(Bloomberg) — California lawmakers are stepping up calls for “urgent action” by the U.S. Justice Department to investigate potential water crimes as the state battles “dire” supply shortages and drought.
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The bipartisan group told U.S. Attorney General Merrick Garland that, along with continued concern about potential “drought profiteering” and water theft, there is growing concern that “fraud and market manipulation” are reducing already very limited water availability.
“We believe this manipulation is causing water prices to rise and may soon cause food prices to rise,” four state lawmakers, including Democratic Sen. Melissa Hurtado and Republican Assemblywoman Suzette Valladares, wrote in a letter to Garland.
Lawmakers did not specify who might have been trying to raise prices in markets where hedge funds, landowners and government agencies trade rights to water that flows to residential customers, commercial users and agricultural interests. In the letter, they expressed concerns that large landowners could use questionable groundwater data from private consulting firms to manipulate small farmers into selling their land.
The issue has huge political resonance in a state whose water disputes date back to the gold rush of the mid-1800s, especially with the Los Angeles area facing unprecedented supply cuts in the worst drought in the western US in 1,200 years. years.
California water prices hit an all-time high of $1,233 an acre on Wednesday in the Nasdaq Veles California Water Index, which tracks the average transaction price for water rights in five markets in the state.
More supply cuts are on the way as policymakers struggle to come up with plans to avoid worst-case scenarios for cities, agriculture, industry and wildlife.
The drought is also having a serious impact as the state’s water districts begin to build the framework for new groundwater use rules. This effort is a potential boon for water advisory services as local officials try to gain access to critical water data needed to implement regulations.
“California’s water story reminds us that it’s not just investors who are to blame for fraud or market manipulation, and that we must consider the role that professional consulting firms play in our water outcomes,” said in the letter lawmakers, including Democrats Dave Cortese and Freddie Rodriguez. .
The Justice Department did not immediately respond to requests for comment.
Three months ago, state senators Hurtado and Cortese sent a letter to the Department of Justice asking for an investigation into possible drought profiteering in western states. Their May 17 letter said “hedge funds and monopolies” are trading water rights in a way that is harmful.
In April, federal prosecutors accused the former director of a California water district of stealing more than $25 million worth of water over nearly a quarter-century by diverting it from a leak to a canal in the Central Valley and then selling it.
(Adds details from letters in fourth, 11th paragraph, legal case in 12th.)
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