(Bloomberg) — California lawmakers are ratcheting up calls for “urgent action” by the US Justice Department to investigate potential water crimes as the state battles “dire” supply shortages and drought.
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The bipartisan group told US Attorney General Merrick Garland that, along with ongoing concern about possible “drought profiteering” and water theft, worry is building that “fraud and market manipulation” is constraining already severely limited water availability.
“We believe this manipulation is causing water prices to spike, and may soon cause a spike in food prices,” four state lawmakers including Democratic Senator Melissa Hurtado and Republican Assembly Member Suzette Valladares wrote Wednesday in a letter to Garland.
Water disputes in California date back to the gold rush in the mid-1800s as early settlers sought to secure water rights in the arid region. The struggles in Los Angeles were made famous in Roman Polanski’s 1974 movie “Chinatown.” Today, with the region facing the worst drought in 1,200 years, the state is contending with unprecedented supply cuts, sending prices for water needed for crops and electricity to record highs.
California water prices hit an all-time high of $1,233 an acre-foot Wednesday on the Nasdaq Veles California Water Index, which tracks the average price of water-rights transactions 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 also is taking severe toll as the state’s water districts begin building the framework for new underground water usage rules. That effort is a potential boon for water consultancies as local officials try to get a handle on crucial water data needed to gird the regulations.
“California’s water history 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,” lawmakers including Democrats Dave Cortese and Freddie Rodriguez said in the letter.
Back in May, state senators Hurtado and Cortese sent a letter to the Justice Department calling for an investigation of potential drought profiteering in western states.
The Justice Department didn’t immediately respond to requests for comment.
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