The Old West is small potatoes in the new economy

 

Local and state governments are no match for the massive corporations moving in on the West's open spaces




From the countryside and small towns of southeast Idaho, they came by the hundreds on late August nights to register their anxieties and frustrations with the Public Utilities Commission. Angered and distressed by congressional policy to deregulate every resource and industry, and then move them into the hands of the highest bidder, they feared their rural electricity would soon be controlled from a boardroom halfway around the world; in fact, in rain-drenched Glasgow, Scotland.


Railroads, banks, airlines, telephones - bad enough. But now that most essential of services for communities dependent upon irrigation pumping was about to be sold for $7 billion to ScottishPower. The aggressive company with 27 subsidiaries boasted an annual rate of return on equity of over 25 percent for each of the past five years.


Congress and the Clinton administration were threatening to fully deregulate electricity prices, removing even the limited authority of state public utility commissions to protect consumers. If electricity were deregulated, could Western water be far behind?


A dozen years earlier, the PUC had approved the sale of the local utility, Utah Power and Light, to PacifiCorp, headquartered in Portland, with promises of better service and lower rates.


PacifiCorp promptly closed local offices and cut services; when outages became more frequent, they had to be reported by phone to Salt Lake City or Portland.


There, the dispatcher demanded the street address of the idled irrigation pump located 15 miles from town, not seeming to care that a delicate crop of potatoes can be lost in a summer heat wave if the power is off for more than a few hours.


With Washington, D.C., pitching deregulation and some states quickly responding, PacifiCorp gobbled up what it could in the American West, then headed to England, where it lost millions failing to buy the huge British Energy Group.


Wounded, PacifiCorp began selling off assets, which made it a prime target for ScottishPower, itself privatized by the British government only in 1991.


Irrigation would represent 16/100 of 1 percent of ScottishPower's business. How, asked the farmers and ranchers, could rain-soaked Scotland comprehend the demands of irrigation in the high Western desert of North America?


The audience did not sit quietly. At four hearings, over 1,200 people showed up, 113 testified, and 110 said no! Had they not been mostly good, devout Mormons, they would have said Hell, no!


One hundred and fifty arid miles to the west, the biggest-is-best policy was shocking the few residents of Owyhee County. Owyhee County has little water for irrigation and vast landscapes of remote, mostly public grazing lands. It takes up 7,666 square miles in the southwest corner of Idaho, bounded by the Snake River on the north and Nevada on the south, with a population of less than 10,000.


In the summer of 1998, a limited liability partnership, or LLC, named Sawtooth Farms, arrived at a meeting of the Idaho Land Board in Boise with lobbyists, administrators from the University of Idaho and the apparent support of several high-level state elected officials. They came to pitch a plan to produce 5 million hogs per year.


To do this, Sawtooth Farms would need buildings for the hogs, pits for the manure, and rendering and slaughtering plants on almost every state-owned section 16 and 36 in Owyhee County. Their proposed facilities stretched some 35 miles east to west and 48 miles north to south. No one had bothered to tell local officials or ranchers who grazed the lands.


The county was already experiencing unusual growth. The Air Force and Idaho elected officials, with support from the air base community of Mountain Home in neighboring Elmore County, had just pushed through the Congress a major expansion of the bombing range into the Owyhee-Bruneau Canyonlands along the Idaho-Nevada-Oregon border.


The Simplot Company was expanding its cattle-feeding operations near Bruneau, along the north side of the Snake River, to 450,000 head per year - the largest in the world. To the chagrin of Idaho grain growers, Simplot had installed a giant system to unload 100 car Union Pacific unit trains of Midwest corn, one car every six minutes.


News accounts indicated extra corn would be sold into the local grain markets.


Envirosafe, a hazardous-waste disposal company located on an old nuclear missile base in the county, scours the nation, if not the world, for product. Despite the business it is in, Envirosafe has been a good neighbor. But the company needed new business and was contracting to accept large amounts of very low-level, federal radioactive waste that fit nicely through a loophole in existing regulations. The move only came to light when a Utah competitor for the same waste blew the whistle on Envirosafe.


A longtime resident of Owyhee County penned a telling letter to the editor of the Idaho Statesman in Boise. Her county, she said, is viewed as remote, rural, unpopulated and beautiful. It has one parking meter along the mostly empty street in front of the courthouse in Murphy.


But what in the world was happening? It is now home to the nation's largest cattle feedlot, one of the country's largest hazardous-waste disposal sites, a greatly expanded bombing range, and targeted to host the world's largest hog farm.


For the moment, the area has dodged some of the bullets aimed at it. Sawtooth Farms backed off when the Bureau of Land Management allowed as how it would be necessary to change its land-use plans and do an environmental impact statement to accommodate the 140 miles of new roads which would have to cross federal lands to connect the pieces on state sections.


Sawtooth, now called Big Sky Farms, bought options on land east of Idaho Falls, but withdrew after it hit high water tables and community opposition. The corporation is now focused on an area east of Burley, in south-central Idaho, where it has bought 4,000 acres of land from Simplot Co., and reduced the numbers from 5 million to 1 million hogs per year.


But the proposed hog operation is just one of several large agricultural projects in the wings. A 50 million bird-per-year broiler operation is in the design phase in Cassia County, and 13,000-head dairy operations are under construction in other south-central locations.


The power situation is somewhat under control. Due to strong opposition to the merger, Scottish and PacifiCorp negotiated binding contracts to protect junior water rights on the Bear River system and on the Henrys Fork of the Snake River. Because the Bear courses through Utah and Wyoming, Idaho invited those states to sign the agreement, and they have.


This is helpful, but it does not change the larger picture. Owyhee County may be an extreme example because so few people live there, but across the Intermountain West, the new economy is transforming rural areas.


Local and state governments are no match for the massive, concentrated increase in wealth; the international movement of huge blocks of capital; unfettered markets; and the limited liability corporations or partnerships which facilitate accumulation of large blocks of capital, provide tax advantages and reduce sharply the liability of ownership when things go sour.


Just how bad things can go in this new environment can be seen by looking across the border to Montana. Two years ago, its state Legislature responded, as usual, quickly and favorably to the requests of Montana Power Company: It deregulated electrical energy.


With shocking speed, the freshly deregulated utility sold all of its generators and water rights.


Farmers of 200,000 irrigated acres and residents of over 200 communities saw water rights they had always thought they owned transferred to an international energy giant in Pennsylvania. These critical waters, Montana officials discovered too late, were junior in time to hydro rights owned by Montana Power, but now held by "Penn Global."


A regulated Montana Power had never called in those rights because the company had a stake in the future of Montana. Under deregulation, the new owner can decide to march only to the financial drums of stockholders.


Thanks in part to Montana's dismal example, Idaho was able to protect water users at risk in the ScottishPower merger.


The landscape is transforming at a stunning pace. Rural counties of the Intermountain West have been slow to adopt even basic planning and zoning. Legislators and county commissioners are reluctant to regulate local farmers, ranchers and businesses. They have a difficult time just saying "No!" We don't easily shift our mental and political gears to such large numbers and profound impacts. With such scale, the decisions are often mutually exclusive and irreversible. The odor and aura of a million hogs will preclude, far into the future, most other options for economic development.


It is a full-court press in the rural West - a catch-up game of enormous stakes.


Copyright © 2000 HCN and Laird Noh