Badlands Journal

Published on 3 Aug 2005 by Media Monitors Network. Archived on 9 Aug 2005.
http://www.energybulletin.net/7707.html

Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse
by William Clark

“This notion that the United States is getting ready to attack Iran is simply ridiculous...Having said that, all options are on the table.”
– President George W. Bush, February 2005

Contemporary warfare has traditionally involved underlying conflicts regarding economics and resources. Today these intertwined conflicts also involve international currencies, and thus increased complexity. Current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iran’s nuclear intentions, and likely include a proposed Iranian “petroeuro” system for oil trade.

Similar to the Iraq war, military operations against Iran relate to the macroeconomics of ‘petrodollar recycling’ and the unpublicized but real challenge to U.S. dollar supremacy from the euro as an alternative oil transaction currency.

It is now obvious the invasion of Iraq had less to do with any threat from Saddam’s long-gone WMD program and certainly less to do to do with fighting International terrorism than it has to do with gaining strategic control over Iraq’s hydrocarbon reserves and in doing so maintain the U.S. dollar as the monopoly currency for the critical international oil market. Throughout 2004 information provided by former administration insiders revealed the Bush/Cheney administration entered into office with the intention of toppling Saddam Hussein.[1][2]

Candidly stated, ‘Operation Iraqi Freedom’ was a war designed to install a pro-U.S. government in Iraq, establish multiple U.S military bases before the onset of global Peak Oil, and to reconvert Iraq back to petrodollars while hoping to thwart further OPEC momentum towards the euro as an alternative oil transaction currency (i.e. “petroeuro”).[3] However, subsequent geopolitical events have exposed neoconservative strategy as fundamentally flawed, with Iran moving towards a petroeuro system for international oil trades, while Russia evaluates this option with the European Union.

In 2003 the global community witnessed a combination of petrodollar warfare and oil depletion warfare. The majority of the world’s governments – especially the E.U., Russia and China – were not amused – and neither are the U.S. soldiers who are currently stationed inside a hostile Iraq. In 2002 I wrote an award-winning online essay that asserted Saddam Hussein sealed his fate when he announced in September 2000 that Iraq was no longer going to accept dollars for oil being sold under the UN’s Oil-for-Food program, and decided to switch to the euro as Iraq’s oil export currency.[4]

Indeed, my original pre-war hypothesis was validated in a Financial Times article dated June 5, 2003, which confirmed Iraqi oil sales returning to the international markets were once again denominated in U.S. dollars – not euros.

The tender, for which bids are due by June 10, switches the transaction back to dollars -- the international currency of oil sales - despite the greenback's recent fall in value. Saddam Hussein in 2000 insisted Iraq's oil be sold for euros, a political move, but one that improved Iraq's recent earnings thanks to the rise in the value of the euro against the dollar [5]

The Bush administration implemented this currency transition despite the adverse impact on profits from Iraqi’s export oil sales.[6] (In mid-2003 the euro was valued approx. 13% higher than the dollar, and thus significantly impacted the ability of future oil proceeds to rebuild Iraq’s infrastructure). Not surprisingly, this detail has never been mentioned in the five U.S. major media conglomerates who control 90% of information flow in the U.S., but confirmation of this vital fact provides insight into one of the crucial – yet overlooked – rationales for 2003 the Iraq war.

Concerning Iran, recent articles have revealed active Pentagon planning for operations against its suspected nuclear facilities. While the publicly stated reasons for any such overt action will be premised as a consequence of Iran's nuclear ambitions, there are again unspoken macroeconomic drivers underlying the second stage of petrodollar warfare – Iran's upcoming oil bourse. (The word bourse refers to a stock exchange for securities trading, and is derived from the French stock exchange in Paris, the Federation Internationale des Bourses de Valeurs.)

In essence, Iran is about to commit a far greater “offense” than Saddam Hussein's conversion to the euro for Iraq’s oil exports in the fall of 2000. Beginning in March 2006, the Tehran government has plans to begin competing with New York's NYMEX and London's IPE with respect to international oil trades – using a euro-based international oil-trading mechanism.[7]

The proposed Iranian oil bourse signifies that without some sort of US intervention, the euro is going to establish a firm foothold in the international oil trade. Given U.S. debt levels and the stated neoconservative project of U.S. global domination, Tehran’s objective constitutes an obvious encroachment on dollar supremacy in the crucial international oil market.

From the autumn of 2004 through August 2005, numerous leaks by concerned Pentagon employees have revealed that the neoconservatives in Washington are quietly – but actively – planning for a possible attack against Iran. In September 2004 Newsweek reported:

Deep in the Pentagon, admirals and generals are updating plans for possible U.S. military action in Syria and Iran. The Defense Department unit responsible for military planning for the two troublesome countries is “busier than ever,” an administration official says. Some Bush advisers characterize the work as merely an effort to revise routine plans the Pentagon maintains for all contingencies in light of the Iraq war. More skittish bureaucrats say the updates are accompanied by a revived campaign by administration conservatives and neocons for more hard-line U.S. policies toward the countries…’

…administration hawks are pinning their hopes on regime change in Tehran – by covert means, preferably, but by force of arms if necessary. Papers on the idea have circulated inside the administration, mostly labeled "draft" or "working draft" to evade congressional subpoena powers and the Freedom of Information Act. Informed sources say the memos echo the administration's abortive Iraq strategy: oust the existing regime, swiftly install a pro-U.S. government in its place (extracting the new regime's promise to renounce any nuclear ambitions) and get out. This daredevil scheme horrifies U.S. military leaders, and there's no evidence that it has won any backers at the cabinet level.[8]

Indeed, there are good reasons for U.S. military commanders to be ‘horrified’ at the prospects of attacking Iran. In the December 2004 issue of the Atlantic Monthly, James Fallows reported that numerous high-level war-gaming sessions had recently been completed by Sam Gardiner, a retired Air Force colonel who has run war games at the National War College for the past two decades.[9] Col. Gardiner summarized the outcome of these war games with this statement, “After all this effort, I am left with two simple sentences for policymakers: You have no military solution for the issues of Iran. And you have to make diplomacy work.” Despite Col. Gardiner’s warnings, yet another story appeared in early 2005 that reiterated this administration’s intentions towards Iran. Investigative reporter Seymour Hersh’s article in The New Yorker included interviews with various high-level U.S. intelligence sources. Hersh wrote:

In my interviews [with former high-level intelligence officials], I was repeatedly told that the next strategic target was Iran. Everyone is saying, ‘You can’t be serious about targeting Iran. Look at Iraq,’ the former [CIA] intelligence official told me. But the [Bush administration officials] say, ‘We’ve got some lessons learned – not militarily, but how we did it politically. We’re not going to rely on agency pissants.’ No loose ends, and that’s why the C.I.A. is out of there.[10]

The most recent, and by far the most troubling, was an article in The American Conservative by intelligence analyst Philip Giraldi. His article, “In Case of Emergency, Nuke Iran,” suggested the resurrection of active U.S. military planning against Iran – but with the shocking disclosure that in the event of another 9/11-type terrorist attack on U.S. soil, Vice President Dick Cheney’s office wants the Pentagon to be prepared to launch a potential tactical nuclear attack on Iran – even if the Iranian government was not involved with any such terrorist attack against the U.S.:

The Pentagon, acting under instructions from Vice President Dick Cheney's office, has tasked the United States Strategic Command (STRATCOM) with drawing up a contingency plan to be employed in response to another 9/11-type terrorist attack on the United States. The plan includes a large-scale air assault on Iran employing both conventional and tactical nuclear weapons. Within Iran there are more than 450 major strategic targets, including numerous suspected nuclear-weapons-program development sites. Many of the targets are hardened or are deep underground and could not be taken out by conventional weapons, hence the nuclear option. As in the case of Iraq, the response is not conditional on Iran actually being involved in the act of terrorism directed against the United States. Several senior Air Force officers involved in the planning are reportedly appalled at the implications of what they are doing – that Iran is being set up for an unprovoked nuclear attack – but no one is prepared to damage his career by posing any objections.[11]

Why would the Vice President instruct the U.S. military to prepare plans for what could likely be an unprovoked nuclear attack against Iran? Setting aside the grave moral implications for a moment, it is remarkable to note that during the same week this “nuke Iran” article appeared, the Washington Post reported that the most recent National Intelligence Estimate (NIE) of Iran’s nuclear program revealed that, “Iran is about a decade away from manufacturing the key ingredient for a nuclear weapon, roughly doubling the previous estimate of five years.”[12]

This article carefully noted this assessment was a “consensus among U.S. intelligence agencies, [and in] contrast with forceful public statements by the White House.” The question remains, Why would the Vice President advocate a possible tactical nuclear attack against Iran in the event of another major terrorist attack against the U.S. – even if Tehran was innocent of involvement?

Perhaps one of the answers relates to the same obfuscated reasons why the U.S. launched an unprovoked invasion to topple the Iraq government – macroeconomics and the desperate desire to maintain U.S. economic supremacy. In essence, petrodollar hegemoy is eroding, which will ultimately force the U.S. to significantly change its current tax, debt, trade, and energy policies, all of which are severely unbalanced. World oil production is reportedly “flat out,” and yet the neoconservatives are apparently willing to undertake huge strategic and tactical risks in the Persian Gulf. Why? Quite simply – their stated goal is U.S. global domination – at any cost.

To date, one of the more difficult technical obstacles concerning a euro-based oil transaction trading system is the lack of a euro-denominated oil pricing standard, or oil ‘marker’ as it is referred to in the industry. The three current oil markers are U.S. dollar denominated, which include the West Texas Intermediate crude (WTI), Norway Brent crude, and the UAE Dubai crude. However, since the summer of 2003 Iran has required payments in the euro currency for its European and Asian/ACU exports – although the oil pricing of these trades was still denominated in the dollar.[13]

Therefore a potentially significant news story was reported in June 2004 announcing Iran’s intentions to create of an Iranian oil bourse. This announcement portended competition would arise between the Iranian oil bourse and London’s International Petroleum Exchange (IPE), as well as the New York Mercantile Exchange (NYMEX). [Both the IPE and NYMEX are owned by a U.S. consortium, and operated by an Atlanta-based corporation, IntercontinentalExchange, Inc.]

The macroeconomic implications of a successful Iranian bourse are noteworthy. Considering that in mid-2003 Iran switched its oil payments from E.U. and ACU customers to the euro, and thus it is logical to assume the proposed Iranian bourse will usher in a fourth crude oil marker – denominated in the euro currency. This event would remove the main technical obstacle for a broad-based petroeuro system for international oil trades. From a purely economic and monetary perspective, a petroeuro system is a logical development given that the European Union imports more oil from OPEC producers than does the U.S., and the E.U. accounted for 45% of exports sold to the Middle East. (Following the May 2004 enlargement, this percentage likely increased).

Despite the complete absence of coverage from the five U.S. corporate media conglomerates, these foreign news stories suggest one of the Federal Reserve’s nightmares may begin to unfold in the spring of 2006, when it appears that international buyers will have a choice of buying a barrel of oil for $60 dollars on the NYMEX and IPE - or purchase a barrel of oil for €45 - €50 euros via the Iranian Bourse. This assumes the euro maintains its current 20-25% appreciated value relative to the dollar – and assumes that some sort of US "intervention" is not launched against Iran.

The upcoming bourse will introduce petrodollar versus petroeuro currency hedging, and fundamentally new dynamics to the biggest market in the world - global oil and gas trades. In essence, the U.S. will no longer be able to effortlessly expand its debt-financing via issuance of U.S. Treasury bills, and the dollar’s international demand/liquidity value will fall.

It is unclear at the time of writing if this project will be successful, or could it prompt overt or covert U.S. interventions – thereby signaling the second phase of petrodollar warfare in the Middle East. Regardless of the potential U.S. response to an Iranian petroeuro system, the emergence of an oil exchange market in the Middle East is not entirely surprising given the domestic peaking and decline of oil exports in the U.S. and U.K, in comparison to the remaining oil reserves in Iran, Iraq and Saudi Arabia.

What we are witnessing is a battle for oil currency supremacy. If Iran’s oil bourse becomes a successful alternative for international oil trades, it would challenge the hegemony currently enjoyed by the financial centers in both London (IPE) and New York (NYMEX), a factor not overlooked in the following (UK) Guardian article:

Iran is to launch an oil trading market for Middle East and Opec producers that could threaten the supremacy of London's International Petroleum Exchange.

…Some industry experts have warned the Iranians and other OPEC producers that western exchanges are controlled by big financial and oil corporations, which have a vested interest in market volatility.

The IPE, bought in 2001 by a consortium that includes BP, Goldman Sachs and Morgan Stanley, was unwilling to discuss the Iranian move yesterday. “We would not have any comment to make on it at this stage,” said an IPE spokeswoman. [14]

During an important speech in April 2002, Mr. Javad Yarjani, an OPEC executive, described three pivotal events that would facilitate an OPEC transition to euros.[15] He stated this would be based on (1) if and when Norway's Brent crude is re-dominated in euros, (2) if and when the U.K. adopts the euro, and (3) whether or not the euro gains parity valuation relative to the dollar, and the EU’s proposed expansion plans were successful.

Notably, both of the later two criteria have transpired: the euro’s valuation has been above the dollar since late 2002, and the euro-based E.U. enlarged in May 2004 from 12 to 22 countries. Despite recent “no” votes by French and Dutch voters regarding a common E.U. Constitution, from a macroeconomic perspective, these domestic disagreements do no reduce the euro currency’s trajectory in the global financial markets – and from Russia and OPEC’s perspective – do not adversely impact momentum towards a petroeuro. In the meantime, the U.K. remains uncomfortably juxtaposed between the financial interests of the U.S. banking nexus (New York/Washington) and the E.U. financial centers (Paris/Frankfurt).

The most recent news reports indicate the oil bourse will start trading on March 20, 2006, coinciding with the Iranian New Year.[16] The implementation of the proposed Iranian oil Bourse – if successful in utilizing the euro as its oil transaction currency standard – essentially negates the previous two criteria as described by Mr. Yarjani regarding the solidification of a petroeuro system for international oil trades. It should also be noted that throughout 2003-2004 both Russia and China significantly increased their central bank holdings of the euro, which appears to be a coordinated move to facilitate the anticipated ascendance of the euro as a second World Reserve Currency. [17] [18]

China’s announcement in July 2005 that it was re-valuing the yuan/RNB was not nearly as important as its decision to divorce itself from a U.S. dollar peg by moving towards a “basket of currencies” – likely to include the yen, euro, and dollar.[19] Additionally, the Chinese re-valuation immediately lowered their monthly imported “oil bill” by 2%, given that oil trades are still priced in dollars, but it is unclear how much longer this monopoly arrangement will last.

Furthermore, the geopolitical stakes for the Bush administration were raised dramatically on October 28, 2004, when Iran and China signed a huge oil and gas trade agreement (valued between $70 - $100 billion dollars.) [20] It should also be noted that China currently receives 13% of its oil imports from Iran. In the aftermath of the Iraq invasion, the U.S.-administered Coalition Provisional Authority (CPA) nullified previous oil lease contracts from 1997-2002 that France, Russia, China and other nations had established under the Saddam regime. The nullification of these contracts worth a reported $1.1 trillion created political tensions between the U.S and the European Union, Russia and China.

The Chinese government may fear the same fate awaits their oil investments in Iran if the U.S. were able to attack and topple the Tehran government. Despite U.S. desires to enforce petrodollar hegemony, the geopolitical risks of an attack on Iran’s nuclear facilities would surely create a serious crisis between Washington and Beijing.

It is increasingly clear that a confrontation and possible war with Iran may transpire during the second Bush term. Clearly, there are numerous tactical risks regarding neoconservative strategy towards Iran. First, unlike Iraq, Iran has a robust military capability. Secondly, a repeat of any “Shock and Awe” tactics is not advisable given that Iran has installed sophisticated anti-ship missiles on the Island of Abu Musa, and therefore controls the critical Strait of Hormuz – where all of the Persian Gulf bound oil tankers must pass.[21]

The immediate question for Americans? Will the neoconservatives attempt to intervene covertly and/or overtly in Iran during 2005 or 2006 in a desperate effort to prevent the initiation of euro-denominated international crude oil sales? Commentators in India are quite correct in their assessment that a U.S. intervention in Iran is likely to prove disastrous for the United States, making matters much worse regarding international terrorism, not to the mention potential effects on the U.S. economy.

…If it [U.S.] intervenes again, it is absolutely certain it will not be able to improve the situation…There is a better way, as the constructive engagement of Libya’s Colonel Muammar Gaddafi has shown...Iran is obviously a more complex case than Libya, because power resides in the clergy, and Iran has not been entirely transparent about its nuclear programme, but the sensible way is to take it gently, and nudge it to moderation. Regime change will only worsen global Islamist terror, and in any case, Saudi Arabia is a fitter case for democratic intervention, if at all.[22]

A successful Iranian bourse will solidify the petroeuro as an alternative oil transaction currency, and thereby end the petrodollar's hegemonic status as the monopoly oil currency. Therefore, a graduated approach is needed to avoid precipitous U.S. economic dislocations. Multilateral compromise with the EU and OPEC regarding oil currency is certainly preferable to an ‘Operation Iranian Freedom,’ or perhaps another CIA-backed coup such as operation "Ajax” from 1953. Despite the impressive power of the U.S. military, and the ability of our intelligence agencies to facilitate ‘interventions,’ it would be perilous and possibly ruinous for the U.S. to intervene in Iran given the dire situation in Iraq. The Monterey Institute of International Studies warned of the possible consequences of a preemptive attack on Iran’s nuclear facilities:

An attack on Iranian nuclear facilities…could have various adverse effects on U.S. interests in the Middle East and the world. Most important, in the absence of evidence of an Iranian illegal nuclear program, an attack on Iran’s nuclear facilities by the U.S. or Israel would be likely to strengthen Iran's international stature and reduce the threat of international sanctions against Iran.[23]

Synopsis:
It is not yet clear if a U.S. military expedition will occur in a desperate attempt to maintain petrodollar supremacy. Regardless of the recent National Intelligence Estimate that down-graded Iran’s potential nuclear weapons program, it appears increasingly likely the Bush administration may use the specter of nuclear weapon proliferation as a pretext for an intervention, similar to the fears invoked in the previous WMD campaign regarding Iraq.

If recent stories are correct regarding Cheney’s plan to possibly use another 9/11 terrorist attack as the pretext or casus belli for a U.S. aerial attack against Iran, this would confirm the Bush administration is prepared to undertake a desperate military strategy to thwart Iran’s nuclear ambitions, while simultaneously attempting to prevent the Iranian oil Bourse from initiating a euro-based system for oil trades.

However, as members of the U.N. Security Council; China, Russia and E.U. nations such as France and Germany would likely veto any U.S.-sponsored U.N. Security Resolution calling the use of force without solid proof of Iranian culpability regarding a terrorist attack in the U.S. A unilateral military strike on Iran would isolate the U.S. government in the eyes of the world community, and it is conceivable that such an overt action could provoke other industrialized nations to strategically abandon the dollar en masse.

Indeed, such an event would create pressure for OPEC and Russia to move towards a monopoly petroeuro system in an effort to cripple the U.S. dollar and thwart the U.S. global military presence. I refer to this in my book as the “rogue nation hypothesis.” (A similar tactic was used by the U.S. to end the 1956 Suez crisis.)

While central bankers throughout the world community would be extremely reluctant to ‘dump the dollar,’ the reasons for any such drastic reaction are likely straightforward from their government’s perspective – the global community is dependent on the oil and gas energy supplies found in the Persian Gulf.

Hence, industrialized nations would likely move in tandem on the currency exchange markets in an effort to thwart the neoconservatives from pursuing their desperate strategy of dominating the world’s largest hydrocarbon energy supply. Any such efforts that resulted in a dollar currency crisis would be undertaken – not to cripple the U.S. dollar and economy as punishment towards the American people per se – but rather to thwart further unilateral warfare and its potentially destructive effects on the critical oil production and shipping infrastructure in the Persian Gulf.

Barring a U.S. attack, it appears imminent that Iran’s euro-denominated oil bourse will open in March 2006. Logically, the most appropriate U.S. strategy is compromise with the E.U. and OPEC towards a dual-currency system for international oil trades.

Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes...known instruments for bringing the many under the domination of the few…No nation could preserve its freedom in the midst of continual warfare.
– James Madison, Political Observations, 1795

***
Footnotes:
[1] Ron Suskind, The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’ Neill, Simon & Schuster publishers (2004)
[2] Richard A. Clarke, Against All Enemies: Inside America’s War on Terror, Free Press (2004)
[3] William Clark, “Revisited - The Real Reasons for the Upcoming War with Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth,” January 2003 (updated January 2004)
www.ratical.org/ratville/CAH/RRiraqWar.html

[4] Peter Philips, Censored 2004, The Top 25 Censored News Stories, Seven Stories Press, (2003) General website for Project Censored: www.projectcensored.org/
Story #19: U.S. Dollar vs. the Euro: Another Reason for the Invasion of Iraq
www.projectcensored.org/publications/2004/19.html

[5] Carol Hoyos and Kevin Morrison, "Iraq returns to the international oil market," Financial Times, June 5, 2003
[6] Faisal Islam, “Iraq nets handsome profit by dumping dollar for euro,” [UK] Guardian, February 16, 2003
observer.guardian.co.uk/iraq/story/0,12239,896344,00.html
[7] “Oil bourse closer to reality,” IranMania.com, December 28, 2004. Also see: “Iran oil bourse wins authorization,” Tehran Times, July 26, 2005

[8] “War-Gaming the Mullahs: The U.S. weighs the price of a pre-emptive strike,” Newsweek, September 27 issue, 2004. Online: www.msnbc.msn.com/id/6039135/site/newsweek/

[9] James Fallows, “Will Iran be Next?,” Atlantic Monthly, December 2004, pgs. 97 – 110

[10] Seymour Hersh, “The Coming Wars,” The New Yorker, January 24th – 31st issue, 2005, pgs. 40-47
Posted online January 17, 2005. Online: www.newyorker.com/fact/content/?050124fa_fact

[11] Philip Giraldi, “In Case of Emergency, Nuke Iran,” American Conservative, August 1, 2005

[12] Dafina Linzer, “Iran Is Judged 10 Years From Nuclear Bomb U.S. Intelligence Review Contrasts With Administration Statements,” Washington Post, August 2, 2005; Page A01

[13] C. Shivkumar, “Iran offers oil to Asian union on easier terms,” The Hindu Business Line (June 16, 2003). www.thehindubusinessline.com/bline/2003/06/17/stories/2003061702380500.htm

[14] Terry Macalister, “Iran takes on west's control of oil trading,” The [UK] Guardian, June 16, 2004
www.guardian.co.uk/business/story/0,3604,1239644,00.html

[15] “The Choice of Currency for the Denomination of the Oil Bill," Speech given by Javad Yarjani, Head of OPEC's Petroleum Market Analysis Dept, on The International Role of the Euro (Invited by the Spanish Minister of Economic Affairs during Spain's Presidency of the EU) (April 14, 2002, Oviedo, Spain)
www.opec.org/NewsInfo/Speeches/sp2002/spAraqueSpainApr14.htm

[16] “Iran's oil bourse expects to start by early 2006,” Reuters, October 5, 2004 www.iranoilgas.com

[17] “Russia shifts to euro as foreign currency reserves soar,” AFP, June 9, 2003
www.cdi.org/russia/johnson/7214-3.cfm

[18] “China to diversify foreign exchange reserves,” China Business Weekly, May 8, 2004
www.chinadaily.com.cn/english/doc/2004-05/08/content_328744.htm

[19] Richard S. Appel, “The Repercussions from the Yuan’s Revaluation,” kitco.com, July 27, 2005
www.kitco.com/ind/appel/jul272005.html

[20] “China, Iran sign biggest oil & gas deal,” China Daily, October 31, 2004. Online: www.chinadaily.com.cn/english/doc/2004-10/31/content_387140.htm

[21] Analysis of Abu Musa Island, www.globalsecurity.org
www.globalsecurity.org/wmd/world/iran/abu-musa.htm

[22] “Terror & regime change: Any US invasion of Iran will have terrible consequences,” News Insight: Public Affairs Magazine, June 11, 2004 www.indiareacts.com/archivedebates/nat2.asp?recno=908&ctg=World

[23] Sammy Salama and Karen Ruster, “A Preemptive Attack on Iran's Nuclear Facilities: Possible Consequences,” Monterry Institute of International Studies, August 12, 2004 (updated September 9, 2004) cns.miis.edu/pubs/week/040812.htm

~~~~~~~~~~~~~~~ Editorial Notes ~~~~~~~~~~~~~~~~~~~

William Clark has recently published, via New Society publishers, Petrodollar Warfare - Oil, Iraq and the Future of the Dollar.

The invasion of Iraq may well be remembered as the first oil currency war. Far from being a response to 9-11 terrorism or Iraq’s alleged weapons of mass destruction, Petrodollar Warfare argues that the invasion was precipitated by two converging phenomena: the imminent peak in global oil production, and the ascendance of the euro currency.

Energy analysts agree that world oil supplies are about to peak, after which there will be a steady decline in supplies of oil. Iraq, possessing the world’s second largest oil reserves, was therefore already a target of U.S. geostrategic interests. Together with the fact that Iraq had switched its oil currency trade to euros — rather than U.S. dollars — the Bush administration’s unreported aim was to prevent further OPEC momentum in favor of the euro as an alternative oil transaction currency standard.

Meticulously researched, Petrodollar Warfare examines U.S. dollar hegemony and the unsustainable macroeconomics of ‘petrodollar recycling,’ pointing out that the issues underlying the Iraq War also apply to geopolitical tensions between the U.S. and other countries including the member states of the European Union (EU), Iran, Venezuela, and Russia. The author warns that without changing course, the American Experiment will end the way all empires end – with military over-extension and subsequent economic decline. He recommends the multilateral pursuit of both energy and monetary reforms within a United Nations framework to create a more balanced global energy and monetary system – thereby reducing the possibility of future oil depletion and oil currency-related warfare.

A sober call for an end to aggressive U.S. unilateralism, Petrodollar Warfare is a unique contribution to the debate about the future global political economy.

About the Author: William Clark has received two Project Censored awards for his research on oil currency conflict, and has recently published a book, Petrodollar Warfare: Oil, Iraq and the Future of the Dollar (New Society Publishers, 2005). He is an Information Security Analyst, and holds a Master of Business Administration and Master of Science in Information and Telecommunication Systems from Johns Hopkins University. He lives near Bethesda, Maryland.
Website: www.petrodollarwarfare.com
Copyright © 2003-2005 William Clark
Reprinted for Fair Use Only

Bicycle

We had some problems with this letter from Hilmar Cheese CEO, John Jeter, printed in the
Modesto Bee, Jan. 29, 2006, Salty waste water a tricky dilemma...John Jeter, chief executive
officer of Hilmar Cheese Co.
http://www.modbee.com/opinion/community/story/11744886p-12466835c.html

First, the fundamental dilemma the plant finds itself in is not mentioned: it is the "largest
cheese plant in the world." The assumption that largest is best is never challenged, yet
obviously, it is the amount of the waste it generates that causes the dilemma.

Secondly, we find Jeter representing the conclusions of a federal Environmental Protection
Agency study on 500 "Class I wells in 14 states." The 1996 EPA study we found on the Internet
by that title did not support the conclusion Jeter reached and included information that
aquifer studies had been done in the Southeast, Texas and Kansas, but not in California. It
does not appear that "underground injection of brines" is old news to California, just
because hundreds of deep injection wells exist already in other parts of the nation. There
are a number of lawsuits mentioned on the Internet, available to all in a 30-second study, in
Florida, Texas and Michigan, that challenge Jeter's claims the wells don't leak and don't
fail.

A foreign suit against deep injection wells that jumped out at us was in Siberia, against the
deep injection of nuclear wastes.

Reading the 1996 EPA study, we learned that "leadership" in this technology has been provided
by US chemical companies. It made us wonder how much cummulative contamination of deep
aquifers in the US has already taken place.

Third, without adequate studies of the underground aquifers in Merced County, we wonder how
any valid tests can be made of the effects of the proposed well on the aquifer. It is in the
nature of this technology, apparently, that the damage is only noticed years after deep
injection begins.

Last, we challenge Jeter's conclusions. Hilmar's salt management problem is the problem of
the producer of the salt. It becomes the public's problem when it pollutes. The public's
problem is to protect itself from Hilmar's salt. The public's solution is government
regulation. It is fair, I think to say, that Hilmar Cheese became the largest cheese factory
in the world in part as the result of the regional water quality board for years "relaxing"
its pollution regulation of Hilmar. After Hilmar had become the largest cheese factory in the
world, the press (Sacramento Bee) exposed the pattern of corruption of the water board. The
board responded by getting tough on Hilmar, after which about half its members resigned or
retired.

Hilmar successfully used the "black box" strategy to avoid regulation by the state. This
strategy works on the principle that "new technology" will always solve pollution problems.
Therefore, while the company is investing in new technologies -- whether they work or not --
the company keeps growing and the regulator "cooperates" with the company in experiments with
environmental pollution. The public is asked to accept the damage in the cause of the
progress of technology. Meanwhile, whether the technology works or not, everybody gets paid
and the environment gets more polluted and the regulating agency can justify its relaxation
on the basis of "black-box development."

The figure of $15 million is constantly repeated in connection with Hilmar's investment in a
black box that failed to remove salt from its wastewater as the company kept growing. We'll
just take a wild guess they invested much less in state and federal legislators and got a lot
bigger bang for the buck. For example, how much Hilmar political largesse flows into the third floor of the Merced County Administrative Building? At one end of the hall are the pockets and offices of of Rep. Dennis Cardoza, Shrimp Slayer-Merced; at the other end are those local land-use decision-makers, the Merced County Board of Supervisors.

As for the principle of "cooperation" the Hilmar infomercial calls for, it looks suspiciously
like the corporation is asking the public to uncritically accept yet another backroom deal
between this polluter and another regulator for the purpose of the corporation's profits and
so, presumably, it won't have to move to Dalhart TX, where, according to corporate
propaganda, the public would be more "cooperative" in allowing its environment to be
polluted.

Corporations like Hilmar, politically connected in powerfully lobbying industries, have been able to politically bargain to get regulators to "relax" regulations the government has placed on huge (polluting) corporations to defend the public against pollution. In this piece, which we suggest might have been written by a PR firm (the Dolphin Group, for example) rather than by Jeter himself, we have the regulated
corporation complaining against the state regulation and representing or misrepresenting
itself as spokesman for the federal regulator. In Hilmar's case, it has had the lobbying
power of the dairy industry (or some portion of it) behind it all the way.

However, as far as we know, Hilmar Cheese does not yet own even one department in the federal
EPA. At least theoretically, even in this administration, EPA is a public, not a private
agency, with its own spokespersons and officials, capable of expressing EPA policies without
the help of Hilmar's PR firm.

The public would like to know if the EPA now allows and encourages regulated corporations to
speak for it.

Jeter's concluding remark --"Hilmar Cheese Co. wants to be a part of the solution and protect
our land and water, and conserve energy resources for future generations" -- is just off the
wall in light of its record. As for conserving energy resources, is Jeter sending a message
to the Bush administration about the Enron trial? Or is Hilmar drilling for oil and gas?

However, a fundamental problem remains. No agency appears to have jurisdiction over either
the supply or quality of groundwater. The moment Hilmar's surface wastewater is injected
into wells, it appears to escape any government regulation beyond monitoring of the well
itself. Perhaps these wells should be called "deep-injection loopholes."

Bill Hatch

Lydia Miller, President
San Joaquin Raptor/Wildlife Rescue Center
(209) 723-9283, ph. & fax
raptorctr@bigvalley.net
P.O. Box 778
Merced, CA 95341

Steve Burke
Protect Our Water (POW)
(209) 523-1391, ph. & fax
sburke5@sbcglobal.net
3105 Yorkshire Lane
Modesto, CA 95350

Bryant Owens – Planada Association and
Planada Community Development Corporation
2683 South Plainsburg Road
Merced CA 95340-9550
(209) 769-0832
recall@mercednet.com
_____________________________________________________________
Wednesday, February 01, 2006
To:
Robert Lewis
Director of Planning and Economic Development
Merced County
2222 M Street
Merced CA 95340
(209) 385-7654
via Fax (209) 726-1710

Thomas R. Pinkos, Executive Officer
Central Valley Regional Water Quality Control Board
11020 Sun Center Drive. #200
Rancho Cordova, CA 95670
via fax 1-888-454-5310
tpinkos@waterboards.ca.gov;

Tam M. Doduc, Chairman
State Water Resources Control Board
1001 I Street
Sacramento, CA 95814
P.O. Box 100
Sacramento, CA 95812
(916) 341-5250
fax (916) 341-5252
tdoduc@waterboards.ca.gov

RE: Planada Community Services District proposal to drill test wells in association with an expanded WWTF- CEQA requirements

Gentlemen:
It is our understanding that Merced County Planning is the land use authority with regard to environmental review of ‘projects’ in the unincorporated sections of Merced County. Planada falls within that category. So does the proposed expansion of the Planada SUDP north of Hwy 140 and east of North Plainsburg Rd.

We feel that a number of individual projects (including relocation of migrant housing near Planada, the proposed expansion of the WWTF, the Compliance Project mandated by RWQCB, expansion of the Planada community SUDP and a proposed Merced County General Plan Update) which should be under the aegis of a single environmental review, are being addressed in a piecemeal and uncoordinated fashion with regard to larger overall needs of this unincorporated predominantly farmworker village.

We therefore request your assistance in determining precisely who has the statutory responsibility for identifying, evaluating and mitigating the potentially significant cumulative environmental effects represented by these various individually identified components of what is clearly a larger picture.

While we clearly understand the need for Planada Community Services District to comply with the regional water board’s cease and desist order for past discharge violations, we are unclear as to what nexus of authority gives the Planada CSD latitude to propose an expansion doubling the capacity of the current WWTF in combination with a land use change to handle effluent discharge without triggering significant and coordinated environmental review by the local land use authority, the county of Merced.

In the county’s presentation of the proposed SUDP expansion referenced above, at the Planada Town Hall Meeting Thursday Jan 26th, 2006 the ‘SUDP expansion project’ was correlated with and described in terms of the number of new homes the expanded WWTF would be able to serve. This may have represented convenient numbers for audience members to recall, however it does not take into account the needs of any potential new commerce or industry, which would seem to be a necessary component of what Supervisor Pedrozo described as the need for ‘smarter growth’ in Planada.

We don’t believe this was an unintentional oversight in Thursday night’s presentation, insofar as residential development pressure seems to be the sole driving force behind this expanded SUDP proposal, and given the glaring lack of any proposed new business or industry in the vicinity over the last 3 years.

County Planning Department’s collaboration with this effort to expand the SUDP, against the wishes of the community and in spite of the ongoing litigation over the previous Community Specific Plan Update, challenged in Merced Superior Court Jan 2004 and currently before the 5th Appellate Court in Fresno is particularly puzzling when this proposal is viewed in light of the current jobs/housing imbalance that already exists in Planada.

Business Housing and Transportation subsidiary organizations are all mandated to incorporate environmental justice sensitive evaluation into approval of the various policies and programs they oversee and enforce.

Planada is predominantly inhabited by a clearly identifiable target population, yet the policies of the State Water Resources Control Board to assist this target population seem to be being hijacked for the direct benefit of speculative residential developers with designs on the community; with the willing assistance of sympathetic county administrators and local elected officials.

We would like some clarification and demonstration as to how the proposed funding stream ($2million grant from SWRCB) for the Planada CSD WWTF expansion will not in fact cause financial detriment to the target population currently living in Planada. This grant is by no means sufficient to fully fund the proposed expansion, by at least several million dollars. The current community can ill afford to service additional tax burden to make up the difference.

This SUDP expansion ‘project’ was reportedly connected to a proposed Merced County General Plan update, which would, according to the county representative, necessarily supercede the various components of the 2003 Planada Community Plan Update, in which Planada’s sewer and water needs were inadequately studied/estimated, and remain points of contention in the ongoing litigation.

Planada CSD was faced with a mandate to cease sewage effluent discharge into Miles Creek, and was given time to achieve a compliance project to bring the needs of the current community into compliance with the regional and state water boards’ discharge requirements.

An increase in the SUDP of this magnitude was not envisioned as part of the mandated compliance project for the WWTF and cannot be environmentally justified in light of the Community Service District’s decision to forego tertiary treatment, to remain with secondary treatment and to change to a land based discharge process.

In fact the funding source for a majority of the mandated compliance project is being pursued through a program funded through the State Water Resources Board chiefly because Planada qualified as a ‘small community with financial hardship’.

The decision, to switch to land based dispersal of effluent and disking of dried biosolids into the soil around Planada, was reached in order to avoid continued pollution of waters that are tributary to the San Joaquin River, which describes Miles Creek, and can only have been reached based on balancing the environmental impacts of allowing Planada to continue to discharge with a more costly tertiary treatment of Planada’s current .5 mgd average effluent load, against the relative environmental impacts of land based dispersal of that same amount of effluent (But certainly not more!) at the current level of treatment.

The county must not be allowed to avoid timely CEQA consideration of the potential significant effects of a WWTF expansion in anticipation of further development by hiding within the mantle of the RWQCB’s mandate to the Planada CDS to cease and desist pollutant discharges.

The State and Regional Water Board were clearly not intent on encouraging what will be essentially another 4000 homes connected to an elaborate leach field on what was once productive agricultural land and which will no longer be capable of growing food for human consumption.

The environmental review under CEQA of the significant effects of this decision to expand the WWTF is clearly the responsibility of the Planning Department of Merced County. The mandate to abate identified discharge violations may trump the county’s responsibility for environmental review of the abatement activities, as an emergency situation exists; that is not in question. The pollution that has occurred must stop.

However, the decision to expand the capacity of the WWTF is a project completely separable from the Regional Water Board’s sanction against the Planada Community Services District, and we maintain that it is the Merced County Planning Department’s ultimate responsibility to identify and evaluate potential significant impacts of the LARGER ‘project’, and to do so at the earliest point in the process in order to ensure that decisions are made based on the best and most thorough information available.

We request that you help us identify which authority has jurisdiction, and require that you collaborate in identifying who exactly has the duty to the public to require an environmental impact report regarding the potential impacts of expanding the capacity of the Planada WWTF and that such agency be directed to comply with the requirement of CEQA regarding the environmental impact report that must be prepared before any other irreversible commitment of the Planada Community’s assets are ‘permitted’ by the County, or allowed to proceed beyond completion of the mandatory aspects of the compliance project.

Drilling of test wells to monitor for potential groundwater contamination from the proposed land based dispersal of effluent creates potential hazards in and of themselves, and threaten direct ground water contamination for a significant number of residents in the areas surrounding the Thiaroff property adjacent to the current Planada WWTF where these test wells are proposed. These affected citizens as well as the public in general, are entitled to the protections of the CEQA insofar as a portion of this ‘project’ is elective and not mandatory.

The CEQA requirement for review at the earliest point in the process must not be circumvented simply because it suits the interests of residential developers who have expressed interest in building homes in the area. In fact it is that very interest that requires the early review of these potential environmental impacts.

At the very least we request that the appropriate permits for drilling wells in unincorporated areas of Merced County be made requisite to the Planada Community Services District Plans, and that copies of those permits be made available for inspection by the public when they are completed and approved, and then incorporated into the administrative record of this ‘project’ when such is officially identified and recorded with the State Clearinghouse of the Governor’s Office of Planning and Research.

Thank you for your timely consideration of these concerns and we look forward to your written response.

Sincerely,

Lydia M. Miller

Steve Burke

Bryant Owens

EDITOR@MERCEDSUN-STAR.COM
Sent: Wednesday, February 01, 2006

Editor,

The sensationalism over the death of Mr. Gomez is remarkably misguided. The accident in question or one of its kind, was predicted as a safety hazard in the development and review of the Environmental Impact Report for the University of California Merced, and has been reiterated ad nauseum in the county’s University Community Plan Environmental Impact Report as well as in public comments on the Yosemite Lake Estates project, and Vista Del Lago. This situation is one of the more obvious dangers in approving uncoordinated approval of multiple sources of traffic impacts on the same rural roads.

Who keeps on approving these clearly identified safety hazards? The County Supervisors! Who is ultimately responsible for putting lighting along those rural roads that must bear the burden of handling this traffic? The County Board of Supervisors!

The Merced County Association of Governments is channeling all available state and federal transportation funding into bypass roadways from the Mission Ave Hwy 99 exchange to the Atwater-Merced Parkway. That plan will eventually get people from out of town to and from the UC faster and safer, but will do nothing for safety on surface roads such as the one on which Mr. Gomez was struck.

No one is naïve enough to believe the every person moving into the residential real estate springing up around UC wont be using the surface roads as well as the bypasses, so where are the road safety improvements going to come from and who’s responsibility is it to upgrade the existing roads to make pedestrian traffic safe in the area now? No one seems to have any idea! Is the liability simply going to fall to the citizens of Merced County? Especially those intrepid pedestrians who take their lives in their hands by walking home drunk instead of driving!

How soon will a UC student be killed on a bicycle trying to cross Yosemite Avenue and Lake Road in the fog? Who will be liable in that event? Just another unavoidable Act of God? I think it unlikely that the Merced County Board of Supervisors would acknowledge their culpability in such a situation, nor would the Merced City Council. Possibly the UC Regents would step up to the plate, but I won’t hold my breath?

Your own editorial today on the Assembly’s vote regarding residential development in floodplains in the central valley had a pertinent gem of truth within, which I would like to reiterate loosely: All elected leaders, including the governor, should know that state taxpayers face massive liabilities when locals approve development in stupid places.

It is not too late to pull the plug on the whole UC Merced real estate debacle, and wouldn’t that have a remarkable effect on Merced County’s supply of affordable housing all of a sudden?

Lynne Ackerman- Catheys Valley (209) 966-8104

Felix Torres CEQA Scoping Request to Agencies
Feb. 6, 2006

From:

Lydia Miller, President
San Joaquin Raptor/Wildlife Rescue Center
(209) 723-9283, ph. & fax
raptorctr@bigvalley.net
P.O. Box 778
Merced, CA 95341

Steve Burke
Protect Our Water (POW)
(209) 523-1391, ph. & fax
sburke5@sbcglobal.net
3105 Yorkshire Lane
Modesto, CA 95350

Bryant Owens
Planada Association and Planada Community Development Corporation
(209) 769-0832
recall@mercednet.com
2683 South Plainsburg Road
Merced CA 95340-9550

To:

Robert Lewis Director
Merced County Planning and Economic Development
2222 M Street
Merced CA 95340
Phone:(209) 385-7654
via Fax (209) 726-1710

Board of Supervisors Merced County
2222 M Street
Merced CA 95340
Phone:(209) 385-7366
via Fax (209) 726-7977

Board of Commissioners
Housing Authority of Merced County
405 U Street
Merced CA 95340
Phone:(209) 722-3501
Fax (209) 722-0106

Sunne Wright McPeak Secretary
Business, Transportation & Housing Agency
980 9th Street, Suite 2450
Sacramento, CA 95814-2719
Phone (916) 323-5400
Fax: 916-323-5440

Judy Nevis Director
Housing & Community Development
1800 Third Street
Sacramento, CA 95814
Phone (916) 445-4775
Fax (916) 324-5107

Richard L. Friedman Acting Deputy Dir.
Division of Financial Assistance
Phone (916) 322-1560
Fax (916) 327-6660

Kim Dunbar Assistant Division Chief
Phone (916) 322-1560
Fax (916) 327-6660

Janet Marzolf, Section Chief

Asset Management & Compliance Section
Phone (916) 327-2896
Fax (916) 327-6660

Patrick Dyas Program Manager
Office of Migrant Services
Phone (916) 327-0942
Fax (916) 327-6660

Monday, February 06, 2006

Re: CEQA review of proposed new migrant housing in Planada (Merced County), Scope of Project, Analysis of alternatives to project, irregularity in NEPA analysis of environmental impacts; project incompatibility with current County General Plan; misappropriation of federal funding for migrant housing to construct low-income housing. Environmental Justice Abuse.

Ladies and Gentlemen:

We are greatly dissatisfied with and concerned over the actions of the Housing Authority of Merced, especially concerning the demolition of the Felix Torres Migrant Camp, and a documented agreement made with certain Merced county officials by Housing Authority Executive Director, Nick Benjamin in which the County of Merced purportedly required Housing Authority to relocate Planada Village in collaboration with SUDP zoning changes proposed by the County of Merced during the environmental review of Planada’s Community Specific Plan Update (Dec 2003).

As you all may certainly verify, the funding for the proposed renovation of the Felix Torres Camp, and funding for the demolition and replacement of Planada Village (asbestos) was individually encumbered in two separate OMS grant in year 2003. There was also a third grant awarded to the Housing Authority bringing the aggregated total for renovation of Planada Migrant camps to just over $10 million dollars.

Planada citizens were delighted with the concept of renovation of the existing camps, but were solidly in opposition to the idea of moving either camp further away from the community. .

The decision to combine these grants into a single ‘project’ seems to have been solely at the discretion of Mr. Nick Benjamin. [1] No satisfactory explanation was ever given to date as to why the Felix Torres camp could not be rebuilt on its original site. It is clear that Department of Housing and Community Development owns the structures of the Planada Village Camp and contracts with Housing Authority of Merced for the maintenance thereof, and it is also clear the Housing Authority owns the land, and both parcels were and are still zoned for the use of Migrant Housing.

Our contention is that CEQA review should have begun at that point at which Mr. Benjamin decided to move the existing camps to new locations, back in 2003. As a semi-autonomous State Agency, Housing Authority has lead agency status with regard to NEPA review of this proposed project, however, that autonomy does not supercede land use authority in Merced County when a proposed project requires a zoning change, or as in this case, a conditional use permit. (Migrant Housing is not an automatically granted land use on land zoned A-1 Agricultural, there are specific requirements of the County General Plan that must be met and approved, and that process requires public review and opportunity to comment under CEQA).

Mr. Benjamin’s decision to relocate the camp(s), was facilitated by the Central Valley Coalition for Affordable Housing (a non-profit organization formed by the Housing Authority of Merced in 1987), which secured a loan from (or through) Housing Authority to purchase alternate land for the construction of a proposed ‘combined’ migrant and year round camp.

Mr. Nick Benjamin at that time was both the Executive Director of Housing Authority, and the Secretary of Central Valley Coalition for Affordable Housing and it is believed that he had full authority to act on behalf of both organization’s boards with regard to the procurement of the specific 24-acre parcel on Gerard Avenue (the originally intended location to which Felix Torres camp was to be moved).

Public outcry and written opposition to the change in location of Felix Torres Camp presented to the County Board of Supervisors, stalled the project and lead to an elaborate ‘shell game’ of deed transfers and money laundering that culminated in Jan. with the recording of the sale of that parcel to Merced County C.E.O. Demetrios Tatum and his wife. This land sale and all its intermediary steps are currently under the investigation of the Merced County Grand Jury.

Mr. Benjamin is a person who wears many hats in Merced County. Beside those previously mentioned, he also holds a position on the board of the Community Action Agency (a quasi-governmental non-profit agency whose funding, such as Community Development Block grants, is directly controlled by the Merced County Board of Supervisors). Mr. Benjamin also sits on the Workforce Investment Board, (established by statute in 2001 and whose members are appointed by the Merced County Board of Supervisors).

Mr. Benjamin has collaborated extensively with Mr. Rudy Buendia, the director of FirmBuild, (a non-profit corporation involved with other projects in Planada such as the Bear Creek Village) for many years. Mr. Buendia currently is appointed as a Commissioner of the Housing Authority of Merced’s Board of Commissioners (appointed by the District Supervisor for district 1 which includes Planada.) Mr. Buendia also hold an appointed position on the Merced County Planning Commission as a Commissioner (also appointed by the District 1 Supervisor)

Mr. Buendia seems to be in the enviable position of sitting as a voting member of the ‘lead agency’ for the NEPA approval of the proposed new Felix Torres Project, and as an advisor to the ‘lead agency’ for the CEQA review of this same project. Additionally FirmBuild may be involved in the eventual reconstruction of the Felix Torres Camp. Consequently the public has no clear or speedy means of determining whether or not any other inappropriate financial aggrandizement may occur through the eventual release of these encumbered OMS grant funds.

The normal checks and balances, which would preclude such conflicts of interest, are demonstrably absent in a rural setting such as Merced County where one person can wear so many hats simultaneously.

There seems to be a great deal of overlap in the funding streams coming into Merced County through the Department of Financial Assistance of the Department of Housing and Community Development. It is clear to these commentators that the restrictions on the beneficiaries of grant funding through specific programs such as Joseph C. Serna Farmworker housing (which represents about one third of the grant funding for this proposed project) may be effectively circumvented under the aegis of Mr. Benjamin’s proposal.

The Predevelopment Loan Program used to demolish the Felix Torres Camp may have been used in violation of CEQA in that no environmental review was even contemplated for that aspect of the project until during the actual demolition when the commentators did a site inspection and discovered evidence of endangered and/or protected species on site, and brought such information to the attention of Housing Authority. The public will never know whether or not there was illegal ‘take’ of endangered/protected species during the demolition of the Felix Torres Camp buildings, but what is clear from written communications with the Housing Authority is their stated contention was that the contractor would have been liable for the illegal ‘take’.

This demonstrably limited understanding of the Housing Authority’s responsibility for complying with the laws of the State of California and those of the United States does not inspire confidence that this project is proceeding according to established standards of environmental review.

Having brought this situation to the attention of the grantors, it should not remain incumbent upon the public to force an internal audit of this morass; it would seem incumbent on the director of the Department of Financial Assistance or his superiors to follow up on a complaint such as this.

We clearly see and understand the financial incentive Housing Authority has in cooperating with the parties financially interested in securing the zoning changes proposed in the 2003 Planada Community Plan Update; the Planada Village was to be replaced with a zone for commercial development along Hwy 140, and the Felix Torres Camp is directly adjacent to a riparian waterway (Miles Creek) and is being actively sought for the residential development capabilities afforded by the proposed change to low density residential zoning.

Both parcels would appreciate multiple orders of magnitude in value and would represent an irresistible temptation to seek less valuable real estate on which to build replacement migrant housing with the already encumbered grant funding.

While we can appreciate the considerable potential financial benefit of this collaboration to Housing Authority, we can also clearly see conflicts with other applicable land use authorities of the State of California including tenets of the Cortese-Knox- Hertzberg Act of 2000, as it would apply to the provision of municipal services outside of an established SUDP; specific proscriptions under CEQA disallowing a public entity to select a preferred alternative based solely upon the affordability of the land in question; the ongoing environmental injustice being inflicted upon the displaced population; not to mention the near impossibility of evaluating the compliance of this proposed project or any like it with the hopelessly outdated Merced County General Plan.

The community has already suffered the deprivation of the 88 Felix Torres Camp units and has born for three years the added congestion of accommodating those returning migrants in the sparsely available low and very low-income housing. The local economy has suffered commensurately lack of workforce during crucial times of harvest during the last three years.

The public was informed by Housing Authority representatives that the decision to close and demolish Felix Torres Camp was a directive of the State of California, and under the Public Records Act we wish to inspect any written document corroborating that assertion, if such could be identified in the files of any of the above parties to whom this letter is addressed. It is our belief that the decision to close and then demolish Felix Torres Camp was rather retaliatory and punitive of the public who voiced opposition to the political and residential development interests who were clearly the intended beneficiaries of this collaboration.

The citizens of Planada participated in the federal NEPA review of this proposed project. Written comments regarding the draft EA (Environmental Assessment) have not been acknowledged or answered and the Housing Authority acting as its own lead agency has approved their NEPA review. We attach a copy[2] of the submitted comments to assist you in determining whether substantive information has been overlooked in the EA by the ‘Lead Agency’(Housing Authority of Merced County).

Irrespective of the relative weight given to public comment during the NEPA environmental review process, the Housing Authority has now contacted the Merced County Planning Department seeking CEQA review and approval of this disputed project.

CEQA requires that the Lead Agency (Merced County) examine all feasible alternatives to the proposed project, and that the scope of that analysis include all issues identified in the earliest initial study, including, in particular, the intent of the original funding source, and the setting in which those particular funds were encumbered. By completing the NEPA analysis of this project independently from the CEQA review, the Housing Authority has sought to limit the analysis of the environmental impact solely to their preferred alternative. This is both subtle and inappropriate.

Plaintiffs who sued Merced County over the inadequacy of the 2003 Planada Community Plan on behalf of those migrants displaced by the actions of the Housing Authority (closing the Felix Torres Camp in 2003 and demolishing it in 2005) have not abandoned their suit. In fact that suit is currently in 5th Appellate Court in Fresno.

Merced County’s recently disclosed plans to radically expand the SUDP boundary of Planada as part of a County General Plan Update, seek to circumvent and moot the efforts of the appellants.

There is clearly a nexus of growth pressures, lack of sewer capacity, declining economic opportunity, and poverty in Planada that demand a comprehensive environmental analysis. The migrant housing to be built with this funding (encumbered since 2003) is certainly a seminal component of Planada’s housing supply, and crucial in that it will be supportive of the actual agricultural labor force indigenous to the community.

Unfortunately, though, it has come to light that the Housing Authority has no intention of limiting residents of the proposed new Felix Torres Camp to farm workers and their dependents. The overarching intent of providing low-income housing in Merced County on which so many other government subsidized funding streams reaching Merced County tend to depend, would seem to provide an incentive for County Planning to limit the CEQA review of this project. We hope this scrutiny will persuade Housing Authority Executive Director Nick Benjamin and County Planning to honor the actual legislative intent of the OMS grant funding. We wish to somehow ensure that the proposed housing is actually going to replace both the structures and the context that were demolished at the original Felix Torres site. The conclusions presented to the public in the Housing Authority’s draft EA do not inspire confidence that the public’s expectations for this project will be realized.

It seems clear that more specific guidance from the State Agency with direct control over the expenditure of these funds is necessary. Without intending to jeopardize the funding for migrant housing in Planada, may we suggest that Housing Authority is within their authority to rebuild the Felix Torres Camp on its original site, and can do so without abusing Merced County’s land use authority or the public’s trust.

If, as we believe the County of Merced is the land use authority and Lead Agency for the CEQA review of the Housing Authority proposed project on newly acquired property, then we request and require that the Scope of this project be broadened to include the original site of the Felix Torres Camp and all of the previous public involvement and comment on this proposal.

Sincerely,

Lydia M. Miller – President Steve Burke,

San Joaquin Raptor/Wildlife Rescue Center Protect Our Water

Bryant Owens- Chairman

Planada Community Development Co.

Attachment: Draft EA Comments-2005

--------------------------------------------------------------------------------

[1] Housing Authority Board of Commissioner minutes

[2] Comments on Draft Environmental Assessment 2005

From:

Lydia Miller, President
San Joaquin Raptor/Wildlife Rescue Center
P.O. Box 778
Merced, CA 95341
(209) 723-9283, ph. & fax

Steve Burke
Protect Our Water (POW)
3105 Yorkshire Lane
Modesto, CA 95350
(209) 523-1391, ph. & fax

Bryant Owens
Planada Association and Planada Community Development Corporation
2683 South Plainsburg Road
Merced CA 95340-9550
(209) 769-0832

To:

Robert Lewis
Director of Planning and Economic Development
Merced County
2222 M Street
Merced CA 95340

Jon LeVan
Local Agency Formation Commission
Merced County
2222 M Street 2nd Floor
Merced CA 95340

Board of Supervisors
Merced County
2222 M Street 3rd Floor
Merced CA 95340

Brandon Friesen
Mayor
1416 C St.
Livingston, CA 95334

Monday, February 06, 2006

Ladies and Gentlemen:

It has come to our attention that the City of Livingston has authorized a private developer to install a 42 -inch sewer main connecting a 300 acre parcel along Magnolia Avenue near Westside Blvd, in a portion of unincorporated Merced County adjacent to but outside the SUDP of the City of Livingston.

This is clearly a ‘project’ under CEQA, and must be halted immediately and the City of Livingston must be enjoined and required to follow all the appropriate protocols for environmental review of a project of this nature. In addition we request and require the County of Merced Planning and Economic Development Department to assert its land use jurisdiction in this matter.

It is our understanding that the installation of these municipal services is a prelude to annexation of this 300-acre parcel into the City of Livingston. As such the entire project is premature and represents a clear violation of LAFCo of Merced County’s jurisdiction and statutory authority with regard to out of boundary service extensions in Merced County.

The City of Livingston’s mistaken authorization of this project has allowed grading and deep ripping on agricultural land in violation of the County of Merced’s Williamson Act Zoning.

The particular parcel must be removed from the Agricultural Preserve according to a prescribed process adopted by the County Board of Supervisors in 2000. This has not been done.

The City of Livingston has acted irresponsibly and precipitously in authorizing non agricultural land uses on land not properly under its legal jurisdiction: Livingston may not act as lead agency with regard to any aspect of this ‘project’ without providing the appropriate Notice of Exemption to the Governor’s Office of Planning and Research, The EPA at the federal level, the County and the Local Agency Formation Commission. No evidence exists that any such notice of exemption has been filed with any of the aforementioned agencies. If such notice has been approved at any level of the City of Livingston City Council level, these commentators challenge the validity of such notice and ask that it be invalidated.

Proceeding in the aforementioned manner places the City Council of Livingston in violation of California Government Code 65402 requiring mandatory referral of such a proposal to the county LAFCo, and the county Department of Planning and Economic Development. This has not been done. If this project is to proceed correctly, given the total acreage involved, such project would definitely qualify as a ‘major expansion’ of an SUDP. Such a designation automatically triggers the need for CEQA review and an EIR is mandatory. The City of Livingston has previously attempted to annex agricultural land by designating it as blighted. This tactic was rebuked by the County of Merced and eventually rescinded by the City of Livingston.

There is no evidence of any negotiations between the County of Merced and the City of Livingston regarding tax and revenue sharing agreement, and consequently there have been no noticed public meetings to discuss those agreements, in violation of state law, local ordinance, and Merced county’s current General Plan. The county of Merced is currently in the preliminary stages of updating its General Plan. The City of Livingston has not yet filed even a notice of preparation for expanding its SUDP. The proposed project is therefore premature in that the context for approving such a major expansion does not yet exist for either jurisdiction. There is no notice of preparation on file with the county or the state reflecting any such intention on the part of the City of Livingston. We therefore request that this project be stopped until such time as the appropriate land use authority can be determined and that jurisdiction be asserted.

The commentators’ request, under the California Public Records Act, to inspect any indemnification agreements entered into by this developer, Mr. Hostetler and Co., and/ or any of his associates, specifically Mike Gallo and Co., ‘holding harmless’ the City of Livingston for any legal challenge to the environmental review of the proponent’s (s’) project. We also request to inspect any documents showing any other agreements between the two named parties and the City of Livingston. We also request to inspect any documents pertaining to any agreements between local business or industry (specifically Foster Farms) with regard to connection to the proposed waste water conduit into the city of Livingston.

To the best of our knowledge, a Ms. Donna McKinney, possibly a consultant with the firm PMC, is acting as the director of Planning for the City of Livingston. Who is paying her salary? To whom does she report?

Another matter of concern is the fact that authorizing this sort of activity outside of an existing SUDP is a violation of the Subdivision Map Act. According to the documentation that has been inspected to date it appears as though the developer has requested pre-zoning for parcels within this 300-acre site, to which the 42-inch sewer main is to connect. This seems to be several steps premature for an annexation request. When will the public have an opportunity to comment on any identified significant environmental effects?

We have grave concerns over the lack of information concerning who will be allowed to access this new infrastructure. Can the City of Livingston WWTF actually serve the anticipated urban expansion? What funding source exists for other necessary municipal services? How does this proposed project coordinate with regional water and wastewater needs? If a municipality in Merced county becomes incapable of serving the WWTF needs of its customers and fails, does the responsibility for those services revert to the county? Can the county afford to assume that sort of infrastructure liability?

Have there been any Can/Will Server letters of agreement between the Livingston WWTF and this developer? Is a Will Serve letter valid in the demonstrable absence of capacity?

Given that this developer has a plethora of residential development projects in Merced County and elsewhere, and considering the abject indiscretion of the City of Livingston in lending its ‘approval’ to this developer (especially since the approval lacked jurisdiction or authority) ,we request that all development projects by this developer throughout Merced County and especially anywhere proximate to the City of Livingston or the surrounding unincorporated communities be red-tagged (administratively halted) until such time as the environmental review of each of those current projects can be reviewed for accuracy and compliance with the appropriate laws, codes mitigation measures and appropriate checklists, and until the public is assured that each project is under the inspection and review of the appropriate agency.

This hubris on the part of the developer coupled with the abject irresponsibility of those agents of the City of Livingston demands commensurate sanctions by the appropriate governing bodies and/or state agencies. We request that those authorized to do so pursue such sanction to the fullest extent of the law.

We appreciate your consideration of this information and request to be notified in writing prior to deliberations and/or actions pertaining to this information by each of the notified agencies. Regarding inspection of the documents requested above, we reserve the right to inspect any documents identified subsequent to the above request, prior to any copies being made. We will give specific instructions as to which documents we need copies of when they have been identified and are available for inspection. It is our understanding that each agency notified in this document is responsible to respond to our request, within the statutory time frame with any identifiable documents described herein.

Sincerely,

Lydia M. Miller, President Steve Burke
San Joaquin Raptor/Wildlife Rescue Center Protect Our Water

Bryant Owens- ChairmanPlanada Community Development Corporation

Cc: Interested Parties

“ With a paid lobbyist by their side, the group of two dozen people calling themselves the "One Voice Delegation" will meet with directors, cabinet heads and politicians in the capital today and Wednesday.” Chris Collins Merced SunStar Tues Feb-07-2006

Regular Meeting
TUESDAY, OCTOBER 18, 2005

Regular Meeting – 10:00 a.m.

48. Supervisor Kelsey - Approve the One Voice Program Membership Contribution of $16,982 for FY 2005/2006 and approve the necessary budget transfer. APPROVED AS RECOMMENDED AYES: ALL

Editor,

The One Voice Delegation walks like a political action committee and talks like a political action committee, it collects political contributions from its members and expends those monies on political special interests like a political action committee, except the One Voice Delegation hasn’t registered with the state of California as a political action committee.

According to the minutes of the October 18th 2005 Board of Supervisors meeting (Item #48), the supervisors unanimously voted to transfer $16,982 from the general fund to the One Voice Delegation for expenses in the 2005/6 fiscal years. This lobbying is therefor being subsidized, directly by county residents through taxes!

That money should be clearly recorded and identifiable as to where that funding comes from and how and where it is being spent. An accounting of how those funds eventually return any appreciable benefit to the unwitting taxpayer should be traceable at the end of the process. Without an accurate audit trail these benefits will not be possible to determine.

This audit trail will not even exist if MCAG is allowed to continue expending county general fund revenues without formally declaring its political motivations and complying with the laws regulating those activities.

It would be appropriate and prudent for this group to document all of its donors and expenditures insofar as the lobbying activities outlined in the Sun Star article represent the “consensus” of a very small and select special interest group from among the diverse population of Merced County. Though brash in the scope of its ambition, the One Voice Delegation cannot possibly believe that it represents the consensus of Merced County as a whole.

The rules under which a political action committee must operate are necessarily more stringent than the requirements imposed by the leadership of the Merced County Association of Governments. There are good and logical reasons for this kind of official supervision not the least of which is to avoid even the appearance of any conflict of interest.

While I strongly defend any political groups right to lobby for a cause, I take great exception to them doing so with my tax dollars if I happen to disagree with either their philosophy or their stated agenda. I happen to disagree that this groups stated philosophy would be achieved by their stated agenda.

I see a request for money to build a bypass for Los Banos, and to widen Hwy 99 and to build the UC campus yellow brick road, and I wonder how do any of these projects or funding alleviate poverty, unemployment or traffic congestion, for the people who actually live in Merced County?

I see an effort to regain access to gasoline taxes for road maintenance at the county level, yet I see a county administration dedicated to urban sprawl. Why should the state build or upkeep roads in Merced so that more people can commute from the Valley to jobs in the Bay Area? For that matter, why does Merced county think building better freeways through the county will alleviate the surface traffic congestion throughout the county?

I am not saying that lobbying the state for funding is wrong, although it does clearly highlight how ‘welfare dependant’ the administration of this county actually is, I rather intend to point out that the One Voice Delegation’s is acting as a political action committee and must submit to the same standard and regulations as any other similar organization.

Ms. Steelman, one of the MCAG facilitators interviewed for the SunStar article is indeed charming and adroit at her job! Having participated directly in the MCAG’s previous program ‘Partners in Planning’ I am painfully aware of the process through which the facilitators are able to steer a disparate group of ‘pre-identified’ stakeholders, to a predetermined consensus. The whole process is chilling in its efficiency, imbued with an indomitable sense of self-preservation and when all is said and done demonstrates as little concern with the input of the stakeholder as an Australian shepherd has with the concerns of a lone sheep.

Bryant Owens- Plainsburg (209) 769-0832

Toronto-based Brookfield Land Co., with offices in Roseville, honored state Sen. Jeff Denham, Dolt-Salinas, and Assemblywoman Barbara Matthews, Shill-Tracy, at a developer fete in Sacramento last night. The Canadian developers plan to build 13,000 houses between Merced and Atwater in the near future.

Booze, finger-food and campaign contributions were served.

Was Brookfield's local fixer, Cameron Doyel, authorized to offer the Dolt and the Shill emigration papers after their terms expire and Valley air quality reaches a level unhealthful for retired developer representatives in the former state Legislature?

http://www.mercedsunstar.com/local/story/11777657p-12497098c.html

Taking an advertising tip from the nation's failing auto industry, which just laid off another 60,000 workers, this Sacramento-area home builder is running a house-product sale reminiscent of a year-end car sale or the weekend radio ads for Okie Paul and Mary's furniture sales fifty years ago in Sacramento. Only the numbers appear to be bigger.

Best news of all -- this fine, genuine, California-built developer culture has come right here in Merced, too. Ain't we big now! Ain't we got klass?

There's some differences and similarities between subdivisions and car lots that might be worth thinking about. When you finish building and selling your house products on your subdivision, you get another lot and do it again. When the car dealer finishes selling last year's models, he gets next year's models on the same lot. It's subtle, but it's there.

But your car lot and your subdivision work together because your new residents bring and buy cars.

But this gets into your air, your water, your traffic and your public health and safety problems -- not to mention what you're doing to the wildlife -- which are all way too subtle thoughts for your genuine California developer culture. Your genuine California developer culture keeps it real simple: it's all about their profits.

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The Sacramento Bee