While 40 million Californians suffer through unprecedented drought, one billionaire couple owns a massive share of the state’s water system, largely seized in a series of secretive meetings two decades ago.
That system was largely paid for by the very taxpayers whose water these billionaires hold hostage.
Urban water systems are desperate for water, but in 2023 they’ll receive just 5% of what they requested from the state. Stewart and Lydia Resnick use 150 billion gallons a year.
Journalist: “I wonder how you’re thinking about water for your businesses?”
Lynda Resnick: “We’re thinking about water 24/7. Okay? I don’t want to get into a drought discussion right now because it’s really off topic but it is serious and a lot of people have suffered… It’s a tough time for people with no rain. But you know, our climate is in terrible jeopardy but we don’t wanna go there right now, we all know that, right.”
The Resnicks are the biggest farmers in California–as of 2007 they owned four San Francisco’s worth of farmland.
And nearly half of Americans buy at least one of their products: Their pistachios, their pomegranate Juice, their mandarins, their flowers
It’s all under one massive umbrella: The Wonderful Company, a privately owned company worth at least 5 billion dollars. The majority owners, the Resnicks, are worth at least 8 billion.
How were they able to take over such a large percentage of what should be a shared public resource?
This is The Class Room from More Perfect Union, and today we’re looking at How The Resnicks Got Rich:
Lynda is a former child actress, the daughter of Jack Harris, a successful movie distributor of the 1950s, most well known for The Blob.
At 19 she founded her own advertising agency, and in her early 20s Lynda actually did something pretty cool: she assisted in the leak of The Pentagon Papers, the Department of Defense documents that showed just how cravenly evil the United States’ actions in Vietnam were.
Stewart was born to a middle class New Jersey family and started his first business, a janitorial service, in grad school.
He eventually acquired American Protection Services, a burglar alarm and security company. Lynda approached him about marketing services for the company, and they hit it off, not knowing that one day they’d work together to take over most of California’s water.
The lovebirds became business partners. They bought Teleflora, the flower delivery company, and The Franklin Mint, purveyors of inane little chotchkies.
Lynda was the marketing person, and Stewart was in charge of business Lynda told the LA times in 1993, “I’ve always said that Stewart and I together make one perfect person, like little salt and pepper shakers.”
In the late 80s they found their primary industry: agriculture.
They got into the pistachio business. Lynda said, “We’ve done more for the pistachio than anyone ever since it was planted in the Garden of Eden. My husband should be canonized for all the work he’s done.”
They started branching into other products– almonds, pomegranates, citrus, wine–and acquiring more and more land to cover it, including some very important land in Kern County which granted them water rights in the area.
As the Resnicks were building their empire, the state of California was building new water infrastructure with taxpayer money.
California’s natural water supply is very inconsistent: vastly differing amounts of rainfall means the state can go from surplus to drought and back very easily. So they build water banks to store water during surpluses to have during droughts.
One important storage facility is the Kern Water Bank, started in 1988. The facility was built with hundreds of millions of taxpayer dollars, which could’ve been a good thing: the people of California would’ve owned the water.
But there were two Californians thirstier than the rest, and they wanted more water: Lynda and Stewart Resnick, and they had a lot of political power–we’ll get to that.
In 1994 state water officials, water infrastructure contractors, and agricultural landowners with water rights arranged a secretive meeting at a resort in Monterey Bay California.
These groups, a mix of private companies and public agencies, rewrote California’s water laws without any input from voters, taxpayers, or legislators. The new laws, called The Monterey Plus Agreement or The Monterey Amendments were devastating for working Californians and great for agriculture billionaires.
The original law had “urban preference” a long-standing rule that in times of drought the state water board would give urban areas–where people live–access to state water supplies before agricultural interests. Monterey axed that. That means that in times of drought the water systems for normal Californians would have to buy water from the private companies, because they weren’t getting it from the state.
The new agreement also loosened regulations on “paper water.” That’s water that doesn’t necessarily actually exist anywhere but on paper: the full quantities of water that providers could have, but don’t actually need to have. Today 5x as much water has been promised and sold as actually exists.
And importantly, the meeting changed ownership of the Kern Water Bank. What once belonged to the state was transferred to a few private water contractors. One of which was Westside Mutual, a wholly owned subsidiary of Wonderful Foods. The Wonderful employee who runs Westside, Bill Phillimore, is the chairman of the ‘public’ organization that manages the Kern Water Bank.
Boom. One secret meeting and the Resnicks owned nearly 60% of an important California water resource, built with hundreds of millions of dollars of taxpayer money.
The new ownership combined with the rules on paper and surplus water meant that during times of drought the Resnicks could sell Kern water back to the state water systems.
They took Californian taxpayers’ water and sold it back to them– both literally as the water supply, and also to grow expensive food like gourmet pistachios and pomegranate juice. They converted the peoples’ water into products many can’t afford.
And that’s just one waterbank, the Resnicks also have control of other water boards and have been sued for directing more water towards their properties.
So how do they get away with this Chinatown-level chicanery? With philanthropy!
The Resnicks donate millions of dollars to politicians and research institutions, which help them secure control over water systems, and even get more water and more taxpayer funding.
One important project is the proposed California Delta Tunnel, a taxpayer funded project which would send water from Northern California to Central, where the Resnicks’ farms are. They’ve spent hundreds of thousands of dollars on California and federal legislation and politicians who support the tunnel project.
But their favorite politician is Senator Diane Feinstein, chair of the Energy and Water subcommittee. She’s a close personal friend of the Resnicks, attending their holiday parties in Aspen and maintaining their financial interests.
A quick look through bills she’s sponsored show several which would direct money to Kern-adjacent water projects. The Resnicks even ask her for things directly:
When a pesky study about endangering salmon and shad fisheries threatened the Delta Tunnel, Stewart wrote a letter to Feinstein demanding a new study. She immediately forwarded it to the Obama administration, who agreed to spend 750 thousand dollars on a new study. It returned the same results as the first one. You can’t buy science! But the Resnicks have tried:
They are among the top donors to the University of California system, with their donations focusing on agricultural and ecological studies. The Resnicks have basically bought entire departments who put out studies on how water systems should be managed, and where funding should go. That leads to even more federal and state taxpayer dollars being used to fix up what the Resnicks profit off of.
This is all bad for California even in a capitalistic sense: agriculture uses 80% of California’s water, but only represents 2% of its GDP.
The Resnicks water monopoly is just one way their quest for wealth hurts the rest of us. They lobby for increased tensions with Iran to keep embargos on superior Iranian pistachios. Their giant crops lead to monocultures which kills important pollinators. They siphon taxpayer dollars into the charter schools they own, set up to train children to work on their farms. And of course, like any company of this size, they exploit their workers.
We need to treat water for what it is: a necessary public resource, a human right, and something that shouldn’t be owned by anyone, and work towards legislative change that stops people like the Resnicks from stealing it.