Tomato Entrepreneur Avoids Government Squeeze

If California regulators thought tomato baron Chris Rufer would roll over and quietly pay a $1.5 million fine then they picked the wrong guy.

The fine was among the 10 largest (No. 8 actually) issued in the past 17 years by the Central Valley Regional Water Quality Control Board, one of nine such boards in California. Regulators claimed Rufer’s Morning Star Co. expanded wastewater discharge ponds at its Williams plant in Colusa County without telling them. Rufer countered that the board was adequately informed and won the case.

Referring to $750,000 in engineering and legal expenses, Rufer said by phone on March 24 “It wasn’t exactly a win but it was better than not winning.”

Regulations on California small businesses cost the state $493 billion, according to a study published in 2009 by two California State University Sacramento professors. The total cost of regulation was $134,122 per small business in 2007, the study states.

When asked what regulation has cost him over the years, Rufer replied “nothing.” He elaborated by saying that all costs to businesses end up being paid by consumers through increased prices of goods and services. Lower-income consumers get hurt the most, Rufer said.

“All taxes are regressive,” he said.

Although he does not object to all regulation, Rufer’s position is congruent with the view expressed by Ludwig von Mises, co-founder of the modern Austrian School of Economics, in his book “Omnipotent Government,” especially in asserting that the more government regulates the more it becomes unable to fulfill its promises.

“Even narrow-minded people would realize that economic laws are inexorable, and that government interference with business cannot attain its ends but must result in a state of affairs which – from the point of view of the government and supporters of its policy – is even less desirable than the conditions which it was designed to alter,” Mises wrote. (“Omnipotent Government”, p. 72, Libertarian Press Inc., 1985).

To stay the water board case ignited the passions of Rufer, a longtime donor and member of the Libertarian parties of California and Sacramento County as well as the national party, would be an understatement. He posted a 13-page document, dated March 26, 2016, to Morning Star’s website that speaks to the specifics of the case as well as his overall economic and social philosophy. He called the claims cited in the fine “baseless.”

Following the levy in February 2016, Rufer went to court in July then got the board to drop the fine in late February of this year. But it’s not over completely. The board has the matter on its April 6-7 meeting agenda although that discussion is unrelated to the fine, according to Patrick Pulupa, a lawyer for the board.

What remains, as far as the government is concerned, is getting the plant’s permit up to date, Pulupa said. The penalty was dropped because of evidence “undiscovered” at the time of the fine was issued, he said.

“We’re trying to put this behind us,” Pulupa said. “We’re not blaming Morning Star or anyone else.”

The network of monitoring wells that track groundwater quality near the plant is being “re-evaluated,” said Miryam Barajas, a spokeswoman for the State Water Resources Board. 

The fact that Rufer is still at the head of his $1 billion-a-year sales company 47 years after its founding is part of the reason for years of rocky relations with the water board, he said.

“They don’t like me,” Rufer said. “They’re not used to dealing with owner-operators. They’ve gotten used to dealing with corporations since most of the small business people are being run out.”

Information and data used to justify the fine against the tomato processing company was cherry-picked, Rufer said.

“What really seems to have happened here in this whole case is that the board staff did not do their homework, did not understand some of their own regulations,” he wrote. “So they ‘threw (sic) the book at us,’ and picked out technicalities which mislead the public to think that we are polluting. Now we are dealing with the ramifications of those faulty conclusions.”

Every company, regardless of size, suffers when government makes accusations, Rufer noted. The water quality board did not issue a press release about revoking the fine.

Rufer, who started his business in 1970 as a one-truck operation hauling to other canneries and has grown it into one of the largest vegetable processors on the West Coast, is rare in the business world including having the wherewithal to withstand a multi-round battle with the government.

“I know that he prevailed, though it cost him quite a bit to do so,” said Ted Brown, chair of the Libertarian Party of California. “Most people who fight government regulatory agencies don’t have the resources to keep up the fight like Chris did, which is a shame. Good for him.”

The case is making Rufer something of a hero nationally to limited government types that know of his plight. Rufer is setting a good example for business conduct, said Dan Reale, chairman of the Libertarian Party of Connecticut.

“He’s just doing his job – and if we all did, things like what happened to him would be very improbable,” Reale said. “I personally hope he sues the board members individually for abuse of process.”

Rufer’s case statement, sprinkled with business and social commentary, shows a man confident that open-minded people will side with him.

“The vast majority of people, especially acting as businesspersons, never say anything when they are wrongly picked out by a government agency for fear that the agency personnel will come down hard on them,” he wrote. “I fully expect that, but I am confident that independent folks will see that we carry out our operations in a respectable manner and I am very open about exhibiting that.”

The water board was aware of Rufer’s Internet manifesto but it was not entered into evidence during the proceedings that lead to the fine, Pulupa said.

After writing that the 2015 expansion of the plant lead to significant percentage decreases per ton in well-water consumption, washwater disposal volume, and electricity use, Rufer moved on to his larger social philosophy.

“While most people seem to believe that ‘jobs’ are the main issue for the economy – they are not…The key objective of commercial enterprise and ‘the economy’ is to produce goods and services to meet real human desires (which drives revenues), and at the same time, conserve materials and human resources…The decreased human work requirement to produce tomato products, in our case, allows people to work on producing other goods and services, providing a higher standard of living for everyone and greater potential for human well-being.”

The Williams plant is one of three owned by Morning Star and goes under the name Morning Star Packaging Co. -- Williams. It was built in 1995 and processes 630 tons of tomatoes per hour, creating 200,000 pounds of tomato paste during that time, the company website says. Morning Star handles more than a quarter of all tomato processing done in California.

Selling its products in 55-gallon drums and 300-gallon bins, Morning Star’s products are used as ingredients in nationally known brands of ketchup and spaghetti sauce including Heinz and Hunt’s.