About a three-hour drive north of Los Angeles in the high desert, stretched out like a crooked finger between the Sierra, White-Inyo and Coso mountains, lies the storied Owens Valley. Visibility is often obscured by what is known as “Keeler fog,” a toxic mixture of alkaline dust laced with arsenic particles that swirl off a dry lakebed in the gusty winds and become embedded deep in the lungs when inhaled.
In an unusual attempt to slice through a fog of mismanagement, or perhaps out of sheer exhaustion, 16 of the Department of Water and Power’s unionized employees on site in Keeler recently went before an employee-assistance counselor to describe what they see as a crisis of leadership and fiscal waste at the nation’s largest public utility.
Most Angelenos know that Owens Lake went dry in 1926, and that the DWP was in large part responsible for accelerating that environmental disaster. But what ratepayers don’t know, according to DWP workers on a 30-square-mile, federally mandated dust mitigation project, is that mega-contractor Ch2M Hill is soaking up DWP money just like DWP founder William Mulholland grabbed Owens Valley water a century ago, when he is said to have instructed his workers, “There it is, take it.”
For the past year, DWP managers have ignored persistent complaints of careless design, shoddy workmanship and excessive costs, according to the workers at the project, which is aimed at irrigating the dry lakebed, eventually to the tune of a half-billion dollars. When they spoke up about what they felt were Ch2M Hill’s failures and abuses, the workers say they were told to stand down by DWP managers who occasionally fly in by helicopter to assess the situation.
The cries of mismanagement got so loud that on September 29, the DWP sent Janet Kennedy, a consultant with Denver-based Horizon Behavioral Services, to counsel the workers in Keeler, according to four of the 16 who attended a two-hour therapy session. The employees, some veterans and some newcomers, told Kennedy they feel marginalized and abandoned. “People in Los Angeles have no idea how their water rates are being spent,” said one worker after the meeting. “Ch2M Hill is screwing the public and the DWP is telling us to keep our mouths shut,” said another.
When they turned to the International Brotherhood of Electrical Workers Local 18, the workers say, union representatives Russ Butow and Ken Delgado tried to mollify them but failed to protect jobs or the DWP’s resources. The DWP workers, many of whom live in Los Angeles and must choose between a three-hour commute or living away from their families, say the IBEW has allowed Ch2M Hill, a Colorado company, to push them aside, hire private workers and run up costs on the city — which is using borrowed money for 70 percent of the project. Private workers on Owens Lake outnumber IBEW members by 2-to-1, according to sources at the site, not including the independent subcontractors that Ch2M Hill has hired. The DWP has approved the hiring of 20 union workers, but so far only two have been hired, employees say.
DWP officials are just now looking into how millions of its dollars have been spent, despite two retroactive approvals by the City Council for cost increases since 2002 and a third amendment that raised Ch2M Hill’s contract to $106 million, in 2004. Earlier this year, according to the workers, DWP senior internal auditor Winetta J. Leslie conducted an audit of the project. DWP officials did not return calls for comment. By Wednesday afternoon the DWP had not released the audit report. And recently, DWP chief operating officer James McDaniel, in charge of the water system, had safety manager Leland Gong investigate allegations of OSHA violations, waste and mismanagement, workers say. McDaniel did not return calls for comment. Gong is on vacation.
Independent subcontractors are surprised the DWP has stood by as contracting costs have spiraled out of control. “Time and materials is pretty wide open,” says a subcontractor who has worked on the project. “And it’s pretty easy to get a change order.”
Air quality regulators in the area, while acknowledging the project is improving air quality, are shocked at the cost. An official with the Great Basin Air Pollution Control District, which monitors pollution levels under federal Environmental Protection Agency guidelines, says Ch2M Hill is spending an unbelievable amount of money on a project that has none of the obstacles the DWP encountered in designing, building and maintaining its own water system. “I’d listen to the [DWP] workers,” says the official, who asked not to be named. “Construction and design should be simple. There’s nothing in the way out here, just blow and go. Ch2M Hill thinks they know better. There’s an arrogance to it.”
Launched in 1998, the Owens Lake Dust Mitigation Project is the result of Los Angeles’ long-standing diversion of water from the Owens Valley, according to a March 2004 report by City Administrative Officer Bill Fujioka. He warned that capital costs, once estimated at $120 million, now at $415 million and expected to exceed $500 million, would require the DWP to jack water rates by 4 percent. The DWP raised water rates 11 percent last year, and has proposed an 18 percent rate increase over the next five years. The contract with Ch2M Hill was first estimated at $42 million but now is approved for $106 million, according to Fujioka’s report. “The cost of the Owens Lake Dust Mitigation Project has dramatically increased since its inception,” he wrote to former mayor Jim Hahn in his 2004 report. “A more cautious approach to oversight may be justified.”
The opposite has happened, say DWP workers and regulators. Despite notification to General Manager Ron Deaton, Director of Water Resources Thomas Erb and Assistant Director of Water Resources Richard Harisick, ratepayer money has evaporated into thin air, workers say. Despite also turning to City Controller Laura Chick, the workers say city officials have given Ch2M Hill carte blanche, resulting in costly do-overs, unnecessary purchases of expensive equipment that failed under harsh desert conditions and use of DWP equipment, vehicles and credit cards. When asked what oversight measures he has taken, Councilman Tony Cardenas, chairman of the Commerce Energy and Natural Resources Committee, could not point to any specifics. Last Friday, he issued a statement: “More needs to be done. I am frustrated by the hideous delay in the DWP’s restoration of Owens Valley. Former DWP officials have admitted the department severely underestimated the costs involved. It’s not excusable and it’s not acceptable.”
One reason city officials have dragged their feet, workers say, is more than $70,000 in contributions to local politicians, including Hahn, Cardenas and Mayor Antonio Villaraigosa by Ch2M Hill and its lobbyists, including John Ek and the lobbying firms Rose & Kindel and Ek & Ek. Ethics Commission records also show that Richard Coles, vice president of Ch2M Hill, donated $1,000 to Hahn’s mayoral campaign in 2000, just before the contract was doubled from $13.9 million to $28 million. Ch2M Hill senior vice president Jack Baylis, who along with his wife has contributed $9,500 to local officials, including Hahn, Villaraigosa, Cardenas and Councilwoman Janice Hahn, a member of the Commerce Committee, referred all questions regarding the Owens Lake project to Richard Harisick of the DWP. Harisick has not returned calls for comment.
“It’s ludicrous,” says a DWP veteran who works at the Keeler site, pointing to $90,000 pumps and high-end valves that Ch2M Hill has purchased with DWP money, even after being told by suppliers that the materials could not withstand the salinated water being used to irrigate the dry lakebed. Predictably, the equipment corroded and had to be replaced, say the workers who point to an “Additions and Betterments” clause in the contract that allows Ch2M Hill to bill the DWP for their own shoddy work. “We could be doing this work, and cheaper. This isn’t rocket science, it’s pushing water around a dry lakebed. It took these geniuses a year to figure out that water flows downhill. The Chinese irrigate rice paddies more effectively and they don’t use any of this fancy equipment. Ch2M Hill is building an unstable, high-maintenance system and charging it to the ratepayers. It’s taking a toll on workers. No one is backing us up.”
Recently, Ch2M Hill was forced to tear down grading systems at four areas in the lakebed, according to an independent subcontractor familiar with the job. “It wasn’t set up right. It’s design-as-you-go, and they’re gonna have to re-do it. It’ll cost a good $20-$30 million.” The subcontractor, a veteran maintenance worker, says Ch2M Hill also has designed faulty spillways that are supposed to prevent washouts from flash floods. “Lots of ’em are pretty messed up. Water flows over them or through them. They had to sandbag ’em.” According to the subcontractor, DWP workers built spillways — known as Arizonas — with walls made of shale. They worked just fine. “Ch2M Hill came in and wanted $200,000 to rebuild the Arizonas that they designed.”
Phase I of the project, a flood zone on the northern boundary of the lakebed, is being re-done, and is now referred to as Phase V, according to a DWP worker. “DWP knows about this. Everyone with power to do anything wants to either lie or stick their head in the sand.”
While most historical accounts point to the DWP’s diversion of water to Los Angeles as the most significant factor in turning the Owens Valley into a dust bowl, some historians claim that agricultural use and the forces of nature were destined to drain the lake with or without the DWP’s help. In any event, in 1990, after decades of heavy winds and dust storms had killed off vegetation and resulted in one of the largest sources of small-particle pollution in the country, California was forced to devise a plan to reach the EPA’s standards for particulate matter.
In 1998, the DWP hired Ch2M Hill for $550,000 to act as an expert witness on dust mitigation to resolve legal issues related to Owens Lake, according to Fujioka’s report. Over the next three years, Ch2M Hill secured a contract to provide scientific, research and engineering activities and took over comprehensive project design and management. In 2002 and 2003, the City Council was forced to approve a pair of retroactive amendments to pay for work already completed. A third amendment in 2004 pushed the Ch2M Hill contract to $106 million. Officials at Great Basin say 19 of the 30 square miles on the project now meet EPA standards.
But at what cost?
L.A. Weekly freelancer William J. Kelly first wrote about the spiked costs in April 2004. This summer, during a follow-up visit by the Weekly, six DWP workers filed into a trailer in Keeler on a 100-degree day and described their dismay. Their allegations included: Contractors and subcontractors were charging supplies to local vendors beyond their budget; grading projects were undertaken without measuring water levels, requiring them to be redone; shale pits were staked out by DWP employees and taken over by contractors, causing concern that the DWP could be billed for the work; unskilled local workers were hired by contractors and paid union wages; contractors were operating DWP equipment and leased vehicles stamped with DWP serial numbers, with vehicles unaccounted for in the early morning hours; and contractors’ gas and cell phone bills were being paid for by the DWP. In one instance, DWP workers say, Ch2M Hill proposed spending $600 per hour to take by helicopter several tons of used fertilizer, until workers insisted on hiring a loader and four trucks to do the job for a fraction of the cost.
City Hall is not oblivious to the situation. One worker says he approached City Controller Laura Chick last year with information about Ch2M Hill’s performance on the contract and she told him she wasn’t going to touch it. When Chick pulled her car to a curb downtown recently to speak with a reporter from the Weekly, she was asked by another Weekly reporter if she intended to audit the contract. “I don’t know,” she replied. “What about time and materials?” Chick was asked. She shook her head and drove off. Mayor Villaraigosa did not return calls for comment. Bill Rosendahl and Janice Hahn, who sit on the Commerce Committee, did not return calls.
Though she told workers she could not address the substance of their complaints, employee-assistance consultant Janet Kennedy got an earful on her recent trip to Keeler. When she will be back, and under what circumstances, is anyone’s guess. “That’ll be some bullshit whitewash,” says a consultant to the DWP who has experience with labor-relations issues. “The DWP will look at it as a few unhappy campers, but that approach will backfire. The complaints will get dumped back on the workers and they’ll be madder tonight than they were last night.”