By Merle Moshiri
Special to the Surf City Voice

Last week I sent a complaint to the California Fair Political Practices Commission asking it to investigate what I believe are serious violations of the California Fair Political Practices Act, including failure to report income and conflict of interest voting, by John V. Foley, Chairman of the Metropolitan Water District of Southern California (MWD).

Foley is not an elected representative of the people. He was appointed to the MWD by our own Municipal Water District of Orange County (MWDOC). He was then elected by MWD members to be chairperson of that body.

The details of Foley’s apparent misconduct have been provided in reports by the Surf City Voice and the Voice of OC. According to those reports, Foley failed to disclose over $600,000 in past income, most of it to his wife, from government and private sources. Also, according to those reports, he arguably cast illegal votes (as an MWD director) on matters related to that income.

Those details have been ignored by the OC Register and the Los Angeles Times even though they have been contacted repeatedly by myself and other concerned citizens. That is why I feel compelled to take action as a public citizen: our public officials and our largest self-proclaimed watchdog institutions have failed us, so concerned citizens must act to take back control of their government.

I filed my complaint last week, but doing so was partly the result of a frustrating process that started 10 years ago.

At that time, many of us in living in southeast Huntington Beach became concerned with plans to build a private ocean desalination plant in our area.  Initially, it appeared to be yet another piece of ugly industry being added to our community that already played host to the AES power generator, with its huge smoke stacks, the OC Sanitation District’s sewage treatment plant, the City Trucking depot, and the ASCON toxic waste dump—38 acres of hazardous waste material dumped close to our homes and schools—that still needs remediation.

Did yet another industry need to be built on our share of the coast?

Upon closer scrutiny, we discovered that the company planning and pitching the desalination plant, Poseidon Resources, Inc., had never built a fully functioning ocean desalination plant before.

But Poseidon pitched its project as a purely private one. The public would pay nothing; it would reap the benefits, but without taking the risks.  Four miles of our streets would be trenched for pipelines, but apparently we were supposed to accept that as one of the hazards of living that came with having a home in our area.

As our research progressed, we learned that there wasn’t any real need in Huntington Beach for desalinated water. We also learned that the “no cost to the public” promise was a pipe dream because ocean desalination was the most expensive alternative source of water. By contrast, water recycling (the Ground Water Replenishment System in Fountain Valley), conservation and retention were all much less expensive water sources.

The more we learned about the Poseidon project, the more skeptical we became.

Why would our public officials be so quick to jump on such a super expensive, energy exhausting, environmentally damaging and out-dated form of technology when there were other readily available and more viable means of meeting our water needs?

When we delved into Poseidon’s dealings with our local city and water officials we were struck by the lack of accountability and transparency that we found while those officials were proposing to spend hundreds of millions of rate payer dollars with apparently little regard for how they would be spent.

Positions on water boards may be seen by some as plumb pickings with nice stipends, health insurance, expense accounts and other benefits along the way. But with election or appointment to these offices comes the responsibility to be ethical and follow the law.

I regularly attend many MWDOC meetings.  About a year ago it was announced that John Foley was going to share some office space at the agency’s headquarters in Fountain Valley.  I knew that he was the chairman of the Metropolitan Water District.  I noticed in a MWDOC expense report that Foley’s wife had been paid by MWDOC for consulting services. I asked about the legality of her contract and what the protocol was for selecting her out of all the other possible consultants.  The answers were not readily available.

Now it appears that Mr. Foley violated the law by not reporting his wife’s income (and some of his own) on his 700 forms and that he created an illegal conflicts of interest by voting on desalination issues that his wife was paid to work on and for contracts for companies that she worked for.

When asked by a local reporter about not reporting his wife’s consulting income, Foley said he didn’t know he was supposed to do that.  But Foley, who has been on the MWD since 1989 and undergoes ethics training by MWD every two years, should have known what his reporting obligations were.

So I ask, is his failure to comply with the law from ignorance or arrogance?  Either one does not go far in protecting the public.

Public trust goes hand in hand with transparency and truth.  Those endowed with the public trust have an obligation to give their constituents no cause for doubt.

By John Earl
Surf City Voice

A Huntington Beach activist has filed a complaint with the Fair Political Practices Commission against the chairman of the Metropolitan Water District of Southern California (MWD), John V. Foley, for alleged violations of the Fair Political Practices Act.

Since 1989 the Municipal Water District of Orange County (MWDOC) has paid Foley as one of two appointed (non-elected) public officials who represent it on the MWD board. In turn, in Jan. 2011 MWD elected him as its chairperson for the second time.

As chairman, Foley runs MWD board meetings and appoints all members of all committees. He also attends some MWDOC meetings for discussion but not for voting.

The complaint, submitted by Merle Moshiri, president of Residents for Responsible Desal, alleges a spate of violations by Foley, including multiple failures to report income—totaling at least $640,000—that he received through his wife’s consulting business and another $15,000 earned from his own consulting business.

His wife, Mary Jane Foley, consults for government water agencies and companies to help them navigate through environmental regulations and obtain permits for water management projects, like ocean desalination.

Under California law, spousal income is considered a 50/50 split unless property is legally separated by a prenuptial agreement.

The complaint also alleges Foley cast four votes since 2005 that were illegal because they related to his wife’s consulting contracts with MWD, MWDOC and other water agencies.

State law requires public officials to disclose all reportable income on financial disclosure (700) forms that are open for public viewing. Those officials must recuse themselves from votes that could result in financial benefit for them or their spouses.

Fines of up to a $5,000 can be levied for each violation.

In an op-ed column published by the Surf City Voice, Moshiri says that her complaint follows a “frustrating process that started 10 years ago” with a city proposal to allow a large ocean desalination plant to be built in southeast Huntington Beach. That process has been marked by a “lack of accountability and transparency,” she wrote.

Merle Moshiri: Photo by John Earl

But Moshiri’s complaint also follows recent disclosures in the Surf City Voice and the Voice of OC (not a related publication) about Foley’s apparent failures to comply with various state conflict of interest laws.

The Surf City Voice first reported that Foley failed to report well over $200,000 of income from his wife’s consulting work (for public agencies only) and subsequently reported that Foley also failed to report $15,000 from his own consulting work.

Last September, Foley told the Surf City Voice that he didn’t know he had to report his wife’s income, stating that that “I never felt it was required. You know, I don’t have no problem with it.”

A month later, however, Foley updated his 700 forms back to 2004 by including his wife’s income. But he did not include his own consulting income in the updates.

On two subsequent occasions in January the Surf City Voice asked Foley by email what specifically had led him to believe that he didn’t have to report his wife’s income. Foley did not respond. During a phone interview on Feb. 7 he said that he still didn’t think he had to report his wife’s income because he had no access to it. He had updated his disclosure forms only for appearance’s sake, he said.

If Foley and his wife had signed a valid prenuptial agreement stipulating the separation of their property, there would have been no conflict of interest or requirement to report the income. He had never mentioned such an agreement before, and when asked the next day if such an agreement existed, he said no.

Then on Feb. 27 the Voice of OC reported that from 2007 to 2010 Foley had voted to approve three contracts—over $9 million worth—with engineering firms that had paid his wife over $20,000 for consulting.

The Voice of OC report also estimated that – including income from his wife’s consulting work for private firms – Foley had failed to report at least $640,000 of income prior to revising his 700 forms.

In that report, Foley reversed course and asserted that he and his wife did have a prenuptial agreement to keep their income separate.

But the Voice of OC noted that Foley had revised his 700 forms as if he had a share his wife’s income, indicated by filling in the part of the form that asks to “Identify … your pro rata share of the gross income to the entity (trust).”

In the same Voice of OC report Foley claimed that his prenuptial agreement also freed him to vote on the contracts.

The next day Foley made a public statement while chairing the MWD’s Executive Committee in Los Angeles, far from the view of the MWDOC ratepayers he represents. He and his wife have an agreement, he said again, which led them to believe that her income wasn’t reportable.

“It was further our understanding,” he added, “that Mary Jane would never work for any agency that had any connection with Metropolitan (MWD). I now realize that it would have been better for me to have abstained from votes pertaining to contracts between Metropolitan and firms that Mary Jane may have consulted with and I plan to do so in the future.”

Foley did not make a statement to the MWDOC board despite an invitation by Chairman Jeffrey Thomas to do so.

And, so far, Foley hasn’t responded to requests by the Voice of OC and the Surf City Voice to see the prenuptial agreement; but, if the FPPC investigates, he will be asked to show proof of it.

But even though a public official’s suspected actions turn out to be legal they aren’t necessarily ethical—a consideration that is big in the MWD’s ethics manual, which Foley and all the other MWD directors presumably have read.

MWDOC doesn’t have an ethics manual, but Chairman Thomas has invited the FPPC and legal experts to put on a workshop titled Ethics & Conflict of Interest Disclosure today (Monday, March 19) from 1:30 – 4:00 p.m. Invited public officials, not just from MWDOC, will learn how to fill out 700 forms.

Thomas explained his reasons for the workshop at a joint meeting of MWD and MWDOC directors that included Foley.

“Given a lot of us having questions on ethics and filing 700 forms and all the nonsense that goes into having to try to remember what you did and what you should report, what is reportable and non reportable, I thought what we would do is have a little mini seminar here.”

Thomas, who has since revoked his “nonsense” remark, invited members of the public to attend as well. The workshop will be held in MWDOC’s meeting room from 1:30 p.m. to 4:00 p.m.

At another meeting held last week, MWDOC Director Brett Barbre proposed that 700 forms for all MWDOC’s directors, its appointed MWD directors, and its employees, be vetted by the board to weed out any potential conflicts of interest. “I just think it’s smart for us to be proactive and as transparent as possible,” he said.

The idea will be discussed at April’s general board meeting and voted on at a subsequent meeting, the committee agreed.

Public citizens like Moshiri wish that MWDOC and the MWD would have been more proactive long ago, but they will probably appreciate even small steps in the right direction.

As Moshiri notes in her commentary, “Those endowed with the public trust have an obligation to give their constituents no cause for doubt.”

By John Earl
Surf City Voice

Following recent revelations by the Surf City Voice that one of MWDOC’s own failed to report hundreds of thousands of dollars of consulting income and voted on projects that could affect his wife’s business, Director Brett Barbre is proposing a novel change in policy designed to prevent conflicts of interest by the agency’s staff and public officials.

Barbre’s proposal would have the MWDOC (Municipal Water District of Orange County) board certify that to the best of its knowledge no conflicts of interest exist for its elected directors or for representatives that it appoints to the Metropolitan Water District of Southern California (MWD). The certification would also apply to all MWDOC employees who are required to report under state disclosure regulations.

“I believe we need to police ourselves,” Barbre said, in an e-mail to the Voice.

California’s Political Reform Act requires public officials to report income and to disclose possible conflicts of interest prior to voting and to recuse themselves when a conflict is determined to exist. And Govt. Code 1090 prohibits public officials from holding a financial interest in any contract made by “any [government] body or board of which they are members.”

But efforts to prevent conflicts of interest by local public officials traditionally have consisted, at best, of legal advice such as city attorneys often give at city council meetings and that relies upon the prior and presumably honest disclosures of public officials.

As first reported by the Surf City Voice, John V. Foley, MWDOC’s appointed representative on the Metropolitan Water District of Southern California (MWD), failed to report an estimated minimum of $248,000 of income his wife, Mary Jane Foley, earned as a consultant from various southern California water districts, including MWDOC and the MWD.

His wife’s consulting work mostly involved permitting, regulatory and promotional issues related to a proposed Dana Point ocean desalination plant and ocean desalination in general.

Foley is currently chairman of MWD’s 37-member board of directors. He can vote only on items before that body but attends MWDOC board meetings and partakes in discussions by that body.

The $248,000 income estimate, which the Voice as since revised to $218,000 after reviewing newly acquired invoice records for 2005, does not include his wife’s other previously unreported income from the Los Angeles Department of Water & Power and several private water related companies going back to 2004. Nor did the estimate include another $15,000 of income that John Foley earned as a consultant but also did not report—also recently disclosed by the Surf City Voice.

Reducing Conflicts
Foley’s wife, Mary Jane Foley, who owns MJF Consulting, was paid as a subcontractor under a contract between Byron Buck Associates and five water agencies, including MWDOC, West Basin (Redondo Beach), City of Long Beach, San Diego Water Authority and MWD, the first four of which are involved directly in ocean desalination projects.

The contract was facilitated by the MWD and ran between 2006 and 2009 with a $125,000 limit, almost $109,000 of which was paid out including about $45,000 that went to MJF Consulting.

MWD Chairman John Foley attends a CalDesal mixer in May of 2010. Photo: Mesa Water

The contract stipulated a minimum number of hours and income for Foley’s wife for ocean desalination related permitting and regulatory work as well as for efforts toward forming a state wide desalination lobbying group to be named CalDesal, public documents obtained by the Voice show.

MWD sells water to other water agencies throughout southern California, including MWDOC, serving 19 million people, and is the largest water wholesaler in the world, according to MWDOC General Manager Kevin Hunt.

MWD exerts considerable influence over water programs and policies throughout its jurisdiction.

As MWD chairman, Foley appoints all members of all standing committees as well as chair persons for special committees for that body. Prior to becoming chairman of the board, he was a member of MWD’s Committee on Desalination and Recycling and later became chairman of the Special Committee on Desalination and Recycling.

MWD records show that on at least four occasions since 2005 Foley voted on ocean desalination issues related to his wife’s consulting contracts with MWDOC and other water agencies:

1)      June 28, 2005, as a member of the Committee on Desalination and Recycling, Foley voted for MWD to enter into agreements to financially support ocean desalination projects for four water southern California water districts, including MWDOC;

2)      July 12, 2005, Foley voted for the same proposal at a regular meeting of the MWD board;

3)      Nov. 10, 2009, Foley voted for the MWD to provide a subsidy of $350 million that would benefit an ocean desalination project in the San Diego Water District, one of five districts contracting with Byron Buck Associates (the last payment of which was made Oct. 15, 2009).

4)      June 8, 2010, Foley voted to have MWD become a member of CalDesal, an ocean desalination lobbying group that his wife helped to form, for a cost of $5,000 per year.

Foley also regularly opines on the topic of ocean desalination at MWD and MWDOC meetings. For example, as reported previously in the Voice, at June 6 MWDOC meeting Foley advocated for a MWD letter of support and $350 million subsidy that would assist Poseidon Resources Inc. to acquire financing for its proposed Huntington Beach ocean desalination plant.

“I am proposing that in April, following the filing everyone’s Form 700, the MWDOC Board will review the form 700s for all MWDOC directors, MWD directors, and all staff, to determine and certify that, to the best of our knowledge, there are no conflicts of interest,” Barbre informed the Voice by e-mail last Thursday. “We will compare 700s against a list of all active contracts at MWDOC,” he added.

Former Huntington Beach mayor Debbie Cook, who has conducted her own investigations of local water districts and advocates for greater transparency, concurred with Barbre’s call for MWDOC to police itself.

Cook stressed that disclosure laws and regulations are not meant to embarrass public officials.

“Every public agency should be policing its own officials for potential conflicts of interest,” she told the Voice. “It contributes toward improving public trust and it protects individuals who may not otherwise be aware of a conflict.”

Barbre, who was first elected to the board in 2000, is the only MWDOC board member in the past year to proactively call for greater board transparency—sometimes to the chagrin of fellow board members and staff, who have generally been reluctant to support placing expense reports online and video streaming board meetings from the MWDOC web site.

“I have been fighting staff on this one,” Barbre said, adding that he has asked that his proposal be placed on the agenda of the Committee on Administration and Finance meeting March 14. The committee would then pass on its recommendation, if any, to the full board for final consideration. If a quorum of the board attends the committee meeting the item could be decided then.

The meeting starts at 5 p.m. and is open to the public.

“If it is not placed on the agenda, look for some fireworks,” Barbre warned.

John Earl
Surf City Voice

Lately, southern California’s top water official, John V. Foley, has been explaining his apparent violations of a state law that requires public officials to disclose their economic interests.

Foley is chairman of the Metropolitan Water District of Southern California (MWD).

The Surf City Voice recently reported that Foley, who was appointed to the MWD by the Municipal Water District of Orange County (MWDOC), failed to report an estimated $248,000 of income that his wife, Mary Jane Foley, earned as a consultant for various water agencies in Los Angeles, Orange and San Diego counties, going back to 2004. That disclosure came from public records obtained by the Voice.

Now, more public records obtained since then reveal that Foley also failed to report over $15,000 of his own income as a private consultant for the Moulton Niguel Water District (Moulton) in south Orange County going back to late 2008.

His failure to report that income was “an oversight,” Foley told the Voice.

The newly obtained documents include the invoices that Foley filed at Moulton when he worked as a private consultant for that agency under a contract (also obtained by the Voice) that is still open.  But he did not report that income on the original financial disclosure (700) forms he filed with the MWD nor in amended versions that followed, records show. Continue Reading

By John Earl
Surf City Voice

The chairman of the Metropolitan Water District of Southern California (MWD), John V. Foley, says that a recent Surf City Voice story, that exposed the omission of his wife’s income from years of financial disclosure statements he filed with the water agency, did him an “injustice by just making your own interpretation, which, quite frankly, is totally different than what mine is.”

The story pointed out that Foley had not reported an estimated $248,000 of income that his wife, Mary Jane Foley, was paid by various southern California water agencies for consulting work going back to 2004.

State law requires government officials to publicly disclose their relevant economic interests, including spousal income, within 30 days of assuming office and annually thereafter.  Fines of up to $5,000 can be levied by the Fair Political Practices Commission for violations.

Foley has served on the MWD as the appointed representative of the Municipal Water District of Orange County since 1989. He was chosen by the MWD to be its chairman for a second time in 2011.

In September Foley told the Voice that he was unaware that he had to report his wife’s income. But in October, after advice from MWD legal counsel, he amended is Statements of Economic Interest, which are filed on “700” forms, to include that income.

“The advice was: rather than get in a big battle over this why don’t you go ahead and report it,” Foley said in a phone interview Tuesday. “I decided for the sake of solving this, and not having it look like it has been hidden—put it in there.”

Mary Jane Foley and husband John V. Foley, MWD Chairman

Foley says that all of his wife’s consulting income goes into a separate trust fund for her children, that he has no access to it and that there is no “co-mingling” of her income with his. He and his wife have separate bank accounts, he adds, and file separate tax returns – all of which he believes exempt him from the state reporting law.

“To be extra safe, I went ahead and reported,” despite his exemption, he said. “I really to this moment think that I don’t have to report it,” he insisted.

But Foley’s interpretation of the law, however sincere, is conclusively incorrect.

Public officials must report spousal income unless they have a pre or post nuptial agreement, according to Tara Stock, a spokesperson for the Fair Political Practices Commission.

Stock would not comment on Foley’s case, but told the Voice by e-mail that “The general rule is that in order for a spouse’s income to possibly be exempt from reporting, there must be a valid prenuptial or postnuptial agreement and a separate property agreement.”

When asked if he had a prenuptial or postnuptial agreement with his wife Foley responded, “Separate tax returns, separate accounts. Yes.” But when asked again, specifically, if he had any nuptial agreements with his wife, Foley said he did not.

Even if Foley had signed a nuptial agreement with his wife, however, he would not have been required to file it with the FPPC or MWD. In fact, according to Stock, the Commission would only seek verification of such an agreement if an official complaint had been filed with her agency.

Foley said that his wife is winding down her consulting work. “In the last two years she’s done very little work and probably will close her business because she does not really want to spend that much time on that stuff anymore. She kind of hates the regulatory field.”

By John Earl
Surf City Voice

John V. Foley, chairman of the Metropolitan Water District of Southern California, failed to report over $248,000 of income from his wife, Mary Jane Foley, back to 2004, records obtained by the Surf City Voice under the Public Records Act show.

California’s Political Reform Act requires government officials, including employees and consultants, to publicly disclose their relevant economic interests, often including spousal income, within 30 days of assuming office and annually thereafter.

The officials make their disclosures on a Statement of Economic Interests or “700” form with their respective agencies, after which the information goes to the county and state. The report helps to highlight potential conflicts of interest they may have with issues that come before a government decision making body.

Under the Act, water board directors are required during meetings to disclose any potential conflicts they have with agenda items and to recuse themselves from the decision making process by leaving the room (for consent calendar items they must recuse but can stay in the room).

California Government Code 1090 is even stricter than the ACT.

Recognizing the indirect as well as direct influence that public officials have on decision making, 1090 prohibits any financial conflict of interest by those officials over contracts, even if the official isn’t voting; those officials, it says, “shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.”

Since 2001, public records obtained by the Voice indicate, Foley’s wife has run her own business, MJF Consulting, Inc., while being paid directly or indirectly for consulting work by water agencies throughout southern California, including the MET and the Municipal Water District of Orange County (MWDOC).

Foley, who has served on the MET since 1989, claimed that he was unaware of any obligation to report his wife’s income.

“I never felt it was required. You know, I don’t have no problem with it,” he told the Voice after a MWDOC meeting last September.

The Voice became aware of some of Foley’s missing financial disclosures after examining his 700 forms going back to 2006. But when questioned, Foley said that he had never reported his wife’s income.

But on October 25, a month after he was questioned by the Voice, Foley filed amended financial disclosures back to 2004 that include most – but not all – consulting income from his wife for each year, records show.

Foley did not respond to requests by the Voice to explain why he updated his disclosure reports and why they are still incomplete. But, according MWDOC General Manager Kevin Hunt, who was present at an interview with Foley conducted by SoCal PBS, Foley said that he had been advised by MET attorneys that it would be “more transparent” to revise his disclosures.

MET spokesperson Bob Muir refused to reveal any confidential advice given to Foley by MET legal counsel, but he did say that no disciplinary action was considered by the board for failing to comply with financial disclosure laws.

The still (partially) missing disclosures involve a three-year $125,000 contract between Byran Buck Associates (BBA) and five water agencies: the MET, MWDOC, San Diego Water Authority, West Basin Municipal Water District and the City of Long Beach Water Department.

Under the terms of the contract, which was administered by the MET, Mary Jane Foley was guaranteed a minimum amount of work as a subcontractor. She was paid $160 per hour or about $45,000 over the contract period. A total of $108,945 or $21,789 each was spent by the five agencies.

The contract was approved by the MET’s general manager, so it did not go to the board for a vote, although contracts for far less value sometimes do– a matter of the GM’s choice, according to MET regulations, when a contract is for $250,000 or less.

The BBA contract violated the law, says former Huntington Beach mayor Debbie Cook, who is also an environmental attorney. Cook has been examining the complex and often hidden operations of local water agencies and was recently interviewed as part of a PBS SoCal expose of the Santa Margarita Water District in south Orange County.

‘A Clear Violation’
Referring to the three-year contract, Cook concludes that it directly benefited long time director Jack Foley and his wife Mary Jane Foley.

“This is a clear violation of Government Code Section 1090. An agency like MWD [MET], with the kinds of resources it has available, should know better,” she wrote in an e-mail to the Voice.

Efforts to contact Chairman Foley since September have been unsuccessful, so far. But MET media spokesperson Armando Acuna, responding to inquires about the legality of Chairman Foley’s standing under 1090, told the Voice, also by e-mail, that “Metropolitan’s Legal Department represents Metropolitan and cannot give legal advice or a legal opinion to members of the public.”

The minimum estimate of $248,000 of unreported income is based on the BBA contracts as well as direct contracts between MWDOC and MJF Consulting, Inc., matched against income sources revealed in Foley’s amended 700 filings (but not including income from other, mostly private, sources that were also part of the amendment filings).

Mary Jane Foley’s work with the five water agencies involved regulatory, permitting and lobbying issues for a proposed ocean desalination plant at Dana Point and for the growth of ocean water (and brackish water) desalination plants throughout California. She is still under contract with MWDOC.

As Chairman of the MET, John Foley selects all members of all standing MET committees and appoints the chairpersons for all special committees and task forces. Before starting his second stint as chairman he headed up the MET’s Special Committee on Desalination and Recycling from its start in 2009 through 2010.

Foley regularly votes on desalination issues at the MET and discusses them at various MWDOC meetings. He is highly venerated by his peers throughout southern California and has strong Republican Party connections going back decades.

The MET casts a vast influence as a water wholesaler over all of southern California, including Ventura County, the Inland Empire, Orange County and San Diego. It delivers 1.6 billion gallons of water per day to 26 cities and water districts, including MWDOC, and to 19 million people, according to its website. MWDOC, in turn, helps manage water for its 28 water agencies and member cities in Orange County.

Foley is one of four appointees chosen by the MWDOC board of directors to represent it on the MET – and he is one of two within that group who were not elected by voters to either board.

The other unelected MET director representing MWDOC is Linda Ackerman. Her husband, Dick Ackerman, is a former California state legislator who works for Nossaman LLP, an Orange County legal and policy consulting firm under contract with MWDOC. Linda Ackerman includes that income source on her 700 forms.

A Seasoned Water Veteran
Cook is skeptical of Foley’s claim that he didn’t think he had to report. “He is a seasoned water veteran. He has received many hours of required training on avoidance of conflicts of interest, and it was common knowledge among his colleagues and MET staff that his wife’s income was derived from the same public agency [MWDOC] that he serves—shame on the entire industry that does not seem willing or able to police its own.”

Based on his impressive resume, Foley would seem anything but a novice when it comes to understanding the rules of water boarding.

He first came to the MET board of directors in 1989 as an appointee of MWDOC. He served as MET chairman from 1993 – 1998 and was elected again by that body to be chairman for a two year term starting in 2011.

From 1979 until Dec. 2007 Foley was also the General Manager of Moulton Niguel Water District in south Orange County. Moulton is one of five water agencies that make up the South Orange Coastal Ocean Desalination Project, a group that plans to build an ocean desalination plant in Dana Point—under guidance from MWDOC and with promised financial assistance from the MET.

Seven months after John Foley left Moulton his wife was warned of a potential conflict of interest with her work on the Dana Point desalination plant because her husband had been involved in that project as Moulton’s general manager. In an e-mail obtained by the Voice, Mary Jane Foley asks MWDOC’s project managers Richard Bell and Karl Seckel what she should do:

“Richard has informed me that since Jack is a signature to the participating desal group from MNWD, I will be perceived as a conflict. Richard said that South Coast will run my contract. How will this all be determined? Do I stop all work and communication with you all now?”

In this e-mail, Mary Jane Foley asks about a conflict of interest between her work and her husband's involvement in a project. To view at full size, click this image once, then after it appears in a new window, click it again.

But Mary Jane Foley continued her consulting work with MWDOC, as well as her work as a subcontractor for Byran Buck Associates. And what could have been taken as a wake up call for her husband – to report a potential conflict of interest on his 700 forms – was overlooked, at least until after the Voice forced the issue.

If hands-on experience isn’t the best teacher, then mandatory ethics training every two years also helps water board directors in California to understand their legal and ethical obligations to the public. Chairman Foley completed ethics classes given at the MET in 2008 and 2010.

He would also have received a copy of the MET’s ethics manual for directors, which reminds its readers of two levels of ethical practice. The first is compliance with “relevant laws, rules, regulations and policies” that come with the job. The second is a “level of ethically ideal behavior in which Directors, officers and employees strive to incorporate Metropolitan’s core values in their daily work.”

That work ethic is also spelled out clearly in the MET’s Administrative Code, Section 7102, which, it might be safely assumed, was also presented to Foley for his reading. On the matter of disclosure, it says, “Directors shall comply with applicable laws regulating their conduct, including conflict of interests and financial disclosure laws.”

When the Voice asked Chairman Foley (in September) if he saw any conflict between his support of desalination projects as a MET director and his wife’s extensive work promoting desalination for MWDOC (at that time the Voice was still unaware of the BBA contract), he denied any conflict and said, contrary to public records, that she had “very little” involvement in desalination issues. “I have nothing to do with it [her work],” he added.

Foley was indifferent when asked about a vote he cast—as a director and while he was Chairman of the Special Committee on Desalination and Recycling—for the MET to join CALDESAL, a pro-desalination lobbying organization that public documents show his wife played an important role in forming while under contract with MWDOC.

“Did the MET show me as voting for it,” he asked. “Whether she was involved or not, I would have supported it,” he said, laughing.

Besides, he explained, “It’s not really a conflict of interest. You’ve got to draw a direct line to really make a point of conflict of interest.”

Foley was obliquely, whether accurately or not, comparing his own situation to legal exemptions that are made in cases where the conflict of interest is, in legal parlance, remote.

“You know, I believe in conservation,” he said, rhetorically. “Does that mean I have a conflict of interest because we voted for conservation?”

By John Earl
Surf City Voice

An Irvine water official recently let members of the Municipal Water District of Orange County (MWDOC) board know that their public relations efforts on behalf of ocean desalination aren’t necessarily welcomed in his agency’s jurisdiction, which stretches across the county’s mid-section as its largest water district.

MWDOC is the retailer for 28 water agencies throughout the county.

Open dissent by local water officials toward ocean desalination projects is rarely if ever heard at MWDOC meetings, where the belief that such projects, however costly, are a vital part of a larger water portfolio is all but officially treated as sacrosanct.

The official, Peer Swan, one of five directors for the Irvine Ranch Water District, spoke out at a monthly meeting of MWDOC’s Public Affairs and Legislation Committee held on Monday, Dec. 19. He told the board that the agencies that don’t agree with the premise of the PR campaign should be able to opt out.

“I would expect that you would respect your customer’s request not to go in and do a PR campaign on something they don’t support,” Swan said.

MWDOC’s directors were discussing plans to increase their efforts to educate county residents about the supposed needs for ocean desalination in Orange County.

MWDOC wants to convince county residents that desalinated ocean water will guarantee them an endless and reliable supply of drinking water during future water shortages to be caused – inevitably – by droughts or by earthquakes that will break water supply lines; or worse, cause the collapse of the California Delta, which supplies about half of Orange County’s water.

MWDOC is pushing two major ocean desalination projects in Orange County. One of them would be in Huntington Beach where Poseidon Resources, Inc. won approval by the city to build (with the help of huge public subsidies) one of the largest and costliest desalination plants in the western hemisphere (the other, similar plant, would be built by Poseidon in Carlsbad in San Diego County)—after offering tax increments and other financial benefits.

Poseidon is stumbling its way through the final stages of the permit process but still lacks private financing. MWDOC is seeking $350 million in public assistance to make the project cost effective for the company and to attract the private investors that it (Poseidon) needs to move forward.

The other, smaller project, which is backed by five south county water agencies, would be publicly owned and located adjacent to San Juan Creek on property that is owned by South Coast Water District.

Unlike the Poseidon plant, which would suck in over 100 million gallons of sea water a day through the intake pipes used by a huge power plant, its ocean intake system would be buried under the beach at Dana Point, where a pilot plant already is operating.

Far from shovel ready, the Dana Point desalination project seems headed for a decision by the local agencies sometime in 2012. From that point it would move into the final design stage and permitting by the relevant government bodies. Construction would start in the 2017 or 2018, according to project manager Karl Seckel.

MWDOC’s staff provided details of the agency’s strategy for gaining public support for the Dana Point project at the meeting.

“We have been working with the project participants to begin getting either letters of support or formal endorsements from community groups, business organizations, and environmental groups within their area, but also county wide,” explained David Cordero, MWDOC’s Director of Governmental Affairs.

Responding to Swan, General Manager Kevin Hunt elaborated on the broader scope of MWDOC’s outreach efforts, including the Poseidon project, which 21 county water agencies, including IRWD, have indicated an interest in, however tenuous. Very few of those agencies disagree with continuing to discuss ocean desalination “as a viable option county wide,” he said.

MWDOC Director Wayne Clark, whose district makes up about half of the IRWD service area, took umbrage with Swan’s suggestion that MWDOC was out of touch. “I represent Irvine as well as other areas and I think that I’m quite capable of communicating with my own constituents,” he said.

But Swan persisted. “We’re in negotiations with Poseidon,” he said. “Until we get a negotiated contract, I think that using the MO that they used in San Diego, creating a tsunami before the agencies approve things, is an inappropriate thing in Orange County.”

Swan told the Voice after the meeting that he doesn’t want the county’s water agencies to be boxed into supporting programs that don’t make much sense. And he thinks there should be a defined program with agreed upon principles and financing before MWDOC or its agencies seek public support for it.

Swan is personally opposed to both ocean desalination plants but not for any of the environmental reasons often listed by other opponents, who are concerned that, especially in the case of Poseidon, marine life will be killed by the associated intake and outflow systems. He is opposed because he believes that neither project will fulfill its intended purpose—to provide a needed or cost-effective water supply.

An ocean desalination plant by its nature has to run 24/7, an expensive operation, Swan says; but the Metropolitan Water District of Southern California (MET), MWDOC’s umbrella agency, “already provides a reliable supply for water for South County 98 percent of the time at a fraction of the cost of the [Dana Point] desal plant.”

Results of a recent poll conducted by Lewis Consulting

And South County residents would be subject to any water shortages (including rationing) that the MET would apply uniformly as a matter of policy, he adds.

“So the plan itself doesn’t supply water in the event of shortages,” Swan said.  “A couple of hundred million dollars for a very small amount of water is a very expensive project for shortages. And there are much cheaper alternatives to provide reliability to South County which have not been as actively pursued.”

There is no need for the Poseidon project either, according to Swan, because it would serve an area that already gets 70 – 80 percent of its water from an existing underground water supply that could provide 100 percent of the water needed in an emergency.

“What these projects will do is provide an expensive new source of water for MET that the local agencies will pay for,” Swan says. “It will add reliability to the MET system because if you produce water in Huntington Beach or Dana Point, MET will no longer need to supply them because there is cheaper water elsewhere. Thank you very much!”

In this election season, as Orange County voters are constantly warned about government overspending, including bullet train boondoggles, ocean desalination critics like Swan may have found a crack in the veneer of unanimity that MWDOC uses as a cloak to protect and promote its desal dreams.

A new poll, conducted for MWDOC by Lewis Consulting, with a sample of 500 registered Orange County voters, shows a statistically significant decline in support for ocean desalination—from 73 percent in 2008 to 63 percent last October.

In each case the respondents were asked, “When thinking about increasing Orange County’s water supply, do you think ocean desalination is a good idea or a bad idea?”

Sixty-three percent is still a landslide of public support for ocean desalination, but that support might not all be transferable to MWDOC’s two ocean desalination projects, which the 500 voters weren’t asked about.

In fact, there may be a lot of leverage for critics of the Poseidon and Dana Point desalination proposals provided by the questions that, so far, pollsters haven’t asked the public.

MWDOC Director Larry Dick, a stalwart supporter of both projects and ocean desalination in general, may have unintentionally revealed that opening at a Nov. 21 board meeting after the poll’s presenter, John Lewis, explained that seniors, at 75 percent, were more likely than any other group to believe that ocean desalination was a good idea.

Dick asked Lewis if, “The seniors who are so in favor of desalination—are they aware of how much it is going to cost versus other things [water supply sources]?”

“No,” Lewis answered, adding that obtaining an in-depth look at voter sentiments would require asking questions that add the necessary information.

Like, “Would you feel the same way if you knew it was going to cost 40 percent more?”

“Exactly,” Lewis said.

Photo, top right: Mobile testing facility for Dana Point ocean desalination project. Courtesy MWDOC

By John Earl
Surf City Voice

What is the future of seawater desalination in California?

As of 2006, 22 desalination plants had been proposed for construction along the California coast between San Rafael in the north to Carlsbad in the south. Today, only nine projects are still in the running, and even those are on shaky ground, according to an analysis by the Desal Response Group, a statewide organization generally opposed to ocean desalination.

Critics of ocean desalination (desal) say that the water industry’s dream — shared with evangelical zeal by a growing cabal of public water officials — of sprinkling the coast with desalination plants is dead in the water.

As proof, they point to spiraling costs, lack of financing, stalled technology, and higher than average water supplies after the end of the California “drought.” They say that there are underutilized and much more cost-efficient alternatives such as conservation, increased water collection and waste water recycling – minus seawater desal’s high environmental costs.

That’s why desal critics are upset after a June 6 vote by the Municipal Water District of Orange County (MWDOC) to send a letter to its umbrella agency, the Metropolitan Water District of Los Angeles County (MET), to request $350 million in funding support for the Huntington Beach Desalination Project that Poseidon Resources Inc. wants to build on Pacific Coast Highway and Newland Avenue.

At an estimated construction cost of $700 (according to a recent Costal Commission analysis), the plant would produce 50 million gallons a day or 56,000 acre feet per year of drinking water, 8 percent of Orange County’s supply. The plant would share the seawater intake pipes currently used for cooling by the AES power generating plant.

Poseidon wants to build a nearly identical desal plant in Carlsbad in San Diego County.

The proposed taxpayer-funded subsidy, says the letter, which was written June 23 and obtained by the Voice, would help MWDOC’s agencies to “defray” the high cost of desalinated water—which is generally two to four times higher than other sources.

The subsidy would go through MWDOC’s agencies which would in turn pay it directly to Poseidon over 25 years at $14 million per year in return for water delivered.

Largely funded by taxpayers outside of Orange County who won’t use the water, the subsidy would artificially lower the cost of Poseidon’s desalinated water, which would still probably not be competitive with the cost of water from other sources, including imported water. Desal advocates say that technological improvements for desalination and rising costs of imported water will cause prices to crisscross in the near future, but those improvements show no signs of arriving soon, if ever.

A pro-industry report published in 2004 by the federal government concluded that the invention of cost effective desal technology would require a huge influx of government subsidies to fund the research and development that the industry is lax in doing itself. Even then, it would take over 20 years to make seawater desal competitive, the report estimated.

Without huge public subsidies, Poseidon cannot attract the private investors and get permission to pass tax free bonds also needed to finance the construction of its Huntington Beach plant. To the point, without subsidies—and based on past experience $350 million would not be nearly enough—Poseidon’s HB plant will be out of business.

That is exactly the scenario that played out last year for Poseidon’s proposed desalination plant at Carlsbad in San Diego County. It would be nearly identical in size and type and has received all of the necessary permits but stalled due to lack of financing and increased cost projections for the price of its water.

As reported last June by the Voice, a memo from the city manager Peter A. Weiss of Oceanside, one of nine water San Diego County agencies that had signed water purchasing agreements with Poseidon at that time, pointed out that Poseidon would need $630 million in government financial assistance.

Poseidon's VP Scott Maloni says the debate is over. Photo: Arturo Tolenttino

“In the past few months it has become apparent that Poseidon’s cost of water is going to be greater than originally proposed,” Weiss wrote. “To make the project viable, Poseidon needs subsidies from the San Diego County Water Authority (CWA) and Metropolitan Water District.”

But $630 million was too much money and a lawsuit filed by the city of Carlsbad against the MET had effectively canceled the larger of the two subsidies anyway. So the CWA decided that the only way to keep the project alive was by spreading the costs to all 26 of its member water agencies rather than the original nine with options to buy the desal plant from Poseidon later on.

That’s exactly the same arrangement that MWDOC will seek for the Huntington Beach plant, according to MWDOC’s General Manager, Kevin Hunt.

With MET’s subsidy to the CWA now off the books, Hunt decided that now is a good time for MWDOC to put a claim on the $350 million on behalf of its 28 agencies. So far, not a single one of them has signed on to buy Poseidon’s water, but Hunt believes that, since the MET will be looking at budget priorities next year, now is a good time to make the request.

The subsidy has always been the 1,000 pound gorilla in the room, although previous Huntington Beach city councils and the mainstream media chose to ignore it. But after years of project delays that were mostly self inflicted, and as the time comes for Poseidon to fish or cut bait, the company’s appetite for public assistance can no longer be hidden and has become a sore spot for the god of the sea.

But before voting to approve and mail the letter that it had not read, the board gave instructions to spin the subsidy from the publicly financed project that it is into the 100 percent privately funded project that Poseidon and supporters have always bragged it is.

Director Brett Barbre, representing parts of northern Orange County, started the impromptu skit, asking Hunt:

Does the $250 [per acre foot] go to Poseidon?

Hunt: No.

Barbre: Or does it go to the water district?

Hunt: The $250 goes to the water authority and its member agencies.

Barbre: Those that are actually purchasing the water?

Hunt: Whenever there is a subsidy, it goes to the public agency, not to the –

Barbre: It’s a big distinction.

Member Susan Hinman from south Orange County wanted and received assurance that Barbre’s spin would be applied to the letter before it was sent. “I feel uncomfortable about this,” she said. “I don’t see a copy of the letter and is there any reason why this can’t be delayed until the next committee meeting with a copy of the letter with the wording that you’re expressing,” she asked Hunt.

But Hunt’s other reason for rushing the letter through is to help Poseidon, which is years behind in answering basic questions put to it by the Coastal Commission, to “get the ball rolling.” Three to six months more for needed staff meetings with the MET would occur before the issue is placed on the agenda for vote, Hunt said.

Jack Foley, MWDOC’s appointed representative to the MET, concurred with the need to create confidence in Poseidon’s project by showing the Coastal Commission and investors that the company’s Surf City desal plant “has a real future” with actual water to sell.

When challenged on the real reason for the subsidy—to attract construction money—Foley stuck to the official story, that it will merely assure investors that there is a buyer for the project over the long term, denying the board’s own admission (in its soon to be sent letter) that the money was needed to defray the [highly uncompetitive] cost of Poseidon’s water.

The subsidy’s true purpose has been an open secret for a decade, but a report last year by the DC Bureau – based on interviews with government and Poseidon officials – spelled out in detail how the previously approved but now revoked subsidy for Poseidon’s identical Carlsbad desal project would have directly benefited the company by reimbursing it, at the company’s request, for construction costs plus interest.

Of course, Poseidon vice president Scott Maloni, who was at the meeting, still boasts that the HB desal plant is a privately funded project and is badly needed by the people of Orange County as part of a larger water portfolio – assertions that Orange County water officials accept as articles of faith.

“I feel like these folks are reopening old debates that have been solved years ago and it’s nothing to do with what’s on the table today,” Maloni told the board, responding to audience members, including this reporter, who challenged his assumptions. “They know that the project is needed…There’s no debate about whether the project is needed. And there’s no debate about how the MET subsidy works.”

In the second and final part of Dead in the Water on Wednesday: Is Poseidon’s proposed Huntington Beach desalination plant needed?