The Morning Report
Get the news and information you need to take on the day.
Over the past two decades, the San Diego County Water Authority has paid $25 million to a single law firm.
The firm, Brownstein Hyatt Farber Schreck, is known for its water law practice across the West. Locally, though, few people know of its influence.
The firm and two of its attorneys – Chris Frahm and Scott Slater – have been involved in major Water Authority decisions since the mid-1990s, decisions that affect the cost and availability of water in San Diego.
To justify the $1.2 million the agency pays to Brownstein in an average year, the Water Authority sent Voice of San Diego a list of 16 “critical matters” the firm has helped with. Most relate to a series of agreements and lawsuits that center on one big thing: About 40 percent of San Diego’s water now comes from a decades-long, multi-billion dollar water deal the firm helped the Water Authority put together.
Because of all that work, it’s sometimes hard to tell where the Water Authority ends and where Brownstein begins.
Frahm, a former Water Authority board chairwoman, joined the firm within weeks of leaving the Water Authority in 1999. She’s spent much of the past 20 years working on aspects of that deal, which she helped construct as a public servant. In recent years, the Water Authority agreed to pay the firm over $27,000 a month for Frahm’s legal work.
Slater and Frahm are also architects of a legal strategy that not only locked the Water Authority into litigation for years but, if successful, could open up opportunities for at least one of their other clients.
Brownstein’s role at the Water Authority dates back to 1996. The Water Authority was at work on a deal that upended the distribution of water in Southern California and set the stage for lawsuits that continue to this day.
For years, the Water Authority was a sleepy little agency, created in the 1940s as a middleman between the Metropolitan Water District of Southern California and local water agencies in San Diego. Metropolitan gathers water from the Colorado River and the rivers of Northern California and resells it across Southern California.
But when a drought came in the early-1990s, there wasn’t enough Metropolitan water to go around, which meant the Water Authority was in trouble too. San Diego was on the brink of being forced to cut its water use in half, a move that would have devastated farms and businesses and risked the region’s way of life.
Frahm was a young attorney first appointed to represent the city of San Diego on the Water Authority’s board of directors in the late-1980s. Following the drought, Frahm was part of a devoted group of Water Authority board members trying to secure new water supplies for San Diego.
The group saw a big opportunity in Imperial County. Imperial — a farming county of 180,000 people — is entitled to as much water from the Colorado River as the states of Arizona and Nevada combined.
In the mid-1990s, billionaire investors who thought they had a bunch of water rights in Imperial approached the Water Authority with an offer to sell that water to San Diego. That offer snowballed into talks between the Water Authority and the Imperial Irrigation District.
From the earliest days, Frahm was a key player in those talks. Frahm became infamous in Imperial County when letters sent to her during the early days of the negotiations were later leaked to the media. One trip Frahm took to Imperial County to explain her actions was the top story on the front page of the Imperial Valley Press. The farmers there were worried about a water grab.
As a deal was still up in the air, she and her supporters launched an effort to become head of the Water Authority’s board. To do so, they upended the normal order of succession at the board, where the vice chair becomes chair, in part by changing how the board tallies votes.
At the time, some Water Authority board members were deeply opposed to Frahm’s ascension, which bypassed the then-vice chairman. About a third of the board’s members walked out in protest when their colleagues chose Frahm to be chairwoman in December 1996. Some of the board members were also concerned about the deal with Imperial, fearing the Water Authority would end up overpaying for the water.
Around that time, the Water Authority turned to Scott Slater, an attorney at Hatch & Parent – a firm that would later merge with Brownstein. When it came to California water law, Slater had literally written the book on it, a two-volume treatise called “California Water Law and Policy.”
Frahm and Slater were now in the thick of what would become the largest water deal of its kind in American history, the deal with Imperial.
When opposing lawyers in a lawsuit brought by the Water Authority were later looking to question a person most knowledgeable about aspects of the deal, the Water Authority sent Slater to talk about how it came together.
“In a lawyer’s life, you do something like this once, maybe twice, if you’re lucky,” Slater said during a 2013 deposition.
As Frahm’s time on the board wound down, local officials, grateful that San Diego might weather future droughts without facing devastating cutbacks, praised her work on key agreements that made the Imperial deal possible. The San Diego City Council made Dec. 9, 1998, “Chris Frahm Day.” The Water Authority board – including members who had protested her election to chairwoman – gave her a standing ovation and a license plate commemorating the water transfer that said “H20 XFER.”
While most of the San Diego establishment favors the deal with Imperial, it has come at a cost. Not only is water more expensive, but the political machinations necessary to secure the water led to tensions with farmers in Imperial and set off a war between the Water Authority and Metropolitan.
While Frahm’s two-year term as chairwoman ended on Dec. 31, 1998, her work with Slater did not.
In spring 1999, Frahm left the Water Authority’s board. In a statement to VOSD, she said she left the board to return to full-time employment and meet the needs of her family.
In May 1999, she joined what’s now Brownstein and became a paid lobbyist for the Water Authority.
In the statement, Frahm disputed any notion that her time as chairwoman allowed her to instigate or exploit water policy for her own gain.
“The timeline of events, the way issues arose, and the manner in which they evolved reveal the true story of San Diego’s ascendance from ‘end of the pipeline,’ to having one of the most reliable water supplies in California,” she wrote. “The credit for this extraordinary success does not go to me, but to the dozens of Water Authority board members, staff, civic leaders, San Diego and statewide elected officials that have made these accomplishments possible.”
In California’s earliest days, water agencies’ biggest challenge was engineering – getting water from one place to another with feats of concrete and steel. As a result, engineers usually ran water agencies. Now water agencies increasingly sell water to one another and deal with complex legal issues.
Brownstein is among the firms to plant a flag in water law. One former Brownstein attorney is head of Denver’s water department, another former Brownstein attorney is a top official at the Department of the Interior, the federal agency with ultimate say over the flow of the Colorado River.
Large law firms often have potential conflicts between their many clients and generally nothing is wrong with that, so long as attorneys disclose the potential conflicts to their clients and the clients are OK with them.
Over two decades, the Water Authority has repeatedly waived Brownstein’s potential conflicts of interest. As a result, Slater and Brownstein have represented the Water Authority at the same time they’ve worked for other clients that might do business with the Water Authority.
When asked to comment for this story, Frahm and Slater mostly had Mitchell Langberg, another attorney at the firm who specializes in defamation law, respond on their behalf. Langberg warned that VOSD was in danger of defaming the firm and its attorneys. The firm also sent several sworn statements, submitted under penalty of perjury, to clarify dealings with the Water Authority.
In a 2002 letter to the Water Authority, for instance, the firm – then still Hatch & Parent – disclosed a half dozen “current actual and potential conflicts” and asked the Water Authority to acknowledge the disclosure and waive any of the current potential conflicts.
The letter, which appears to be the only such letter that the Water Authority has not shielded with attorney-client privilege, sheds some light on how the firm informs the agency of its potential conflicts. It shows the Water Authority expressed concern about some potential conflicts but waived others.
“As you well know, actual and potential conflicts of interest are a common situation for law firms specializing in the water practice area and/or working in the governmental or political arenas,” Steve Amerikaner, an attorney at the firm, wrote. “We have made a substantial effort to be responsive to the Authority’s wishes, including relinquishing and foregoing representation of particular clients at your request even when actual conflicts of interest were not presented. The firm took these extraordinary steps because it considers the Authority to be an important client.”
That didn’t stop the Water Authority from crossing paths with other clients of the firm.
For instance, in 2009, Slater, by then inarguably one of California’s most experienced water lawyers, presented the Water Authority two chances to buy more water.
The Water Authority, Chino Basin and Cadiz had something in common: Slater was an attorney for all three.
The Water Authority and Brownstein said the firm did not represent the Water Authority in negotiations with Chino Basin or Cadiz.
Brownstein also disputed these opportunities were formal offers.
But records show that Slater sent three senior Water Authority officials a summary of the Cadiz project with a note that said he hoped they found the project “extremely competitive and worth pursuing.”
The firm also acknowledged that Slater and staff from the Chino Basin Watermaster talked with the Water Authority about participating in a water auction, though the auction didn’t end up happening.
“The fact that the Water Authority had communications with Mr. Slater and Watermaster staff is neither surprising nor particularly interesting, and certainly does not reflect improper conduct or conflict of any kind,” Brownstein’s Langberg said in a letter.
While the 2009 deal with Chino Basin never came to pass and the Water Authority has never bought water from Cadiz, it was an example of how close-knit water politics are in California, even when everything is done by the book.
For years, Cadiz has pushed one of the most controversial water projects in California history. Cadiz’s plan is to take water from beneath the ground of the Mojave Desert and sell it to water agencies in Southern California.
Slater became the president of Cadiz in 2011 and its CEO in 2013. He also continued to do legal work for the Water Authority.
The company or its customers could benefit from one of the court cases the Water Authority has been pursuing for much of the past decade at the expense of San Diego ratepayers. The lawsuit has been the centerpiece of the Water Authority’s long-running rivalry with the Metropolitan.
The Water Authority has long argued that Metropolitan is overcharging San Diego for use of the Metropolitan-owned Colorado River Aqueduct, a 240-mile straw from the Colorado River into Southern California.
The water the Water Authority buys from Imperial can’t get to San Diego without using that aqueduct, a fact that makes the Water Authority physically reliant on Metropolitan. Cadiz, likewise, has water stuck out in the desert that it wants to deliver to water agencies in Southern California using Metropolitan’s aqueduct.
Since 2010, the Water Authority has been in court fighting to lower Metropolitan’s aqueduct-related fees, known as the wheeling rate. The Water Authority spent over $21 million on the wheeling rate case, including $3.7 million to Brownstein. In 2017, however, courts rejected the core of the Water Authority’s argument, a major setback for the Water Authority.
There’s little doubt a win would have helped San Diego ratepayers, sparing them potentially billions in higher fees in coming decades, but a win also could have helped Cadiz or its customers who need to use the aqueduct.
A spokeswoman for Cadiz disagreed and said the company would negotiate a different and unique wheeling rate from San Diego’s.
“From where we are today, our supplies are already competitive with new sources of supply without the litigation,” the spokeswoman, Courtney Degener, said in an email.
But Mark Watton, the general manager of the Otay Water District in East County, said Otay would have looked at buying water from Cadiz if the Water Authority had won the case that Brownstein was helping with. As it stands, though, Cadiz’s water would cost too much for Otay.
Brownstein has also done consulting work for Otay – Frahm and Watton, himself a former Water Authority board chairman, go way back. In a later sworn statement sent to VOSD on his behalf by Brownstein, Watton said if he had tried to do business with Cadiz, he would have gotten another attorney to handle negotiations.
In an interview, Watton said he’d never seen Slater cross any lines.
“My own experience with Scott has always been of the highest ethics,” Watton said.
Brownstein has regularly disclosed its potential conflicts to the Water Authority, said the Water Authority’s in-house general counsel, Mark Hattam, in a sworn statement submitted on his behalf by Brownstein. Daniel Hentschke, a former Water Authority in-house counsel, said in an email that he’d never seen anything that caused him to worry that the legal advice from Brownstein was designed to help Cadiz rather than the Water Authority.
Langberg said VOSD started reporting this story with “uninformed and false assumption that merely having multiple clients who may have organizational relationships or do business in the same field—‘water’– creates a conflict” and had asked questions that were simply “vague snippets of events that occurred more than 20 years ago and over an extended period of time.”
He suggested that some sources might be trying to influence the outcome of ongoing litigation between Metropolitan and the Water Authority.
The firm also talked about proactive steps it had taken to avoid potential conflicts. For instance, in about 2002, it stopped representing Poseidon Water – the company that eventually signed a deal in 2012 with the Water Authority to build a desalination plant in Carlsbad that now provides about a tenth of the region’s water – because of a potential conflict the firm had representing both the company and the Water Authority.
“This is laudable precautionary conduct,” Langberg said.