Uprising in the Water Colonies

RON DEATON, THE DEPARTMENT OF WATER AND POWER’S embattled general manager, was not up to talking about the doomed Owens Lake Dust Mitigation Project, or any other factor in L.A.’s looming water-rate hikes. So he retreated to the back of a DWP van, where two of Mayor Antonio Villaraigosa’s deputies were waiting — also anxious to leave a public meeting that was long on rhetoric but short on details.

Deaton and the mayor’s energy and environment deputies, Nancy Sutley and Kecia Washington, had come to Bishop, 300 miles north of L.A., along with the DWP Board of Commissioners, appointed by Villaraigosa. They came to see if they could quell suspicion and acrimony in the city’s water colonies in Mono and Inyo counties; the result of a century’s worth of taking, double talk and hardball stall tactics.

The journey began last Wednesday with a cuddly meet-and-greet at the Grand Sierra Lodge in Mammoth Lakes, in Mono County, where scars from battles with the DWP seem to have healed. It had started out on a positive note. After a State of the City address in which the mayor avoided mentioning the DWP, here were his top three commissioners, Mary Nichols, David Nahai and Nick Patsaouras, and two of his deputies hobnobbing with ranchers, Native Americans, environmentalists and local officials who are inclined to distrust anything from the mouth of an L.A. official. The trip was meant to address “Eastern Sierra Commitments and Issues.” Dubbed by skeptical locals as the “Peace in the Valley Tour,” it had the makings of a schmooze fest.

Nichols and Nahai had been making speeches about a new era of cooperation; they expressed shock at how broken the relationships were. Sensing a “historic” opportunity, locals had asked gingerly for more water, more environmental mitigation, more freedom to grow their own towns. Patsaouras, after first resisting the journey, had brought along his special brand of no-nonsense talk. His Greek accent had been a big hit. But now the group was down in Inyo County, where the wounds are raw and the memories long. Most here know that Deaton pulls the levers of power at the nation’s largest public utility.

Yet not only was Deaton loath to respond to questions about what the DWP plans to do about the bloated and costly dust-removal project — he was literally running away from a reporter and refusing to talk. The project, rooted in an era of cronyism and pay-to-play at City Hall, has been targeted for a forensic audit and put back out to bid. Scientists, engineers, environmentalists, regulators and residents around the 100-square-mile dry lake still can’t agree on whether it is controlling the dust. The International Brotherhood of Electrical Workers (IBEW) Local 18 has filed a lawsuit over the DWP’s decision to break the contract into four pieces. Deaton wasn’t ready to hear more bad news.

Huddled in the back of a DWP van, however, surrounded by the mayor’s deputies, he had nowhere to hide from allegations of an unhealthy situation on the ground — one that mirrors the high-end intrigue attached to the city’s largest public-works contract since the second aqueduct was built in the 1970s: that DWP employees have been using department funds to pay for repairs for their trucks, gravel for their driveways, lumber for their homes and swamp coolers for their mistresses’ trailers. The L.A. Weekly received a tip regarding these allegations weeks ago.

On Thursday, DWP manager Dan Raftevold, in the Bishop office, had said, “I can’t comment on that.” DWP supervisor Chris Plakos replied, “Nobody comments on that stuff, you’ll have to talk to Deaton.” Gene Coufal, who runs the Bishop office of the DWP, did not seem surprised. He shrugged and offered what people up here call the “upside-down smile” and said, “You’ll have to talk to Barbara Garrett,” referring to Deaton’s right-hand woman on lake issues. Garrett had passed the buck back to Deaton.

So here came the question through an open side door to the van: “Mr. Deaton, what is the DWP doing in response to allegations of employee theft on the lake?” A pause. Deputy mayors Sutley and Washington looked startled by such an unseemly proposition. Then the grudging reply: “We’re investigating,” Deaton muttered, as the door slammed and the van drove off.

Maybe he was telling it like it is. The Weekly has learned that Deaton is beefing up an investigative unit at the DWP for just such occasions. Sources at the DWP say he has modeled the unit after an investigative unit at City Hall. Former law enforcers Bill Jones and Bill Garcia, investigators at the DWP, will head the unit and report to Assistant General Manager Hal Lindsey, sources at the DWP say. Jones and Garcia are on the case of alleged theft on the lake.


Not surprisingly, the DWP has $20 million per year in purchase-card activity, only 20 percent of which is reviewed or audited, according to Commissioner Nahai. Sources familiar with this recent report of theft say that a DWP manager leaked the allegations of a lake scam to DWP employees. A DWP employee on Owens Lake told the Weekly, “All the documentation of those purchase-card accounts has disappeared. It’s gone.”

L.A. OWNS ALMOST ALL OF THE LAND in Inyo County and a good chunk of Mono. Residents up here sometimes feel unable to realize the full potential of their little slice of paradise. The diplomatic overtures from Nichols, Patsaouras and Nahai offered hope. Then the Owens Lake Dust Mitigation Project came up. Left until the end of a three-day whirlwind, the half-billion-dollar project, orchestrated by megacontractor CH2M Hill, with help from its friends in City Hall, has no easy answers — a good reason for L.A. ratepayers and Owens Valley residents to be wary.

From the start, the Owens Lake project has been tainted by lack of oversight at the highest levels. Last fall, the Weekly reported employees’ claims of mismanagement and runaway costs on the lake. The IBEW grumbled that employees on the lake were disgruntled castaways. Since then a lot has happened, but little has changed. Patsaouras was the first to jump all over CH2M Hill. He called for the audit and the re-bid and prevented CH2M Hill from acting as engineer and construction manager, an arrangement ripe for conflict that has insulated the company when problems emerged.

Detractors in City Hall said Patsaouras had ulterior motives. Some suggested he had friends in the contracting business who might want to get in on the action. But after five months, with an auditing firm yet to be chosen, CH2M Hill has learned it will be awarded three of the four contracts, with its subsidiary, OMI Inc., being awarded the fourth. Rich Coles, the project manager for CH2M Hill, said on Friday that his staff has been informed by DWP staff that they will continue to run the dust-mitigation project, which was responsible for a 4 percent water-rate hike in recent years, and is driving proposed rate hikes of more than 7 percent over the next two years, according to a city report and a rate-hike audit.

Asked why the audit has lagged, Nahai replied sadly, “We’ve pushed for it. Staff is preparing the proposal. Are you suggesting the process is manipulated?” When confronted with the audit’s questionable progress, Patsaouras grew irritated. “CH2M Hill has been fucking the city with uncontrolled expenses. You wait and see what happens when we get the results. It won’t be all CH2M Hill.” Nichols abruptly ended a phone conversation when informed that many contractors did not bother to bid on the Owens Lake contracts. “CH2M Hill and OMI are clearly cozy with DWP staff,” says Carla Scheidlinger, a consultant with Agrarian Research and president of the Owens Valley Committee. “DWP staff was told by the commissioners to put the contract back out to bid. Contractors can tell when the outcome is wired.”

Intrigue has surrounded the dust project. CH2M Hill senior vice president Jack Baylis, a well-known fixture at City Hall, has left the company. Speculation about Baylis’ departure is rampant. He would not comment. A spokesman from the Denver office praised Baylis and said they were sorry to see him go. Sources familiar with CH2M Hill say that in the past, Baylis had been troubled by reports from subcontractors that questioned Rich Coles’ methods in awarding subcontracts. A procedure was set up to oversee Coles’ hiring of subcontractors, which had included public-relations firm Lee Andrews Group, hired at the behest of former DWP commissioner Kenneth Lombard.

There are signs that it was a two-way street. Former DWP water manager Gerry Gewe’s son, Andrew, works for CH2M Hill as a database manager. Gewe insists he had nothing to do with his son’s hiring. “I’m not naïve enough to say my name didn’t have an influence, but it has never affected my decisions.” Gewe also heads a missionary effort in Kenya on behalf of Eagle Rock Baptist Church, and one of its staunch supporters, according to Pastor Rick Manbel, is former NBA all-star forward and CH2M Hill’s “juice guy” at the DWP, Bill Bridges, a consultant. Sources say Bridges urged CH2M Hill to contribute to Gewe’s church charity, but the company would not confirm any contributions. Bridges could not be reached for comment.

CH2M Hill has upgraded its connections. Coles says he is thinking of retiring. The company has hired Villaraigosa’s former council deputy chief of staff Linda Waade to serve as “client services manager” in the company’s L.A. office. Waade brings another advantage for any contractor trying to hold on to DWP business: She worked with DWP board president Mary Nichols to raise funds for Villaraigosa’s first run for mayor. Waade, sources who know her say, is an old friend of Nichols. Both are environmentally and politically active. Waade did not return calls for comment.


Out on a mission of good will, Deaton and deputy mayors Sutley and Washington ducked questions about the dust project’s shallow flood zone, which has only small amounts of vegetation and uses 50,000 acre-feet a year of L.A. Aqueduct water. Sutley said that Villaraigosa had not been briefed nor had he asked to be briefed on the water usage in the Owens Valley that has been required as a result of decades’ worth of environmental damage. Washington declined to elaborate on the mayor’s policies for the DWP or its presence in the Owens Valley, even though the dust-mitigation project is driving proposed rate increases for L.A.

The turmoil was a stark contrast to what the commissioners had in mind when they ventured to DWP’s remote company towns. “This is voluntary — they’ve come out of their love for the city,” gushed Julie Bear, director of the Eastern Sierra Land Trust, which is angling for the DWP to subsidize controlled growth in Mono County towns such as Lee Vining, which are surrounded by DWP land. “There’s no limit to the good you can do if you don’t care who gets the credit,” Nichols replied.

Sutley reiterated that Villaraigosa wants L.A. to become “the greatest big city in America” and a green one at that. Nahai was effusive in his praise for the “glory and the divinity of the Eastern Sierra,” pledging a new day of cooperation between the DWP and the people of the Owens Valley: “Scratch the surface, and we are all the same. The one thing that poisons relationships is suspicion. It is like a weed that can overtake anything.”

In Inyo County, at the fairgrounds in Bishop, a community scarred by groundwater-pumping disputes, a bitter fight over the DWP’s resistance to restoring the Lower Owens River and the entrenched dust-mitigation project, shared stories of health problems and isolation. They begged the commissioners to approve a plan to expand the Bishop airport. They wondered where Villaraigosa plans to get the water to feed the million trees he wants to plant in L.A.

“Dream with me,” said Wilfred Nabahe, of the Lone Pine tribe, quoting Villaraigosa from his State of the City speech. Then he voiced the concerns of many in attendance, who recall the way the DWP does business in its water colonies. “There’s no believing their words,” he told the local supervisors who seemed perplexed by all the conciliatory talk. “Who cares about rates in L.A.?”?

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