All In with Chris Hayes, Transcript 07/16/15

(BEGIN VIDEOTAPE) CHRIS HAYES, MSNBC HOST (voice-over): Tonight on ALL IN -- UNIDENTIFIED MALE: We are conducting this as an act of domestic terrorism. HAYES: A mass murder in Tennessee. Four marines killed, the alleged gunman is dead. Tonight, we`re learning more about the motive. We`ll go to Chattanooga for the latest. Then, the verdict in the Colorado theater shooting is in. We`ll go to Aurora for the latest. Plus, the president makes history inside an American prison. BARACK OBAMA, PRESIDENT OF THE UNITED STATES: These are young people who made mistakes that aren`t that different than the mistakes I made. HAYES: And, "ALL IN America: Water Wars". There is a knockdown, drag-out fight over bottled water, and we got inside the bottling plant. Why should you be able to do this in the midst of this resource stream? ALL IN starts right now. (END VIDEOTAPE) HAYES: Good evening from Castaic Lake in California. I`m Chris Hayes. We`re here as part of our week-long series on the crucial water shortage in this state. But we begin tonight with breaking news. This morning, a gunman apparently acting alone opened fire at two military offices in Chattanooga, Tennessee, killing four marines. The gunman was also killed. That alleged gunman has now been identified as 24-year-old Mohammod Youssuf Abdulazeez. Officials say he is a naturalized U.S. citizen born in Kuwait. According to the "Chattanooga Times Free Press", this is a Bobbing photo of Abdulazeez from April, 2015, DUI arrest. At about 10:30 this morning, shots rang out at a recruitment center at a strip mall where five branches of the military reportedly have adjoining offices. Later, seven miles away, shots were fired at a Navy and Marine Corps Center. It is there that four marines were killed, along with the shooter. Three other people were also injured in today`s shooting. President Obama was briefed on the incident and spoke just hours ago. (BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: At this point, a full investigation is taking place. The FBI will be in the lead, working closely with local law enforcement. We`ve also been in contact with the Department of Defense to make sure that all our defense facilities are properly attentive and vigilant. My main message right now is, obviously, the deepest sympathies of the American people to the four marines that have been killed. It is a heartbreaking circumstance. (END VIDEO CLIP) HAYES: Joining me now, NBC News correspondent Gabe Gutierrez. Gabe, how much do we know about how this unfolded, and at what point law enforcement or marine or navy officials knew what was happening? GABE GUTIERREZ, NBC NEWS CORRESPONDENT: Well, Chris, good evening. Yes, that is the big question right now, exactly when -- there was no advance warning of this, we`re told. Witnesses here on the scene -- we`re here at the strip mall you mentioned. It was the site of the first shooting scene around 10:35 in the morning. Witnesses say that they heard a quick succession of loud noises, they weren`t even sure they were gunshots at the very beginning. They thought it was some sort of construction work or something that was making all that noise. But as you mentioned, the shooting started here. There were more than 25 rounds that were fired at this location. Then the gunman moved on to another location seven miles away, that reserve center, and that was where four marines lost their lives. Amazingly at this location everyone inside the building survived. There was at least one officer -- or one military officer that was wounded in the leg. Now, as you can see behind me, the FBI is now on the scene. They`re taking the lead in this investigation. The big question right now is what exactly the motive is. Federal officials, as you reported, are treating this as an act of domestic terrorism, but they`re looking to see if he may have been inspired by someone outside the country perhaps. At this point, we just don`t know. This evening, officials have been going through his home near Chattanooga to see what they can learn from here and they`ll be going through who he spoke with in the last couple of weeks, who -- what type of e-mail communications he may have had. So, all those are questions right now that we`re hoping to learn more about -- Chris. HAYES: Gabe, so you`re saying that first location, this was essentially it sounds like a drive-by. He did not -- we don`t know, but it appears he didn`t even get out of the car, but a huge amount of gunfire was aimed into that center. Miraculously no one was killed there. Then, a second location. If nothing else, it does seem at this point, at this early point, this was highly targeted in terms of where the alleged gunman was going. GUTIERREZ: Well, it would appear so, Chris. I mean, he targeted two military offices. Those were his two targets. There were no shots fired in any other locations. And this -- again, he fired more than 25 shots at this location alone and then moved on to that other location. So, yes, federal officials are treating this as this was a targeted mass murder. He was apparently trying to inflict great damage at these military offices and he succeeded, unfortunately. And right now, the big question is, why he did so -- Chris. HAYES: I imagine, Gabe, there`s a tremendous sense of shock in Chattanooga. We saw some of the local official its talking, and tremendous grief among members of the marines and their families there. We do not know yet the names of those who were killed, but there`s got to be just a tremendous sense of grief washing over those folks down there. GUTIERREZ: Immense grief here. It`s a very somber scene here at this parking lot. The other scene is blocked off. But local officials here are just devastated by this. And people from this town, we`ve been seeing them come to the scene throughout the afternoon, throughout the evening, and there`s a small makeshift memorial with lots of American flags. People here in this area -- you know, this was a targeted attack it appears on the military. And these are people that, you know, serve this country. And it appears somebody targeted them for that. And this community is devastated. There`s a lot of questions right now about why, how this could have happened, and as we learn more about that over the next coming days, what we can tell you right now is there are several prayer services scheduled for tonight and many people around here are grieving -- Chris. HAYES: All right. Gabe Gutierrez, thank you so much for that reporting. Joining me now by phone is Bassam Issa. He`s the board member of the Islamic Society for Greater Chattanooga. Mr. Issa, I imagine you`re reeling in shock at this as well. BASSAM ISSA, ISLAMIC SOCIETY FOR GREATER CHATTANOOGA (via telephone): Yes, we are. Terrible shock. We as Americans, as Tennesseans, as Chattanoogans, as Muslims of Chattanooga, we are totally shocked, in full disbelief. We strongly condemn this heinous act and cowardice act, and we reach out to the families of our beloved marines. They`re our sons too. We probably see them in the streets all the time, and we do feel this as our own loss, and we are very, very furious for what happened. HAYES: I know, Mr. Issa, that you`ve conducted a lot of tremendous interfaith work down there through the society in sort of reaching across different kind of religious lines. Chattanooga -- how do you see Chattanooga reacting to this as the sort of facts come to be known? ISSA: Chattanooga is our city. Most of us have been living here for tens of years. I personally have been living here for 41 years, since I was young, 19 years old. And Chattanooga has been exemplary. Chattanoogans have helped us out through the process when we built the Islamic center, support from local media, support from all the churches, and the Jewish community, and we have interfaith relationships and meetings all the time, and gathering at our place or their place. They let us park there in their church, parking in holidays in their churches, we just -- it`s just a wonderful city. And this heinous act has just put a very dark spot on what happened. But I believe that we will go through the process together as Chattanoogans, as Americans, and we`ll overcome this domestic terrorism. What happened we don`t know, but basically we`re just shocked. We don`t know what else to say right now. HAYES: All right. Bassam Issa, thank you very much for joining me tonight, I really appreciate it. ISSA: Thank you very much. HAYES: All right. Joining me now, Karen Greenberg, director of the Center on National Security, and Mark Fullman, national affairs editor for "Mother Jones". Karen, there`s been some reports about possibly -- "The Daily Beast" said a possible blog post from the alleged shooter that was sort of religious in nature, although not violent in any way. To take a step back for a second, because we don`t know the specific details here, although obviously the targeting is pretty obvious, it appears. The fear of people acting alone and using guns has been something law enforcement has been talking about quite a bit over the last few months. Is that right? KAREN GREENBERG, CENTER ON NATIONAL SECURITY: That`s correct. And they have been talking about it largely in the context of ISIS-related cases, but not solely ISIS-related cases. So -- HAYES: And we also have -- GREENBERG: Go ahead. HAYES: We also have -- if you can sort of walk us through what the kind of scope of those cases have been, these kinds of lone wolf plots, whether thwarted or not, independent of what we`re just now learning about today`s shooting. GREENBERG: Right. What`s interesting about today`s shooting in the larger context of these lone wolf attempts that the FBI has disrupted or that they think were about to happen or those that have happened is that there is -- there seems to be an age around 20 to 25 of individuals who get inspired for whatever reasons to partake in a one-off violence that is gun- related rather than explosive-related, as we saw in the past with al Qaeda type of crimes, that is aimed at military officers, at law enforcement and other officials, whether they`re federal or state officials. So, you`re seeing a crossover of the kinds of things that ISIS is asking for and what domestic terrorism has often looked like, which is attacks not on civilians, but attacks targeted against these officials at a variety of different levels. So, the discomfort here is that part of this, the look of this, without knowing the narrative and without knowing the exact specifics, is that the age, the target seems to be what we`ve been seeing from the ISIS- related cases, which raises the larger question of, what is this really all about in the context of American society? If you look at the ISIS cases, there`s 62 incidences since the past 15 months. What you will find is that they are not really profileable. They are not from the Middle East, they are not of Arab descent for the most part, they are individuals, 80 percent of them are American citizens. Only 10 percent of those are naturalized American citizens. They are of all colors. They are of all religious backgrounds. And so, if this is a much larger and profound problem that raises questions about the vulnerability of our youth to a variety of messages and to guns that allow them to express their anger in a context that seems to be increasingly destabilizing for them. HAYES: Mark, you`ve covered mass shootings and obviously in the case of the last few attacks, even the one in Canada, the thwarted attack happened, the Pam Geller event, these were not explosives, they were not large conspiracies that involved a large number of people attempting to do something logistically complicated, like procuring fertilizer or something like that. Guns have been the implement of choice, whether it`s Dylann Roof in Charleston or the attack today. MARK FULLMAN, MOTHER JONES: That`s right, Chris. You know, we`re seeing the same thing unfold today that we`ve seen so many times recently. I think if we set aside the ideological motivation, what`s interesting here is that, as Karen said, you do have a number of things that seem to fit a familiar profile, and yet there is no way to profile the people that do this. But there is a common denominator. You know, I`m struck today thinking about this is a day where we`re getting a guilty verdict in the Aurora mass shooting three years ago. The massacre in Charleston, South Carolina, is still fresh on everyone`s minds. There`s still evidence emerging in that case. Now we have this attack today in Chattanooga. And, you know, in some ways they appear to be different in terms of motivation, in terms of specific context. And yet, it`s all young men who carry these attacks out and they all had really powerful firearms. That is a common denominator in all of these kinds of attacks that we have been seeing, which have been increasing in recent years in the United States. If you look at the data, we`ve studied a lot at "Mother Jones", and there is a distinct increase in this type of violence going on in our society now. HAYES: Karen, is there any ability when you`re talking about an individual just by himself, I think of Dylann Roof, who it apparently was kind of -- had become part of this Internet community of white supremacists, but it`s unclear whether there was anyone else. It appears he was just alone. Is -- how able are authorities to interrupt something that a person, an individual takes on by themselves if there`s no conspirators, no one else they`re plotting with? GREENBERG: You know, it`s increasingly difficult, and that`s what today`s incident really shows, because the FBI is not un-attentive these days to the possibility of shooters. And so, what we`re learning now, I think, is that everybody is going to have to pitch in as constructive a way as possible. That law enforcement can only bear a part of the burden when these individuals turn towards criminal activity or a desire for criminal activity. But for the most part, this puts a tremendous burden on community services, on parents, on social services to help individuals so that they are dealing with some of these issues before they get to the point that law enforcement has them on their radar. HAYES: Mark, could you imagine a politics around guns that is different if they are seen increasingly as essentially the tool by which these kinds of attacks are implemented? FULLMAN: It`s an interesting question, Chris. You know, I think recently we published a major investigation on the costs of gun violence, which is -- you know, normally we look at these tragedies through the lens of tragedy, of human loss, and it`s profound, it`s devastating. You know, everyone is expressing shock again today. But, you know, if you look at the costs of these events economically, they`re huge too. I started to wonder recently if that would change the conversation. If there`s a growing fear that this is happening related to international affairs with the wars in the Middle East, perhaps that changes the way you think about it, people think about it. But on the other hand, we know how just incredibly entrenched the politics of this issue are, and it`s -- you know, it`s also difficult to imagine people really starting to have a more open-minded debate about this in terms of the national discussion around gun regulations. HAYES: Karen Greenberg and Mark Fullman, thank you so much. GREENBERG: Thanks. HAYES: Still ahead, there is news tonight from Aurora, Colorado, as Mark just mentioned, where a jury renders verdicts in the murder trial of the movie theater shooter, James Holmes. Plus, another historic moment in the Obama presidency. This time he does it with bipartisan support. Also, there`s new polling tonight showing Donald Trump pulling away from the Republican field as he starts to viciously attack them on Twitter. And later, the latest from "ALL IN America", I took a look at one of the most controversial products in drought-stricken California, bottled water. Stay with us. (COMMERCIAL BREAK) HAYES: It has been a week since the contentious debate in South Carolina which ended with the confederate battle flag being taken down from the state house grounds in Columbia, but for some Americans the issue is not over. Take a look at the scene which greeted the president of the United States last night outside his hotel. A small group of protesters waving large Confederate flags. The display was quickly denounced by officials in Oklahoma, including Republican Representative Tom Cole who said in a statement, "I was shocked and disappointed by those who showed up to wave Confederate flags soon after President Obama arrived in Oklahoma. Their actions were not only disappointing but disrespectful, insensitive and embarrassing to the entire state. No president should ever be confronted by such behavior, especially when the purpose of the visit was meant to celebrate and recognize some of our state`s greatest achievements." More on that historic visit coming up. (COMMERCIAL BREAK) HAYES: A jury late today found James Holmes guilty of multiple counts of first-degree murder in the July 2012 shooting rampage at a midnight screening of "The Dark Knight" movie in Aurora, Colorado. Twelve people were killed, 70 more wounded. Holmes` lawyers had acknowledged that their client carried out the attack but Holmes pleaded not guilty by reason of insanity with the defense citing his delusion that each person he killed would increase his self-worth. Prosecution argued that Holmes understood that what he was doing was wrong and pointed to evidence that he had meticulously planned the attack. Holmes could now face the death penalty for his crime. Joining me now from outside the Arapahoe County Justice Center in Centennial, Colorado, MSNBC correspondent Scott Cohn. Scott, the jury basically didn`t have to decide if, but why essentially. If this was someone who essentially knew the difference between right and wrong could understand what he was doing. How is that case made? SCOTT COHN, MSNBC CORRESPONDENT: Well, the case by the defense was made in sort of clinical terms, much different from the prosecution, which played to the jury`s emotions throughout its case. The defense calling the psychiatrist who basically -- who literally wrote the book on schizophrenia to talk about how Holmes was in the throes of mental illness that went back to a suicide attempt when he was 11 years old. And the idea was that despite all of the planning that he put into it, that everybody acknowledged he put into it, that that too was a symptom of this mental illness, of not knowing right from wrong, and that was what was controlling him. Obviously, the jury didn`t buy it. HAYES: Yes, the prosecution`s case rested very heavily on that planning as a means of essentially them trying to show that he knew what he was doing. What was that case like? COHN: Well, that was just that, and there was so much from his notebook to the fact that all of his purchases of the weapons and the explosives and everything that he did, the fact that he armed -- he armored himself, dressed in armor to avoid being killed himself when he carried out this attack, to the calm way he went into -- he bought a ticket, went into the theater, made the display of sort of using a cell phone to get to the door that he then ultimately propped open so he could come back in armed and open fire almost exactly three years ago. It was so meticulously planned, the prosecution argued, that this was someone who did know the difference of right from wrong and that`s obviously what the jury sided with. HAYES: The reason this trial took so long to actually go to trial was because of a series of legal battles over whether he was fit to stand trial. Does the defense now have recourse in terms of appeals on the decision that he was in fact fit? COHN: Well, we don`t know yet what the grounds for appeal will be, but it`s a fair bet there will be lots of them. Colorado does not have much of a record of carrying out executions, only one since the 1970s, and so, it`s clear that Holmes` ultimate fate may not be known for a while if the jury decides to go ahead and order the death penalty. That sentencing phase begins next week. HAYES: And we now move to sentencing phase to decide that. Scott Cohn, thank you very much. Appreciate it. COHN: Sure. OK. HAYES: Still ahead, President Obama visited a federal prison today to get a firsthand look at the rate of incarceration for nonviolent criminals. That`s next. (COMMERCIAL BREAK) (BEGIN VIDEO CLIP) OBAMA: There are people who need to be in prison, and I don`t have tolerance for violent criminals. Many of them may have made mistakes, but we need to keep our communities safe. On the other hand, when we`re looking at nonviolent offenders, we have to reconsider whether 20-year, 30- year life sentences for nonviolent crimes is the best way for us to solve these problems. (END VIDEO CLIP) HAYES: Today, an image never before seen in the history of the country, the president of the United States inside a federal prison. Barack Obama became the first sitting president to do that today, touring El Reno Federal Correctional Institution in Oklahoma. After meeting with inmates, the president seemed to reflect on a life that could have been, referencing his own experiences with marijuana and cocaine when he was much younger. (BEGIN VIDEO CLIP) OBAMA: These are young people that made mistakes that aren`t that different from the mistakes I made and the mistakes that a lot of you guys make. The difference is they did not have the kinds of support structures, the second chances, the resources that would allow them to survive those mistakes. (END VIDEO CLIP) HAYES: Today`s visit was part of an effort to further highlight the president`s agenda of criminal justice reform, which the president laid out in a speech to the NAACP on Tuesday, a day after he commuted the sentences of 46 nonviolent drug offenders. It`s kind of hard to imagine that 20 years ago, a Democratic president pushing to shorten sentences and reduce incarceration would feel that he had the political room to do it. But now, it seems that having the world`s largest prison population, full of racial discrepancies, is increasingly seen as a policy failure, even as a source of national shame. There seems to be surprising support from both Democrats and Republicans to do something about it. (BEGIN VIDEO CLIP) REPORTER: Bipartisan bill -- Congressman Sensenbrenner and Congressman Scott about criminal justice reform, will you allow that to move forward in your House? REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Absolutely. REPORTER: So you want that bill on the floor? BOEHNER: Yes, I`d like to see it on the floor. We`ve got a lot of people in prison, frankly, that really in my view really don`t need to be there. It`s expensive. The housed prisoners, sometimes, frankly, some of these people are there under what I would call flimsy reasons. And so I think it`s time that we review this process they have and I`m looking forward to putting these recommendations on the floor. (END VIDEO CLIP) HAYES: Joining me now, Anthony Graves who spent 18 years behind bars for murder. In 2010, all murder charges against him were dropped and he was released from jail. He was formally exonerated in 2011. Now he`s working for the city of Houston to help prevent wrongful convictions. Mr. Graves, the image today of the president in that prison was very striking and I was actually surprised to learn that he was the first president to make this kind of visit. What did you make of the symbolism of this visit? ANTHONY GRAVES, CITY OF HOUSTON: I think it`s time. I mean I think it`s time that it goes all the way to the top in terms of the concern, because we do have a lot of people in prison that shouldn`t be there. We have a lot of people in prison that`s mentally ill. We have a lot of people in prison just because they didn`t have any resources to afford the justice that we initiate in this country. So I am -- I am definitely proud of my president. I`m excited to see that he is pushing for reform and I`d like for him to continue. HAYES: Part of what was striking about the image is there was a period of time in the country`s politics when they were the most kind of angry about crime and criminals in which it was very easy and very cheap for politicians to dehumanize the people in prison, to call them monsters or superhuman. And you`re someone who spent a lot of time around prisoners. And what today seemed to be was in some ways about humanizing them. What do you think people don`t understand about the folks that are in prison? GRAVES: That they`re someone`s child, they`re someone`s father, they`re someone`s brother, they`re someone`s sister, they`re someone`s mother and they made a mistake. I mean a mistake for five minutes of your life shouldn`t sum you up to be a bad person. And it seems like in the system that`s what we do. We take a five-minute mistake and we sum them up to be a monster after that. And I just think it`s unfair. HAYES: There`s a lot of people watching this who say that five-minute mistake might have resulted in something horrible for someone else -- injury, death, a loss of something, and that`s going to stay with them for life. What do you say to folks that have that response, particularly when that ends up being so much of the emotional core of this debate we have about crime? GRAVES: I say that our system shouldn`t become a criminal just because we`re trying to arrest and convict a criminal. Our criminal justice system has now become criminal. I mean, look, I`m death row exonoree 138. There have been 154 of us exonerated within the last few years, since 1976. So, our criminal justice system has become the criminal and I say to those people that says that that five minutes may have taken someone`s life for the rest of their life, sure, yes, but that person needs help. That person needs to figure out why he did that. And he can`t do that in solitary confinement. I met men back there who had made grave mistakes and was so remorseful that they was reaching out to the public trying to make amends for it. I mean, but if you`re going to sentence them to death and murder him, even though his life still has value, we won`t know that. A young man that I know reached out to young men that were in gangs from behind bars, shared his story with them about his life, and these same young men that he reached out to put down their flags and started picking up books. They went to college because they did not want to be like the man who was writing them telling them not to be like him. So I mean, we give up on people too quick, that`s just it. HAYES: You`re in Houston, and it seems to me there`s kind of two conversations happening. A lot of this is national. The president, John Boehner, there`s some bipartisan support for this idea, but most of the people that are in prison aren`t in federal prisons, most of what our criminal justice system does is at the local level like the prosecutor`s office that prosecuted you. From your perspective down in Texas, in Houston, do you feel like the rhetoric and the language around this is changing. GRAVES: Yes, I do. I do, because I get out and I talk to people. I crisscross the globe, particularly in the state of Texas, I crisscross Texas and I talk to students and I talk to church leaders and I talk to our politicians and I can tell you that the rhetoric is changing. And people are getting concerned, because too many people every time you look up is walking out of prison after spending 30 and 40 years for crimes they did not commit. HAYSE: Now, in Houston you are now working, if I understand it correctly, with one of the bodies that oversees the forensics in Houston. It`s precisely that misuse of forensic evidence that landed you on death row wrongfully for 18 years. GRAVES: Yeah. I`m with the Houston Forensic Science Center and our job is to make sure the Is are dotted, the Ts are crossed and everybody is playing fair. And I`m going to be right there to make sure that`s what`s happening. HAYES: All right, Anthony Graves, Houston Forensic Science Committee, thank you so much. GRAVES: Thank you, sir. HAYES: Still ahead, in drought-stricken California there is a nasty fight over bottled water. Tonight, we bring you to the front lines inside the Nestle bottling plant. And Donald Trump`s vicious Twitter assault on his Republican rivals has officially begun. We`ll tell you which senator he called a dummy and which ex-governor he wants to take an IQ test, next. (COMMERCIAL BREAK) (BEGIN VIDEO CLIP) DONALD TRUMP, 2016 PRESIDENTIAL CANDIDATE: I blow people away on leadership. I blow people away on economic development and anything financial, I blow them away. I mean, can you imagine, I`m dealing with Bush. I mean, if I don`t win that one, I think I`m going to just quit. I`m going to win the Hispanic vote. Bush isn`t going to win, even though he`ll say five words in Spanish. No, he`s not going to win because he`s not going to put anybody to work. (END VIDEO CLIP) HAYES: When you`ve got more than 15 Republicans running for president, it is inevitable you`re going to see candidates taking shots at the lead dog. The problem for them is the current lead dog has a nasty bite. A new poll from Fox News shows Donald Trump leading the pack in the GOP presidential race with 18 percent support. Trump, who just wrapped up a campaign event in New Hampshire today attacked Senator John McCain, who lamented to the New Yorker that at a recent event in Arizona, Trump had, quote, "fired up the crazies." Trump fired up the Twitter, first calling on McCain to apologize for calling his supporters crazy and then writing, quote, Senator John McCain should be defeated in the primaries. Graduated last in his class at Annapolis, dummy! Exclamation point. But the Donald was not finished. He also went after GOP presidential rival Rick Perry who said in a statement today that Trump has been offering up, quote, "a toxic mix of demagoguery nonsense. Trump shot back again on Twitter that Perry, quote, doesn`t understand what the word demagoguery means. And then added, quote, "Governor Perry failed on the border. He should be forced to take an IQ test before being allowed to enter the GOP debate." Trump`s polling surge suggests he will easily qualify for that first GOP debate which takes place next month on Fox in which only the candidates polling in the top ten nationally will be allowed onstage. Perry, by contrast, is polling around just 2 percent and he faces the real prospect of being left out of the debate. In light of today`s back and forth, here`s hoping they both make the cut. (COMMERCIAL BREAK) HAYES: Standing in front of Castaic Lake, a reservoir that provides drinking water for residents of Southern California. Three years ago, it looked like this. Today, it`s at 38 percent capacity. The water level has shrunk by 100 feet, leaving vast swaths of what used to be under water literally high and dry. This is what a historic water shortage in California looks like, and with drinking water reservoirs like Castaic Lake at such lows, a lot of attention here in California is currently focused on the corporations that make a profit by bottling and selling California`s water. Well, we managed to visit one of those bottling plants. And what we found out, next. (COMMERCIAL BREAK) HAYSE: The drought here in California has certainly produced its fair share of cartoon villains. Villains like the almond which takes over a gallon of water to produce just one. Actor Tom Selleck who now has to pay more than $21,000 to settle a lawsuit alleging he stole water to put that water on his ranch. And of course bottled water. (BEGIN VIDEO CLIP) UNIDENTIFIED MALE: California water shipped to western states during an unprecedented California drought. UNIDENTIFIED MALE: With so much focus on the drought, private companies making a profit on California`s water has become an issue of perception. More than 100 other companies already bottling and selling water in California. UNIDENTIFIED MALE: This water comes from the municipal supply of Modesto, California, or Sacramento, California, and those places are hit hard by the punishing drought. (END VIDEO CLIP) HAYES: Bottled water companies point out that only a minuscule fraction of California`s water is used to make their product. And according to the state water resources board, that`s absolutely true. The industrial sector overall uses just 1 percent of California`s water and bottled water uses just a tiny percentage of that. Companies like Nestle, one of several bottling water in California, say they are implementing technologies to use water more efficiently. I took a tour of one of Nestle`s bottled water facilities in Ontario, California, to find out more. And later I got a chance to ask them about the controversy. DAVE THOMAS: So, this is where the bottle starts. I mean we bring in recycled PET. We blend it together, we make a preform. This is the beginning of the bottle. HAYES: PET is? THOMAS: Polyethylene terisalate. HAYES: Even more complicated. THOMAS: But it`s every container that you drink out of every day is made out of PET. HAYES: OK. THOMAS: And PET has an infinite life. So, with the recycle rates in California, which are at 73 percent, we`re making bottles out of bottles. HAYES: What am I looking at? THOMAS: This is still the preform. HAYES: This is raw material out of which the bottle is made. That`s water you`re bottling, right, but then any big industrial process like this uses a lot of water to make the process run. What are you guys doing about sort of rigging the most you can out of that water? THOMAS: Sure. We`re implementing conservation projects. So there`s water that we`re taking from the process, we`re filtering it and then putting it back -- in this case we`re using it in our cooling towers. So we`re recycling or wer`e reusing that water. HAYES: What`s going on here? THOMAS: This is a belt. This belt carries this product from the filling process all the way to the packaging process. In the past, this belt we would use a water-based lubricant so it would be kind of foamy and almost look like soap. Several years ago we went to a dry lube, saved over a million gallons, just this factory. HAYES: OK, but here`s my question, why does that decision get made? Someone in the company said -- took the time -- is that because we`re several years into the drought? Is that because we`re actually paying on a cost basis for that -- the million gallons of water we`re using for this wet lube? Like, who makes that decision and why? THOMAS: I think as an organization we`re always trying to drive down and be much more conservation conscious. I mean, we want to reduce -- we have to reduce water. It`s our responsibility. HAYES: I think it is hard for people to get their heads around bottling water in the midst of the California drought. THOMAS: Sure. HAYES: People talk so much about the scarcity of this resource, and you`ve got farmers saying we need this to grow our almonds and you`ve got people in the city saying we need this for our businesses. And it seems like if the low- hanging fruit is like well maybe we shouldn`t bottle water. Are people wrong to have that instinct? Like why should they not think that? THOMAS: I think access to water is essential. I mean it`s essential. 70 percent to 80 percent of what we drink every day comes out of a bottle or a can. And I think it`s essential that people have a choice, they have a choice to drink a zero calorie beverage, whether they do it in their home, whether they take it out of the tap, They fill their refillable container or when they`re on the go. You`re out, you go to a convenience store, you want to have access to water. And this is just a great, healthy beverage. HAYES: Right. But I mean this thing is being fought over. There`s a sort of scarcity. You know, you guys run a business. You guys make money off it, right? THOMAS: Right. HAYES: Why should you be able to do this in the midst of this resource stream? THOMAS: Well, I think people are -- they are buying the product. They`re getting out there. There`s a demand for the product. HAYES: The same reason people grow almonds. People want to eat almonds and drink their bottled water. THOMAS: Yeah, I think another people have to understand is we have a responsibility. And our conservation methods and the technology we`re applying out there, you saw some of it today where we`re -- you know, we reduce, reuse, recycle. I mean, it`s ingrained in every person that lives in California. They get that. (END VIDEOTAPE) HAYES: I`ve got to admit it was pretty surreal to be inside a bottled water factory after we`ve been spending a lot of time around scenes like this down in the central valley where we saw fallow fields and the juxtaposition was pretty intense. Now, Nestle is not the only one that does this, there are a lot of bottled water factories and they are right about the actual amount of water in the total pie chart of water used. But what was most striking to me is this. The price signals for water in this great state of California, in the fifth largest economy in the world, seemed completely screwy. At one point in the interview in fact, if I didn`t misunderstand, he said that their internal price for water hadn`t even actually gone up. Something is amiss fundamentally in the way that this very scarce resource is being priced and rationed. Now bottled water is just a small drop of California`s water usage, but in a shortage where every drop counts, who gets what, and what is the process that decides that? That`s the question we`ve been asked since we first started doing research for these package of shows. And I`m going to talk to someone finally on the board in charge of helping figure out who gets what next. (COMMERCIAL BREAK) (BEGIN VIDEO CLIP) HAYES: Why should you be able to do this in the midst of this resource stream? THOMAS: Well, I think people are -- they are buying the product. They are getting out there, there`s a demand for the product. HAYES: The same reason people grow almonds. THOMAS: Sure. HAYES: People wanting to eat almonds and they want to drink their bottled water. THOMAS: Yeah, I think another piece people don`t understand is we have a... (END VIDEO CLIP) HAYES: Joining me now, Frances Spivy Weber. She`s the vice chair of the California State Water Resources Control Board. I don`t think I -- several months ago if you told me that you did that if we met somewhere, I would think, oh, well that`s nice. But I realize that`s very powerful. FRANCES SPIVY WEBER, CALIFORNIA STATE WATER RESOURCES CONTROL BOARD: It`s very powerful. HAYES: You are a powerful person. You hold people... WEBER: I`m a very nice powerful person. HAYES: I believe it. So you`ve got -- let`s start here. Who gets what and how do you decide on that board? WEBER: The rules were established long -- back in the 1800s and early 1900s. And we implement -- we make those laws work. HAYES: When you say the rules, does that mean I just bought a farm somewhere and it`s got a title and attached to that title is the right to a certain amount of water? WEBERT: No, no. You would have to come -- if you just bought your farm, you would have to come to us and tell us how you were going to be using that water and we would give you a water right for that property. HAYES: So I have to earn it from you. I have to come and bow before you. WEBER: Yes. HAYES: No wonder the farmers hate you guys. WEBER: Right. HAYES: I mean I`m serious, right? Like, what case do I make? What if I say, look, I bought this farm. You know, we want to grow cantaloupes and almonds and cherries and I want to employ a bunch of people and make as much money as I can. Can I have water, please? WEBER: Fortunately, in the past you probably would get the water that you needed for that particular enterprise, whatever it was. And now, however, because we`re in a drought, we`re having to cut people back. You said you needed a certain amount of water, but you are very junior, you`re a new farmer. And so the older farmers can keep their water rights, but you`re going to have to cut way, way back. HAYES: OK. So this is important. So there`s some seniority here. WEBER: Exactly. HAYES: If I`m farming a farm that`s been in the family for a hundred years, right? WEBER: Right. HAYES: And that`s been passed along, I`m senior in that line to get that water. WEBER: Exactly. HAYES: Ok. So then there`s also this -- there`s a Central Valley Project, there`s a huge federal public works project for the Central Valley. Then there`s the stuff that you guys mostly do, right, which is the municipalities, right? WEBER: We do it all. HAYES: You do it all, OK. WEBER: We do it all. HAYES: How do we decide -- like, OK, I have a new business idea. My business idea is to hook up a hose in my house in Malibu and make bottled water. And it`s awesome because it doesn`t cost me a lot of money and I can then sell that bottled water for a dollar, right? That to me is sort of like zeros in on the prime issue here. Which is it does not seem that the inputs for whether it`s industrial processes or bottling water are keeping up with the actual amount of scarcity there is. The price does not seem to be responding to the scarcity we`re seeing out here. WEBER: The scarcity is new. We`ve had scarcity from time to time but never at the level that we have right now. But you are absolutely right. We are realizing that what we have set up doesn`t work and it may continue to work even more poorly in the future. HAYES: So there were claims that you have out there that are sort of established that you say yes to, whether it`s municipalities or farmers that can be met essentially. WEBER: Right. And so what we`re asking of people is we`re asking them based on their seniority, we`re asking -- we`re ordering the juniors to not use the water that they might be taking out of the stream. Now, some of them will have groundwater and so they will be able to keep their farms alive using groundwater. HAYES: For years California did not regulate groundwater. WEBER: Yes. HAYES: It was known as the last state in the west to regulate ground water, and ground water is a little like the thought experiment with the faucet. It`s like, oh, I`m just going to draw it out. I can use it for my farm. I don`t know who I`m taking it from in some sense. Now you guys are going to regulate that too? WEBER: Well, we are going to regulate it if it needs to be regulated, if the locals can`t organize themselves and regulate it among themselves. In some areas, particularly in Southern California, you have courts that have allocated the water. They call adjudicated basins. And now people will be asked to organize themselves to go to the courts for adjudication. HAYES: There are going to be water courts? WEBER: Well, no, these are just regular courts. HAYES: Regular courts, OK. WEBER: But that take on the water issue. You know, a judge will say, OK, usually after about 20 years in court you get this and you get that and someone else gets something else. HAYES: Well, it seems to me that this -- if this drought continues or this era of climate change we`re now entering strains it, there`s a lot that has to be done in the guts of how this system works. WEBER: Exactly. HAYES: So that people don`t end up outside your door with pitchforks. Thank you for coming. You are a very nice powerful person it turns out. WEBER: Thank you. HAYES: Tomorrow we`re wrapping up our week in California by taking a look at the state`s largest lake, the Salton Sea. It`s a body of water that was created totally by accident. Once a beloved vacation spot, today it is on the brink of a major environmental disaster. We`ll bring you that story, plus a look at some of the possible solutions to the drought that include taking the salt out of ocean water. Our final installment of All in America: Water Wars is tomorrow. And that is All In for this evening. THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. END