysis allow both the public and public officials to gauge the effectiveness of expenditures and to modify spending patterns as necessary to achieve the best possible results.  Transparency also gives the public confidence that we are properly managing its funds.  In response to this, the Deputy Director for Management at OMB is issuing the following memorandum to increase the culture of transparency in federal spending:

Open Government Directive – Federal Spending Transparency :  This memorandum establishes an October 1, 2010, deadline for Federal agencies to initiate sub-award reporting and provides a timeline for additional guidance to assist agencies in meeting these goals, initiates new requirements for Federal agencies to maintain metrics on the quality and completeness of Federal spending data provided, and announces the release of the new website.

Open Government Directive - Federal Spending Transparency through Subaward and Executive Compensation Reporting :  This memorandum provides Federal agencies with guidance on reporting subaward and compensation data for Federal contracts and grants. As required by the Federal Funding Accountability and Transparency Act ("Transparency Act" or "FFATA") and subsequent OMB guidance, information on the first-tier subawards related to Federal contracts and grants and the executive compensation of awardees must be made publicly available. This memorandum and accompanying documents provide agencies with guidance to implement these reporting requirements.

Share Your Ideas

Share your ideas for how OMB's open government plan can increase transparency, participation, and collaboration. Email us at  to let us know your views about what information we should prioritize for publication and your thoughts on the quality of our published information.  Your comments will help OMB in developing a plan to improve accountability and performance, and to provide more useful information to the public.


See a full inventory of OMB high-value datasets .

Evaluating Our Progress

The Open Government Dashboard tracks agency progress on the milestones set out in the Directive .  Learn more about our Dashboard scores ,  the steps we have taken, and how we are evaluating our progress towards achieving the goals of participation, collaboration, and transparency.  OMB has completed a self-evaluation of our Open Government Plan against the criteria laid out in the Directive.

Open Government Plan

As OMB has helped to guide agency implementation of the December 2009 Open Government Directive, we have also complied with its requirements, including the mandate to issue an Open Government Plan.  We invite you to review OMB's Plan , and look forward to hearing your views and ideas at as we work to apply the principles of open government to make OMB more accountable, efficient, and effective.



Critical Infrastructure Identification, Prioritization, and Protection

REPORT TO CONGRESS.—Not later than 210 days after the date of enactment of this Act, the Secretary shall submit to the Committee on Homeland Security and Governmental Affairs of the Senate and the Committee on Homeland Security and the Committee on Transportation and Infrastructure of the House of Representatives a report detailing—
(1) any action taken to implement section 524(b) of the Homeland Security Act of 2002, as added by subsection (a), including a discussion of—
(A) the separate methods of classification and certification for small business concerns (under the meaning given that term in section 3 of the Small Business Act (15 U.S.C. 632)) as compared to other private sector entities; and American National Standards Institute’s
National Fire Protection Association Standard on Disaster/
Emergency Management and Business Continuity Programs
(ANSI/NFPA 1600).’’.
CLERICAL AMENDMENTS.—The table of contents in section 1(b) of such Act is further amended by adding at the end the following:
‘‘Sec. 523. Guidance and recommendations. ‘‘Sec. 524. Voluntary private sector preparedness accreditation and certification program.’’.
(f) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated such sums as may be necessary to carry out this section and the amendments made by this section.
(a) IN GENERAL.—Section 102(f) of the Homeland Security Act of 2002 (6 U.S.C. 112(f)) is amended—
(1) by redesignating paragraphs (8) through (10) as paragraphs (9) through (11), respectively; and
(2) by inserting after paragraph (7) the following:
‘‘(8) providing information to the private sector regarding
voluntary preparedness standards and the business justification
for preparedness and promoting to the private sector the adoption of voluntary preparedness standards;’’.
(b) PRIVATE SECTOR ADVISORY COUNCILS.—Section 102(f)(4) of the Homeland Security Act of 2002 (6 U.S.C. 112(f)(4)) is amended—
(1) in subparagraph (A), by striking ‘‘and’’ at the end;
(2) in subparagraph (B), by inserting ‘‘and’’ after the semicolon at the end; and
(3) by adding at the end the following: ‘‘(C) advise the Secretary on private sector preparedness issues, including effective methods for— ‘‘(i) promoting voluntary preparedness standards to the private sector; and
‘‘(ii) assisting the private sector in adopting voluntary preparedness standards;’’.


a private party may “recover expenses associated with cleaning up contaminated sites.” United States v. Atl. Research Corp., 551 U.S. 128, 131


MOAs Are Missing Key Regulatory Requirements
MOAs were missing key requirements of Title 40 CFR 123.24. MOA documents also lacked MOA-specific program regulations contained in Title 40 CFR 123.26 and 123.27. For each of the 46 criteria, OIG rated the MOA as a “0” (does not address this element), “1” (addresses the element in some way), or “2” (addresses the element verbatim or in synonymous language). Figure 2-1 shows that across all regulatory criteria, MOAs did not contain 39 percent of the criteria, and that 61 percent of regulatory criteria are either not addressed or only partially addressed. EPA should define the requirements for management control of a nationally consistent enforcement program, and then review each State MOA to determine which MOAs are adequate and which MOAs need to be revised.

MOAs did not address key regulatory requirements for MOA documents. For example, the CFR requires that States establish data management systems to support their compliance evaluation activities. Twenty percent of the MOAs did not contain any language about a data management system. This does not mean the State does not have such a system or that the system is not discussed in another document. However, because the primary, required document, the MOA, does not mention it, EPA cannot readily determine whether there is nationwide uniformity in data management systems.
MOAs also did not include a number of the additional regulatory program requirements contained in Title 40 CFR 123.26 and 123.27. These additional requirements correspond to the programmatic deficiencies that OECA identified in its first-round State Review Framework evaluations (data quality, identification of significant violations, the timeliness of enforcement actions, and penalties). For example, the CFR requires that States establish minimum civil penalty policies, such as the ability to assess at least a $5,000 penalty per day for each NPDES violation. The State Review Framework identified penalty calculation as a comprehensive weakness. Fifty-four percent of MOAs did not include any language about minimum civil penalty standards (i.e., received a score of “0” for this element). Only 1 of the 46 MOAs specified that the minimum penalty per day, per violation, would be $5,000 (a score of “2”).
MOAs most comprehensively addressed the MOA-specific regulations (CFR 123.24), containing these requirements 77 percent of the time. MOAs contained fewer requirements in the non-MOA-specific monitoring and inspections section (65 percent for CFR 123.26) and fewest in the enforcement section (36 percent for CFR 123.27). For example, 63 percent of the MOAs did not include language verifying that no other State enforcement agreement could override the MOA, as required by CFR 123.24(c). Eighty percent of MOAs did not note whether the State had the authority to enter any permitted facility (123.26(c)). Figure 2-2 shows how the percentage of missing regulations varied according to the CFR section under review.




Supreme Court's Denial of Certiorari in Apex Oil Leaves Standing Seventh Circuit Ruling that Environmental Cleanup Injunctions are Not Dischargeable in Bankruptcy


Empowering Safe Lands & Watersheds

1. To invest with power, especially legal power or official authority. Stakeholder Meetings/CEQA



By What Warrant he claims to have, use, and enjoy the liberties, privileges, and franchises aforesaid.

A writ which lies against any person or corporation that usurps any franchise or liberty against the king without good title, and is brought against the usurpers to show by what right or title they hold or claim such franchise or liberty. It also lies for misuser or nonuser of privileges granted ; and, by Bracton, it may be brought against one who intrudes himself as heir into land, ftc. Old Nat. Br. 149.








Repeal the Seventeenth Amendment
From the November 15, 2010, issue of NR


Joe Miller, Alaska's Republican nominee for the United States Senate , recently expressed support for an idea that is rapidly gaining steam in Tea Party circles: the repeal of the Seventeenth Amendment. Miller subsequently backtracked from his statement, but he shouldn't have: Repealing the Seventeenth Amendment would go a long way toward restoring federalism and frustrating special-interest influence over Washington.

Ratified in 1913, the Seventeenth Amendment replaced the election of U.S. senators by state legislators with the current system of direct election by the people. By securing the Seventeenth Amendment's ratification, progressives dealt a blow to the Framers' vision of the Constitution from which we have yet to recover.

The Constitution did not create a direct democracy; it established a constitutional republic. Its goal was to preserve liberty, not to maximize popular sovereignty. To this end, the Framers provided that the power of various political actors would derive from different sources. While House members were to be elected directly by the people, the president would be elected by the Electoral College . The people would have no direct influence on the selection of judges, who would be nominated by the president and confirmed by the Senate to serve for life or “during good behavior.” And senators would be elected by state legislatures.

Empowering state legislatures to elect senators was considered both good politics and good constitutional design. At the Constitutional Convention in Philadelphia, the proposal was ratified with minimal discussion and recognized as the approach “most congenial” to public opinion. Direct election was proposed by Pennsylvania's James Wilson but defeated ten to one in a straw poll. More important than public opinion, however, was that limitations on direct popular sovereignty are an important aspect of a constitutional republic's superiority to a direct democracy. As Madison observes in Federalist 51, “A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.”

Election of senators by state legislatures was a cornerstone of two of the most important “auxiliary precautions”: federalism and the separation of powers. Absent some direct grant of federal influence to state governments, the latter would be in peril of being “swallowed up,” to use George Mason's phrase. Even arch-centralizer Hamilton recognized that this institutional protection was necessary to safeguard state autonomy. In addition, the Senate was seen as a means of linking the state governments together with the federal one. Senators' constituents would be state legislators rather than the people, and through their senators the states could influence federal legislation or even propose constitutional amendments under Article V of the Constitution.

The Seventeenth Amendment ended all that, bringing about the master-servant relationship between the federal and state governments that the original constitutional design sought to prevent. Before the Seventeenth Amendment, the now-widespread Washington practice of commandeering the states for federal ends — through such actions as “unfunded mandates,” laws requiring states to implement voter-registration policies that enable fraud (such as the “Motor Voter” law signed by Bill Clinton), and the provisions of Obamacare that override state policy decisions — would have been unthinkable. Instead, senators today act all but identically to House members, treating federalism as a matter of political expediency rather than constitutional principle.

There is no indication that the supporters of the Seventeenth Amendment understood that they were destroying federalism. But they failed to recognize a fundamental principle of constitutional design: that in order for constraints to bind, it is necessary for politicians to have personal incentives to respect them. “Ambition,” Madison insisted in Federalist 51, “must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place.”

Under the original arrangement, senators had strong incentives to protect federalism. They recognized that their reelection depended on pleasing state legislators who preferred that power be kept close to home. Whereas House members were considered representatives of the people, senators were considered ambassadors of their state governments to the federal government and, like national ambassadors to foreign countries, were subject to instruction by the parties they represented (although not to recall if they refused to follow instructions). And they tended to act accordingly, ceding to the national government only the power necessary to perform its enumerated functions, such as fighting wars and building interstate infrastructure. Moreover, when the federal government expanded to address a crisis (such as war), it quickly retreated to its intended modest level after the crisis had passed. Today, as historian Robert Higgs has observed, federal expansion creates a “ratchet effect.”

Just as important as its role in securing federalism, the Senate as originally conceived was essential to the system of separation of powers. Bicameralism — the division of the legislature into two houses elected by different constituencies — was designed to frustrate special-interest factions. Madison noted in Federalist 62 that basing the House and Senate on different constituent foundations would provide an “additional impediment . . . against improper acts of legislation” by requiring the concurrence of a majority of the people with a majority of the state governments before a law could enacted. By resting both houses of Congress on the same constituency base — the people — the Seventeenth Amendment substantially watered down bicameralism as a check on interest-group rent-seeking, laying the foundation for the modern special-interest state.

Finally, the Framers hoped that indirect election of senators would elevate the quality of the Senate, making it a sort of American version of the House of Lords, by bringing to public service men of supreme accomplishment in business, law, and military affairs. There is some evidence that the indirectly elected Senate was more accessible to non-career politicians than today's version is. And research by law professor Vikram Amar has found that during the 19th century, accomplished senators such as Webster and Calhoun frequently rotated out of the Senate and into the executive branch or the private sector, with an understanding among state legislators — and, notably, the senator selected to fill the seat — that they could return to service if they wished to do so or were needed. Foes of the Seventeenth Amendment argued at the time that its enactment would spawn a deterioration in the body's quality. Whether the modern titans of the Senate such as Trent Lott, Bill Frist, Harry Reid, and the late Ted Kennedy are superior to Webster, Clay, and Calhoun is to some extent a matter of taste. But it is likely that reinstating the original mode of selection would change the type of individuals selected — and it is not implausible to think that the change would be positive. 

Establishment media and liberal politicians have mocked tea partiers' calls for repeal of the Seventeenth Amendment as anti-democratic. To be sure, indirect election would be less democratic than direct election, but this is beside the point. Notably, those who are most shocked by the proposal to repeal the Seventeenth Amendment are also the most vociferous in denouncing democratic election of judges. The Framers understood what today's self-interested sloganeers of democracy do not: What matters is not whether a given method of selecting governmental officials is more or less democratic, but whether it will safeguard the constitutional functions bestowed upon each branch and conduce to their competent execution. Indeed, certain of the Senate's duties — such as its role as a type of jury for impeachment proceedings — make sense only if it is somewhat insulated from the public's passions of the moment, as was well demonstrated by the farcical Senate trial of Bill Clinton.

Critics of repeal have also contended that election of senators by state legislatures was, and would be today, unusually prone to corruption and bribery. But research by historian C. H. Hoebeke found that of the 1,180 Senate elections between 1789 and 1909, in only 15 cases was fraud credibly alleged, and in only seven was it actually found — approximately one-half of 1 percent. Moreover, it is absurd to think that even this modest degree of corruption would be tolerated in the modern media age, any more than politicians can today sell judgeships or other appointed offices, as they frequently did in the past. And even in the progressive era it was not believed that direct election of senators would prevent corruption. Among the Seventeenth Amendment's staunchest supporters were urban political machines (hardly advocates of clean government), which understood that direct election would boost their control of the Senate as they drove and bribed their followers to the polls.

Repealing the Seventeenth Amendment would not be a panacea for what ails the American political and constitutional system. As during the era before the Seventeenth Amendment, many states would probably adopt either de facto direct election of senators, in which legislatures essentially agree to ratify the popular vote, or attenuated forms of it, such as primaries or conventions to select party nominees from whom the legislatures choose. And much work would remain to be done to restore the public's understanding of the difference between a direct democracy and a democratic constitutional republic. But repeal would be a step in the direction of restraining an imperialistic central government and frustrating special-interest influence. Whether or not it is good politics, it remains sound constitutional design.

—Mr. Zywicki is a George Mason University Foundation professor of law and a senior scholar of the Mercatus Center. He has written several law-review articles examining the history and impact of the Seventeenth Amendment. This article first appeared in the November 15, 2010, issue of National Review .

Protection Is Our Trademark
U.S. Government Seizes and Shutters

Quote: is down today; the site was apparently seized by government agencies for reasons unknown. In all likelihood, the site was taken down due to intellectual property concerns including copyright infringement and trafficking in counterfeit goods.

The agencies named in the notice include the Department of Justice, the National Intellectual Property Rights Coordination Center , and the Immigration and Customs Enforcement arm of Homeland Security Investigations.
(Emphasis added)

The what?

We have a distinct government organization called the "National Intellectual Property Rights Coordination Center?" Well, yes, apparently we do , and it has its own staff, bureaucracy, and they've even taken the time to design their own nifty shield and logo. (Oh, and I bet they have their own uniforms. I mean, after all now, we can't risk a situation in the field where you can't quickly identify the IPR Center agents in the operation, now can we? Timing is critical! Fines are at stake!)

Reading down a little, we find the IPR Center is partnered with a long list of other US and international organizations, including:

  • U.S. Immigration and Customs Enforcement

  • U.S. Customs and Border Protection

  • Federal Bureau of Investigation

  • Food and Drug Administration, Office of Criminal Investigations

  • U.S. Postal Inspection Service

  • Department of Commerce, International Trade Administration

  • U.S. Patent and Trademark Office

  • Naval Criminal Investigative Service

  • Defense Criminal Investigative Service

  • U.S. Army Criminal Investigative Command, Major Procurement Fraud Unit

  • General Services Administration, Office of Inspector General

  • Consumer Product Safety Commission


  • Government of Mexico Tax Administration Service

Questions about this list:

U.S. Patent and Trademark Office : OK, isn't this whole concept of intellectual property protection exactly why we have the Patent & Trademark Office? Shouldn't they be handling this instead of having the creation of a "National IPR Center?"

Food and Drug Administration, Office of Criminal Investigations The FDA has an "Office of Criminal Investigations?" What do they do that couldn't be done by other organizations, like say some hypothetical federal bureau that investigates things that are violations of federal crimes? (Maybe this "federal investigating bureau" exists, but it's really really obscure and the folks at the FDA never heard of it?) (And even worse yet, why do I have the creepy feeling that the FDA "Office of Criminal Investigations" has its own SWAT unit?)

NCIS, DCIS, and the Army's Criminal Investigation Command : Holy cow, the National IPR needs military backup? No, it's probably just a matter of "coordinating efforts," but again why would these agencies be independently investigating copyright matters? Are we chasing after GIs who occasionally buy bootleg DVDs in downtown Baghdad just so they have something to watch on TV back in their quarters? Are they hoping that some week Mark Harmon and team will do an episode where they bust some seaman for downloading Tron Legacy ?

Ya wanna know why the government is broke? It's because of organizations like this, the death of a thousand cuts. The National IPR Center has it's own offices, staff, leadership, phones, IT structure, copy machines, coffee machines, and web page. It's got it's own civil servant in charge, with his/her own administrative staff, including finance (they always have finance). They've got their own friggin' logo and motto, and a crack team that assembles statistics to put into nifty PowerPoint presentations (which they manage to screw up, see page 9 and a few other locations).

At the top of the list of things that they're finding...and they brag about shoes !

Ya wanna know part of the reason why the government is broke? Because we paid a group of people to sit around and decide that for reporting purposes, seized sunglasses would be classified as "Safety and Security" items (PPT presentation page 10), which sounds suspiciously to me like somebody had a mandate to "Boost those S & S numbers for the annual report, dammit!" ("Sunglasses, Wilson?" "Yes sir, why our team has determined that substandard sunglasses provide insufficient protection against wind-blown beach sand. This could cause eye damage which would impair a person's ability to serve in the military, and thus weaken our national defense.") Multiply this by the hundreds of similar, obscure, duplicate organizations that exist throughout the federal government and one begins to see why we're now running a trillion dollars in debt.

The National IPR Center. "Protection Is Our Trademark." Yes, your tax dollars paid somebody to spend the time to dream up that motto. And in return, you got safe shoes. Maybe.

Solar Millennium LLC, the American project development unit of the Solar Millennium Group(ISIN DE0007218406), has received the draft of a conditional term sheet from the U.S. Department of Energy (DOE) in the scope of the approval process for the federal loan Guarantee program. The terms and conditions in the draft term sheet provide a framework for the commencement of discussions on terms between the DOE and Solar Millennium regarding the securing of the loan guarantee. In these discussions, the major terms of a proposed loan guarantee are set forth. Receipt of the term sheet is thus a significant prerequisite for successfully concluding the financing of the planned power plants Blythe 1 and 2.

At the Blythe location in Riverside County, California, Solar Millennium plans to build and operate up to four parabolic trough power plants through Solar Trust of America, LLC, with a capacity of 250 megawatts (MW) each. All four solar power plants together will make up the world's largest solar power facility to date. Solar Millennium has already received the respective construction permits by the California regulatory authorities and the U.S. government in September and October. The Company plans to finance at least two-thirds of the construction volume of its two power plants with low-rate loans by the U.S. Federal Finance Bank. In order to secure this share of debt capital, the Company has applied for the respective loan guarantees from the U.S. Department of Energy.

Oliver Blamberger, CFO of Solar Millennium AG, explains the further business plans: "We assume we'll be able to wrap up negotiations with the U.S. Department of Energy in the new year. Because the Blythe projects represent a significant portion of our sales and profit planning, the Executive Board has decided not to give an early forecast for the current fiscal year until further notice." Regarding the schedule for the two solar power plants going forward, Blamberger adds: "As we have already announced, we plan to begin construction on Blythe 1 and 2 in December regardless of the conclusion of financing. The preliminary contracts here have already been signed with a major U.S. construction company."

Uwe T. Schmidt, Chairman and CEO of Solar Trust of America, is pleased about the receipt of the draft term sheet: "We‘re extremely pleased with the proactive approach by the U.S. Department of Energy with regard to our Blythe projects, and we are excited to see the progress made in securing the loan guarantees." Schmidt is also optimistic about the further course of the approval process: "We are confident that the U.S. Department of Energy, as well as the other federal authorities involved in the loan guarantee program, will now act quickly to move the approved power plant projects forward. The solar power plants under development and construction are of central importance not only for reaching California's climate goals, but also for improving the region's economic future."

Solar Millennium believes the construction phase of Blythe will create more than 1,100 jobs as well as up to 200 permanent maintenance and operations positions once the two power plants are fully operational. With a potential capacity of 1,000 MW, Blythe will forge ahead of the dimension of nuclear power plants. The four power plants together are expected to produce enough electricity for more than 300,000 American households, thereby saving roughly one million tons of carbon dioxide annually.

Power purchase agreements between Solar Millennium LLC and the American utility Southern California Edison (SCE) for the first two 250-MW solar power plants to be realized were approved by the California Public Utilities Commission in July of this year. The agreements regulate the purchase of electricity produced by SCE.







Sub specie mali : The stream of thought flows on; but most of its segments fall into the bottomless abyss of oblivion. Of some, no memory survives the instant of their passage. Of others, it is confined to a few moments, hours or days. Others, again, leave vestiges which are indestructible, and by means of which they may be recalled as long as life endures. -William James

what is fear, saith Solomon, but a betraying of the succours that reason offereth

Deo, Patriae, Tibi.


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